Sri Lanka: A Journey from Conflict-Prone, Vulnerable, and Failing State to Peace, Stability, and Prosperity

["British Tamils Forum (BTF) பிரித்தானிய தமிழர் பேரவை"]



15 December 2025

 

Prime Minister

10 Downing Street

London SW1A 2AA

 

Dear Prime Minister, The Rt Hon Sir Keir Starmer MP,

Sri Lanka: A Journey from Conflict-Prone, Vulnerable, and Failing State to Peace, Stability, and Prosperity

Sri Lanka has been severely affected by Cyclone Ditwah, pushing an already-fragile economy into deeper crisis. As the nation mourns the loss of lives and the devastation inflicted upon its agricultural base and infrastructure, the challenge of rebuilding the country to even its pre-cyclone condition poses a serious concern for the Government.

While expressing sincere gratitude to the international community for its timely assistance, it is crucial that Sri Lanka reassesses its internal structures and adopts an inclusive approach to rebuilding. Sustainable recovery is only possible if power is genuinely shared among all peoples of the island—regardless of race, religion, or background. The responsibility for rebuilding must rest with all citizens, not just a centralised political elite.

This requires confronting and rectifying the failures that have accumulated since independence from British rule in 1948.

Sri Lanka: From Asia’s Early Role Model to a Bankrupt Nation

Lee Kuan Yew’s Observations

 

Singapore’s founding Prime Minister, Mr. Lee Kuan Yew, once regarded Sri Lanka as a promising model for Asian development. However, he later became one of its most pointed critics, especially regarding ethnic governance.

His key observations include:

• Early admiration: In the 1960s, Sri Lanka stood out as one of Asia’s most advanced societies, with social and economic indicators surpassed only by Japan.

• Critique of ethnic policies: Lee criticised the systematic marginalisation of Tamil communities and the entrenchment of majoritarian Sinhala politics, which he believed sowed the seeds of conflict.

• Call for political solutions: He advised former President R. Premadasa that the ethnic conflict could never be solved through military means, insisting that a durable political settlement was indispensable.

• Condemnation of wartime actions: Lee later referred to the conduct during the final stages of the 2009 civil war as “ethnic cleansing” and characterised President Mahinda Rajapaksa as a “Sinhala extremist.”

• Holistic warning: Lee consistently argued that economic progress alone cannot sustain a nation in the absence of ethnic harmony and equitable governance. Without addressing deep-rooted grievances and structural inequalities, he warned, national stability would remain fragile.

 

Sri Lanka’s Contemporary Situation

• Urgent need to find a minimum of USD 7 billion to be allocated for recent cyclone and floods damaged reconstruction.

• Total external debt: USD 57 billion

• Projected trade deficit for 2025: USD 7 billion

• Post-cyclone reconstruction may take at least two years, require increased imports and further expand the deficit.

• The current IMF EFF programme runs roughly from March 2023 ending in March 2027.

• In the current political and economic climate, significant Foreign Direct Investment (FDI) is unlikely (Low investor confidence + instability → weak investment → slow growth).

• public debt still hovering above 100% of GDP

 

Debt Clearance Outlook (Next 10 Years)

To clear its external debt and offset recurring deficits - based on scenario estimates Sri Lanka will need at least:

• USD 13 billion under a linear projection, or

• USD 10 billion under an exponential projection.

Without a coherent and sustained national strategy, achieving these targets will be highly unlikely, placing long-term economic recovery at serious risk.

Why These Targets Are Currently Unattainable

Given the constraints:

• No major FDI inflows

• High import dependency

• Weak export diversification

• Rising reconstruction costs

• Temporary IMF support

• High public debt ratio

Within the existing state structure model, Sri Lanka lacks an engine capable of producing the foreign exchange surplus required for repayment.

Reconciliation, Institutional Reform, and Structural Change: The Conditions for Prosperity

Austerity and rigid fiscal tightening alone cannot revive Sri Lanka’s economy. The Government must acknowledge past failures and take decisive steps toward inclusive governance and equitable nation-building.

Lee Kuan Yew foresaw Sri Lanka’s potential to become one of Asia’s great success stories—second only to Japan—had it embraced equal rights for all its citizens and rejected divisive ethnonationalism. It is widely acknowledged that racial and religious discrimination has been the root cause of the country’s prolonged instability and decline.

Sri Lanka must accept its pluralistic identity. The aspirations of each community—especially Tamils and Muslims—must be respected through meaningful sharing of power, allowing regions to manage their own development, similar to the model in Canada, USA, Switzerland, EU and India.

UNHRC High Commissioner’s Report (A/HRC/57/19), Paragraph 64

“Following the elections, the newly elected Government should—as a matter of urgency—pursue an inclusive national vision for Sri Lanka that addresses the root causes of the conflict and undertakes fundamental constitutional and institutional reforms needed to strengthen democracy and devolution of political authority and advance accountability and reconciliation.”

Unless Sri Lanka embraces substantial power sharing model and ensures equal rights—particularly for the Tamil people—the nation will continue to descend into economic and political instability.

Cycles of violence, genocide and State Policies Contributing to the Present Predicament

A series of legislative acts, discriminatory policies, and violent episodes shaped the long-standing ethnic tensions in Sri Lanka and contributed to the present crisis. Key developments include:

• Citizenship Act (1948), which rendered Tamil plantation workers stateless.

• Sinhala Only Act (1956), instituted Sinhala as the sole official language, marginalizing Tamil speakers in education, public administration, and employment.

• 158 documented pogroms against Tamils (1956–2008) have been recorded during this period, resulting in loss of life, displacement, and deepening mistrust between communities.

• Abolition of Article 29 (2): removal of this key minority-protection clause from the Soulbury Constitution weakened constitutional safeguards for non-Sinhala communities.

• Granting Buddhism foremost place in the Constitution, reinforced majoritarian nationalism and extremist elements. 

• “Standardisation” policy (1972): Introduced criteria that disproportionately reduced access to higher studies for Tamil students, intensifying perceptions of systemic discrimination.

• Burning of the Jaffna Public Library: The destruction of over 97,000 rare books and manuscripts remains one of the most culturally devastating acts of the conflict era.

• Prevention of Terrorism Act (1979) enabled prolonged detention without trial, widespread reports of torture, disappearances, and other human rights abuses.

• A 26-year civil war causing widespread death, displacement, and enduring psychological and socioeconomic trauma across all communities.

• State sponsored land grabs aiming on destabilisation of traditional homeland of Tamils. 

 

Lessons from Sri Lanka’s Racially Driven Policies

• Political elites repeatedly mobilised ethnic identity to secure power, entrenching cycles of majoritarianism while enabling corruption, policy incoherence, fiscal waste, and growing militarisation.

• Decades of violence and discriminatory governance eroded human capital, devastated infrastructure, and diverted national resources toward war and security, pushing the economy deeper into debt.

• Events such as the 2019 Easter Bombings, widely alleged by various actors to have political dimensions—revealed profound institutional dysfunction, persistent intelligence manure, and vulnerabilities within the state apparatus.

• The COVID-19 pandemic (2020) further obscured systemic governance failures, enabling mismanagement, lack of transparency, and weak oversight during a period of heightened public fear and uncertainty.

• Corruption permeated defence procurement and major foreign acquisitions, distorting national priorities and undermining both fiscal sustainability and national security.

• From 1983 to 2025, a succession of shocks—prolonged defence expenditures (1983 – 2025), the 2019 Easter Bombings, the 2020 Covid pandemic, the 2022 sovereign default, and the 2025 cyclone and flood catastrophe—combined the effects of human-driven policy failures and natural disasters, inflicting severe and lasting damage on Sri Lanka’s stability and future prosperity.

 

Facts and Figures on Unwarranted Defence Spending

• Defence expenditure (1983–2009): USD 14.14 billion

• Defence expenditure (2009–2018): USD 17.35 billion, despite the absence of war

• Military personnel increased from 200,000 (2009) to 318,000 (2018)

• Of Sri Lanka’s 19 military divisions, 16 remain stationed in the Northern Province

• Reports indicate human rights violations, land occupation, and abuses of women and children

• Sri Lanka maintains a larger military force than the UK

• Despite expectations, the new government continues to prioritise defence over essential sectors

• The military proved inadequate in responding to Cyclone Ditwah, whereas Indian forces reached difficult areas more effectively

 

Why Sri Lanka’s Centralised Governance Structure Hinders Growth and Development

Sri Lanka’s highly centralised and rigid governance model—anchored in a unitary constitutional framework—has long been recognised as a major obstacle to economic progress, institutional efficiency, and balanced regional development. The concentration of authority in Colombo severely restricts local and provincial actors from responding swiftly to emerging challenges or crafting solutions suited to their own social and economic realities.

i. Centralisation slows down decision-making

In Sri Lanka, almost every significant development initiative—whether in infrastructure, housing, investment approvals, or disaster management—must pass through multiple layers of central bureaucracy. This creates systemic delays, increases administrative costs, and undermines the responsiveness required in a globalised and rapidly evolving environment.

Projects that should take weeks frequently drag on for months or years, not due to technical limitations but because of institutional bottlenecks. By the time approvals are granted, economic conditions may have shifted, opportunities may have vanished, and public confidence may have diminished.

ii. ⁠Bureaucracy and red tape limit innovation

Excessive procedural requirements, compounded by entrenched corruption among segments of the political leadership and bureaucracy, deter officials from exploring innovative practices or adopting modern governance models. Local authorities, lacking meaningful autonomy, are rarely empowered to pilot reforms without the explicit consent of central ministries.

As a result:
• Promising ideas fail before reaching implementation
• Policy learning and adaptation happen slowly
• Public-sector performance remains stagnant

iii. Political conflicts and entrenched corruption create further delays

Centralised systems tend to concentrate not only authority but also political opportunism. Ministries and agencies obstruct or delay initiatives associated with rival political actors or factions. When decision-making power is concentrated among a small group—whether politicians or bureaucrats—the risk of corruption increases significantly, as these actors control major financial flows and approval mechanisms.

Consequently, national-level political instability routinely disrupts development at the provincial and local levels, even when communities face urgent needs.

iv. Regional institutions lack autonomy

Provincial councils, local governments, and regional development bodies lack the fiscal and legislative independence necessary to address local priorities. Unlike federal or semi-federal systems—where states or provinces can craft their own economic strategies—Sri Lanka’s regions remain dependent on central government transfers and approvals.

This results in:
• Stagnant development outcomes
• Underutilisation of regional resources
• Slow disaster recovery
• Minimal investment in local innovation
• Reduced economic diversification

v. Lack of power sharing makes much needed reforms difficult

Critical reforms—such as improving public service delivery, modernising agriculture, upgrading infrastructure, or establishing regional economic hubs—require coordinated action across multiple layers of government. In a highly centralised administrative culture, such reforms become vulnerable to political turnover, bureaucratic inertia, and resistance from those who benefit from existing arrangements.

This rigidity leaves Sri Lanka slow to adapt, even when confronted with severe economic crises, climate-related disasters, or competitive pressures from the global economy.

Sri Lanka’s highly centralised, unitary governance model significantly limits economic dynamism and institutional effectiveness. For decades, the concentration of authority in Colombo has been recognised as a major constraint on the country’s economic growth, administrative efficiency, transparency and regional development. This centralised structure prevents local and regional actors from responding swiftly to emerging challenges or designing solutions tailored to their specific social and economic contexts.

• Centralisation slows decision-making

Lengthy approval chains delay development projects and undermine the country’s ability to respond to rapidly changing economic and environmental conditions.

• Bureaucracy stifles innovation

Local authorities lack the autonomy to test new approaches, pilot reforms, or adapt policies to regional needs, resulting in stagnation and missed opportunities.

• Political rivalry and corruption create further delays

Centralised authority intensifies political competition, enabling factional obstruction, patronage networks, and corruption—further slowing progress.

• Regional institutions have insufficient autonomy

Provincial and local bodies lack the fiscal and legislative powers necessary to manage development independently, leading to uneven growth and chronic underuse of regional resources.

• Large-scale reforms become harder

Over-centralisation entrenches resistance to structural reform, making it harder for Sri Lanka to adapt during economic crises, climate shocks, or shifts in global markets.

 

Despite liberalising its economy in 1977, Sri Lanka has failed to achieve the transformative outcomes seen in neighbouring India, which embarked on liberalisation later, in 1991. India’s federal structure enabled its states to compete, innovate, and pursue distinct development strategies—resulting in steady and often rapid regional progress.

By contrast, Sri Lanka’s rigid centralised power structure and the persistent failure of national-level political decision-makers continue to impede meaningful reform and sustainable development. Unless structural changes are made to empower regional governance and devolved authority, Sri Lanka risks repeating its cycle of economic stagnation and missed opportunities.

Imperativeness for reconciliation and rebuilding Sri Lanka from its declining 

The foregoing signifies that Sri Lanka’s centralised governance system has long stifled economic growth, constrained innovation, and deepened ethnic divisions. A genuinely devolved, accountable, and regionally empowered political framework is essential if the country is to recover from its failures and realise its true potential.

However, regardless of which political system is inherited in Sri Lanka, entrenched institutional forces—particularly institutionalised Buddhist hard core and an oversized, militarised state apparatus—continue to hold an effective veto over meaningful reform. These forces have repeatedly obstructed initiatives aimed at reconciliation, justice, power sharing and sustainable peace.

While international assistance during this acute crisis is deeply appreciated, such support must be paired with firm encouragement for structural, institutional, and constitutional reform. Genuine reconciliation cannot be achieved without addressing the legitimate political aspirations of the Tamil people, ensuring meaningful regional autonomy, and dismantling entrenched systems of racial and religious discrimination.

Without these transformative measures, Sri Lanka will remain trapped in cycles of violence, instability and decline, with the continued risk of a major regional conflict.

Given the United Kingdom’s historic role in shaping the early institutions of Sri Lanka, formerly Ceylon, and the improper decolonisation process, we respectfully urge you to initiate a fast-track process in collaboration with global partners to help bring an end to the long-standing conflict, advance justice, and support essential constitutional and institutional reforms. These steps are vital to securing peace, stability, and prosperity for all communities in Sri Lanka.

Even in this moment of profound crisis, there is a real opportunity—and hope—for a better future.

Thank you, Prime Minister.

 

Yours sincerely

V. Ravi Kumar
General Secretary
British Tamils Forum (BTF)
Secretariat for the All-Party Parliamentary Group for Tamils (APPG T)