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Supporters react during an election campaign rally for Sajith Premadasa, leader of the Samagi Jana Balawegaya (SJB) party, ahead of the presidential election, in Colombo, Sri Lanka September 18, 2024.
Sri Lankans go to polls at pivotal moment for economy
On Sept. 21, Sri Lanka will hold its first presidential vote since the spectacular economic meltdown of 2022, when the pandemic-scarred country defaulted on its massive debts, imports dried up, and widespread shortages of basic goods developed. Images of angry protesters invading the luxurious estates of the president and prime minister appeared on television screens around the world.
Following a government shakeup, new President Ranil Wickremesinghe negotiated a bailout with the IMF that helped to stabilize the situation. He is asking voters this weekend for another five years in office to continue the work of rebuilding the economy, but the tough terms of the IMF program have undermined his support.
We asked Eurasia Group expert Rahul Bhatia what to expect from the upcoming election.
What are the main issues for voters? Is the IMF program a campaign issue?
Economic issues have naturally taken center stage in the election as Sri Lanka continues its fragile recovery. While shortages of everyday essentials such as food, fuel, and medicines have subsided, there is still widespread discontent over the increased cost of living and reduced welfare programs. The IMF bail-out mandated austerity measures such as tax hikes and subsidy cuts, which have increased hardships for many Sri Lankans.
As a result, most candidates are campaigning on promises such as cutting taxes, raising the salaries of government employees, providing subsidies for low-income groups and farmers, and lowering fuel and electricity prices. None of the frontrunners have opposed the IMF program in principle, but most have promised to renegotiate it.
How far has the economy come since the crisis of 2022?
The economy returned to modest growth in the second half of 2023, and inflation, too, has eased to normal levels from its peak of nearly 70% at the height of the crisis. Nevertheless, economic output declined by 9.5% over 2022 and 2023, and it will take time for it to return to pre-crisis levels. About one-quarter of the population still lives below the poverty line, as the economic crisis and subsequent austerity measures have disproportionately affected low and middle-income families. Overall, Sri Lanka’s economic situation remains precarious, and it will need a stable government to complete its recovery.
Who are the frontrunners in this election?
Amid a field of 38 contestants, there are four clear frontrunners: the incumbent Wickremesinghe, opposition leader Sajith Premadasa, the leftist Anura Kumara Dissanayake, and Namal Rajapaksa, scion of the Rajapaksa family that once dominated the island's politics but has been largely discredited by the economic crisis. (Then-president President Gotabaya Rajapaksa fled the country after angry protesters invaded his residence in July 2022.) This means the presidential election will effectively be a three-way contest between Wickremesinghe, Premadasa, and Dissanayake.
What are they offering?
Veteran politician Wickremesinghe is campaigning on steering the country out of its worst economic crisis in modern times. Meanwhile, Premadasa and Dissanayake have sought to exploit the unpopularity of his austerity measures and have promised to ease the burden for Sri Lankans. They have also leveled charges of corruption against Wickremesinghe.
Premadasa comes from a well-known political family, but Dissanayake was a marginal player in Sri Lankan politics until recently. His popularity has risen rapidly over the last three years on the back of the protest movement that ousted Gotabaya Rajapaksa and an effective grassroots campaign. While Premadasa enjoys the support of the country’s Tamil minority, Dissanayake has captured the imagination of the youth.
What are the challenges the next president will face keeping the recovery on track?
To retain the IMF’s support, the government will have to reach a budget surplus, which could prove challenging given the welfare measures the candidates have proposed. The next president will have to balance improving the everyday lives of Sri Lankans and reducing the country’s debt burden.
The next president will also face a parliament dominated by the Rajapaksa-led Sri Lanka People’s Front, which was elected in 2020. Premadasa and Dissanayake, in particular, would find it difficult to pass legislation without a parliamentary majority. Both would thus likely call for parliamentary elections before the end of the year as one of their first actions.
Will these elections reverberate beyond Sri Lanka’s borders?
Given Sri Lanka’s towering debt obligations with foreign creditors and strategic location in the Indian Ocean, many countries have a vested interest in the island nation’s political and economic stability. India would prefer a Premadasa or Wickremesinghe presidency, though it has indicated it would work with any of the four frontrunners. Apart from political stability, New Delhi will prioritize limiting China’s influence on the island—a concern the US and Japan share. It will also seek to bolster connectivity between India and Sri Lanka and push the next president to grant the Tamil provinces a degree of autonomy.
China continues to have a sizeable economic footprint in Sri Lanka, but its influence has waned with that of the Rajapaksas. Former president and prime minister Mahinda Rajapaksa and his brother Gotabaya were close to Beijing and oversaw a range of Chinese infrastructure projects on the island, partially contributing to its debt problems (China still accounts for about half of Sri Lanka's bilateral debt). Nevertheless, Dissanayake is thought to have close ties to China, and if he becomes president, it could allow China to regain some of its influence.
Edited by Jonathan House, Senior Editor at Eurasia Group.
As the island nation attempts to crawl its way out of a crippling economic crisis, Sri Lanka’s leading presidential candidates are promising a fairer shake for ordinary families — but will voters demand an upheaval of the entrenched aristocracy?
In Sri Lanka’s elections, the system is on trial
As the island nation attempts to crawl its way out of a crippling economic crisis, Sri Lanka’s leading presidential candidates are promising a fairer shake for ordinary families — but will voters demand an upheaval of the entrenched aristocracy? The country heads to the polls on Saturday, Sept. 21.
Sajith Premadasa, leader of the main opposition United People’s Power party and son of the country’s third president, says that he willrenegotiate the country’s International Monetary Fund deal to shift more of the burden onto wealthy citizens if he wins. Years ofeconomic mismanagement led to food, fuel, and medicine shortages and mass protests, with then-President Gotabaya Rajapaksa and his brother (then-Prime Minister) Mahinda Rajapaksa fleeing the country in 2022. Mahinda Rajapaksa’s son Namal is also running for president today.
Rajapaksa’s close political ally Ranil Wickremesinghe has been running the country ever since and negotiated a bailout with the IMF that included fiscal reforms and tax increases. Inflation has fallen from 70% in 2022 to 0.5% last month, and the currency is gaining strength as foreign reserves increase. Whether voters are feeling those improvements in their daily lives will determine whether he stays in power.
Sri Lanka’s 1983-2009 civil war hangs heavily over the election as well. Premadasa has reached out to the minority Tamil community, who make up about 11% of the population overall but predominate in the north and east. The Liberation Tigers of Tamil Eelam fought for independence in those regions after a series of vicious anti-Tamil pogroms between 1956 and 1983, and atrocity after atrocity by both sides have deeply scarred the country.
Estimates of the death toll run over 200,000 people, not to mention hundreds of thousands more displaced, and thousands disappeared, tortured, and executed without a trace. If Tamil voters believe in Premadasa’s promises of devolution of power, they could tip the election in his favor — but with so much blood spilt, it will be a hard sell.
We also have our eye on Anura Kumara Dissanayake, who alone among the major candidates has no ties to the island’s elite families. He rose from humble roots to lead the National People’s Power coalition and isalso promising to renegotiate the IMF deal and tackle pervasive corruption. However, he is not free of the taint of war: He is the leader of the Janatha Vimukthi Peramuna, a communist party behind the 1987-1989 uprising that killed at least 60,000 people.Indian PM Narendra Modi.
Bombastic Modi no more?
Would the Narendra Modi of 2019 – the year his clampdown on Kashmir drew ire from human rights activists worldwide – have backed down on Prophet Mohammad-related gaffes made by members of his party? Pre-pandemic, would the bombastic Indian prime minister have missed a chance to forcefully weigh in on Sri Lankan domestic affairs amid a dire political crisis?
It wasn’t so long ago when former Sri Lankan President Mahinda Rajapaksa alleged in 2015, just days after voters removed him from office, that India’s spy agency, the Research & Analysis Wing, had helped oust him from power. Now, the tone of Rajapaksa’s family toward India couldn’t be more different. Namal, Rajapaksa’s son, recently thanked Modi and “the people of India” for sending aid to his country at a time when Sri Lanka is battling its worst economic crisis since independence in 1948.
The Sri Lankan crisis has helped reveal a departure from Modi’s traditionally muscular foreign policy approach. This comes after a series of unrealistic promises, hyperactive diplomacy, and religious divisions in India have backfired on New Delhi globally. Modi’s newfound caution has potential implications for the United States as it presses India to play more of a leadership role in the Indo-Pacific.
Rajapaksa, who returned in 2020 as prime minister of Sri Lanka, went into hiding last month after being targeted by protesters. His younger brother Gotabaya, meanwhile, is grimly holding on to the presidency despite demands for his resignation amid a crisis that has seen him order the stockpiling of goods to avoid food shortages. That’s just the sort of messy situation where Modi would’ve once forcefully intervened – in keeping with his aspirations of projecting India as a rising global power. Instead, Modi is treading with care in Sri Lanka at a time when economic and political fires are erupting across South Asia, including in Pakistan and Nepal. While India has committed more than $3 billion in aid to Sri Lanka, it has carefully avoided any suggestion that it has a favorite among the political leaders vying to lead the island nation.
“It’s a very interesting shift,” said Michael Kugelman, deputy director of the Asia Program at the Wilson Center. “India is clearly being cautious politically in Sri Lanka, even though it is sending significant economic aid.”
Kugelman said that it might be premature to conclude a broader move away from Modi’s assertive diplomacy based just on the change in strategy with Colombo. But there are other signs that suggest Modi is on the defensive internationally in a way that hasn’t happened before.
This week, Saudi Arabia, Iran, Qatar, and Kuwait lashed out publicly against the prime minister’s Bharatiya Janata Party after its representatives made controversial comments about Prophet Mohammad. Modi, who has built a reputation as a leader who doesn’t buckle in the face of criticism, caved, and the BJP suspended one leader and sacked another for their comments.
In many ways, that caution echoes India’s low-risk foreign policy approach of old. During the Cold War, India was non-aligned, though it did lean toward Moscow starting in the 1970s. By the 1990s, India had adopted a relatively more sedate stance even in its neighborhood.
Modi promised to change that with a “Neighborhood First'' policy. He became the first Indian leader to visit Nepal in 17 years. “At that time, we used to joke that Modi would win elections in Nepal too — that’s how popular he was because he said the right things,” said Santosh Sharma Poudel, co-founder of the Kathmandu-based Nepal Institute for Policy Research. Modi held one-on-one summits with Chinese President Xi Jinping to try to build a personal relationship. And addressing the U.S. Congress, he said New Delhi and Washington had finally overcome “the hesitations of history.”
But Modi has struggled to live up to many of his bombastic commitments, forcing New Delhi to confront the re-emergence of doubts about India’s role in its neighborhood and the world.
In April 2015, Modi claimed it was his tweet that told Nepal’s prime minister about the earthquake that had just devastated the Himalayan nation. Then, his government boasted about aiding Nepal. As a backlash started in that country, he asked Ranjit Rae, India’s ambassador to Kathmandu: “Why don’t they like us?”
Yet only a few months later, India tried to pressure Nepal to pause on adopting a controversial new constitution, setting the stage for a border blockade that strangled the smaller landlocked nation’s economy. Kathmandu blamed New Delhi and pulled closer to Beijing.
Now, as Nepal faces a foreign exchange crisis — it banned the import of cars, alcohol, and luxury items last month to maintain its remaining reserves — India has been more careful with its words and actions. “A big part of why India is disliked by many in Nepal is because it is seen as trying to interfere at the micro-level,” said Poudel.
That’s true in Sri Lanka too, where “India often gets blamed for everything,” said Asanga Abeyagoonasekara, a senior fellow at the Washington-based Millennium Project. Still, Rajapaksa’s claims in 2015 came at a particularly fraught moment in relations. Colombo had drifted too close to Beijing for New Delhi’s comfort. India was widely believed to have helped unite a fractured Sri Lankan opposition that then defeated Rajapaksa. But his return in 2020 forced New Delhi to reconcile with its former nemesis in Colombo.
Globally, India also has had to sheepishly walk back some of Modi’s boldest promises. Amid disruptions to global food supplies because of the war in Ukraine, Modi said India would boost its wheat exports. Instead, it has had to ban wheat exports because of a poor harvest. Last summer, India had to ban the export of COVID-19 vaccines after Modi promised to produce enough shots to meet the world’s needs — because his government failed to order enough doses. “There’s a lesson here on how it's probably wise to be more careful about what you promise,” Kugelman said.
Meanwhile, in Sri Lanka, India needs to walk a tightrope, said Abeyagoonasekara. Protesters appreciate the economic help from their northern neighbor, he said. But already, New Delhi is having to fend off criticism – this time that it’s helping the Rajapaksas. It has rejected claims that Mahinda Rajapaksa has escaped to India and rumors that the government in Colombo has bought water cannons directed against protesters using an Indian loan.
At a time when Western officials believe that China is establishing a military base in Cambodia, Modi’s reticence to insert India more proactively in Sri Lanka sits uneasily with his previous claims that New Delhi would serve as a “net security provider” in the Indo-Pacific.
But India can’t afford to sit on the fence too long. “This [the crisis in Sri Lanka] could become a national security challenge for India too,” Abeyagoonasekara warned.
Charu Kasturi is a freelance writer specializing in foreign affairs. He is based in Bangalore, India, and often writes for outlets such as Al Jazeera and Foreign Policy.