A population of approximately twenty million people, a military strength of more than two hundred thousand soldiers, a high literacy rate and a strategic location along the one of the busiest sea routes in the world should have all combined to make Sri Lanka an important player in South Asia. Unfortunately for the last three decades much of the country’s energy has been devoted to dealing with an on-and-off civil war against the Liberation Tigers of Tamil Eelam (LTTE). Claiming repression by the state, the LTTE, under the leadership of Velupillai Prabhakaran, wanted to create a separate state for the Tamils, variously estimated as between 10 and fifteen percent of the total population. The government declared victory in May 2009 after a series of military engagements that finally routed the LTTE from their northern base, and led to the death of their leader, Prabhakaran.

The more than 26 years of war have seen an enormous amount of destruction, especially to the north of the country. The violence also affected the country’s trade, especially tourism, as no part of the country seemed secure especially after its only international airport was attacked by the LTTE in 2001. The end of the violence has seen an upsurge in tourism, which, with the export of plantation crops such as tea, cinnamon, rubber, sugar and coffee and the manufacture of textiles, constitutes most of the economy. Moreover, despite the war Sri Lanka has an estimated per capita income of USD 1,780 (World Bank, Oct 2009), more than fifty percent higher than India’s and twice that of Pakistan’s. The civil war has also led to Sri Lanka engaging deeply with countries such as the US, Japan, the United Kingdom, Norway, and lately China and Pakistan. In 2009 Chinese aid to Sri Lanka increased five fold to USD 1 billion, making it the biggest single donor, followed by Japan and India. Iran, too, has offered a line of credit for USD 1.6 billion to Sri Lanka to help it buy Iranian oil.

Both the relatively high income and the high profile give Sri Lanka room to manoeuvre, but also mean that its choices will remain of high importance to many power centres. With the rise of new partners such as China and countries from the Persian Gulf, Sri Lanka also has to find out how to deal with its traditional partners such as India and the US, as well as the EU which remains its biggest trading partner. New elections have been scheduled for 2010, two years before end of the term, and government which takes power after them will be the one to watch.

Article by Tim Clifton.

About Tim Clifton & Pasco.
Tim Clifton is a security professional and Managing Director of Pasco's Middle East & Asia Pacific regions.