India and Bangladesh Secure US Tax Concessions as Sri Lanka Struggles for a Deal
New Spoilers Emerge to Derail SJB–UNP Union
Major Garment Factory on the Brink of Closure
Tilvin’s Temple Visit and India Trip Draw Attention
Disappeared Provincial Councils
When Mahinda Rajapaksa became President in 2005 and served for ten years, the biggest accusation levelled against him by the opposition was that he kept holding elections repeatedly, sometimes several times within a year. Whenever the government faced pressure domestically or internationally, Mahinda would call for some kind of election, refresh his public mandate, and show both the country and the world that he still had popular support. However, in those elections, the United People’s Freedom Alliance led by Mahinda won so decisively that the opposition could not even come close. Such was Mahinda’s popularity at the time that, even knowing he might lose, he went ahead and held elections in the North and East as well.
After Mahinda’s defeat, the Maithripala-Ranil “good governance” government came to power in 2015. In 2018, they held the local government elections, which resulted in a massive setback for them nationwide. Because of that, Ranil and his allies introduced the issue of delimitation as an excuse and avoided holding the provincial council elections. Gotabaya Rajapaksa, who came to power after Maithripala, also did not hold provincial council elections.
Later, when Ranil Wickremesinghe assumed the presidency through Parliament, he too refrained from holding provincial council elections. Furthermore, in violation of the law, Ranil postponed the local government elections claiming there were no funds. At that time, the opposition went to court, and the judiciary ruled that the local government elections must be held. The Election Commission also maintained that the elections should be conducted. Yet, during Ranil’s tenure, no elections were held.
Postponed LG elections
Subsequently, Anura Kumara won the presidential election. First, he held the general election and succeeded in securing a two-thirds majority. Government representatives then announced that within a year, all provincial council and local government elections would be held and completed. Since the government had received a large number of votes from the Northern and Eastern provinces, many believed that the provincial council elections would also be held quickly.
Accordingly, five months after the general election, Anura proceeded to hold the local government elections. Unexpectedly, the Malima government lost about two million votes and faced a major setback. Following that, Anura too, just like Ranil, brought up the delimitation issue as an excuse and made the provincial council elections disappear.
Four Letters-No Response
Last week, a special revelation was made regarding the provincial council elections. The Chairman of the Election Commission had sent four letters to the Presidential Secretariat requesting recommendations on holding provincial council elections. However, in all four instances, no reply whatsoever was received from the Presidential Secretariat. As we know, the President had promised the Tamil parties in the North and East that provincial council elections would be held. He had also given the same assurance to India during his official visit there, and to the country at large. Yet, according to information from within the government, it is now reported that the Malima administration has decided not to hold provincial council elections before another major election takes place. The lack of any response to the Election Commission’s letters seems to confirm this decision.
One of the clearest examples showing that the government is deliberately postponing the provincial council elections is its failure to appoint members to the Parliamentary Select Committee established to make decisions on the matter. That committee was appointed in January, and the opposition nominated four representatives: Ranjith Maddumabandara, Mano Ganesan, Nizam Kariapper, and Shanakyayan Rasamanickam. However, the government has still not appointed its 12 representatives. According to the rules, once the committee is properly constituted and holds its first meeting, it must submit its final report within 90 days. Since the government has not named its members, no action can be taken regarding provincial council elections.
All are dumb
What is striking here is that neither the main opposition, nor opposition parties, nor the Tamil and Muslim parties in the North and East have spoken out against the government’s election plan. No campaign has been launched demanding elections. Whether this silence is due to fear of facing elections or internal problems within the opposition is unclear, but at present the opposition remains passive on the issue.
From the government’s side, the reasoning is that—right or wrong—after the setback suffered in the local government elections, holding provincial council elections now would almost certainly lead to another serious defeat given the current situation in the country. Therefore, the government has planned not to create unnecessary problems for itself by holding provincial council elections at this moment.
India would exert pressure on Sri Lanka to hold provincial council elections, since the provincial council system itself was introduced through Indian mediation under the Indo-Lanka Accord. But at present, India too has not pressed the government on this matter. Thus, with silence from the opposition, the Tamil parties, and India, the government is proceeding comfortably without holding provincial council elections.
No Agreement
Over the past several weeks, many revelations have been made under the “Inside Politics” column regarding Sri Lanka’s extended credit facility with the International Monetary Fund (IMF). We reported that, under current conditions, the economy could deteriorate to the point that even considering elections would be impossible. This was based on information from the IMF and other economic analysts, who indicated that the situation was unfavourable.
On January 22, an IMF team visited Sri Lanka and held discussions with senior government officials. However, no detailed information was reported about these talks. The only reports were that the IMF team had visited, held successful discussions, and then departed for the United States.
Staff level agreement!
Yet, according to information we have, the government and the IMF failed to reach any agreement during these discussions. The staff-level agreement required to release the fifth tranche of Sri Lanka’s loan was originally scheduled for November 15 last year, but the IMF postponed signing it. We previously reported that after the cyclone, the government decided to release Rs. 500 billion without IMF approval, which led to disputes and disagreements between the government and the IMF. This time, the IMF team came to finalize the agreement for releasing the fifth tranche. Many expected that a final decision would be made, the staff-level agreement reached, and then approved by the IMF’s Executive Board. But we are now reporting that no agreement was reached.
The IMF representatives strongly questioned Sri Lanka’s dollar revenue and rupee revenue, as well as the completion of commitments under the agreement. Since these are critical issues, the IMF pressed hard, but was not satisfied with the government’s responses.As a result, there is now a major risk concerning Sri Lanka’s agreement with the IMF. At any moment, the IMF could make a decisive statement about Sri Lanka’s debt sustainability. Many believe that if such a statement is made, it would mark the beginning of a new crisis for the country. Meanwhile, IMF Managing Director Kristalina Georgieva has also decided to visit Sri Lanka. After reviewing the agreements reached during these discussions, the IMF is expected to deliver its conclusion.
Bangladesh Moves Ahead
As disagreements between Sri Lanka and the International Monetary Fund continue, another unexpected economic risk is emerging for Sri Lanka. During the tariff impositions introduced by U.S. President Donald Trump on many countries, Sri Lanka managed to secure a major concession by reducing its tariff rate to 20%. This was considered a significant achievement for the Anura Kumara-led Malima government, though many believe the real credit belonged to Sri Lanka’s ambassador to the U.S., Mahinda Samarasinghe, whose diplomatic skill and negotiation experience made it possible.
However, Trump did not deal with other countries in the same way he dealt with Sri Lanka. India, for example, faced heavy tariffs after continuing to buy oil from Russia against U.S. policy. Although tensions arose, behind-the-scenes negotiations last week led to a compromise. In a phone discussion between Trump and Modi, India agreed to stop purchasing oil from Russia and instead buy from the U.S. and Venezuela. As a result, Trump reduced India’s tariff rate to 18%. Many believe this poses a serious threat to Sri Lanka, since the U.S. is Sri Lanka’s largest buyer, and India now enjoys a lower tariff rate.
The second danger is expected to materialize next Monday, when the Trump administration and Bangladesh are set to sign a final tariff agreement. In the export market, Sri Lanka’s closest competitors are India and Bangladesh. With India’s tariff already reduced to 18%, many expect Bangladesh’s tariff to be lowered to 18% or even less. This would place Sri Lanka at a clear disadvantage.
No Agreement Yet
The serious issue is that while Bangladesh has negotiated and is about to finalize its tariff agreement with the U.S., Sri Lanka has not. At present, Sri Lanka only has a verbal understanding that its tariff is 20%. To make this binding, formal negotiations and a signed agreement are required, but no such talks have taken place. Reports suggest that five or six key economic matters between the two countries have not even been discussed. Neither the Treasury nor the Board of Investment has engaged in meaningful exchanges with U.S. counterparts.
In contrast, Bangladesh has moved forward and will sign its agreement next Monday, securing a stable path ahead. Bangladesh, after a period of political instability and the ousting of its Prime Minister, is now preparing for its first general election under an interim government led by Muhammad Yunus. That election, scheduled for the 12th, is expected to bring a stable government, with international media predicting victory for Tarique Rahman’s BNP party. Once the new government is in place, Bangladesh will finalize its agreement with the U.S., laying the foundation for a stable economic journey.
As a result, many believe several Sri Lankan garment factories may shut down and relocate to Bangladesh, where tariffs will be lower. India too is expected to finalize its agreement with the U.S. soon. Meanwhile, Sri Lanka’s delay in signing its agreement leaves its export sector facing a dangerous situation.
Looming Crisis
Opposition Leader Sajith Premadasa revealed in Parliament last week that MAS Holdings, one of Sri Lanka’s leading apparel companies, has already decided to close several of its factories, putting thousands of jobs at risk. Some media outlets have reported this as well. Additionally, another major apparel factory has decided to shut down, with its investor withdrawing due to lack of government support. This risk is expected to intensify after Monday, once the U.S. and Bangladesh sign their final tariff agreement. Many believe the coming months could bring major upheavals in Sri Lanka—economic, political, and even social.
Sajith–Ranil Meeting
Against this backdrop, last week’s most talked‑about topic among many circles was the face‑to‑face meeting between young leaders of the Samagi Jana Balawegaya (SJB) and the United National Party (UNP). The foundation for this was laid when SJB leader Sajith Premadasa met UNP youth leaders Ruwan Wijewardene, Navin Dissanayake, and Akila Viraj Kariyawasam at the Colombo Club in the Taj Samudra Hotel. Later, Sajith also held discussions at the same venue with UNP National Organizer Sagala Ratnayake and UNP General Secretary Talatha Athukorala regarding the possible unification of the two parties.
Many pointed out that after these second‑tier discussions, the two party leaders themselves should meet directly and make a final decision. Within the SJB, questions were raised, but Sajith informed the party’s executive committee that such a meeting should not be rushed; first, grassroots members of both parties should be brought together, and only then, at the time of an election, should the leaders meet to finalize decisions.
The Wedding Encounter
In this context, social media was abuzz last Sunday with a photo of Ranil and Sajith together, which spread rapidly. The photo was heavily promoted by UNP’s Harin Fernando’s social media team, and Ranil himself seemed to encourage its wide circulation. Investigations revealed that the meeting took place at the Cinnamon Lakeside Hotel in Colombo, during the wedding of the son of Saman Rathnapriya, a former presidential advisor and UNP representative. Both Ranil and Sajith had been invited. Two adjacent tables were reserved for political representatives: one for second‑tier UNP leaders, and the other for senior leaders including Ranil and Sajith.
When Sajith arrived, the ceremony had already begun. Although a seat next to Ranil had been reserved for him, Sajith instead chose to sit at the table with Ruwan, Akila, Sagala, Talatha, and Navin. He spent a long time chatting and joking with them, while Ranil, Vajira, Rajitha, Mano Ganesan, and Digambaram sat at the adjacent table.
Ranil Approaches Sajith
At one point, surprising everyone, Ranil stood up, walked over to Sajith, placed both hands on Sajith’s shoulders, and began speaking to him in English. Smiling, Ranil said: “Alright, alright, now finish talking with these friends and come talk with us too…” He then returned to his seat, while Sajith continued conversing with his old colleagues.
Talatha Athukorala first reminded Sajith to join the leaders’ table, saying: “Why are you sitting here? The leaders are over there…” Navin, laughing, added: “The leader is waiting at the other table until you come…” Digambaram also encouraged him, but Sajith replied with a smile: “No, no, I want to talk with my old friends first…”
After a short while, Sajith bid farewell to Ruwan, Akila, Navin, and Talatha, and moved to Ranil’s table. There, the two discussed the recent remanding of former Presidential Secretary Saman Ekanayake. Ranil explained that he had visited the prison to check on Saman’s wellbeing, and Sajith asked for more details. Apart from that, no political discussions took place between them. Later, Ranil invited Talatha Athukorala to join his table as well. Once she did, the group spent a long time laughing, joking, and chatting together. Sajith drank two cups of coffee, then excused himself, saying he had to attend another event, and left.
Social Media Buzz
Harin Fernando’s social media team gave wide publicity to the Sajith–Ranil interaction. However, the earlier photo of Sajith meeting Ruwan, Akila, and Navin at the Taj Samudra Hotel also received strong reactions. Both sets of images generated excitement among SJB and UNP supporters, fueling speculation and enthusiasm about possible cooperation between the two parties.
The Latest “Spoilers”
Last week, we spoke in our Inside Politics column about the UNP, who are undermining the SJB–UNP unity talks. We reported that two or three such “spoilers” exist within the UNP. This became evident when, just before the Sajith–Ranil meeting, Rajitha Senaratne appeared in a YouTube interview and launched a strong attack on Sajith and the SJB. He even criticized Jalani, saying that any alliance between the SJB and UNP would be fruitless, and made several harsh statements.
Rajitha’s opposition to unity stems from several reasons. He has no political space left, especially in Kalutara, where the SJB has grown stronger. Even if the parties unite, he knows he has no place there. Rajitha has always shifted from one camp to another: starting with Vijaya, then joining Mahinda, then Ranil, then Maithripala, back to Ranil, then Sajith, and again back to Ranil. Now he has nowhere else to go, and Sajith himself does not consider him important. Moreover, UNP heavyweights like Talatha, Ruwan, Akila, and Navin are in serious conflict with Rajitha because of his repeated public statements against unity.
Rajitha’s open remarks
At last week’s UNP executive committee meeting, Rajitha openly declared that unity with the SJB would be meaningless and that Sajith was not a leader. He said: “If we join with the SJB, it won’t matter. Sajith will take revenge on us. He is not a leader. Even professors and doctors I meet are not with him. So we shouldn’t go after Sajith or the SJB. Namal is rising now. What we should do is form a broad alliance and bring a common candidate for the presidential election.” Interestingly, no one responded to his remarks.
Harin Fernando countered gently, saying: “No, Sajith is not someone who harbours grudges.” Ranil too did not support Rajitha’s view, instead saying: “No, no, first we must finish discussions with the SJB. That’s what we should do.”Thus, among the “spoilers” we identified, one is Rajitha Senaratne. Another is Ajith Mannapperuma, who made similar remarks in a UNP discussion three weeks ago. A third figure remains quiet publicly but is said to be working behind the scenes, sometimes suggesting alliances with Namal, sometimes with Sajith. At private meetings, this person reportedly boasts: “I made Ranil president when he had no seat in Parliament. If you come to me, I’ll make Sajith president within a year.” For now, however, this “spoiler” has gone silent.
Why is Champika Alarmed?
Meanwhile, someone outside the UNP also expressed alarm last week about the SJB–UNP unity: former minister Champika Ranawaka. Reports say he met UNP deputy leader Navin Dissanayake and voiced negative views about unity. Navin has been one of the strongest advocates for joining with the SJB rather than the SLPP, and he was present at the first unity talks at the Taj Samudra Hotel.
After meeting Champika, Navin informed his colleagues that Champika had warned him not to join Sajith, describing Sajith as a dangerous person who abandons people. Navin even planned to inform Sajith directly. Later, Digambaram also learned of this and asked Navin if it was true, and Navin confirmed it. Digambaram then passed the message to Sajith. As a result, Champika’s stance is now widely known in both parties, raising the question of why he is so disturbed by the idea of unity.
Rajitha’s New Exposure
Last week, Rajitha also appeared on Hiru TV’s ‘Salakuna’ program and made another revelation: that during the 2015 presidential election, the UNP gave millions of rupees to the JVP and to the “Puravesi Balaya” (Citizen’s Power) organization, which included several independent activists. This claim has stirred controversy. Later, when Champika appeared on Hiru TV, he was asked about it. He said he did not personally know, but since Rajitha had made the claim publicly, if it was false the JVP could sue. He even challenged the JVP to do so.
Namal Rajapaksa also commented later, saying that it has now been revealed how the JVP took money from the UNP to attack the Rajapaksas. We plan to reveal next week further details about how the UNP funded “Puravesi Balaya,” including who exactly received the money.
Bringing Back Arjun Mahendran
This discussion surfaced when journalists questioned Rajitha about the bond scam. Yet now, the government itself seems to have forgotten the massive bond fraud. When the current administration came to power, one of its two main promises during the presidential and general elections was to punish all those involved in the bond scam. The mastermind, Arjun Mahendran, was said to be brought back from Singapore “by the neck.” The other promise was to punish those behind the Easter Sunday attacks.
While the Easter issue remains unresolved, we have learned new information about the bond scam. A certain investigative team has reportedly begun dealings with Arjun Mahendran, considered the chief architect of the fraud. Previously, we reported that a team had traveled to Singapore to investigate him.
This time, the team went to Singapore for two main reasons:
- To meet Mahendran and secure his cooperation in ongoing court cases related to the bond transactions. Reports say a secret meeting took place between the team and Mahendran in Singapore.
- To obtain information—officially or unofficially—about the bank accounts of several powerful politicians operating in Singapore. However, this mission failed, as Singaporean law strictly prohibits disclosure of bank account details without proper legal procedures.
Since the first mission succeeded, Mahendran reappeared publicly last week on social media. Earlier, he had surfaced through journalist Uvindu Kurukulasuriya’s Facebook account, showing a photo of them together. On January 1st, Mahendran posted a New Year’s photo with his wife. Recently, he updated his Facebook again with a special photo among friends. Whether this signals another round of headlines is uncertain.
Chandrika Responds to Sagara
While some figures were working behind the scenes to disrupt SJB–UNP unity, last week an unexpected attack came from SLPP General Secretary Sagara Kariyawasam, targeting Sajith Premadasa and the SJB. Just a day before Namal and Shiranthi Rajapaksa were summoned to the CID and FCID, Sagara held a press briefing where he declared that Sajith was not a leader and that the SJB had no political future.
Although the SJB and SLPP sometimes cooperate in Parliament or outside on certain issues, no one could understand why Sagara suddenly launched such an attack. Normally, Sagara does not speak independently but issues statements based on instructions from party seniors. Therefore, it was suspected that he had been directed either by Basil Rajapaksa from the U.S., by Namal Rajapaksa as SLPP National Organizer, or possibly even by UNP figures seeking to weaken Sajith.
Insignificant remarks
However, Sagara’s attack gained little traction in society. Some friends forwarded the statement to Sajith via WhatsApp, but he dismissed it as insignificant, saying such attacks actually benefit them.
This tactic—using others to attack someone in order to draw them closer—was famously practiced by Mahinda Rajapaksa. He would let someone be attacked, then call them directly to console and reconcile, thereby winning them over. But in this case, Sajith ignored the attack completely, so the strategy failed.
After Sagara’s remarks, Namal reportedly tried several times to call Sajith, and even sent SMS messages, but Sajith did not respond.
Ironically, within 24 hours of Sagara’s attack, former President Chandrika Bandaranaike Kumaratunga released a video on social media directly calling the Rajapaksas “thieves” and launching a fierce attack. Many who had forwarded Sagara’s video to Sajith also sent Chandrika’s video. Sajith gave no reaction, but it is said he accepted it calmly. While Sagara’s video may have caused him some discomfort, Chandrika’s video likely made him smile, thinking: “Well, you hit me, but look what happened to you…”
Some SJB MPs asked Sajith about it, and he replied: “Sagara’s attack on the party and me is actually a blessing. We can never go with the SLPP. Our culture and theirs are different. If we join them, we’re finished. Chandrika’s video proved that.”
Sridharan Removed
Last week, the Tamil Arasu Kachchi party convened its political council in Trincomalee. The main reason was to make a final decision regarding MP S. Sridharan, who had been accused of cooperating with the government. In private discussions with party MPs, Sridharan reportedly admitted to this, leading the council to ask him to step down from the party’s executive committee.
When the meeting began, Sridharan was formally informed to resign from the executive committee. However, since he refused, the party decided to remove him from his position as parliamentary group leader. A letter to this effect was immediately sent to Parliament, and Shanakyayan Rasamanickam was appointed as the new group leader.
Tilvin at Gangaramaya
Last week, the media reported unusual photographs of JVP General Secretary Tilvin Silva visiting the Hunupitiya Gangaramaya Temple. He attended the temple during the Nawam Perahera inauguration, alongside several ministers representing the Malima government.
Historically, Gangaramaya Temple has been closely associated with the UNP. During Ranasinghe Premadasa’s tenure as Prime Minister and President, he maintained strong ties with the temple’s chief monk, Galaboda Gnanissara Thero. The temple’s main patron was Ranjith Wijewardene, uncle of Ranil Wickremesinghe, further strengthening ties between the UNP and Gangaramaya.
After Chandrika Kumaratunga came to power in 1994, disputes arose between the temple and her government, particularly involving Mangala Samaraweera over land issues and tourism projects. Later, Mahinda Rajapaksa rebuilt close relations with the temple, frequently visiting from Temple Trees, and even had his children participate in the Perahera as officials.
Despite these ties, Gangaramaya was never known to be close to the JVP, which traditionally avoided religious institutions in politics. However, after the Malima government came to power, Harin Fernando was reported to have visited the temple and held discussions with Ranil.
Against this backdrop, Tilvin’s sudden visit to Gangaramaya surprised many. Reports suggest Ranil himself reacted strongly to Tilvin’s presence, though details remain undisclosed.
JVP and India
Another significant development last week was Tilvin’s first official visit to India. Historically, the JVP has been staunchly anti‑India, famously opposing the 1987 Indo‑Lanka Accord and leading mass protests that escalated into the 1988–89 insurrection.
Now, however, the JVP appears to be building closer ties with India. Anura Kumara Dissanayake visited India both before and after coming to power, and later this month the President is scheduled to travel there again. This shift suggests that the JVP, once fiercely opposed to India, has decided to pursue a political journey in cooperation with it. Whether this is due to tensions with China remains unclear.
