 Welcome. On behalf of the U.S. Institute of Peace, I'm glad you can join us today for a very important discussion about Sri Lanka. Today we're thinking about Sri Lanka one year after the historic Aragalia protest and the worst economic default in Sri Lanka's history since independence. My name is Damanna Salikuddin. I'm director for South Asia programs at the U.S. Institute of Peace, and we are very excited for you to join today's discussion. If you have questions, please follow along on our website. There is a Q&A box where you can go ahead and put in questions for all our panelists. We'll start by opening remarks, and then we will turn to your questions later during the event today. Many of us sitting here in Washington last July a year ago were watching images from Colombo of protesters taking over the presidential palace in response to Sri Lanka's worst economic crisis since independence. In the year since, there have been a lot of developments, but today we want to discuss how far Sri Lanka has actually come. It has secured a $2.9 billion bailout from the IMF in March. It started to implement parts of that agreement, including a domestic debt restructuring plan. However, Sri Lanka's economic problems are far from fixed. According to the World Bank, Sri Lanka's poverty rate nearly doubled to 25% of the population last year, and it could jump to 27.4% this year alone. This year, this also marks one year since President Ranil Vikramasinga was elected by the existing parliament, a parliament that was previously headed by President Gautabhaya Rajapaksa and hasn't changed due to postponed elections. Since taking office, Vikramasinga's administration has pledged to implement a truth and reconciliation mechanism to address the legacies of the Sri Lankan civil war, especially for ethnic minorities. Sri Lanka is also in a very challenging geopolitical neighborhood where there is very evident competition on the island between India and China. And while the Rajapaksas previously had very close ties to China, we see in the wake of this crisis, New Delhi has really come in and built up its relationship with Colombo, stronger given lines of credit and other responses to the crisis. President Vikramasinga just visited India last week. So to discuss all of this and more, we have a great panel with us today. I'm going to briefly introduce everybody on the panel. We have Nishan Damel, who is the executive director of Verite Research Limited, a think tank providing analytic research and advisory services on economic, political and legal issues in Sri Lanka and broader, broader Asia. He's an economist with extensive academic policy and private sector experience. We also have Nilanthi Samarnayaka, who is a visiting expert in USIP's South Asia program. In addition to USIP, she is also an adjunct fellow at the East-West Centers Washington office. She has 25 years of experience in the research sector and most recently served as director of strategy and policy analysis at CNA, where she led a team conducting multidisciplinary research and her work focuses on regional security in the Indian Ocean. And last but certainly not least, we have Ambika Sethgunathan, who is a human rights lawyer and human rights activist. From 2015 to 2020, she was commissioner of the Human Rights Commission of Sri Lanka. And for nine years before that, she was a legal consultant to the UN office of the High Commissioner for Human Rights in Sri Lanka. Her research in advocacy and activism have focused on transitional justice, custodial violence, penal policy and prison reform, gender and Tamil nationalism. Without further ado, I'm going to turn to Ambika to make some opening remarks really about where have we come in one year? We saw historic protests last year. We were all watching very closely and they had the protesters really were pushing back not only on the economic crisis, but demanding a lot of political change. And they forced President Gotubaya Rajapaksa out of office. But where we come on all the rest of the political reforms and corruption demands and other issues that Sri Lanka is facing. Over to you, Ambika. Thank you, Tamanna. Thank you for inviting me to be part of the panel. I think the more things change, the more they stay the same because as you yourself mentioned, we've only had one change in that Gotubaya Rajapaksa is no longer president. We have Ronald Vikram Singh as president, but he was elected by parliament by members of Gotubaya Rajapaksa's party. So in effect, it is still the same government, the same ministers and the same political culture. For example, we heard recently that members of Gotubaya Rajapaksa's party, the SLPP, they're demanding portfolios that even in the midst of the economic crisis, they want to be ministers, deputy ministers. And we saw the minister of health, for instance, stand up in parliament and make really callous remarks about recent deaths due to using medicine. You know, that was clearly tainted and which was procured without following due process, without transparency, cutting corners. So it is pretty much, I would say, the same. We do not have that person as head of government, but everything else is pretty much the same. And I would like to move away from the current issues and talk a little bit about the structural issues because I think for the international community, the United Nations, it is important to address those and also look at it in an historical perspective as that is relevant. So all this comes down to the fact that Sri Lanka has an accountability problem. But when we say this, everyone immediately thinks of war crimes. But Sri Lanka has a broader accountability problem. It is this that led to not only the grave human rights violations during the war, but even the current economic crisis. The root causes of the economic crisis are systemic and structural. So merely passing a law or setting up an institution is not going to fix it. Things such as unaccountable executive presidency, lacks of checks and balances on government decision making processes, disrespect for the rule of law, the sense of impunity, lack of transparency, which are also behaviors and cultures and not just something that can be reformed through law. The root causes of the ethnic conflict, such as the Singhala Buddhist state, the deep-rooted racism are also connected to the economic crisis. Because it is due to these factors, the Rajapaksas who've now wrecked havoc on the polity and the economy, it is because of these factors they were re-elected despite their appalling governance record. Impunity is entrenched. But it's not only politicians, the military or the police, but a range of state actors from directors of government departments to what we call the Gram and Niladaris, which are the village-level officers. All of them engage in the abuse of power, exploitation and corruption every day and escape accountability. This everyday nature of impunity has eroded respect for the rule of law and created an environment for a certain type of lawlessness to become normalized. Now the Aragaliya that you mentioned did change this to some extent. It made citizens demand accountability, at least in relation to certain issues such as public finance, you know, corruption. However, as always in Sri Lanka, the Aragaliya changed it for a moment in our history. And we failed to capitalize on that moment and to address the root causes of the ailing dysfunctional, deeply dysfunctional Sri Lankan state. But what is interesting is that the silences and the erasures in the Aragaliya, and this is something I've written about in the past, such as, you know, war crimes, ethnic conflict, political solutions. Those silences and gaps, they mirror the silences and gaps we've had throughout our post-colonial history, pointing to deep-rooted reluctance to address these issues. Now in post-colonial Sri Lanka, we witnessed numerous efforts over the decades to reform the state and restructure constitutional and institutional arrangements. Yet in each instance, reform attempts have taken place only at the convenience of the executive with the purpose of gaining some sort of political advantage or at the behest of bilateral or multilateral institutions, such as the United Nations. I would say the same is taking place now where the economy is concerned. The political class's lack of interest in effecting meaningful change is a feature observed in successive regimes. But this is due not only to the political class, but also other powerful actors, such as the corporate sector, having invested interest in maintaining the status quo. Reform in Sri Lanka has therefore been reactive rather than proactive, with addressing the root causes always left for later. One of the root causes that brought Sri Lanka to this crisis point are informal processes that undermine the rule of law. Now this came into being because formal rules and procedures failed to function effectively or they were applied unequally or in a biased manner, which meant that people found another way to get around them and to get things done. This led to a parallel system of informal rules and processes which undermine institutions and legal processes and even any reform processes have been scuttled because of this. Once again, this is not new, but the two Rajapaksa regimes really entrenched it because they actively enabled and encouraged it because they wanted to destroy a rule-based system. But while the state flouts the law with impunity, what we are seeing is that the law has also become the state's weapon of choice to control social behavior, particularly dissent. The law is therefore being used as a tool of oppression in three ways. Firstly, it uses existing repressive laws. So we have the Prevention of Terrorism Act, we have the Vagrant's Ordinance and secondly, it tries to enact new repressive laws like the Anti-Terrorism Bill and the Broadcast Authority Act. Thirdly, it weaponizes or subverts laws which are meant to actually protect human rights, such as the International Covenant on Civil and Political Rights Act, which it has ironically used to curtail freedom of expression. So how can we or how do we resist this? Now in Sri Lanka, we haven't seen mass grassroots organizing or mobilization such as in India to resist authoritarianism. Resistance has been fragmented and there aren't many collectives that consistently challenge and push back. The forms of resistance that are noteworthy are those by the victims or survivors themselves, such as the families of the disappeared, the communities whose lands were acquired or occupied by the military. We are also increasingly witnessing protests by economically marginalized groups regarding labor rights and social protection, which once again the state is trying to repress. Given the high level of corruption we have, the dysfunctional state coupled with systemic discrimination, those such as the plantation community, people in the north and the east, the Tamils, who have been subject to historical discrimination, along with other marginalized groups such as women heads of households, persons with disabilities, these groups are going to be severely affected during the economic crisis and the future and ongoing various economic and legal reform processes the government undertakes as part of the IMF bailout. However, any effort to provide redress to these groups will be undermined and stymied by various vested interests, unless the aforementioned underlying structural and systemic dysfunctionalities in the Sri Lankan state are addressed. Thank you. Thank you so much, Ambika, for that opening. You've given us a lot to discuss and I'm excited to come back to you with questions. I want to turn to you, Nishan. You visited us at USIP last summer. And when you were here, you and I talked about basically the Sri Lankan economy hitting rock bottom. I mean you had sovereign debt issues, budget, current account deficits, hyperinflation, devalued currency. Basically everything that could go wrong with an economy had gone wrong when we talked last summer. But now you are, you know, in March you have this almost $3 billion IMF program, which requires several reforms. I was just in Sri Lanka in May and the casual observer will see, you know, beautiful hotels, posh restaurants full expensive imported cars. And yet there's a dissonance. I mean the poverty, you know, numbers that I read out that seems that the most vulnerable are actually bearing the brunt of this crisis. I want to turn to you for your thoughts on how not only the economy, but the political economy is doing one year out. Thank you so much, Tamana. Great to be back with you guys. And thank you for hosting this event. I'll make the brief remarks that we have to make today in three parts. So let me talk about perhaps recovery, equity and sustainability. I won't dwell on the tragedy. I think that's well told. And I also will not repeat much of the comments that we have already published. On the recovery side, just to highlight the positive aspects of it, I would say that inflation this year as an annualized average is at around 5%, which is a great recovery from what it was last year going up to 70% year on year inflation. Interest rates which skyrocketed to above 30% in Sri Lanka are now below 20%. And of course, there is hope that it will come down even further. Tourism income has increased substantially. And worker remittances, which are also very important to the country, has improved to almost 85% of what they were in 2019. And account really for about 50% of export revenue. So you can imagine how important it is for the country to have these remittances from their workers. And I would say on exports of goods, it's more important because the export revenue does include an imported component. So worker remittances really are almost as important as exports now. And tourism is still only about 50% of what it was in 2018, about one third of the export revenue is what it was in 2018. So in a positive way, the glasses half full way to look at it is there's more to go in attracting tourism. So the recovery hasn't started yet. The economy has lost production even up to June this year and lost jobs. But there is a sense that it is possible to start the recovery process this year. Getting into the question of equity, I think we all know that there are winners and losers, even in a crisis with interest rates above 30%. Certainly there were a great deal of winners, the same people who had savings, I think made a lot more than that just on lending to government. Whereas those who were living in poverty or those who needed to borrow have suffered hugely. Poverty rates have more than doubled. We expect that they are above 30% in the country. And jobs have been lost month on month for over a year now, which means that people are really struggling to make ends meet and are probably only being sustained by remittances. So what you see in Colombo, as you mentioned, I think is mostly the winners. And you don't see the losers, which is perhaps much of the country at the moment. The critical question is that of sustainability. Can Sri Lanka sustain the recovery? And can this debt restructuring be sustainable? So I'm going to just share a few slides just to think that question through. And I'm hoping that the slides that I'm sharing will actually show up on your screen. Just to put this in perspective, Sri Lanka has been through many IMF programs. And not all of them have been completed. In fact, almost 50% were not completed. Veritor research has something called the IMF tracker. And I hope somebody will put that link to that for all the people who are on the site today. You can see that 33 out of the 55 commitments currently due have been completed up to now, 14 are unknown. 8 have not been done. And it's so very important for Sri Lanka not to be business as usual. In the past, we had commitments. We didn't meet them on time and over time that led to difficulties in continuing the program. So Sri Lanka has now a run rate, we would say up to September of 11 commitments to meet a month. And the run rate, required run rate has been increasing. We are a cricketing nation and I use the metaphors. But even more important or concerning is when you look at what is it that Sri Lanka is not doing. Sri Lanka is not doing things that are related to governance. Creating a fiscal transparency platform to let everybody know the tax exemptions the government is giving corporates. And the major procurement that government is doing was due in March but not yet done. Increasing betting and gaming levies. So we talk about equity, lots of taxes have increased for lots of areas and people. But for the casino and betting and gaming industry, the increase that was due has not been done. Publishing reports of state-owned enterprises, financial statements. So the critical issue I think for sustainability is that things related to governance seem to be getting procrastinated on. And the reason that it is so important is because when you look at the history of countries that restructure debt. You know from 1975 we realize only 41% manage to restructure once and get sustainable 59% restructure twice. What is the key difference between countries that restructure once or twice? And you can see it in this slide here we have data from 2000 that countries that on average have more than minus 0.1 on the World Bank governance indicators. They are all in green, restructured once. Countries that had average score less than that restructured more than once, sometimes twice, twice or more times. Belize looks like an exception but actually its governance indicators fell during the first restructure. So that explains that and Grenada is the only exception to this rule that predicts whether you restructure once or twice. You can see that Sri Lanka is on the cusp of this line which means the direction in which governance goes in Sri Lanka is the direction of sustainable economic recovery. So let me just end with that thought and take up questions later. Thank you. Thanks very much. I'm going to come back to you and talk a little bit about what are your recommendations for this governance phase. I'm going to turn now to Nalanti Samarnaika. Nalanti, this has been an interesting moment as we here in Washington were just global competition, especially between the US and China, but also India and Japan have been important creditors and important allies of Sri Lanka as well. Can you talk a little bit about how this crisis and a year out, how have the relations changed and how is a country like Sri Lanka faring or managing in this era of geopolitical competition? Sure. Thanks a lot, Tamina. Excuse me. I'll provide some personal observations on the situation a year later. Overall Sri Lanka's relationship with India has grown much stronger, especially in terms of economics and the defense ties were already pretty close. In contrast, China's response to the crisis has been very disappointing and still presents Sri Lanka with much uncertainty regarding Beijing's next steps. And as you mentioned last week, we saw the Sri Lankan president travel to India in a short visit. They discussed various topics like cooperation on land and very connectivity. They talked about some of their persistent fishing disputes and developing trinconally into a regional energy and industrial hub. But taking a step back, it's useful to think about Sri Lanka and smaller states more broadly as a key grouping that weren't greater analytical attention. And I see a framework with three components that can enhance our understanding of smaller states and in particular Sri Lanka. So first, they have a clear set of needs. Second, they have concerns, especially as they navigate major power rivalry. And third, they have surprising strengths despite their smaller size. So first regarding needs with Sri Lanka in the past year, it's been focused on its economic needs, understandably. And India has been a critical partner to Sri Lanka, mostly through lines of credit, currency swaps and deferred repayments. But India has also remained its primary defense partner with three major outputs in the past year. Delivery of a Dornier Maritime Surveillance aircraft, their annual defense dialogue and the SLINX naval exercise. Second, in terms of concerns, Sri Lanka is a smaller South Asian country that is increasingly caught up in strategic competition between larger powers. And so Sri Lanka, we see it trying to maintain its agency in foreign policy. But it's also needed to acknowledge India's growing regional standing and capabilities as well as its global standing as India is president of the G20. And it's also had to factor in the added complication of China-India rivalry. So in August of last year, we saw Sri Lanka conduct frantic diplomacy with both India and China and reportedly the United States after its decision to permit a Chinese ship visit to Hambanthoda port in the south. So there are clearly challenges for smaller states in navigating large power tensions and experiencing pressure on themselves. And there were some indications that the Sri Lankan president and Indian prime minister, they spoke about this issue last week and how Sri Lanka can be sensitive to India's security concerns. And one idea that has moved forward is what's been called a standard operating procedure or SOP for future port calls by official military craft and foreign research vessels. And the Sri Lankan foreign minister subsequently confirmed that Sri Lanka has finalized this SOP. At the same time, we've seen the Sri Lankan president discuss how Sri Lanka is a neutral country, but he also emphasized the fact that, quote, we cannot allow Sri Lanka to be used as a base for any threats against India, end quote. So I think we'll need to see how this SOP will actually be implemented. So what ship visits will be permitted in the coming year, what won't be permitted. And that will include military as well as non-military, especially. But it's worth noting this theme that the Sri Lankan president mentioned is consistent across some other smaller South Asian countries as they're navigating this dynamic major power rivalry. For instance, just in the past month, we've seen heads of state or foreign ministers from Bangladesh, Maldives and Sri Lanka speak to their approach of trying to maintain independence, which highlights their desire for agency as smaller states. And Sri Lankan and Maldivian officials in particular speaking to their desire for peace amid China-India rivalry. And then taking that extra step and discussing sensitivities to India's concerns in particular. And then third, Sri Lanka has strengths that can be surprising to observers, despite its smaller size as an Indian Ocean Island state. Colombo Port consistently ranks as the top South Asian port and Lloyd's List, even despite a drop in its ranking after the economic crisis. And Sri Lanka has been stepping up its Indian Ocean and maritime security leadership, like through the Colombo Security Conclave, and later this year. Sri Lanka will assume the chair of the Indian Ocean Rim Association after serving as vice chair for the past two years. So we see Sri Lanka as a smaller state operating in a position of leadership in regional architecture. So to wrap up by this time next year, next summer, it'll be important to take another temperature check on not only where Sri Lanka stands in terms of its needs. So will it be on track in terms of meeting its economic goals, but also how it's addressing concerns and pressures of major power rivalry. But at the same time, how will it be demonstrating strengths that may not necessarily be expected of it, particularly at this difficult time in its history? And I'll pause there. Thanks very much, Nalanda. I'm sure our viewers have lots of questions for you as well. Please, I encourage the audience to go on to our website at usip.org. And if you're following along, there's a question box and you can please submit your questions. I actually have plenty of questions and we're starting to get questions from the audience as well. I want to open up with some questions for you on, you talk about the lack of resistance or the need for resistance to some of the repressive laws, the lack of accountability, lack of real governance and structural reforms on many things, whether it's the terrorism act or the executive presidency. How do you see the politics of the country playing out? Are there political parties which are there, whether they are in the South, but also in the North and the East? How do you see the politics playing out at this moment? Is there an effective coalition of parties, maybe from the North and East, who might be able to stand up and demand elections? How do you see this unfolding? We are hearing that the first elections may be next year presidential elections, but no parliamentary elections in sight. Some people have talked about whether a unity government or something going back to the good governance era. I invite your insights on that. Well, I don't think any of the parties at present actually want an election, certainly not a parliamentary election, because everyone is afraid that they're going to see a dip in their previous, you know, the wins, the number of seats they won. So I don't think anyone wants it. At the same time, you know, there was agitation for the local government elections, but you would have noted that even that has fallen by the wayside. And if we're talking about a change or a government that has the trust of the people, we really do need not even the local government or the presidential elections, but we really do need parliamentary elections. That's what matters. But once again, if Ronil Vikramasinger continues to be president and let's say, you know, he calls it is all parliament and calls elections next week, then if we get, you know, the UNP, his own party, he's certainly not going to win our seats, which means you'll have to go into coalition government with whom we'll be able to go and history shows that coalition governments really don't do well because we do not know how to work with each other. And also, I don't think any one party is going to win enough seats to form a government because all of them, while JVP will probably see an increase. It's certainly not going to be enough to form a government and SJB, SLPP, everyone's going to see a dip. Maybe UNP will see a slight increase, but once again, not enough to form a government, which means we'll be back at this, you know, we'll have this impasse, or we'll have a government that once again will lead to, you know, the Ronil Chandrika 2002 government. What happened to that? Then 2015, Sirisena, Ronil, and now I do not know. So, yeah, we don't see much hope in that in the political community or the political class. I mean, I want to turn a little bit to how the North and the East are doing. I mean, one of the criticisms of the Aragalia was it didn't necessarily represent the concerns of folks in the North and the East, and especially minority and vulnerable communities, as you mentioned, both Hindus and also Muslims in the East. But the current administration has announced that they are trying to establish a truth and reconciliation mechanism more than a decade after the Civil War ended. What do you make of these efforts? And also, how are the communities responding? I mean, when I was just in Sri Lanka, I mean, some of the things you write about were very apparent that there are a lot of vulnerabilities both in the North and the East. So I welcome your thoughts on that. I've been very vocal about the TRC. My question is, why do we need to waste resources and enact another law and set up another institution when we'd had several similar commissions in the past through seeking mechanisms? We have unpublished reports of some of those mechanisms. Some reports have been published. We've got hundreds of recommendations, none of which have been implemented. If the government began implementing those recommendations, then I think it would solve about at least 50% of the problems. Secondly, they themselves, I think it was either the president or the foreign minister, I can't recall in a tweet. They themselves said that this would be a way of escaping scrutiny. Well, they didn't use the word escaping, but preventing Sri Lanka from being subject to another human rights council resolution. Thirdly, the the North and East really has no faith. That has been illustrated by not just one, but four different statements issued over the last week by different civil society groups that work with the victims in the North and the East. And how can they expect people to have trust when just a couple of days ago in Colombo, when they were trying to commemorate the 40 year anniversary of the 1983 riots, drugs turned up, police did nothing to stop them. Instead, they use force against the people who are commemorating. We continuously the surveillance, intimidation, harassment of civil society organizations or former combatants of people out on bail under the PTA. Even people discharged from PTA, from cases under the PTA. That is continuing. I have plenty of cases. People call me all the time, people I know who have assisted, you know. And so that happens. How can you expect people to have faith? And most importantly, do we really want to re-traumatize the families, the victims? They appeared before every commission. And the irony here is that despite the opposition, now they will say they don't want it. But if they do establish an institution, they will appear before it. Why? Because they're so desperate because they think maybe this will give me an answer. But when we know it won't, it will only re-traumatize them. Why are we doing it? That is disheartening. Are there any of the mechanisms even at the local level that are producing any results? You know, the reparations that have been giving out some for missing persons. Are any of the current mechanisms working or anything that's politically feasible in the near term? No, they aren't. They aren't. The OMP, the Office of Missing Persons, really, we've seen no progress. Also the people who were appointed to it, not really suitable. And then we don't hear anything from them. The families say some of them haven't even received acknowledgments for the cases that they have submitted. No progress. Same with the Office of the Reparations. And I think this has a lot to do with a political will. Who do you appoint to these institutions? The financial resources you give them. But more the political will, because these institutions also take their cue from the government. And once again, it's about also who do you appoint to these institutions? Sure. A related question. I got a question online here for you. What is the relationship between the political elites and the security forces, and how do they perpetuate the dynamics of impunity that you mentioned? And what are the real possibilities? Are there any real possibilities for reform in these sectors? Wow. I would say right now, no possibility. But this is one sector that desperately needs reform because the military has grown. Funnily enough, after the end of the war, during the Rajapaksa era, after the end of the war, it has grown in ways that I think even the government is not aware of. In terms of probably internal informal structures, et cetera. And they still got businesses running. They still interfere with civil society. They participate in even drafting of the laws like the anti-terror bill, the rehabilitation bureau bill. I have an upcoming piece that will be published in the next two days that speaks about this whole militarization. So it's a sector that needs to be reformed. But none of the southern parties are willing to touch it. During the Aragalia, because we saw militarization or the military being engaged in quelling protests, they started speaking about it in the south and they've started asking questions. Why are they involved in policing? And we've seen think tanks talk about the military budget, critiquing the budget, saying that the military has to be downsized or right-sized, whichever term you prefer. In reference to the economic crisis, the IMF, et cetera. But no one talks about why is the military still taking over private land in the north and the east to expand military camps? Why haven't they released RAND? Why is the military assisting the Department of Archaeology and Buddhist monks to destroy Hindu temples and build Buddhist temples? So those questions really the south is still not asking. The southern political parties do not want to touch it with the barge board. A great example is that if you look at the past three years, and I've tweeted this religiously over the past three years, the Auditor General's report on the military, the Army Navy and the Air Force. Plenty of instances of financial misuse, mismanagement, wastage. But have those reports been debated in parliament? No. Instead, we've had opposition parties, even the Sajid Premadas critiquing the US when they sanctioned or they put a place to travel ban on Shamindra Silva. So hence, the connection between the southern political parties and the military structure is strong. Even if it isn't, they are loath to critique them and call them to account because they're afraid that it will impact their vote base. Great. Thank you very much for that. Tamala, can I come in on a couple of questions that you asked? Yes, please. Feel free to answer those. And then I have several questions for you, Nishan. I'm sure you do. Please. So just on a very quick one. You asked this question about what can be done, low-hanging fruit on the North at least. I think there's one that's very obvious and I'm surprised that even India has taken a greater interest. Sri Lanka has a 13th Amendment to the Constitution, which promised substantial devolution, not enough, not perfect, but incompletely executed. And one of the easiest things to do is to complete land devolution and all it requires is an administrative action to set up a National Land Commission. So land devolution is in the Constitution, but it is administratively not implemented because it's unlocked by creating a National Land Commission. So I would say we need to aim for things like that that are easy, quick, don't require really any constitutional change, but go a significant distance in demonstrating good faith of the government in moving forward the promise of Sri Lanka's Constitution and devolution. I want to come on one other thing. Sure. Ambedkar talked about, I think, elections and how it could create a hung parliament. Look, I want to be a little more hopeful about the possibility of elections. I think there is an argument in Sri Lanka and it's not Ambedkar's argument. That stability is the most important thing and that we must maintain stability and elections can wait. And I think different, and I'm sure Ambedkar agrees with me on this, that legitimacy is the most important thing, that a government that needs to drive changes to governance, reform, corruption, change the pathway of the economy needs legitimacy more than anything else. And without an election, we cannot get legitimacy. And I think we need to think that people must have the good sense to know how to vote and we must give them a chance with an election. And then Sri Lanka perhaps gets into a better situation in terms of being able to solve its problems. So let me just, you know, make those two. No, I want to draw you out a little bit. I may, if I may, just because I do not want to miss the understanding on this at all. When I said no one wants elections, I didn't mean the people they do want and I didn't mean me, I do want elections. I meant the members of parliament. And I am with Nishan where I think, oh God, the stability is absolute nonsense because we don't have stability and the hung parliament is what could potentially happen. But that does not mean that we shouldn't have. We should have and we should have had elections long before. So I didn't want any misunderstanding. No, of course. Okay. Thank you. Nishan, I want to go back to you on this idea of, you know, of legitimacy. So most people that I talked to when I was just in Sri Lanka were, they don't find the current parliament legitimate because it doesn't reflect the people's wishes and they do want elections. But there were a lot of politicians who talked about this idea of bringing all the parties together, a unity government. What do you think of that? Is that even possible? Is that something that could work? They felt that that would maybe offer legitimacy with stability. Yeah. So thank you for that. The unity government is meaningful only in as much. The opinions of all the parties are reasonably reflected in the decisions government makes. There is a great deal of opportunity for that already in the parliament by, for instance, allowing the opposition leadership in parliamentary committees. Now, if the space available for allowing the opposition to have a meaningful voice in parliament is already not utilized and significantly suppressed actually against the standing orders of parliament as well, then I think the offer of a unity government becomes simply a window dressing, which and not a meaningful engagement of allowing all views to shape parliament. So I think unity government would be great if there was real intention of, which is currently not reflected in the practices of the government. Of course. So we have several questions on corruption and corruption was something that was one of the demands during the Argalia as well. And you mentioned it in terms of lack of governance. So I want to ask you that parliament did pass an anti-corruption bill last week as part of their IMF commitments. How effective do you think this measure will be and what impact will it have on the economy, but on debt, on other parts of governance? Yeah. This was an important bill. And it's a very significant improvement on the law that is currently in place. It incorporated in addition to anti-corruption unit in government also transparency measures with regards to asset declarations, which is very positive and had been brought separately to parliament by a private member, but is now incorporated in this bill. The proof of the pudding, of course, is in the eating tomorrow. And when we see a high-profile politician prosecuted, we will know that something is working. Unfortunately, every time Sri Lanka passed new laws, even in setting the current anti-corruption unit, there has been great hope that this will now solve our problems. We have been a rather adept at creating institutions that then didn't deliver. And I think Ambika also mentioned things like the missing persons office, etc. So I think we can have hope again, but it is very important to realize that the government itself does not have an incentive because of how it is composed of and the actors in parliament to take corruption seriously. And it is not showing that it does so. If it was serious, there is a very important parliamentary committee called Committee on Public, that works on corruption, Committee on Public Enterprises. Now, that committee is required by the standing orders of parliament to be led by a member of the opposition. But actually, the government has not allowed that. And even a government member who was acting somewhat independently has been removed and replaced with someone more compliant. So the government is demonstrating that it is not serious about corruption while passing laws that, of course, the IMF has asked. So I think if the law can still do its work despite government resistance, then we wish it well. But the proof of the pudding is in the eating. Interesting. Is there anything that international partners, the US included, can do to make this more real, to have some teeth to actually solve some of the corruption issues? I think giving a great deal more weight to governance related commitments on the IMF program and making assistance fairly clearly connected to improvements in governance and reduction in corruption can go a long way because otherwise, even the assistance that flows into Sri Lanka does not flow too enough to the general population. Because of the level of vested interest influence that Sri Lanka has, this is what's causing the economy to crash and be undermined. So I think it's always good to understand that there's a lot of leverage and incentives that the international community can offer for Sri Lanka to improve its governance. And it's not only corruption, but corruption is a significant part of that. Being very targeted and very precise in asking Sri Lanka for outcomes, not just processors, not just institutions, but actual outcomes in advancing corruption mitigation and improving governance. That would be the ticket, I think. Thank you, Nishan. We have a couple of questions for you on debt restructuring. Earlier this month, the program for domestic debt restructuring was announced. And I know there has been some criticism of it. But is the process of the parliament approved a sustainable and equitable solution to a fairly complex issue in terms of domestic debt? Yeah. So Sri Lanka did something very strange with domestic debt restructuring. You know, when countries restructure domestic debt, they usually try to make it as equitable as possible. That is to treat everyone equally. But also they look at protecting the vulnerable. So for instance, retirement income funds are the ones that are touched the last and you try to avoid touching them. Sri Lanka chose to put the entire burden of domestic debt restructure exclusively on the retirement income funds of workers in the country. So that I think is extremely unusual, but also reflects the kind of vested interest influence in Sri Lanka that allowed private bondholders, equity holders of banks who had already priced in the risk of restructure to get windfall gains while workers who are forced to put their savings in government and already having government invested for poor returns are now forced into a 16-year program of having very poor returns on their investments in government securities and their retirement earnings. So I think this is just an indication of all the problems we're talking about in terms of governance and how the weak are paying the price for those who have power to influence decision making. I want to ask you one broader question about, you know, the lessons learned. I mean, it's only been a year. The recovery is just nascent. But, you know, this debt vulnerability that Sri Lanka experienced and hit default. This is not unique to Sri Lanka. Many countries in Asia and in Africa, post-COVID, have really found that the borrowing that they've been financing much of their spending with has become a vulnerability for them. And they are also facing the same things that you raised in your remarks. The poverty has increased and there is no jobs. We're not able to increase jobs. Are there lessons here that Sri Lanka is learning that can be applied or that you would offer to other similarly placed countries that have this debt vulnerability? I think Sri Lanka's particular crisis emerges not only from global conditions that turned adverse but from specific decisions on taxation, public finance that really drove Sri Lanka deeply into the crisis. For instance, Sri Lanka's interest cost is 78% of government revenue, the highest in the world even today. And it has been since 2020 when Sri Lanka cut its taxes. So I think one lesson to learn is you have to make sure that when your economy is growing, your tax base is growing in a way that government revenue grows with it. In Sri Lanka, it's been a little bit the other way around, where the revenue to GDP has come down as the economy has grown, which means that too many people got tax holidays, there was too little collection. So key lesson, grow your tax base and revenue to government. Don't go for the cheap approach to growth by giving tax holidays willy-nilly that ultimately puts your country into crisis. And I think when you have to cut government, reduce your budget deficits, don't take it from healthcare, education and social welfare. These are enormous investments in human beings that have long-term dividends and payouts for the country. Sri Lanka is still benefiting from historical investments. We made in a free-for-all healthcare system and education system. But those dividends are declining because we are not producing universities and scholars that are competitive in the world anymore. And we can't continue to live on past investments, we have to redo them all over. So I would just keep those two lessons, learn to tax in a way that your growth is reflected in the growth of your taxes and invest in human beings. And that's not the first place to cut when you want to manage your public finances better. Thank you for that, Nishan. Folks in the audience, we have about 10 minutes left, so please continue to send in your questions. I want to turn to you, Nalanti. You know, Sri Lanka is in a key location in the Indian Ocean, and definitely we at USIP are trying to put the Indo back in the Indo-Pacific strategy. So I want to hear from you. Are there ways that Sri Lanka can benefit more from the Indo-Pacific strategy, whether it's IPATH or Maritime Domain Awareness? How is it playing? Is Indo-Pacific strategy, the US Indo-Pacific strategy benefiting Sri Lanka at all? How can it take better advantage of some of the programs there, both on the security side, but I think also the economic side? Yeah, that's a great question, Tamana. First of all, I think the Indo-Pacific strategy, when it was released, it really focused, at least within South Asia, it focused on India and the importance of supporting India's leadership in South Asia and the Indian Ocean. But I think one of the oversights was not mentioning the smaller South Asian states like Sri Lanka. So I think as the government continues to, the US government continues to update its thinking and its policies, I think acknowledging those smaller partners would be a welcome addition to a subsequent version of the strategy. But in terms of policy, we do see US policy being responsive to Sri Lanka's economic crisis in terms of the assistance the US government has provided. Also, it really, I think, speaks to a disconnect between US strategy and US policy because we were, at least in terms of thinking about international relations and strategic competition. It's all about China. So in terms of thinking of who are partners to bring along, of course, India. We saw a very successful visit by Prime Minister Modi to the United States recently. So I think that kind of has been the focus in terms of US policy. But US policy has also, I think, tried to be responsive to the economic crisis. And then there's also been some long-standing efforts to increase defense and security ties with Sri Lanka. Hasn't always been successful, like with the discussion about the status of forces agreement a few years ago. But it has been successful in other ways, such as the transfer of retired Coast Guard cutters and helping Sri Lanka with its consistent maritime security objectives. So those aren't going away. So I think that reflects a positive emphasis in terms of US policy and will help Sri Lanka continue to try to climb its way out of the economic crisis because the maritime domain is so important to Sri Lanka in terms of its economic objectives and wider objectives. I want to draw you a little bit out on the India-China component of the relationship with Sri Lanka. I mean, here in Washington, we might think that the default might have pushed Sri Lanka to be pro-India and sort of turned its back on Chinese debt, but that's not actually the case. I mean, most people were very upset about the Rajapaksas, they were upset about the debt, but they're not necessarily upset about China. And I think there's still some hope that China, with its infrastructure development, et cetera, could be useful for Sri Lanka. And at the same time, even with all the Indian assistance, you spoke with folks in the very wary of India being too involved, you know, sort of the big brother in the region, they are still wary about India. So how is Sri Lanka, and particularly President Vikram Asingha, how are they managing that very complex relationship? It is indeed complex because, as you mentioned, China is still a very important partner to Sri Lanka and Sri Lankan officials are really kind of emphasizing their hope that China will be responsive to Sri Lanka in terms of the debt restructuring. So that response has obviously been very disappointing to Sri Lankan officials, but what can they do? They're really just kind of waiting on China in that regard. And in addition, China still represents a source of potential foreign direct investment for Sri Lanka. Discussion recently about a potential refinery deal in the southern part of the country in Hamanthoda. Sino-Pak also recently signed a deal for fuel. So, you know, they're still, they're not going away. China is still an important player here. But in terms of India, the past year has really shown a greater reliance on India economically. It's response has been standout to Sri Lanka and it's been much, much appreciated. But at the same time, it does raise questions in terms of Sri Lanka's foreign policy and its strategic outlook in terms of what will its room for operating and freedom of action, what will that look like? So I think this standard operating procedure that was previewed before the Sri Lankan presidents visit to India and was subsequently confirmed by the foreign minister. I think this will be interesting to watch in the next 12 months, essentially. What ship visits will Sri Lanka permit? Will any be Chinese? I mean, that's a big question. And I think we need to see that slight change essentially in the context of Sri Lanka's economic crisis because that discussion didn't exist before. Tamana, can I come in briefly on this? As an economist, I prefer not to think about, is it a Chinese investment, an Indian investment or an American investment? But to think about, is it a competitively bid out investment that gets the best company to provide the best outcome in Sri Lanka? So the problem with these contracts is not the country of origin of the contractors or the investing party. It is the method or process followed in providing it that most of quite a few of these have had no competitive bidding, have had tax holidays that have been put into the contracts, which means that it does not translate into government revenue and is not economically, therefore, justifiably beneficial for the country against other alternatives. So while I understand the geopolitical questions, I think we should get out of the question of which country and we certainly would not have concern if American companies invested in Sri Lanka provided they were competitively bid out and the offers were genuinely allowing the country to benefit in a way that shared the profits of the company with the government in taxes as well. So just to leave that thought. No, no, I think that's important. I think the question of equity and transparency and sort of process is very important there. I just have very one more minute. I think I have a question here following up on the TRC about in 2013 during a previous Rajapaksa government. There were attempts made with South African TRC experts. What makes those attempts different from now with the present hybrid regime? I don't think there's any difference at all because it was during the Rajapaksa regime. We also had the Udallagama Commission, the Paranagama Commission, the Lessons Learned and Reconciliation Commission, all of which published reports and some of the recommendations and even in those reports were actually not bad. And if they could perhaps begin by implementing them, we'd save everyone a lot of money, energy and prevent the re-traumatization of the victims. Very important point. I want to give you a minute any last comments, recommendations for folks here in Washington, but also folks in Colombo and elsewhere on how we can move the recovery forward. Please. I will make it. Is it Ambedkar? Go ahead, Nishan. Nishan, why don't you start and then I'll go back to Ambedkar. Sure. I would say, you know, it's governance, governance and governance. Sri Lanka's economic crisis is foundationally a governance crisis. And it would be very short-term and an unsustainable fix that Sri Lanka gets if we try to recover the economy without recovering governance to a different place than it has been in the last 20, 30 years. Thank you so much. Thank you. Ambedkar, over to you for a lot of good work. Yeah. Taking on from Nishan, I couldn't agree more. And but my point is that we think that governance or governance reforms only means enacting yet another law establishing yet another institution. We do not acknowledge the existing systemic structural dysfunctionalities and identify that it's a culture that's there. It's habit. It's process. So we need to focus on that as well and not tick the box, which is what many in the international community and the multilateral and bilateral donors do. Nilanthi, I'll give you the last word. Do you have any recommendations for international partners of Sri Lanka, including the U.S., of course, on how we can help the recovery? I think this discussion has shown just the significant work that lies ahead for Sri Lanka in terms of the systemic challenges, governance challenges and international partners in the world are really watching Sri Lanka. And they look at its key role in the Central Indian Ocean in terms of what it contributes to regional trade and also really regional security as well. So I think we'll keep watching. Thank you so much. On behalf of the U.S. Institute of Peace, I want to thank you all for tuning in to this important discussion. We want to continue to engage with Sri Lanka and Sri Lankans and look towards a brighter future. I want to give a very warm thank you to Ambika, Satgunathan, Nishan Damal, and Nilanthi Samaranayaka for joining us today. Thank you all and look forward to staying in touch. Thank you. Thank you, Damana.