“It is very important to have capable and eloquent diplomats in Sri Lanka’s embassies, in order to be able to canvass issues and economic interests more successfully. It is important to bear in mind that the West is an important market, and have a balanced foreign policy towards Western countries, in Sri Lanka’s best interests” says Dr. Saman Kelegama.

Dr. Saman Kelegama

Delivering a lecture on the topic “Economic Dimensions of Sri Lanka’s Foreign Policy”, last evening at the BCIS (Bandaranaike Centre for International Studies) in Colombo, today (Oct 12, 2013), the Executive Director of the Institute of Policy Studies and a well-known economist in Sri Lanka said; ” allowing of casinos is not a bad thing, because gambling is a matter of choice, in the world casino rankings, Macau is number 1, Las Vegas is at number 2 and Singapore is now at number 3,  the present government policy of letting in casinos is not a bad thing for Sri Lanka overall.”

Dr. Kelegama spoke of how economic policy agendas of Sri Lanka have influenced its foreign policy under various countries, at multilateral, regional and bilateral levels.

He said that from 1948 to 1955, the foreign policy was influenced by the market economic models that were inherited from the colonial regime that existrd before. The market for key exports (more than 90% plantation items) was the West. Thus, foreign policy was dictated by a tilt towards the West. Commonwealth membership and the initiation of the Colombo Plan (1951) were with Western support for the economy.

At the same time, the China-Ceylon Rubber-Rice Pact of 1953, became one of the firat South-South cooperation programmes in the world. Likewise, in 1954, there were attempts to forge cooperation within ‘Asian powers’.

However, from 1956 to 1959, there was a concerted effort to reduce dependence on Britain and Western powers. The political ideology was one of ‘detachment from tbe West’ and one which leaned towards socialist ideology, resulting in import substitution etc.Dr. Kelegama said that the next period was from 1960 to 1964, with an aggressive nationalisation policy. Many companies were even taken over without compensation to foreign owners. This led to a cutting off of US financial support. There was greater dependence on the Socialist bloc for financial aid, he said.

He went on to say that from 1965 to 1970, Prime Minister Dudley Senanayake took steps while retaining a non alignment, to remove the US financial aid embargo and initiate IMF negotiations.

From 1970 to 1977, there was a move towards a highly closed economy with emphasis on self sufficiency where economic policy was concerned. Thus, the favour of the socialist bloc was sought, to gain support for new state owned enterprises. Meanwhile, a non-aligned policy was maintained, and Sri Lanka managed to get GSP concessions in 1972. Sri Lankan economist and civil servant Dr. Gamani Corea, who became Secretary General of UNCTAD was involved in the North-South dialogue, to get rich countres to help poor countries.

From 1978 to 1988, the economy was opened under President J. R. Jayewardene, with massive aid from the West, resulting in an economic boom. The accelerated Mahaweli scheme involved western support through the OECD countries. Japan also became a key funding and technical supporter of Sri Lanka. During this time, SAARC was also formed (1985), but without an economic agenda. Sri Lanka became a member with minimum economic benefits.

From 1989 to 1993, the economic policy agenda dictated foreign policy in the same way as between 1978 to 1988. SAFTA was signed (1993), to stimulate regional trading. Good diplomatic relations were developed with the Middle East, to enable more employment there for Sri Lankans.

From 1994 to 2005, globalisation and the emergence of new markets saw the government seek to establish new diomatic ties. This was seen at the multilateral (WTO) , regional (SAPTA) and bilateral (ILFTA and PLFTA) levels. Focus was placed on rebuilding Sri Lanka’s image in the West and gaining more access to Southern States (newly emerging states – with the break up of the Soviet Union, in the Middle East etc.)

The period 2006 to 2013, saw a gradual shift of global power from the West to Asia. Concessional aid for Sri Lanka started drying up, after reaching “lower middle income country” status in the early 2000s. A need was felt for infrastructure development support, with the LTTE terrorism being defeated. China and Pakistan had become important suppliers of military equipment to defeat the LTTE. Stronger diplomatic relations with China, Pakistan, Iran, Vietnam etc. were formed, with Western countries dropping their levels of support, with concerns over Sri Lankan rule of law and human rights record coming to the fore. The government adopted a confrontational approach in dealing with these concerns, resulting in a drop in Western support.

Dr. Kelegama said that economic interests being built into foreign policy, are witnessed in all the periods from 1948 (since independance from British rule). Every embassy of Sri Lanka has an ‘economic division’ which deals with economy related aspects in dealings with foreign countries. It is the same where foreign embassies in Sri Lanka are concerned. The Department of Commerce had an overseas network in selected cities to promote Sri Lankan commercial interests. (E.g. in Bombay).