In 2008, Sri Lanka oscillated between hope and despair
Anjali Sharma

Overview

Historic events marked the year in Sri Lanka. Militarily, the LTTE was vanquished by the Sri Lankan forces. Politically, the first-ever domestic elections were held in the Eastern province of Sri Lanka after it was freed from the clutches of LTTE. The country got its first-ever former militant-turned-Tamil Chief Minister in a Tamil majority district of the East. Though human rights situation worsened throughout the year, President Mahinda Rajapaksa succeeded in convincing international community about the justness of his cause. Economically, while the bulls and bears continued fighting with the cost of living reaching unprecedented heights, the country managed to get its GDP growth of 6%.

POLITICS

The year proved good for the Rajapaksa led-Sri Lanka Freedom Alliance (SLFA) with three consecutive victories in the provincial councils of the East, North Central and Sabaragamuva provinces and in one local government elections in the Batticaloa district. Unlike previous year, this time the Mahinda government had a smooth sailing in Parliament during the budget vote despite 8% increase in the defence expenditure.

The alliance not only managed to have strong relations with the Eastern and Middle Eastern powers like China, Pakistan and Iran but was also able to wrest major concession from the European Union in the form of a Generalized System of Trade Preferences (GSP+) despite having a negative human rights record. Rajapaksa succeeded in deflecting even pressure from the LTTE sympathisers in Tamil Nadu by directly engaging the Indian government. He emerged successful in breaking the popular belief in the invincibility of LTTE by defeating them militarily and regaining the areas from their control. The year saw Rajapaksa consolidating his position on all fronts while the parties in the Opposition got further divided and weakened.

Janata Vimukti Peramuna, chiefly considered as the radical leftist in the country's politics, split into two factions shattering widely-held belief in the party's monolithic structure and singularity in views and ideology. The party also failed to muster required numbers in any of the provincial and local elections to regain its glory in the parliament even after drawing heavily on its trademark anti-India rhetoric. The new faction called Jathika Nidhas Peramuna (JNP) was formed pledging allegiance to the ruling SLFA. Besides, talks for a change in the leadership of the weakest-ever opposition United National Party in the history of the country strongly emerged following its debacle in almost every elections held during the year though opponents of Ranil Wickremasinghe failed miserably in coming up with an alternative. Another radical Buddhist element Jathika Hela Urumaya remained strongly attached with the ruling coalition invoking religious blessings on the Rajapaksa family, as and when desired. The parties representing the ethnic minorities like the LTTE-proxy Tamil National Alliance and Sri Lanka Muslim Congress similarly failed to make a significant dent in the polity of Sri Lanka.

ECONOMICS

Assessing the performance of the Sri Lankan economy throughout the year, International Monetary Fund painted a bleak scenario by saying that ?its widening current account deficit, dependence on foreign borrowings and an overvalued currency? pose a 'serious risks' to the country's future financial stability. Given a fragile peace prevailing in the island nation there is also a chance of foreign investments drying up in Sri Lanka amid global financial meltdown.

To stem the outflow of foreign exchange was thus the focus of the 1.19 trillion rupees ($ 10.8 billion) yearly budget as also to provide impetus to domestic industry and infrastructure development. The Socialist budget of the nationalist government increased cess on imported items notably consumer goods, food items and animal feed with a nation-building cess of 1%. SLR 100 million was set aside for the development of tourist infrastructure in Galle and SLR 3 billion for the restructure and development of the North after the separatist war was over. The defence spending was given a massive boost from the previous Rs. 166.44 billion to this year's Rs 177 billion for the ongoing war.

Despite the government agencies refuting/ignoring the negative effects of the global meltdown on the country's economy, the crisis hit the economy in the last quarter of 2008. Standard and Poor Rating services lowered Sri Lanka's sovereign rating by one notch to B from B-plus, citing the country's declining foreign currency reserves which were around $900 million by end-2008 from end-October's $2.37 billion due to low net capital inflows resulted from withdrawals of short-term portfolio capital and the government's reduced access to external borrowing. Financial frauds severely hit the already dilapidated economy of Sri Lanka with its shares falling to four year low since January 3, 2005.

The top export earners throughout the year faced a crisis-like situation. Prominent among them are Garments, Tea, Rubber and Tourism. Apparel industry in Sri Lanka began to feel the effects of recession, months before it actually hits its largest buyer market USA. The analysts predict further doom for the garments sector in 2009. Already, out of the original 800 garments factories only around 275 remained in the operation as at end 2008. Tea small holders accused the government of intervening three months after the industry had virtually collapsed, turning most of the tea lands into forest lands. Similarly a proper pricing formula in place of subsidies is required to salvage the rubber industry. Travel advisories issued by the countries like Australia, Germany, UK, Canada and Russia in wake of continuing civil war dampened the prospects of the potentially vibrant tourism industry of Sri Lanka. Despite predicting 6.8% growth in the tourism sector by the World Tourism Council, the country had to downgrade its growth figure to a meager 3% which is a 15% drop compared to 2007.

MILITARYbr />
The Army expanded its force last year by recruiting 40,000 more soldiers with the raising of 47 new battalions, 13 Brigades and 4 Task Force contingents and Two Divisions (courtesy: Daily Mirror). According to an estimate, nearly 4000 army deserters rejoined taking advantage of general amnesty granted by the government of Sri Lanka. Besides 57, 58 and 59 Divisions were credited with liberating most of the areas under the LTTE control. Drawing lessons from their previous experiences, Sri Lankan forces emerged stronger inflicting crushing damages and increasing enemy's casualties while minimizing their own casualty rates. Various high-tech and state of the art weaponry was purchased for use in the battlefields.

Sri Lankan Air Force carried out hundreds of air strikes including its first Air to Air attack in which it gunned down one LTTE aircraft over the jungles of Mullaitheevu. The SLAF attacks reached its peak in the last quarter of the year in Wanni. They supported the ground troops by attacking LTTE bunker lines, earth bunds and meeting grounds. It also launched a series of attacks targeting key LTTE buildings including the LTTE Police headquarters, Black Tigers and Intelligence headquarters. They also launched a number of rescue missions on Special Forces troops and used in its operations mainly, Kfir, Mig 21 fighter jets and MI24 attacking helicopters.

The last quarter of the year was also a witness to some of the fierce sea battles involving Sea Tigers and the Sri Lankan Navy. In September, Sri Lankan Navy (SLN) foiled Sea Tigers attempt to attack Navy's Special Boat Squadron (SBS) and the Rapid Action Boat Squadron (RBS) and damaging three large sea tiger attack crafts and 7 small tiger attack crafts killing at least 26 Sea Tigers in counter attack. Another suicide attempt of the LTTE was foiled by the SLN in the Northern seas by completely destroying their two suicide boats in October. In late December, Navy detected and destroyed a medium-size LTTE logistics vessel carrying a war like material, North-East of Mullaitheevu. Several other attack crafts were destroyed by the Navy along with its occupants.

The armed forces inflicted severe damages and reversals on its adversaries by ousting them altogether from the areas which were once considered their strongholds. It is also noteworthy that all through the offensive, not even a single chance was provided by the military to the LTTE to launch counter-offensive, the fact acknowledged even by the senior LTTE leaders. All the three branches of the Army, Navy and Air Force must be credited with accomplishing a commendable job against a formidable enemy without facing even a single defeat through their combined efforts which hitherto seems impossible.

LTTEbr />
Throughout the year, LTTE suffered reversals, damages and destruction. Not even a declaration of a unilateral ceasefire during 15th SAARC summit held in Colombo turn the tables for the beleaguered rebels. Their bad times started from the day the Government of Sri Lanka (GoSL) officially and unilaterally abrogated the Norway-brokered Ceasefire Agreement with the LTTE. The peace agreement was withdrawn because of its incessant violation by both the sides. It is estimated that LTTE has gone back on the agreement 9,700 times in six years starting from 2002 onwards which included 20 suicide attacks, 21 political killings, assassination of three senior army officers and killing of nearly 1500 civilians as compared to the government who has violated it 351 times.

Internal succession struggles within the LTTE erupted at regular intervals along with depleting artillery stocks. Intelligence reports however claimed that LTTE procured weapons from foreign arms dealers in Myanmar, Indonesia and Eritrea. Reports also indicated that rebels have started manufacturing 60 mm, 81 mm and 82 mm mortar shells locally. They have also reportedly used CS gas to attack Sri Lankan soldiers which made the breathing difficult. The real estimate of the LTTE cadres along with an exact number of aircrafts and artillery stocks it has, remained a mystery even in the event of their downfall as also the escape of the LTTE chief Prabhakaran.

HUMAN RIGHTS

Human rights record in Sri Lanka worsened throughout the year which resulted in Sri Lanka losing its seat in the UN Human Rights Council despite getting support from India, China and Japan. The plight of the 2,50,000 civilians trapped in the unclear areas continue to deteriorate after the Rajapaksa government issued orders to the Non-Governmental Organizations like the UN and the Red Cross to leave in anticipation of heavy fighting between the rebel and the armed forces. Continuous fighting resulted in hundreds of deaths.The country earned a bad reputation for its human rights record when a US-based pressure group Human Rights Watch called it as being one of the world's worst perpetrators of enforced disappearances. The things heated up further when Sri Lanka's Defence spokesman Keheliya Rambukwella accused international organizations such as Amnesty International and others of being in the payroll of terrorist organizations like the LTTE.

Media freedom remained most vulnerable during the year as the journalists and the reporters who refused to toe the line of the high and the mighty bore the brunt of being anti-government. They were presented with a stark choice of being either pro-government or pro-terrorists ? sparking renewed alarm among media rights activists about freedom of press. Official media policy was described by the Defence Secretary of Sri Lanka as the one advocating press censorship, harsh punishments for critical reporting on the military and military expenditures and a criminal defamation law.

The attacks on media started as early as January 25 with a knife attack on Lal Hemantha Mawalage, producer in the news division of the state-controlled Sri Lanka Rupavahini Corporation followed by manhandling of their staff by the government minister and his goons. Private TV channels were attacked for being 'unpatriotic' in their telecast. Foreign journalists were barred from entering into unclear areas for news. They were even barred from covering elections in the erstwhile LTTE held Eastern province which was increasingly being seen as a test of confidence in the government.

INTERNATIONAL RELATIONS

The largest number of foreign leaders visited the country this year during 15th SAARC summit that was held in July in Colombo when President Mahinda Rajapaksa assumed the chair of the regional body. Apart from the Head of the States of the SAARC nations, President of Iran and Palestine also visited the island nation.

Sri Lankan diplomacy got a rebuke from the government for failing in strongly engaging foreign missions against the propaganda network of the LTTE as many countries do not provide weapons to Sri Lanka even for money. The nationalist bent in the foreign policy became evident when Mr Rajapaksa proclaimed that the era of rulers who were dependent on the West was over with his regime in Sri Lanka. It became clearer when despite the reservations of the US, Sri Lanka went ahead in cementing ties with the anti-US axis which includes countries like China, Iran and Russia.

Further assessment of Sri Lanka's relations with the world can be divided into two parts ? one, putting emphasis on India and the other, on rest of the world.

Relations with India

Throughout the year, India played a very active role with numerous high-powered trips across the border to keep track of situation in Sri Lanka. Sri Lanka in its turn, got influenced and several times became responsible for influencing the events in India, especially in its Southern part. For the most part, India's activities remained more pro-government and anti-LTTE in Sri Lanka though Prabhakaran in his Heroes Day speech on November 27 appealed for support from the Indian government, in general and Tamils, in particular.

With India making proper distinction between the Tamils and the LTTE, the latter further got banned for two more years through a Special Court order while the former was supplied with the 1650 tonnes of humanitarian aid. India didn't even raise an eyebrow on the abrogation of the CFA however it continues opposing military solution of the 25 year old ethnic conflict. Central government in India did not budge even an inch from its pre-stated position of non-interference in the internal matters of the island nation and instead, went to the extent of risking its own political stability when its coalition partner from South India threatened to withdraw its support in protest against the war unleashed on the Tamil Tigers in Sri Lanka. Political solution of the problem remained ingrained in the psyche of the Indian Tamils but with an increasing realization that only military victories will pave the way for a long lasting solution.

Though no offensive weapons were supplied by India to Sri Lanka, advanced military training was certainly provided to the Sri Lankan military personnel in top military training colleges of India. Indo-Lanka maritime cooperation in the form of a tightened sea vigil was commended by the Sri Lankan Vice Admiral as extremely successful in countering terrorism. During the year, several successful crackdowns on the LTTE agents and contingents in Tamil Nadu and Kerala by the Tamil Nadu Police and its Intelligence 'Q' branch has earned a lot of praise across the borders.

Economically, both the sides agreed to raise the level of bilateral trade to US $5 billion by the year 2010 though negotiations leading to the finalization of the Comprehensive Economic Partnership Agreement fell by the wayside due to the opposition by the ultra-nationalist elements in Sri Lanka. Nevertheless India succeeded in claiming the largest block for oil exploration during bidding for the same. National Thermal Power Corporation (NTPC) and Ceylon Electricity Board (CEB) entered into an agreement to build a US $250 million coal-fired thermal power plant of 500 MW in Trincomalee.

Focusing on the mutual interest in institutionalizing a technical and scientific cooperation in the field of highway construction, maintenance and management of roads along with the exchange in expertise, research and knowledge, an agreement was signed between the Road Development Authority of Sri Lanka and the National Highways Authority of India.

Several private Indian firms secured entry to capture the Sri Lankan markets which included Bharti Airtel and Mahindra&Mahindra which aimed to set up US $ 100 million IT centre in the Economic Processing Zone at Katunayake that is expected to generate 25,000 IT jobs. The group has also decided to set up a manufacturing facility over 900 acre of land at Trincomalee. Steps have also been initiated to enable Sri Lankan IT graduates to secure employment in India which also included learning English language.

Confusion and conflict persisted over the twin issues relating to the ownership of Kachchaitheevu and the arrests and killings of the Indian and Sri Lankan fishermen on both sides of the border. Indian Supreme Court also stayed Sethu Samudram project till all contentious issues are resolved. Eyebrows were raised in India over the remarks of the Sri Lankan Chief Sarath Fonseka calling some South Indian politicians as 'jokers' and accusing them of getting money from the LTTE though the matter cooled down quickly with an apology from the Sri Lankan Defence Ministry.

Relations with the world

China

China emerged as one of the largest investors and development partners in Sri Lanka investing to the tune of US $1 billion even though it denied harbouring any strategic interests in the Indian Ocean region, in general and Sri Lanka, in particular. Sri Lanka's relationship with China throughout the year was earmarked by various high-level visits including a visit by Rajapaksa to that country and a return visit by the Chinese Foreign Minister Yang Jeichi. During an interaction with several key Chinese leaders, President Rajapaksa thanked China for providing assistance to the Norochcholai Coal Power Project, the Hambantota and Puttalam Port projects and the Performing Arts Theatre in Colombo. Memorandum of Understanding (MoU) with China was also signed providing for a 'sister city' agreement between the Eastern Chinese province of Yongzhou and Nuwara Eliya for rapid economic and infrastructural development, greater market access and increased people to people contact. Focusing mainly on enhancing commercial transactions, these visits paved the way for better understanding between the two countries. Sri Lanka reiterated its support for the 'One China' policy and China, in its turn pledged its assistance in fully eradicating the forces of terror in the island nation.

Pakistan

Relations with Pakistan developed further in the beginning of the year when Sri Lanka signed a deal with the Pakistan Ordnance Factory for the purchase of small weapons citing India's reluctance to supply the same as the cause. Earlier this year, Sri Lanka ordered emergency military supplies from Pakistan which included among other things 150,000 rounds of 60 mm mortar ammunition and as many hand grenades for immediate delivery along with US $ 25 million worth of 81 mm, 120 mm and 130 mm mortar ammunition to be delivered within a month. The total purchases until December 2007 were worth US $50 million while there has been a sudden jump in the quantity of merchandise ordered this year.

Pakistan mainly supplies mortar ammunition, radio sets, hand grenades, naval ammunition and tanks to Sri Lanka. Though regular protests from New Delhi were heard by the Sri Lankan authorities that blamed Sri Lanka for undermining India's pre-eminent position in the region, Colombo says that in any case it keeps New Delhi informed about their shopping list.

Sri Lanka and Pakistan decided to expand trade to the tune of US $1 billion under Free Trade Agreement by 2010. Both the sides noticed with satisfaction that their bilateral trade almost doubled from US $170 million to US $270 million in just two years. Interaction was further increased when a batch of aircraft engineers from Pakistan arrived in Sri Lanka for aviation training at Katunayake airbase.

Iran

Sri Lanka continued to maintain friendly relations with Teheran as Iranian President Mahmoud Ahmedinejad arrived in Sri Lanka. During a visit, five Memorandum of Understanding was signed which included establishment of Iranian club in Sri Lanka, creating a consultation body between the two countries, developing production capacity of an oil refinery, financing a dam project and a hydroelectric power plant, and cooperation on executing aforementioned projects. Iran has agreed to provide low interest credit to Sri Lanka to enable it to purchase military equipment from Pakistan and China and to train a small group of Sri Lankan army and intelligence officers in Iran. It is also expected to make Sri Lanka self-sufficient in aviation fuel and tar. Being a largest crude oil supplier to Sri Lanka, Iran initiated a project to upgrade Sapugaskanda oil refinery which will increase the daily output capacity of 50,000 barrels to 150,000 barrels of refined oil. Both the projects are worth over US $ 1.9 billion wholly funded by Iran. Besides, Iran also expressed its willingness to share nuclear technology for peaceful purposes in Sri Lanka.

United States and European Union

Human right situation in Sri Lanka remained the sole concern of the United States and EU countries during the year. Both expressed their opposition for the military solution of the ethnic problem and displeasure over the eastern provincial council elections with contestants carrying arms. The US suspended the sales and transfer of arms and ammunition to Sri Lanka though US Navy Pacific Fleet commander Admiral Robert F Willard appreciated Sri Lankan efforts to contain terrorism. Under section 1206 of US National Defence Authorization Act the US provided radar-based maritime surveillance system and the Rigid Hull Inflatable boats to Sri Lanka. Faculty of a reputed counter-terrorism school in the US also came to train mid-level and senior police officers in Sri Lanka to combat LTTE at the Police Training School in Kalutara. The US asked LTTE chief Prabhakaran to give up his demand for a separate state and seek solution within the framework of a united Sri Lanka. The country assured Sri Lanka of its firmness in finding a political solution to a decade-old ethnic problem and professed its continuity in policy towards terrorism unleashed by the LTTE following a regime change under Barack Obama.

CONCLUSION

The entire year was a witness to the ascendancy of the Rajapaksa regime at all levels, national as well as international. Adversaries of the Rajapaksa regime including the LTTE and the opposition suffered severe reprisals all through the year. Economy and media freedom was ignored to make way for the military victories that were seemingly nationalistic. No more talks of power devolution were heard among the political circles. Dissenting voices, if any, were stopped by all means from airing their views in public. Common man irrespective of his/her community continues to suffer.

Significant progress was made on the foreign policy front in making the world community understand the real nature behind the Tamil Nationalist struggle. With the LTTE practically gone in the conventional sense of the term, it remains to be seen as to how President Rajapaksa deliver on the promises and pledges made to the hapless Tamil community. 2008 was the year of the achievable milestones. 2009 is going to be the year of not only retaining but also maintaining these milestones which also includes among other things, finding Prabhakaran, devolution of powers, streamlining economy and restoring media freedom. Having completed the manual cleaning of the areas, there is also a need to wipe out the bitter memories of those who suffered under the LTTE rule. The year ahead throws a challenge of instilling a sense of belonging to a single nation in the minds of all communities which is a task more onerous then merely defeating the LTTE, militarily.

Anjali Sharma is Associate Fellow, ORF