This election drew the attention of the whole world because of the geo-strategic position of Sri Lanka and also its bilateral and multilateral relations with some important countries in South Asia as well as the Far East. There was also the question of how it was going to tackle the dire financial scenario that had gradually increased over the last two years. This was Sri Lanka's first election since its economy buckled in 2022 under a severe foreign exchange shortage, leaving it unable to pay for imports of essentials including fuel, medicine and cooking gas. Protests forced then-President Gotabaya Rajapaksa to flee and later resign.
Dissanayake ran in Sri Lanka's latest Presidential election as the candidate for the National People's Power coalition, which included his Janatha Vimukthi Peramuna party that has been championing Marxist economic policies, centred on protectionism and state intervention. However, in recent years the party had taken more centrist positions. Anura Kumara Dissanayake popularly known as AKD, leads the Marxist-leaning National People's Power alliance, which includes his party, the Janatha Vimukthi Peramuna (JVP) or People's Liberation Front. After his swearing in ceremony he promised to provide a fresh start for the beleaguered island nation as it emerges from the worst economic crisis in its independent history. His emphasis was particularly on restoring economic order, addressing poverty and reviewing the terms of Sri Lanka's $2.9 billion International Monetary Fund bailout. Through this he promised a monumental task of economic stabilisation.
Analysts have also reported that AKD wants to follow a more nuanced approach in its foreign policy calculations and dealings with the Asian neighbours.
It may be recalled at this point that Sri Lanka's 2022 economic crisis opened an opportunity for India to regain some influence that it had lost to China, which became a significant player in Sri Lanka. New Delhi stepped in with about US Dollar 4 billion in financial assistance, including food, essential medicine and fuel, as well as currency swaps and loan deferments. On the other hand, for its part, Beijing provided around US Dollar 75 million in humanitarian aid, such as food, pharmaceuticals and other essentials.
Remembering this, Srikanth Kondapalli, a Professor of China studies at New Delhi's Jawaharlal Nehru University has commented that "AKD is aware that China's debt is significant and India's economic bailout and geographical proximity are indispensable. He is likely to follow a balanced policy with primacy to economic development." Such a reference was based on Sri Lanka's strategic location at the crossroads of busy shipping routes linking Asia to Africa and Europe.
Similarly, Professor Sreeradha Datta, a Sri Lanka expert from the India-based Jindal School of International Affairs, has observed that despite its past anti-India stance and ties with China, the JVP is expected to adopt a more moderate approach under Dissanayake's leadership. She has also observed that "No president in Sri Lanka can afford to or would espouse such strong positions. For a Head of the Government, pragmatism is bound to offer greater opportunities and while many in India enjoy overplaying the China preferences, I do not think we need to focus on that too much." Datta has also suggested that "China will continue to engage, but India will also be seen as a partner." In Datta's reckoning, India will need to convey its political and economic intention to engage with Sri Lanka and continue to extend support and cooperation. "Let us not forget that not many governments in Colombo have been particularly close to India, but times are changing and India has much to offer and Dissanayake needs to deliver to its people," she added. Nevertheless, Datta has also underlined that "given their history with China, Sri Lanka is bound to be wary and would not rush to accommodate China as we have seen previous Presidents did in the past".
It may be noted that earlier this year, Dissanayake visited India and met with External Affairs Minister S Jaishankar and National Security Advisor A K Doval. Following his election victory, Dissanayake was also quick to respond to Indian Prime Minister Narendra Modi's congratulatory message, promising to work together.
Sri Lanka's close neighbours India, Pakistan, and the Maldives have also congratulated Dissanayake on his victory.
However, it needs to be mentioned that China has not made any mistake of keeping silent. Chinese President Xi Jinping also congratulated him and pledged to work with the new government in boosting development and cooperation in China's Belt and Road Initiative (BRI) - often dubbed the New Silk Road - a massive infrastructure plan that aims to smooth trade links with dozens of countries.
After the election results many analysts have observed that it will be significant to see which way Sri Lanka will tilt its efforts. They have referred to the fact that though Dissanayake has expressed his intentions to boost ties with both China and India, he has also made it clear that Sri Lanka's assets - including its land, sea and airspace - are not up for grabs. Such a stance was evident when he recently opposed India's Adani Group gaining control over key sectors like Sri Lankan ports and renewable energy, citing environmental concerns.
In this context it would be appropriate to refer to what Ajay Bisaria, a former Indian diplomat, has mentioned-- "so far at least, India is the preferred security partner. On its part, India is learning to build long-term equities in the neighbourhood that transcend regimes." Bisaria has also pointed out that New Delhi had been engaging with Dissanayake well before he came to power, and the financial support was an example of the advantages India provides to its smaller neighbours. Additionally, he felt that the strong web of economic interdependence has built tremendous goodwill that will not diminish across governments. Bisara has also observed that - "while newer regimes in India's neighbourhood may bring cyclical changes in their emphasis on relations with India - as seen in Bangladesh and the Maldives - the overall trend is toward increased engagement with India." Datta has also commented that in the long run, the strategic competition in the Indian Ocean is bound to play out sharply, and it will be improbable for Sri Lanka to give any assurances to India on that count at this point.
In the meantime, after assuming the Presidency of Sri Lanka, Sri Lankan President Anura Kumara Dissanayake dissolved the country's Parliament, setting up snap general elections on November 14. Geo-political analysts have observed that this decision probably stems from the fact that Dissanayake took office after winning the country's presidential election but his coalition-the National People's Power, or NPP-holds just three of 225 seats in Sri Lanka's parliament. Dissanayake's decision to dissolve Parliament has hardly been a surprise-as he will obviously need more than three parliamentary representatives to advance his agenda. That's especially true because the agenda that Dissanayake, a Marxist-leaning politician, hopes to advance will in many ways mark a clear break from current policies.
In the meantime, attention within the international financial community has been drawn to anticipated measures that will need to be taken by Sri Lanka particularly with regard to IMF and the associated process in future renegotiations with an IMF bailout that threw a lifeline to Sri Lanka. Dissanayake, who has been a vocal critic of global lenders from the fringes of the island nation's politics, is now expected to reverse steep tax hikes, raise public servants' salaries and renegotiate the International Monetary Fund rescue package secured by his predecessor.
However, Murtaza Jafferjee of the Colombo-based economic think tank Advocata has observed, "there are certain red lines that the IMF will not agree to negotiate." In this context he has said that the Washington-based lender of last resort would be very unlikely to budge on core components of its US Dollar 2.9 billion bailout, including a ban on printing money and revenue and spending targets agreed by the last administration. In this regard JVP politburo member Bimal Ratnayake's comment has been interesting- "We will not tear up the IMF programme. It is a binding document, but there is a provision to renegotiate."
One of Dissanayake's first acts of business will be to secure a parliamentary endorsement for a debt restructuring deal with international bondholders, negotiated by his predecessor at the eleventh hour and announced last week. However, that will have to wait for the election of a new parliament, as Dissanayake sought to capitalise on his landslide win by calling snap polls after he was sworn in.
Umesh Moramudali, an economics lecturer at the University of Colombo has warned that failing to secure the deal's passage could open Sri Lanka to legal action from its creditors. He has observed that "It would be in the best interest of the country to avoid litigation with bondholders".
Dissanayake's ideological leanings, his campaign against an India-backed energy project and the JVP's historical anti-India stance had led some experts to suspect his administration would lead Sri Lanka to a closer relationship with Beijing. But AKD used his inauguration speech to reject "power divisions in the world" and pledged to work with all other countries for the benefit of his own. After his victory, anticipating a possible anti-India approach, Farwa Aamer of the Asia Society Policy Institute had observed that "the new leader's foreign policy stance will be important. It will be in his interest to work with India, as a regional partner, as he focuses on economic development."
A recent report published by AFP has pointed out that cash strapped Sri Lanka's economy has recorded falling consumer prices for the first time in 29 years and the September inflation figure has dipped to negative 0.5 per cent. Price drops have taken place in both food and non-food goods. This has contributed to deflation in September. It has been indicated that the last recorded deflation took place in March 1995, with a figure of negative 0.9 per cent.
In Bangladesh, relevant officials and economists trying to re-structure our economy with international financial assistance-- not grants-- need to monitor closely what is evolving in Sri Lanka and how they are trying to tackle economic and financial difficulties.
Muhammad Zamir, a former Ambassador, is an analyst specialised in foreign affairs, right to information and good governance.
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