Ethnic Divisions Create Persistent Risk of Conflict
As Sri Lanka approaches the three-year anniversary of the end of its long civil war, the political dominance of President Mahinda Rajapaksa and his SLFP is uncontested.
The extension of the prison term of Rajapaksa’s main political rival, former armed forces commander Sareth Fonseka, means he will not be released until after the next scheduled presidential election, which must be held by January 2016.
In the meantime, a campaign of intimidation against members of the press will have a dampening effect on media criticism of the administration, a prospect that in combination with a generally favorable medium-term outlook for the economy makes it likely that Rajapaksa and the SLFP-led UPFA will win re-election when their current mandates expire. Even so, the risk of renewed instability cannot be ruled out.
Although the president continues to pay lip service to national reconciliation, the government is tightening military control over the northern and eastern areas in which the minority Tamil population is concentrated, and there are reports that the government is promoting the migration of Sinhalese into Tamil strongholds with the aim of weakening the demographic basis for demands for regional autonomy. Both of these strategies are designed to neutralize the threat posed by the persistence of ethnic tensions, but could have the opposite result.
SUMMARY OF 18-MONTH FORECAST
|REGIMES & PROBABILITIES||SLFP-led Coalition 85%||Divided Government 10%||SLFP-UNP
|Operations||High||SLIGHTLY MORE||SLIGHTLY MORE||Same|
|Exchange||Low||SLIGHTLY LESS||SLIGHTLY MORE||SLIGHTLY MORE|
|Tariffs||Moderate||SLIGHTLY LESS||Same||SLIGHTLY LESS|
|Other Barriers||High||SLIGHTLY MORE||SLIGHTLY MORE||Same|
|Expansion||Very High||Same||SLIGHTLY MORE||SLIGHTLY LESS|
|Labor Costs||Moderate||SLIGHTLY MORE||SLIGHTLY MORE||Same|
|Foreign Debt||Moderate||SLIGHTLY MORE||MORE||SLIGHTLY MORE|
SUMMARY OF FIVE-YEAR FORECAST
|REGIMES & PROBABILITIES||SLFP-led Coalition 80%||Divided Government 15%||SLFP-UNP
|Turmoil||Moderate||Same||SLIGHTLY MORE||SLIGHTLY LESS|
|Trade||Moderate||SLIGHTLY LESS||SLIGHTLY LESS||SLIGHTLY LESS|
|International||High||SLIGHTLY MORE||SLIGHTLY MORE||Same|
|* When present, indicates forecast of a new regime|
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