January 7, 2015 6:53 pm
Sri Lanka: Test for triumphalism
James Crabtree FT
Rajapaksa’s expected victory in the polls is now uncertain in the face of a resurgent opposition
The Port of Colombo ranks among the busiest in south Asia, with gigantic red and yellow cranes shifting millions of tonnes of cargo annually, roughly half of which heads north to neighbouring India.
But on an otherwise quiet day last September, Indian authorities discovered that a less welcome visitor had slipped into Sri Lanka’s busiest harbour: Great Wall 0329, a Chinese military submarine.
The vessel arrived without announcement, docking in a recently opened $500m container terminal, built and majority-owned by Chinese state companies. No submarine from China had visited Sri Lanka before. Coming days before a visit from President Xi Jinping, its appearance prompted alarm in New Delhi and beyond. “It was quite a shock,” says one senior Colombo-based diplomat, whose government contacted Beijing demanding an explanation. “Clearly it came here just to demonstrate that China could just do this without warning . . . It shows that in Sri Lanka, China is here to stay.”
Chinese officials deny sabre-rattling, saying the vessel simply refuelled after an east African anti-piracy mission. Yet China’s growing financial and military muscle in Sri Lanka is hard to dispute.
Despite Indian protests, a second military submarine turned up in November. During the state visit, Mr Xi described the island nation of 21m as an important link in plans for a new “maritime silk road” linking China to the Gulf. Other western analysts fret about Sri Lanka’s place on the so-called “string of pearls”, a network of Chinese-linked commercial and military facilities stretching around south Asia.
Sri Lanka’s strategic location close to the world’s busiest sea lanes means it is often described as a “swing state” in the regional tussle for maritime supremacy between China, India and the US — a fact that explains heightened foreign interest in the outcome of what many see as the country’s most important presidential election in a generation.
Voters head to the polls on Thursday following a snap contest called in November by President Mahinda Rajapaksa, architect of those growing Chinese ties. Having ended his country’s long civil war and presided over a post-conflict economic boom, he expected an easy victory. Instead, he faces a resurgent opposition — and a fight for political survival.
If Mr Rajapaksa did suffer a defeat, it would mark a profound shift for a country that he has dominated for a decade, amid accusations of a drift towards authoritarian family-dominated rule. A victory for the opposition would begin to reshape Sri Lanka’s place within the region, as its leaders promise corruption probes into Chinese-funded investment projects, potentially signalling a turn against Beijing while seeking to repair frayed ties with India and the west.
Before his decision to call the election, few analysts would have predicted anything other than Mr Rajapaksa strolling comfortably to a third term. Government data put growth in gross domestic product at nearly 8 per cent in 2014. Inflation is low. Fancy new Hyatt and Shangri-La hotels are springing up along Colombo’s beachfront, as the tourist economy prospers. The island bristles with infrastructure projects elsewhere, including a reopened rail link to the northern Tamil-majority city of Jaffna.
A populist and an effective campaigner, Mr Rajapaksa led government forces to victory against separatist Tamil guerrillas in 2009. He won domestic plaudits by rebuffing international demands for inquiries into alleged war crimes committed in the conflict’s closing stages, when at least 10,000 civilians are estimated to have died. Government-controlled media should have helped his cause too, projecting images of prosperity and unity.
Instead, the election has underlined Sri Lanka’s many divisions, including those within the ruling party. A senior minister, Maithripala Sirisena, defected as electioneering began. A down-to-earth figure from the rural town of Polonnaruwa, he was quickly adopted as the main opposition candidate, launching a populist campaign of his own.
Appealing to the conservative Buddhist Sinhalese majority, Mr Sirisena has lambasted corruption, drawing a link to Chinese-funded development projects. Controversial plans for big casinos in downtown Colombo have been attacked too.
Yet Mr Sirisena has been careful to criticise international war crimes investigations, promising to protect Mr Rajapaksa from prosecutions, in the process upsetting attempts to portray him as a western stooge.
Most significantly, the opposition plans dramatic constitutional reforms. Sri Lanka’s powerful presidency, which Mr Sirisena says has been captured by Mr Rajapaksa’s family, would be scrapped. The island would return to a British-style parliamentary system, with greater judicial independence and media freedom. “We will get rid of all of this crony capitalism and centralisation,” says Ranil Wickramasinghe, leader of the United National party, Sri Lanka’s main opposition group.
Analysts say the island’s minorities — about a third of the population — will overwhelmingly reject Mr Rajapaksa. Tamil parties, dismayed over scant postwar reconciliation, have backed the opposition. Muslim leaders, anxious following anti-Islamic riots led by Buddhist extremists last year, have turned against the president too.
The result has been a tense contest, marred in recent days by shootings and violence against opposition campaigners, according to election monitors. Although few predict widespread electoral fraud, the International Crisis Group says the ruling party is allowing “a significant level of misuse of state resources” as it tries to cling on to power.
In December, Mr Rajapaksa told the Financial Times that he remained confident of victory, albeit while pledging an orderly handover if results went against him. Sri Lanka lacks reliable opinion polls, but many analysts think his confidence is misplaced. A narrow opposition victory is the likely outcome, says Sasha Riser-Kositsky of Eurasia Group, a risk consultancy, with Mr Sirisena winning enough of the Sinhalese vote to pull off what, only a few months ago, would have seemed an improbable victory.
If Mr Rajapaksa prevails, he will have his economic record to thank. Supporters trumpet not just improved infrastructure but declining government debts and interest rates near record lows. All this “will weigh on the minds of people when they are voting”, says central bank governor Ajith Cabraal, a close ally of the president. “Uncertainty is a risk when the economy is moving in the right direction.”
If the opposition wins, it may be because Sri Lanka’s stellar growth is not quite what it seems. Many economists argue that GDP figures are inflated; fuel and food costs remain high; heavy investment in ports and airports close to Mr Rajapaksa’s home city of Hambantota are often described as white elephants; and talk of transforming the area into an economic hub shows little sign of progress.
Sri Lanka’s infrastructure boom might not have benefited ordinary voters, but it has provided ammunition for accusations of graft — again bringing China to the fore. Mr Wickramasinghe says projects will be halted, pending corruption investigations. A $1.4bn Dubai-style “port city”, to be built by Chinese companies on reclaimed land next to Colombo’s port, will be probed. Mr Sirisena says many such projects should be scrapped.
Foreign diplomats, meanwhile, worry about growing commercial debts owed to Chinese banks. The total outstanding is hard to pin down, but opposition leaders cite figures of $5bn or more since the end of the war. Government data show China as Sri Lanka’s largest financial partner in 2013, providing a fifth of all loans and grants, up from virtually nothing a decade earlier.
PB Jayasundera, the country’s senior finance official, says future growth will easily cover any repayments, but the debts remain a concern. “You won’t find us worrying about new Chinese road projects,” says an Indian official. “But ownership of ports is a problem. And China has a knack of turning all this debt into equity too.”
It is against this backdrop that China’s submarines prompted remonstrations from India, underlining worries that Colombo’s Chinese-owned port terminal might become used for military purposes. Mooted plans for a small Chinese aircraft repair base close to the eastern port of Trincomalee were scrapped, again following protests from New Delhi. “A red line was crossed there,” says a western diplomat. “The Indians read him [Rajapaksa] the riot act.”
Sri Lanka’s courtship of China is partly India’s own fault, given its inability to provide greater postwar funds to its neighbour. Mr Rajapaksa denies accusations that he plays the two powers off against one another. “We expect investments to increase not only from China but also from many other countries,” he says of his post-election plans.
Government officials say continuity in power would benefit Sri Lanka’s economy. Mr Jayasundera talks of a new stage of export-led growth: per capita GDP can rise from $4,000 to around $7,500 by 2020, he says. Yet in the short term a new period of heightened instability is likely, whoever wins the vote.
A victorious Rajapaksa regime would be likely to retrench. “He will learn that he must take more power for the family,” says Paikiasothy Saravanamuttu of the Colombo-based Centre for Policy Alternatives. Tamil parties talk of a post-election civil disobedience campaign. Further bust-ups with the west are likely, with an independent UN war crimes investigation due in March, and talk of possible future sanctions.
Yet an opposition victory would herald problems of its own. Mr Sirisena, so recently an ally of the president, seems unlikely to bend to the demands of the island’s beleaguered minorities. His early months will focus on complex constitutional reforms. Fresh parliamentary elections will be needed, severely testing opposition unity. Anti-corruption investigations may end in score-settling, delaying infrastructure projects. Also, promises to repair relations abroad will have to be balanced by the need to secure foreign investment.
At best, a new government could see the country revert to its more traditional state as a rambunctious south Asian democracy, ending Mr Rajapaksa’s flirtation with a more authoritarian form of nationalism. But the odds on Sri Lanka finally enjoying a period of national healing seem slim, argues Samanth Subramanian, author of This Divided Island .
“It almost doesn’t seem possible, but since the war Sri Lanka’s divisions have almost deteriorated,” he says. “And given how this election has been fought, there is no real scenario I can see in which that situation improves.”
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