Sri Lanka, Pivot of Asia

by Véronique Queffélec on janvier 1, 2011


“Sri Lanka has everything it takes to be the wonder of Asia. » Friday December 17th 2010. Mahinda Rajapakse, the president of Sri Lanka, must savour these words pronounced by Ngozi Okonjo-Iweala, general director of the World Bank, who recognises ipso facto the emergence of that country as one of the most rapidly developing economies. This undoubtedly is the opening up to the world of the island after a 30-year civil war between the separatist Tigers liberation movement of the Tamil Eel am (LTTE) and the central power at Colombo (which left between 80,000 and 100,000 victims). Ending in May of 2009, this civil war leaves consequences throughout. Yet the growth estimates of Sri Lanka and its geostrategic position make it a country that cannot be ignored.

At present, several countries avoid the Sri Lanka in the name of Human Rights. Mahinda Rajapakse sees the paradox. “We are the only country in the world to have defeated terrorism with its army. Thirty years of facing suicide bombers, car bombs, assassinations, even our Central Bank was bombed. We have suffered a lot. We tried to negotiate with the LTTE in vain. We have undergone what the West is undergoing now. We had to do what we did. Some appreciate, others do not. Today many nations are seeking our advice on how to win decisively against terrorists with minimum damage to civilians. I believe the world has woken up.”

On September 11th, 2001, the West discovered the true face of terrorism, which it had thought confined to certain countries, and adopted a double-standard analysis. When terrorism touches a western country, the news makes the headlines all over the world whereas it is considered inevitable if it touches other areas. The West has always adopted a condescend stance concerning the governments of developing countries, seeing them as the immature children of western democracy. Terrorism would be the reflection of this immaturity, of the search for democracy and of political construction. However, when terrorism hits at the heart of western nations, the excuses found to explain terrorist actions are of a different nature. They are never seen as people using poverty for ideological reasons. For Mahinda Rajapakse, “Someone who would eliminate Ben Laden or Al Qaeda would be celebrated as a hero by the nations who have given moral support to the LTTE, ignoring our plight. I can’t understand the difference between Al Qaeda and LTTE.”

Having been invited recently by the Oxford Union, the president’s visit was cancelled at the last minute due to demonstrations by LTTE supporters. “I thought that the UK was the mother of democracy and of free speech as your philosopher Voltaire understood it. Though I may disagree with what you say, I will defend to my death your right to say it. The aborted speech was to deal with the defeat of the terrorists, reconciliation, development programs in the north of Sri Lanka, the destruction of the railway lines, roads, hospitals…and of the 2 billion dollar reconstruction.

“Quite a number of terrorists are in the UK and Canada. It’s good business. They apply for visas, then for refugee status and collect money abroad.” They are “mafias extorting money”. Rajapakse also notes that “according to Wikileaks, David Miliband was spending about 60 per cent of his time on LTTE issues. To obtain their votes.”

A number of former Tamil leaders are part of the new government of Sri Lanka, working in the spirit of reconciliation. The LTTE’s second in command, the Chief Minister of the Eastern Province (a former child soldier). “Yet the West doesn’t care to listen to their story.” The press paid no attention to atrocities committed by the Tigers, or to the forced enrolment of children at the doors of schools.

As a lawyer and a defender of human rights, Rajapakse fought precisely to restore these rights in the north of the island. “I state with authority that our troops were under the strictest orders to prevent any civilian casualties. We have investigated crimes whenever we have received evidence and we have prosecuted and even jailed the guilty.”

Rapid Economic Growth

Mahinda Rajapakse is now looking towards the future. “Without peace there is no development, without development no peace.” “I will continue in my efforts to unite all the people of our country, whether they live in Sri Lanka or overseas. As a united country we have a great future.” This coincides with the analysis of several international institutions. “Sri Lanka’s remarkable capacity to overcome its past difficulties is proof of its people’s tenacity and of its leaders’ commitment” says Ngozi Okonjo-Iweala. Since Sri Lanka can henceforth benefit from aid from the International Bank for Reconstruction and Development (IBRD) as well as from the International Monetary Fund, the government has gone forth with an investment strategy and works towards liberalising the economy in order to reach a growth rate of 8% per year in the next few years. In 2010, its growth rate is expected to reach 7%, according to the IMF, after reaching 3.5% in 2009. “At the moment, we don’t need another loan from the IMF. We have very good reserves. When we sought the earlier tranche it was not in the nature of Greece or Spain. At the moment, our growth is at 6.5% annually.” “We are going forward very fast.”

Since president Rajapakse’s election in 2005, the country’s annual income has gone from US$1000 to US$ 2000 per capita, “and now I want it to double” rapidly. President Rajapakse would like to strengthen ties with Europe, particularly with France. “France sometimes misunderstands our position. As far as we are concerned, we have always wanted closer ties between our two countries. All of Sri Lanka Airline’s fleet is Airbus.” And this fleet is expected to grow. For the president, this is an unequivocal sign of his commitment to France. Yet Boeing is undoubtedly in the starting blocks for the next airplane order. Air transportation is not the only priority. Maritime transport is important as well as commerce and power hubs (commercial activities centres). Major tax reforms recently adopted have reduced import taxes for equipment, and for the fishing, agricultural and construction sectors. “The sea is the next economic zone for Sri Lanka – our source of titanium, oil, sand, the wealth of the ocean, fisheries and all of the assets of the marine world.” Special Economic Zones at Tricomalee, Hambantota and Colombo are planned. “We are among the few countries in the world that allow 100 per cent repatriation of foreign investment. This is guaranteed by the Constitution.”

New ventures including a division of Pearson and MphasiS, a technology company partly owned by Hewlett-Packard, are expected to create 2000 jobs over the next three years. But there are also “great opportunities for small and mid-cap companies in jewellery, garment, embroidery, hand-made lace, agriculture, and of course, IT since we have liberalized our foreign investment policies.”

In response to the question of whether someone will be left out, President Rajapakse says, “Why should anyone be left behind? With widespread use of English and a literacy rate of over 90 per cent, along with competitive wages, Sri Lanka will transform its post war economy from a tea and textile island into a tiny, high-end outsourcing powerhouse. About 50 000 people in Sri Lanka are now employed in one form of outsourcing or another. There is an exciting new field: accounting. With the development of outsourcing in accounting, we hope to triple our revenues by 2015 to nearly US$1 billion.”

Although Sri Lanka has long been considered an unsafe destination, National Geographics rates it as the second best island destination of the year. The New York Times has placed it among its 30 best tourist destinations in 2010. The Shangri-La will be the first luxury group to invest there. The island’s 15 000 hotel-room capacity is expected to reach 50,000 by 2016. Sri Lanka would also like to see French hotels chains on the island.

Sri Lanka’s potentially large petroleum reserves and its key strategic position for the petroleum trade undoubtedly explain the hyper-reactivity evident in the post-conflict period. Information from various satellites shared with India shows reserves in the Cuenca de Cauvery area. The largest oil deposits lye in the north of the country. Studies conducted by the US Geologic Service confirm that Sri Lanka sits on the largest oil reserves in South-East Asia. Sixty per cent of India’s oil needs are satisfied by this same Cuenca de Cauvery reserve.

An Unquestionable Geostrategic Importance

Sri Lanka’s geostrategic importance is undeniable. The north of the Indian sub-continent is unstable. The former “silk route”, today’s access to the energy resources of the Middle East, instigates all the greeds.

There remains an area (almost) totally free to the south of the sub-continent: the sea lanes that border on Sri Lanka. China is well aware of this fact. “Some people say that I’m close to China but this is LTTE propaganda. When the Chinese came here we took commercial loans from them, we bought weapons from them openly. I was in a battle with terrorists. We bought from China, from India, from Ukraine, Russia, Israel, even Hungary. We made no secret of this.” “Sri Lanka and its waters are a place where all important sea lanes connecting the world actually converge. The new Humbatota (Magampura) port will emerge as one of the largest hubs of its kind in the entire region. Leaders of several nations want to visit and see for themselves.” This one billion dollars port of Hambantota, in the strategic South of the island, was built by the Chinese. It could supply the Chinese Navy with fuel and become a transit point for its ships which patrol the Indian Ocean and protect its sea-lanes in these waters. Former Indian diplomat, M.K. Bhadrakumar, a specialist of Euro-Asian geopolitics, explains that China has more ships than the US in these waters.

Sri Lanka is located in a key area, near the major maritime lanes of the Indian Ocean. The end of civil conflicts on the island placed Indian Ocean’s sea-lanes out of western control, sea-lanes where seventy per cent of the world’s oil and oil by-products as well as half of the cargo ships pass, an unlucky hand for the US who would like to set up a base for its seventh fleet in the area. It’s also looking for a base for NATO in the Indian Ocean, its forces being already present in the Persian Gulf.

After having tergiversated with India, basically due to a misunderstanding of cultural differences, Europe
can play its cards with Sri Lanka, thus keeping it from falling into the binomial G2. But things have to be
done fast. Europe can stake on a country that is in full development, that is producing high yields, and thus avoid being excluded from an unquestionable strategic and economic pivot. Considering the state of our continent, do we have the choice of ignoring Sri Lanka?