Sri Lanka

As the United States advances its Indo-Pacific strategy, its collaboration with Sri Lanka will be critical to the larger task of building partnerships, resilience, security, and prosperity in the region.

State contingent instruments can play a role in debt restructuring agreements, but they shouldn’t be a give-away to investors.  There is a compelling case for their use in Zambia—but not in Sri Lanka.

Sri Lanka’s collapse should be a wake-up call for other South Asian countries that suffer from the same trend of “familycracy.”

Struggling to make ends meet as inflation and interest rates climb, many emerging markets will have to pursue difficult debt restructuring with international creditors.

Sri Lanka’s new president should be able to finish negotiations with the IMF, but protesters will likely demand more.

Hacktivists deface Sri Lankan web domains, highlight social issues; Hacker attempts to poison water supply in Florida city; Clubhouse blocked in China; Forced sale of TikTok to Oracle and Walmart put on hold; and Federal election agency updates voting security guidelines.

Although coronavirus cases in India, Pakistan, and across the region have not increased as quickly as some feared (so far), South Asia's economies are struggling deeply. Sri Lanka and the Maldives experienced a surge in cases.

Sri Lankans went to the polls November 16 to elect a president, and former Secretary of Defense Gotabaya Rajapaksa was declared the winner on November 17. Sri Lanka faces significant national security challenges, and has become a focus of geopolitical competition. Ambassador Teresita Schaffer, a retired career member of the U.S. Foreign Service, was U.S. ambassador to Sri Lanka (1992-1995), U.S. deputy assistant secretary of state for South Asia, the first woman director of the Foreign Service Institute, and the author or co-author of three books about South Asia. She has been involved with U.S.-Sri Lankan relations for decades. I asked her about the geopolitical implications of this election. A discussion focused on the human rights issues at stake in this election appears here. Who were Sri Lankans choosing for president? The incumbent, Maithripala Sirisena, chose not to run, and his predecessor, Mahinda Rajapaksa, who presided over the end of the country’s long civil war, faced term limits. Both were originally from the left-leaning Sri Lanka People’s Front (SLPF), but Sirisena had governed in a turbulent alliance with the traditionally right-of-center United National Front (UNF). Uncharacteristically for Sri Lanka, there were some thirty-five candidates contesting this election. The two most prominent were from these same two parties: SLPF, now called the Sri Lanka People’s Party (SLPP), and UNF. Gotabaya Rajapaksa, SLPP’s candidate, is the brother of former President Mahinda Rajapaksa, and was defense chief in his brother’s administration. Sajith Premadasa, the UNF standard-bearer, served as housing minister in the Sirisena government. He was a young student when his father, former President Ranasinghe Premadasa, was assassinated in 1993. What were the most significant campaign issues? The most important issues for the country are security, ethnic peace, and the economy. Sri Lanka’s long civil war ended in a victory for the army, but reconciliation among the ethnic groups has not made much progress, and the “Easter bombings” that shook the island in April opened up new wounds in the country’s ethnic tapestry. Gotabaya Rajapaksa campaigned on security, focusing on his experience as defense chief. He and his family are canny politicians with an especially strong base along the south coast. His primary opponent, Sajith Premadasa, ran on “kitchen table issues,” promising concrete benefits. He has been in politics for a couple of decades, but this was his first high-profile election. What are U.S. national interests in Sri Lanka? Sri Lanka is located at a critical spot for Indian Ocean security. The United States also has a strong interest in preventing a recurrence of the civil war that raged for decades in Sri Lanka, and especially in preventing the Liberation Tigers of Tamil Eelam from resuming their campaign of terrorism. Sri Lanka has been a good commercial partner, though it is a relatively small market. How does Sri Lanka fit into the U.S. “Free and Open Indo-Pacific” strategy? Both the emerging U.S.-Sri Lankan security relationship and the country’s relatively successful economy make it a natural partner in the Indo-Pacific region. It boasts virtually universal literacy and an educated labor force, and has been trying to position its ports as gateways for its South Asian neighbors. Sri Lanka’s politicians are split on the Indo-Pacific strategy. During the Rajapaksas’ previous time in power from 2005 to 2015, U.S. military cooperation with Sri Lanka was limited, largely due to U.S. human rights concerns. In the past few years, some left-of-center parties expressed skepticism of security ties with the United States, which they saw as undercutting their traditional nonalignment. Gotabaya Rajapaksa has said little on that subject, however. The coalition in power for the past four years saw a benefit in the kind of balance offered by the strategy, as it worked in close cooperation with the United States and India. Sri Lanka has two important relationships in the region: India and China. Both have deep roots. India’s ethnic ties with Sri Lanka’s 21 percent Tamil population have been both a bond and a complication. Some of India’s Tamil political parties supported the Tamil separatism that fueled Sri Lanka’s civil war. On the other hand, the current Indian government, and several of its predecessors, have worked hard to build up strategic ties with Sri Lanka. Sri Lanka’s ties with China go back to the early 1950s, when a rice-rubber barter deal resolved an economic crisis for both, while running Sri Lanka afoul of the anti-China legislation then in force in the United States. Ties with Beijing are likely to remain important. There’s been a lot of U.S. media coverage of Sri Lanka as the prime example of the potential costs to sovereignty of China’s Belt and Road projects. What does this portend for Sri Lanka-China ties? China pumped massive infrastructure into Sri Lanka after the end of the civil war in 2009, building roads, electricity generating plants, and most famously, a new port at Hambantota, a town in the southwest corner of the island that has important constituencies for both the leading presidential contenders. This assistance has been popular, despite some criticism of the quality of what the Chinese built, and despite concerns about the level of debt Sri Lanka has incurred. China has always provided some level of military equipment to Sri Lanka. In recent years it has moved more strongly into naval equipment. What are the stakes for the United States in this election? The United States had difficult relations with the Rajapaksas when they were previously in power, primarily on account of human rights problems at the end of Sri Lanka’s civil war. The key question for the United States is now whether the two countries can reset their dialogue on the Indo-Pacific and regional peace and capitalize on the interests they share. The Rajapaksas are close to China, but any Sri Lankan government (as seen with the Sirisena government) would consider China a reliable friend and seek warm ties accordingly. Gotabaya Rajapaksa saw relatively little benefit in traditional peace-building policies when he was defense secretary, and he instead argued that economic development would solve the problems of ethnic relationships. There are deep concerns in Sri Lanka’s Tamil and Muslim communities that a Rajapaksa government will deal harshly with them. Disclosure: Ambassador Schaffer serves as a part-time advisor to McLarty Associates, as do I.

Sri Lanka will hold its presidential election on November 16. In the decade since the end of its long-running internal conflict, lack of progress on human rights, reconciliation, and accountability has kept concern for these issues on the international agenda. I asked Meenakshi Ganguly, South Asia director at Human Rights Watch, about the human rights issues at stake in this election. Our exchange appears below. The global human rights community has consistently called upon Sri Lanka to address reconciliation and accountability for the human rights and international humanitarian law violations during its thirty-year conflict. Where does that process stand today? There have been serious challenges to addressing wartime violations by both sides in Sri Lanka. Soon after the war ended in 2009, the government of President Mahinda Rajapaksa was determined to deny all allegations of violations by security forces despite numerous findings by domestic and international groups, media, and the United Nations. There was some progress after Rajapaksa was defeated in the 2015 election. The new government under the current President Maithripala Sirisena agreed to a U.S.-led resolution at the UN Human Rights Council and pledged reform and justice. Unfortunately, after initial good steps including lifting the Rajapaksa government’s authoritarian stranglehold on dissent and the media, bolstering the national human rights commission, and setting up civil society-led public consultations on the need for accountability and constitutional reform, progress slowed down. The Office on Missing Persons took a long time to set up and has yet to resolve even a single case. The Office for Reparations too has made little headway. And key issues such as repealing the Prevention of Terrorism Act and establishing a truth and reconciliation mechanism have just fallen off the radar. The worst is the rhetoric around setting up an independent justice mechanism with international participation—Sirisena simply reneged, saying that his government had no intention of prosecuting “war heroes.” What are the presidential candidates emphasizing, if anything, in their reconciliation and accountability agendas?  There are a number of candidates, but the contest is largely seen to be between Gotabaya Rajapaksa and Sajith Premadasa. Gotabaya, whose brother Mahinda was president during the final years of the war with the Liberation Tigers of Tamil Eelam (LTTE), was defense secretary at that time, and is widely alleged to have presided over conflict atrocities and the repression of peaceful critics. Premadasa’s father was also president, and was assassinated by an LTTE suicide bomber in 1993. In seeking to appeal to Sri Lanka’s Sinhala Buddhist majority, most politicians seem to think that calling for accountability, or even reconciliation among the country’s main ethnic and religious groups, will not win them votes. After the Easter Sunday bombings this year by Islamist groups that killed and injured hundreds—reminding many of similar past attacks by the LTTE—many Sri Lankans are seeking reassurances on security. Gotabaya Rajapaksa has not endorsed accountability for past rights abuses but emphasizes national security: “The security apparatus would be strengthened to secure the country from threats of terrorism, underworld activities, robbers, extortionists, drugs, violence and as well as foreign threats,” he recently said. Premadasa has sought the support of minority Tamil and Muslim communities who fear the return of an authoritarian Rajapaksa government, but has not put forward an accountability agenda. Human Rights Watch has highlighted how social media platforms in Sri Lanka have been used to amplify hate speech. Can you say more about this challenge, what should be done about it, and what progress has been made? Social media and WhatsApp have become popular platforms to share and inform public opinion. But they have also been used to promote misinformation and incite hatred against marginalized groups. Tech companies need to uphold standards in protecting against human rights harm. Of course, companies wish to make a profit, but they need to recognize a key flaw. Algorithms engineered to maximize user engagement for advertising revenue can end up amplifying societal outrage and polarization by rewarding inflammatory and partisan content that people are more likely to share. What are the stakes for U.S. interests, particularly on the values and human rights front, with this upcoming election? Since the end of the armed conflict in 2009, the United States has played an important part promoting human rights in Sri Lanka. It had a key role in building the consensus for the resolution on Sri Lanka at the UN Human Rights Council in 2015. Since the Trump administration completely withdrew from participation in the council, the United States has effectively removed itself from the most important international forum for promoting human rights in Sri Lanka. The United States, which has strategic concerns about China’s increasing footprint in the Indian Ocean, should recognize that promoting human rights, justice and accountability is crucial for ensuring that democracies which respect rights thrive in the region. Whoever wins the election, the United States should make human rights a priority of its foreign policy.

Neil Edwards is the volunteer intern for CFR's Africa Program in Washington, DC. He is a master's candidate at the School of International Service at American University and is a returned Peace Corps Rwanda volunteer. Uganda is heading toward a debt crisis. According to a senior official at the Bank of Uganda, unless the country is able to sustain a growth rate of at least 7 percent—which economic projections show Uganda will not do—the country will default on its payments. As is the case for many African countries, China is Uganda’s largest creditor, making up 39 percent of total debt this past fiscal year. If Uganda defaults, it is unclear how China will react. Will China flex its muscles and negotiate for the rights to Uganda’s sovereign assets like it did in Sri Lanka, or ease the debt pressure, by restructuring Uganda’s loans over a longer time period as it did in Ethiopia?   Generally speaking, foreign governments and international financial institutions are hesitant to make loans to Uganda. They remain skeptical that Uganda will be able to honor them—except, apparently, China. Ugandan President Yoweri Museveni recently admitted that China is the only partner that would agree to lend Uganda, Tanzania, and Kenya $3.5 billion to construct a series of railways and roads. In addition, China is financing a $4 billion oil pipeline, currently under construction, that will connect the western region of Uganda to the port in Tanga, Tanzania—giving the landlocked country access to the Indian Ocean. Many of China’s loans to Sub-Saharan Africa can be seen in the context of China’s belt and road initiative.  China has reacted differently to each country’s individual debt crisis. At one end of the spectrum, China allegedly uses its leverage to gain strategic and material concessions if a debtor country is unable to pay their debts, exemplified by Sri Lanka handing over control of the Hambantota Port to China for ninety-nine years. China's alleged practice of debt-trap diplomacy, as it has been dubbed, has been hotly debated, though there seems to be a consensus that their lending practices are problematic. At the other end, China works with governments to restructure loans over a longer time period—often forgiving past interest payments—as illustrated by China’s twenty-year-loan extension to Ethiopia.  Completed in 2010, the Hambantota port did not draw enough ships to make the operations economically feasible. By July 2015, Sri Lanka could not service its payments. Consequently, in order to avoid defaulting on its debt, the government relinquished control of the port to China for nearly a century. Uganda’s auditor general report warns that the conditions of their loans similarly threaten the country’s sovereign assets. If the economic predictions hold and the country defaults on its payments to China, Uganda’s infrastructure projects might face a similar fate.  Ethiopia faces a similar debt crisis, linked in large part to the Chinese-financed, $4 billion Addis Ababa-Djibouti Railway. Opened in January 2018, the railway intended to expand Ethiopia’s export market by connecting its capital to the sea via Djibouti. But Ethiopia is importing more than it is exporting via the railway, not generating the revenue needed to service its debt to China. In response, China renegotiated the terms of the loan with Ethiopia to extend the payments over a longer period of time.  Based on China’s approach to Ethiopia and the similarity of its infrastructure projects connecting Uganda to the sea, it is more likely that China will work with Uganda to extend the repayment terms of the loans. There is speculation that China sought control of the Hambantota port because it is strategically important. According to some analysts, the port should be thought of as part of a string of pearls—China’s plan to have a line of ports stretching from Beijing to the Persian Gulf. Viewed this way, the Hambantota port is of much more strategic significance to China than Ethiopia’s and Uganda’s railways. Finally, internal and external criticism of China's lending practices are likely to encourage a more constructive approach to debtor countries.

This week: Sri Lanka bans social media; UK National Security Council's Huawei decision leaked; election system vendors working to secure election security; and, Facebook faces landmark FTC fine.