The country is a perfect candidate for globalization. But a new president must first put an end to decades of bloody civil strife.
Nov. 14, 2005 issue - Back in the 1960s, Singaporean leader Lee Kuan Yew said that he hoped his island nation could one day emulate the success of Sri Lanka. In those days, the former Ceylon had a lot going for it: its per capita income exceeded Thailand's and was roughly equal to South Korea's. What's more, Sri Lanka's literacy rate was very high and its infant-mortality and birthrates low—attributes that Sri Lankans still enjoy today. With its proximity to India, ancient Buddhist culture, enviable geostrategic location and 1,600 kilometers of coconut-palm-lined beaches, Sri Lanka seemed poised to become a shipping, airline, tourism andforeign-investment hub of Asia.
Things obviously haven't worked out that way. In the decades since Lee's praise, Sri Lanka has failed miserably to live up to its glowing postcolonial promise. (The country's per capita income is roughly $1,000, compared with nearly $28,000 for Singapore.) A series of economic and political errors over the years has stymied its development: long-discredited socialist policies; the nationalization of the once thriving tea, rubber and coconut plantations; populist subsidies for everything from rice to electricity.
Worst of all has been the country's failure to solve the long-running conflict between the ethnic Sinhalese majority and the Tamil minority. Twenty years ago, tensions boiled over into a bitter, budget-busting bloodbath. Some 60,000 Sri Lankans have died since fighting began in 1983 between the military and Tamil guerrillas, called the Liberation Tigers of Tamil Eelam (LTTE). Last December's devastating tsunami, which killed 35,000 Sri Lankans and left 500,000 homeless, was seen as a chance to get the government and the LTTE to cooperate in distributing aid. But those efforts were stillborn, largely due to government political infighting.
With a presidential election scheduled for Nov. 17, the country is now at a crossroads. "This is unquestionably the most important election since independence," says R. Rampanthan, a leading Tamil politician. "The outcome will determine this country's future." Sri Lanka has a spiraling budget deficit and a crushing public debt equal to 108 percent of the country's GDP. Lacking a negotiated, permanent peace, foreigners and even many Sri Lankans are reluctant to invest. If that doesn't change soon, the country risks being consigned to has-been status: with its neighbors gobbling up more and more of the global outsourcing pie, and the lifting of textile quotas threatening one of its major industries, the country's prospects are fragile. "We need leadership that will be—gin taking the dramatic steps necessary to give us peace along with political and economic stability," says Saman Kelegama, executive director of the Institute of Policy Studies in Colombo.
The election's two front runners, both Sinhalese Buddhists, present sharply differing visions. Current Prime Minister Mahinda Rajapakse is the more charismatic candidate, but his platform is more modest. He wants to proceed cautiously on the peace front, looking only to renegotiate a shaky ceasefire that ended major combat in 2002. He is skeptical of proposals to grant sweeping autonomy to the Tamil-dominated north and east as the price for peace. Before re-entering peace talks with the Tigers, he wants the Sinhalese Buddhist majority in the south, which makes up about 75 percent of the population, to reach a consensus negotiating position—a process that could take months, if not years. Rajapakse is also more of a populist economically. He opposes further privatization of state assets, and talks about hiring more civil servants to solve the problem of unemployed high-school graduates.
His opponent, Ranil Wickremesinghe, successfully negotiated the 2002 ceasefire and began Norwegian-brokered peace talks with the LTTE while he was prime minister between 2001 and 2004. He's a colorless campaigner, but his proposals are ambitious: an economic liberal whom one Western diplomat in Colombo calls a "neo-Thatcherite," he favors the privatization of ailing state companies. Most important, he strongly believes in a rapid return to talks with the Tigers and advocates a federalist solution—devolving substantial self-governing powers to the Tamil-dominated strongholds. In a recent campaign appearance he promised to negotiate a "permanent peace" with the LTTE in two to three years. Responding to such talk, Rajapakse's economic adviser, Ajith Cabraal, says Wickremesinghe "would give anything and everything to achieve peace."
After years of war, so would many Sri Lankans. (Recent polls show Wickremesinghe with a slight lead.) The country desperately needs to upgrade its roads and seaports, and to exponentially increase agricultural and manufactured exports. Peace would allow the defense budget to be slashed, freeing up funds for development and education. Outsourcing is a potential growth area. The one bright spot is the garment industry, which continues to attract high-end contracts from companies like the Gap and Victoria's Secret. The industry has become the nation's leading foreign-exchange earner, with $2.5 billion in exports last year, and is the main reason the economy will grow by over 5 percent this year. "Sri Lanka has enormous potential," says U.S. Ambassador Jeffrey Lunstead.
Some analysts suspect that the hard-line LTTE leadership hopes for a Rajapakse victory. In that case the Tigers could accuse Sinhalese of rejecting the peace process, and justify a return to combat in order to win an independent Tamil state. Paikiasothy Saravanamuttu, executive director of Colombo's Center for Policy Alternatives, says only moderates on both sides can end the conflict. "The Sri Lankan state has to move toward power sharing and federalism," he says, "and the LTTE has to transform itself into a responsible, democratic player, giving up violence as well as secession." Unfortunately, neither side has shown much inclination to take any historical steps. Without them, Sri Lanka's genuine promise will never be realized.