The Strategic Importance of Sri Lanka to Australia

The recent influx of Sri Lankan asylum seekers to Australia in the aftermath of Sri Lanka’s civil war has brought a rare spotlight on Australia’s bilateral relationship with Sri Lanka

1st Jun 2010

The recent influx of Sri Lankan asylum seekers to Australia in the aftermath of Sri Lanka’s civil war has brought a rare spotlight on Australia’s bilateral relationship with Sri Lanka. Whilst the Australian government has made desperate attempts to curb the flow of asylum seekers from Sri Lanka, it should also use this opportunity to refocus its foreign policy objectives, with a view to upgrading relations and embracing a new era.

Relations Since World War II

Sri Lanka attained independence from Britain in the aftermath of the Second World War on 4 February 1948, which led to the opening of a High Commission in Canberra in 1949. From 1950 onwards, Australia’s involvement in the Colombo Plan, touted as Asia’s Marshall Plan equivalent, strengthened bilateral relations by sponsoring Sri Lankan students and technical specialists to study or train in Australian tertiary and technical institutions. Relations were further strengthened throughout the 1950s, 1960s and 1970s when the first major waves of Sri Lankan migrants settled in Australia, the vast bulk of whom were English speaking and of Burgher or Eurasian ethnic lineage.

Sri Lanka’s first high profile diplomatic visit to Australia was headed by its first Prime Minister DS Senanayake in 1951, and later followed by Prime Minister Sir John Kotalawela in 1954. The last Sri Lankan head of state to visit Australia was President JR Jayewardene in 1978. However, only two Australian heads of government have visited Sri Lanka, namely Prime Ministers Sir Robert Menzies, and latterly, Gough Whitlam in 1974. Despite such interactions, which have seen cultural relations and people-to-people links flourish, there was at the time little formal development in bilateral relations.

However, from the late 1990s onwards, Australia’s relationship with Sri Lanka witnessed a new phase of growth and diplomatic activity. In 1997, AusAID commissioned the Australian National University to undertake a trade and investment study, entitled: Cultivating the Pearl: Australia’s Economic Relations with Sri Lanka. Similarly, in 2001 the Sri Lanka Export Development Board published a market research study on Australia with the aim of strengthening trade relations. Lamentably, these initiatives did not lead to tangible policy changes such as a formally sanctioned portal like an Australia-Sri Lanka Business Council.

On the diplomatic field, in March 2002, then Sri Lankan Minister of Foreign Affairs (Austin Fernando) visited Australia, which was followed by another visit in October 2008 by Sri Lanka’s incumbent Foreign Minister Rohitha Bogollagama. The former Australian Minister for Foreign Affairs, Alexander Downer, visited Sri Lanka in May 2003, followed by a visit of then Minister for Immigration Senator Amanda Vanstone in March 2006.

Geopolitical Considerations

In Australia, the recognition of Sri Lanka’s strategic position has hardly featured in the ongoing debate on cultivating Australia’s interests in the Indian Ocean. Given that Australia is the only Western country with national borders directly beside the Indian Ocean, and is seeking to develop and expand its interests in the region, it is imperative that Australian foreign policy and defence planners take a fresh look at relations with Sri Lanka. While Australia has demonstrated enthusiasm in expanding relations with India, foreign policy officials need to be wary of developing an India-centric foreign policy, that is at the expense of cultivating relations with neighbouring countries in South Asia. This point was recently raised by the Australian Strategic Policy Institute [ASPI] in its March 2010 report, Our Western Front: Australia and the Indian Ocean, which identified: “India’s expansion, or even hegemony, in the Indian Ocean mightn’t always be in Australia’s interests ... The attitude and expectations of other regional countries are important. Other countries might feel intimidated by India and some Indian policies. Other IOR [Indian Ocean Region] countries might have expectations of Australia providing an alternative to Indian influence.”

Given these considerations, it would be instructive for Australia to observe that since Sri Lanka attained independence in 1948, relations with India have been inconsistent, sometimes turbulent, and usually fraught with suspicion. Take for instance an observation made by the Australian Foreign Minister RG Casey, who visited Sri Lanka in 1956: “The highest authorities with whom I have had contact in Colombo have said that India was winning the fear but not the friendship of her neighbours. They have said that Ceylon had the feeling that she might be becoming the ‘tail piece’ of India, which they did not relish.”

Despite the major improvement in relations between Sri Lanka and India in recent years, historic tensions and suspicions of Indian intentions have enduredA recent example was the comment made by General Cyril Ranatunga, a former Sri Lankan Defence Secretary, who stated: “India had trained, armed and financed the separatist groups with the intention of getting fully involved in the internal affairs of Sri Lanka. It clearly showed the hand of India and the intensity of Indian intents on our country. The final goal may have been to achieve a sense of hegemony in the region … I will never forget and will never forgive India to my dying day.” Even though relations with India have improved considerably since the 1980s, and India more recently played a key role in helping Sri Lanka defeat the LTTE; in March this year, Nandana Goonathilake, the Sri Lankan Minister for Post and Telecommunications, alleged: “Even at the recent presidential elections certain Indian officials did not want President Mahinda Rajapakse to win. Not the Indian government or the Indian Prime Minister, but certain individuals. We have seen examples of this in the past. RAW [Research and Analysis Wing, India’s premier intelligence agency] has a long-term agenda of how they want relations in the region to progress so as to maintain their dominance in the region.”

Furthermore, Australia can learn a lot from the strategic mistakes made by the European Union and the United States. So far, all attempts by the United States and European Union to either coerce or punish Sri Lanka for rejecting often invasive demands in its internal affairs, have not succeeded. Key examples include sustained criticism of Sri Lanka’s military campaign to defeat the LTTE which was manifested in the reduction of foreign aid and arms purchases; demands for a permanent ceasefire and recommencement of negotiations with the LTTE when it was on the brink of defeat; attempts to obstruct and delay the multi-billion dollar International Monetary Fund bailout package at the end of the civil war; insistence on pursuing war crimes investigations; and, withdrawal of trade concessions by the European Union with damaging repercussions to Sri Lanka’s economy. Such measures have served to erode confidence, deteriorate relations and push Sri Lanka away from the West. In fact, since 2006 Sri Lanka’s foreign policy has moved away from the West towards strengthening relations with China, India, Russia, Iran, Libya, Saudi Arabia and other countries that have been traditionally associated with the Non-Aligned Movement.

The inability and unwillingness of the West to act as a viable security partner has led Sri Lanka to join as a Dialogue Partner with the Russo-Chinese led Shanghai Cooperation Organisation [SCO] in 2009, which is touted to be the emerging strategic alliance to rival the North Atlantic Treaty Organisation. Sri Lanka now represents the southern-most expansion of the increasingly influential SCO. Such examples further demonstrate that Western strategy towards Sri Lanka has only succeeded in alienating the island-nation. In the emerging multi-polar world order, the West will find it increasingly harder to compete with its brand of diplomacy that advocates, often unreasonably, aid and development assistance with conditions of political and human rights reform.

Unlike many of its Western counterparts, and to its credit, Australia refrained from calling for war crimes investigations and has positioned itself as an important aid donor to Sri Lanka, which over the last ten years has seen in order of AU $220 million provided in development and humanitarian assistance. Australia should recognise that Sri Lanka is strategically positioned astride the world’s major shipping arterials between the Red Sea, the Bay of Bengal and the Malacca Strait, and is unlike any other island in the Indian Ocean. The ASPI report only briefly referred to Sri Lanka, and while it provided some constructive suggestions for improving relations, the report stopped short of recognising the island’s strategic importance in the Indian Ocean: “Bilateral relations with Sri Lanka are becoming more important, particularly as the exodus of political and economic refugees from there continues. Australia has a search and rescue region boundary with Sri Lanka but no MoU [Memorandums of Understandings] on SAR [Search and Rescue]. That should be pursued. Sri Lanka might also welcome capacity-building assistance with maritime SAR, as well as with managing its other maritime interests.” In contrast, a US Senate report published in December 2009 by the Committee on Foreign Relations, entitled, Sri Lanka: Recharting US Strategy After the War, emphatically noted: “U.S. policymakers have tended to underestimate Sri Lanka’s geostrategic importance for American interests. Sri Lanka is located at the nexus of crucial maritime trading routes in the Indian Ocean connecting Europe and the Middle East to China and the rest of Asia. The United States cannot afford to ‘lose’ Sri Lanka. The Obama administration is currently weighing a new strategy for relations with Sri Lanka.”

Hypothetically, in an extreme scenario if Sri Lanka is increasingly backed into a corner, it will lean heavily towards China in search of security and support. Under such circumstances, it might well be possible that the new Hambantota port could transform into a key staging post for Chinese warships operating in the Indian Ocean, which would have serious geostrategic implications for Australia and the West in general. Such a scenario could emerge if Western governments continue to demonstrate their susceptibility to the powerful lobbying of the Tamil diaspora and pursue initiatives detrimental to Sri Lanka. This is why Australia should take more seriously the recent comments expressed by Sri Lanka’s former UN Ambassador, Dr. Dayan Jayatilleka: “China’s power of veto forestalled a possible Western move to push a truce through the UN Security Council, none can fault us for recognising the grand strategic value – perhaps even primacy – of that relationship, which we cannot and must not compromise.” He added: “While our relationship with the US cannot be at the expense of our relationship with China, our relationship with China and India cannot be at the expense of each other.”

Security Cooperation

As recent events surrounding the problems of Sri Lankan asylum seekers have shown, if Australia wishes to enhance its influence in Sri Lanka, it needs to build, at the very least, a rudimentary and durable bilateral security relationship. Historically, only a handful of Sri Lankan military officials have trained at Australian military institutions. With the exception of the Australian Federal Police (which created a post in Colombo in October 2009 due to the problem posed by people smuggling), the only defence relationship that has existed has transpired through occasional visits by Australia’s defence attaché in South Asia; infrequent goodwill visits by Royal Australian Navy [RAN] ships, the most recent being that of HMAS Glenelg in January this year; and, the RAN association with the Sri Lanka Navy (SLN) through the Indian Ocean Naval Symposium.

Over the last decade Australia has expressed growing interest in developing relations with South Asia, which has seen a number of ministerial visits and delegations. Australia has signed counter-terrorism MoUs with 13 countries of which three are in South Asia, namely Bangladesh, India and Pakistan.

Australia signed its most recent counter-terrorism MoU with Bangladesh in December 2008, the significance of which was affirmed in a Department of Foreign Affairs and Trade media release: “The conclusion of the MOUs reflects the importance Australia and its partner countries place on close and effective cooperation between governments against international terrorism.” Conspicuously, no such initiative has transpired with Sri Lanka, even though it faced, until the defeat of the LTTE, perhaps the most serious terrorist threat of any country in the region. Seemingly, this anomaly raises some interesting questions on how Sri Lanka has featured among Australian foreign and defence policy planners, especially given the current crisis with asylum seekers from Sri Lanka, some of who are suspected to be former LTTE combatants escaping legitimate prosecution. Indeed, this might reveal two considerations: first, that Sri Lanka does not feature in Australia’s engagement with South Asia; and second, Australia has remained reluctant to engage in any formal counter-terrorism agreements due to the powerful lobbying activities of pro-LTTE elements within the Tamil diaspora.

Interestingly, the recent Australian delegations to Sri Lanka in July 2009 led by Senator Chris Evans, the Minister for Immigration and Citizenship, which paved the way for the visit of the Minister for Foreign Affairs, Stephen Smith in November 2009, only led to the signing of an MoU addressing people smuggling and related organised criminal activities. A notable shortcoming of the recent MoU signed with Sri Lanka is that it stops short of addressing co-operation in counter-terrorism. This again emphasises the low priority of Sri Lanka and the ambiguity in Australia’s bilateral foreign policy objectives. Now that the civil war is over, and Sri Lanka appears to be making rapid progress towards normalcy, Australia should consider widening its existing relations with Sri Lanka by formalising cooperation in a range of areas, such as:-

· Exchange programs and training courses for military personnel between Australian and Sri Lankan military institutions;

· RAN involvement in joint training exercises with the SLN and the recently formed Sri Lanka Coast Guard [SLCG];

· RAN or Royal Australian Air Force cooperation with the Sri Lanka Air Force and SLN to enhance its capabilities in humanitarian assistance and disaster relief, maritime surveillance, search and rescue;

· Surveillance/detection equipment or vessels/aircraft to enhance the peacetime surveillance capabilities of the SLN, SLCG and Sri Lanka Air Force in anti-smuggling operations;

· Technology sharing and technical assistance to Sri Lankan security forces; and,

· Intelligence sharing with Sri Lankan authorities on a wide array of matters, including maritime security and counter-terrorism. This is particularly relevant to the activities of the LTTE, and in more recent times with the rise of Wahabism in Sri Lanka.

Economic Co-operation

Similarly, the end of Sri Lanka’s civil war has transformed the economic environment of the country and has provided a strong foundation for future growth, as seen in the newly released annual World Bank report, Doing Business 2010 South Asia. In the ‘South Asia Aggregate Rankings’ index, the report ranked Sri Lanka third and India seventh. In fact, out of 29 separate indices which depicted the comparative ranking of South Asian countries in ease of doing business, Sri Lanka outranked India in 18 indices.

Historically, the trade balance between Australia and Sri Lanka have been in favour of Australia, and currently, there are 38 Australian companies which have operations on the island, equating to tens of millions of dollars worth of investments. Such indicators are likely to attract more Australian investment in the near future and might act as a catalyst for the expansion of bilateral trade relations. For instance, prospective Australian mining and exploration companies now have potentially lucrative opportunities to invest in Sri Lanka, which has known high-grade deposits of ilmenite, rutile, zircon, graphite, phosphate and thorium, and growing evidence of the existence of offshore petroleum reserves in the Mannar Basin. In line with this, Australia should also consider upgrading the function of the Australia/Sri Lanka Parliamentary Group, which is composed of 36 Australian MPs and Senators, and has not transformed into anything more than a networking and socialising forum. If directed appropriately, this body could be instrumental in utilising its influence alongside Australia’s estimated 80,000 strong Sri Lankan community in developing bilateral institutions such as a DFAT (Department of Foreign Affairs and Trade) endorsed Australia-Sri Lanka Institute. This should emulate the function of the recently founded Australia-Malaysia Institute, which is designed to promote bilateral relations, institutional and cultural connections, and expand linkages in public policy, health, culture and the arts.

Among Western nations, Australia has showed more scepticism and restraint towards the activities and influence of domestic lobby groups. As such, Australia is ideally positioned to make major in-roads into Sri Lanka to enhance its influence and soft power options, which will not only have benefits for the bilateral relationship but will serve to further enhance Australia’s influence and prestige in the region. The end of Sri Lanka’s civil war should serve as an ideal opportunity for Australia to take a fresh look at its bilateral relationship with a view to strengthening its diplomatic, commercial and security interests.


Table 1: Australia's Merchandise Trade with Sri Lanka

Trade Categories

CY 2000


CY 2001


CY 2002




CY 2004


CY 2005


CY 2006


CY 2007


CY 2008


CY 2009


Merchandise Exports











Merchandise Imports











Total Merchandise Trade











Trade Balance











Source:  DFAT, STARS database consistent with ABS, Cat. 5368.0, Dec 2009.

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