Reconciliation in Sri Lanka: Harder than Ever
Reconciliation in Sri Lanka: Harder than Ever
Table of Contents
  1. Executive Summary
Sri Lanka’s Economic Meltdown Triggers Popular Uprising and Political Turmoil
Sri Lanka’s Economic Meltdown Triggers Popular Uprising and Political Turmoil
Report 209 / Asia

Reconciliation in Sri Lanka: Harder than Ever

President Mahinda Rajapaksa’s authoritarian and Sinhalese nationalist post-war policies are undermining prospects for reconciling Sri Lanka’s ethnic communities, weakening democracy for all Sri Lankans and increasing the risk of a return to violent conflict.

Executive Summary

Two years since the defeat of the Liberation Tigers of Tamil Eelam (LTTE), Sri Lanka is further from reconciliation than ever. Triumphalist in its successful “war on terror”, the government of President Mahinda Rajapaksa has refused to acknowledge, let alone address, the Tamil minority’s legitimate grievances against the state. The regime destroyed the Tigers by rejecting the more conciliatory approach of prior governments and adopting the insurgents’ brutality and intolerance of dissent. Now, contrary to the image it projects, the government has increasingly cut minorities and opponents out of decisions on their economic and political futures rather than work toward reconciliation. As power and wealth is concentrated in the Rajapaksa family, the risks of renewed conflict are growing again. Partners, especially India, Japan, the U.S., UK, European Union (EU) and UN, should send a strong message against increasing authoritarianism, condition aid on transparency and restored civilian administration in north and east and support accountability, including an international inquiry into alleged atrocities by both sides in the war’s final stages.

Much has improved with the end of the war in May 2009. The paralysing threat of suicide attacks on civilians in the south has ended with the destruction of the LTTE, while Tamil families no longer fear the Tigers’ forced recruitment of their children and other abuses. Economic and political security is better for some segments of society. But decades of political violence and civil war have polarised Sri Lanka’s ethnic communities and undermined institutions, particularly those involved in law and order. Each of the major ethnic groups – Sinhalese, Tamils and Muslims – has suffered immensely. Conflicts have not just left hundreds of thousands dead, injured or displaced but have also entrenched fears and misunderstandings in each community.

Progress toward reconciliation in this environment was always going to be difficult. It has been made much more so by the post-war policies of President Rajapaksa and his powerful brothers. With emergency and anti-terrorism laws still in place, they continue to violently repress the media and political opponents, while manipulating elections and silencing civil society. Constitutional reforms strong-armed through parliament have removed presidential term limits and solidified the president’s power over the attorney general, judiciary and various “independent” commissions. Northern areas once ruled by the LTTE are now dominated by the military, which has taken over civil administration and controls all aspects of daily life – undermining what little remains of local capacity. Democratic political activities in the north and east have been suppressed through the use of violent and corrupt ethnic Tamil proxies and other Rajapaksa loyalists. Development of those areas has been conducted without local consultation; indeed many Tamil residents feel that it is more like the extraction of the spoils of war than a real effort to improve livelihoods and build trust.

To deflect criticism of its unlawful conduct in the final stages of the war the government established a Lessons Learnt and Reconciliation Commission (LLRC). Promoted as a mechanism for both accountability and reconciliation, it will produce neither. In April 2011, a UN panel of experts found that the LLRC lacks the independence, mandate and witness protection capacity to serve as an accountability process for the many credible allegations of war crimes and crimes against humanity committed by both sides and recommended an international investigation. Correcting the LLRC’s flaws would require not only a new commission or other mechanism but also a reversal of the Rajapaksas’ core post-war policies. While the LLRC has served as a platform for airing some grievances, it has failed to win confidence domestically and can do little to aid reconciliation. Sri Lankans know better than anyone that such a commission is ultimately powerless.

Despite Sri Lanka’s long history of failed and ignored ad hoc inquiries, the international community seems willing to gamble on another. While India, the U.S. and UK have recently signalled greater scepticism of the government’s efforts, so far they and other supporters are repeating the mistake they made during the war. There was little real effort to prevent the atrocities at the end of the fighting, in part because the LTTE was so reviled but also because it was convenient to believe President Rajapaksa’s assurances that there would be political reform and conciliatory policies after a military victory. Now they risk falling again for the government’s delaying tactics and promises of accountability through the LLRC and political compromise through talks with Tamil political parties. So long as there continues to be no progress on either issue, large portions of the Tamil diaspora will remain convinced their community needs the protection that only a separate state can offer and will continue to ignore the LTTE’s share of responsibility for the atrocities at the end of the war and for the destruction of Tamil political society.

While the government tries to sell its “reconciliation” plans, the realities on the ground in the north and east are ominous. Many households are now headed by women, who are extremely vulnerable under military rule. Much of the aid promised has not arrived, and all is strictly controlled by the military. Over two thirds of the nearly 300,000 displaced civilians interned in the north at the end of the war have been sent home, but mostly to areas devoid of the most basic amenities. Another 180,000 of those and others displaced in prior stages of the war are still in camps or other temporary settings. Of the 12,000 or more alleged LTTE cadres detained at the end of the war, 3,000 are still undergoing “rehabilitation”. Hundreds more LTTE suspects, many detained for years without charge, are held separately. There is little transparency about the numbers or identities of post-war detainees, and upon release, many are closely monitored and harassed or pressured to act as informants. Families throughout the north and east are still searching for missing relatives.

Tamils are not the only community to find themselves marginalised. There have been no official efforts to address the conflicts that flared within Sinhalese communities in the south. Many disappearances have not been investigated; few families have been adequately compensated. No one has been held accountable. Similarly, Muslims expelled from the north or relatives of those murdered in the east by the LTTE have seen little in the way of resettlement, compensation or justice. Land disputes exacerbated by the conflicts affect all communities, but little has been done to design sustainable solutions. Concerns about corruption and increasing cost of living only add to the wounds of the past.

Reconciliation will slip further out of reach if the government maintains its policies. As part of broader efforts to counter false narratives put forth by it and by Tiger apologists alike and to restore the badly damaged rule of law, Sri Lanka’s partners should take immediate steps. Aid money should not be delivered without firm knowledge of how it will be spent, which requires extensive monitoring. Assertions that the government is moving towards reconciliation must be tested against realities on the ground, which means insisting on access. The Rajapaksas’ authoritarianism must be challenged directly and publicly, with strong messages against retrograde constitutional changes and centralisation of power. An international inquiry into alleged atrocities by both the government and LTTE is needed; UN member states should actively work to establish one, unless the government shows by the end of 2011 that it is willing and able to ensure accountability on its own. Sri Lanka eventually should also have an independent, inclusive truth commission to examine injustices suffered by all communities. It requires a fair accounting of its violent history to avoid repeating it.

Colombo/Brussels, 18 July 2011

 

A protestor wearing a mask of Sri Lanka's President Gotabaya Rajapaksa performs during a protest against President Rajapaksa in front of the Presidential Secretariat, amid the country's economic crisis in Colombo, Sri Lanka, April 9, 2022. REUTERS/Dinuka Liyanawatte
Q&A / Asia

Sri Lanka’s Economic Meltdown Triggers Popular Uprising and Political Turmoil

Sri Lanka is embroiled in nationwide protests amid deepening economic woes and increasing political volatility. In this Q&A, Crisis Group expert Alan Keenan analyses the implications of the crisis, which could have lasting political and economic effects.

What has been happening in Sri Lanka?

Protests, which had been building from late February in response to Sri Lanka’s worst economic crisis in nearly 75 years of independence, have now morphed into a nationwide uprising. Protesters are demanding the resignation of President Gotabaya Rajapaksa and removal of the Rajapaksa family from politics.

The protest wave gained momentum as the results of the government’s financial and economic mismanagement became increasingly visible amid rapidly disappearing hard currency reserves and widespread shortages. As prices of petrol and other basic commodities spiked, and imported goods became more expensive and harder to find, the public expressed its growing frustration through ad hoc protests and nightly vigils in middle-class neighbourhoods. Average Sri Lankans are furious at the collapse of living standards and government ministers’ repeated statements betraying indifference to the immense hardships they are facing. Popular anger grew after the president addressed the nation on 16 March, refusing to accept any responsibility for the economic problems, and a special All-Party Conference on 23 March produced no solutions to the crisis.

Organised in large part through social media, including under the banner of #GoHomeGota, protesters have shifted from calling on the president to resign to calling for the whole Rajapaksa family – including the prime minister and former president, Mahinda Rajapaksa – to exit politics. They are also demanding thorough investigations into the alleged large-scale corruption and political crimes widely attributed to the ruling family and their associates. Since 9 April, thousands of peaceful protesters have been continuously camped outside the president’s offices in central Colombo. While the Rajapaksas’ reputation for political repression had earlier deterred many protesters, growing anger seems to have overcome fear.

The evening of 31 March was a turning point for the protest movement, as large crowds gathered near Gotabaya’s private residence. Protesters marched directly up to the president’s well-guarded house, chanting their demand that he leave office. Police efforts to disperse the crowd with tear gas and water cannons only fuelled discontent. The clashes saw security forces assault journalists and arrest more than 50 demonstrators, some of whom were reportedly tortured. Public outrage at police violence and the deployment of troops deepened the shift in public mood against the Rajapaksas. In the protesters’ eyes, the family, which has been at the core of the nation’s power politics since 2005, is the central cause of Sri Lanka’s woes and no longer credible as the protectors of the country’s Sinhala Buddhist majority.

On 1 April, in an effort to prevent planned future protests, the president declared a state of emergency, followed by an island-wide curfew and a shutdown of social media networks. He lifted these measures within days, but even before he did so, protest organisers had found ways around the social media ban. Demonstrations on 4 April saw tens of thousands in the streets in multiple locations, with some protesters beginning to link the government’s economic mismanagement to the Rajapaksa family’s alleged corruption and other crimes, starting with Gotabaya himself.

Amid the tumult, the entire slate of government ministers resigned on 3 April. It was a coordinated move, allowing Gotabaya to appoint a new four-member cabinet, still headed by his brother Mahinda as prime minister. Gone from office were two other Rajapaksas – Basil, who as finance minister had been a lightning rod for popular anger, and Namal, Mahinda’s son and heir apparent, who had been sports minister. The loathed Central Bank governor, Ajith Nivard Cabraal, also resigned.

The president then called on the opposition to join a “national unity” government, but there were no takers, and his political stock continued to plummet. On 5 April, more than 40 allied lawmakers withdrew support from the governing coalition led by Gotabaya’s Sri Lanka Podujana Peramuna party (SLPP), putting its parliamentary majority in doubt. In response, Gotabaya said any group of parties that could assemble a majority was invited to form a new government, but so far none has tried to do so.

The emergence of a broad-based popular movement against autocratic rule is for many Sri Lankans a welcome change in a country traditionally divided on ethnic and religious grounds. The situation is volatile, however. Political paralysis could lead to even deeper economic collapse or more serious social unrest. Authorities could in turn use the turmoil to justify violent repression and an even larger role for the military in governance.

For the time being, Sri Lanka is stuck in a political standoff: the president refuses to resign, even as his parliamentary majority is in question, while the opposition has failed to develop a coherent plan for removing him or for ruling the country if he leaves. Even if Gotabaya resigns, it is not clear that opposition parties are ready to take on the responsibility of seeing Sri Lanka through the economic crisis, given that international creditors are certain to impose conditions for further lending that will force painful sacrifices on average Sri Lankans, making whoever is in power unpopular.

Sri Lanka has never faced this kind of economic and political meltdown.

Just how bad have things become for average Sri Lankans?

Sri Lankans across the island are increasingly desperate. Skyrocketing prices – due to the scarcity of imported goods, low recent crop yields and a 60 per cent drop in the Sri Lankan rupee’s value since mid-March – have made even basic commodities unaffordable for many families. The risk of widespread food insecurity and malnutrition is growing. High prices have hit the poor and day labourers particularly hard, but shortages of key food items, cooking gas and petrol have affected the middle class badly, too. The misery is worsened by daily power outages up to twelve hours long, with power plants lacking the imported fuel they need to generate electricity and water levels in hydroelectric reservoirs low due to drought. Lack of reliable power forces many businesses to shorten their hours. Medicines and medical supplies – virtually all imported – are getting hard to find, with doctors and medical trade unions warning that the health system could fall apart.

Although no stranger to natural and manmade disasters, Sri Lanka has never faced this kind of economic and political meltdown. Even through 30 years of war, it maintained a relatively high standard of living in most parts of the country, with a functioning, if increasingly threadbare welfare state. The economic pressures and rapid decline in living standards are traumatic for all but the wealthiest Sri Lankans and lie at the core of the nearly universal anger at the government.

Meanwhile, the possibility that the crisis spirals into a humanitarian emergency looms as Sri Lanka’s lack of money threatens to cripple economic activity and undermine its shaky banking system. On 12 April, the Central Bank announced it was suspending repayments of foreign debt in advance of negotiations with the International Monetary Fund (IMF) and other outside creditors. In effect, the announcement begins the process of Sri Lanka’s first-ever default, although some economists and investors are nevertheless welcoming it as a long overdue acknowledgment of how critical the situation has become.

Even if the government is able to reach a deal with the IMF to avoid an “unstructured default” (ie, one that occurs outside a deal with creditors and the IMF) and the downward spiral that could ensue, Sri Lanka’s economy and living standards will take years to recover.
 

What is driving the economic crisis?

Sri Lanka’s economic disaster has deep roots: the country has long lived beyond its means – borrowing too much and taxing too little – and produced below its potential. But the Rajapaksa administration’s gross negligence on economic matters since it came to power in November 2019 has significantly aggravated the island’s chronic problems.

At the heart of the crisis is the lack of hard currency needed to service the country’s huge foreign debt and to purchase the imported goods that Sri Lankans rely on, including much of their food and medicine, and all of their fuel. Foreign reserves have long been low, but the COVID-19 pandemic made things worse by almost entirely interrupting tourism, one of the country’s largest sources of foreign currency. Meanwhile, Sri Lanka’s international debt obligations have steadily grown, in part because of costly infrastructure projects financed with Chinese loans that must be repaid even though the projects have yet to pay economic dividends, and the need to finance chronic budget deficits generated by a large public sector and low taxation rates. With debt increasingly composed of high-interest commercial loans and sovereign bonds held by international creditors, Sri Lanka needs to repay another $4-6 billion in 2022 alone, but has less than half a billion in usable dollar reserves.

Gotabaya’s authoritarian, centralised and non-transparent decision-making is central to the crisis.

The previous government (2015-2019) made modest progress toward fixing Sri Lanka’s chronic problems, but its efforts were quickly reversed after Gotabaya’s election. In early 2020, just before the COVID-19 pandemic started affecting the economy, the new administration introduced massive tax cuts that sharply reduced government revenue and garnered lower credit ratings that eliminated its ability to borrow on the international market. In an effort to keep inflation under control, the government spent large amounts of its dwindling hard currency reserves to prop up the Sri Lankan rupee’s value. To save hard currency, the president also banned the import of chemical fertilisers in April 2021, forcing farmers to adopt organic methods overnight, without resources or training. As result, agricultural yields plummeted, farmers got poorer and the government was forced to import more food.

Gotabaya’s authoritarian, centralised and non-transparent decision-making is central to the crisis. Surrounded by cronies and oblivious to criticism, his administration rejected repeated calls for a course correction as the crisis deepened. Defying expert opinion, the president and his Central Bank governor initially refused to enter into negotiations with the IMF to arrange a financial package that could win international creditors’ confidence and allow for the restructuring, and reduction, of Sri Lanka’s debt. Instead, throughout 2021 and the first quarter of 2022, the government arranged a series of short-term currency swaps and credit lines from China, India, Bangladesh and others. These were merely stopgap measures, failing to address the fundamental problems and in fact adding to Sri Lanka’s total debt.

After more than a year of resistance, Gotabaya announced on 16 March that his government would enter into negotiations with the IMF. By then, the situation had grown truly dire, with currency reserves down to dangerously low levels and the government struggling to pay for even the most essential imported goods. Two weeks earlier, the IMF had issued a statement outlining the reforms needed to win its financial support. These include a long series of austerity measures, from budget cuts to income tax and VAT increases, an end to inflationary money printing by the Central Bank, phasing out import restrictions, stopping government interventions aimed at stabilising the rupee, and “growth-enhancing structural reforms”, which will likely include the sale or partial privatisation of state-owned companies.

On 6 April, the president appointed a committee of three respected economists to handle talks with the IMF. It will face a daunting task. In addition to negotiating with the IMF on the details of long-term structural reforms, the committee, together with the finance ministry and Central Bank, will need to arrange urgent “bridge financing” from international agencies to inject short-term liquidity, convince creditors to allow a pause in debt payments, and prepare a range of legislation to increase taxes and cut non-urgent public spending. With currency reserves dangerously close to zeroing out, speed is of the essence. While the Central Bank’s 8 April doubling of interest rates and subsequent suspension of debt repayments shows that some in the government now seem to understand the urgency of the situation, there is little in the administration’s record to inspire confidence about how it will handle the challenges ahead.

The government is due to start talks with the IMF on 18 April and has announced that it needs $3-4 billion in support from external lenders for the remainder of 2022. To secure agreement from the fund on such a large amount will likely take months, but it might deploy emergency financing (most likely in the tens of millions) as a stopgap, likely in coordination with the World Bank, which has said it is considering emergency assistance. Whether the IMF acts quickly will likely depend on how serious the Sri Lankan team seems about reforms, how dire the situation continues to look on the ground, and how eager the IMF is to avoid rattling the global markets that see Sri Lanka as a bellwether for a string of future potential defaults across the developing world.


What is the way out of the political crisis?

Despite the vigorous protest campaign demanding his resignation, President Rajapaksa appears determined to cling to power, especially as public calls to hold him and his family accountable for alleged corruption and other crimes grow louder. Various parties in the opposition are developing plans to remove him or trim his powers, but it is proving to be a challenging undertaking. One possible road to removal is impeachment – a complex effort that requires a two-thirds majority in parliament. The bloc most likely to attempt it is an awkward grouping of the main opposition Samagi Jana Balawegaya (SJB), former Rajapaksa supporters, the leftist Janatha Vimukthi Peramuna (JVP), and smaller Tamil and Muslim parties. But they are still far from meeting the required threshold.

Another approach that may present fewer procedural obstacles, proposed by SJB leader Sajith Premadasa on 5 April, would be to amend the constitution to strip the presidency of its executive powers and transfer them to the prime minister and cabinet, who would be accountable to parliament. A draft bill giving effect to this approach, formulated with a view to past supreme court rulings in order to avoid the need for approval by referendum, is reportedly ready to be tabled at the next parliamentary session on 19 April. If the amendment is approved – which would also require two-thirds support and take three to four weeks – Gotabaya would have the choice to remain as a ceremonial president or to resign. Under this scenario, whatever new parliamentary majority and prime minister emerged would then face the challenge of negotiating with the IMF to win support from the fund and begin restoring investor confidence, before likely calling fresh elections.

To increase political pressure on Gotabaya to resign and be in a stronger position to win a vote on amending the constitution, the main opposition party, the SJB, plans first to call for a no-confidence vote in the hopes of then forming an interim coalition government it will lead. It had earlier hesitated to do so, uncertain that it has the votes and also well aware it could struggle to set policy with Gotabaya still in office given the enormous powers the president enjoys (and which he significantly reinforced though a constitutional amendment after coming to power). The SJB also knows that governing under Gotabaya, even briefly before his removal, could taint it by association and damage it politically, especially given the unpopular decisions any government will need to make to stabilise the country’s financial situation. The SJB’s hesitation, and its failure to communicate to the public a clear strategy for removing Gotabaya and addressing the immediate economic crisis, appear to have provided space for the Rajapaksas to regroup partially. Other parties, including those formerly in government, are floating rival plans.

Any move to remove or sideline President Rajapaksa is likely to take weeks, if not months, and could fail entirely. Meanwhile, the prospect of an unmanaged default looms, with hard currency reserves likely to run dry within the next few weeks. Moreover, there is no guarantee of success in negotiations with the IMF and international bondholders, who will want to be assured that any likely government will make and sustain the reforms and other measures they insist on as a condition to any relief package. Against this backdrop, opposition parties will need to work with serving officials on an urgent basis to craft a consensus set of economic policies that can win over the IMF. They will need to cooperate closely with the new Central Bank governor, P. Nandalal Weerasinghe, and the committee of economists appointed by the president to manage the IMF negotiations.

Outside powers and international institutions have an important role to play.

Is there a risk political tensions could turn violent? Could the military be tempted to intervene?

Should the protests continue to grow or turn violent, perhaps following a banking collapse, some fear Gotabaya, known for his hot temper and his role in brutal counter-insurgency campaigns against both Sinhalese and Tamil insurgencies during his military and political career, might be willing to call in the military to crush them. So far, the government has been careful to cultivate an international image of moderation, and the military has denied any plans to intervene, but Prime Minister Mahinda Rajapaksa’s address to the nation on 11 April, in which he presented the protest movement as anti-democratic and hostile to the police and military, was widely interpreted as a veiled threat.

It is unclear how much support there would be in the army for a crackdown. On one hand, its top commanders – most notably the army head, Major General Shavendra Silva (sanctioned by the United States for credible allegations of war crimes), and the defence secretary, retired General Kamal Gunaratne – are known to be close to the president. On the other hand, while military personnel are paid well relative to other civil servants, the worse the economic crisis gets, the more they and their families will also feel its effects. They could be reluctant to turn their guns on protesters, especially those who are fellow Sinhalese. There is also evidence of fissures between the army and police, who are normally in charge of dealing with protests. In one incident – widely discussed on social media – police turned away unmarked army special forces motorcycle units sent in to intimidate protesters near parliament on 5 April. The army commander and defence secretary reacted angrily and ordered the chief of police to discipline the policemen involved.


What can foreign governments and multilateral agencies do to help?

Only Sri Lankans can solve the country’s crises, but outside powers and international institutions have an important role to play in reducing the risks of economic collapse and violence. In particular:

  • First and foremost, donors can provide urgently needed humanitarian assistance, particularly in the form of medicine and medical supplies. An Indian government credit line to buy fuel, food and medicine has been crucial, but with Sri Lanka’s hard currency resources diminishing further each day, more assistance in those same areas is immediately required to prevent a serious humanitarian crisis.
     
  • Secondly, to limit the risks of violent escalation, Sri Lanka’s democratic foreign partners should send strong messages to military leaders that any attempt to intervene in politics or to repress protest will do lasting damage to bilateral relations and could trigger targeted human rights and other sanctions of the sort that the U.S. has enabled under the Magnitsky Act.
     
  • Thirdly, support from the IMF (as well as the World Bank and bilateral donors) is essential to avoid a complete economic disaster. But it brings risks, too. Many critics of the president and his administration fear that a lifeline from the IMF, while easing pressures on average Sri Lankans, could provide breathing space to Gotabaya as well, allowing him and his family to restore themselves. In the event the political opposition mounts a successful impeachment or power-stripping effort along the lines outlined above, this concern will at some point become moot. But regardless of the Rajapaksas’ fate, the IMF should take steps to help ensure that any international bailout does not perpetuate the systemic weaknesses that have contributed to the current crises. To this end, the IMF should insist on reforms that can help rein in a bloated military, institutionalised corruption enabled by a lack of financial and political accountability, and systematic attacks on free media that make it harder to report on and challenge official malfeasance.
     

Whatever happens over the next few weeks and months, Sri Lanka’s recovery from the current crisis is likely to be difficult and could last years. If the Rajapaksas hold onto power, they will be governing an angry, restless populace without the public support needed to impose the painful measures Sri Lanka must take to restructure its international debt. If they do not, a string of unstable and short-lived governments is a distinct possibility, as few politicians will be eager to design or administer the new social and economic policies that creditors will require as part of any bailout package. Sri Lanka will warrant close international attention and support throughout the difficult years ahead.