S ri Lanka Ele c tions 2015: W hat the C hange of Guard Implie s for India

Amrita De Aiyer is an associate director based in APCO Worldwides Mumbai office.

Sri Lanka has jus t witnes s ed an epic victory for Maithripala Siris ena, the is land countrys s ixth executive pres ident. Epic
becaus e it brought to end the reign of South As ias longes t-serving ruler, Mahinda Rajapaks a, who was fas t los ing
peoples trus t amid allegations of corruption, nepotis m and authoritarianis m.
Ironically the dis as trous election res ults , announced January 9, 2015, are perhaps tes timony to Rajapaksas increas ing
mis us e of pres idential powers . Apprehens ive of what the verdict would be in the event he completed his full term in
November 2016, Rajapaksa lifted the cons titutional bar for an incumbent to contes t a third term by introducing an
amendment to the Cons titution. He then announced that Sri Lanka would hold a s nap pres idential electi on in January
2015. This was nearly two years ahead of schedule. More than a two -thirds parliamentary majority was achieved thanks
to Rajapaks as victory over the Liberation Tigers of Tamil Eelam (LTTE) more than five years ago, which helped him
amend the Cons titution.
The peoples verdict was a vindication of s orts , with Rajapaks as one -time colleague, Siris ena, winning 51.28 percent of
the total votes polled and gathering unprecedented s upport from both the electorate and political peers . Siris ena, who
was minis ter of health in Rajapaks as government until November 2014, defected and was able to win the confidence of
several members of the political classes , lawmakers , and ethnic and religious minorities , to form a joint oppos ition to
fight for regime change. The election verdict mus t have seemed like poetic jus tice to many civilians, including the media,
who faced increas ing cens ors hip under Rajapaks as regime, and for the thous ands of Sri Lankan Tamils affected by the
nearly three-decade-long civil war on the is land.
But what does Maithripala Siris enas victory mean for India?
More Inclusive Geopolitical R elationship
In recent times India has lacked s us tained, progress ive relations with other countries in the SAARC region, except
perhaps Bhutan. Indias relations hip with Sri Lanka goes back to Hindu epics , when Lord Rama (cons idered an avatar of
Hindu god Vis hnu and the protagonis t of the Hindu epic, Ramayana) vanquis hed Lankas legendary King Ravana. More
recently, s ince 2009 the two countries have had bilateral exchanges at various levels , especially Indian ass is tance in
developmental projects for Sri Lankas Internally D is placed Pers ons (IDPs ). This group is composed mainly of ethnic
Tamils from Sri Lankas north and eas t, the territory formerly governed by the LTTE. However, with Chinas increas ed
interes t in Sri Lanka s eeing fruition with Rajapaks as cooperation, there have been tenuous twis ts in this relations hip.
Sri Lankas gradual change in s tance on China began when Rajapaks a was facing allegations of war crimes and human
rights abus es following the 2009 end of the countrys civil war. Chinas s upport was vita l for Sri Lanka to confront U.S.backed resolutions at the United Nations Human Rights Council. This geopolitical s hift saw China funding several
infras tructure projects in Sri Lanka, emerging as the countrys larges t foreign-finance partner in 2010 and becoming its
third-larges t trading partner in 2012.
However, Sri Lanka is one of Indias clos es t neighbors , the Palk Strait connecting the two countries with an average
dis tance of 32 kilometers . This geographic proximity magnified concerns in New Delhi when China pumped in money to
build the $1.5 billion port city on Colombos waterfront, and more s o when China quite literally docked the Great Wall
No. 329 s ubmarine in Indias backyard. This was extremely alarming to India because despite Chinas denials the writing
was on the wall: China was us ing Sri Lankan s oil for military activities , and it was doing s o with the approval of former
Pres ident Rajapaks a.

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Under the new Sri Lankan adminis tration, India has reas on to hope that this geopolitical s tance towards China will wane
es pecially s ince part of Siris enas campaign platform was the prediction that with increas ing debt to China, Sri Lanka
would s oon become a colony. The new pres ident has announced his aim to maintain equal relations with India and
China. He is equally concerned about excessive inde btedness to any s pecific foreign power. That Siris ena is expected to
s tart his firs t official bilateral vis it with India in February 2015 is an encouraging s ign. Prime Minis ter Ranil
Wickremas inghe, one of the primary political leaders in Siris enas rainbow coalition formed during the campaign, has
als o announced that Sri Lanka might recons ider the Chinese -funded port projects due to environmental concerns . How
s uccess ful Wickremas inghe will be remains a key ques tion because Sri Lanka has committed to s trengthening inves tment
relations through the Maritime Silk Road initiative, which has enormous s trategic importance for Beijing in the Indian
Ocean.
Apart from becoming a Chines e s tronghold, India has faced another threat with Sri Lanka. The arres t of a S ri Lankan
national, s us pected Inter-Services Intelligence (ISI) operative Zakir Huss ain, in Chennai las t year s trengthened the
perception that Pakis tani intelligence elements were setting up arms training camps in Sri Lanka and s ending militants
into India through coas tal routes . Hussain is s aid to have told his interrogators he was hired by an official in the Pakis tan
High Commis s ion in Colombo to conduct reconnaissance of the U.S. Cons ulate in Chennai and the Is raeli Consulate in
Bengaluru, per ISI plans .
Sirisena, who won the election on the back of huge s upport from the minority communities that had felt left out by
Rajapaks a, is expected to attend to Tamils and Mus lims who res ide predominantly in Sri Lankas north. One can hope
that the new adminis tration will work toward enhancing economic opportunities and education for Mus lim youth, which
might help addres s thes e growing challenges .
Inc reased Trade and Investment Ties
Sirisena is expected to focus on economic development, one of the main reasons Sri Lankas s outh voted for him. This
region compris es mainly Sinhales e Buddhis ts , traditionally Rajapaks a s upporters . And while Sirisena did woo the ethnic
minority communities , including Tamils and Mus lims , to be s uccessful in the longer term he will hav e to bear in mind the
concerns of the majority Sinhala community, to which he hims elf belongs .
Economic relations between India and Sri Lanka date back to pre -colonial times, but they grew particularly rapidly after
the implementation of the India-Sri Lanka Free Trade Agreement (FTA) in 2000. Though, according to the ADB report
Deepening Economic Cooperation between India and Sri Lanka the negative lis ts of both countries under the FTA
need s ignificant pruning s o that the number of eligible products for export under the concess ion-offered route can
increas e. The FTA was formulated based on the negative lis t approach where each country extended
concessions /preferences to all commodities except those indicated in its negative lis t. More recently, while both s ides
have been working on the Comprehens ive Economic Partners hip Agreement (CEPA), progress has been s low. Sri Lanka
is concerned that granting more Indian access to its markets would des troy the countrys domes tic indus try. The new
government in Colombo is expected to drive momentum on this piece.
Indian companies have committed nearly $2 billion in foreign direct inves tment (FDI) over the next five years . FDI
inves tments from India to Sri Lanka s tarted with bus manufacturing in the 1980s and gave way in the 1990s to inves tment
in sectors s uch as s teel, cement and copper, and in the early years of the new millennium to s ervices s uch as telecom,
banking, oil and touris m. India is now among the larges t inves tors in Sri Lanka. Sri Lankan companies have als o inves ted
in India, albeit on a much s maller s cale, in s ectors including apparel, logis tics and hos pitality.
One can expect that in future Sri Lanka will need inves tments in order to develop the new export s ectors and to set up
production facilities and s upply chains . Sri Lankas inves tments in India will als o mean jobs for the local population. An
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option to increase trade between the two countries might be to promote joint ventures between Indian and Sri Lankan
companies with buy-back agreements .
Defense is a particularly promis ing s ector of export opportunity. Sri Lanka has ordere d offs hore patrol vessels from the
Goa Shipyard, and these vessels are currently being built at home without any technology cooperation from foreign
partners .
Sri Lankan IT companies are already s ervicing Indian firms , with Sri Lanka emerging as a feas ible base for analytical work.
Wage arbitrage could play a role in the trans fer of IT s ervices from India to Sri Lanka, though this is als o a ris k that Indian
BPO/KPOs may face.
Education, health care and touris m have a good deal of potential for inves tment as well. India is a viable option for Sri
Lankas middle-class population vis--vis the Wes t or As ia-Pacific, locations which are frequented more by the affluent
classes for purposes of education and health care. In order to boos t inbound numbers India needs to ease access to s uch
facilities for Sri Lankans . Outbound travel from India to Sri Lanka has increased thanks to the new vis a-on-arrival facility. In
2012 India was the leading producer of touris m to Sri Lanka, accounting for 17.5 percent of total traffic, according to the
Annual Statis tical Report 2012 of the Sri Lanka Touris m Development Authority . Sri Lankan Airlines , Sri Lankas flags hip
carrier, derives a s ignificant chunk of its revenue from India and expands its network frequency to India nearly every year.
According to the SriLankan Airlines Annual Report 2012-2013, India contributed 16 percent of the total revenue of
SriLankan Cargo in 2012-13. India, on the other hand, s hould promote its Buddhis t Circuit amongs t Sri Lankas
predominant Sinhales e Buddhis t community.
C onclus ion
Should the winds of change in Colombo worry Beijing? Perhaps . But today both New Delhi and Beijing need to
recognize that the new leaders hip in Sri Lanka will likely maintain a balanced approach in its relations hips with India and
China.
That s aid, India s hould be mindful of the fact that China will never allow Sino -Sri Lankan ties to be so eas ily severed.
China has a great s take in Sri Lanka not only with the Maritime Silk Road initiative but als o becaus e up the wes tern coas t
of India Sri Lanka is a gateway port for China, and further wes t to Iran, an important oil exporter to China. There is als o a
Free Trade Agreement (FTA), expected to be s igned between the two countries this year, which s hould help reduce the
trade imbalance, currently heavily in favor of China.
India would do well to remember that while Siris ena has proven to be Rajapaksas nemesis , he was als o Rajapaksas ally
until November 2014. As Bus iness Standard political editor Aditi Phadnis recently s aid, Siris ena was very much part of
the Rajapaks a regime through thick and thin - and s ick and s in. Trus t in Indo-Sri Lankan bilateral ties under Sri Lankas
new regime will therefore need to walk s everal tentative s teps before it can reach the level des ired by India.
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