ECONOMYNEXT – Sri Lanka will go for the island nation’s 8th presidential poll to elect a new leader for the next five years later this year between September 17 and October 16.
The election comes two years after President Ranil Wickremesinghe was elected as the 8th leader of the country through the parliament in an unprecedented manner after his predecessor Gotabaya Rajapaksa fled the country fearing for his life in July 2022 amid mass protests across the country following an economic crisis.
Wickremesinghe, since then, had to implement a raft of hard economic reforms committed to the International Monetary Fund (IMF) including tax hikes, and new laws to ensure the economic recovery under an IMF programme.
Wickremesinghe’s policies have started to help the economic recovery at the expense of his popularity in a nation where there is already confusion and division about right or wrong economic policies. They elect leaders based on unproven campaign promises for short term benefits, where the longer term effects are not initially evident.
Here are five key political risks the island nation is facing ahead of the upcoming presidential polls:
Economic Stability:
Sri Lanka still faces significant economic challenges despite Wickremesinghe government’s gains through IMF-led policy reforms. It has returned to positive economic growth, lower single digit inflation, primary surplus in current account, and higher tax revenue due to tough policies under IMF.
The central bank going against the usual ‘overvalued currency’ claims of the IMF has allowed the rupee to appreciate, bringing some benefits of stability to the people.
But the island nation has yet to complete external debt restructuring formally with both bilateral and private commercial creditors/sovereign bond holders.
Sri Lanka has a bad reputation of policy inconsistency from one government to another and sometimes within the same government in the past mainly to sustain electoral wins.
Still the island nation’s political leaders are struggling to agree on key policies. Opposition parties have publicly said they want to amend commitments Wickremesinghe’s government has agreed with the IMF while there are contradictions over the current government policies within the coalition partners of the government. Such undecided policies could impact external creditors and new investors. Wickremesinghe is trying ensure policy stability through parliament approvals such as the proposed Economic Transformation Act.
Inconsistent policies could hit economic stability as well as the ability to seek external funding as well as investments for future economic development.
Another economic crisis could lead to more social unrest and political instability.
Geopolitical Influences:
Sri Lanka’s strategic location in the Indian Ocean makes it a focal point in regional geopolitics, with competing influences from major powers like India and China. That could impact domestic political stability.
Under Wickremesinghe, China has been maintaining a lower profile though it has won crucial deals like Sinopec fuel distributor stations and a the rights to build a massive refinery in the deep Southern port district of Hambantota with their own funds.
India, on the other hand, has been very active in the island nation’s politics and economic recovery. India helped with large loans without an IMF program while other countries halted loans after default.
However, many political analysts and legislators who see unprecedented Indian influence in a number of Sri Lanka’s strategic policies including defence, energy, and economy fear the re-kindling of dormant anti-Indian sentiment. LL
Some political analysts see India as a key strategic partner on one hand and a spoiler on the other hand for its role in intervening in some crucial domestic policies.
The current government leaders have acknowledged the Indian concerns over the regional security against high Chinese influence in the past.
However, they say, India’s hard push for some projects has left the government in difficulties while others have also has unclear terms. These projects include Adani’s renewable energy projects, unique identity card deal funded by India, and key connectivity projects like electricity grids, along with gas and oil pipelines between the two neighbours. India is also pushing to take control of one of the world’s most strategic natural ports in the Eastern port district of Trincomalee on a long term lease similar to China got the Hambantota port in 2017.
These projects, which could be beneficial for the country, are likely to face delays because of the hard push by India and protests by Sri Lankans, government officials say. India, however, has denied claims of intervention and its hard push for projects.
On the other hand, senior government officials say, Beijing has been irritating India through sending its research ships to Sri Lanka time to time for port calls. On repeated strong Indian protests, Sri Lanka banned Chinese research vessels coming to Colombo for research purposes in 2023 for one year. India argues such ships could compromise its and the India Ocean’s security. Some Sri Lanka cabinet ministers say Sri Lanka can’t stop Chinese research ships if they come for port calls.
Recovering from the unprecedented economic crisis, Sri Lanka cannot antagonise either India or China along with other strategic international partners like the United States, Japan, Russia, the United Kingdom, European Union countries, and Iran.
Any future government will be compelled to navigate through the concerns of these international partners when dealing with strategic investment policies. The island nation’s current simple non-aligned foreign policy may not be adequate for such navigations, they say.
Wickremesinghe’s administration has handled such concerns with compromises and political instability could arise if a future government deviate from the current stance, analysts say.
Governance and Corruption:
Concerns persist about governance issues, corruption, and lack of transparency, which erode public trust in institutions and could lead to protests or political instability. One of the key demands of millions of 2022 protestors who forced former leader Gotabaya Rajapaksa to flee the country was to deal with corruption.
They have articulated that past corruption led to the economic crisis in 2022. They have demanded strong actions against those corrupt leaders and bureaucrats and to recover stolen assets owned by them both within and outside Sri Lanka.
Wickremesinghe’s government has come up with Anti-Corruption Act and proposed a strong Proceeds of Crime bill. However, the public perception on the deep rooted corruption has not changed. If Sri Lankan policy makers delay the implementation of corruption-busting policies and punish those involved in past corrupt deals further, it could contribute to instability and public disenchantment of ruling governments.
Concerns over Human Rights/Economic Crimes:
The country’s human rights record, particularly concerning allegations of war crimes and accountability issues related to the civil war, remains a contentious issue both domestically and internationally.
Sri Lanka has taken baby steps to address the past allegations of human rights abuses. These steps include setting up offices to deal with missing people and reparation. However, victims and immediate family members say the government is not doing enough.
Many political leaders still believe demand for accountability on the human rights could disappear with time. Instead, the island nation’s political leaders, military officials, and bureaucrats are still facing sanctions like travel bans from third countries.
Already a new report from the Office of the United Nations High Commissioner for Human Rights (OHCHR) has recommended targeted sanctions on officials responsible for disappearances in Sri Lanka since 1970 and has called for justice outside the country for the families of victims.
A limited number of Western nations have already imposed targeted sanctions, including travel bans for some Sri Lankan political and military leaders, after finding credible information about human rights violations. The United States has imposed a travel ban on former Army Chief Shavendra Silva and his immediate family members, former Navy chief Wasantha Karannagoda, and some others citing human rights violations. Canada last year announced financial sanctions to freeze the assets of former Sri Lankan presidents Mahinda Rajapaksa and Gotabaya Rajapaksa citing rights abuses. This list is expected to expand with Sri Lanka’s denial of addressing the past rights allegations.
The OHCHR has urged the international community to engage with Sri Lanka due to an accountability gap at the domestic level with victims urging prosecution in a third State due to “widespread impunity in Sri Lanka.” With the alleged economic crimes, some new actions including asset freezing are expected in the near future, global analysts say.
The 2022 economic crisis also has also renewed interest Sri Lanka’s international partners on whether assets were bought from money siphoned off through corrupt deals. International analysts say Sri Lankans who are alleged to have misappropriated public funds and properties may also face questioning on the assets owned by them in other countries in future.
The key concern has been most of the alleged human rights violators and economic criminals are yet to face any local investigation or law suit. President Wickremesinghe has been accused of protecting miscreants though he has pledged that he will act according to the law and is strengthening an anti-corruption body including through an IMF program. Those involved in corruption could become a liability for any government in the future unless they are cleared by an independent judiciary. Having such accused could bring some elements of political instability and public unrest.
Political uncertainty:
Sri Lanka is facing uncertainty due to risks involved with possible policy changes after the presidential poll.
President Wickremesinghe has been constrained by a lack of a people’s mandate though his election as the president in the parliament is constitutional. He became the president while his party had only one seat in the 225-member legislature. He is being backed by former President Rajapaksa-led nationalist Sri Lanka Podujana Peramuna (SLPP) which people wanted to oust for its wrong economic policies.
Opposition parties are divided and polarised while political analysts predict no clear winner in the upcoming presidential poll as of now.
Anura Kumara Dissanayaka, the leader of Marxist Janatha Vimukthi Peramuna (JVP)-led National People’s Power (NPP) has gained popularity according to some surveys followed by the main opposition leader Sajith Premadasa.
Analysts say Dissanayaka’s popularity comes mainly from his eloquent critique of corruption under successive governments and promises to act on wrong doers. But there are some concerns over the Marxist leader running an effective government if he wins the poll as he and his party have zero experience in formulating and delivering policies.
Premadasa has been trying to win people by impressing them with his Japanese language and sports skills among many others. Analysts say Premadasa is benefiting form father former leader Ranasinghe Premadasa and anti-incumbency stance by the public. Premadasa, analysts say, also has little experience in handling a crisis-hit economy. Premadasa was the deputy party leader Wickremesinghe’s UNP until he broke away from it and started Samagi Jana Balawegaya (SJB) as an alternative. Moves to iron out differences between Wickremasinghe and Premadasa have yet to see success.
Wickremesinghe, whose party has only one member in the parliament, is planning to contest under a broader independent coalition, according to some insiders in the expectation that it could allow most current and the past legislators to back him despite ideological differences their parties have.
There is no clear survey or polls to suggest who will be the likely winner at the moment. Wickremesinghe’s popularity has been on the rise among the public in the last two months, but Dissanayaka and Premadasa are ahead of him, analysts say.
These factors collectively contribute to a complex political landscape in Sri Lanka, influencing both domestic governance and international relations. (EN -Colombo/June 16/2024)