Sri Lankans went to the polls in parliamentary elections on Wednesday, with analysts predicting that the Rajapaksa political dynasty will tighten its grip on power and move the country closer to China.
Following the Easter Sunday terrorist bombings last year, Sri Lankans elected former defence secretary Gotabaya Rajapaksa as president to restore security in the country of 22 milion people. He appointed Mahinda Rajapaksa, his elder brother and president from 2000 to 2015, as prime minister.
The brothers are popular with the Sinhalese majority for brutally ending a 26-year civil war with Tamil insurgents in 2009 and have campaigned on their nationalist credentials and authoritarian brand.
The Rajapaksas have also been credited with containing the coronavirus pandemic. Sri Lanka has reported fewer than 3,000 confirmed Covid-19 cases and 11 deaths, setting it apart from its neighbour India, which has the world's third-highest caseload.
The run-up to the polls has been unusually subdued as a result of Covid-19 protocols. There have been limited rallies and not that many posters on the quiet streets of Colombo. Voters were required to wear masks, stand one metre apart and bring their own pens to mark their ballots.
The brothers as well as Namal Rajapaksa, an MP and son of Mahinda – hope to win a two-thirds majority to roll back constitutional changes introduced by the previous government that limited executive power. But that has raised fears about a return to authoritarian rule, the erosion of Sri Lanka’s democracy and commitment to reconciliation efforts between the country’s ethnic groups.
“Vote for our party to revive the economy, build a disciplined society and take the country in the right direction,” Mahinda Rajapaksa told supporters at his final election rallies last weekend.
‘Rajapaksa octopus’
The Rajapaksas are facing off against a divided opposition: Sajith Premadasa formed the Samagi Jana Balawegaya alliance after leaving the United National party led by Ranil Wickremesinghe, a former prime minister. Their candidates quip that the "Rajapaksa octopus" is staging a comeback.
A shift towards China would mirror Mahinda Rajapaksa's approach as president, when he turned to Beijing for backing to build major infrastructure projects. These included a cricket stadium, an airport and the port of Hambantota, which cost $1.3 billion to build with financial support from Chinese state-owned lenders.
Colombo was unable to maintain its payments on the lossmaking port and handed control to Beijing under a 99-year lease in 2017 despite public protests. Critics described the project as a textbook example of China’s debt-trap diplomacy.
Brahma Chellaney, professor of strategic studies at the Centre for Policy Research, a New Delhi-based think-tank, says a Rajapaksa victory would favour China. Beijing would also gain a stronger foothold in the Indo-Pacific at the expense of the US and India, which is still seething after a border clash in the Himalayas with Chinese troops that killed at least 20 Indian soldiers.
“If the two brothers are ensconced in power and willing to ride roughshod over the constitution, it will increase China’s leeway in Sri Lanka,” he said. “China’s modus operandi is to deal with strongmen. The vulnerable economy is an additional factor that could work to China’s favour.”
The pain of an economic slowdown in Sri Lanka was amplified by the coronavirus crisis that thrashed tourism and garment exports, the country’s two biggest industries.
Debt levels
Standard Chartered expects Sri Lanka’s fiscal deficit to hit 10.5 per cent of gross domestic product with debt levels surpassing 100 per cent by the end of this year. With about $6.7 billion (€5.6 billion) in foreign reserves, Sri Lanka will need to raise external financing to meet its annual debt repayments of more than $4 billion until 2025.
“The new government’s ability to formulate a medium-term economic and fiscal consolidation plan will be key,” StanChart economists wrote in a recent note. “IMF support is crucial for Sri Lanka to resolve its debt sustainability challenges.”
Sri Lanka’s extended fund facility with the IMF was derailed last year after Gotabaya Rajapaksa slashed value added tax from 15 per cent to 8 per cent and abolished other taxes, sparking concern about the government’s ability to repay its debts.
"We were the miracle of Asia, all free market reform. Unfortunately that couldn't continue," said Murtaza Jafferjee, Colombo-based head of JB Securities. "We need to negotiate a three-year moratorium with all our external creditors by restructuring our debt. We have some serious issues." – Copyright The Financial Times Limited 2020