Sri Lanka’s recently concluded parliamentary elections—alongside the Presidential election in November—ushered in the return to power of the formidable Rajapaksa political dynasty. The current ruling coalition swept away their predecessors, deeply unpopular due to internal divisions between President Maithripala Sirisena and Prime Minister Ranil Wickremesinghe, a stalling economy, and the catastrophic Easter Sunday terrorist attacks in April 2019. The broad mandate the current government has achieved, on a platform of nationalist populism, may yield significant changes to the country’s political, economic, and foreign policy landscape. On the political front, the country is likely to see a power concentration with the executive presidency. On the economic and foreign policy fronts, political-economic realities—such as a narrow fiscal space, heavy debt burden, and the critical role of both India and China—will determine policy options more than any particular ideological leaning.
Politics: Power Balance Between the President and Prime Minister
On the economic and foreign policy fronts, political-economic realities will determine policy options more than any particular ideological leaning.
Arguably, the most significant outcome from the recent election is the ruling party, the Sri Lanka Podujana Peramuna (SLPP), and its allies winning a two-thirds majority in parliament. Notably, this allows the government to repeal the 19th amendment to the constitution, passed by the previous government to reduce the powers of the executive presidency and reallocate those powers to the parliament and independent commissions. The proposed draft of the 20th amendment, gazetted last month, gives the president unbridled power by granting the presidency powers to appoint key personnel to prominent institutions, dissolve parliament after one year, and gain full legal immunity, among others. The draft 20th amendment also effectively undermines the Right to Information Commission and abolishes the Audit Service Commission and the National Procurement Commission. The draft, which was presented to parliament without public consultations, has been criticized as an anti-democratic measure by the opposition, the international community, and civil society organizations.
Crucially, however, the draft constitutional amendment has also faced push back from members within the ruling party closely affiliated to Prime Minister Mahinda Rajapaksa. He has since appointed a committee to study the proposed amendment and pledged to submit a revised draft to parliament. While a 20th amendment, repealing many of the provisions made through the 19th amendment, is very likely to pass during the next few months, the Prime Minister and his allies in parliament are likely to attempt to reduce the amount of power that would shift away from the parliament to the presidency.
The government has also vowed to draft a new constitution for the country during the current presidential term. While the exact nature of the new constitution is unknown, it is likely to see changes to the electoral process (currently operating on a proportional representation system) and the potential elimination of Provincial Councils. The latter is especially likely to raise concerns in India, as Provincial Councils were established through the 13th amendment to the constitution following concerted pressure by India during the 1987 India-Sri Lanka accords. The amendment was then seen as an important step towards devolving power in order to achieve a political solution to the island’s ethnic conflict.
During this critical juncture in Sri Lankan politics, the country’s opposition parties are arguably at their weakest. The United National Party (UNP), the majority party in the previous ruling coalition, was decimated at the polls and secured only one seat in parliament. Meanwhile the Samagi Jana Balawegaya (SJB), the current main opposition party with 54 seats, was only recently formed by a group that split from the UNP and is still at the early stages of attempting to establish its political identity. As such, the party is struggling to chart a clear distinction for itself from the UNP and provide a viable alternative to the SLPP.
Economics: Managing Fiscal Pressures
Even before the COVID-19 pandemic, the Sri Lankan economy was in a perilous position due to slow growth, a stagnant manufacturing export sector, narrow fiscal space, and rising debt levels. The pandemic has exacerbated these economic vulnerabilities significantly. The country’s tourism sector, in particular, which accounts for approximately 12 percent of GDP, has, since mid-March, been at a complete standstill. The sector is unlikely to recover in the short term since the border is expected to remain closed to foreigners for some time. Similarly, demand for Sri Lankan exports is also likely to suffer due to the economic slowdown in the United States and Europe, its key markets. Combined with a fall in migrant remittances, the country’s currency is facing considerable pressure and placing a substantial burden on the government’s debt repayment mechanisms.
Amidst these challenges, a laudable, well-coordinated and effective public health response based on contact-tracing and quarantine has enabled Sri Lanka to contain the community spread of COVID-19. As a result, the recovery of domestic economic activities has moved much faster than for most countries around the world. While an economic contraction in 2020 is inevitable, Sri Lanka may have effectively mitigated its extent. Greater political stability will likely improve business sentiment and facilitate post-COVID-19 economic growth as well.
The biggest challenge for the current government will be to catalyze economic growth while managing a narrow fiscal space. With substantial foreign debt repayments due over the next few years, continuous macroeconomic instability and accompanying rating downgrades could severely jeopardize the country’s debt sustainability. As such, the efficacy of current protectionist measures to heavily restrict imports is especially questionable. An erosion of the economy’s competitiveness as a result of higher production costs linked with import substitution will undoubtedly worsen its economic position.
Foreign Policy: Addressing the regional balance of power
At first glance, given Sri Lanka’s foreign policy under Mahinda Rajapaksa’s presidency from 2005 to 2015, one would assume that the return of a Rajapaksa regime would inevitably lead to a heavily China-centric foreign policy. In reality, however, the country’s foreign policy realignments are likely to be less pronounced due to politico-economic realities. The government will ideally attempt to balance Chinese and Indian interests rather than heavily aligning with one over the other. While India has strong political and some economic interests in Sri Lanka, China is now the main source of large-scale investment to the country. Alienating either would be to the detriment of the island-nation.
Since the election of President Gotabaya Rajapaksa, the Modi administration and their Sri Lankan counterparts have been proactive in strengthening bilateral relations. President Rajapaksa’s first foreign visit in his role was to India. In a recent interview, the newly appointed Secretary to the Ministry of Foreign Affairs stated that the government would pursue an “India first” foreign policy. Whilst this could potentially be a means of assuaging Indian concerns about an over reliance on China, the practical implications of such a policy are as yet unclear. In the long term, Sri Lanka would be better served with an Asia-focused foreign policy, rather than a predisposition towards one particular country. An Asia-focused relationship could especially benefit Sri Lanka in terms of diversifying its export destinations and sources of foreign direct investment (FDI).
In the long term, Sri Lanka would be better served with an Asia-focused foreign policy, rather than a predisposition towards one particular country.
Although Sri Lanka’s Indo-China relationship is likely to shift from its pre-2015 position, a similar shift is unlikely to take place with Western powers. The administration has come under considerable scrutiny due to its checkered human rights record. As such, the government is likely to face greater scrutiny at the international stage, especially through the UN Human Rights Council, on its actions in relation to democratic reforms, minority rights and reconciliation. Sri Lanka should remain cognizant of the fact that nearly half of its exports are destined for the United States and European Union, and those too heavily depend on preferential trading arrangements such as the EU GSP+. While an Asia-focused foreign policy would be advantageous, it should not come at the expense of Sri Lanka’s diplomatic relations with the West. An acrimonious relationship with the West could potentially have severe repercussions on the country’s economy.
The 2015 election in Sri Lanka was seen as a watershed moment in Sri Lankan politics as it promised a great deal of political and economic reform. Yet internal divisions and an apathetic attitude towards delivering on these promised reforms undermined its own limited successes. As a result, the stunning rebuke of the previous administration in the recent presidential and parliamentary election may unravel some of the progressive democratic reforms that were heralded at the time.
It would be wrong to consider the current administration as purely a reversal to pre-2015 politics, as even in its infancy, the current administration is largely beholden to a presidential campaign that promised a change in the governing culture of the country and in doing so, a critique of the pre-2015 administration as well. As such, the popularity of the current government will depend on its domestic policies maintaining a careful balance between delivering a shift from its own previous record as well as the previous administration, albeit with a largely familiar cast.
Views expressed here are the author’s own and should not be attributed to any organization with which he is affiliated.
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