Sri Lanka country brief
Introduction
Sri Lanka (formerly Ceylon) is an island in the Indian Ocean, lying east of the southern tip of the Indian subcontinent, from which it is separated by the Palk Strait. Sri Lanka is about the size of Tasmania, with an area of 66,000 square km, including 870 square km of inland waters. The population of Sri Lanka is 20 million with 2.2 million living in the capital city, Colombo. Other major cities include Gampaha (2 million), Kurunegala (1.4 million) and Kandy (1.2 million). Sri Lanka's official languages are Sinhala and Tamil although English is commonly used in government and is spoken competently by about 10% of the Sri Lankan population. The major religious groups in Sri Lanka are Buddhist 69%, Hindu 15%, Christian 8% and Muslim 7%. The currency is the Sri Lankan Rupee.
Civil conflict
From mid 1983 Sri Lanka was afflicted by a serious civil conflict between the government and the Liberation Tigers of Tamil Eelam (LTTE). Hundreds of thousands of people were displaced by the fighting and it is estimated that over 70,000 people were killed.
The conflict began in July 1983 following 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, Mr 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. However further surges in violence in April and May 2006 led to the cancellation of talks scheduled to take place in Geneva in April 2006.
In early January 2008, the 2002 ceasefire agreement was abrogated by the Sri Lankan Government and the end of the ceasefire came into effect on 16 January 2008. The 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 northeast coast On 18 May, the Defence Ministry announced that LTTE leader Prabhakaran and several other senior LTTE leaders had been killed in fighting. On 19 May, Sri Lankan President Rajapaksa delivered a ‘victory’ speech to Parliament.
Approximately 250,000 Tamil civilians remain in Government camps in northern Sri Lanka. The Sri Lankan Government has stated its commitment to resettle 80 per cent by year end as part of its "180-day" plan. In recognition of the difficulties of accommodating people in the camps during the monsoon, the Sri Lankan government announced plans that it would speed up resettlement in September and October with plans to release between 50,000 and 100,000 to their homes, different IDP camps or to live with host families. Progress on these resettlements has, however, been slow.
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), which is the major party in the present People's Alliance (PA) coalition of President Mahinda Rajapaksa, and the centre-right United National Party (UNP). The current Prime Minister is Mr Ratnasiri Wickremanayake. 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, Mrs Sirimavo Bandaranaike, from a constitutional monarchy to a republic, but with the retention of a Westminster style of government. In 1978, the newly-elected UNP government of Mr J R (Junius Richard) Jayawardene 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.
Mr Rajapaksa, the ruling People's Alliance candidate, was elected president on 17 November 2005. Defections to the government of 18 disaffected UNP members and the six Sri Lankan Muslim Congress members in January 2007 means that Mr Rajapaksa's centre-left government is now able to govern with a majority. Since the conclusion of military hostilities in May 2009, eight provincial council elections have been held. The last parliamentary election was held on 2 April 2004 and the next is due before April 2010.
Economic overview
Sri Lanka is characterised by high levels of literacy (93 per cent), life expectancy (74 years) and infant mortality that are comparable to those of developed countries. Its success in generating economic growth, however, has not been commensurate with its social progress.
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 service sector accounts for over 55 per cent of GDP. Manufacturing, the fastest growing sector, is dominated by the garment industry. The agriculture sector, though decreasing in importance to the economy, nevertheless accounts for around 18 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, 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 Organization (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), but a moratorium on new membership until 2010 was confirmed at the Sydney APEC meeting in September 2007.
The International Monetary Fund (IMF) has forecast Sri Lanka's economic growth in 2009 to be 3.5 percent (revised upwards from 3 percent). Despite the optimism of the Sri Lankan business community following the conclusion of military operations in the north, the global economic crisis has had a significant impact on Sri Lanka's economy. Persistent high budget deficits forced the Sri Lanka Government to rely on short-term financing from international markets. The global shock 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, despite the recent rebound in capital inflows, 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 SDR 1.65 billion (around $US2.6 billion) to support the country's economic reform program.
Consumer price inflation was estimated at 22.6 per cent in 2008, driven by demand, higher oil prices and depreciation of the rupee. Inflation is falling in 2009 due to a fall in oil prices and the impact of the global financial crisis.
Approximately 800,000 Sri Lankans work abroad, 90 per cent in the Middle East, and send about AUD4 billion in remittances to Sri Lanka each year. This is second only to the textile industry, which is the major source of foreign exchange earnings.
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 enjoys warm bilateral relations with Sri Lanka, underpinned by trade and investment flows, education, immigration and other people-to-people links and development cooperation. Based on the 2006 Australian Census, Australia's Sri Lankan community is estimated at over 80,000 people
Australia is also committed to assisting the economic and social development of Sri Lanka, including through the provision of humanitarian assistance to protect the welfare of civilians and to promote reconciliation. In 2008-09 Australia provided $24.5 million in humanitarian assistance to meet the critical needs of civilians adversely affected by the conflict (total assistance to Sri Lanka in 2008-09 amounted to $41 million). On 14 September 2009, Australia announced a further $5 million contribution to support the resettlement of displaced Sri Lankan citizens.
The 2009-10 budget estimate for aid to Sri Lanka is $35 million. For further information please see the AusAID website.
Bilateral economic and trade relationship
Two-way trade between Australia and Sri Lanka in the 2008 calendar year was valued at $328 million per annum. Vegetables, gold, and dairy products are Australia's main merchandise exports. Tea and other food products, as well as textiles, clothing, rubber tyres and articles of iron and steel are Australia's main imports from Sri Lanka.
Education continues to play a significant role in the relationship, with Australia the leading provider of tertiary education services to Sri Lanka. The number of Sri Lankans studying in Australia has been increasing and about 8 000 Sri Lankan students currently attend Australian tertiary institutions. Three Australian tertiary providers have launched distance education facilities in Sri Lanka: Monash College, an affiliate of Monash University; the Australian College of Business and Technology, an affiliate of Edith Cowan University; and Royal Melbourne Institute of Technology (RMIT). The University of Southern Queensland provides a distance learning program in Sri Lanka which is offered by the Sri Lanka Institute of Chartered Accountants.
Among the largest Australian investments is Pacific Dunlop's Ansell Lanka rubber products plant in Biyagama, which is one of the largest foreign investments in an industrial plant in Sri Lanka and the largest single industrial employer in the country.
Updated 21 October 2009