Wide Angle focus on Govt’s efforts to reset of political culture

• CNL Reporter
• March 9, 2025
• Weekly Political Review
• Weekly Political review
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Weekly Political Review

Sri Lanka Pursues Reforms and Stability amid Geopolitical Challenges

The Sri Lankan government remains steadfast in its commitment to adhering to the International Monetary Fund (IMF) program and finalizing the restructuring of its international sovereign bonds.

Additionally, it is focused on tackling corruption and collaborating with American partners to establish a transparent, rules-based investment environment that will drive sustainable growth.

While achieving economic stability is an essential first step, the more challenging task lies in fostering long-term growth, improving productivity, and instilling responsible financial and economic practices.

A significant milestone in this reform process is the launch of the government’s “Clean Sri Lanka” initiative, which goes beyond environmental cleanliness to encompass a broader reset of political and economic culture.

The nation eagerly anticipates tangible actions under this initiative, particularly in combating corruption and implementing systemic reforms.

Key concerns include whether inefficient state-owned enterprises will be overhauled, whether contractual obligations will be upheld, and whether foreign businesses will be assured fair competition, free from protectionist policies.

Additionally, the role of artificial intelligence in shaping business and economic landscapes remains a critical point of discussion.

At the same time, Sri Lanka must navigate global challenges that impact its economy, including disruptions in global shipping due to Houthi attacks in the Red Sea and economic instability caused by the ongoing conflict in Ukraine.

These international crises, among others, create economic uncertainties that necessitate careful planning and strategic decision-making to mitigate potential risks and adapt to evolving circumstances.

Reinventing Political Culture and Economic Policies

Rather than merely re-democratizing governance, the National People’s Power (NPP) party is focused on reinventing Sri Lanka’s political culture based on principles of transparency and integrity.

This involves pragmatic steps to alleviate poverty, prohibit communal politics, improve administrative efficiency, and uphold judicial impartiality.

However, the economic and political burdens inherited by the new administration pose significant challenges, limiting the government’s maneuverability despite its parliamentary majority and recent financial improvements.

Renegotiating IMF agreements to ease the financial burden on citizens, combating corruption, monitoring political transformation, strengthening inter-community relations, and fostering trust with the Sri Lankan Tamil diaspora are among the priorities.

From a geopolitical standpoint, Sri Lanka must balance its strategic position between regional powers such as India and China while leveraging international rivalries to secure foreign direct investment without compromising its sovereignty.

The previous Rajapaksa administration, despite its claims of defending national independence, deepened Sri Lanka’s financial dependence on China. In contrast, former President Wickremesinghe sought to counterbalance this by strengthening ties with Western allies.

The new leadership under Anura Kumara Dissanayake appears to be adopting a realist approach, reflected in his early diplomatic visits to both India and China.

Key Infrastructure Projects and Strategic Dilemmas

Several major projects remain at the center of Sri Lanka’s economic and political decision-making. The ‘Colombo Port City’ development, initiated under Mahinda Rajapaksa’s tenure, is a key component of China’s Belt and Road Initiative, intended as a global business and tourism hub modeled after Dubai.

However, critics argue that it represents a modern version of colonial exploitation, particularly given its proximity to the Galle Face area, a historic protest site.

Another controversial project is the Hambantota Port, which was built with Chinese investment and leased to China Merchant Ports in 2017 for 99 years due to the Sri Lankan government’s inability to repay its debt.

Additionally, a large oil refinery in the same region has been awarded to the Chinese firm Sinopec as of January 2025. Meanwhile, India has strategic interests in Trincomalee’s natural harbor, which has historical significance dating back to World War II.

The joint venture between the Sri Lankan government and the Indian Oil Corporation, established in 2022, aims to modernize the existing oil storage infrastructure and construct a new refinery.

Furthermore, the previous administration had approved a wind energy project by Indian billionaire Gautam Adani, which aimed to develop turbines along the northwestern coast in Mannar and Pooneryn.

However, concerns regarding the project’s unfavorable financial terms and corruption allegations against Adani have led to its reassessment. Similarly, the expansion of the Colombo Port’s container terminal, another project partly funded by Adani with U.S. loans, is under scrutiny.

As noted in an analysis published by The Diplomat in January 2025, the way Sri Lanka handles these projects will serve as a critical test of its commitment to sovereignty and transparency amidst global power rivalries.

This moment presents an opportunity for the NPP government to demonstrate that its electoral promises of integrity extend beyond rhetoric and into action.

Strengthening Governance and Economic Partnerships

The government’s focus on good governance and anti-corruption measures is essential for fostering a business-friendly environment.

Transparency and accountability serve as the cornerstones of a thriving economy. Organizations like the American Chamber of Commerce can play a crucial role in promoting these values and working alongside the government to implement effective policies.

The United States is already contributing to Sri Lanka’s economic progress through various initiatives. These include Development Finance Corporation loans for small and medium-sized enterprises (SMEs), entrepreneurial training programs, and technical assistance from the U.S. Treasury Department and USAID in sectors such as renewable energy, procurement, and tax reforms.

As Sri Lanka’s top export market and a key economic partner, the U.S. plays a significant role in the country’s recovery and long-term growth.

However, economic transformation is a gradual process that requires sustained effort, collaboration, and a shared vision among stakeholders.

The business community, government, and international partners must work together to foster innovation, attract investment, and ensure sustainable development.

The nation has already made significant strides since its recent economic crisis, and continued commitment to reform will be critical in securing a prosperous future for all Sri Lankans.

Looking Ahead: A Year of Growth and Development

As Sri Lanka moves forward, it is essential to remain focused on long-term economic resilience, strategic diplomacy, and governance reforms.

By the end of 2025, the hope is that Sri Lanka will reflect on the year as one of growth, development, and meaningful progress.

Through continued advocacy and policy-driven initiatives, the country has the potential to transform its economic landscape and emerge as a model of sustainable development and governance in the region.