President Anura Kumara Dissanayake is scheduled to make his first international visit to India this week.  This is expected to be followed by a visit to China in close order.  The president, and the country itself, is walking a tightrope between these two Asian giants, one which is the world’s second largest economy and other its fifth largest.  Both of them see the island of Sri Lanka as a strategic location for their geopolitical aims.  In the case of India, the stakes are particularly high as it does not wish China to pose a military challenge to it in the south when it is a belligerent power in the north where the two countries have gone to war over territory each claims for itself.

The manner in which the government is seeking to project the two visits that the president is to make is to call them economic investment-related visits.  Indeed, both countries hold keys to Sri Lanka’s future prosperity.  If they invest in productive enterprises, they will enable Sri Lanka to provide jobs to its people and perhaps keep them at home instead of migrating in droves to foreign countries for employment.  Increased economic production as a result of foreign investment can also reduce the heavy burden of foreign loan repayments that impoverish the people.  Loans that are used in corrupt ways are no substitute for foreign investment in economic enterprises.

So far Sri Lanka has been walking the tightrope between giving preference to the countries that have sustained the economy after the economic bankruptcy.  The role that India played in giving emergency assistance during the height of the crisis in 2021 cannot be forgotten.  Thereafter Sri Lanka has accepted the IMF loans and the new government continues to abide by its terms. In the past, the JVP leadership opposed deals with the IMF or compromise with the UN on issues it saw as being in the realm of protecting the country’s sovereignty. The most positive feature of the NPP government is its rationality in doing what is necessary to protect the country’s interests even if it is not in alignment with positions taken by its own leadership in the past.  This can be seen in relation to the IMF agreement, the approach to the UN Human Rights Commission and on inter-ethnic peacebuilding.

ANTI-CORRUPTION DRIVE
The visit of US Assistant Secretary of State for South and Central Asian Affairs, Donald Lu went smoothly with the president’s media division describing the outcome as being one in which the US envoy pledged “Unwavering Support for Sri Lanka’s Anti-Corruption Drive.” It also reported that the US is prepared to provide financial and technical assistance to strengthen Sri Lanka’s security and economy.  Assistant Secretary Lu had also emphasized the US government’s willingness to offer technical expertise to help recover funds that were illegally taken out of the country, as part of Sri Lanka’s anti-corruption programme. The government’s positive understanding of the meeting was also that “The discussion highlighted the US government’s appreciation for the new administration’s prioritization of key political, economic, and social challenges.”

The driving force behind the Aragalaya people’s movement that drove the then government out of power despite its nearly two-thirds majority in parliament was the belief that corruption at the highest levels of that government was responsible for the economic debacle the country faced in 2021.  There is a consensus in the country that crosses all its main divides, ethnic, religious and class, that corruption in high places is an evil that needs to be dealt with.  The failure of previous governments to deal with this problem, notwithstanding their promises to do so, was the lack of internal political will.  The unfortunate reality was that those at the helm of government were themselves complicit in the corruption they pledged to bring to an end.

The unique feature of the NPP government is that its leading members are not known to be complicit in corruption due to their ideological convictions and modest lifestyles.  They have also not held positions of power to be tested nor do they appear to have personal relationships with those believed to be corrupt. The government’s commitment to ensuring that there will be no corruption and the general population’s alignment with that commitment provides the country with the opportunity to accept the US offer to help it tackle the problem of corruption. The modern digital economy that the government is emphasizing offers the best possibility of containing such corruption by the publication of all large calls for proposals or calls for tenders on a public website. Civil society think tank, Verite Research is currently completing a study on detecting corruption in procurement practices. The worst forms of corruption that cost, and continue to cost, the country billions have come as a result of corrupt contracts, unsolicited project proposals, where there is no competitive bidding and where there is no visibility.

CONSENSUS BUILDING
The main constraint to the government’s success at the present time is the lack of economic resources due to the profligacy and corruption of the past. It is difficult to understand the rationale why the previous government under President Gotabaya Rajapaksa thought it fit to reject the USD 450 milllion grant that the US was willing to provide to improve the country’s road and transport system under the Millennium Challenge Corporation (MCC) and the USD 1.2 billion long term low interest loan that Japan offered to set up a light rail transport system.  At the present time these appear to be lost opportunities, though the new government needs to keep trying in the hope that fortune can smile a second time.  Sri Lanka’s location in the Indian Ocean and its importance to the sea lanes is an asset that needs to yield positive returns to the country.

During his visit, Assistant Secretary Lu offered a different financial assistance programme in the form of anti-corruption systems that could, potentially, bring in millions of revenue that are currently lost to the government.  Enhanced revenue flows from taxes and customs revenues that are properly collected could lead to a corresponding reduction of the tax burden placed on the masses of people through unjust taxes such as the VAT which falls especially hard on the poorest sections of society, although they are the easiest taxes to collect. There will be massive cost savings and revenue generation if contracts are awarded in term of economic merit and not done in a corrupt manner.  Anti-corruption measures that the international community can support Sri Lanka with could be quickly put in place as there will be no resistance to them from the general population, although there will surely be vested interests which will resist such anti-corruption measures.

The government will, however, be less willing to accept the offer of international assistance when it comes to issues on which the population is divided and not of one mind. The government faces challenges in navigating divisive issues like national security and ethnic conflict as seen recently on the Heroes Day celebrations. While international assistance in areas like corruption finds public backing, issues like replacing laws such as the Prevention of Terrorism Act (PTA) and the Online Safety Act (OSA) which empowers it to take action in the name of national security or addressing ethnic power-sharing require careful consensus-building. Policies that risk further polarizing communities could undermine stability. This is where special emphasis needs to be placed on peacebuilding and social cohesion building which requires dialogue both within and outside the country in forums such as the UN Human Rights Council.