Construction at China’s biggest Sri Lankan real estate project, the massive Port City near Colombo, has been halted. The $1.4 billion project was stopped not long after Sri Lankan President Maithripala Sirisena took office in January. (Paula Bronstein/The Washington Post)

— In the past seven months, Sri Lanka’s new president, Maithripala Sirisena, has tried to steer the island nation back to the path of good governance and reverse the excesses of his predecessor, Mahinda Rajapaksa.

He has grounded the air-conditioned buses the former president’s family used for cross-country joy rides. Luxury government cars driven by cronies have been reclaimed. Work has stopped on a building in the former presidential compound meant for Rajapaksa’s voluminous security detail.

Sirisena’s government has pressed for and won a constitutional amendment to curtail the wide powers of the presidency, and has begun to reduce the military presence in the war-torn north and east. And the government has moved to rebalance the country’s foreign policy away from Rajapaksa’s closest ally, China, toward India and the West, putting a massive Chinese “Port City” and other projects on hold and examining millions of dollars in pricey Chinese loans.

But these reforms now hang in the balance as the former president — who has been accused with his family of socking away $18 billion of the country’s money in overseas accounts — has retaken the national stage.

He is vying for a seat in Parliament in Monday’s elections, with an eye to becoming prime minister — although Sirisena told him in a letter last week that he would not appoint him, even if Rajapaksa’s coalition won a majority of votes.

Mahinda Rajapaksa cast his vote on Aug. 17, as the former Sri Lankan president sought a return to power, eight months after his stunning loss in the presidential elections. The vote is seen as a referendum on his comeback bid. (Reuters)

If the current governing coalition prevails Monday and Rajapaksa is elected to Parliament as an opposition leader, his official reemergence will complicate Sri Lanka’s ongoing recovery from a debilitating three-decade civil war and its efforts to move out of China’s shadow, analysts say.

“Rajapaksa is unwilling to step aside,” said Jehan Perera, the executive director of the National Peace Council of Sri Lanka. “He has too much to lose.”

The money trail

Most days, the bombastic Rajapaksa still dons his trademark red scarf — a tribute to his farming family — and his lucky elephant-hair bracelet and meets dozens of supplicants in his “office” in a temple complex in Colombo, Sri Lanka’s capital.


Former president Mahinda Rajapaksa attends an event in Colombo, the Sri Lankan capital. (Paula Bronstein/The Washington Post)

President Maithripala Sirisena, second from left, attends an event in Colombo. (Paula Bronstein/The Washington Post)

He has been out of power since January, when Sirisena, who was health minister for more than four years in Rajapaksa’s government, pulled off an upset campaign victory by appealing to a range of voters, including majority Sinhalese as well as minority Tamils and Muslims — many of whom were tired of Rajapaksa’s cronyism and the country’s flagging economy.

Nevertheless, Rajapaksa, who was first elected to office in 2005, remains widely popular with many in the Sinhalese majority who credit him with ending the nearly 30-year civil war with a Tamil insurgency that was seeking a separate homeland. The bloody conflict left more than 80,000 dead, including approximately 40,000 civilians in the war’s waning days; a report examining alleged atrocities is due from the U.N. High Commissioner for Human Rights in late September.

At a recent appearance by Rajapaksa on a humid summer night outside Colombo, hundreds of his supporters crowded into a tent lit by tiny white lights to cheer their war hero, who was flanked by members of his political party.

“We were able to bring back genuine peace to the country from an era of war, when there were bombs going off in the roads,” Rajapaksa said, trumpeting his record on national security. Taking a swipe at the current government, he added, “Today we have suspicions that the military camps in the north are being removed.”


Work has stopped on the Port City project near Colombo. Built by a state-owned Chinese construction firm, the project is a reclamation of 575 acres of seabed that is intended to be the site of homes for more than 60,000 people, luxury hotels, office buildings, an amusement park and a hospital. (Paula Bronstein/The Washington Post)

Rajapaksa turned to China for financial help early in his first tenure, seeking millions of dollars in loans for wartime spending, then millions more during the rebuilding phase after the war ended in 2009, an estimated total of $5 billion borrowed.

Sirisena’s new government is trying to unravel the costs and terms of those loans after years without transparency, according to Anushka Wijesinha, a Sri Lankan economist who has written about the Sri Lanka-China relationship.

“We don’t know what the cost of these projects really was,” Wijesinha said. “We’re just getting our mind around it. We don’t really know what went on with the public finances.”

Among them are several highway projects and a $103 million cellphone tower shaped like a lotus flower. Also under scrutiny are the finances of a $209 million airport in Rajapaksa’s region of Hambantota, sitting virtually inactive — although government officials are thinking of using it as a place to store rice — and a $580 million southern port that has failed to reach revenue targets.

“They built bridges where there were not rivers. . . . That’s the type of corruption that went on,” Ravi Karunanayake, the country’s finance minister, told CNN this year.

Rajapaksa’s supporters have denied these charges, and they and the Chinese government said the loans were not exorbitant.

“We were able to get loans and other assistance for our development projects from China because of our relationship,” said Ranjith Siyambalapitiya, who was Rajapaksa’s top lieutenant at the Finance Ministry. “In the last six months, the government has damaged that relationship with China. It has moved away from China and moved closer to the West. The result is that our economic growth has slowed down.”

Aiming to restart projects

The geopolitical stakes in Monday’s elections are high: whether Sirisena can maintain his fragile governing coalition and keep it on the path to change, or whether China will again have the upper hand with the strategically important island that figures into its maritime “Silk Road” expansion strategy into the Indian Ocean. Before Sirisena’s victory, the close relationship between Sri Lanka and China had been a concern to India and the United States, especially after Chinese submarines docked off the Colombo port on two separate occasions last fall.

“Sri Lankan voters will effectively decide whether their country should kowtow to China’s regional ambitions or shape its own destiny by promoting an independent foreign policy and an open economy,” New Delhi-based strategic analyst Brahma Chellaney wrote in a recent opinion piece titled “Sri Lanka’s Chinese Election.”


The Lotus Flower cellphone tower being built by a Chinese construction company. (Paula Bronstein/The Washington Post)

Siyambalapitiya said that if his coalition achieves a majority in Monday’s elections, it plans to restart all the Chinese-funded projects put on hold by Sirisena’s government, including the $1.4 billion Port City project planned for Colombo and built by a state-owned Chinese construction company. The project is a reclamation of 575 acres of seabed that is intended eventually to be the site of homes for more than 60,000 people, luxury hotels, office buildings, an amusement park and a hospital.

The project is so vast that, once completed, it will block most of the sweeping sea view from Sirisena’s office in the Presidential Secretariat, an old colonial building just off Colombo’s beachfront promenade.

The project is on hold because of concerns about its environmental impact and permitting, although Sirisena’s government appears in recent days to be softening its stance on the shutdown.

Because of the size and scope of the deal, it will be difficult for the Sri Lankans to extricate themselves from it, analysts say. Construction of the land bank is 13 percent complete, according to the Chinese construction company.

“We are not against China, but we have been analyzing and reevaluating all the projects so that Sri Lanka gets the best deal,” said Rajitha Senaratne, a government spokesman. He said the government “will not favor one nation over the other.”

Amantha Perera in Colombo and Liu Liu in Beijing contributed to this report.

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