Colombo Should Heal Wounds and Develop a Balanced Foreign Policy – FT

Sri Lankan voters have dealt a decisive blow to the comeback ambitions of former president Mahinda Rajapaksa, who ran the island nation of 20m people in authoritarian style for a decade. Their rejection of his bid for the premiership almost certainly ends his chances of leading the country again. It also opens up the possibility of the former strongman being investigated for both corruption and human rights violations. He denies both accusations.

The voters in one of Asia’s oldest democracies have made an excellent choice. True, under Mr Rajapaksa, Sri Lanka ended 26 years of vicious civil war, and embarked on a phase of rapid development. But Mr Rajapaksa, who began to rule more like an emperor, oversaw an administration that reeked of nepotism and paid scant attention to the rule of law.

The main winners are Ranil Wickremesinghe, the returning prime minister and, especially, Maithripala Sirisena, the president, a former ally of Mr Rajapaksa, who surprised almost everyone by dislodging him in January’s presidential election. Together, they must deal with several legacy issues, including strengthening the democratic institutions undermined during the previous presidency.

Most urgent is to reach a political settlement with the minority Tamils in the north and east. They must be convinced that the Sinhalese chauvinism practised by Mr Rajapaksa is over. Power is already devolved to some extent, but this may have to go further. Any settlement must also involve a credible inquiry into the final months of the civil war in 2009 when the government launched a crushing offensive against the Tamil Tigers. Its victory involved the shelling and bombing of civilians and other alleged atrocities. The UN estimates that 40,000 civilians died in the final stretch of the war.

Second on the agenda is to tweak foreign policy. Colombo had become too close to Beijing, which spent lavishly on infrastructure, including roads and ports. That made Delhi nervous. It saw Sri Lanka as being co-opted into a Chinese strategy of encircling India, a fear that was exacerbated when Chinese submarines twice docked in Colombo harbour. Part of the reason voters rejected Mr Rajapaksa in January was nervousness at Beijing’s growing influence. Sri Lanka should now develop a balanced foreign policy in which it maintains good relations with both India and China, as well as the US.

Third is the economy. Although it has been growing fast, much of this has been turbocharged with debt. Some efforts have been made to rein in fiscal deficits, but tax revenue remains too low. Under Mr Rajapaksa, business was regularly handed out to friends and relatives. Investigations into past misdemeanours, already under way, must continue. Even more important, however, is to put in place the conditions for more sustained and balanced growth.

The government must show zero tolerance of continued corruption and should work harder to cut the red tape that still puts off foreign investors. If Sri Lanka were an easier place to do business, it could rapidly develop as a regional centre for manufacturing and service exports. Although the tourist industry has come on significantly, Sri Lanka’s beaches and culture could draw many more visitors.

Sri Lanka may never quite be the Singapore of South Asia to which it aspires. Unless it can get its business environment right it risks getting stuck in a middle-income trap. Sri Lankans have voted for what could be a new era in a country that has seen too much tragedy and wasted potential. The winners of the election must not squander this opportunity to set a better course.

FT