Sri Lanka is poised to become even more indebted to Beijing with the return of pro-China ex-President Mahinda Rajapaksa, after his newly formed Sri Lanka People's Front won a landslide victory at Saturday's local government elections.
The victory for the party could see Sri Lanka flip back into the arms of China, Rajapaksa's favorite lender and builder. The current government had leant toward India and Western powers but this dynamic could now be tested. Already, as a legacy of Rajapaksa's government, Sri Lanka owes China $8 billion of its total $65 billion of debt, equivalent to over 70% of its gross domestic product.
After suffering two back-to-back election defeats in 2015, the return of Rajapaksa's party has not only dealt a humiliating defeat to the coalition government, but also unleashed political chaos. The Sri Lankan rupee fell to a record low this week due to the political uncertainty.
Namal Rajapaksa, the ex-president's eldest son and a parliamentarian, said if his father formed a government, Sri Lanka will continue to rely on China. But he was also quick to add that the government will not extend any preferential treatment to China specifically, and will also invite India, the U.S., the U.K. and Europe to invest in Sri Lanka.
"My father has been close with China, and I believe he will continue this and I see no harm in it. However, it is also important that we have a non-aligned policy. But, we will continue to rely on China, and there is nothing wrong with that," he told the Nikkei Asian Review.
Port City Colombo is being developed by China in a major land reclamation project. (Photo by Yuji Kuronuma)
Although Rajapaksa has won majority of the local authorities convincingly, he has to rely on the central government to release funds for development in these same wards. Local governments cannot directly borrow from foreign lenders.
As such, Rajapaksa has been pressuring President Maithripala Sirisena to dissolve parliament and hold a snap general election, in the hopes that he will win enough votes to establish a new government. But Sirisena and Prime Minister Ranil Wickremesinghe reached an agreement on Tuesday to continue the coalition government for the next two years and to set up a committee to consider policy changes, including a possible corruption crackdown.
Despite this tentative agreement, Namal Rajapaksa said that the internal bickering within the coalition did not bode well for its future. "There is no political stability within the central government. They are constantly arguing and both parties are having opposing policies. This is why we are calling on President Sirisena to dissolve parliament and go in for a snap election."
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