Sri Lanka: A Political And Policy Tightrope Awaits New President – Analysis

By Devaka Gunawardena and Ahilan Kadirgamar

Anura Kumara Dissanayake has emerged victorious in Sri Lanka’s presidential election, held on 21 September 2024. Dissanayake, who obtained 42.3 per cent of the votes, managed to secure victory over his closest competitor Sajith Premadasa, who gained 32.8 per cent of votes.

This represents a historic change in the country. For the first time in Sri Lanka’s post-independence history, a candidate belonging to neither of the two main elite parties or their offshoots has come to power. Incumbent president Ranil Wickremesinghe came in a distant third, with 17.3 per cent of the votes. Namal Rajapaksa, the son of former president Mahinda Rajapaksa, came fourth with a mere 2.6 per cent of the votes.

The results are not surprising given the extent to which the Wickremesinghe–Rajapaksa government had been discredited. The 2022 protests that led to then-president Gotabaya Rajapaksa fleeing the country were inevitably going to bring about a major change in the politics of the country. The people have waited patiently for the next election.

Dissanayake’s party, the Janatha Vimukthi Peramuna (JVP), is the chief constituent of the National People’s Power coalition. It has a contentious past, having played a role in two bloody insurrections in 1971 and 1988–1989. But the rebranding of the JVP under Dissanayake’s coalition has made it more palatable as a centre-left alternative. Though sceptical of revolutionary change, people are eager for an alternative to the elite establishment that has ruled the country and the International Monetary Fund (IMF)-backed austerity measures that have devastated people’s living standards.

In this context, it is telling that international media coverage has emphasised Dissanayake’s Marxist credentials. Such radicalism is purported to be the motivation behind Dissanayake’s potential policy choices, rather than the ground realities of the suffering citizenry.

The JVP in its current form is the product of a long internal power struggle and the reshaping of its image in a more moderate direction. It has retained its legacy symbols, such as the hammer and sickle, while essentially adapting to ‘open economy’ policies, including giving greater importance to foreign investment. But the decades-long effort to liberalise Sri Lanka’s economy has resulted in tremendous inequality. Along with the defunding of social welfare, there has been a shift towards external commercial borrowing for speculative investments. This pattern culminated in the ongoing economic crisis and the country’s first ever sovereign default in April 2022.

The depth and severity of the ongoing economic crisis may compel Dissanayake to adopt relief and stimulus measures that go against the demands of the IMF and Sri Lanka’s external bondholders. To this end, Dissanayake, aware of the frustration and suffering of the population, has pledged to revisit the IMF agreement of March 2023 with a view to its potential renegotiation.

While that agreement is Sri Lanka’s 17th with the institution, the difference this time is that the IMF is the arbiter for debt restructuring with powerful external creditors. Dissanayake and the coalition that he represents have been cautious in their rhetoric about the IMF.

Whether Dissanayake will be able to pursue the measures required to resolve the crisis, including offering relief to the people and obtaining long-term investment for development, will depend both on his degree of domestic support and the latitude he is given by the international community. Many analysts have already pointed to the tightrope Dissanayake must now walk to provide domestic relief without exceeding the fiscal constraints of the IMF agreement. A key concern here is whether his government will have the political will to take forward redistribution, including through a robust wealth tax.

Dissanayake secured his victory by leveraging popular frustration with Wickremesinghe, who bent over backwards to accommodate global interests — conceding to powerful Western bondholders while contemplating a potential fire sale of Sri Lanka’s strategic assets to China and India. Dissanayake has already pledged to review the terms of an agreement with the Adani Group for a nearly US$442 million project to provide renewable energy in northern Sri Lanka.

The question facing Sri Lanka is whether Dissanayake’s government will be able to pursue anon-aligned foreign policy. It remains unclear whether the country will be able to secure external investment and financing for development without being compelled to surrender control over its essential resources. Sri Lanka will need to pursue policy goals with the best interests of its people, as opposed to powerful external actors, in mind. A balancing act in working with India and China — without being pulled to one side or attempting to play one against the other — would be crucial for survival amid mounting geopolitical tensions.

Any attempt by global powers to apply pressure on the Dissanayake government could create a renewed bout ofinstability in the country. The reality is that only an international order that can accommodate the needs of Sri Lanka’s beleaguered people will be able to retain the country in its orbit.

The danger is that if Dissanayake’s government fails, xenophobic forces, currently bowed by the defeat of the Rajapaksas and their acolytes, could occupy the power vacuum. While seemingly distant from the post-election euphoria, such concerns cannot be dismissed given how suddenly politics in Sri Lanka has shifted in recent years. It has shifted for the better, in the case of the popular uprising that ousted the Rajapaksas, and for the worse, given how swiftly powerful external actors and the elite backed a counterrevolution against it. The National People’s Power victory is a delayed response, but it is not necessarily the resolution of this historic crisis.

Dissanayake faces a raft ofcomplex domestic and international challenges, from engaging with the demands of minority communities to obtaining long-term financing for Sri Lanka’s development. But the election that brought him to power was perhaps the most peaceful in recent history — and, for the most part, free of narrow, nationalist rhetoric. It would be a shame if short-sighted external objectives, whether in pursuit of power or wealth, derail the relief and support necessary for Sri Lanka’s polity to emerge from the challenges it faces. Those challenges include ethnic antagonism and what threatens to become a full-blown crisis of development.

About the authors:

• Devaka Gunawardena is Research Fellow at the Social Scientists’ Association, Colombo.
• Ahilan Kadirgamar is Senior Lecturer in the Department of Sociology at the University of Jaffna.

Source: This article was published by East Asia Forum