Sri Lankan state in a changing global context

Sri Lankan state in a changing global context 

Sunil Bastian

This short article emphasises the need to analyse the Sri Lankan state by placing it in the global context. This means not confining our minds within the borders of the Sri Lankan state. To emphasise this point I would like to point out that the formation of the Sri Lankan state itself was a product of a global phenomenon - British colonialism. (See Bastian Sunil (2025) State formation and Conflicts in Sri Lanka. London: Bloomsbury Academic for an analysis of Sri Lankan state formation). 

Under British colonialism the entire geographic space of the island was covered by a single unit of territorial power. To administer the territory, the island was divided into spatial units using the directions of a compass. In this way cartography became an instrument of British colonialism. Other techniques of state formation were establishing an administrative structure, a judicial system, a system to collect taxes, regular census and the coercive power of the state to cover the entire island.

Once the territory was consolidated under a single territorial power, the process of capitalist development intensified. This is another dimension that makes it necessary to consider the global context to understand the Sri Lankan state. Capitalist transition of the Sri Lankan economy always takes place in a context of global capitalism. The politics of international economic relations becomes a crucial factor in ensuring the economic security of the state. 

Global processes had an impact on Sri Lanka gaining independence. The weakening of the British Empire after the first World War 1 was an important factor. Political agitation within Sri Lanka in this global context led to the emergence of the post-colonial Sri Lankan state. In addition, in the post-colonial period regional security structures had a relative autonomy. The Sri Lankan state was within the South Asian security structure, where India was the hegemonic power. 

Post-colonial Sri Lankan state evolved in the context of three periods that characterised the global context – the Cold War period, a period when what can be called a neoliberal political project dominated the world, and the current global context. What follows is a brief description of the last two periods, which interest us most at present. 

A global neoliberal political project

A neoliberal political project led by the US came to dominate the world after the collapse of the state socialist system led by the Soviet Union. The economic dimension of this project was based on an ideology of neoliberalism that believed human well-being can be achieved by establishing private property rights, free markets, and free trade. The role of the state was to create and maintain institutions that promote these dimensions in the economy. This ideology was extended to areas such as education and health. The state should take steps to develop the private sector and markets in these areas. Apart from this, the role of the state in the economy was expected to be minimal. 

This ideology projected global capitalism as a benevolent system that incorporates more and more people into a market economy, brings about an interconnected world, and spreads prosperity and freedom to all corners of the world. The political agenda was to establish liberal democracy, and reform states based on liberal principles. The neoliberal political project also believed that liberalism in economics and politics would lead to a more peaceful world. International relations were to be managed through liberal principles. This was the security dimension of this project. 

Liberal principles in economics, politics, security and international relations added up to a vision of the total transformation of the world based on liberal principles – or a liberal Utopia. Some ideologues of this project even boasted about an ‘End of History’. This meant that the collapse of the state socialist system ended ideological debates about social systems. Capitalism and liberal democracy were seen as the final answer in this quest, and the entire world was supposed to move towards this ideal. A key assumption of this liberal Utopia was the continuation of Western hegemony in a world led by the US. Some analysists have characterised this as a new manifestation of US imperialism. The ideology of liberal triumphalism led by the US was at its peak in the aftermath of the end of the socialist bloc of states, led by the Soviet Union. With the final break-up of the Soviet Union in 1991 this process was complete. 

However, it is important to remember that this was only an ideology that tried to legitimise a US-led Western hegemony after the collapse of the Soviet Union. The actual behaviour of Western states was determined by their strategic interests. For example, after the attack by an Islam political movement on the Twin Towers in New York, the US with the support of some Western countries, resorted to military aggression against a number of Middle Eastern countries and Afghanistan. This strategy continues even now, as seen in what is happening in Gaza. 

The current global context

Looking at the world today it is clear that the world did not evolve in the manner those who advocated the post-Cold War neoliberal political project expected. A major flaw of liberal analysis was a zero-sum approach towards states and markets. With the expansion of free markets globally, the importance of states was expected to diminish. However, the evolution of states has its own dynamics. In addition, liberal internationalism never recognised the unequal economic benefits of neoliberal capitalism and their political outcomes within states. This applies to developed capitalist countries of the West as well.

The growth of global capitalism under neoliberalism had a diverse impact on states. In the case of some states there was a growth of capitalism, making them stronger and challenging the balance of power at regional and global levels. This happened in the past in the history of global capitalism and territorial forms of power. Giovanni Arrighi’s, The Long Twentieth Century: Money Power and the Origins of our Times is one of the best accounts of this historical process. What we are seeing is a new phase of this. 

Competition between states in the current global context is very different from what happened during the Cold War period. During the Cold War there was a clash between two different political and economic systems. This is not the case at present. Global capitalism and major power conflicts is a better way to understand the current global context. 

A key outcome of the period of neoliberal capitalism has been capitalist growth in China, with China becoming a strong state. With these developments China has begun to challenge the hegemony of the US, especially in the Asia-Pacific region. The US has constructed a new regional strategic space called the Indo-Pacific to meet this challenge. 

There has been capitalist growth in India, and India is asserting its power in the South Asian region. Both India and China are guided by their own political, economic and strategic interests when dealing with other states. 

The rise of new centres of capitalist growth that have begun to challenge US hegemony is already having an impact on the global economic integration that neoliberal capitalism advocated. There have been significant shifts in the economy policy of developed capitalist countries of the West. Several terms are used to characterise these changes. The Economist magazine, a long-standing supporter of economic globalisation, has pointed out how the global economic system is fracturing. It has used the term ‘the Rise of Homeland Economics’ to identify this trend. The-US based Foreign Affairs journalrefers to the rise of the ‘Economic Security State’ to characterise the same phenomenon. The central message is that ensuring the economic security of the state is prioritised over promotion of globalisation.

A major recent development in this process has been the emergence of protectionist policies in the US under the new regime. The latest example of this is a policy of increasing tariffs on goods imported by the US. Closing down US-Aid, and reducing foreign aid assistance, is part of same political trend. We also need to note that these new economic policies are backed by an ultra-conservative ideology. This is opposing what has been achieved in areas such as social inequality, minority rights, and gender equality through the dominance of liberal ideology under the neoliberal political project. This Right-wing shift is seen in many developed capitalist countries of the West.  Finally, in contrast to the peaceful, rule-governed world that liberal internationalists hoped for, the current global context is characterised by conflicts of various types. 

The Sri Lankan state was integrated into the global neoliberal political project led by the US, due to the inauguration of the more liberal period of capitalist transition in 1977. There is a lot of empirical material, covering a period of four decades, to understand the impact of this integration. This is an area of research that needs more attention. 

To end this short article let me point out an impact of the current global context. This is the interest of major powers in Sri Lankan harbours. This is a continuation of a historical trend seen during the colonial period. Even after independence, for several years, the UK’s Royal Navy was stationed in Trincomalee. Many analysts point out that the Indian Ocean is becoming a strategically important area in the current global context. 

This means for the Sri Lankan state, the politics of international economic relations, economic security of the state, and its geographical position in the Indian Ocean will become crucial in a world characterised by global capitalism and major power conflicts.