Earlier this year the UN Human Rights Council adopted a resolution put forward by the United States urging Sri Lanka to implement the recommendations of an official Sri Lankan probe.
That commission called for the prosecution of soldiers guilty of misconduct. The government said in July it would take up to five years to try those accused of atrocities, a step critics denounced as a bluff to reduce international scrutiny. Tens of thousands of civilians were killed in 2009 in the final months of Sri Lanka’s 25-year civil war, a United Nations panel said last year, as government troops advanced on the ever-shrinking northern tip of the island controlled by Tamil forces fighting for an independent homeland.
Though Sarath Fonseka is not an immediate political threat to Rajapaksa, the former general is still popular among many Sri Lankans for his outspoken criticism of the government. The US had long demanded Fonseka’s release, calling him a political prisoner, while rights groups have accused both Fonseka and the president in shooting surrendering Tamil Tiger rebels in the final stage of the war. Fonseka is, however, capable of causing massive damage to Rajapaksa’s popularity, given that great numbers of Sri Lankans believe the former soldier could deliver in politics after helping to win the 25-year war. A politically savvy Rajapaksa has only remitted his sentence, ensuring Fonseka is unable to stand in an election in the next seven years. Undeterred by that, Fonseka has started public campaigns to meet his supporters, and discuss Rajapaksa’s alleged policy lapses. He has openly called for a wider opposition alliance to topple the government.
In late September the central bank downwardly revised its projection for 2012 economic growth to 6.8 percent, a second reduction from its original 8 percent. Treasury Secretary PB Jayasundera has predicted it will be a minimum 6.5 percent depending on the impact of a drought that has started in early 2012. Growth last year was a record 8.3 percent, but 6.4 percent in the second quarter of this year was Sri Lanka’s slowest since the fourth quarter of 2009. The government will cut spending from the 2012 budget to keep the fiscal deficit to a targeted 6.2 percent, Jayasundera has said. By April, Sri Lanka’s budget deficit was 285.8 billion rupees ($2.14 billion), almost 61 percent of the full-year goal of 468.9 billion rupees, raising concerns it may miss the target. The International Monetary Fund in June lowered its growth forecast to 6.75 percent, down from an earlier estimate of 7.5 percent, due to tough policy measures the country has implemented since February.
Despite the tension with Washington, Sri Lanka has been given an extended waiver on imports of Iranian crude after it cut imports from Iran by up to 38 percent, switching to alternatives from Oman and Saudi Arabia. However, it will have to abide by certain conditions including a further reducing imports during the six months to Dec. 31 if it wants the waiver to be extended. Oil Minister Susil Premajayantha has said Sri Lanka, which is dependent on crude imports, took steps to reduce Iran crude purchases during the first six months of 2012 to eight cargoes per year from 13, buying four cargoes from Oman and one from Saudi Aramco. He has also said the government will refurbish its only oil refinery to process oil from other origins. Last year, Sri Lanka imported 93 percent of its crude from Iran, so if a waiver is not agreed it could suffer badly from sanctions on Iran.