Victory in War and Defeat in Peace: 政治

Victory in War and Defeat in Peace: 政治
and Economics of Post-Conflict Sri Lanka∗

Prema-chandra Athukorala
Arndt-Corden Department of Economics
Crawford School of Public Policy
Australian National University
堪培拉, ACT 0200
澳大利亚
prema-chandra.athukorala@anu.edu.au

Sisira Jayasuriya
经济系
Caulfield Campus
Monash University
Caulfield, 维多利亚 3168
澳大利亚
sisira.jayasuriya@monash.edu

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抽象的
This paper examines causes and implications of Sri Lanka’s political regime shift in February 2015,
which has been widely hailed a victory for democracy, against the backdrop of the country’s political
and economic development in the post-independence era. The regime shift vividly demonstrates that
选民, given the chance, turn against leaders they perceive to be corrupt, nepotistic, or needlessly
divisive, even if they deliver handsome growth figures; there are limits to gaining political legitimacy
in a multi-ethnic state simply by creating cleavages between majority and minority communities. 为了
the first time, the minority communities in Sri Lanka appear to have felt themselves part of, and po-
tentially an important influence on, the national political scene. 这是, 然而, difficult at this stage to
predict whether the regime change would usher in an era of ethnic harmony and robust economic
生长. One hope is that war-weariness and discontent with the previous regime seem to have led to
a greater willingness to accommodate diverse perspectives and demands within the political system.

∗ We gratefully acknowledge valuable comments received from the three discussants, Gamini
Herath, Fredrik Sj ¨oholm, and Siow Yue Chia, and other participants at the Asian Economics
Panel Meeting held at Sunway University, Kuala Lumpur, 23–24 March 2015, and from Zahabia
Adamaly, Sarath Rajapatirana, and Michael Roberts. Thanks are also due to Fahad Khan for his
help with the econometrics.

Asian Economic Papers 14:3

C(西德:3) 2015 by the Earth Institute at Columbia University and the Massachusetts

Institute of Technology

土井:10.1162/ASEP_a_00371

Victory in War and Defeat in Peace: Politics and Economics of Post-Conflict Sri Lanka

1. 介绍

Sri Lanka is one of the most heavily researched of the developing countries. It has repeat-
edly gained attention among scholars as a laboratory for studying issues central to the
debates on sociopolitical and economic transformation in countries that gained indepen-
dence from colonialism. In the 1960s and 1970s Sri Lanka attracted attention as an illustra-
tive case in the debate on the growth-equity trade-off and the untoward consequences of
prolonged adherence to a state-led import substitution development strategy. 从
late 1970s it became an important case study for the analysis of the impact of economic
liberalization and structural adjustment. Following the eruption of the ethnic conflict in
the early 1980s there was a new focus on Sri Lanka as a test case for studying various
facets of the interplay of government policies and social harmony in a multi-ethnic na-
的. It provided a fertile ground for studies of the art of unconventional warfare, of in-
ternationalized conflict resolution and peacemaking in protracted ethnic conflicts, 和
finally of how military means can be effectively used to defeat armed separatist move-
评论. With the stunning change in the political regime at the 8 一月 2015 presidential
选举, Sri Lanka now provides the international research community with another op-
portunity to undertake illustrative case studies of a range of issues relating to political
transitions and regime change, post-conflict economic management and governance in a
multi-ethnic country.

The outcome of the presidential election that toppled the incumbent, 先生. Mahinda Ra-
japaksa, and elected a new president, 先生. Maithripapa Sirisena, came as a surprise to
most observers and analysts. The Rajapaksa government had crushed the Liberation
Tigers of Tamil Eelam (LTTE, the “Tamil Tigers”) 在 2009, ending a quarter-century-old
civil war and won the election in 2010 with an 18 percent margin over his nearest rival,
ex-army commander Sarath Fonseka, who had fallen out with the regime in the aftermath
of the military victory. When Mr. Rajapaksa suddenly declared his intention to go for an
early election in November 2014, two years ahead of schedule, his victory seemed a fore-
gone conclusion: The regime appeared so strongly entrenched that the only issue seemed
to be whether the size of the majority would be reduced.

The purpose of this paper is to study this dramatic shift in the political regime in Sri
Lanka against the backdrop of longer term sociopolitical development in the post-
independence era, placing emphasis on the determinants of the regime shift, and its im-
plications for development prospects of the country and the resolution of the ethnic con-
flict. 部分 2 begins with an overview of the historical background to the conflict and the
political economy context that shaped policymaking in the post–civil war period. 部分
3 discusses political developments and economic performance during the Rajapaksa era
with particular attention to the sources of public discontent, which underpinned its elec-
tion defeat. 部分 4 deals with the regime shift and underlying causes drawing on the

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Victory in War and Defeat in Peace: Politics and Economics of Post-Conflict Sri Lanka

discussion in Section 2. The paper ends with some concluding remarks on the medium-
term prospects for the Sri Lankan economy.

2. Political and policy history

At independence in 1948, Sri Lanka’s (Ceylon until 1972) economic prospects seemed
highly promising. The colonial inheritance included a well-developed infrastructure,
an efficient administrative mechanism and a thriving primary export sector with poten-
tial for substantial expansion. In terms of per capita income, literacy, and health care, Sri
Lanka was ahead of most other countries in the region. It had a vibrant parliamentary
democracy that had evolved through a step-by-step transition from a colonial system
through a succession of constitutional reforms since the turn of the century. 民众-
tion had enjoyed universal suffrage since 1931; only three years after universal suffrage
was implemented in Great Britain. In these and other ways, Ceylon seemed blessed com-
pared with its neighbors (Athukorala and Jayasuriya 1994; Wriggins 2011).

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But the mobilization of this promising development potential for building the new inde-
pendent Sri Lanka had to be done under the challenges of a plural polity that comprised
a number of distinct ethnic groups with historically rooted cultural and linguistic differ-
恩塞斯. The major ethnic group, Sinhalese (70 percent of the population in 1946), trace their
ancestry to a group of North Indian Aryansettlers believed to have arrived in the coun-
try around 500 BC. The second largest ethnic group, the Sri Lankan Tamils (11.0 百分),
claim to have lived in the country for at least two millennia.1 The Indian Tamils (11.7
百分) 是 (大多) descendants of migrant workers brought from South India by the
British in the late 19th and early 20th centuries to work as indentured laborers on the tea
and rubber plantations. The Muslims (Moors) (6.4 百分) trace their ancestry to Arab
traders involved in the millennia-old seaborne trade between the Middle East and South
and Southeast Asia. A smaller group, the Ceylon Burghers, are descendants of various
European settlers (Athukorala and Jayasuriya 1994, 桌子 3.1).

These different ethnic groups, with some overlap, belong to different religious and lin-
guistic groups. The Sinhalese are majority Buddhist and speak Sinhala. The majority of
泰米尔人 (both Sri Lankan and Indian) are Hindu and speak Tamil. Significant minorities in
both Sinhalese and Tamil communities are Christians (predominantly Roman Catholic).
The Muslims are the only ethnic group in Sri Lanka that are identified completely by
their religion, but they speak Sinhala and/or Tamil, depending on where they live. 这些

1 There is historical and archeological evidence that the ethnic identities of the Sinhalese and the Sri
Lankan Tamils evolved over time through the intermingling of many waves of migrants from dif-
ferent parts of India. According a recent study of genetic relations among the main ethnic groups
in Sri Lanka, there is no clear genetic separation between these two ethnic groups (Ranaweera
等人. 2014).

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Victory in War and Defeat in Peace: Politics and Economics of Post-Conflict Sri Lanka

communities are geographically concentrated in different parts of the country.2 The Sin-
halese live mainly in the southern, western and north central provinces. The Sri Lankan
Tamils are concentrated in the northern province leading up to the Jaffna Peninsula and
in the eastern province, though a significant number live in Colombo. Given its remote
location in relation to the capital city (Colombo) and proximity to South India (Tamil
Nadu), there remains distinctive sense of Tamil identity in Jaffna, which is not limited
only to the language (Tamil) and religion (Hindu). Most Indian Tamils live in the planta-
tions of the interior hill country. 大部分情况下, they remain distinct as a community
from the Sri Lankan Tamils. The majority of Muslims live in the coastal regions of the
eastern province along with Sri Lankan Tamils and in small pockets in many urban cen-
tres elsewhere.

During the colonial era, a multi-ethnic, middle-class elite emerged with the expansion of
the “modern” commercial and industrial sectors and the colonial administrative appara-
这. Many Sri Lankan Tamils migrated from the traditional northern and eastern regions
to Colombo to work in the state services and the commercial and financial sectors. En-
glish, the language of the colonial rulers, became the common language among elites of
all ethnic groups, and proficiency in English has remained an important asset in both
social and economic spheres. By and large, 然而, the deep divide among the major
ethnic groups in terms of language, religion, and culture endured.

At the beginning of the 20th century the westernized Sri Lankan elite formed the Cey-
lon National Congress (CNC) taking a cue from the nationalist movement in India. Ini-
tially, ethnic divisions were secondary and the Sri Lankan Tamil elite played a pivotal
role in the CNC, collaborating closely with Sinhalese and other ethnic elites in the politi-
cal discourse with the colonial administration (De Silva 1986). This ethnic unity, 然而,
eroded from the 1920s as the colonial administration embarked on a gradual process of
devolution of power to the locals, and the basis for representation in the legislative coun-
cil shifted from a communal to a territorial one.

The Sinhalese elite, recognizing the power of their majority position, began to exploit
ethnic divisions by appealing to the hitherto dormant Sinhala nationalism. Nationalism
also helped the elites in fending off the ideological challenge posed by the radical left,
which became increasingly influential within the working class and the lower income
groups from the late 1920s. Thus ethno-nationalism started to play a major role in shaping
the formation and evolution of political organizations and parties. 在此背景下, the Sri
Lanka Tamils, with distinct regional concentration, a well-developed cultural identity,

2 Refer to Sri Lanka: Population by Ethnicity and Province, 2012, for a clear picture at

www.statistics.gov.lk/PopHouSat/PopulationAtla_2012/02_ProvincialMaps/Map%20P1.4.1
%20Population%20by%20Ethnici%20ty%20and%20Province,%202012.pdf.

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Victory in War and Defeat in Peace: Politics and Economics of Post-Conflict Sri Lanka

and a strong position within the colonial administration, began to be concerned about the
likely architecture of the post-colonial independent state with growing fears that British
rule would be replaced by Sinhalese rule. These concerns culminated in the quest for a
“50–50” formula for representation in the legislature by G.G. Ponnambalam, the leader
of the most prominent Tamil political party at the time, the Tamil Congress. To many
Sinhalese, this became “a symbol of the unreasonable ambition of that energetic minority”
(Wriggins 2011, 5). The Muslim elite, 相比之下, opted to work with the Sinhalese elite
(Shastri 1997).

At independence in 1948 Sri Lanka adopted a constitution based on the British Westmin-
ster parliamentary model. The Sri Lankan constitution was not based on a broad-based
process of negotiation between the various ethnic groups. 相当, it came out of discus-
sions between colonial administrators, the Sinhalese-elite dominated Board of Ministers,
and the Sinhalese elite represented by Don Steven Senanayake. The issues of particular
concern in a multi-ethnic state, such as citizenship, franchise, and individual and group
权利, were not discussed or agreed to by representatives of the country’s largest ethnic
团体. Unlike in the Indian constitution, the Sri Lankan constitution did not include an
explicit bill of individual rights or anything resembling effective formal protection for
minorities other than creating a number of urban multi-member constituencies in multi-
ethnic localities. Every important matter of government policy was to be defined and im-
plemented by the national government in Colombo. Municipal, town and village coun-
cils were responsible for only a limited range of matters of strictly local concern. 在里面
process of designing the constitution Tamil demands and proposals were treated as acts
that would delay or obstruct “Ceylon’s march to freedom” (De Silva 1986, 146–7). 康塞-
经常地, the new constitution was not approved by 5 的 10 members of the legislative
council elected by the Tamil community.3 Thus the widely-held view that the transfer of
power in 1948 was peaceful and orderly is deceptive.

The conservative United National Party (UNP), led by Don Steven Senanayake, 出现了
as the largest party at the first general election held in 1947, but it won only 40 百分
of the seats. The UNP formed a government with Senanayake as Prime Minister and
Solomon West Ridgway Dias Bandaranaike as his deputy, in a coalition with the con-
servative Tamil and Muslim groups. The Trotskyite Lanka Sama Samaja Party, which had
a strong multi-ethnic power base, emerged as the main opposition in the new parliament.
The new government moved swiftly to pass legislations to deprive Indian Tamils of cit-
izenship and voting rights to contain the power of the left. The disfranchising of Indian
Tamils enhanced the electoral weight of the Sinhalese population in the central highlands

3 The five members who voted in favor lost the seats they contested at the first election (1948) 握住

under the new constitution (Shastri 1997).

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Victory in War and Defeat in Peace: Politics and Economics of Post-Conflict Sri Lanka

of the country, creating an additional inducement for political parties to raise issues that
would attract the votes of the Sinhalese electorate (Jennings 1954).4

In September 1951 Bandaranaike formed a new political party, the Sri Lanka Freedom
Party (SLFP), because of his “dismay over his prospects within the ruling party” (庄园
1989, 192). Over the next four years the SLFP developed a strong support base in rural
Sinhalese constituencies on a promise to make Sinhala the official language, promote Bud-
dhism and Sinhalese culture, and reform the system of education to benefit the Sinhalese
rural middle- and lower-middle classes. 这 1956 election was the first where ethnic po-
larization based on the official language issue played a dominant role. The UNP suffered
a landslide defeat at the hands of a three-party coalition (Mahajana Eksath Peramuna
[MEP]) headed by the SLFP.

The first action taken by the new MEP government was to pass the Official Language
Act of 1956, a law that declared Sinhala the country’s official language. 达成协议
was subsequently negotiated between Premier Minister Bandaranaike and S. J. V. 切尔-
vanayagam, the leader of the SLFP, in July 1957 (the Bandaranayike-Chelvanayagam Pact)
to give regional autonomy for Tamil areas (in the northern and eastern provinces) 之内
the existing framework of unitary state and to recognize Tamil as the language of govern-
ment administration in these areas. Protests and demonstration by Sinhalese extremists
within the ruling party and by the UNP (led by J. 右. Jayawardene), 然而, forced Ban-
daranaike to abrogate the pact. Tamil protests against efforts to extend the use of Sinhala
as the official language in their areas escalated into an even more horrific clash. 在 1958,
a Tamil language act was approved by the parliament to provide for “reasonable” use
of Tamil in northern and eastern provinces and in the national government, 但它是
never implemented.5

The change in government in 1956 was a political watershed in Sri Lankan history in
which relations between the Sinhalese and Tamil communities took a sharp turn for the
更差. From then on, Sri Lankan politics entered into a pattern of competitive bidding

4 Under agreements between India and Sri Lanka signed in 1964 和 1974, about three-fifths of the
Indian Tamil population was repatriated to India and others were given citizenship in the 1970s
和 20 世纪 80 年代.

5 Discontent within his own ranks about his indecisiveness in delivering the “Sinhala-only” and

“favored status of Buddhism” promises resulted in Bandaranaike’s assassination in 1959 by a Bud-
dhist monk. In an authoritative biography of Bandaranaike, 詹姆斯庄园 (1989, 320) concludes,
“The riots . . . [和] the polarization of society along linguistic lines . . . virtually guaranteed that
his bold move to the left would not have led nowhere. . . . [时间]he assassination has obscured the
wasted opportunities of his premiership by distracting attention from the disintegration of the
political experiment that he had undertaken as Prime Minister. His murder and the legend which
grew up around him therefore did more to revive the fortunes of that experiment than could have
anything that he might have done had he survived.”

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Victory in War and Defeat in Peace: Politics and Economics of Post-Conflict Sri Lanka

by the major Sinhalese-dominated parties for the support of the Sinhalese community.
Within a few years even the main left-wing parties abandoned their multi-ethnic posture.
During the next three decades, no serious attempt was made to address the language and
regional autonomy issues with a view to achieving ethnic harmony. 在 1965 the govern-
ment of Dudley Senanayake (the UNP-led coalition with SLFP as one of the coalition part-
ner) negotiated a devolution agreement (District Council Bill) with SLFP broadly along
the lines of the defunct Bandaranaike-Chelvanayagam agreement. It was opposed by the
SLFP-led opposition, in an almost exact replay of the 1956 event with roles reversed (的
席尔瓦 1986, 193).

The United Front government (a SLFP-led coalition), which came to power at the 1970
选举, promulgated a new constitution in 1972. It accorded Buddhism the “foremost
place” in the country’s religious hierarchy and affirmed the role of Sinhala as the offi-
cial language. The limited preferential representation given to the Tamils in the Western
province under multi-member constituencies was abolished under the electoral rules of
the new unicameral legislature.

The United Front government also introduced a new system of university admission in-
volving standardization of marks across language groups and by regions, in place of the
earlier system based solely on academic achievements tested through an open competi-
tive examination (De Silva 1978). This de facto ethnic-based quota system worked to the
relative disadvantage of the Sri Lankan Tamils, who had for years enjoyed a position of
prominence in the science-based faculties because of their higher rate of literacy in En-
glish and better facilities for science education in the schools of the Jaffna district. 和-
der the new system, the percentage of university places in the science-based disciplines
(medicine, 工程, and natural sciences) held by Tamils fell from 35.3 百分比在 1970
到 20.9 百分比在 1974 和 19 百分比在 1975; there was for the first time a substantial
decline in even their absolute number despite a continuous increase in the total intake of
students in these courses.

The Tamil discontent, resulting from policy failures in devolution and the discriminatory
university entry system, was aggravated by rising youth unemployment in the context
of a near stagnant economy (Wriggins 2011; Athukorala and Jayasuriya 2013). 开始于
the late 1950s successive governments vigorously pursued a state-led import-substitution
strategy as the basic tenet of the country’s development strategy. By the mid 1970s, Sri
Lanka had become one of the most inward-oriented economies of the world, with an
economy dominated by extensive state ownership. The government had become the “em-
ployer of last resort” and the public sector outpaced the private sector in employment
creation. As the economy began to experience massive unemployment resulting from
a combination of slow economic growth and rapid population growth, employment in
the public sector became increasingly subject to patronage politics and access to political

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Victory in War and Defeat in Peace: Politics and Economics of Post-Conflict Sri Lanka

力量. Tamil youth were further disadvantaged in gaining public sector employment
by the imposition of proficiency requirements in Sinhalese. If a development strategy
that permitted greater scope for employment creation outside the state sector had been
adopted, alternative jobs might have been more widely available to soften the growing
resentment among unemployed Tamil (and also Sinhalese) youth.6

These developments provided the breeding ground for separatist ideologies among the
Tamil youth who became alienated from mainstream politics. Several youth-based move-
ments committed to a struggle for a separate state emerged in Jaffna. In response to the
growing radicalization among the youth, the traditional Tamil political parties came to-
gether in 1976 to form the Tamil United Liberation Front (TULF), which committed it-
self to establishing a separate Tamil state. 反过来, the demand for an independent state
that claimed nearly one-third of the land area exacerbated Sinhalese hostility toward the
Tamil community.

At the parliamentary election held in 1977, the UNP led by J. 右. Jayawardene swept into
power with a landslide victory thanks to the widespread voter disenchantment cre-
ated by the dismal performance of the economy under the previous dirigiste economic
policy regime. The TULF, which swept the northern and eastern provinces on a plat-
form that called for the establishment of an independent Tamil state, became the main
opposition party.

The new government launched a series of fundamental liberalization policy reforms that
marked a decisive break from the decades of import substitution industrialization poli-
化学系. In the aftermath of the liberalization reforms, the country seemed poised to embark
on a trajectory of rapid growth that would enable it to emulate the dynamic East Asian
经济体. The economy failed to maintain the initial growth dynamism, 然而, 是-
cause other components of the policy package undermined the initial stimulus to the
country’s international competitiveness. The opening up of the economy was accompa-
nied by huge and often wasteful foreign-aid-supported public investment program. 这
inflationary side effects eroded the initial salutary effect of trade and exchange rate re-
forms on the competitiveness of tradable sectors, and constrained the growth of exports
and efficient import-competing industries. The government also failed to put adequate
resources into upgrading essential infrastructure and communications to complement
trade and investment liberalization as the emphasis was on politically appealing mega-
infrastructure projects and on attaining self-sufficiency in rice (the main staple) (Athuko-
rala and Jayasuriya 1994; Snodgrass 1999; Wriggins 2011).

6 It is important to note that social and political tensions in post-independence Sri Lanka were not
confined to the Tamil youth in the north; there were two traumatic episodes of uprising of the
Sinhalese youth in the south in 1971 and in 1998–99 (Bandarage 2009).

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The designers of the liberalization policy package also failed to take into account the pos-
sible adverse side effects of its immediate distributional effects on the social fabric of a
multi-ethnic, socially stratified society highly sensitive to equity concerns. The liberaliza-
tion reform package was implemented in a non-uniform and discriminatory manner; 它
favored different regions, 部门, and particular segments of the population. The abo-
lition of import quotas and lowering of tariffs on imports of several commodities (这样的
as onions, red chillies, and some fruits and vegetables) cultivated mainly in the Jaffna
peninsula had a disproportionate adverse impact on Tamil farmers. The growth in trade,
export-oriented industrial production, tourism, urban development, and construction ac-
tivity mainly benefited the Sinhalese-dominated southwest regions of the island. 但即使
there the benefits were not shared equally: The real income of many poorer people, 参与-
ularly in urban areas, declined because of drastic cuts to food subsidies and high inflation
(an outcome of the macroeconomic policy slippage noted earlier) whereas Tamils engaged
in private business and commerce in these areas benefited from the reforms (添加
1997). As discussed subsequently, this situation was exploited by various groups as an
excuse to unleash anti-Tamil violence.

The government used its two-thirds parliamentary majority to promulgate a new consti-
tution, a presidential-parliamentary system patterned after Charles de Gaulle’s French
constitution of 1958. The new system established a directly elected executive president
with wide powers, who would appoint the Prime Minister and Cabinet from members
of the parliament, and preside over their workings, without being personally responsible
to the parliament. A unicameral legislature was to be elected on the basis of proportional
表示, with individual votes cast for party lists in multimember constituencies.
The expectation was that the new constitution, by making it extremely difficult for any
single party to get a two-thirds majority in the parliament, would provide political stabil-
ity conducive to economic transformation under market-oriented policy reforms.

But any expectation that Jayawardene would use his victory to undertake constitutional
reforms and satisfy moderate Tamil demands for greater devolution of power to the
Northern and Eastern provinces proved to be misplaced. The TULF leadership sought
some concessions from the government, pointing to the danger of violent action by ex-
tremist groups, but the government, with ethnic chauvinism rampant in its own ranks,
refused to budge. This accelerated the radicalization of Tamil youth and their embrace of
separatism. Among several militant separatist Tamil organizations, the LTTE) led by the
charismatic and ruthless Velupillai Prabhakaran, eventually became dominant, using bru-
tal violence to eliminate challengers. It developed a highly disciplined and well-organized
military force with support networks within the Tamil diaspora in countries such as India,
加拿大, 澳大利亚, 英国, 法国, 美国, and Singapore (Wayland 2004).

The first signs of violent activity by Tamil militant groups—attacks on government offi-
cials and security personnel—began to surface in the northern province in the mid 1970s.

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In response to the rising hostility among the Tamils, the government implemented sev-
eral institutional measures, including recognition of Tamil as a “national language” along
with Sinhala, and permitting it to be used along with Sinhala for administrative, 司法,
and educational purposes in the northern and eastern provinces. A belated effort was
made to provide for a modest measure of regional devolution of power by passing leg-
islation in 1981 to establish District Development Councils. The traumatic events of July
1983 (“Black July”), 然而, swept away the District Development Council initiative
(罗伯茨 1986).

Black July marked a historic break in the relations between the Sinhalese majority and
the Tamil minority. An attack on security forces by an armed group of the LTTE in Jaffna
在 23 July led to a violent anti-Tamil program and mob attacks with widespread looting,
arson, and violence in the southern parts of the country, including the capital, Colombo,
that resulted in hundreds of deaths, and the start of the mass exodus of Tamil refugees
from Sri Lanka. The manner in which the riots were handled by the government deep-
ened Tamil resentment against the Sinhala-dominated government, and increased sympa-
thy and support for separatism (Biziouras 2014).

Immediately after Black July, the government passed a constitutional amendment requir-
ing members of parliament to take an oath explicitly disavowing support for separatism.
The moderate Tamil members of parliament, who had been elected in 1977 from the north
and east on a platform that called for the establishment of a separate Tamil state, 可以
not take such an oath and found themselves expelled from the parliament, leaving no
legitimate representation of the Tamils. The cycle of violence and retaliation escalated
and the LTTE established a de facto separate state in parts of the north and east of the
国家. LTTE attacks on government establishments and the Sinhalese civilians rapidly
spread not only throughout the northern and eastern provinces but also to the Sinhalese-
dominated areas.

As the conflict escalated, a large number of Tamil refugees fled across the water to Tamil
Nadu, an ethnic Tamil state in South India. Various militant groups started using Tamil
Nadu as a base for conducting the armed conflict in Sri Lanka (De Silva 1986; Bandarage
2009). These events strained the relationship between Sri Lanka and India. 在 1987 这
Sri Lankan government signed an accord with India. Under the terms of the accord, 在-
dia sent an Indian peacekeeping force to Sri Lanka to monitor a cease-fire in the civil war
and to disarm the LTTE militants to prepare the ground for a settlement within the con-
text of a unitary state. 作为回报, Sri Lanka agreed to resolve the Tamil problem through
regional decentralization of power. The Indian peacekeeping force, 然而, failed to dis-
arm the LTTE and was consequently compelled to fight the LTTE. Because of divisions
within its own ranks, the Sri Lankan government failed to devolve adequate power under
the weakly instituted provincial councils and failed to win over any significant segment

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of Tamil opinion. President Premadasa, who assumed power in 1989 after two terms of
the Jayawardene presidency, demanded that the Indian peacekeeping force leave and it
completed its withdrawal in 1990.

在 1994 presidential election, Chandrika Kumaratunga (the daughter of two previous
prime ministers, S. 瓦. 右. D. Bandaranaike and Sirimavo Bandaranaike) came to power
as the leader of the People’s Alliance on a ticket seeking peace with the LTTE.7 The new
government offered a cessation of hostilities and unconditional talks to the LTTE, 哪个
led to a brief ceasefire and hopes of a negotiated settlement. 尽管如此, the proposed
devolution of power to the provincial councils fell well short of the aims of the LTTE,
which stalled negotiations and then broke the ceasefire in April 1995, reigniting the armed
冲突. After a botched assassination attempt by the LTTE on the president, the govern-
ment launched a concerted offensive against the LTTE and in December 1995 the govern-
ment forces recaptured the city of Jaffna, which had served as the de facto capital of the
LTTE mini-state. This forced the LTTE to rely primarily on guerrilla warfare from then on,
operating primarily in the jungle areas of the northern province and parts of the eastern
province. A new attempt at a negotiated peace led to a Norwegian-brokered cease-fire
agreement in February 2002, which remained largely intact until late 2006 (though its
terms were frequently violated in practice).

The dynamics of the conflict began to change following the 2005 presidential election.
Mahinda Rajapaksa of the People’s Alliance secured a narrow victory over his closest ri-
val Ranil Wickramasinghe (UNP) (53.0 百分比和 48.4 percent of the vote, 分别).
Though the new government initially continued to adhere to the peace agreement, 和
the UNP, on its part, backed the government, after two rounds of failed peace talks and
intensified military action by the LTTE, the government began to prepare for an all-out
military offensive.

在 2007, President Rajapaksa strengthened his political position for the war effort by engi-
neering the defection of 19 members from the opposition UNP to his governing coalition
and by forging alliances with several groups of Sinhala Buddhist nationalists and the left-
wing nationalist Janatha Vimukthi Peramuna (JVP). The government, with support and
assistance from the Western powers, 印度, 巴基斯坦, 和, 特别, 中国, sharply in-
creased the military budget and escalated the military campaign to annihilate the LTTE.

7 For the first time in Sri Lankan history, the change of government in 1994 did not result in a major
change in economic policy. In a significant departure from its past history of adherence to state-led
closed economy policies, the new People’s Alliance government continued and even built on the
pro-market policies of the previous regime. Despite the continuing civil war, by this time the gains
from reforms had been impressive enough to win bipartisan support.

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在 2009 June the LTTE was defeated as a fighting force and its leadership was decimated
(De Silva 2012).8

3. Post-conflict politics and economics

After the country returned to a state of normalcy at the end of the 30-year-old civil war
in May 2009, President Rajapaksa consolidated power by calling fresh presidential and
parliamentary elections in 2010 and winning both decisively.9 Soon after the parliamen-
tary election victory, he used the two-thirds majority in the parliament to enact the 18th
amendment to the constitution that vastly extended the executive powers of the presi-
dency. This amendment abolished the requirement for the president to stand down after
two 6-year terms, and authorized him to appoint judges of the Supreme Court, the Attor-
ney General, the Auditor General, the Ombudsman, and the members of important bodies
including the Judicial Service Commission, the National Police Commission, the Human
Rights Commission and the Election Commission, and the Commission to Investigate
Allegations of Bribery and Corruption (IBA 2013).

The president used the new powers and a combination of inducements and intimida-
tion to further divide and weaken the opposition (Goodhand 2012; Jayasuriya 2013). 经过
2012 a tiny family group comprising the president, his brothers, and his elder son, exer-
cised almost total control over the financial, 安全, and judicial powers of the state. 这
bureaucracy was expanded to provide an independent powerbase for the regime.10 In
2013 the Chief Justice was sacked as she delivered rulings against some government de-
cisions, and a supporter of the regime was appointed in her place. Paramilitary agents,
allegedly sponsored by the state, continued to intimidate political opponents and crit-
集成电路: “fear of the white van without the licence plate became a common theme in day-to-
day conversations” (霍尔特 2011, 715).11 On the Reporters san Frontieres World Press
Freedom Index, Sri Lankan’s rank dropped from 51st among 139 countries in 2002 (这
initial year of the index) to 165th out of 198 countries in 2014.12 As we have observed

8 The manner in which the final stage of the war was fought has subsequently generated interna-

tional concern over war crimes and investigations by UN bodies.

9 At the presidential election held on 26 一月 2010 Rajapaksa received 57 percent of total votes
(17 percent margin over the main opponent); at the parliamentary election held on 20 四月 2010
the United People’s Freedom Alliance led by Rajapaksa won 144 的 225 座位.

10 Total employment in the public sector increased from around 900,000 (10.4 占总数的百分比

labor force) 在 2005 to over 1.2 百万 (14 百分) 在 2012 (Ministry of Finance 2013).

11 This was dramatically demonstrated in the murder of leading journalist Lasantha Wickrematunge
在一月 2009 (霍尔特 2011). Following his murder, the “independent” media in the country began
to self-censor. The editorial written by Wickrematunge (entitled “And They Came for Me”), 和
instruction for it to be published in the event of his murder, has been reproduced in Holt (2011,
715–20).

12 参见http://rsf.org.

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别处, “The situation in Sri Lanka (曾是) increasingly exhibiting striking parallels with
the Marcos regime in the Philippines and the final phase of the Suharto regime in Indone-
sia” (Athukorala and Jayasuriya 2013, 24).

There were expectations in the aftermath of the military victory that the government
would move towards the long-delayed devolution of power to provincial councils. 但
this was not to be. The government appointed a Lessons Learned and Reconciliation
Commission to come up with recommendations for political reconciliation, but then
swept the commission report under the carpet. 反而, the government continued to
maintain a strong military presence in the Jaffna Peninsula. Land taken over by the mil-
itary allegedly for security reasons was reportedly used to run military-operated hotels
and other commercial enterprises (Transparency International 2014).

Despite its authoritarian nature, the regime continued to enjoy substantial support from
Muslim and other non-Tamil minority communities in the first few years of the post-
conflict period; authoritarian actions were tolerated as the price that had to be paid for
the successful prosecution of the war. But Muslim support for the government eroded
following the campaign from 2012 onward by the Bodu Bala Sena (BBS), an extreme Sin-
hala Buddhist organization closely associated with Gotabhaya Rajapaksa, the Defense
Secretary and a brother of the President, to entrench Sinhala Buddhist supremacy in the
国家. 在 2013 BBS called for an end to halal certification, and declared that it will de-
stroy a 10th-century mosque allegedly built by destroying a Buddhist temple. The BBS’s
anti-Muslim campaign culminated in violence in a southern Sri Lankan town in June 2014
(Bastian 2014). Though the government officially dissociated itself from the anti-Muslim
campaign of the BBS, it did nothing to prosecute it or otherwise censure its actions. 这
BBS campaign to entrench Sinhala Buddhist supremacy also led Christians to seriously
question their future in the country under the Rajapaksa regime.

3.1 Policy shifts

The new development strategy of the Rajapaksa regime marked a significant departure
from the market-oriented policy stance maintained for over three decades from the late
1970s and harked back to the populist economic policies of the 1960s and 1970s (Athuko-
rala 2012). It emphasized the role of the state in “guiding the markets” with a view to
redressing alleged untoward effects of economic globalization. As has so often happened
in the history of developing countries (Whitehead 1990), this kind of economic ideology
was ideally suited to the needs of the regime that sought a developmental rationale for
expanding centralized state power.

The trade regime was the first victim of this policy reversal. Import substitution in
both manufacturing and agriculture was put back on the policy agenda. New export
taxes were introduced on tea and rubber exported in raw and semi-processed form to

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Victory in War and Defeat in Peace: Politics and Economics of Post-Conflict Sri Lanka

promote further domestic processing of these products. Arbitrary increases in duties,
driven by both revenue-raising and protectionist objectives, resulted in higher levels and
inter-industry variations in the effective rates of protection.

The foreign investment approval procedures also became more interventionist and
opaque following the promulgation of the Strategic Development Projects Act in 2008,
empowering the minister in charge of the Board of Investment (BOI) to grant exemptions
from all taxes for a period of up to 25 years to “strategic development projects.” A Revival
of Underperforming Enterprises and Underutilized Assets Act was passed in November
2011, empowering the government to acquire and manage 37 “underperforming” or “un-
derutilized” private enterprises. A number of new state-owned enterprises were set up,
including a second national airline with a name adapted from the president’s first name
(Mihin Air).

On the macroeconomic front, there emerged a fundamental contradiction between ex-
change rate policy and fiscal policy and monetary policies. The Central Bank maintained a
stable nominal exchange rate of the rupee vis-`a-vis the U.S. dollar by drawing on foreign
reserves and foreign borrowing, in a context where fiscal and monetary policy excesses
continued to fuel domestic inflation. The persistent stability of the nominal exchange rate,
coupled with higher domestic inflation compared to that of the trading partner countries,
resulted in an appreciation of the real exchange rate by about 20 percent during 2005–13
compared with the previous five years, eroding the competitiveness of export-oriented
and import-competing production in the economy (桌子 1).

Rapid infrastructure development became the key policy priority of the Rajapaksa regime.
A large-scale reconstruction effort with substantial public sector involvement was clearly
needed after a quarter century of destruction, neglect, and decay of essential infrastruc-
真实. 尽管如此, the prioritization and economic efficiency of many government infras-
tructure projects, such as a modern port and other facilities (built with Chinese assistance)
in the heartland of the electoral support base of the President are questionable (Law &
Society Trust 2012; Sarvananthan 2015). 还, the faster than programmed, lumpy dis-
bursements for a couple of large foreign financed infrastructure projects and for their
counterpart funds (IMF 2011) became a major factor in the widening of the fiscal deficit
and erosion of macroeconomic stability.

The massive construction projects also became the focal point of widespread public con-
cern and complaints about financial excesses and rampant corruption. According to a
study conducted by a senior professor of Transport & Logistic Management at a major Sri
Lankan university (Kumarage 2014), the cost of highway construction (measured by cost
per km) increased two to three times over a period of five to six years, a rate of increase
that far exceeds the rate of construction cost increases even in developed countries such as

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Victory in War and Defeat in Peace: Politics and Economics of Post-Conflict Sri Lanka

Australia.13 In a project by project analysis, Kumarage (2014) finds that costs in projects
awarded by competitive bidding exceed costs in projects offered without such bidding
to be higher by about 130 百分. The value of contracts awarded without competitive
bidding reached a peak of US$ 2,540 百万 2014.14 Kumarage’s findings are consis- tent with those recorded in the emerging literature on the costs of road construction and associated corruption (Tanzi and Davoodi 1998; Kenny 2009; 科利尔, Kirchberger, and Soderbom 2013). 科利尔, Kirchberger, and Soderbom (2013), 尤其, find that road construction costs are higher in countries with higher levels of corruption. 3.2 Economic performance The Sri Lankan economy grew at an average annual rate of 7.0 percent from 2010–14. This turned out to be the five-year period of fastest growth in the country’s post-independent history (桌子 1). Per capita income increased from US$ 1,062 在 2004 to US$ 3,191 在 2013. The rate of inflation came down from a historical high of 22.6 百分比在 2008 to an aver- age annual rate of 6 percent during the following five years. The unemployment rate fell from 8.3 百分比在 2004 到 4.4 百分比在 2013. 之间 2006 和 2012, the poverty head count ratio declined from 15.2 百分比到 6.7 百分, accompanied by a reduction in the poverty gap from 3.1 百分比到 1.7 百分. The Gini coefficient also declined from 0.40 到 0.36 between these two years, indicating that rapid growth was accompanied by an im- provement in income distribution (CBSL 2013). 尽管如此, these impressive headline economic figures need to be treated with caution for a number of reasons. Sri Lanka’s system of national accounts has not been revised/updated since the early 1970s and “[t]he national accounts suffer from insufficient data sources and underdevel- oped statistical techniques” (IMF 2014, Statistical Appendix). Given the unavailability of detailed data needed to measure both output and intermediate inputs, some of the gross value-added figures are estimated indirectly using fixed ratios obtained from outdated studies or based on ad hoc assumptions. 当然, although the resulting biases can go either way, such a virtual “non-system” naturally leaves room for “creative” accounting. This is particularly important because of concerns raised about political influence on the generation of sensitive data following the transfer of the compilation of national accounts and the consumer price index (CPI) from the Central Bank to the Department of Census and Statistics (DCS), which comes directly under the President.15 The new CPI compiled 13 The per-kilometer cost of constructing highways in Sri Lanka in 2005 appeared to match the global levels. But during more recent years, the cost in Sri Lanka was 5 到 15 times higher than even the upper-bound estimators reported in global studies. 14 有趣的是, all these non-bidding projects (except one—a US$ 845 million project awarded to a

local contractor) were funded from Chinese sources and awarded to Chinese contractors.

15 In January 2014, the DCS sacked the Acting Director of its National Accounts Department after
he revealed that the CDS, in his absence, revised up the 2013 first quarter growth rate from 5.4
百分比到 6 百分 (Aneez and Sirilal 2014).

37

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Victory in War and Defeat in Peace: Politics and Economics of Post-Conflict Sri Lanka

by the DCS since 2007 has excluded alcohol (a commodity that accounts for a substantial
share of household expenditure, particularly in working class households) from the com-
modity basket, and some important items (such as the cost of transport and housing) 是
estimated using regulated (controlled) rather than market prices. Quite apart from un-
derstating the cost of living, these limitations of the CPI are bound to overstate the rate of
growth in the economy because CPI and its sub-indices are used for estimating real value-
added in a number of sectors (尤其, many subcategories in the services sector)
(Shourie 1974).

Data on poverty and income distribution, which are usually published at the national
等级, are naturally subject to aggregation biases. 例如, in a disaggregated anal-
ysis of unpublished household survey data, Sarvananthan (2015) shows that poverty
levels in some districts and sub-regions in the eastern and northern provinces still re-
main stubbornly high, notwithstanding massive government infrastructure investment
in these areas. Relating to income inequality, there is a large difference between the latest
available figure of the Gini ratio (为了 2012) as reported in the Central Bank report (0.36)
and the one reported by the Department of Census and Statistics for the same year (0.48)
(SLDCS 2015).

Even if we take the official data at face value, there are several qualifications that must
be made to this rosy picture when we analyze the overall growth experiences from a
long-term sustainability perspective. 第一的, the main drivers of growth have been the non-
tradable sectors (建造, 运输, utilities, trade and other services), driven largely
by the major public sector infrastructure development projects. 超过 70 的百分比
total increment in real GDP between 2004 和 2013 originated in these sectors. The manu-
facturing sector grew only at a modest rate, resulting in a decline in its share in GDP from
18.5 percent during 2000–04 to 16.5 percent during 2005–13. Within manufacturing, 这
largest contributor to growth was the food, beverages, and tobacco product sector where
production is predominantly domestic market–oriented. Sectors such as non-metallic
mineral products, rubber and plastics, and miscellaneous manufacturing (where export
production is concentrated), have recorded much slower growth.16 In sum, the sectoral
profile of economic performance in recent years is consistent with the erosion of the
competitiveness of traded goods production (real exchange rate appreciation) noted in
the previous section.

第二, the three-fold increase in per capita income in current US$ terms between 2004 和 2013 partly reflects domestic inflation and the artificial stability of the exchange rate 16 The only notable exception has been the export-oriented ready-made garment industry, which had already been well integrated within the global apparel value chain as a producer of upmarket apparel products (lingerie and fashion casual wear) thanks to trade-cum-investment liberalization reforms in the 1980s and 1990s. 38 Asian Economic Papers l D o w n o a d e d f r o m h t t p : / / 直接的 . 米特 . / e d u a s e p a r t i c e – 压力 / 的f / / / / / 1 4 3 2 2 1 6 8 4 3 6 8 a s e p _ a _ 0 0 3 7 1 压力 . 来宾来访 0 7 九月 2 0 2 3 Victory in War and Defeat in Peace: Politics and Economics of Post-Conflict Sri Lanka of the Sri Lankan rupee against the dollar. When the data are expressed in real (2005) prices to allow for these factors, per capita income in 2013 (美元$ 1,920) was only 62 百分
higher than that in 2004 (美元$ 1,182) (桌子 1). 第三, the decline in the unemployment rate was partly due to an increase in public sec- tor recruitments and a surge in overseas employment of Sri Lankans. The share of public sector employment in the total labor force increased from 10.4 百分比在 2005 到 14 每- 分在 2012. During 2002–12, 每年, 一般, a quarter of a million Sri Lankans left for overseas employment, with the number increasing every year. The total stock of Sri Lankan overseas contract migrant workers would have reached two million by 2011, 总计超过 23 percent of the total labor force (Arunatilake, Jayawardena, and Weerakoon 2011). 第四, although the official aggregate figures show a notable increase in total foreign di- rect investment (FDI) inflows during the past three years, data at the sector/industry level reveal that the increase has come largely from projects in the construction and services sectors. During 2010–13, manufacturing accounted for only 31 percent of total realized FDI. The bulk of these flows were to domestic market–oriented industries (mostly food and beverages), with garments being the only export-oriented industry to attract some FDI. There is evidence that a large number of export-oriented foreign firms have closed down their operations in Sri Lanka. A comparison of the firm-level records of the BOI shows that 465 firms that were in operation in 2002 had disappeared from the BOI list in 2009. This number is too large to be interpreted solely as a recording error. Of these firms, the majority are firms with foreign capital participation (joint venture or fully foreign- owned). 相比之下, the majority of newly established firms (超过 80 百分) are fully locally owned. Investors from India, who have set up production bases to benefit from tariff concessions under the Sri Lanka–India free trade agreement, now dominate the list of firms whereas many firms from Korea, 香港, and from a number of developed countries have left Sri Lanka (Athukorala 2012). 第五, the external payments position of the country has deteriorated over the past three years. 在 2013, total imports were double the size of export earnings. There has been a massive contraction in exports of goods and services as a share of GDP, from an average level of 25.6 percent during 2004–09 to 16.8 percent during 2010–13. 在 2013, export earn- ings covered only 57 percent of total outlay on imports. Although weak global demand in the aftermath of the 2008–09 global financial crisis and the recent withdrawal of “GSP Plus” tariff concessions by the EU would have played a role, a comparative analysis of Sri Lanka export performance suggests that the problem is mostly home grown (Rajapatirana 2013). Viewed against the experiences of the 1980s and 1990s, the continuous apprecia- tion of the real exchange rate and Sri Lanka’s failure to attract export-oriented foreign in- vestors (and also to retain those who had set up production bases in the country) 出现 39 Asian Economic Papers l D o w n o a d e d f r o m h t t p : / / 直接的 . 米特 . / e d u a s e p a r t i c e – 压力 / 的f / / / / / 1 4 3 2 2 1 6 8 4 3 6 8 a s e p _ a _ 0 0 3 7 1 压力 . 来宾来访 0 7 九月 2 0 2 3 Victory in War and Defeat in Peace: Politics and Economics of Post-Conflict Sri Lanka to be the main factors behind the export slowdown. Largely because of the sluggish ex- port performance, the current account deficit widened from 0.5 percent of GDP in 2009 到 7.8 百分比在 2010. It has come down since then thanks to the rapid increase in inward re- mittances by Sri Lankan overseas migrant workers and slower import growth. 但, 在 3.9 percent of GDP, it is still well above the average level in the emerging market economies (1.8 percent of GDP). 17 Total outstanding external debt almost doubled, from US$ 20.9 十亿 (49.7 的百分比
GDP) 在 2009 to US$ 39.7 十亿 (59.2 percent of GDP) 在 2013 (桌子 1). 更重要的是- 急切地, this increase was underpinned by a palpable shift in the composition of external debt from concessional loans from bilateral donors and international developmental agen- 化学系, to borrowings on commercial terms (IMF 2014). Within commercial borrowing, 在- vate sector debt—in the form of foreign bank borrowings and international debt securities issued by the state-owned banks under explicit or implicit government guarantees—has increased rapidly. There has also been a rapid growth of short-term debt (foreign capital flows to government securities and banking sector external liabilities), from US$ 5.3 曾是-
lion in 2008 to US$ 9.0 十亿 2013. As a result of the overall increase in debt and the shift of its composition from concessional debt to loans on commercial terms, the debt ser- vice ratio increased from an average level of 12.5 percent during 2004–08 to 25.3 百分比在 2013. The debt service ratio is bound to increase more rapidly in years to come when the accumulated long-term debt begins to mature. 到年底 2013, total gross foreign-exchange reserves (美元$ 7 十亿) were adequate
to cover 4.6 months of imports. According to the IMF estimates, 然而, net foreign ex-
change reserves18 were only US$ 4.6 十亿, which was sufficient to cover the country’s
import bill for approximately 2.5 months—below the traditional rule of thumb level for
reserve adequacy (3 月). 然而, this import-based reserve adequacy measure,
which originated in the days of the Bretton Woods system,19 is no longer an appropriate
yardstick for measuring reserve adequacy because Sri Lanka is now significantly inte-
grated into global capital markets through foreign borrowings and its short-term debt
exposure has increased significantly in recent years. An important lesson learned from the
string of financial crises that engulfed emerging market economies in the 1990s was that
the prudent level of reserves needs to be determined in relation to the volume of short-
term foreign-currency liabilities (Fischer 2004; Eichengreen 2006; Lee and Park 2009). 在

17 The figure is from the IMF World Economic Outlook database.

18 Gross official reserves net of short-term (less than one year) contractual payment obligations and

foreign exchange swap arrangements with domestic banks.

19 Under the Bretton Woods system of fixed exchange rates combined with binding controls on capi-
tal flows, the worst situation that could be imagined relating to balance of payments management
of a country was that it could lose access to trade credit, which normally matures in three months
(Athukorala and Warr 2002).

40

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Victory in War and Defeat in Peace: Politics and Economics of Post-Conflict Sri Lanka

terms of this criterion, Sri Lanka’s ability to defend the rupee in the event of an external
shock that trigger short-term capital outflow has rapidly eroded in recent years. 比例
of net foreign-exchange reserves to total short-term debt20 sharply declined from 2010,
reaching 50.9 百分比在 2013 (桌子 1).

最后, the other side of the coin of the worsening current account deficit and massive
foreign debt accumulation is the widening budget deficit (桌子 1). From about the late
1990s until 2008, the budget deficit hovered around 7 percent of GDP, with military ex-
penditure accounting for the lion’s share of deficit financing, and reached a historical high
的 9.9 percent of GDP at the final stage of the conflict in 2009. Notwithstanding a mild
decline during the past three years, the budget deficit still remains well above the inter-
nationally considered safety range of 3 百分比到 5 百分. Even this mild decline in the
officially reported deficit figures needs to be treated with caution because from about 2012
the government has been shifting budgetary transfers to the loss-making public enter-
prises “off budget,” by forcing these enterprises to borrow on their own from domestic
banks under government guarantees.21

4. Regime shift

As discussed in the previous section, 经过 2014 there were clear signs that the debt-fuelled
growth dynamism was not sustainable. 还, despite the glowing headline economic
numbers, early signs of popular dissatisfaction with the economic performance, com-
plaints about the increasing cost of living among the general public, and concerns about
the sustainability of debt-fuelled growth among the politically vigilant middle class, 有
begun to emerge. Authoritarianism, nepotism, and corruption of the regime turned out to
be part of day-to-day conversations. A clear warning signal of waning electoral support
came from the provincial council elections held in the Uva Province, where the govern-
ment share of the votes slumped from 72 百分比到 51 百分. 在此背景下, in Novem-
误码率 2014 President Rajapaksa called a snap election for 8 一月 2015, two full years
ahead of his second 6-year term, anticipating further erosion of his electoral support as
economic conditions worsened. He expected to win on the back of his popularity as the
hero who ended the civil war and started the post-civil war “economic boom.”22

Rajapaksa’s decision to go to a snap election was also premised on the calculation that
he would face a weak and splintered opposition, with Ranil Wickremasinghe, long-time

20 This ratio is the single most empirically supported indicator of a country’s vulnerability to cur-

rency crises (Jeanne and Ranciere 2011).

21 Total losses of public corporations increased from Rs 8 十亿 (0.3 of GDP) 在 2005 to Rs 191 十亿

(2.5 percent of GDP) 在 2012 (Ministry of Finance 2013).

22 Another seemingly important reason was that the President’s trusted astrologer had predicted

indubitable victory if the elections was held on the specified date! (Economist 2015)

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Victory in War and Defeat in Peace: Politics and Economics of Post-Conflict Sri Lanka

leader of the UNP and a many-times unsuccessful presidential candidate, would be his
main challenger. 这, 然而, proved to be a major miscalculation. In a series of events
that moved at a dizzying pace, the regime found itself facing a united, well-organized,
generously financed opposition that launched a disciplined and focused campaign. 先生.
Maithripala Sirisena, a Senior Minister and General Secretary of the president’s own
派对 (SLFP) in the ruling coalition announced his intention to challenge the President
as the common opposition candidate.23 The Sirisena campaign progressively broadened
its support base spanning a wide array of disparate political and social groups includ-
ing the conservative UNP; the left-wing nationalist JVP; the socialist Nava Sama Samaja
Party; the Sinhala-Buddhist Jathika Hela Urumaya; the main Tamil party, Tamil Na-
tional Alliance; the main Muslim party, the Muslim Congress; and a number of “civil
society” organizations. The opposition campaign was concentrated on pledges for sweep-
ing changes within 100 天 (“100-Day Program”) including pruning the power of execu-
tive presidency; forming an all-party (national) 政府; restoring the independence
of institutions such as the police, judiciary, and public services; eliminating corruption;
and reducing the cost of living. The promises also included some “sweeteners,” including
public sector wage increases.

A month before calling the election, the government introduced a big-spending budget.
The state machinery and resources were used in the election campaign in violation of the
election law (Bastian 2014; Weerakoon 2015). The state-run media gave virtually exclusive
coverage to Rajapaksa’s campaign. Samurdi [Prosperity], a welfare payment (cash grant)
system for low-income households, was used to woo voters. The Samurdi recipients and
newly appointed public-sector employees were dragooned to the election campaign. 这
military was used to distribute and exhibit government propaganda. The government’s
election campaign was marred by violence and malpractices of various kinds against the
opposition supporters.

但, contrary to expectations, voting proceeded in an unexpectedly calm and orderly
fashion on election day. This may have been because of the pressing need for the gov-
ernment to display that the election was free and fair, but the mammoth election rallies
(although orchestrated abusing incumbency advantage) and his astrologer’s prediction
probably also made the president confident that he would easily win without tampering
with the voting process. The election commissioner took an unexpectedly hard-line stance
on regime shenanigans. As the election turned out to be a close contest during the last
few days of the campaign, there was also a “natural” compulsion for officials involved in
conducting the election (the returning officers, the police on duty, ballot-box handlers) 到
follow the procedures correctly (Weerakoon 2015).

23 Apparently Sirisena’s candidacy was orchestrated using satellite phones to escape the Rajapaksa

regime’s oppressive surveillance (Cronin-Furman 2015).

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Victory in War and Defeat in Peace: Politics and Economics of Post-Conflict Sri Lanka

桌子 2. 斯里兰卡: Results of the presidential elections, 2010 和 2015

Province/district

Western province

Colombo district

Central province
Southern province
Northern province
Eastern province
Northwestern province
North central province
Uva province
Sabaragamuwa province
斯里兰卡

2010 选举
Valid
votes
(数千) Turnouta

SF

2015 选举
MR
Valid
votes votes votes
(%)
(%)

(数千) Turnouta

2,981
1,161
1,362
1,397
284
684
1,268
673
676
1,072
10,397

78.9
77.1
77.9
79.8
31.1
69.6
76.3
78.9
78.2
80.1
76.8

58.6
52.9
52.6
65.1
25.7
40.1
61.9
65.9
58.6
62.9
57.9

40.2
45.9
44.8
33.3
65.0
56.8
36.6
32.5
39.3
35.3
40.1

3,391
1,296
1,592
1,579
521
810
1,445
781
788
1,217
12,123

83.2
82.7
82.2
83.6
68.5
75.2
80.4
83.4
83.3
84.3
81.8

MR MS
votes votes
(%)

(%)

47.9
43.4
42.9
58.2
20.9
26.5
52.2
49.5
53.5
54.0
47.6

51.4
55.9
55.6
40.9
75.8
72.0
47.0
49.5
45.0
44.8
51.3

来源: Compiled for data extracted from Department of Census and Statistics (DCS), Statistical Yearbook 2010 (for data on the

2005 选举), and the DCS Web site (www.statistics.gov.lk).

Notes: A. Percentage of valid votes in total registered voters.
MR = Mahinda Rajapaksa; SF = Sarath Fonseka; MS = Maithripala Sirisena.

桌子 3. 斯里兰卡: Population, urbanization, and ethnic composition, 2012

Province

Urban

Population population1
(数千)

(%)

Western province

Colombo district

Central province
Sourthern province
Northern province
Eastern province
Northwestern province
North Central province
Uva province
Sabaragamuwa province
斯里兰卡

5,854
2,324
2,572
2,477
1,062
1,555
2,380
1,267
1,266
1,929
20,359

38.8
77.5
10.5
10.6
16.5
25.0
4.1
4.3
5.8
6.0
18.2

Ethnic composition (%)

Sri
Lankan Indian

Sinhalese Tamil

Tamil Muslim Other

84.1
76.5
65.9
95.0
2.0
23.2
85.8
90.8
80.8
86.3
74.9

5.8
10.1
4.9
1.0
92.9
39.3
2.8
0.9
2.4
3.7
11.1

1.0
1.0
18.9
0.7
0.8
0.3
0.2
0.1
12.2
5.4
4.1

7.9
10.8
9.9
2.9
2.9
36.9
11.1
8.0
4.3
4.3
9.3

1.2
1.5
0.3
0.4
1.4
0.4
0.2
0.2
0.2
0.3
0.5

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来源: Sri Lanka Department of Census and Statistics, Population and Housing Census 2012,

http://www.statistics.gov.lk/PopHouSat/CPH2011/Pages/Activities/Reports/CPH_2012_5Per_Rpt.pdf.

The voter turnout was 81.5 百分, by far the highest of the seven elections held under
the presidential system since 1982. Rajapaksa’s share of the total votes fell from 57.9 每-
分在 2010 到 47.6 百分比在 2015. Sirisena won with a margin of 3.7 百分点
(51.3 percent of the total votes) (桌子 2). The anti-Rajapaksa swing was stronger in the
northern and eastern provinces and in the Nuwara Eliya district, where ethnic minorities
are heavily concentrated (Tables 2 和 3). But there was also a massive swing against Ra-
japaksa in the predominantly Sinhala-Buddhist hinterland, even in the southern province,
the heartland of his support base.

Following the election there was a peaceful transition of power. 然而, 无论
this was an “honorable stepping down” by President Rajapaksa or the outcome of the

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Victory in War and Defeat in Peace: Politics and Economics of Post-Conflict Sri Lanka

system’s checks and balance remains a debatable issue. According to some media com-
mentaries, he explored the possibility of declaring the election results null and void, 但
failed because the attorney general, the solicitor general, the inspector general of police,
and the military commanders were not supportive (The Economist 2015).

4.1 What caused the regime change?

How does Sri Lanka’s seemingly impossible regime change fit within the existing body
of knowledge on regime changes? The available theoretical and empirical literature on
this subject has specifically focused on transition from authoritarian to democratic (或者
hybrid) rule and/or, in a few cases, reversion from democracy to dictatorship.24 The
downfall of the Rajapaksa regime does not fit neatly within this framework. In spite
of the significant dictatorial tendencies developed over time, it was not a pure author-
itarian regime (dictatorship). Rather it was an “illiberal democracy,” which still de-
pended on electoral support for survival. 这是, 实际上, the reason why president
Rajapaksa went for a snap election before the people’s memories of the civil war vic-
tory faded and the debt-fuelled economic boom dissipated. The regime shift, 所以,
involved two separate, but closely related, episodes: Sirisena’s decision to contest the
incumbent president in the election and the expression at the ballot box of the voters’
discontent that had been simmering beneath the surface. Sirisena’s defection from the
government that triggered the regime change was a clear case of an “elite rupture,”
a well-calculated reaction to the increased concentration of power in the presidency,
which alienated the president (and his close associates) within the ruling party itself
(Langston 2006).

There has been considerable speculation, and direct allegations by the ex-president and
others in his camp,25 that western countries and India played a role in orchestrating
the elite rupture. It is certainly the case that Sri Lanka, because of its strategic location,
is of significant interest to the major powers in the balance of power game in the Indian
Ocean (斯科特 2008; 卡普兰 2009). As a reaction to the deterioration of relations with west-
ern powers and India on the issue of allegation of war crimes during the final phase of
the civil war, the Rajapaksa regime had embraced China as Sri Lanka’s “first friend.”
Whatever role foreign powers may have played, 然而, our analysis of the regime
consolidation in the previous section suggests that the elite rupture would not have hap-
pened without the disenchantment within the government itself caused by one-family
authoritarian tendencies.

24 See Kuran (1991), Teorell (2010), Haggard and Kaufman (2012), and the works cited therein.

25 www.scmp.com/news/asia/article/1735379/sri-lanka-should-thank-china-not-attack-it-ex

-president-rajapaksa-says.

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Victory in War and Defeat in Peace: Politics and Economics of Post-Conflict Sri Lanka

We estimated the following two simple regression equations to examine change in voter
behavior between the 2010 和 2015 presidential elections:

MRMit

= α

1

+ A

2 D15 + β

1 E T Hit

+ β

2U RBit

+ β

3T RNit

, + β

4 D15 ∗ E T Hit

+ β

5 D15 ∗ U RBit

+ β

6 D15 ∗ T NVit

+ δ

+ μ

我,t

,

MRMit

= α

1

+ A

2 D15 + β

1 SL Tit

+ β

2 I NTit

+ β

3 MSL it

+ β

4U RBit

+ β

5T RNit

,

+ β

6 D15 ∗ SL Tit

β

7 D15 ∗ I NTit

+ β

8 D15 ∗ MSL it

+ β

9 D15 ∗ U RBit

+ β

10 D15 ∗ T NVit

+ δ

+ μ

我,t

(1)

(2)

where MRM the difference between percentage share of Mahinda Rajapaksa’s votes in
total votes polled and that of the major contestant (Mahinda Rajapaksa Margin); ETH rep-
resents the share of all ethnic minorities (SLT + INT + MSL) in the total population in
the district (百分); SLT the share of Sri Lankan Tamils in the total population is in the
区 (百分); INT the share of Indian Tamils in the total population is in the district
(百分); MSL the share of Muslims in the total population is in the district (百分);
URB is the share of urban population in the total population in the district (百分); TNV
represents the change in voter turnout in the election in the given year over the previ-
ous election (百分); and D15 is binary dummy variable, which takes value 1 为了 2015
δ captures the joint impact of
和 0 为了 2010. The standard constant term is denoted by α
unobserved explanatory variables (unobserved effects); μ is the disturbance term that is
assumed to satisfy the usual regression model conditions; i = 1, 2 , . . . , 22 is the district;
and t = 2010, 2015 denotes the two elections.

,

在等式中 (1), ETH captures the swing votes of the three ethnic memories lumped to-
在一起 (non-Sinhalese) between the two candidates. The three ethnic groups (SLT, INT,
and MSL) are included separately in equation (2) to test the possible difference in their
voting patterns. The other two explanatory variables are common to both equations. URB
is expected to capture the combined impact of voters’ discontent caused by the increase in
the cost of living and of their concern about the deterioration of the quality of governance.
People living in urban areas are more affected by increases in cost of living compared
with their rural counterparts. The middle class, which is presumably more concerned
about corruption and other malpractices and also better aware of the fragility of the eco-
nomic boom, is heavily concentrated in urban areas. 很遗憾, the available data
do not permit us to specify suitable variables to capture the two effects separately. TNV
could capture the possible impact on the election outcome of the “last-minute” turnout
of voters, who until then remained “discouraged” because of the perception of impos-
sibility of regime change and activated as the opportunity for a change became clearer.
The intercept dummy variable, D15, and its interaction terms with the other explanatory
变量 (slope dummies) are included to test whether the voting patterns in 2015 是

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Victory in War and Defeat in Peace: Politics and Economics of Post-Conflict Sri Lanka

different from the “average” pattern for the two elections. This approach is equivalent to
estimating two separate regressions for the two elections, but has the added advantage
of providing a direct test of the statistical significance of the differences between the esti-
mated coefficients (Dougherty 2007).

We estimated the two equations using a two-dimensional (year and district) panel data
set.26 The pooled ordinary least-squares and the random effects estimators were used
as alternative estimation methods.27 In terms of the Breush-Pagan test for the pres-
ence of unobserved heterogeneity across the districts of the election results, we were
not able to reject the null hypothesis of no difference between the two estimators of
both equation (p-value = 1.00). We therefore opted for pooled ordinary least-squares on
efficiency grounds.

The results are reported in Table 4. In terms of the adjusted-R2, both equations explain
超过 80 percent of the variation in inter-district differences in the voting patterns. The F-
test for the joint significances of D15 and its interaction terms with the three explanatory
变量 (reported in the last row of Table 4) overwhelmingly support the hypothesis
that the voting patterns in the 2015 elections are significantly different from those of the
2010 选举.

The results confirm the important role of ethnicity in determining the swing against
Rajapaksa in the 2015 选举. 在里面 2010 选举, a percentage point change in the
combined share of the three minor ethnic groups in total population among the dis-
tricts contributed to a 0.13 percentage point reduction is Rajapaksa’s margin (平等-
的 (1)). 在里面 2015 选举, the anti-Rajapaksa swing in the ethnic vote was as high
作为 0.69 百分点. When the ethnic population is disaggregated into the three
ethnic groups (SLT, INDT, MSL) the coefficients of the three variables do not overlap
with each other, suggesting that the voting patterns among the three groups are signifi-
cantly different. 为此原因, we consider Equation 2 as our preferred equation in the
following discussion.

有趣的是, the coefficient of the dummy interaction variable for the Sri Lankan Tamils
(D15∗SLT) is not statistically significant. This suggests that there was no significant differ-
ence in the anti-Rajapaksa swing in the Sri Lankan Tamil votes in the two elections. 这
anti-Rajapaksa swing in the 2015 election came solely from the other two ethnic minori-
领带, in particular from the Muslim voters. When controlling for the other variables, 那里
was an almost one-to-one correspondence in 2015 between the degree of swing against

26 The data are compiled from the sources listed in Tables 2 和 3.

27 The fixed-effects estimator is not applicable because the data series on the ethnicity variables are

time-invariant.

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Victory in War and Defeat in Peace: Politics and Economics of Post-Conflict Sri Lanka

桌子 4. Determinants of Mahindra Rajapaksa’s margin (MRM):
Presidential elections 2010 和 2015

Explanatory variable

方程 (1) 方程 (2)

持续的

ETH: The three minor ethnic groups, %

SLT: Sri Lankan Tamils, %

INDT: Indian Tamils, %

MSL: Muslims, %

URB: Urbanization, %

TNV: Change in turnout from previous election, %

D15: 2015 election dummy

D15∗ETH

D15∗SLT

D15∗INT

D15∗MSL

D15∗URB

D15∗TNV

Number of districts
Number of observations
Adjusted R2
Breusch-Pagan LM test for (p-value)A
Test for joint significance of D15 and its interaction
terms with other variables (p-value)乙

9.13∗∗∗
(1.16)
−0.13∗∗∗
(0.02)

−0.01
(0.02)
0.01
(0.04)
8.55∗∗
(3.45)
−0.56∗∗∗
(0.12)


−0.24
(0.13)
−0.06
(0.34)
22
44
0.83
1.00
0.00

9.65∗∗∗
(1.34)

−0.13∗∗∗
(0.01)
−0.21∗∗∗
(0.04)
−0.17∗∗∗
(0.073)
∗∗
−0.11
(0.05)
0.02
(0.0.3)
14.68∗∗∗
(5.85)

−0.23
(0.16)
−0.53∗∗∗
(0.16)
−1.02∗∗
(0.42)
∗∗
−0.23
(0.10)
−1.09∗∗
(0.53)
22
44
0.85
1.00
0.00

来源: Estimated using the relevant data series given in Tables 2 和 3.

笔记: The dependent variable (MRM) is the difference between percentage share of Mahinda

Rajapaksa’s votes in total votes polled and that of the major contestant. Heteroscedasticity-

collected standard errors (clustered by districts) are reported in parenthesis, with the statistical

significance of the regression coefficient denoted as

∗∗∗

statistically significant at the 1 百分

∗∗

等级,

statistically significant at the 5 percent level, 和

statistically significant at the 10

percent level.

A. A test for the choice of pool OLS estimator over random effects estimator.

乙. A test of the statistical difference of the regression coefficients between 2010 和 2015

选举.

Rajapaksa and inter-district differences in the share of Muslim population (–1.19 = –0.17 –
1.02, with a standard error of 0.43), 从 0.17 在 2010. One percentage point change in
the share of the Indian Tamil population accounted for a 0.74 percentage point reduction
in Rajapaksa’s margin, compared with 0.21 在 2010.

Urbanization emerges as a much more important factor in 2015 compared with 2010. 在
2015 a one percentage point change in the degree of urbanization across districts is as-
sociated with 0.23 percentage point of the swing against Rajapaksa, compared with 0.11
百分比在 2010. As discussed earlier, this pro-opposition shift in the urban votes can be

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Victory in War and Defeat in Peace: Politics and Economics of Post-Conflict Sri Lanka

reasonably attributed to a combination of the relatively higher cost of living in urban ar-
eas and, perhaps more importantly, the fact that a higher share of the population in urban
areas are presumably more concerned about the authoritarian tendencies of the regime.

The latter inference relating to the voting patterns of the urban population is consistent
with the available evidence that shows sharp changes in the voting preferences of postal
voters between the two elections (Gunasekera 2015). 在 2010 Rajapaksa won the postal
votes by a higher margin of general votes. 在里面 2015, he was defeated in postal votes as
出色地; interestingly, his opponent’s winning margin turned out to be larger in postal votes
compared with that of general votes. Postal voters are almost entirely police and military
personnel and government employees engaged in election duties and essential services,
who presumably represent significant sections among the more politically sophisticated
选民. 讽刺地, in the regime’s view, they owed their allegiance to the president: 作为
discussed, over-staffing government offices through new recruitment and increasing pub-
lic service salaries were an integral part of the government’s preparation for the election.
Though exact figures are not available, the absolute majority of postal voters are Sinhalese
(Gunasekara 2015).

在里面 2015 选举, unlike in 2010, the coefficient of the change in voter turnout vari-
有能力的 (1.09) is statistically significant at the 5 percent level with a negative sign. This sug-
gests that there was an almost one-to-one relationship between reduction in Rajapaksa’s
margin and the increase in voter turnout across the districts, notwithstanding the fund-
ing he lavished on the election campaign. 最后, the intercept dummy variable (D15)
carries a coefficient of 14.5, which is statistically highly significant. This suggests that if
it were not for the swing against him of ethnic minorities and urban voters, and the in-
crease in turnout that overwhelmingly went against him, Rajapaksa’s margin over his
opponent would have increased by 14.5 percentage points at the 2015 election over the
previous election.

5. Prospects and challenges

The “elite rupture”—Maithreepala Sirisena’s defection from the ruling party to contest
the incumbent president as the common candidate—was only the proximate cause of Sri
Lanka’s stunning regime shift in January 2015. It provided the voters with an unantici-
pated opportunity to express their discontent with the Rajapaksa regime, which had been
simmering beneath the surface, at the ballot box. The overwhelming support received
by Sirisena from the Tamil and Muslim communities, despite his own past as a senior
member of the Rajapaksa government and the presence of Sinhala-chauvinist forces in
his ranks, played an important role in the regime shift. Most importantly, 然而, 这
regime change reflected an underlying assertiveness on the part of the wider electorate,
encompassing all ethnic groups, of its democratic rights. For the first time in Sri Lanka’s

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post-independence history, the minority communities appear to have felt themselves part
的, and potentially an important influence on, the national political scene. But sustain-
ing their faith and ensuring ethnic harmony, although achieving an economic transition
from the debt-driven bubble economy to sustainable growth, is bound to be a formidable
task for the new regime. The country is now run by a motley coalition, by far the most
diverse political alliance in Sri Lankan history, which does not have a clear majority in
the parliament. Ideological differences make it difficult for agreement on policy, 尽管
war-weariness and the discontent with the Rajapaksa regime may have led to a greater
willingness to accommodate diverse perspectives and demands within the political sys-
TEM, which may also help the reconciliation process.

The new government has taken some early steps to restore institutions and the rule of
法律. Restrictions on the media have been removed, militarization of civilian spaces has
decreased, and the judiciary seems to have become more assertive and independent.
A start was also made to shift power from the presidency to the prime minister and
strengthening parliamentary oversight through an amendment to the constitution (这
19th Amendment) (Fernando 2015). Although it falls far short of the election promise to
abolish the presidential system, this amendment does provide for transferring many of
the executive powers to the cabinet, which is directly responsible to the parliament. 这
term of the parliament and the president is shortened from 6 years to 5 年, 普雷西-
dent cannot dissolve the parliament within 4.5 年, and the president is eligible to con-
test only for a second term.

The hardest problem faced by the new regime is to find a solution to the ethnic conflict
that would enable the military to be withdrawn from the Tamil majority areas and restore
civil rule with an acceptable degree of administrative autonomy. It has already begun to
release some land acquired by the military in the northern province to the original own-
呃. The anti-minority hysteria has also receded thanks to initiatives to restore law and
order and putting an end to the militarization of civilian spaces. 然而, 是否
regime shift will provide a window of opportunity for working towards national reconcil-
iation is yet to be seen.

On the economic front, the challenges facing the new regime are quite daunting. 这
biggest challenges arise from the legacy of the debt-financed economic boom, driven
to a large extent by Chinese-funded public sector investments. Though this boom was
intrinsically unsustainable, it was also the basis of a sense of growing prosperity. 这
unfortunate reality is that the economic performance of the new government will be
judged by the electorate with the overall growth performance during the Rajapaksa pe-
riod as a benchmark. The policy dilemma of the new regime is, 所以, how to redirect
policy changes to restore the international competitiveness of the economy, and to con-
tain debt dependency while maintaining the living standards of the population and an

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adequate growth momentum to sustain employment levels. A lower growth rate and a
slide in living standards will produce an electoral backlash that may well reverse the po-
litical transition or generate high political volatility and instability.

Here it is important to emphasize the fundamental change that has occurred in the nature
of the Sri Lankan economy during the Rajapaksa regime. The large and persistent current
account deficits and the shift to commercial debt financing have exposed the economy
to volatile capital movements in a way that is unprecedented. In an attempt to stabilize
its own direct foreign borrowings under pressure from the IMF, the government relaxed
previous controls, allowing domestic banks, state-owned enterprises, and private cor-
porations to engage in foreign borrowings, and then borrowed from these “domestic”
来源. 因此, the state controlled banks have substantially increased their foreign
currency exposures, which carry an implicit government guarantee and in effect create
a contingent public sector liability. This makes the Sri Lankan economy quite similar in
important ways to the Southeast Asian economies such as Thailand, Malaysia, 和在-
donesia that were hit by the 1997–98 Asian financial crisis (Athukorala and Warr 2002). 它
remains much more vulnerable to sudden adverse shocks from the global economy than
in the past, particularly in the context of increased fragility in the emerging markets and
continuing poor conditions in key markets, including the EU.

The new government’s foreign policy initiatives to restoring relationships with the West-
ern powers also pose problems, particularly in the short run, for managing the transition
from a bubble economy to a sustainable growth path. The political pressures to reduce the
economic dependency on China—seen as the driver of the political and strategic tilt to-
ward China—is likely to lower the flow of future Chinese financial assistance and invest-
蒙特, even if current projects and commitments continue. Although many public sector
investment projects funded by the Chinese are widely considered to be inefficient “white
elephants”, it is not clear that compensating capital and financial flows will flow from the
West or India to maintain current levels of investment and economic activity.

Even under an optimistic scenario of availability of external financing from alternative
来源, the debt-driven growth dynamism can be sustained only as long as foreigners
keep lending to Sri Lanka and increasing their total Sri Lankan exposure. Eventually sus-
taining robust growth requires macroeconomic adjustments to restore the international
competitiveness of the economy through depreciation of the real exchange rate. Realis-
抽搐地, this will require a substantial nominal depreciation of the rupee. Under current
economic conditions, 然而, relying on nominal exchange rate depreciation alone for
achieving this economic adjustment could be a recipe for economic disaster. Given the
massive build-up of foreign currency–denominated government debt, exchange rate de-
preciation naturally worsens budgetary woes. And given the increased exposure of the
economy to global capital markets (正如所讨论的) a large abrupt change in the exchange

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rate could also shatter investor confidence, triggering capital outflows. 所以, 什么
is required is a comprehensive policy package encompassing greater exchange rate flex-
ibility and fiscal consolidation (which requires both rationalization of expenditure and
widening the revenue base) to achieve a durable reduction in public debt, and comple-
mentary measures, including trade and investment policy reforms, to improve the overall
investment climate in the country.

The current government, a coalition of disparate groups with divergent ideologies, is un-
likely to effectively implement major policy changes. It is difficult at this stage to predict
the composition and economic policy stance of the regime that will emerge from the up-
coming parliamentary election, but it will certainly need strong economic and political
skills to successfully achieve what the Sri Lankan electorate hopes for and deserves. 这
bottom line is that governing multi-ethnic states require special political ingenuity and
关心: As Sri Lankan’s post-independence political and economic experiences have vividly
证明了, maintaining ethnic harmony and sustaining growth momentum of the
economy are intricately interrelated.

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