Time for US policy toward Sri Lanka to be more symmetrical

By Ajith Nivard Cabraal

Forbes magazine: Sri Lanka’s economy is growing at about a 7.5% annual clip, with low inflation and a per capita income of US$ 2,923. We are striving towards a per capita income of over $4,000 by 2016 and are on track to surpass the United Nations Millennium Development goals by 2015.

This is remarkable, given that Sri Lanka had a per capita income of only US$ 981 in 2003, and it was only four years ago that it broke free from the grip of terrorism, and is still recovering from the economic, political, and social upheaval caused by the destructive conflict. The dividends of peace in Sri Lanka now seem real, and the country is poised to become the next breakout nation.

However, if one were to Google Sri Lanka today, it appears as if the international community, led by the US, is mostly focused on a short episode of 2009, namely the last months of the war on the Tamil Tigers, during which many combatants on both sides lost their lives. That is probably why the US sponsored a resolution at the United Nations Human Rights Council this year that asked Sri Lanka to speed up the reconciliation process and investigate allegations of human rights abuses.

It is now becoming increasingly clear that US (and European) policies towards Sri Lanka are asymmetrical. The US is applying heavy pressure toward the Sri Lanka Government to accelerate the reconciliation process with the minority Tamil population while ignoring the major strides that have been made towards this goal by the Sri Lankan Government and people. At the same time, the US seems to be paying little attention to the geo-strategic dimensions of US-Sri Lanka relations as well as to the economic potential that Sri Lanka has to offer as the fastest growing economy in its region and as a gateway to a one billion people market in next door India.

When the US declared war on terror after 9/11, Sri Lanka had already been fighting such a war for decades. As with 9/11, Sri Lanka’s financial sector too was a target. On 31 January 1996, a Tamil suicide bomber drove a truck laden with high explosives into the building of the Central Bank of Sri Lanka, killing 91 and injuring 1,300.

Today, the war in Sri Lanka is behind us, having been settled decisively in May 2009 on the battlefield. The challenges facing our nation now include the physical reconstruction of the infrastructure of war-affected areas in the north and east of Sri Lanka, and the growing of an economy that will benefit all Sri Lankans, including the minority Tamil population.

Through an active funding program, the Government and the Central Bank of Sri Lanka has already financed and implemented the removal of landmines, physical reconstruction of infrastructure, resettling all internally displaced persons, improving health and education sectors, strengthening financial inclusiveness, opening up local markets and improving the movement of people and goods, especially in the war-affected areas. All these are vital human rights too. Of course, reconciliation after a conflict is important. But, this is a psychological process that can take many years, decades in most cases, and which needs to follow its own course, driven by the parties involved. Perhaps US policymakers would do well to reflect as to how long the US took to reconcile after its own civil war. Sri Lankans need time and space to overcome the mistrust and the bitterness brought about by 30 years of war and terrorism. Outside support can be helpful, but outside pressure that appears to be inspired by a very vocal Tamil diaspora, without taking into account, achievements on the ground and the larger political and economic picture, is not well received or understood in Colombo.

From a strategic perspective, Sri Lanka is located at the intersection of the world’s busiest shipping lanes between Europe, South Asia, the Middle-East, China and Japan, navigated by 50% of global container traffic and 70% of global energy supplies. Its harbours are vital in the fight against piracy.

From an economic perspective, Sri Lanka’s business climate, well-educated work force and proximity to India make it an ideal springboard for companies to do business in India’s states and to launch products onto the global market.

We value our relations with America. The US is a major market for our exports. US investors have made significant foreign direct investments and are the leading holders of Sri Lankan bonds. At the same time, we increasingly depend on China and India for investments in our infrastructure. Just last month, Sri Lanka opened its second international airport, funded by a $ 209 million Chinese loan.

Is the US “losing” Sri Lanka? Not yet. In December 2009, Senators Kerry and Lugar circulated a report to their colleagues in the Senate Committee on Foreign Relations that concluded that “US policymakers have tended to underestimate Sri Lanka’s geostrategic importance for American interests” and that ‘a more multifaceted US strategy would capitalise on the economic, trade, and security aspects of the relationship’. On its part, Sri Lanka would welcome a recalibration of US policy towards a more symmetrical US strategy that takes into consideration, the key strategic, economic and trade perspectives. Surely, such a strategy will serve both countries’ long term interests.



(The writer is Governor of the Central Bank of Sri Lanka.)