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Sri Lanka turns to strongman as president

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      By Emerging Markets Debt TeamEaton Vance Management

      Boston - The world's trend toward strongman/authoritarian rulers advanced another notch on November 17 in Sri Lanka, with the election of Gotabaya Rajapaksa as president. The election has crucial implications for the balance of power in the Indo-Pacific region, as the U.S., India and China all vie for influence with the nation.

      Rajapaksa's candidacy, which emphasized his commitment to security, likely benefited from fear sparked by the Easter 2019 bombings by Islamic militants that killed more than 260 people. Rajapaksa's brother, Mahinda, was president between 2005 and 2015 when the government won the war against insurgents from the Tamil minority. Gotabaya was the defense secretary and directed the war effort, which was marred by allegations of human rights abuses.

      Mahinda's presidency brought Sri Lanka closer to Beijing through a number of infrastructure deals financed by China. The pendulum swung back during the outgoing government, which moved alliances closer to the U.S. and India. Also, Sri Lanka became a logistics hub for the U.S. Navy in December 2018 to counter China in the Indo-Pacific region.

      The U.S. would like to sign an economic aid program and a military agreement that would enable the U.S. military to operate freely in Sri Lanka. But at this time, an adviser to Rajapaksa said he couldn't see the need for the military agreement with the U.S. However, Gotabaya lived in the U.S. in the 1990s through 2005; he was a U.S. citizen prior to renouncing that status to run for president in Sri Lanka. Press reports say he is eager to maintain good ties with the U.S., and another Rajapaksa brother — Basil — was quoted as saying U.S. and western countries will be invited as partners in development.

      Markets are rallying, apparently in anticipation of greater political stability and a parliamentary majority for Rajapaksa's party in March's parliamentary elections. Additionally, Mahinda is now expected to seek the position of prime minister in parliament.

      Bottom line: Rajapaksa is assuming the presidency of a country still wounded from civil conflict, with a fragile economy, while balancing the ambitions of three major global powers. Progress will be difficult, but at least he has a firm mandate to make the attempt.