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1. A VIF-CII delegation headed by Gen. NC Vij and comprising of Lt. Gen Ravi Sawhney, Mr. CD Sahay, Ambassador Alok Prasad, Mr. Manish Mohan, Regional Director International for South and Central Asia of CII AND Mr. Pankaj Mohan, Vice president KEC Ltd. visited Sri Lanka from 7-10 December 2015. During the visit the delegation met a large number of experts, political and economic analysts invited by the Pathfinder Foundation, representatives of the Tamil community, and senior members of the Buddhist mahasangha. There was a structured interaction with Ceylon Chamber of Commerce, as well as meetings with Defence Secretary and the Foreign Secretary. The gist of the discussions and impressions gathered, are given in the succeeding paragraphs.

Political Situation

2. Following the parliamentary elections and passing of the budget the political situation is moving on a positive trajectory. There is a sense that the coalition between President Sirisena (PSA) and Prime Minister Ranil Wickremasinghe will last for some time, even though support for former President Mahinda Rajapakse remains strong amongst the Sinhala-Buddhist community especially in the southern

1. The coalition does face several challenges including amending the Constitution to abolish the Executive Presidency and nature of the polity thereafter and how the equation between PSA and PMRW will evolve subsequently.
2. The so called national question i.e. devolution of power to the Tamils, does not appear to be high priority and has been subsumed under the constitutional amendment process. The Tamil community, however, still remains by and large hopeful and retains some faith that the present dispensation will deliver a reasonable outcome.
3. On the mechanics of the constitutional process, it is proposed that the present parliament will convert itself into a Constitutional Assembly (note: not Constituent Assembly), and will function under the normal procedures of Parliament. Incidentally it is interesting that India’s position on Nepal’s constitution is being watched with considerable interest and some concern in this context.

Foreign and Economic Policies

3. The following trends in the Economic and Foreign Policy of the Sri Lankan Government can be discerned:-

1. It is quite evident that the present Govt. has decisively moved away from the foreign and economic policies of the Rajapakse regime, towards greater engagement with the West, and better relations with India. The Foreign Secretary, however, made it a point of referring both to Pakistan and China amongst the foreign policy priorities of the Govt.
3. The present budget is being seen to be much more private sector and FDI friendly. There is doubt whether numbers on fiscal deficit can be met. There is also some concern as to what is the present debt liability particularly with regard to Chinese loans taken by the previous Govt. The budget figures reveal a debt servicing burden of about 90% of estimated revenues which are rather optimistic. Some observers felt that the actual burden could be even higher. The Govt. is hedging on this issue, perhaps with a view to renegotiate the terms of earlier contracts.

Indo-Sri Lankan Bilateral Relations

4. On Indo-Sri Lankan bilateral relations, while there is a general optimism but there are also concerns about the shadow some issues may cast, particularly on fishing and the general sense of continuing hostility from Tamil Nadu. The discussions with the Pathfinder Foundation focussed on three clusters of economic, political and security and strategic issues:-

1. On the economic side there was considerable discussion on business and trade related problems faced by both sides. It was generally agreed that an enhanced trade technology and economic cooperation agreement would be positive, but that it is important to address some of the existing constraints both in the course of the negotiations as well as the early harvest discussions particularly on non-tariff barriers.
2. There was a broader discussion on connectivity issues and a general agreement emerged that both VIF and Pathfinder would try and promote three initiatives. One that both sides try and restore the ferry connection from Tallaimannar eventually perhaps leading to a land bridge. Second, the submarine electricity cable link between Sri Lanka and Southern India grid which would also assist in grid management in Sri Lanka, once the India assisted thermal power plant came up. Thirdly, to explore better fibre connectivity to enable high speed data links.
3. On the political side, it was noted that there has been historical goodwill between people of the two countries which is amply reflected by the bi-partisan support from political parties and close ties amongst the leadership in both countries. However, this cannot be taken for granted and has to be consciously nurtured by both sides. A pre requisite of this was clear transparent communication between both sides with absolutely no room for surprises.

Security Issues

5. On the security side there was a general consensus that the security of both countries must be treated as indivisible. Both sides must take each other’s concerns into account and act accordingly, without trying to second guess or rationalize the others concerns. There was brief discussion of larger strategic issues like the Indo-Pacific and the rise of Chinese power. Typically, the Sri Lankan analysts tended to view such issues largely in terms of India-China rivalry. The VIF delegation explained the larger strategic picture which goes well beyond India and China and involved the US, Japan, Australia and ASEAN. The Sri Lankan side was more forthcoming on Indian Ocean issues and suggested India and Sri Lanka working co-operatively to provide security in the IOR. The meeting with the Defence Secretary, however, did not yield much new information. A useful suggestion was made that VIF also interact with Sri Lanka’s Defence University as well as a new think tank that the Defence Ministry is sponsoring.

6. The meeting with the Foreign Secretary largely focussed on the implementation of the UNHCR resolution. The FS said that while some progress is being made on the other three legs, the accountability leg is proving to be difficult especially the issue of involvement of foreign legal experts in
the process. The Sri Lankan side does not have any clear ideas as to how to manage this, and is currently consulting other political parties and the Armed Forces.

Interaction with the Buddhist Sangha and Hindu Clergy

7. The meeting with Buddhist Sangha was very well attended with representatives from all the major sects. Relations between the Hindu and the Buddhist clergy seem fairly harmonious. Both seemed concerned with the aggressive proselytisation apparently being carried out by Islamic mosques and clergy, especially in the Eastern Province.