On Tuesday the 23rd of June 2016 people of United Kingdom made a historic decision by voting to leave the European Union. The referendum turnout was 71.8%with more than 30 million people voting for ‘Leave’ campaign which won by 52% to 48%. On the aftermaths of the referendum the Prime Minister of the United Kingdom David Cameron has pledged to resign in October and the First Minister of Scotland, Nicola Sturgeon has now stated that a second Independence Referendum for Scotland is now very likely while in Ireland Deputy First Minister Martin McGuinness has said that the impact in Northern Ireland would be “very profound” and that the whole island of Ireland should now be able to vote on reunification. (In Scotland the vote for “stay” was 62% and in Northern Ireland 55.8%) The Great Britain Pound (GBP) as we speak is on a historical drop and is bound to continue that way for a considerable amount of time.
The impact on Sri Lanka
Sri Lankan economy is likely to get adversely affected in multiple dimension. UK accounts to around 10% of total Sri Lankan exports and around 40% of total exports to the European Union. Textile sector seems very vulnerable while the Foreign Direct Investment and tourism from United Kingdom will be affected by the drop of the GBP. While the initial shock with currency markets is likely to cause turbulences to Sri Lankan economy, there will definitely be a long-term adverse shock to the economy unless the Sri Lankan government makes a radical shift of policy to adapt to the new environment.
Sri Lankan government in yet another blunder of Foreign Policy decided to get actively involved in the election process. This is probably a rare occasion where a government of an Asian country has participated as a lobbying group in an election in the Western World. Few days prior to the referendum some of the key figures of the government were there in London ‘Educating’ Sri Lankans in UK why they must vote to stay in the European Union.
The government from the time of being elected has reflected that they are adopting a very Western Aligned Foreign Policy or rather a “White Skinned” foreign policy. In its heights were incidents such as the President shaking hands with her Majesty the Queen or attending as invitees to elite clubs such as G7. However, although the Western World has embraced its new member in the club with open arms, so far they have not been able to be of any significant assistance to the Sri Lankan government that has gone to the extent of lobbying for them in their own elections.
Firstly, history has shown that a polarization of Foreign Policy either to the West or to the East is not practical for countries such as Sri Lanka. The simple reason is the constant nature of change in global politics making it difficult to predict the future. When we chose a partisan foreign policy, the effect of such would be that even a small change in the global politics and economy will have an enhanced effect on a small country such as ours.
Secondly, couldn’t the government foresee this outcome? If the government had the slightest idea that David Cameron was going to lose the referendum, they could have abstained from campaigning for him. Yet, the government decided to back him up when 138 of his own Conservative Party MPs and 6 Cabinet Ministers were campaigning against him for a Leave vote. Undoubtedly, this is a great blunder for the Foreign Service who has failed to give the government a proper analysis on the situation, as it is unlikely that the government willingly and knowingly entered into the sinking ship of David Cameron. It brings us to the question does the government has right people in right places? Have we moved forward from the Rajapaksa Era with regard to Foreign Service and Policy? Or is it only a reverse of the same policy implemented in the same manner without analysis?
While the UK leaving the EU will undoubtedly have dire consequences on Sri Lanka, by getting involved in their internal election process the government has now jeopardized and has made it even more complicated to enter into ties with the New British Premier who will swear in, in October. British sources say that it is likely that Boris Johnson, a senior Conservative MP who backed “Leave” is likely to win the Conservative Party election while this is subject to change depending on the sentiments of the voters in Conservative Party.
In any event there is no way to prevent the new British Prime Minister viewing Sri Lanka as a party who campaigned for David Cameron to stay in the European Union. It is in this light that the Sri Lankan government will now have to open discussions on the possibility of entering into direct trade agreements with the government of the United Kingdom.
By all means it is apparent that the globe is about to go through a political storm. With the elections coming in the United States and the possibility of a complete turnaround of Policy if Republican candidate Donald Trump wins the election, the United Kingdom with the possibility of going into severe internal issues with Scotland and Ireland together with a financial crisis and the way how European Union is going to operate without one of its major members is all in the pipeline to watch. With the government participating actively in the UK referendum Sri Lanka too is now right in the center of the global political storm. Will the government and its International allies survive the storm or will it take us together with it, is now the question.