Press "Enter" to skip to content

Sri Lanka Suffers from Flawed Non-Aligned Foreign Policy

‘The past quarter century has witnessed remarkable growth in world foreign direct investment (FDI) flows, spurred by the evolving investment strategies of transnational corporations (TNCs) and the liberalization of national FDI policies. These policy changes have been accompanied by numerous bilateral investment treaties and more recently by a number of regional and interregional agreements on investment.’

While FDI offers recipient economies important potential benefits in the form of capital inflows, technology transfer and improved access to export markets and sources of supply, such benefits cannot be taken for granted.

Sri Lanka did not inherit a foreign policy at independence but has striven to pursue a policy of  ‘friendship with all, enmity with none’ although this non-aligned foreign policy has had its spectacular ups and downs. The country enjoyed a robust non-aligned foreign policy way back in time when Madam Bandaranaike ruled the roost.

Sri Lanka has always had a soft-spot relationship with China as well as communist-block nations including Yugoslavia where Mrs Banadaranaike and her counterpart Marshall Tito held sway.

The ascendancy to the Executive Presidency by JR Jayawardena – tricky dicky as he was fondly called – saw Sri Lanka pursue an aggressive capitalist-centric economic policy embracing several open market principles. In the backdrop of Mrs Bandaranaike’s austere economics the Sri Lankan economy boomed like it never had before. Non-aligned foreign policy seemed to take a beating although the government maintained strong links with Japan and China.

The internecine war carried out in Sri Lanka for over thirty years came to an end in 2009 and thus began a new set of troubles in terms of its foreign relationships.

The country suffered grave reputational damage at the conclusion of the hostilities when it found out to its cost that despite the millions of dollars spent on US and British PR agencies, they were no match to the superior PR machinery deployed by the international arm of the LTTE.

Innocuous statements made with political flourish that there were ‘no civilian casualties’ – was happily used by the LTTE PR machinery in the style of ‘all is grist for the mill’ – meaning that Sri Lanka faced an avalanche of claims alleging atrocities in the theatre of the closing stages of the war.

There followed significant difficulties to the war-winning government impacting on their ability to raise development funding from the western world. This saw an almost natural progression of dependency to funding from China who it turns out were willing lenders especially with the Belt & Road initiative.

Of course western governments tied aid and funding to strenuous addressing of touchy issues like human rights and international investigators into allegations of abuses by the tri forces in Sri Lanka. The Chinese had far less such requirements. The final tally showed that Chinese loans to Sri Lanka exceeded USD 9 Billion without several Chinese-backed investments in the country including the flagship Port City development which involves reclaiming land off the coast of the city of Colombo.

‘Government policies are vital for enhancing the developmental impact of FDI. Furthermore, at the same time as barriers to cross-border exchanges are being reduced, including in the area of investment, international cooperation has been strengthened through various international agreements to regulate these exchanges.’

Countries thus need to ensure that policies undertaken at the national level in pursuit of specific development objectives are enhanced, and not hindered, by international rule making or by skewed political non-alignment.

The world’s 21st largest economy happens to be Taiwan. In terms of per capita GDP Taiwan is ranked 15th. Taiwan’s export-oriented industrial economy has major contributions from steel, machinery, electronics and chemical manufacturing. Taiwan is a developed country and It is ranked highly in terms of political and civil liberties, education, health care and human development.

The political standing of Taiwan remains stable if at times uncertain. The ROC is no longer a member of the UN, having lost its position to mainland China in 1971. Taiwan is claimed by the PRC, which refuses diplomatic relations with countries that recognise the ROC. Taiwan values its recognition by 14 out of 193 UN member states and the Vatican.

International organisations in which the PRC participates either refuse to grant membership to Taiwan or allow it to participate only on a non-state basis.

Taiwan is a member of the World Trade OrganizationAsia-Pacific Economic Cooperation and Asian Development Bank under various names. Nearby countries and countries with large economies maintain unofficial ties with Taiwan through representative offices and institutions that function as de facto embassies and consulates.

In terms of lost opportunities perhaps as the focus on a sustained political non-alignment has slipped away, Sri Lanka is all the poorer. Taiwanese investment in Sri Lanka is meagre at best (USD 19.3 million).

Sri Lanka’s new President has shown a certain je nais se quoi when it comes to out of the box thinking perhaps coming as he does from an administrative background as opposed to a purely political one. He is credited with pursuing practical avenues as opposed to highways of politically-considered decisions.

He is backed by professionals with years of expertise in the hot seats of critical decision making – like the veteran economist Dr P B Jayasundera and Prof Lakshman at the Central Bank. In the administrative background the President has with him the experienced Lalith Weeratunga who has served for years in senior Administrative roles.

In the new normal of the world order with the scaling back to ‘what was’ countries like Sri Lanka will need to pursue pure political non-alignment with a crystal clear forward vision of developing its economy and building expertise by inviting one and all and keeping true to its original stated foreign policy vision of enemies with none and friends with all.