Updated February 23, 2023
Sri Lanka
Background and Historical Setting
Figure 1. Sri Lanka in Brief
The Democratic Socialist Republic of Sri Lanka, known as
Ceylon until 1972, is a constitutional democracy in South
Asia with relatively high levels of economic and social
development. It is strategically located in the Indian Ocean
off the southeastern tip of India’s Deccan Peninsula. The
island nation was settled by successive waves of migration
from India beginning in the 5th-century BC. Indo-Aryans
from northern India established Sinhalese Buddhist
kingdoms in the central part of the island. Tamil Hindus
from southern India also settled in northeastern coastal
areas and established a kingdom on the Jaffna Peninsula.
Beginning in the 16th century, Sri Lanka was colonized in
succession by the Portuguese, Dutch, and English.
Although Ceylon gained its independence from Britain
peacefully in 1948, succeeding decades were marred by
ethnic conflict between the country’s Sinhalese majority,
clustered in the densely populated South and West, and the
largely Hindu Tamil minority living in the North and East.
Following independence, the Tamils—who had attained
educational and civil service positions under the British—
increasingly faced discrimination from the Sinhalese-

dominated government, which made Sinhala the sole

official language and gave preferences to Sinhalese in
brother of former President Mahinda Rajapaksa, won the
university admissions and government jobs. The Sinhalese,
2019 presidential election on a platform of national
who had deeply resented British favoritism toward the
security, pledging to suppress Islamist extremism. His and
Tamils, saw themselves not only as the majority in Sri
his brother’s key base of support was the Sinhalese
Lanka, but also as a minority in a larger regional context
Buddhist majority. Most Tamils, who are largely Hindu, as
that includes over 70 million Tamils in southern India.
well as most Muslims, voted for Gotabaya’s opponent.
Civil War and Political Developments
Gotabaya selected his brother as prime minister. The
Rajapaksa political position was further strengthened in
For 26 years, from 1983 to 2009, a Tamil militant separatist
2020, when the SLPP won 145 of 225 seats in parliament.
group, the Liberation Tigers of Tamil Elam (LTTE) sought
In October 2020, parliament passed an amendment that
to establish a separate state or internal self-rule in the
strengthened the powers of the president and reversed
Tamil-dominated areas of Sri Lanka. Political, social, and
previous reforms. Observers viewed Gotabaya’s election as
economic development was constrained by the ethnic
bringing a return to nepotistic and authoritarian
conflict and war between the government and the LTTE,
government. The context for the 2019 presidential election
which cost an estimated 70,000-130,000 lives. After the
was at least partially set by the April 2019 “Easter
civil war’s violent end in May 2009, when the military
bombings” that killed over 250 people at several churches
crushed LTTE forces and precipitated a humanitarian
emergency in Sri Lanka’s Tamil
and hotels in Sri Lanka. Security was a key theme in the
-dominated north, attention
election and played in favor of Gotabaya, a former
turned to whether the government had the ability and
Secretary of Defense credited by many Sinhalese with the
intention to build a stable peace in Sri Lanka. Former
defeat of the LTTE in 2009 and the end of the country’s 26-
President Mahinda Rajapaksa (2005-2015) faced criticism
year-long civil war.
for an insufficient response to reported war crimes by
government forces, a nepotistic and ethnically-biased
Economic, Financial, and Political Crises
government, increasing restrictions on media, and uneven
Sri Lanka is in the midst of its worst-ever economic crisis.
economic development. In the 2015 presidential election,
In April and May 2022, Sri Lanka informed its creditors it
Mahinda lost to Maithripala Sirisena (2015-2019).
would not make payments until it was able to restructure its
Parliamentary elections led to a unity government
debt. At that time, Sri Lanka reportedly owed $51 billion.
supportive of Sirisena’s reform agenda, including efforts to
(Sri Lanka’s largest external creditors are the Asian
reduce the authority of the executive presidency.
Development Bank, China, Japan, and the World Bank.)
The Rajapaksas
Flawed agricultural policies, a tax cut, limited foreign
exchange, declines in remittances and tourism, and the
Former President Gotabaya Rajapaksa (2019-2022) of the
increasing costs of food and fuel all contributed to the
Sri Lanka Podujana Peramuna (SLPP) party, a
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Sri Lanka
crisis. Inflation reached over 50% in June 2022 and was
establish a Sri Lankan Marine Corp and a National Defense
53.2% in January 2023. The Rajapaksas had banned
College, exercises, and the donation of Coast Guard cutters
imports of synthetic agrochemicals, including chemical
to the Sri Lankan navy. The Millennium Challenge
fertilizers and pesticides, as part of a policy to move Sri
Corporation (MCC) Compact, which was negotiated with
Lanka to organic agriculture without a transition period.
the Sirisena government, approved a five-year, $480
This, along with fuel shortages, led to significantly
million Compact in 2019 aimed at reducing poverty in Sri
decreased agricultural yields for the growing season ending
Lanka. The MCC board discontinued the Compact with Sri
in March 2022. Foreign remittances also declined to less
Lanka in December 2020 following the recommendation of
than half of 2019 levels, and tourism was down due to the
a Sri Lankan special committee to reject the agreement.
COVID-19 pandemic.
The U.N., Sri Lanka, and Human Rights
Mass demonstrations protesting the Rajapaksa
During Sirisena’s term of office, Office of Missing Persons
government’s inability to alleviate food, fuel, and medicine
was established, and parliament pass a Right to Information
shortages and address power cuts culminated in protesters
law. The Sri Lankan government also co-sponsored a U.N.
storming the presidential palace and the prime minister’s
Human Rights Council resolution on accountability for
residence in July 2022. Prime Minister Mahinda Rajapaska
human rights abuses during the Sri Lanka civil war that was
then President Gotabaya Rajapaksa resigned. Gotabaya
adopted by the Council in October 2015. The resolution
subsequently fled the country, but has since returned. Ranil
followed the September 2015 publication of the Report of
Wickremesinghe of the United National Party (UNP)
the U.N. Office of the High Commissioner for Human
subsequently became president by parliamentary vote. He is
Rights Investigation on Sri Lanka, and at the time many
to serve out Gotabaya’s term, which runs to 2024.
viewed it as a positive step toward justice in Sri Lanka.
The International Monetary Fund (IMF) approved a $2.9
Following the adoption of the resolution, then-President
billion bailout package over four years in September 2022,
Sirisena backed away from supporting any significant
pending Sri Lanka’s ability to restructure its debt with
involvement of international judges in a special judicial
creditors. President Wickremesinghe reportedly
mechanism to prosecute war crimes. Then-High
Commissioner for Human Rights Zeid Ra’ad Al Hussein
acknowledged that China’s reluctance to restructure Sri
Lanka’s debt had caused delays in approval. Sri Lanka
noted steps taken by Sri Lanka, but also called for a
reportedly owes China nearly one-fifth of its total
transitional justice mechanism to deal with past human
outstanding foreign debt when loans from China’s Exim
rights abuses. As President, Gotabaya Rajapaksa was
Bank and the China Development Bank are included. China
reluctant to fulfill commitments made to the U.N. Human
has committed to a two-year debt moratorium on debt
Rights Council relating to a transitional justice agenda.
service payments, but only for loans from Exim Bank.
Strategic Setting
IMF austerity measures, such as increased taxes, higher
Sri Lanka is situated near strategically important sea lanes
electricity bills, and reduced government expenditures, are
transiting the Indian Ocean that link energy-rich Persian
unpopular in Sri Lanka. The government has also indicated
Gulf states with the economies of Asia. Sri Lanka and India
it plans to cut its army by over a third to 100,000 by 2030,
share close, long-standing, historical, cultural, and religious
and reduce expenditures of each ministry by 5%; it may
ties. India became involved in the counter-insurgency war
privatize Sri Lankan Telecommunications and Sri Lankan
against the LTTE following the 1987 Indo-Sri Lanka
Airlines. Such measures may increase political risk for
Agreement. Between 1987 and 1990, India lost over 1,200
Wickremesinghe, who does not have a direct political
soldiers in this conflict before an LTTE suicide bomber
mandate. In February 2023, approximately 40 trade unions
assassinated then-Indian Prime Minister Rajiv Gandhi in
threatened to strike if tax increases were not withdrawn, and
1991. India reportedly provided $4.5 billion in assistance to
civil society groups demonstrated against reported plans to
Colombo in 2022.
postpone local elections scheduled for March 9, 2023.
During Mahinda Rajapaksa’s presidency, international
Observers view the elections as a test of Wickremesinghe’s
observers expressed concern over Sri Lanka’s deepening
support, and opposition MPs have accused the government
relationship with China, particularly China’s 2014 naval
of using the crisis as an excuse to suppress democracy.
submarine visit to Sri Lanka. Beijing has significant
Congressional Interest
investments in Sri Lanka’s infrastructure sector, and in
Congressional interest in Sri Lanka has focused on
2017, Sri Lanka leased port facilities at Hambantota to
supporting Sri Lanka’s democratic institutions, encouraging
China for 99 years for an estimated $1.1 billion. China also
economic development and trade, promoting human rights
is working with Sri Lanka to build a $13 billion Port City
project on 660 acres of reclaimed land in Colombo’s
and reconciliation between religious and ethnic groups, and
addressing regional geopolitical dynamics. A Congressional
harbor. China’s activities in Sri Lanka are part of Beijing’s
Caucus on Sri Lanka was formed in 1998. The United
Belt and Road Initiative, aimed in part at gaining access to
States has provided over $2 billion in assistance to Sri
ports in the Indian Ocean to help secure China’s interests
Lanka since its 1948 independence. Through foreign aid
along vital sea lanes. China’s economic presence in Sri
and diplomacy, the United States has supported initiatives
Lanka has caused concern among some policymakers in
intended to strengthen governance, democratic reform, rule
Washington, New Delhi, and other capitals.
of law, and human rights in Sri Lanka. The United States is
Sri Lanka’s single
Bruce Vaughn, Specialist in Asian Affairs
-largest market, accounting for
approximately 25% of Sri Lankan exports. Bilateral
IF10213
military cooperation includes port calls, a partnership to
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Sri Lanka


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https://crsreports.congress.gov | IF10213 · VERSION 17 · UPDATED

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