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The Consequences Of Sri Lankas Civil War

The small island of Sri Lanka is a country rich with agricultural treasures from bountiful tea leaves to lush paddy fields. However, this country has a bloody past that still haunts its present economic and political state. As a Tamil Sri Lankan, I feel it is important that the future of Sri Lanka be analyzed to determine whether it can compete in the globalized world because of its choices with regards to the civil war. As a result of colonization, Sri Lanka was torn apart by two races which ultimately caused a civil war that lasted many years. In this essay, the effects of Sri Lanka’s civil war will be analyzed from an economic and political standpoint. Viewed from a modernization theory perspective, Sri Lanka’s costly civil war has caused much damage to the country’s economy and has hindered its progress in terms of its future development projects. This conflict has also created difficulties for Sri Lanka to ‘develop’ when compared to first world countries because of the macroeconomic implications such as the repercussions of its military spending, its rising international debt, lack of investment, and the weaknesses seen in its political structure (BBC, n.d.). This topic is relevant because in the evolving world, Sri Lanka will find it very difficult to succeed in the international economy because of the choices implemented by the government during the civil war. This essay will argue that the Sri Lankan civil war, brought about by colonization, has diminished the country’s growth prospects and thrown the government into political instability resulting in a current futile attempt at modernization.

Theoretical Framework

The concept of modernization where third world countries follow the path of first world countries in order to reach their level of development is directly tied to the development theory postulated by Walt Rowle. Therefore, the main theory that will be discussed in this essay is the modernization theory of development. However, this theory will be critiqued as a development theory that cannot be used as a guideline for countries to follow because there is no mention of colonization (Chirot & Hall, 1982, p. 84). Despite this, Sri Lanka still pursues this development theory because it desperately wants to adopt Western ideals of development. Because Sri Lanka wants to establish close relationships with the Western world, they are willing to put the impact colonization inflicted on the country’s two major races aside, and continue with their goals of development, ultimately leading to a civil war. Instead of attempting to fix the politics within the country, Sri Lanka continues to follow the developed countries to an unreachable epitome of development. This theory holds that development is evolutionary and intervention from developed countries is acceptable in order to direct change; therefore, interference from the Western world in matters of the state is not criticized (So, 1990, p. 18). Rostow’s evolutionary ladder of development, which is composed of a traditional society, pre-conditions for take-off, take-off, the drive to maturity, and the age of high mass consumption, are deeply flawed (Rostow, 1964, p. 4). He does not take into consideration the effect colonization has had on the country because not only does it leave an impact on the colonized country’s economic and political situation, but it also leaves the colonizing country in a very advantaged position. While Sri Lanka hopes to achieve the ideal form of development from a modernization perspective, it will suffer greatly if it does not undergo an economic reform and change its political policies.

Historical Context

Since 150 B.C., the island of Ceylon–renamed Sri Lanka after gaining independence from the British–has had tension between the two largest ethnic groups in the country: the Sinhalese majority and the Tamil minority (Grobar & Gnanaselvam, 1993, p. 396). However, even though there was miscommunication from both parts for many years, they still lived in peace. Because of British intervention in the colonial period, an open conflict commenced in the 1980s between the Sri Lankan government and the Tamil rebellion. One of the reasons for the conflict was identified before independence: the British introduced the idea of ‘territorial representation’ as opposed to ‘communal representation’ to the Singhalese people, who agreed to it because they would have more influence in government being the majority, while keeping the Tamil people as a minority in government (Managoran, 1987, p. 7). Because of the country’s poor choices in developing their government after independence, the minorities within the country had to suffer. The war lasted almost 30 years and finally ended in 2009 killing “more than 70,000 people, damaged the economy and harmed tourism in one of South Asia’s potentially prosperous societies” (BBC, n.d.). When granted independence from the British in 1948 (Tambiah, 1986, p.68), Sri Lanka was more prosperous than most of its Asian neighbours; it had a well developed infrastructure and a well functioning judiciary and democratic political system that was both efficient and productive. However, the decolonization process played a part in the civil war because although the British colonial power left the developing country with minimal economic damage and a fairly stable infrastructure, the ideology they professed continued in Sri Lankan tradition which proved disastrous because the citizens developed a superiority complex.

Colonization had its both positive and negative effects within the country. For example, the economy was strengthening because colonization increased paddy production, and even afterwards, the country utilized most of their raw materials, such as tea (Peebles, 1990, p. 37). However, a negative effect of colonization was that ethnic politics and conflicts were beginning to emerge because the Tamil population believed they were being treated unfairly after the British left. During the British colonial rule (1796-1948), Tamil people received nepotism over the Sinhalese people because they were more willing to cooperate with the British (Peebles, 1990, p. 32). Because of this, Tamils had a “greater advantage of the colonial dispensation, with its connections to the Western world of commerce, professional opportunity and governmental service” (Rotberg, 1999, p. 5) leaving the Sinhalese people poor and neglected. This fuelled the aggravation between the Tamils and Sinhalese because the Tamils, being the minority, were receiving better education and employment opportunities than the Sinhalese people. The Sinhalese believed that the opportunities provided by the state should be represented by the population. The Sinhalese people were not used to being subordinate to the Tamils in terms of their level of education and financial stability. As a result, the Singhalese people subordinated the Tamils and the Tamils eventually fought back. Once the war was in full force, the country was left in economic ruin because the government began spending increasing amounts of money on the military thereby diminishing future growth prospects (Grobar, & Gnanaselvam 1993, p. 396).

Macroeconomic Effects:

Market Mechanisms

The bleak future in the business sector of Sri Lanka is due to the development policy mistakes and social exclusion of the new generation (Abeyratne, 2004, p. 1300). Some of these poor development policy mistakes include the lack of consideration in long term investments, and growth in tourism. Because of the lack of worthwhile investments in the technological sector, Sri Lanka has nothing to put forth in the industrialized market which poses a problem when Sri Lanka looks toward a modernization development scheme. In order for countries to follow Rostow’s ladder of development, they must begin to expand their technological sector (Rostow, 1964, p. 9). As for the exclusion of the younger generation in the business world, a ‘brain drain’ phenomenon has been a crucial problem because the war has caused educated citizens to leave Sri Lanka, resulting in the country having a weak base of skilled workers. Moreover, the war has killed more than 70,000 people, many of which were young adults, thereby slashing the working force and leaving a large displaced population of children and seniors (Asia Economic Institute, 2011). However, there is still hope for the country because the Sri Lankan rupee, its national currency, which has been gradually decreasing over the years due to changing commodity prices, has experienced a boost due to hopes of a post-war strengthened economy (Asia Economic Institute, 2011). However, the tourism industry, which once brought great profit to the country because it provided an important source of foreign exchange, has been largely affected by the conflict. This sector has suffered an 11.7% drop in tourists in 2007, compared with the previous year. The violence also caused a “31.4% year-on-year plunge in visitors for August 2008” and the country expected tourism to fall a further 10% in 2009 (Asia Economic Institute, 2011). Because of the means the country deployed for the civil war, they lost the advantage in the global economy and are now left in a vulnerable situation.

International Debt and Stalled Development Projects

Economic growth in Sri Lanka is stifled because long term investment opportunities were not given money since government funding was fuelling the costly war effort. Sri Lanka has been “heavily dependent on foreign savings to finance investment projects, and the availability of foreign savings have been a major constraint on Sri Lanka’s total level of investment” (Grobar & Gnanaselvam, 1993, p. 401). Whereas in 1982 government spending has increased in health, education and welfare, the spending on economic services that had the potential to make profit in future years have significantly decreased since 1986 (Grobar & Gnanaselvam, 1993, p. 399). Sri Lanka is also sinking deeper into international debt and the large cuts in economic services ensure that projects such as the Mahaweli Dam will not be finished or maintained, resulting in a major opportunity cost to the country (Grobar & Gnanaselvam, 1993, p.400). This Mahaweli Dam project is one of many examples of the investments Sri Lanka had to forsake to fund the war. According to the International Monetary Fund, “Sri Lanka’s widening current-account deficit, a dependence on foreign borrowings and an overvalued currency pose a ‘serious risk’ to the nation’s economic stability” (Yong, 2008). The island also adopted a course of structural adjustment because the government found it necessary to develop close ties with Western countries and nongovernmental organizations (DeVotta, 1998, p. 458). Because of these policies, it will be doubly difficult for the Sri Lankan government to intervene in business matters because it follows a neoliberalism philosophy (The Social Consequences, 2005). As a result, the country will be taken advantage of by external sources because Sri Lanka will be unable to develop a technological sector due to their increasing debt and structural adjustment policies, and must constantly be relying on their raw materials for export (DeVotta, 1998, p. 461). Sri Lanka also lacks efficient capital markets to effectively progress in the business sector. The government has rationed investment resources; therefore due to low domestic savings, Sri Lanka has ‘paid’ for its civil war by cutbacks in nonmilitary government spending and large reductions in investment. However, because of this, the long term economic implications of the war are very significant since there is no money being generated from any sources within the country and from external sources. Foreign investors were hesitant to dole money in a country with an unstable political makeup (Grobar & Gnanaselvam, 1993, p. 404). Since Sri Lanka has no efficient capital flowing in from other countries, in order to progress, it must now rely on its own economic strength to alleviate its international debt.

Military Expenses and Growth Prospects

Currently, Sri Lanka hopes to put the civil war past them and continue in their hopes of achieving Western ideals of development. However, this will most surely not be the case when the country comes to terms with the amount of spending they have allocated for the cause. The cost of the long run civil war has significantly slowed down Sri Lanka’s economy and left it in a vulnerable position. For example “in 2007, the government borrowed $181,449 worth of defense loans from international financial markets, which was double the amount from the year before” (Asia Economic Institute, 2011). Also, in 2008, the Sinhalese government designated $1.5 billion for the defence sector to strengthen the military, which was also a 20% increase from the budget in 2007. Finally, “in 2009, Sri Lanka designated $1.64 billion to the war effort, making it a 6.4% year-on-year increase” (Asia Economic Institute, 2011). These war costs have consumed approximately 30% of the government’s budget, “and has been estimated to have cost the country over $200 billion over the years” (Asia Economic Institute, 2011). That money could have been used to fund businesses, build infrastructure, and even decrease the poverty rate in Sri Lanka. At one point, Sri Lanka was a nation that had a great advantage over other South Asian countries, but now it is delving deeper into a debt that will be very difficult for the country to repay.

Political Instability:

Intergovernmental Power Struggles

The political instability of Sri Lanka is an important factor when determining whether the country can be a competitor in the global market. Although it is a nation that is filled with beautiful, tropical landscape, the political infrastructure within is composed of a clashing of views from government officials and separatists. The civil war was not a linear historical process where one event led to another (Perera, 1999, p.1), instead it was a civil war “fuelled by competing conceptions of nationalism” (Rotberg, 1999, p. 7). Neelan Tiruchelvam, who was a leading Sri Lankan constitutional thinker and Member of Parliament until his assassination in 1999, believed one of the major problems with Sri Lanka since 1948 was the definition of the state (Rotberg, 1999, p. 15). The Sinhalese majority had always assumed a unitary entity, but something other than a unitary state truly matches the plural nature of the contemporary nation (Rotberg, 1999, p. 15). Tiruchelvam states that “Sri Lankans must recognize Sri Lankan Tamils as a distinct nationality, acknowledge and give lasting territorial integrity to a Tamil homeland…and enshrine into law the right of Tamils to full citizenship and all democratic rights” (Rotberg, 1999, p. 15). It will be impossible for the Sri Lankan community to move on in peace for future generations if the government of Sri Lanka does not represent the Tamil population in government. Tamils hopelessly pushed for a federal government as opposed to a unitary government, so that there would be a decentralization of power and a better representation of minorities in government, but failed and resorted to violent means to make their voice heard (Background Notes, 2001). For Sri Lanka to progress in the developing world, it must first establish a stable government so as to avoid further conflict in the future, and then it can take control of the nation so it can prosper in the business sector.

Future for Sri Lanka’s Government

The only path Sri Lanka must take to strengthen its government and in turn regain financial vigour is to comply with some of the needs from the Tamil population. Political solutions to the Tamil situation must be devised immediately because the Tamils are not content with the outcome of the war. The government’s concentration purely on trying to set the economy on track, and its failure to consider any long-term reconciliation with the Tamil minority will ultimately result in long-term grievances within the country’s society. Even though “the Sinhalese population is dominant on the island, 15% of the population are Tamil and 5% are not ethnically Sinhalese” (Asia Economic Institute, 2011). After almost 30 years of this ethnic conflict, “the nation lies divided as racism and mistrust takes over the population, hindering any hopes of unification” (Asia Economic Institute, 2011). This is sadly the case since nothing was truly gained from the war. There was no economic gain and the Tamils have lost their last hope. However, if political solutions are not being implemented, there is a great chance of a Tamil guerrilla style uprising. Not only would this disturb the peace of the Sri Lankan civilians, “analysts suggest that the Tamil minority will show their dissatisfaction by hitting economic and political targets, inflicting great damage in the country’s prospects of long-term stability” (Asia Economic Institute, 2011). Before the war ended, Tamils who fled Sri Lanka during the war banded together to protest in major cities of many countries including Canada, the United States and Australia to request that the government of these countries help stop the Tamil genocide (Blanchfield, 2009). But since the war is now over, Tamils must now take action within the country in a peaceful manner and hope their voice will finally be heard.


Sri Lanka is a beautiful country that is scarred by a bloody 30 year war between the two largest ethnic groups in the country: the Tamils and the Singhalese. Unfortunately, because of this civil war, Sri Lanka is left in a vulnerable position in the global market. This essay proved that Sri Lanka’s gradual slide into international debt, its exclusion of the younger generation and poor development choices with managing investments and the tourism sector, create many problems for the country to progress economically. The political situation in Sri Lanka is also a hindrance to its growth because it needs to change its policies in order to represent the minorities or risk another uprising. This essay shows that development needs to come from within the country; Sri Lanka needs to completely solve its political differences before it can focus on economic expansion. However, is it possible to satisfy both ethnic groups when there is still animosity between them after the war? Ultimately, the wider economic issue that this paper addresses is the pressure placed on third world countries to try to achieve Western ideals of development. By following a modernization perspective, this cannot be done. Sri Lanka needs to take charge of its own future and unify the country to make it a stronger force in the globalized world.

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