Thursday, April 08, 2010

Sri Lanka polls to decide depth of Rajapaksa's power

Sri Lanka's legislative polls Thursday will decide the depth of President Mahinda Rajapaksa's already vast powers and should remove the last big uncertainty for investors keen to tap the country's post-war potential.

With his victory in one of Asia's longest-running wars not quite a year old, Rajapaksa and his ruling United Peoples Freedom Alliance (UPFA) are expected to win a majority in the polls to elect the 225-member parliament.]

A total of 7,620 candidates representing 36 parties and 301 independent groups are competing.

Unaccustomed to losing since he was first elected president in 2005, Rajapaksa and his allies are aiming to win 150 seats, or the two-thirds majority he needs to change the constitution to his whim -- though he has not made public his intentions.

The opposition has vowed to stop him, saying he has too much power already with a normal legislative majority.

More than 14 million voters are registered to cast ballots, with nearly 80,000 police and soldiers standing watch. By Sri Lankan standards, the campaign has been relatively calm with at least 340 acts of violence and one death.

"This government has done the work to get a two-thirds majority. Development work, the economy, they have ended the 30-year-old war. This country has progressed by doing these things," trader H.M. Sudath told Reuters.

Popularity stemming from the defeat of the Tamil Tigers separatists in May last year helped propel Rajapaksa to a second six-year term in January, when he won a landslide 58 percent over retired General Sarath Fonseka in a bitter and personal contest.

"You have the government contesting with a great deal of confidence. The opposition seems to be divided and demoralized," University of Colombo constitutional affairs lecturer Rohan Edirisinghe told Reuters.


Fonseka, who as army commander stood side-by-side with Rajapaksa in the war victory, is running for parliament despite being in military custody and facing two courts-martial, for politicking while in uniform and improper procurement.

He polled 40 percent on election day in January, the day after which he found himself surrounded in a luxury Colombo hotel by elite troops he had commanded a few months previously, with the government saying it was feared he was planning a coup.

The main opposition parties have rallied behind him, although they are not contesting as single alliance as they did in the presidential election.

Rajapaksa and his allies have also trumpeted about a resurgent post-war economy, propelled by a stock market that has gained more than 150 percent since 2009, accelerated development and foreign investment in government securities.

However, the end of the war did not bring immediate stability because Rajapaksa made clear he would call early elections, and Western countries and the United Nations have kept up pressure over possible war crimes and human rights violations.

"Foreign investors might get more interested in the stock market if there is political stability after the election. But otherwise, I do not see any changes," Amal Sandaratne, economist at Frontier Research, told Reuters.

With the rupee currency on the rise, bond dealers say they expect steady foreign demand for government securities of 18 months' tenure or less to pick up, especially after the vote.

One concern foreign investors have always had is the government's big public sector spending, which has often hampered growth. The central bank reported GDP growth of 3.5 percent last year, and forecast 6.5 percent this year.

"If the ruling party comes to power then there will be stability, but still it is not clear what economic ideologies they are going to implement," said Sirimal Abeyratne, an economics lecturer at the University of Colombo.

The government has pledged to curb its deficit under a $2.6 billion International Monetary Fund loan, but Monday said it would renegotiate the stringent targets after it missed the first year's goal with 9.8 percent deficit last year.

© Reuters

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