Sri Lanka flag

Sri Lanka country brief

Introduction

Sri Lanka (formerly Ceylon) is an island about the size of Tasmania in the Indian Ocean, lying east of the southern tip of the Indian subcontinent from which it is separated by the Palk Strait. The population of Sri Lanka is 20.27 million, with 2.3 million people living in the capital city of Colombo. Major districts include Gampaha (2.2 million people), Kurunegala (1.6million people) and Kandy (1.3 million people). Sri Lanka's official languages are Sinhala and Tamil, although English is commonly used in government and is spoken competently by about 10 per cent of the Sri Lankan population. The major ethnic groups are the Sinhalese (74 per cent) and Tamils (18 per cent). The major religions in Sri Lanka are Buddhism (69 per cent), Hinduism (15 per cent), Christianity (8 per cent) and Islam (7 per cent). The currency is the Sri Lankan Rupee.

Civil conflict

From mid-1983 Sri Lanka was afflicted by a serious civil conflict between the government forces and the Liberation Tigers of Tamil Eelam (LTTE). The conflict followed the most destructive explosion of communal rioting in the history of Sri Lanka. The riots proved a turning point in Tamil militancy. Through a ruthless strategy of elimination of any opposition, the LTTE, under the leadership of Velupillai Prabhakaran, became the largest and most powerful Tamil group. It began a major military campaign against the Sri Lankan Government, with its main aim the establishment of a separate Tamil state, Tamil Eelam, in the north and east.

In February 2002, the Sri Lankan Government and the LTTE signed an agreement for an indefinite ceasefire, which was supervised by a small peace monitoring mission led by Norway. Six rounds of peace talks were held between September 2002 and April 2003 when the LTTE suspended participation, citing dissatisfaction with the pace of progress towards granting interim regional autonomy in the north and east.

The ceasefire came under mounting pressure in 2004, following a split between the eastern and northern 'wings' of the LTTE, violence between the two, allegations by the LTTE leadership of government involvement in the split, and threats of a return to war. The then Sri Lankan Foreign Minister, Lakshman Kadirgamar, was assassinated on 12 August 2005 in Colombo. The violence escalated in December 2005 and January 2006, including attacks by the LTTE in the north and east. The Sri Lankan Government and the LTTE met in Geneva in February 2006 for talks on the implementation of the ceasefire agreement. Surges in violence in April and May 2006 however, led to the cancellation of further scheduled talks.

In early January 2008, the 2002 ceasefire agreement was abrogated by the Sri Lankan Government and armed conflict intensified as the Sri Lankan Government sought to reclaim large areas under LTTE control in the Vanni region in northern Sri Lanka. By April 2009, the Sri Lankan Government had reclaimed all areas under LTTE control except for a small area of land on the north-east coast. On 18 May, the Defence Ministry announced that LTTE leader Prabhakaran and several other senior LTTE leaders had been killed in fighting. On 18 May 2009, the Sri Lankan Government formally announced its military victory over the LTTE and its regaining of complete territorial control over Sri Lanka. On 19 May 2009, Sri Lankan President Rajapaksa delivered a victory speech to Parliament. Over the course of the 26 year conflict hundreds of thousands of people were displaced by the fighting and tens of thousands of people were killed.

In May 2010, President Rajapaksa appointed a Lessons Learnt and Reconciliation Commission (LLRC) to investigate events from February 2002 to the end of the conflict in May 2009 and report whether any person, group or institution bore responsibility for those events and to make recommendations to prevent a recurrence of conflict and regarding restitution. The final LLRC report, tabled in Sri Lanka’s Parliament on 16 December 2011, recommended advancing reconciliation and reconstruction, including through reducing the presence of security forces in the north, care of internally displaced persons and enhanced media freedoms. In December 2011, the Sri Lankan Government decided also to implement a National Human Rights Action Plan (NHRAP), which was approved by Sri Lanka’s Cabinet on 8 September 2011.

In March 2012, the UN Human Rights Council adopted a resolution calling on Sri Lanka to address alleged violations of international law, to implement the LLRC report’s constructive recommendations, and to present a comprehensive action plan on implementing the recommendations. Australia was one of 40 co-sponsors of the resolution.

The Sri Lankan Government released a National Action Plan to implement the recommendations of the LLRC report on 26 July 2012. Sri Lanka’s progress on human rights will be reviewed by the UN Human Rights Council at Sri Lanka’s second Universal Periodic Review on 1 November 2012.

The LTTE

Successive Australian Governments have consistently and strongly opposed all forms of terrorism, including LTTE terrorist acts.

On 21 December 2001, the Minister for Foreign Affairs gazetted the LTTE as a terrorist organisation for asset freezing purposes in accordance with Australia's obligations under United Nations Security Council Resolution 1373 of 28 September 2001. Consequently, it is a criminal offence in Australia to use or deal with assets owned or controlled by the LTTE, or to provide assets to the LTTE, whether directly or indirectly.

Political overview

Political life in the Democratic Socialist Republic of Sri Lanka since independence in 1948 has been marked by a commitment to the democratic process. Power has fluctuated between two main political parties – the leftist Sri Lanka Freedom Party (SLFP) and the centre-right United National Party (UNP). The SLFP is the major party in the present United People's Freedom Alliance (UPFA, formerly known as People’s Alliance) coalition of President Mahinda Rajapaksa. The President is considered both the Head of State and Head of Government.

Constitutional changes since independence include the conversion in 1972 by the SLFP-led government of the late Prime Minister, Sirimavo Bandaranaike (the world’s first elected female Prime Minister), from a constitutional monarchy to a republic that retained a Westminster style of government. In 1978, the elected UNP Government of Junius Richard Jayewardene introduced a Presidential system in which executive power was concentrated in the hands of a President elected for a six-year term. The Office of Prime Minister, and a Cabinet drawn from Parliament, were retained but were clearly subordinate to the President.

Mahinda Rajapaksa was elected President on 17 November 2005. Defections to the Government of 18 disaffected UNP members and six Sri Lankan Muslim Congress members in January 2007 meant that President Rajapaksa's centre-left Government was able to govern with a majority.

On 26 January 2010, Presidential elections were held nation-wide – the first time in over two decades that voting could take place in all parts of the country due to the end of the conflict. On 27 January, the Sri Lankan Commissioner for Elections announced that President Rajapaksa had been re-elected for a second six-year term. The Sri Lankan Supreme Court ruled on 2 February that the second term would start on 19 November 2010.

On 8 April 2010, Parliamentary elections began. The formal election results were announced by the Elections Commissioner on 21 April, following re-polling on 20 April in two districts. President Rajapaksa's UPFA finished with 144 seats. DM Jayaratne was sworn in as the new Prime Minister. A major cabinet reshuffle followed and Basil Rajapaksa, President Rajapaksa’s brother, became the Minister of Economic Development and Professor Gamini Lakshman Peiris replaced Rohitha Bogollagama as the Minister of External Affairs.

Economic overview

Sri Lanka is characterised by high levels of literacy (91 per cent) and life expectancy (75 years) and a low rate of infant mortality (14 per 1,000 live births), figures comparable to those of developed countries. Its success in generating economic growth has been improving since the end of the conflict in 2009.

Sri Lanka began economic liberalisation, and a move away from socialism, after the UNP's defeat of the left-leaning SLFP government in 1977. Sri Lanka's export-oriented policies have seen a shift from a reliance on agricultural exports to an increasing emphasis on the services and manufacturing sectors. The services sector accounts for almost 60 per cent of GDP. Manufacturing, the fastest-growing sector accounting for almost 30 per cent of GDP, is dominated by the garment industry. The agriculture sector, though decreasing in importance to the economy, nevertheless accounts for around 11 per cent of national output and employs more than one-third of the workforce. The public sector remains large, with the state continuing to dominate in the financial, utilities, health and education sectors.

Sri Lanka’s exports (mainly garments, tea and rubber) contributed US$10.56 billion to the economy in 2011 while imports (mainly oil, textiles, machinery and food) costUS$20.27 billion. The resulting large trade deficit was financed primarily by remittances from Sri Lankan migrant workers, foreign assistance and commercial borrowing. Approximately 1.7 million Sri Lankans work abroad, and send about US$4.1 billion in remittances to Sri Lanka each year, the major source of foreign exchange earnings. A majority of Sri Lankan migrant workers are women working as housemaids in the Middle East.

The economy was hit by a balance of payments crisis in early 2009. Persistent high budget deficits forced the Sri Lankan Government to rely on short-term financing from international markets. The global financial crisis resulted in a sudden stop to this financing. Capital outflows and intervention by the central bank to prevent the exchange rate from depreciating – exacerbated by a decline in demand for Sri Lanka's exports – resulted in a significant loss of international reserves which remain low. On 24 July 2009, the IMF Executive Board approved Sri Lanka's request for a stand-by arrangement in an amount equivalent to US$2.6 billion to support the country's economic reform program.

Over the past three years, the US$59 billion economy has rebounded. Sri Lanka reported strong economic growth of 8.2 per cent in 2011.The unemployment rate hit a record low of 4.3 per cent in early 2011. According to the IMF, Sri Lanka's fiscal position is still weak but the country's high public debt to GDP ratio, at 79 per cent, is falling steadily. Inflation stood at 6.7per cent at the end of 2011.

Sri Lanka, a contracting party to the General Agreement on Tariffs and Trade (GATT) from 1948, ratified the Marrakesh Agreement in June 1994 to become a founding member of the World Trade Organisation (WTO). The country historically has been one of the driving forces for trade liberalisation in the region and is particularly active in the South Asian Association for Regional Cooperation (SAARC). In 1998, Sri Lanka signed a free trade agreement (FTA) with India, the first stage of which came into force in February 2000. Sri Lanka is one of a number of countries that have expressed an interest in joining APEC (Asia-Pacific Economic Cooperation).

December 2004 tsunami

The 26 December 2004 tsunami devastated Sri Lanka. Over 35,000 people were killed and approximately 418,000 were displaced. Around 65 per cent of the country's fishing fleet of 29,700 boats was either damaged or destroyed. The tsunami affected economic activity, particularly in the fishing, hotels and restaurants, banking, small industry, domestic trade and transport sectors. The Sri Lankan Government's Reconstruction Strategy has estimated the total recovery cost to be US$2.2 billion.

Bilateral relationship

Australia has good bilateral relations with Sri Lanka, underpinned by trade and investment flows, education, immigration, strong people-to-people links and development co-operation. Australia's Sri Lankan community is estimated at 110,000 people.

Australia is committed to assisting the economic and social development of Sri Lanka. As the situation in the country improves, Australia has shifted focus from short-term humanitarian support in conflict-affected areas to long-term development assistance.

In 2012–13, Australia provided $42.6 million in development assistance to Sri Lanka for demining, and reconstruction of schools and houses damaged during the civil conflict. Funding also helped disadvantaged people find work, start a business or restart sustainable farming or fishing activities.

More information on Australia's development assistance to Sri Lanka

Bilateral economic and trade relationship

Two-way trade between Australia and Sri Lanka in 2011 was valued at $362 million, with exports to Sri Lanka totalling $244 million. Vegetables, dairy products and wheat were the main merchandise exports. Tea, clothing and rubber tyres were Australia's main imports from Sri Lanka.

Education plays a significant role in the relationship, with Australia the most popular study destination for Sri Lankan students. About 4,500 Sri Lankan students are currently enrolled at Australian universities. A number of Australian tertiary providers operate distance education facilities in Sri Lanka including Monash College, an affiliate of Monash University, and the Australian College of Business and Technology, an affiliate of Edith Cowan University. The University of Southern Queensland provides a distance learning program in Sri Lanka, which is offered by the Institute of Chartered Accountants of Sri Lanka.

Among the largest Australian investments is Ansell's Ansell Lanka rubber products plant in Biyagama, which is one of the largest foreign investments in an industrial plant in Sri Lanka.

Updated August 2012