By Thareendra Kalpage 

One of the world’s great diplomats, Henry Kissinger, once said: “Behind the slogans lay an intellectual vacuum.” I have always found it fascinating to read about Henry Kissinger the diplomat, and spending 20 years of my adult life in Sri Lanka proves to me how accurate that statement is. He was correct. Whether external or internal policies, Sri Lankan political leadership has always consisted mainly of empty slogans.

This article is not about Henry Kissinger or his brand of foreign policy but the commonly held belief that foreign policy is the ultimate weapon for any country’s survival. Our island nation needs to construct a policy that can lead it from a default situation to a prosperous one. 

Factors such as a smaller population, a weak economy, and lower internal productivity will make it difficult for Sri Lanka to bargain with the outside world. However, as the old saying goes, ‘If there is a will, there is always a way’. By making a genuine effort and reworking its foreign policy, improving trade facilitation, enabling regulations, boosting innovations, and addressing labour-related issues, Sri Lanka can help attract the outside world.

Sri Lanka’s policymakers must first focus on sound decision-making and a comprehensive foreign policy makeover to accomplish economic growth. Failure to address the issue through foreign policy will have severe consequences for Sri Lanka. Smaller countries have traditionally had less to offer the business community in the past, and Sri Lanka is no exception. Nonetheless, the Government must focus on economic liberalism or intense economic diplomacy to provide the world with something more appealing.

The economic lesson learned during World War II was that nationalism was costly. The Bretton Woods Agreement set a fixed exchange rate using gold as the standard and the 44-nation agreement created the International Monetary Fund (IMF) and the World Bank (WB) as part of the alternative for the costly nationalism-driven path. 

The system proved workable for many countries. By the 1970s, political economy came into existence as a field of international relations. The North-South gap, economic regulations, and barriers to third world economies started to be discussed. Gradually it was felt that there was a dire need to make a financial web, so all the states became involved economically to avoid poverty, war, and conflicts. 

The concept is called economic interdependence, and it was put forth by liberals such as Joseph Nye and Robert Owen Keohane. Countries like Singapore, South Korea, and many Southeast Asian nations opted for the liberal economic model and have progressed significantly. Today, Singapore is more capitalist than the US and an ideal to many Asian and African countries.

Sri Lanka should indulge in economic liberalism by making its markets more open. For that, it should reconsider its protectionist and regulatory policies. More importantly, financial stability and true democracy are the first criteria for opening up to economic liberalism. If there is political instability and a non-democratic setup, no state or financial institution would risk investing in the country. 

Sri Lanka’s foreign policy background 

 

The basic principle of Sri Lanka’s foreign policy is ‘friendship towards all, enmity towards none,’ which can be traced from the inception of its foreign policy. Sri Lanka was a founding member of the Non-Aligned Movement (NAM) because it wanted to maintain a foreign policy of neutrality. In contrast, Sri Lanka’s first Constitution was Westminster, which influenced its foreign policy at its commencement. The first Prime Minister of independent Sri Lanka, D.S. Senanayake maintained British legacies, but gradually these attitudes changed with time. 

Diversity and multilateralism entered foreign policy in 1956 under the leadership of then Prime Minister S.W.R.D. Bandaranaike, and Sri Lanka established diplomatic relations with China and the USSR. The Rubber-Rice Pact with China and Sri Lanka’s position on the Suez issue were giant strides towards multilateralism.

However, the opening up of the Sri Lankan economy in 1977 changed it entirely, while the separatist conflict was also highly responsible for slow economic progress. Since 2009, Sri Lanka has been performing well on its foreign policy front, but certain challenges still have to be resolved. 

Currently, the country faces many challenges regarding its foreign policy. For example, it faces a growth challenge, as there is no economic diversity in the island. In other words, the only sector the country has is the non-tradable sector of the economy. Furthermore, climate change and Covid-19 are affecting the agriculture sector. Similarly, there is the challenge of maintaining a non-aligned spirit in the country’s foreign policy amidst great powers’ competition in the Indo-Pacific and the Indian ocean. The civil war has significantly affected Foreign Direct Investment (FDI) because of the country’s lack of stability and weak infrastructure. 

There are three main objectives of Sri Lanka’s foreign policy: promoting economic ties with the world, ensuring the country’s national security, and seeking the world’s help for domestic security.  

Sri Lanka is in desperate need of a foreign policy

 

The country’s ailing economy is the most significant issue that needs to be resolved as the first step, which requires external financial support and Foreign Direct Investment. Achieving this is the primary job of policymakers in the Government. 

Secondly, the location of a country is of formidable importance in its foreign policy. Sri Lanka’s location as a gateway to South Asia offers an attractive economic opportunity, but unfortunately, national debt, rising geopolitical tensions, and climate change in the region pose severe challenges to the Sri Lankan policy establishment. Sri Lanka must deal with these issues and take better advantage of its location.

Thirdly, Sri Lanka has no institutionalised foreign policy; instead, personalised ambitions have always driven external policy. In other words, its foreign policy is driven by its rulers rather than by the country’s institutions. 

Fourthly, within the past few years, Sri Lanka’s foreign policy evolved around China. There is a need for diversity in the country’s foreign relations, since even when China imposes demanding conditions, Sri Lanka still remains in China’s orbit. There will be no harm if Sri Lanka departs from this orbit. 

Last but not least, Sri Lanka is always at loggerheads when it comes to foreign policy decisions, particularly regarding aid and loans. Some support China, while others side with India and the US, threatening the consistency and legitimacy of a foreign policy makeover. 

How should Sri Lanka approach its foreign policy?

 

Sri Lanka has undergone poor governance, marked by corruption, nepotism, and unsustainability in economic policies, ultimately leading to political instability, which creates doubt in the mind of investors and the fear of losing their investments. Sri Lanka should establish meritocracy instead of the prevailing nepotism and instability in order to win the trust of the business community. 

Inclusive economic institutions lead to inclusive political institutions. Once Sri Lanka gets inclusive political institutions, there would be no reason not to invest in the country. This would help the country to get more FDIs, and therefore the Government should work on enabling regulations and promoting investments.

Regardless, the country’s geographical location is of immense importance. It can provide security to India and be a trade route between East Asia and West Asia. It also connects the Middle East with ASEAN countries and is a turning point between QUAD, AUKUS (a trilateral security pact between Australia, the UK, and the US), and BRI (Belt and Road Initiative). Sri Lanka should fully utilise its geographic location to reap the maximum foreign policy benefits, as location can be the most viable tool in its foreign policy bargaining.

In addition, there are several options that can be used by the Government while pursuing its economic diplomacy. On the international front, the country can use Bretton Wood institutions, particularly the IMF; Sri Lanka can seek European markets and ask for loans from giant powers. At the regional level, by using economic diplomacy, Sri Lanka can get loans from friendly states or initiate bilateral trade in the region to manage its import expenditure.

Similarly, the national debt and rising political tensions pose severe challenges for the Sri Lankan policy establishment in bringing in FDIs. The country must work on facilitating the ease of doing business so it can attract more FDIs – according to experts, an increase in the ease of doing business rank of a nation can contribute up to $ 44 million to its economy. While Sri Lanka’s foreign policy aims to attract outside support for its post-conflict domestic stability, these desired goals cannot be achieved due to a lack of sufficient national consensus on the type of post-conflict society and due to weak infrastructure. What the country needs the most is to build national consensus and work for its national interests.

Moreover, diplomats should forge links between leaders and institutions of foreign countries that are relevant to Sri Lanka to facilitate discussion and build the greater consensus needed. With a national agreement, external engagement to support domestic stability is more likely to be constructive and beneficial.

However, one must consider the fact that in future, there will be a strategic challenge for many states to manage China’s rise, particularly in the Indian Ocean, and Sri Lanka cannot set itself apart in the contest. Therefore, the Sri Lankan establishment will hurry to maintain the realpolitik paradigm of a balance of power between the US and China in its foreign policy in the Indian Ocean.

More importantly, Sri Lanka needs to work with the US, Europe, SAARC, OECD, and Southeast Asian countries to secure its national interests, especially among economically powerful nations. However, what the nation has seen in more than 70 years is the downgrading of its growth and a high increase in foreign borrowings. 

The Government adopted an unconventional policy in 2020 to support its economy, with the imposition of the ban on imports of unnecessary goods, which improved the economy by 8% in the first half of 2021. But still, the economy is in trouble, and the Government should reconsider its foreign contracts, especially with China. This would be the prime task of policymakers. Furthermore, Sri Lanka needs to overcome its debt burden through a viable foreign policy, while improving and building a strong economy and constructing trade ties with SAARC and BIMSTEC countries. 

Besides, Sri Lanka’s elites are pursuing their self-interests over national interests, when they should instead be changing the policies used for dealing with foreign countries. For example, in the agreement with China, the elites went for a high interest agreement with their Chinese counterparts rather than the Build, Operate and Transfer model. The move exposed their ruthless ambitions. 

Sun Tzu, in his book ‘The Art of War,’ says that when an individual commits something wrong, it is called a mistake. When it comes to leadership, then it is not merely a mistake but a blunder, because leadership decisions sustain or destroy the nation. To overcome its challenges, Sri Lanka requires visionary leadership and a firm grasp of foreign policy. Through this, the author was emphasising the significance of a State-driven policy where a visionary policy would prevail regardless of who is in power, such as the US Senate Committee on Foreign Relations.

The tourism industry is considered to be the backbone of Sri Lanka, which was unfortunately  severely affected by Covid-19. In 2018, tourism contributed a total of 5.6% to the GDP. Accordingly, it contributed $ 4.4 billion in 2018, which shrunk to 0.8% in 2020. As Covid-19 slowly disappears, the Government should take all the basic steps to attract tourism. 

Currently, Sri Lanka’s vaccination rates have slowed. This means the Government is not serious about dealing with Covid-related issues in order to attract tourists. Hence, to support the largest industry in the country, the Government should take all the essential steps regarding Covid-related issues and focus on vaccination in order to declare the country as fully vaccinated. It could also introduce a ‘free tourist visa policy’ to attract international tourists.

There is hope for Sri Lanka to play a more provocative role in terms of regionalism and multilateralism. The country’s stature as a leading player in multilateral and regional organisations such as the Indian Ocean Rim Association (IORA) and BIMSTEC has grown recently. By using active foreign policy, it can perform a leading role in the future, which would be beneficial in building its reputation as a trustworthy nation. 

Conclusion

There is always a conflict between continuity and change in the field of world politics. Sri Lanka is experiencing the same situation. For example, it is struggling with whether to maintain the old legacies/policies or adopt new ones by taking some risks. There are always challenges for every nation when it comes to foreign policy. Foreign policy means to achieve national interests in a challenging environment, or what realists in international relations call anarchy. There are three models for foreign policy decision-making: the Rational Actor Model, the Organisational Actor Model, and the Bureaucratic Actor Model.

The Rational Actor Model suits Sri Lanka. Sri Lanka’s foreign policy faces challenges from domestic issues such as political instability, weak institutions, dead growth, and less technological innovation, to external issues such as always entering into losing negotiations with greater powers, balancing the US-China rivalry, increasing bilateral trade with regional countries, re-establishing the confidence of global economic institutions, and facilitating business grounds for FDI.

On the other hand, the Rational Actor Model with a cost-benefit analysis takes the central role in decision-making. Sri Lanka has many opportunities, and by using them with enthusiasm, it can achieve all the desired ambitions of its people.  

It’s the Cinderella story of Asia. Sri Lanka, like all Cinderellas, is the most beautiful country with the most beautiful natural environment, situated at a crossroads for all trade routes, despite working in a rat-infested kitchen.

(The writer is the Chief Executive Officer of Epic Lanka Technologies. The perspectives and opinions expressed in this article are solely the author’s personal viewpoints)