‘Rocky and tumultuous time’ for Sri Lanka warns consultancy groups

<p>Political turmoil in Sri Lanka looks set to continue in the year ahead, warned analysts from consultancy groups this week, with worries that investors may have underestimated the crisis on the island.</p> <p>Sasha Riser-Kositsky, senior analyst at political risk consultancy Eurasia Group, told CNBC that the current impasse is “at best an uneasy and fragile truce”.</p> <p>“What I think is under appreciated by a number of investors is how fragile things still are,” Riser-Kositsky said. “The relationship between the prime minister and the president is fundamentally broken. The president has now shown that he is willing to take pretty out-there unconstitutional actions, there’s nothing preventing him (from doing) something like this again.”</p> <p>“It’s going to be a pretty rocky and tumultuous time through the next elections. Governance rarely works when the two most senior figures in government despise one another. And one is continuously seeking means to undermine the other.”</p> <p>“It does not make for stability or policy making. And that’s the scenario investors will confront in Sri Lanka for much, if not all, of 2019,” he added.</p> <p>His comments were echoed by Pratyush Rao, lead analyst for India and South Asia at global risk consulting firm Control Risks, who said the stoking of Sinhala Buddhist nationalism did not bode well for other on the island.</p> <p>“There is a concern that minority rights — or at least progress on some of the pending issues — will slow down between now and the elections. And you might see progress only after the elections and that, too, if you have the right kind of verdict. If Rajapaksa comes to power you can almost be rest assured that he is ... not concretely going to make a move towards these (minority) issues,” said Rao.</p> <p>Even countries like China may be wary of further involvement in Sri Lanka, given October’s political crisis Riser-Kositsky added, stating that it will “probably make China more wary of so openly backing adventures in third countries”.</p> <p>“The perception that China backed a series of unconstitutional moves designed to replace a national leader with an individual seen as friendlier toward Chinese interests will set back China’s broader push to win friends and influence people around the world, particularly in Belt and Road Initiative countries,” he told CNBC in an email.</p> <p>See more from CNBC <a href="https://www.cnbc.com/2018/12/27/investors-underestimate-the-political-t…">here</a>.</p> <p>&nbsp;</p>