Ranil Wickremesinghe in New Delhi: What are the challenges Sri Lankan president faces?

Sri Lankan president Ranil Wickremesinghe arrived in New Delhi on Thursday for a two-day visit.

Wickremesinghe met External Affairs Minister S Jaishankar on Thursday and held talks with Prime Minister Narendra Modi on Friday.

Wickremesinghe’s trip to India is the first by a senior Sri Lankan leader since the island nation was hit by an unprecedented economic crisis last year.

But what are the challenges the president and six-time prime minister faces both at home and abroad?

Let’s take a closer look:

At home

First, let’s briefly examine how Wickremesinghe came to power.

In May 2022, his predecessor Gotabaya Rajapaksa turned to Wickremesinghe to replace his brother Mahinda as prime minister after Mahinda was forced to quit.

The hope was to restore Sri Lanka’s international credibility after it stopped making payments on its $51 billion in foreign debt when its foreign reserves dwindled perilously low, and Wickremesenghe had been leading negotiations with the International Monetary Fund on a bailout.

Then Rajapaksa was toppled in dramatic circumstances.

Street protests over Sri Lanka’s economic meltdown simmered for months before boiling over when hundreds of thousands of people took over government buildings in Colombo, blaming the Rajapaksa family and allies for runaway inflation, shortages of basic goods, and corruption.

Rajapaksa in July 2022 fled the island nation for the Maldives on a military jet along with his wife and two security guards.

Meanwhile, Sri Lanka’s Supreme Court barred his brothers Mahinda and Basil from leaving the country.

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Wickremesinghe, after being sworn in by the chief justice as interim president, vowed to follow the constitutional process and establish law and order.

He also said he would increase parliament’s powers and reduce those of the president – which protesters had demanded.

On 20 July 2022, Wickremesinghe officially became Sri Lanka’s ninth president after easily winning the presidential poll in Parliament.

Wickremesinghe will hold the job till 2024.

Since taking over as president, Wickremesinghe has since managed to quieten things down.

The island’s streets are calm, there are no serpentine queues at fuel stations and hours-long power cuts have ended.

Sri Lanka’s central bank expects the economy to resume growth this quarter after six quarters of contraction - faster than expected by many economists - while overseas remittances are surging and tourist numbers are rising.

While economists judge the country to be past the worst of the crisis, its problems are far from fixed.

Food, healthcare and house rental costs are high and still increasing, the poverty rate has doubled in the last year and is seen rising further, while negotiations to reorganise the government’s crippling debt burden face some uncertainty.

“Stability is somewhat there but what it means is no extreme shortages, no fuel queues, and no 13-hour power cuts,” said Rehana Thowfeek, an economist at the Colombo-based Advocata Institute think-tank.

Expert aren’t rushing to give Wickremesinghe credit.

As political analyst Dinidu de Alwis told The Print, “…in reality, we need to realise that this is basically the product of listening to reasonable economists, which happened by the second week of April 2022, and not really any ‘magic sauce’ by Wickremesinghe.”

Others say worse times are ahead.

Dayan Jayatilleka, former Sri Lankan diplomat and politician, told the outlet, “Sri Lanka is in a lull between two storms”.

“The first storm was in 2022 against the wildly irrational economics of an elected President. The second will be against the ruthlessly harsh economics of the International Monetary Fund (IMF) austerity imposed by an unelected President,” Jayatilleka said.

“Inflation is tapering off but compared to pre-crisis levels, the cost of living is very high and incomes have not kept up. The bulk of Sri Lanka’s poor people are daily wage earners, and they are among the hardest hit,” Thowfeek added.

Complicated equation with India

India’s support was critical for Sri Lanka last year after it almost ran out of dollars and sank into a financial crisis that left it struggling to fund essential imports including fuel and medicine.

India provided about $4 billion in rapid assistance between January and July 2022, including credit lines, a currency-swap arrangement and deferred import payments, and sent a warship carrying essential drugs for the island’s 22 million people.

But experts say that the relationship between Delhi and Colombo blows hot and cold.

A piece in Indian Express noted that though India gave Sri Lanka assistance and helped it secure the $3 billion bailout from the IMF, New Delhi did not exactly gush over Wickremesinghe’s election as prime minister.

New Delhi in its message said it would “continue to be supportive of the quest of the people of Sri Lanka for stability and economic recovery, through democratic means and values, established democratic institutions and constitutional framework”.

Modi, meanwhile, congratulated Wickremesinghe after a week.

The piece stated that when Wickremesinghe was prime minister between 2015 and 2018, New Delhi felt Sri Lanka did not deliver on its promises.

An MOU signed in 2017 that listed a slew of projects including the development of the Trincomalee oil tank farm, and a Comprehensive Economic Partnership Agreement (CEPA) remained undeveloped as the relationship between the top brass in Colombo deteriorated and the wheels of government ground to a halt, as per Indian Express.

India and Sri Lanka said on Friday that they had agreed to improve economic ties by increasing cooperation in renewable energy and studying the feasibility of building an oil pipeline and a land bridge between the two countries.

New Delhi will also help develop a port and an economic hub at Trincomalee, a city on Sri Lanka’s northeastern coast.

The announcements were made by the leaders of the two countries.

Modi said on Friday that the two leaders “adopted a vision document for our Economic Partnership” to strengthen maritime, air, energy and people-to-people connectivity, to accelerate mutual cooperation in tourism, power, trade, higher education, and skill development.

Modi also said the two sides would work quickly to connect their electricity grids and study the feasibility of building a petroleum pipeline and a land bridge between the countries, which are about 50 km (31 miles) apart at one point.

The projects to connect the power grids through undersea cables and the oil pipeline are expected to cost around $4 billion in total, according to officials on both sides. Few details were released on the agreements on renewables.

Wickremesinghe said that “constructing a multi-product petroleum pipeline from the southern part of India to Sri Lanka will ensure an affordable and reliable supply of energy to Sri Lanka.”

The two countries also will soon restart negotiations on a more expansive trade deal known as the Economic and Technological Cooperation Agreement.

Wickremesinghe also said that he had updated Modi about the reform measures being taken by his government to resolve the island’s financial crisis, and expressed appreciation for the support provided by India for the “most challenging period in modern history”.

Wickremesinghe’s trip also comes as Sri Lanka has become a battleground between India and Beijing over its strategic location in the Indian Ocean.

The China factor

The Print piece noted that Sri Lanka’s connection with China is a source of discomfit for many in New Delhi.

According to Mint, the presence of Chinese spy ships including the Yuan Wang-5 in Hambantota Port in August 2022 and Yuan Wang-6 during India’s planned test launch of its nuclear-capable Agni-ballistic missile perturbed India.

The Indian Express piece also noted that Hambantota Port was sold to Beijing’s state-run company during Wickremesinghe’s tenure.

Foreign minister Ali Sabry ahead of Wickremesinghe’s visit told reporters both China Harbour Corp and Sinopec were keen to invest in Sri Lanka. Sinopec has already been short-listed for a $4 billion refinery near southern Sri Lanka’s Hambantota port.

Beijing has given Colombo over $7 billion – and is reportedly its biggest bilateral creditor.

However, it is important to note that Beijing has thus far declined to join a so-called common framework led by Japan and the Paris Club to renegotiate Sri Lanka’s debt.

The Indian Express piece concluded on a hopeful note –noting that Wickremesinghe has remained a passionate supporter of closer ties with New Delhi as well as “economic integration”

With inputs from agencies