SHORT-TERM OUTLOOK IN CEYLON*

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79R00904A000500020021-4
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 8
• Document Creation Date: December 19, 2016
• Document Release Date: December 30, 2005
• Sequence Number: 21
• Publication Date: June 27, 1960
• Content Type: MF

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C E N T R A L I N T E L L I G E N C E A G E N C Y
27 June 1960
DRAFT
MEMORANDUM FOR THE DIRECTOR
SUBJECT: Short-Term Outlook in Ceylon*
The last NIE on Ceylon (14 July 1959) was focused
primarily on the precarious position of the Bandaranaike
government, with only minor references to what might follow
the fall of that government. The rapid succession of events
since Bandaranaike's assassination in September has, of course,
thoroughly altered the outlook. The conflicts inherent in the
Ceylonese political scene are again becoming sharp as the 20
July general elections draw near.
20 The prospects for Bandaranaikets Sri Lanka Freedom
Party (SLFP) following his death appeared very gloomy. The
party--a heterogenous organization elected because of Bandara-
naikeis original popularity and held together chiefly by a
*The NIE on Ceylon scheduled for November will deal with the
outlook for Ceylon over the next few years. This memorandum
focuses on the interim period.
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desire for the spoils of office--had declined steadily in appeal
since late 1957, chiefly because of interminable political
infighting and failure to make progress toward solving pressing
social and economic problems. Some of the partyts radical
elements resigned shortly before Bandaranaikets death when
Philip Gunawardena's small Trotskyite party was expelled from
the government coalition as a result of right wing pressure.
Following Bandaranaikots death, factional disputes and personal
rivalries became so acute that Dahanayake--Bandaranaikets
successor as prime minister--requested the Governor General
to dissolve parliament and hold new elections in March.
Dahanayake and many conservatives then left the SLFP to form
their own party. In view of the STFPts poor record and the
defection of its radical and conservative wings, most observers
thought the party would make a very poor showing in the elec-
tions, The relatively conserv::tive United National Party (UNP),
which had provided stable government and considerable economic
progress from 1948 to 1956, was expected to win at least a
strong plurality.
3. Such early forecasts., however, underestimated the }.ower
of Mrso Bandaranaike, who began campaigning "vigorously throupheut
the island, She shed great quantities of tears for her dead
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husband before large audiences, and appealed to the people to
support the SLFP in sympathy for the ideals proclaimed by her
husband--who regained in death much of the popularity he lost
in his last years. Mrs. Bandaranaikets style of campaigning
had a powerful emotional impact--particularly on Ceylonese
women--and enabled the SLFP to win 16 of the 151 seats at stake
compared to the 50 won by the UNPo Although the Governor General
gave UNP leader Dudley Senanayake the task of forming the new
government, he was unable to co so and new elections are
scheduled for 20 July.
The outlook for the coming elections is complicated
by several diverse trends. The SLFP has arranged an electoral
agreement with the Trotskyite LSSP, the largest of Ceylon's
three Marxist parties, and with the orthodox Ceylon Communist
Party. This agreement poses a real threat to the UNP, for in
many constituencies won by the UNP last March the total opresi-
tion vote exceeded that of the UNP. In addition, the Soviet
ambassador apparently met with top LSSP leaders recently, and
while the subjects discussed are not known, it seems likely
that the USSR is attempting to improve the prospects for the
coalition by offering Soviet assistance to the LSSP despite
its Trotskyite nature, While the LSSP has been opposed to
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1701--
cooperation with the USSR in the past, it has recently alter~.d
some of its long-held policies in order to improve its electoral
position, and so may now be willing to accept Soviet assistance,
5a The impact of the electoral agreement may be partially
offset, however, by the fact that many independent conservative
candidates have withdrawn from the forthcoming elections, which
should benefit the UNP. In addition, the UNP appears to be
taking the lead in exploiting the potentially explosive communal
issue with charges that the coalition will not protect Sinhalese
interests as regards the Tamils. The key factor, however, is
once again likely to be the response to Mrs. Bandaranaikeis
campaiEgning.
6. In view of these diverse trends no prediction about
the election outcome can be made with confidence. At the
moment, indidations are that neither the UNI' or the SLFP will
Fain a clear-cut majority. In such an event, a coalition
government-probably unstable--is likely. In any event, the
outlook for political stability is not bright0
7. Continued failure to achieve stability under the
parliamentary system might cause rightist groups to resume
their efforts to organize a coup, possibly with the cooperation
-1t-
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of the Governor General, A successful coup would require the
supr:ort of Ceylon's 179500 man defense and police forces, which
have been non-political in the past. However, there have been
indications that some leading officers have become discontented
with the lack of effective government and leftward trend of the
country during recent years, but little is known about the
attitude of the forces as a whole. While the security forces
probably could seize control of the government, their small
size and relatively limitod capabilities would make it difficult,
if not impossible, for them to maintain their c!.ntrol for long,
In view of this, it is unlikely that they would act unless
assured of the cooperation of at least some conservative politi-
cal leaders,
8o Any new government will be faced with serious economic
problems, The economy grew ral idly in the first post-war deca;'e,,
but has made little orooress since 1955, and in some respects
has retrogressed. There has been increasing resort to deficit
financing over the past several years and a? growing level of
imports with no corresponc'in increase in exports. Ceylon's
foreign exchange reserves have declined from $247 million at
the end of 1956 to
1L6 million in March 19609 with most of
the decline taking place Luring 1959. Even if a new government
-5-
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is able to bring Ceylon's immediate financial problems under
control, political and communal bickerin_; will still impede
economic development.
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Major Parties
1. The United National party (UNP); relatively conservative,
ruling party from 1947 to 19561, winner of a plurality (33 percent
of seats) in March.
2. The Sri Lanka. Freedom party (SLFP); moderate socialist,
major component of the coalition which ruled from 1956 to 1959,
won second place in March,
3. The Lanka Sama Samaj party (LSSP); Trotskyite, leading
opposition party from 1956 to 1959.
4. The Mahajana Eksath Peramuna, or Peoples United Front"
(MEP); ostensibly Buddhist -nationalist, basically Marxist.
The Ceylon Communist party (CCP); orthodox Communist.
6G The Federal party (FP); major representative of the
Tamil-speaking minority.
Outstanding personalities
1. Dudley Senanayake, leader of the UNP and son of Ceylon's
first and most respect(-;d prime minister, has been caretaker prime
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AM
minister since Parliament's defeat of his minority government
in April. While his father's reputation and his own integrity
have earned Senanayake respect, he lacks the personal magnetistm
needed to attract widespread support.
20 Mrs. Sirima Bandaranaike, leader of the SLFP and widow
of the late prime minister, revived public support for the party
during the March campaign by evoking the memory of her assassinated
husband. Although not contesting a seat, she is the SLFP's candi-
date for the prime ministership.
3. N.M. Pe` era, the head of the LSSP, has been, because of
his intelligence and his adherence to political principles, one
of Ceylon's few generally respected political leaders. However
recent opportunistic moves by his party may have damaged Perera's
personal presti e somewhat.
l., Philip Gunawardena, leftist MEP leader, was the most
capable member of the Bandaranaike cabinet until his defection
in mid-1959. Dynamic and highly ambitious,
particularly popularo.
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