SRI LANKA: MRS BANDARANAIKE STRUGGLES ON

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T00875R001100130106-5
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 12
• Document Creation Date: December 21, 2016
• Document Release Date: November 18, 2008
• Sequence Number: 106
• Publication Date: October 31, 1972
• Content Type: IM

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C) c/ oZ081
f '7 J,
Confidential
DIRECTOKATE OF
INTELLIGENCE
Intelligence Memorandum
Sri Lanka: Mrs. Banderanaikc Struggles On
CIA
1IMEN1 SfRUl~.F-S QRANCPI
FILE CLIP V
DO NOT DESTROY
Confidential
87
31 October 1972
Nc. 2081/72
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ANTRAL INTELLIGENCE AG INC:Y
DIRT (:TGRATl 6i INTELLIGENCE
31 October 1972
INTELLIGENCE MGMORANDUM'i
Sri Lanka: Mrs. Bandarannike Struggles On
"The mass of Ceyiunese detest their goi'ernmeut. " -Prom "Ceylon-The Balance Up-
set "-final report of US Ambassador Robert Strausz-Hupe, I Pebnnarp 1972
A steady decline in the economy appears to have diminished the
popularity of Prime Minister Baularanaike's three-party coalition govern-
ment since it took office some two and a half years ago. Although no public
opinion polls or new nationwide elections have tested attitude:: toward the
Bandaranaike regime, steady public grumbling over the economic situation, a
large-scale uprising last year by disgruntled youths, a recent series of by-elec-
tion victories for the opposition, and increased restiveness among labor
unions and the sizable Tamil minority all point to declining support for the
regime. So far, the government has responded by adding to its armed
strength and its constitutional powers, rather than by initiating effective
measures to revitalize the economy.
Note: This memorandum was prepared by the Office of Current Intelligence and coordi-
nated within CIA.
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The Government Loses Popularity...
Even at the outset, the Bandaranaike coalition had less public support
than is parliamentary strength-1 15 of 151 scats-indicated. Weighted ap-
portionment favoring rural areas had enabled the coalition to obtain this
majority with only 48.8 percent of the popular vote. Nevertheless, as Mrs.
Bandaranaike began her term, most Ceylonese seemed hopeful that her
regime would make headway in arresting the economic decline that had
already started to drag down thecountry's living standards toward those of
its badly impoverished south Asian neighbors.
These hopes have not been fulfillf;d. Sri Lanka's economy Continues to
be buffeted by deteriorating terms of trade, stagnating exports, low foreign
exchange reserves, and lack of growth. Agricultural production was hit hard
by a severe drought early this year. Many consumer goods have grown scarce
and services have deteriorated. Prices, fairly stable before 1968, have since
risen substantially and unemployment has reached massive proportions. A
visiting International Labor Organization study groaip recently estimated
that in a total population of about 13 million over 700,000-mostly young
people with at least some education-are jobless. Additional thousands are
underemployed.
The government's standing with the public appears to have fallen as
Lconomic problems have --worsened. Roughly 20,000 disaffected young
Ceylonese participated in a large-scale insurrection that almost toppled the
regime 18 months ago. The insurgents have been quiet this year, but
thousands have been released from custody and some of them may be
making preparations for future attempts against the regime. A substantial
portion of the population appears at least partially sympathetic to these
youthful revolutionaries.
This month an apparent decline in the government's popularity was
indicated anew when the mail; opposition political party, the right-of-center
United National Party, won-although only by narrow margins-three of four
parliamentary by-elections held in different parts of the country. Mrs.
Bandaranaike's Sri Lanka Freedom Party had won three of these four seats
in the 1970 general elections. Her party's margin of' victory in the sole
by-election it won was only mall' -as large as in the 1970 balloting for the
same seat. The government had postponed the by-elections-made necessary
by death or disqualification-on several occasions, apparently because is
feared just what happened.
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Leader of (lie Opposition Senanayakc
Although the opposition United National Party received some 13,000
votes more than in the 1970 races Ibr these four seats, the by-election results
(1o not necessarily represent a substantial upsurge in the party's popularity,
either in these constituencies or in the country at large. In two of the races
Mrs. Bandaranaike's party was hurt by squabbling between loca'. party
factions. Also, many Ceylonese probably feel that the apposition party,
which governed the country from 1965 to 1970, shares responsibility for the
country's troubles and, asa result, they may be disenchanted with both the
government coalition and the United National Party. At pr sent, no groups
other than Mrs. Bandaranaike's party and the main opposition party appear
strong enough to rule the country. Mrs, 13andaranaike's party still Sias nearly
90 seats in the oational assembly, any; h! two coalition partners hold
another 25. The United National Part;, although it obtained 38 percent of
the popular vote in the 1970 elections, holds o'.iy 18 seats. The only other
opposition group represented in the assembly, tic Tamil United Front, has
14. There are also six government-appointed members.
The Tamil minority community has been particularly unhappy with the
Bandaranaike government. The Tamils -an ethnic group of south Indian
origin--make up about 22 percent of Sri Lanka's Population and are con-
centrated in the country's northern and eastern regions. They have never
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been enthusiastic about Mrs. Bandaranaike's party, which has sought to
appeal to th;; nationalist sentiments of the country's Sinhalese majority since
her late husband founded the party in 195 1. Tamil opposition to the
government has intensified since 1970, partly because of the deteriorating
economy and partly because of what the Tamils view as discriminatory
provisions in Sri Lanka's new constitution. Leading Tamil political organiza-
tions have been considering attempting an extensive non-violent protest
campaign sometime this fall. The most prominent Tamil leader, S.J.V.
Chelvanayakam, has resigned his seat in the national legislature and is making
thinly veiled threats to seek complete independence for the Tamils.
The Tamils' ability to mount a serious challenge at this time is doubt-
ful. Communal passions art, less in tense now than in the !ate 1950s and early
1960s, when Tamil protests resulted in widespread violence. Caste, regional,
and generational bickering among the Tamils has further weakened them.
Nonetheless, Tamil organizations and sogan, still provide rallying points for
the many Tamils who resent the limited economic opportunities available to
them.
...But Remains Entrenched
Aware of the apparent decline in its popularity, the Bandaranaike
regime has made a number of moves to retain power. A constitution
promulgated last May, which converted Ceylon into the Republic of Sri
Lanka, gives the government new tools for holding on to power without
popular support. The new charter postpones the deadline for the next
national elections, originally slated for no later than May 1975, until May
1977-or even later should the government decide to invoke emergency
powers to delay elections further. The constitution also diminishes the
independence and power of the judiciary and gives the cabinet greater power
to distribute patronage, intimidate the civil service, and introduce any
legislation it desires, even measures inconsistent with the constitution itself.
The new constitution does not automatically make Sri Lanka a more
authoritarian country, but it does provide the regime with an option in that
direction. T,n what may be its first move toward picking up that option, the
government last August introduced a bill that would have conside-ably
augmented existing constraints on freedom of the press. In its original form,
the bill called for the creation of a government-dominated press council
empowered to censor virtually all news on government activities and to force
the press to divulge sources of information. The council was to be given
quasi-judicial powers to enforce compliance with its orders. The bill came
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under heavy fire i'rom a wide range of politicians, the news media, and civic
groups, and the government decided to redraft the measure. In its new form
the measure reportedly protects journalists against compulsory disclosure of
sources and somewhat eases the proposed restriction on publication of
government news, but adds new limitations on news of military operations
and economic and financial pleasures planned by the government.
Since the 1971 insurrection the government has made a considerable
effort to improve its previously weak security forces, augmenting their ranks
by several thousand men and acquiring extensive new military ^quipment
from a variety of foreign donors. The i 972 budget called for a 53-percent
increase over the previous year in spending on the police and armed forces.
According to the head of Colombo's delegation at last spring's annual
meeting of the Western-sponsored Ceylon Aid Group, government spending
on security has risen from a pre-insurgency level of about two percent of
total recurring expenditures to 6.6 percent.
In determining its economic policies the Bandaranaike government
appears to have made its own political survival the overriding objective.
Aware that significant reductions in Sri Lanka's costly social welfare ar:d
consumer subsidy programs would probably meet with broad public op-
position, the regime has repeatedly set aside plans for imposing such cuts.
Most important, it has avoided making a meaningful reduction in the rice
subsidy. In recent years. rice subsidies have accounted for over 20 percent of
the government's non-capital expenditures and 50 to 60 percent of the
budget deficit. Moreover, the government, apparently reluctant to risk
antagonizing leftist supporters, has taken no effective steps to stimulate new
domestic and foreign private investment. Most cabinet members seem aware
of the need to reduce consun;%:r subsidies and prom-)te investment. The
cabinet reportedly has been contemplating the introduction of significant
cuts in the rice subsidy sometime this fall.
The Bandaranaike government has been careful to contain intra-cabinet
disputes so that they do not threaten the survival of the coalition. The
cabinet is divided into two loosely knit groupings. A leftist faction is
composed of men who appear dedicated to orthodox Marxist principles. This
group includes three ministers who belong to a self-sty!,ed Trotskyite party,
the Lanka Sama Samaja Party; one who belongs to the Soviet-oriented
Communist Party/Moscow; and several from Mrs. Bandaranaike's Sri Lanka
Freedom Party. The other bloc is composed of men who are more moderate.
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The ministers in this group are all members of' Mrs. Bandaranaike's party.
They slightly outnumber the leftists, but the latter tend to be more assertive
and to prevail in policy disputes except when Mrs. Bandaranaike actively
sides with the moderates.
Mrs. Bandaranaike herself probably shares many of the statist, anti-
capitalist views of her leftist ministers, but, being a practical politician, she
has been careful to avoid causing either group-along with its parliamentary
supporters-to abandon her. The ministers share her desire to keep the
regime intact. As a result, very few legislators and only one cabinet member
have stepped out of government ranks since the coalition came to power in
May 1970. A measure of' this overriding determination to keep the govern-
ment intact was the decision on the part of cabinet moderates to stand aside
as their leftist colleagues incorporated undemocratic features into the con-
stitution. Similarly, the concern for self-preservation led the leftists to
modify their revolutionary rhetoric in April 1971 and to join with the
moderates to help suppress the uprising by young radicals.
This same desire not to jeopardize the government is also illustrated by
the course of months-long bickering between the smallest of the coalition
parties-the Communist Party/Moscow-and the rest of the regime. At a
party congress last August, a militant faction captured control of the party
and installed its own leaders in key party posts. The militants are dissatisfied
with what they view as the government's failure to move with rigor against
domestic and foreign capitalists and to defend the interests of Ceylonese
workers. Despite their enhanced strength and their opposition to many
government policies, the mil tants have not withdrawn the party from the
coalition. The regime has exercised equal forbearance. For example, last
spring when tour of' the Communist Party's six members of parliament failed
to support a m major government crime bill, Mrs. Bandaranaike simply sus-
pended the four deputies from the government's parliamentary group-a
largely meaningless move. Even after the militants had captured control of'
the party in August, they stayed in the government. Mrs. Bandaranaike
knows that, although the Communists hold few seats in the legislature, they
enjoy strong trade union backing and could heighten existing labor unrest if
they became outright opponents of' the regime. The Communists apparently
realize that withdrawal from the coalition might open the way for repressive
government action against them.
A Revamped Foreign Policy
The desire to stay in office has also prompted the Bandaranaike
gover:;;i,ent to ai;;!-st its international posture. In 1970 the coalition's
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campaign platform called for a sharp leftward shift in foreign policy. During
its first few months in office the regime moved in that direction. It estab-
lished full diplomatic relations with East Germany, North Korea, and North
Vietnam. It also recognized the Viet Cong government in South Vietnam, It
took over the remaining properties of an American and a British oil company
as part of a program for nationalizing petroleum distribution facilities that
had been initiated in the early I 960s during Mrs. Bandaranaike's first terns as
prime minister. By the end of 1970 Mrs. Bandaranaike had suspended
relations with Israel, terminated US Peace Corps activities on the island.
evicted the Asia Foundation, and halted Ceylonese military training in the
Since late 1970, and especially since the 1971 insurgency, the govern-
ment has shifted to a more balanced policy. Mrs. Bandaranaike and Other
cabinet members have become more accessible to US officials. The govern-
nment has permitted naval visits by American as well as Soviet ships and has
moved to end the anti-US bias in pro-government news media. Last month
S-i Lanka requested that training of Ceylonese Air Force personnel in the US
be s, :,umed. Although the Business Acquisitions Act of 1971 gave the state
almost unlimited authority to acquire private firms and properties, no major
foreign holdings have been nationalized since the act passed, and the govern-
ment has tried to convince investors that the law will be implemented only
sparingly. Mrs. Bandaranaike expelled the entire staff of the North Korean
Embassy in 1971 on suspicion of having helped foment the insurgency. She
has since rebuffed bids for its reopening.
Mrs Bandaranaike may even be weighing a resumption of ties with
Israel. She was angered by the success of non-Asian participants at the
conference of nonaligned nations last August in Guyana in getting Algiers
rather than Colombo named as the site cf the next conference. Mrs. Banda-
ranaike, believing that this development undercut her chances for a major
leadership role among nonalig1ied countries, reportedly has begun con-
templating changes in Ceylonese policies toward Africa and the Arab world.
Her foreign affairs advisers have suggested that she make her point by
reopening relations with Tel Aviv.
Several other factors account for the government's change of attitude
toward the West. The main one is probably the worsening economy, which
makes large-scale Western assistance even more vital than in the past. The
economic situation also appears to be forcing the government to realize that
backing the causes of Arab and other underdeveloped countries brings few
tangible benefits. Moreover, the insurrection in 1971 sharpened the govern-
ment's eagerness to ensure continued military assistance from Western as
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well as other sources. The US, Britahi, the USSR, and China have all
provided Colombo with substantial quantities of military equipment since
the upri,iing.
The Ceylonese have evinced concern over the changed power balance in
south Asia in the wake of the Indo-Pakistani war of December 197 1. They
fear that India, no longer preoccupied with a Pakistani threat, could eventu-
ally become more aggressive toward Sri Lanka, particularly if members of
South India's Tamil community should move to assist Sri Lanka's dis-
gruntled Tamil minority. New Delhi's closer ties to Moscow also make the
Ceylonese uncomfortable. Some high officials in Colombo-including Mrs.
Bandaranaike-appear convinced that the Soviets had something to do with
last year's Ceylonese insurrection.
There is no good evidence to support this suspicion. Furthermore, there
is no indication that India's Tamils are fomenting unrest among Sri Lanka's
Tamils or that New Delhi has any plans for abandoning its relaxed policy
toward Sri Lanka. The Bandaranaike government, nevertheless, r -+ntinues to
regard the Indians-and the Soviets-as potential threats to Ceylonese se-
curity, and it apparently views good relations with the West as a safeguard.
Friendship with China remains an important pillar of Ceylonese policy.
China is Sri Lanka's second-ranking trading partner-after Britain-and has
become an important donor of aid. Under the rice-rubber agreement first
negotiated in 1952, China has become Sri Lanka's primary source of rice and
the principal market for Sri Lanka's second largest export, rubber. The US
was Colombo's principal source of economic assistance during the latter half
of the I 960s, but Peking has been the leading donor so far in the I 970s.
China extended a $25-million, hard-currency credit to Sri Lanka in .1971 and
loans worth over $50 million during Mrs. Bandaranaike's ten-day state visit
to China last summer. These credits account for over half' thr, total assistance
Peking has committed to Colombo since the late I 950s. The two countries
agreed this year to set up a small, Chinese-financed joint shipping service.
China, moreover, has been the only major power to support Colombo's
efforts to have the UN declare the Indian Ocean a demilitarized "peace
zone," the Chinese also are ignoring the Communist Party/Peking, a small
Ceylonese opposition party now suffering from serious internal divisions.
Mrs. Bandaranaike's Prospects
The Bandaranaike government does not appear to be in any immediate
danger. The deadline for the next national elections is nearly five years away.
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Labor, minority, and youth groups are restive, but none seems strong enough
to threaten the regime soon. There are no signs as yet of significant
disloyalty among military leaders, cabinet ministers, or government back-
benchers in the legislature.
Foreign aid donors are not enthusiastic about continuing to finance
excessive subsidization of consumption levels. Unless the Ceylonese authori-
ties themselves can somehow bring about the economic growth needed to
meet popular expectations, the public probably will continue to grow more
and more disenchanted with the political establishment. An effective pro-
gram for economic revival would present a dilemma for the regime, for the
measures needed to restore growth would involve an unpopular curtailment
of consumption and might trigger new agitation. Mrs. Bandaranaike's govern-
ment, however, can probably keep any such unrest from getting out of
hand.
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