Sri Lanka: AKD starts 2025 with tight rope walking

 

In Sri Lanka Perspectives January 2025, Col Hariharan reflects on AKD's China visit and portends of balancing with India

South Asia Security Trends, February 2025 | https://www.security-risks.com

In Brief

President Anura Kumar Dissanayake started the new year with some tight rope walking both externally and internally. It did not matter that he was following up what was contemplated earlier by his predecessors. His maiden state visit to China hogged the media space as a slew of formal agreements were signed during the visit. These included an agreement with Sinopec to build a $3.7 bn oil refinery in Hambantota and the Bank of China (BoC) and the Central Bank of Sri Lanka (CBSL) renewing the currency swap agreement for RMB 10 bn (equal to about $1.7 bn) for three years. These agreements will help China to strengthen its presence in Sri Lanka, particularly in the energy sector. That can make Sri Lanka's strategic balancing act with India and the US, a little more difficult.

Sri Lanka’s export earnings touched a record high figure of $16.1 bn in 2024. This has stoked AKD’s ambitions to set the export revenue target of $36 bn by 2030. Similarly, the government has raised the renewable energy target from the current 70 percent by 2030 to 100 percent.

President Dissanayake repeated his promise to abolish pensions for parliamentarians. Already a committee headed by a retired Supreme Court judge has submitted its report on perks and privileges enjoyed by politicians. It probably includes recommendations on the high cost of running mansions provided to former presidents. These moves caused a flutter among opposition politicians. Former president Mahinda Rajapaksa is already furious with the downgrading of his security detail. And the talk of huge amounts spent by the State on maintaining former presidents is making him livid. To add to his agony, the government had booked his two sons on criminal charges. Yoshitha Rajapaksa was arrested on a money laundering charge hanging fire from 2019. Namal, the national organiser of Sri Lanka Podujana Peramuna (SLPP), is facing charges of criminal misappropriation of LKR 70 million related to the Krrish Tower project. People are keenly awaiting follow up action on these cases; in the past even after filing charges, the cases never came up before the courts.

The month ended on a sour note on relations with India, when a Sri Lanka Navy sailor opened fire injuring two Indian fishermen poaching off the coast of Valvettithurai in Jaffna peninsula’s northern coast. It served as a strong reminder to both Sri Lanka and India of the unresolved issue of Tamil Nadu fishermen continuing to poach in Sri Lankan waters, regardless of government injunctions on both sides.

Comparing AKD’s visits to China and India

President Dissanayake visited China from 14-17 January 2025. The joint statement issued after his meeting with President Xi Jinping is interesting when compared with the joint statement issued after President Dissanayake’s visit to New Delhi in December 2024. Prime Minister Narendra Modi had “affirmed India’s continued commitment to support Sri Lanka in its economic stabilization efforts for its economic recovery and economic growth.” PM Modi further assured President Dissanayake that India's approach would be investment-based and grant-oriented to reduce the debt burden on Sri Lanka and to assist them in generating economic opportunities that are long-term and sustainable and will eventually contribute to growing the absolute size of the Sri Lankan economy. (Emphasis added).

In contrast, the joint statement issued in Beijing gives a glimpse of how China views its relationship with smaller countries like Sri Lanka. China focused on "mutual trust, support, respect, win-win cooperation, and common development" while reiterating "its commitment to an independent foreign policy of peace." It expressed its “firm support for Sri Lanka in safeguarding its independence, sovereignty, and territorial integrity.” Sri Lanka, while reaffirming this, reiterated "its commitment to an independent, non-aligned foreign policy." Sri Lanka expressed "its commitment to the one-China principle, recognizing the People's Republic of China as the sole legal government representing the whole of China, and Taiwan is an inalienable part of China's territory" along with strong opposition to "Taiwan independence." Sri Lanka pledged not to allow anti-China or separatist activities on its territory.

For the first time, Sri Lanka “reassured its support to China regarding its policies with Xizang (Tibet) and Xinjiang.” The explicit emphasis on Tibet and Xinjiang for the first time shows China’s anxiety in seeking reassurance from a Buddhist country like Sri Lanka. Some of the other agreements of interest signed during the visit are discussed below.

Energy security and Hambantota Oil Refinery

During AKD’s visit an agreement was signed with Sinopec Group for establishing a state-of-the art oil refinery at Hambantota. The refinery estimated to cost $ 3.7 billion, will have a capacity of 200,000 barrels daily, mainly for export. It also reflected the significance of Hambantota as a strategic economic hub for China. Opting for a high-cost oil refinery project might appear contrary to Sri Lanka’s goal of achieving energy self-sufficiency through renewable energy sources by 2030. However, it gives Sri Lanka the option to diversify its energy sources, reducing its dependence on imported refined petroleum products. It can also stimulate economic growth in the region and create jobs. Most importantly, the large-scale Chinese investment project strengthens Sri Lanka’s strategic partnership with China with potential for more investments in allied industries.

As against this, India’s approach towards Sri Lanka’s energy security is more holistic. The emphasis is on the need for reliable, affordable and timely energy resources to meet the basic needs of the people. The Indian and Sri Lankan leaders had agreed to take steps towards the implementation of the solar power project in Sampur, continue discussion on supply of LNG from India to Sri Lanka, establishing a high-capacity power grid connecting India and Sri Lanka. Both countries also agreed to cooperate with the UAE to implement a multi-product pipeline from India to Sri Lanka to supply affordable energy. They had also agreed to jointly develop offshore wind power potential in Palk Straits, paying attention to environmental protection. Both the leaders had agreed to continue with the development of Trincomalee tank farms and develop Trincomalee as a regional energy and industrial hub. 

Financial and Technical Assistance

China granted Sri Lanka RMB 500 million for Economic and Technical Cooperation. They also agreed to create an Investment and Economic Cooperation Working Group to enhance bilateral trade and encourage investments. The CBSL and the PBoC renewed their Bilateral Currency Swap Agreement in December 2024. This agreement, originally signed in 2021, allows for a currency swap facility of RMB10 billion (approximately USD 1.4 billion). The renewed agreement extends the facility for another three years. The financial cooperation agreement aims to enhance economic stability and support trade between the two countries.

As against this, India ‘s Reserve Bank of India (RBI) and CBSL entered into a bilateral currency swap agreement on July 24, 2020. This was part of the SAARC Currency Swap Framework 2019-23. Under this agreement CBSL can draw up to $400 million in multiple tranches to meet short term forex requirements. The CBSL and RBI are also discussing securing an additional $1 billion under a special swap agreement.

Chinese language and cultural exchange

Apart from promoting teaching the Chinese language in Sri Lanka, it is proposed to develop the China-Sri Lanka Joint Centre for Education and Research “to strengthen scientific and technological exchanges.” The two sides will also cooperate in areas including "youth, think tanks, sports, and the media, build upon the bond of Buddhist exchanges and sister-city exchanges." There is also reference to jointly promote tourism flows, with China encouraging Sri Lankan cities to participate in the International Tourism Alliance of Silk Road Cities (ITASRC). Since 2024, China has been promoting ITASRC to further BRI interests.

BRI and Maritime cooperation

Greater commitment for integrated development of infrastructure projects – Colombo Port City and Hambantota Port – which are expected to draw more investments and offer economic opportunities. China also wants Sri Lanka’s participation in the BRI Green Development Coalition in view of climate change. They have agreed to collaborate in disaster prevention, mitigation and emergency management and rescue. They are to negotiate a MoU on Ocean Cooperation towards a Blue Partnership for sustainable use of ocean resources. This will mean more Chinese “research ships” visiting Sri Lanka’s neighbourhood.

Security

China and Sri Lanka in their joint statement recognised “judicial, law enforcement and security cooperation as an important component of bilateral cooperation, and stand ready to jointly crack down on cross-border crimes such as telecom fraud and online gambling. China is ready to do its best to support capacity building in Sri Lanka's judicial, law enforcement and security areas and provide assistance with police supplies.” This is interesting as it may lead to the establishment of Chinese police stations in Sri Lanka. According to a Brookings report “between 2016 and 2022, four local Chinese public security bureaus established 102 overseas police service stations in 53 countries across North and South America, Europe, Africa, and Asia.

India’s security cooperation with Sri Lanka is on a different level. The New Delhi joint statement says the two countries “reaffirmed their commitment to work together in countering traditional and non-traditional threats as well as to ensure a free, open, safe and secure Indian Ocean Region. India being Sri Lanka’s closest maritime neighbour, President Disanayaka reiterated Sri Lanka’s stated position of not permitting its territory to be used in any manner inimical to the security of India as well as towards regional stability.”

The two countries agreed to explore the possibility of concluding a framework Agreement on Defence Cooperation. India had also agreed to extend assistance in providing defence platforms and assets to augment Sri Lanka’s defence capabilities with tailor made training programmes.

Enterprise support

China has agreed to continue supporting Sri Lankan tea, gems, and other enterprises. This programme “would propel exports of Sri Lankan goods.” The leader’s discussion “included various ways to push forward digital transformation, green development, and logistics to offer Sri Lanka an opportunity to introduce modernized activities within industries. During President AKD’s New Delhi visit, he expressed Sri Lanka’s interest in exploring the establishment of people-centric digitization as in India to improve governance, service delivery and social welfare. Accordingly, India agreed to help in expediting implementation of Sri Lanka's Unique Digital Identity (SLUDI) project and assist Sri Lanka to roll out Digital Public Infrastructure (DPI). India had also agreed to promote digital financial transactions by extending the use of UPI digital payments to benefit both countries.

Tailpiece: Illegal arms threat

73 T-56 firearms are reported missing from the armoury of an army camp in Polonnaruwa. Authorities have recovered 36 of them and the rest are still unaccounted for. According to the Geneva-based Small Arms Survey estimates, there are around 1.9 million illegal small arms in Sri Lanka, with the total number of small arms in the country potentially reaching 2.3 million, significantly higher than official figures of registered firearms which are much lower. This is one issue in which President AKD’s urgent attention is required amidst his official preoccupations.

[Col R Hariharan VSM, a retired MI specialist on South Asia and terrorism, served as the head of intelligence of the Indian Peace Keeping Force in Sri Lanka 1987-90. He is associated with the Chennai Centre for China Studies. Email: haridirect@gmail.com, Website: https://col.hariharan.info]

President Dissanayake’s agenda for 2025

 Col R Hariharan

Sri Lanka Perspectives December 2024 | South Asia Security Trends, January 2025 | https://www.security-risks.com

The reassertion of democratic polity in Sri Lanka during the year 2024 is the signal achievement of the people of the country, more than its political class. They had shown that the Aragalaya protests, which toppled President Gotabaya Rajapaksa and the Rajapaksa clan from power, mattered in deciding the winners in both presidential and parliamentary elections. They not only elected the National People's Power (NPP) leader Anura Kumara Dissanayake (aka AKD) as President, but also gave the NPP two-thirds majority in parliament

These changes in power politics by the end of 2024 has given a new life to the country’s democracy, wilting under the burden of self-seeking politicians. People voted for the neophyte President AKD and the NPP government because they want a change from the way the mainstream parties ruled them. They had voted the Sirisena-Wickremesinghe combine to power in 2015 with similar hopes. But their hopes were shattered when the duo failed to fulfil their promises. Not only that, their endless squabbles resulted in Easter Sunday terrorist attacks.

This time the people will probably put the AKD government on probation to ensure the government meets their aspirations. The year 2024 has ended with AKD in power for barely 100 days and it is only 49 days since the parliament came into being. It is probably too early to judge the performance of the government under AKD’s leadership.

But even within this short period AKD has taken some welcome steps on both symbolic and substantive issues. Some of the actions of AKD like shunning official residence, swearing in the smallest cabinet, electing the highest number of women MPs from non- political families and giving representation in parliament to visually challenged person, were symbolic. But they reflected the liberal views of the government.

President’s action agenda 2025

President Dissanayake in his brief New Year message has spoken of  initiating “a transformative political shift, fulfilling our democratic responsibilities to build the good governance our citizens aspire to.” The primary developmental goals include eradicating rural poverty, implementing the ‘Clean Sri Lanka’ initiative, and building a digital economy.

The “Clean Sri Lanka” initiative, launched alongside the New Year, aims to uplift society to greater heights through social, environmental, and ethical revival. The program envisions a broad national effort, transcending political and communal differences, to instil attitudinal, behavioural, and qualitative changes among citizens. It focuses on improving living standards, eradicating corruption, and promoting transparency and accountability in every sector.

The initiative also includes a dedicated website and app to enhance public participation and transparency. The goal is to position Sri Lanka among the cleanest nations in the world and ensure a prosperous and beautiful life for all its citizens. This is likely to occupy immediate attention of the government so that visible changes are ushered in the country.

AKD’s agenda is likely to focus on internal issues so that the NPP performs reasonably well in local body elections in 2025. The NPP has a weak footprint on the ground unlike mainstream parties which have traditional strongholds. Issues with a long gestation period like reframing of the constitution and even abolition of executive presidency are likely to be deferred.   

This means existing foreign policy initiatives involving India, China and the US are likely to continue. It will also mean deferring controversial issues involving India like the talks on the Economic and Technology Cooperation Agreement (ETCA) to enhance economic and technological cooperation between the two countries which was resumed with 12^th round of talks in November 2023. Similarly, full implementation of 13^th Constitutional Amendment giving minority Tamils a level of autonomy, which India had been insisting on, is also likely to go down in AKD’s priority. At the same time the issue of Indian fishermen poaching in Sri Lankan waters is likely to be elevated to the government-to-government level as it can help NPP to garner votes in Northern Province in local body elections.

Other issues likely to figure in AKD’s 2025 agenda are given below.

Good governance issues:

Administrative reforms by digitisation of data to enable timely delivery of relief to citizens is likely to be given priority. To curb wasteful expenditure the government has already undertaken various measures:

·      Revising security arrangements for former presidents: Starting from January 1, 2025, the government has decided to withdraw members of the tri-forces from the security details of former presidents. Only police officers will now handle their security. The new norm based on security assessments is expected to save over SL Rs1,000 million annually. Former President Mahinda Rajapaksa's security expenses were the highest at Rs 710 million spent on his protection. Similarly, STF protection will now only be provided to the President and Prime Minister.

·      Abolition of the post of Chief of Defence Staff: The AKD government has decided to abolish the Office of the Chief of Defence Staff (CDS) at the end of the year 2024. This decision comes as General Shavendra Silva, the current CDS, retires after 40 years of service. The CDS post was initially established to coordinate joint operations among the armed forces. However, the new government believes that the post is no longer necessary given the current security landscape, which is perhaps realistic. The AKD government has decided to employ armed forces only in military roles; this may herald the restructuring of the armed forces.

Anti-corruption drive

Since AKD came to power, the anti-corruption drive has been gingered up, resulting in several high-profile cases. The government is to appoint a committee to look for amendments in the Anti-Corruption Act passed in 2023 to block legal and technical loopholes while carrying out investigations. Here are some of the major cases being investigated:

·      Central Bank Bond Scam: This infamous case, which has been a focal point of public outrage, involves allegations of large-scale financial fraud during the final years of the previous administration. AKD has revived the investigations.

·      Ministerial Malfeasance: Whistleblower Thushan Gunawardena exposed alleged corruption involving high-ranking ministers. His revelations led to a series of investigations targeting corrupt officials.

·      Public Procurement Fraud: Several cases of corruption in public procurement processes have been uncovered, involving the misallocation of funds and resources meant for public projects.

·      Tax Evasion and Revenue Department Corruption: The IMF recommended immediate anti-corruption measures within revenue departments are likely to continue.

Drive against narcotics trafficking

In 2024, approximately 149,000 individuals were apprehended for drug related offences. During operation Yukthiya, which began in December 2023, led to the recovery of drugs worth over SL Rs 19 billion. With international tourist figures touching two million in 2024, Sri Lanka is likely to further tighten measures against narcotics trafficking with the cooperation of India during 2025. 

[Col R Hariharan VSM, a retired MI specialist on South Asia and terrorism, served as the head of intelligence of the Indian Peace Keeping Force in Sri Lanka 1987-90. He is associated with the Chennai Centre for China Studies. Email: haridirect@gmail.com, Website: https://col.hariharan.info]