(UNTITLED)

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP84S00556R000200150005-4
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 23
• Document Creation Date: January 12, 2017
• Document Release Date: June 21, 2011
• Sequence Number: 5
• Publication Date: June 1, 1983
• Content Type: REPORT

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Directorate of
Sri Lanka: Jayewardene's
Approach to Democracy
and Free Enterprise
NESA 83-10139
June 1983
Copy 2 7 2
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Directorate of Secret
Intelligence
Sri Lanka: Jayewardene's
Approach to Democracy
and Free Enterprise
Office of Near East-South Asia Analysis,
with a contribution b It was
coordinated with the Directorate of Operations and
the National Intelligence Council.
Comments and queries are welcome and may be
directed to the Chief, South Asia Division, NESA, on
Secret
NESA 83-10139
June 1983
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Sri Lanka: Jayewardene's
Approach to Democracy
and Free Enterprise
Key Judgments President J. R. Jayewardene's United National Party (UNP) government
Information available will continue to dominate Sri Lanka until at least 1989. The results of the
as of 13 June 1983 October presidential election and the December referendum to extend the
was used in this report. life of the current UNP-controlled Parliament for six years constitute a
personal triumph for the healthy 76-year-old President and a strong vote of
confidence in his leadership and his Western-style, free enterprise econom-
ic policies. The twin victories mark the first time in almost three decades
that a Sri Lankan government has succeeded itself in power. We believe
that Jayewardene's death in office would pose no immediate threat to the
stability or smooth functioning of the government.
The fresh mandate provides Jayewardene an opportunity to complete Sri
Lanka's transition to a high-growth, free market economy. We expect the
President to focus on completing several far-reaching and ambitious
development projects that his government undertook when it swept to
power in 1977 and that Jayewardene hopes will launch the country on a
path of self-sustained growth.
Although overall growth is likely to increase in 1983, Sri Lanka faces
thorny economic problems in the near-to-mid-term. The government has
borrowed heavily to pay for development that will not begin to yield
dividends for several years. We believe that the UNP's most urgent priority
is to curb massive deficits in the national budget-which accounts for an
unusually high percentage of gross domestic product-as the country
passes through the years of peak development expenditure. Sri Lanka will
also face growing strains in its balance of payments, which may not prove
curable through import substitution and export promotion.
Jayewardene's reelection implies that Sri Lanka will continue playing a
moderate and constructive role in world forums. The UNP seeks to retain a
pro-Western orientation while maintaining its nonaligned credibility. Rela-
tions with the United States will remain friendly and will continue to have
a greater economic than political emphasis as the government seeks to
promote investment opportunities.
iii Secret
NESA 83-10139
June 1983
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The UNP's overwhelming dominance of the government, coupled with the
weakness of the traditional opposition parties, will enhance prospects for
political stability, but the party's unorthodox use of its incumbency to
ensure its own succession could eventually prove detrimental to democracy
in Sri Lanka. Jayewardene appears to be aware of the need to guard
against the danger that, lacking a credible opposition, many in his party
may become corrupt, arrogant, and indifferent to the needs of constituents.
Communal disharmony is the most serious potential threat to Sri Lankan
stability, and prospects for long-term harmony are not promising. Al-
though Jayewardene is committed to fostering better relations between the
majority Sinhalese and minority Tamils, powerful members of his own
party are much less conciliatory, and Tamil dissidents are likely to launch
sporadic terrorist attacks. We believe that Jayewardene will invoke the
government's special emergency powers if Tamil agitation for a separate
state once again flares into widespread bloody confrontation.
Democratic practice and communal relations could undergo significant
changes once Jayewardene leaves power, particularly if a less committed
democrat were to inherit the powers of the presidency. The new generation
of leaders may be less well grounded than the President in Western
philosophies of government and may have less of an ideological commit-
ment to established democratic principles.
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Sri Lanka: Jayewardene's
Approach to Democracy
and Free Enterprise
Democracy and Free Enterprise
Sri Lanka is a rarity among developing countries for
its solid tradition of democratic practice and, current-
ly, for its free enterprise economic policies. The
electorate is highly literate-around 87 percent-and
politically sophisticated. Elections have been a stand-
ard feature of Sri Lankan political life since independ-
ence in 1948.
The twin electoral victories of President J. R.
Jayewardene and his ruling United National Party
(UNP) last fall ensure their continued domination of
Sri Lanka's political landscape until at least 1989.
The results of the October presidential election and
the December referendum to extend the current
UNP-controlled Parliament by six years constitute a
personal triumph for the 76-year-old President and a
strong vote of confidence in his leadership and in his
market- and development-oriented economic policies
and programs.
When the UNP swept to power with a five-sixths
parliamentary majority in 1977, Jayewardene became
Prime Minister. Jayewardene had long been con-
vinced, however, that he needed greater executive
power and more than a single term in office in order
to rehabilitate Sri Lanka's ailing welfare-oriented
economy, according to Embassy reporting. One of his
first acts was to amend the constitution to provide for
a strong presidential form of government, which he
believed would provide the political stability necessary
to attract foreign investment and inspire confidence
among aid donors. He also instituted proportional
representation in parliamentary elections in order to
brake the wide swings that have characterized Sri
Lanka's frequent changes of government.
earner. Jayewardene has long admired Singapore's 25X1
economic record, and we believe he has tried to
pattern Sri Lanka's development along similar lines,
consistent, however, with the island's strong traditions
of democratic government.
When he came to power, Jayewardene inherited a
stagnant economy. Years of ambitious social welfare
policies had diverted government resources to sustain
costly consumer subsidy programs and massive social
services. The debilitating effects of these income
redistribution policies became most evident during
1970-77, when Prime Minister Sirimavo Bandara-
naike's United Front government held power. During
those years, average growth languished at about 3
percent, unemployment peaked around 24 percent,
and shortages of food and consumer goods were 25X1
commonplace. 25X1
Jayewardene also made early use of his political
strength to risk a major shift in economic priorities.
He established strong incentives for the production
and export of textiles, electronics, and other manufac-
tured goods, although agricultural commodities re-
main the country's most important foreign exchange
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Figure 1
India
Palk
Strait e `~.. atfpe~'~
Bay
North
Central(
Northern
Gulf
of
Mannar
North
Western
Sri Lanka
COLOMBO
%'
Western'
baraeanluwa
' .C
Sduth:e~ A
,Trincomalee
Bay
of
Bengal
Uva
634458 6-83
Secret 2
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The "Executive Presidency"-An Assessment of
Jayewardene's Leadership
President Jayewardene is Sri Lanka's central politi-
cal figure and the undisputed leader of both the
government and the UNP. As the island's first Presi-
dent with more than nominal powers, he is the only
leader since independence to have personally won a
national mandate-an achievement that we believe
strengthens his position.
Sri Lanka's `executive presidency "-generally based
on the Gaullist model-was tailor made for Jayewar-
dene. We believe the office's authority, prestige, and
relative detachment suit his somewhat aloof person-
ality and preferred leadership style. His broad power
coupled with his removal from the thrust and parry
of parliamentary politics enables Jayewardene to
play the role of distant and austere yet benevolent
and revered father figure. As President, Jayewar-
dene is chief of state, head of government, and
commander in chief of the armed forces; he also
heads the Cabinet, approves all government appoint-
ments, and makes all major policy decisions. He is
neither responsible to Parliament nor dependent upon
his party s fortunes there, which enables him to make
unpopular decisions in the national interest without
fear of parliamentary censure.
A political pragmatist with shrewdness and organiza-
tional skill, Jayewardene played a major role in
rebuilding the UNP after he became party leader in
1973, reorganizing it and reshaping its image in order
to give it greater popular appeal without alienating its
traditional supporters. The President has a reputa-
tion for outmaneuvering his adversaries and exploit-
ing their weaknesses. He also possesses a well-
developed sense of political timing, moving cautiously
when pieces are missing from the political puzzle but
striking swiftly when all are in place. In our judg- 25X1
ment, Jayewardene has demonstrated that he has the
courage to take political risks and the skill to make
them pay off.
Although some have accused him of ruthlessness,
others have faulted Jayewardene for being too toler-
ant of mediocrity and corruption in his party. He ha:25X1
recently begun to remove some party deadwood, but
we believe that he is reluctant to discipline old and
loyal political cronies who do not share his ideals.
The President's strengths increase the risk that he
could become isolated and out of touch with emerg-
ing trends. According to Embassy reporting, some
younger members of Parliament say that he is ex-
tremely difficult to approach, and the unusual sensi-
tivity to criticism that he displayed during last year's
campaigns may discourage colleagues from seeking
his counsel on matters where there is disagreement.
Age differences increase this distance; Jayewardene is
one of the few remaining politicians of the generation
that brought independence, and most of his col-
leagues are considerably younger.
Armed with a strong popular mandate to turn the
economy around, the UNP set about stimulating
growth and employment by loosening government
controls, allowing freer play to market forces, and
encouraging export growth. In line with International
Monetary Fund prescriptions, the UNP eliminated
excessive trade controls, devalued the currency, liber-
alized imports, and took the politically risky step of
reducing consumer subsidies on basic commodities.
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To boost investment, Jayewardene welcomed private
foreign investors and initiated an unprecedented drive
for concessional foreign aid to fund large-scale proj-
Figure 2
Sri Lanka: Gross Domestic Product
ects for irrigation and electricity.
The combined effect of economic liberalization and
heavy capital investment quickly earned handsome
dividends for the UNP as the economy became buoy-
ant. During 1978-81 economic growth jumped to an
annual average rate of 6.5 percent-in favorable
contrast to the 3 percent recorded during 1971-77.
New construction boomed as investment rose to near-
ly 30 percent of GDP in contrast to only 16 percent
during the previous administration. Exports of manu-
factured goods expanded 550 percent from a very low
base between 1977 and 1981, in part due to success in
attracting foreign investment to a free trade zone set
up near Colombo in 1978. Unemployment rates
dropped to about 15 percent, with some 800,000 jobs
being created by new industries and more vigorous
growth
The glitter of Jayewardene's economic program start-
ed to fade in 1980. Massive budget deficits, higher
prices for imported goods, particularly oil, and the
lifting of price controls resulted in high inflation.
Government expenditures rose to an unprecedented
43 percent of GDP, and the overall deficit reached 23
percent of GDP. The IMF suspended its balance-of-
payments support and warned Colombo to take reme-
dial action, after which the overall deficit was reduced
to a more manageable 15.6 percent of GDP.
and its members of Parliament-creating a bandwag-
on effect. A constitutional amendment permitting an
early presidential election was rammed through Par-
liament in August 1982. Jayewardene won an abso-
lute majority in the six-sided contest with 52.9 percent
Faced with the looming necessity of imposing addi-
tional politically unpopular austerity measures to
comply with the IMF, Jayewardene decided last year
to seek early reelection both for himself and his party.
In addition to the economic imperative, Jayewardene
wanted to exploit the serious disarray and demoraliza-
tion among the various opposition parties, according
to Embassy reporting.
Jayewardene chose to hold the presidential contest
first in order to capitalize on his personal popularity-
widely recognized to be greater than that of his party
of the vote.
Fears that the UNP might drop below the all-
important two-thirds majority level in Parliament-
necessary to amend the constitution and prolong
states of emergency-prompted Jayewardene to pro-
pose a national referendum to extend the life of the
current Parliament by six years instead of holding a
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full-blown election. Another constitutional amend-
ment was hurriedly pushed through Parliament, and
on 22 December the referendum passed with 54.7
percent of the vote
Jayewardene's election victories were unique in sever-
al respects. They marked the first time in almost three
decades that a Sri Lankan government had managed
to succeed itself in power, thus avoiding the policy
dislocations that have usually accompanied changes of
administration. The presidential election was the first
opportunity for Sri Lankans to vote specifically for a
national leader under the new presidential system of
government and the referendum was the first use of
that device for extending the life of a sitting Parlia-
The government's new mandate-and the prospect of
stability and government continuity-provides unpar-
alleled opportunities to complete the transition to a
high-growth, development-oriented, free market
economy-a process that lost considerable momentum
during the election period. According to Embassy
reporting, the government believes that the election
results have removed an element of uncertainty
among potential investors and will inspire increased
confidence among aid donors.
UNP policies have brought a measure of progress but
have also generated a new set of economic problems.
The government has had to borrow heavily from the
future to pay for its ambitious development programs,
which Jayewardene hopes will eventually generate
self-sustained growth but will not pay dividends for
several years. As a result, Sri Lanka suffers from:
? An overheated economy due to massive budget
deficits.
? Serious trade imbalances.
? A growing debt service burden.
? A disturbing balance-of-payments problem.
Figure 3
Sri Lanka: Overheating the Economy-the
Savings-Investment Gap
o Total investment (SLFP government)a
0 Domestic savings (SLFP government)
o Total investment (UNP government)a
Percent of GDP
a Gross fixed capital formation.
b Provisional.
limited domestic savings away from private invest-
ment. Armed with its fresh mandate, the Jayewar-
dene government has put together a new budget that
will probably meet at least in part the IMF's demands
for austerity measures. The government also has:
? Enacted increases in import duties and taxes to help
bring external payments and budget deficits under
control.
? Allowed the rupee/dollar exchange rate to float,
resulting in some depreciation.
? Eased administrative price controls over certain
daily essentials such as kerosene and other fuels,
making them more expensive in rupee terms.F_~
In our view the government's most pressing short-
term priority is to control the budget in order to
accommodate peak development expenditures without
reigniting domestic inflation, triggering additional
demand for imported consumer goods, or diverting
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Figure 4
Pa/k
Strait
Gulf
of
Mannar
Sri Lanka
Expected extent of irrigated land
at completion of Mahaweli Project
Bay
of
Bengal
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The Mahaweli Project
By far the most ambitious of Sri Lanka's major
investment projects is the Accelerated Mahaweli Riv-
er hydroelectric/irrigation/resettlement scheme. Orig-
inally conceived as a 30 year undertaking by the
previous government, the project was accelerated
when Jayewardene came to power, and we expect that
the bulk of construction will be completed by the
mid-to-late 1980s at a cost of well over $2 billion.F_
The scheme involves the construction of four major
dams along the Mahaweli River and its tributaries
and a network of downstream irrigation canals
stretching from the mountainous center of the island
in a wide diagonal swath northeast. to the Trincoma-
lee region. The dams will provide badly needed
hydroelectric power, while irrigation will open up
and areas to intensive agriculture and the resettle-
ment of landless farmers.
The Mahaweli program, which is by far the largest
single item in the Sri Lankan budget, exerts a
significant influence over the economy as a whole.
Heavy new expenditures for Mahaweli tend to ex-
pand the budget deficit, generating inflationary pres-
sures and placing strains on the balance of payments.
These strains are particularly acute at present as Sri
Lanka enters the years of peak Mahaweli expendi-
ture.
Economic Prospects
We believe that for the next few years Sri Lanka may
have to tolerate a reduced rate of growth in order to
conform to IMF guidelines. The Sri Lankan Govern-
ment estimates overall growth this year at about 5
percent in spite of the austerity budget. Other IMF-
recommended measures, however, such as increases in
government-administered prices and depreciation of
the rupee, will probably hurt consumers. Although
Jayewardene has publicly stated that the IMF will not
be allowed to dictate policy to Sri Lanka, there is little
doubt that future IMF restrictions will have to be
taken seriously as long as Colombo continues to run
Figure 5
Sri Lanka: External Trade and Current
Account Balances
o Trade balance (SLFP government)
o Current account balance (SLFP government)
0 Trade balance (UNP government)
The austerity budget precludes spending on new
projects that could provide additional employment to
absorb the backlog of unemployed as well as new
entrants to the labor force. Current projects have
already hired their full complement of workers, and
the labor force faces some retrenchment once they are
completed. Although some workers may be absorbed
in the agricultural sector, private enterprise remains
the principal means of increasing employment. There
are few incentives in the 1983 budget, however, for
the expansion of private-sector investment and pro-
duction.
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large foreign trade and current account deficits.
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The balance-of-payments position will continue to be
strained at least until the late 1980s as debt service
payments mount and project aid (which finances some
local costs as well as equipment imports) begins to
decline. We are uncertain of Sri Lanka's ability to
offset these projected deficits through import substitu-
tion and export promotion programs. Almost half of
Sri Lanka's exports consist of a few agricultural
products. Increasingly tight world supplies may raise
multinational rubber prices during the remainder of
this decade, but the more important tea exports,
already constrained by inadequate investment and
poor management, face stagnant world demand. The
island's manufactured exports still consist primarily
of textiles and garments for which foreign demand
has been restricted by quotas. Plans for some addi-
tional major export-oriented investment have not yet
been implemented. We believe that Jayewardene's
renewed emphasis on improving operations on govern-
ment-owned plantations indicates an eagerness to
boost the production of tea and perhaps an implicit
acknowledgment that Sri Lanka must continue to rely
on its agricultural exports.
The UNP's overwhelming dominance of the govern-
ment will enhance prospects for political stability, but
we believe it has some disquieting implications for Sri
Lanka's strong democratic tradition. The UNP has
proven that it can use its political supremacy to pass
whatever legislation it wants. We believe there is a
danger that, lacking a credible opposition, many in
the party may become arrogant, corrupt, and indiffer-
ent to the needs of constituents. In addition, according
to Embassy reporting, the government risks losing
touch with political realities if the extension of its
mandate leads to an unhealthy sense of invincibility.
Press commentaries indicate that many committed
democrats in Sri Lanka believe that the UNP's
heavyhanded preelection behavior demonstrated a
disquieting authoritarian streak in manipulating the
constitution for partisan advantage. The government's
resort to a referendum to extend the life of
a sitting Parliament, though technically legal, was
unprecedented, and press and Embassy analyses indi-
cate that it left a bad taste in many mouths. Although
the referendum passed comfortably nationwide, the
voting results and commentaries in the English-
language press suggest that many of Colombo's so-
phisticated and Westernized voters were upset by the
idea and voted against it.
Also disturbing were the circumstances under which
the vote was held. In selling the referendum to the
public, the government made a major issue of alleged
threats to national security from subversive and anti-
democratic elements. Charges against the opposition
Sri Lanka Freedom Party (SLFP) provided a pretext
for emergency measures against that party in order to
further disrupt it and ensure a referendum victory.
Whether he believed the charges or not, Jayewardene
appears to have been genuinely worried that the
leftist-dominated SLFP would have picked up dozens
of seats in a full-scale parliamentary election, accord-
ing to Embassy sources. A state of emergency put into
effect immediately after the close of the presidential
polling to prevent possible violence was extended
twice in the absence of any clear security threat,
finally expiring in mid-January. According to Embas-
sy reporting, UNP leaders prolonged it in order to
arrest and hold without charge a number of SLFP
leaders and organizers through the end of the referen-
dum campaign.
Jayewardene has already taken measures to counter-
act criticism that the referendum was undemocratic,
broadening the UNP's popular appeal and reestab-
lishing his own democratic credentials. He recently
began a campaign to cull party deadwood by remov-
ing a number of corrupt and inefficient members of
Parliament who had performed poorly and tarnished
the UNP's image.
Instead of filling these seats through direct nomina-
tion, as provided in the 1978 constitution, Jayewar-
dene sponsored an amendment that allows for byelec-
tions if the nominating party takes no action within 30
days. The byelections, which were held in mid-May,
offered a safe and painless way to clean house, create
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headroom in the party, and permit the opposition to
increase its parliamentary representation. The UNP
stood in no danger of losing its all-important two-
thirds majority and in fact won 14 of the 18 seats
Marxist ideology no longer has the wide
contested.'
The government has hinted it might hold future
elections to increase the size of Parliament from its
present 168 seats to 196, as mandated by the 1978
constitution. We believe that the UNP may eventual-
ly hold these elections, but only if opposition party
impotence assures it of maintaining the majority it
believes is necessary to ensure political stability
Opposition Disarray
Sri Lanka's opposition parties were largely caught off
guard by Jayewardene's accelerated election schedule,
are riven by disorganization and factional rivalries,
-and, in our view, will pose virtually no threat to the
government for the foreseeable future.' The SLFP,
which held power three times (1956-60, 1960-65, and
1970-77), is the only political force capable of chal-
lenging the UNP at the polls, but it has not recovered
from its humiliating defeat in 1977 when it won only
seven seats and could not even qualify as the official
opposition. Since losing power, the party leadership
has been unable to develop a workable program, and
Embassy reporting indicates that the party has been
plagued by organizational neglect, indecision at the
top, debilitating factional disputes, and a wave of
prominent defections to the UNP. The Tamil United
Liberation Front (TULF), the major political spokes-
man for Tamil interests, is the third-largest party in
terms of voter support and is the official opposition in
Parliament, but it is concerned exclusively with pro-
moting autonomy for Tamil majority areas and has no
aspirations for national leadership.
The remaining opposition parties, all well to the left of
the SLFP, lack that party's electoral base in the
countryside as well as suffering many of the SLFP's
internal problems.
The other seats were won by the SLFP (3) and the minuscule
appeal it once enjoyed in Sri Lanka. The economic
mess left by the SLFP-led United Front government
in 1977 produced general disenchantment with the
socialist-collectivist approach to economic policy, 25X1
which has severely narrowed the bases of the SLFP's
former coalition partners.
Attempts at forging common fronts to contest elec-
tions have been dilatory, half-hearted, and largely
ineffective. A sort of common effort was hammered
out in the closing days of the recent byelections, but it
did not extend to races for local council seats, where 25X1
various and often contradictory anti-UNP coalitions
were arranged. As a result, independent candidates-
some of whom may have been covertly backed by the
UNP-were more successful at the local level than
most of the recognized opposition parties.
Several opposition groups-possibly including the
rudderless SLFP-are likely to undergo breakups and
realignments within the next few years in order to
improve chances for gaining parliamentary represen-
tation. The smaller leftist parties in particular face a
bleak future after the next general election-now
scheduled for 1989-when proportional representa-
tion goes into effect. In order to qualify for any seat, a
party will have to amass at least 12.5 percent of the
total vote in any district. Because most of the votes
traditionally go to the two major parties, the lesser
groups could be shut out completely.
Jayewardene has hinted that the UNP may form a
government of national unity that would include
representatives of other moderate political
elements. Making opposition figures partners in gov-
ernment could promote national reconciliation and
ease some discomfort with the UNP's overwhelming
control. It is also likely to exacerbate tensions within
the SLFP. Press commentary on the concept has been
generally favorable, but opposition reaction has been
mixed. The TULF leadership has been cautiously
positive, but SLFP president Sirimavo Bandaranaike
has ruled out any plans for participation. Some UNP
members, such as Sinhalese chauvinist Cyril Mathew,
oppose it because of the additional weight a national
unity government would have ive to the Tamil
voice.
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Communal Tensions-A Long-Term
Threat to Stability
The threat of serious communal violence poses a
major challenge to the UNP government. Traditional
animosities between the Sinhalese Buddhist majority
(about 74 percent of the population) and the Tamil
Hindu minority (about 13 percent)'-which are based
on religion, language, cultural identity, and numerous
specific grievances-have often flared into wide-
spread, bloody confrontations. Since the mid-1970s
the Tamils have pressed demands for a separate and
independent Tamil state (Eelam) in the Northern and
Eastern provinces where they predominate
Jayewardene recognizes the threat of communal dif-
ferences and is deeply
committed to fostering better Tamil-Sinhalese rela-
tions. Although he is o osed to the concept of a
separate Tamil state, I he
has nevertheless worked harder than his predecessors
to provide the Tamils with a greater voice in their own
affairs. With TULF concurrence, a District Develop-
ment Council system was established by Jayewardene
in 1981 to give Tamils a measure of local autonomy,
' This figure includes only those Tamils who are native to Sri
Lanka. So-called Indian Tamils, who were imported by the British
as plantation labor in the 19th century, comprise a much smaller
Although we believe that Jayewardene enjoys good
health, his advanced age increases the possibility that
he will die during his six-year term. Under the 1978
constitution, the Prime Minister, Ranasinghe Prema-
dasa, would become Acting President until parlia-
ment chose a successor from among its members. As
the undisputed leader of the UNP's Parliamentary
contingent, we believe Premadasa would be the most
likely candidate to be chosen to fill out Jayewa-
rdene's term. In this event, we would expect him to
continue the UNP s free market, development-
oriented policies.
Premadasa, 58, sees himself as Jayewardene's heir
apparent. Highly popular, capable, and hard working,
he displays a common touch that Jayewardene lacks
and has proved himself a major votegetter for the
party. According to Embassy reporting, Jayewardene
holds Premadasa's political skills in high regard,
depends on the Prime Minister, and works closely
with him.
Ironically, Premadasa's low-caste origins, which have
undoubtedly added to his popular standing, could
derail his succession to the presidency. Sri Lanka has
been governed since independence predominantly by
members of the goigama (cultivator) caste, the high-
est in status and numerically the largest. Premadasa
is the only major political figure on the current scene
who is of significantly lower caste, and Embassy
reporting indicates that some elements in the UNP
are anxious to prevent his succession. We believe
recent suggestions that the constitution be amended
to provide for an office of vice president reflect an
attempt to thwart Premadasa's candidacy by appoint-
ing a suitably high-caste vice president who would
then automatically succeed Jayewardene.
The UNP has thus far displayed none of the debili-
tating infighting that has plagued Sri Lanka's other
major parties. Although presidential hopefuls are
looking around for support, we see little prospect of
any dramatic power plays as long as Jayewardene
remains healthy.
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but the scheme has never been adequately implement-
ed. Jayewardene also initiated a series of amity talks
with TULF General Secretary Amirthalingam as a
means of hearing Tamil grievances and reducing
communal tensions.
several radical Tamil
terrorist groups have sprung up, all ostensibly dedicat-
ed to dramatizing the Eelam cause and provoking
Sinhalese and government overreaction to their activi-
ties, thereby further alienating the Tamil community,
most notorious of these organizations-the Tamil
Tigers-has mounted a number of bloody bank rob-
beries and terrorist raids on police stations in search
of cash and arms and has been responsible for numer-
ous bombings and assassinations designed to intimi-
date more moderate Tamils. Many Tamils neverthe-
less view the Tigers as folk heros.
The TULF has consistently condemned Tiger vio-
lence, some of which has been directed against moder-
ate TULF politicians as a warning against dealing
with the Colombo government.
Jayewardene has swiftly employed the government's
emergency powers to restore order following isolated
communal incidents in order to keep them from
spreading. Special antiterrorist legislation that is
aimed at curbing Tamil violence in the north also
gives security forces extraordinary powers for dealing
with suspected terrorist groups.
We believe that an escalation in Tiger terrorism could
pose a serious threat to stability but would probably
not threaten the government. A Tamil-Sinhalese con-
frontation could spread rapidly in this communally
sensitive society. Although Tiger effectiveness has
been hampered in the past by internal leadership
struggles and competition between rival groups, and
popular support for
have shown an unusually high degree of efficiency
and organization. The government takes this threat
seriously and has recently set up a new 500-member
antiterrorist police unit to deal with the problem
Foreign Policy and Implications
for the United States
Jayewardene's electoral victories, in our view, will
have little impact on the style and substance of Sri
Lanka's moderate and nonaligned foreign policy,
which did not even become an issue in the recent
campaigns. Unlike his predecessor Sirimavo Banda-
ranaike, who reveled in her leadership of the Non-
aligned Movement, Jayewardene has shown little
personal interest in foreign affairs or in projecting a
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role for Sri Lanka on the world stage. We believe that
with his economic transformation of the country
incomplete, foreign policy will continue to take a
backseat to domestic affairs.
Still, Jayewardene may take advantage of his secure
domestic position to carve out a role as an elder
statesman focusing on global economic problems.
According to Embassy assessments, Jayewardene has
long been impatient with the contentious political
issues that have often bogged down nonaligned pro-
ceedings, and in his recent speech to the Nonaligned
Conference in New Delhi, he argued forcefully that
the movement does not pay enough attention to more
critical worldwide economic problems that hurt devel-
oping countries like Sri Lanka.
We expect that the UNP government will retain its
broadly pro-Western orientation, but not at the ex-
pense of its nonaligned credibility.
~ayewardene feels a strong personal
friendship toward the United States and is generally
sympathetic to the values and economic policies of the
current US administration. Although his renewed
mandate should make him less vulnerable to opposi-
tion needling, he is acutely sensitive to longstanding
charges by his domestic critics that he is a US stooge.
We believe that he is unlikely to adopt policies or
positions that would compromise Sri Lanka's valued
nonaligned status.
We believe that Sri Lanka's relations with the West
in general and the United States in particular will
continue to be more heavily economic than political.
Jayewardene is eager to advertise Sri Lanka's project-
ed political stability as a means of attracting in-
creased foreign investment and fueling the island's
economic growth. His virtually unassailable political
position reduces his vulnerability to opposition pres-
sures against opening too wide a door to Western
investors and should enable him to offer appealing
opportunities to US and other foreign companies. We
expect that Sri Lanka will continue to welcome visits
Sri Lanka's democratic structure has probably not
suffered immediate damage from Jayewardene's
somewhat unorthodox maneuvering to ensure his own
succession. We believe that his instincts remain solid-
ly democratic and that he is contemptuous of suspi-
cions that the UNP is trying to build a one-party
state. Thus, he is unlikely to adopt tactics that would
weaken the SLFP beyond repair. In our view,
Jayewardene recognizes that the country needs a
credible democratic alternative and that the SLFP-a
known and relatively moderate quantity-would be
preferable to any of the other parties.
Prospects for communal harmony are reasonably good
as long as Jayewardene remains in control, but the
situation remains potentially dangerous. The Presi-
dent's election victories should strengthen his hand in
bringing Sinhalese chauvinists in the UNP into line.
Accommodation talks with the TULF, however,
which were interrupted by the recent elections, have
not been reopened. This unexplained hiatus has result-
ed in an erosion of confidence in the government
among moderate Tamil leaders and was an important
factor in the rise in violence during the most recent
elections. We believe that without a good faith at-
tempt by Jayewardene to resolve outstanding Tamil
grievances, Sri Lanka can look forward to increased
Tamil unrest in the months ahead
Democratic practice and communal relations could
undergo significant changes once Jayewardene leaves
power, particularly if a less committed democrat were
to inherit the powers of the presidency. The Presi-
dent's political generation, which was well grounded
in Western philosophies of government and which
came from the Westernized, upper class, English-
speaking elite, is beginning to pass from the scene.
The generation of leaders that will succeed Jayewar-
dene is less homogeneous in educational, social, and
economic terms and may have less of an ideological
commitment to the established norms of democratic
government.
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We believe that prospects for Tamil-Sinhalese harmo-
ny in the post-Jayewardene era are not promising.
Since 1948 political parties have developed along
linguistic and ethnic lines, which have intensified
communal differences, and the new generation of
leaders now reaching maturity has been immersed in
communal politics. Jayewardene grew up in a more
tolerant era, and his goal of accommodation is not
shared by many powerful members of his own party,
nor by an increasing number of dissident Tamils
whose support for the TULF's moderate policies will
be critical.
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Appendix
Opposition Dynamics
In our judgment, the government's electoral successes
were greatly facilitated by the weakness and uninspir-
ing performances of Sri Lanka's opposition parties,
which were largely caught off guard by Jayewar-
dene's accelerated election schedule. Disorganization
and factional rivalries prevented them from backing a
single opponent to Jayewardene in the presidential
election and from mounting a significant common
effort to defeat the referendum
Nonetheless, the opposition is not a spent force. Sri
Lanka has a long history of protest voting against the
government at general elections, and the failure of the
UNP to fulfill its economic promises would undoubt-
edly play into opposition hands in future elections.
The SLFP, which held power three times (1956-60,
1960-65, and 1970-77), still has a solid base among
Sinhalese Buddhists, and we believe that its potential
national electoral support remains substantial.F
The once proud SLFP is still the only political force
with any hope of effectively challenging the UNP at
the polls, but it has not recovered from its humiliating
defeat in 1977 when the party won only seven seats
and could not even qualify as the official opposition.
Traditionally left of center, the SLFP has come under
the control of more radical leftist elements in recent
months to the detriment of the party's predominant
moderate faction,
Since losing power, the party has also suffered from
organizational neglect, a shortage of dynamic and
decisive leadership, debilitating factionalism, and a
wave of prominent defections.
The SLFP is plagued by many internal weaknesses,
which we believe have been exacerbated and exploited
by the UNP. Former Prime Minister Sirimavo Ban-
daranaike, who led the last two SLFP governments,
has run the party like a family fiefdom for over two
decades. Her autocratic style and firm grip on power
have stifled the emergence of a solid organization and 25X1
a cadre of younger leaders who could eventually
challenge her.
Although an accomplished politician, Bandaranaike is
neither brilliant nor imaginative, and we believe she
lacks a selfless interest in her party's future. She has
concentrated her efforts on protecting her own posi-
tion within the party hierarchy instead of examining
and trying to rectify the serious policy shortcomings
that brought about the election debacle in 1977.
Embassy and press sources report the party still has
no coherent program for challenging the UNP.F_
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2 A11
The SLFP was plunged into a bitter succession battle
in late 1980 when Bandaranaike-its chief votegetter
and only national figure-was stripped of her civic
rights. A Special Presidential Commission of Inquiry 25X1
found her guilty of corruption and misuse of power
while in office. She subsequently was expelled from
Parliament and prohibited from engaging in political
activity (including holding public office) for seven
years. Despite this grave handicap, she has refused to
step aside.
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The ensuing struggle to replace her has brought about
one major split, polarized the remainder of the party
into leftist and moderate factions, divided the Banda-
ranaike family itself, and made the party an object of
public ridicule, according to Embassy sources. Leftist
ascendancy in the party, in our view, may have
peaked with the nomination last July of former
Agriculture Minister Hector Kobbekaduwa as the
SLFP's presidential candidate. We believe that Rec-
tor's loss to Jayewardene, albeit with a respectable 39
percent of the vote, may have discredited the leftists
enough to enable the moderates to regain control of
the party
Still, the internal power struggle seems far from over.
Without a restoration of her rights, which we judge
unlikely before 1981, we believe that Bandaranaike
would like to see her moderate son, Anura, emerge as
party leader. This would involve isolating the leftists,
however, including her radical daughter, Chandrika
Kumaratunga, whom she believes is astrologically
favored for political advancement. Although Anura
has resolved his quarrel with his mother, he is unlikely
to do so with Chandrika, a standoff that may eventu-
ally force Bandaranaike to choose between them if she
wishes to rebuild the party and give it a solid direc-
tion
Ironically, Jayewardene regards Anura as a promising
future leader of Sri Lanka. Embassy sources report
that, despite their party rivalry, the two have a
reasonably close relationship. Anura has the national-
ly recognized Bandaranaike name and high-caste
background, and his moderate economic views are
similar to Jayewardene's. On the other hand, Anura
appears to lack the ambition necessary for national
leadership and must also overcome his reputation as a
playboy who lacks political experience.
TULF, the major political spokesman for native
Tamil interests, is the third-largest party in terms of
voter support, but we believe it is too narrowly based
to become an alternative to the UNP or the SLFP and
in fact has no aspirations for national leadership.
Although the TULF commands 18 seats in Parlia-
ment, where it serves as the official opposition, we
believe party leaders view themselves as outsiders in
the generally Sinhalese political life of the country
and prefer to remain aloof from political activity.
In our view, the TULF is hamstrung by its commit-
ment to work for a separate Tamil state and its
recognition that no useful purpose would be served by
launching a confrontation with the predominantly
Sinhalese government on this issue. The need to
preserve political credibility with both the UNP and
with its increasingly dissident, proseparatist constitu-
ents has severely reduced the Front's ability to serve
as a moderating force in communal relations.
TULF General Secretary Amirthalingam has fol-
lowed a tenuous middle course designed to ensure a
measure of political autonomy through constitutional
means and to ease Tamil grievances through direct
negotiations with Jayewardene. Voter support for the
TULF, however, appears to have eroded during the
past several years as the separatist goal has proved
increasingly elusive. According to press reports, the
larger-than-expected voter turnout in Jaffna-the
major Tamil stronghold in the north-for the presi-
dential election was a blow to the prestige of the
TULF, which had advocated nonparticipation. Die-
hard separatists regard the amity talks as one more
sign that the TULF leadership has been co-opted by
the UNP and sold them out.
The Traditional Left-
Fading Out.of Favor
Sri Lanka's traditional leftist parties-the Trotskyite
Lanka Sama Samaja Party (LSSP) and its offshoots
and the Sri Lanka Communist Party/pro-Moscow
(CCP/M)-remain visible but politically irrelevant.
Both were coalition partners of the SLFP for the first
five years of Bandaranaike's United Front govern-
ment (1970-77) and shared that party's rejection in
1977 when neither won a parliamentary seat.'
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Marxist ideology no longer has the wide appeal it once
enjoyed in Sri Lanka,
The economic mess left by the United Front govern-
ment brought about a general disenchantment with
the socialist-collectivist approach to economic policy,
drastically narrowing the electoral base of both par-
ties. In addition, they suffer from aging, factionalized
leadership and an inability to appeal to youth. Despite
its limited support, the LSSP persisted in a quixotic
bid for the presidency and, to the SLFP's disappoint-
ment, succeeded only in splitting the leftist vote. The
LSSP candidate, the venerable and respected Colvin
R. de Silva, garnered less than 1 percent of the vote.
The traditional leftist parties have been largely dis-
placed as a magnet for dissident youth by the more
dynamic, radical Marxist Janatha Vimukthi Pera-
muna (People's Liberation Front-JVP), whose presi-
dential candidate ran a distant third in the October
election. Although the results were disappointing to
the party leadership, according to press reports, the
JVP's electoral performance was respectable for an
organization that has only recently entered legitimate
politics. JVP leaders argue that the traditional left is
no longer capable of serving the masses and are
attempting to establish the JVP as the country's
leading leftist party. According to Embassy reporting,
JVP leaders acknowledge this will be a long process
and are looking toward the next decade when the
youth they are training now will have reached maturi-
ty and positions of responsibility.
A onetime insurgent movement that paralyzed the
island in 1971 when it attempted to topple Bandara-
naike's United Front government, the JVP attained
political legitimacy last summer when the Elections
Commissioner-presumably at Jayewardene's be-
hest-recognized it as a legal political party able to
contest elections. Since he came to power, Jayewa-
rdene has adopted a policy of encouraging the JVP to
pursue its revolutionary goals through peaceful and
constructive political activity. In order to head off a
JVP threat to his own government, Jayewardene has 25X1
tried to bring the JVP off the streets and into the
political system. Shortly after assuming office, he
released party president Rohana Wijeweera and other
JVP leaders from prison as a gesture of national
unity-and to further divide his leftist opposition.F_~
The UNP has taken considerable risk in legitimizing
the JVP. We believe that the party remains distant,
enigmatic, unpredictable,
There is a danger that many 25X1
within it have not forsaken the violent path to revolu-
tion, and the disappointing presidential election re- 25X1
sults may have persuaded others that the JVP stands
little chance of attaining power through constitutional
means. In addition, given the movement's grass-roots
origins, JVP leaders do not come from the Western-
ized, high-caste, English-speaking elite from which
Sri Lankan parties across the political spectrum-
including the Communists-have traditionally drawn
their leadership.
The JVP receives much public attention by staging
visually impressive, well-organized rallies. Tradition-
ally, it has aimed its revolutionary message at educat-
ed, unemployed youth, especially to those with low-
caste backgrounds seeking upward mobility. The JVP
is an active recruiter on campuses, and it controls
most student governments. According to Embassy
reporting, the recent spate of student unrest at Sri
Lankan universities is being led and exploited by the
JVP, but we do not believe these student radicals pose
any imminent threat to stability
The party's national appeal is sharply limited, howev-
er, and we do not believe it shows much promise of
becoming a viable alternative to the SLFP or the
traditional left for the remainder of this decade. The 25X1
party's antireligious philosophy will prevent it from
gaining much popularity in a country where Bud-
dhism is so deeply ingrained. Although rigidly doctri-
naire in its own peculiar brand of Marxism, the JVP
lacks a cohesive, credible program and has no leaders
of national stature. JVP presidential candidate
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Wijeweera received 273,000 votes, amounting to only
about one-third of the party's total claimed member-
ship. In addition, rivals for leadership may be emerg-
ing to challenge Wijeweera's near-total control of
party coffers and decisionmaking.
A return to the economic problems of the Bandara-
naike years, however, could give the JVP a new lease
on life, especially if the SLFP remains divided and
disabled. The party is well funded, and, according to
Embassy reporting, some observers believe that the
JVP could become the Soviet Union's preferred
agent-in-place should the CCP/M wither away.
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