Col R Hariharan | Sri Lanka Perspectives March 2026| South Asia Security Trends, April 2026 | https://www.security-risks.com
War in perspective
The plight of Sri Lanka, an island nation of about
23 million people caught in the after effect of a war in faraway Iran and GCC
countries (Bahrain, Qatar, Kuwait, Oman, Saudi Arabia and the United Arab
Emirate - UAE) reminds one of Satyajit Ray’s acclaimed 1973 film Asani Sanket
(Distant Thunder). The movie depicts the sufferings of a small village in
Bengal due the great Bengal famine triggered by World War II.
Sri Lanka was rudely awakened to the reality of the
war in Iran, when US Navy submarine USS Charlotte (SSN-766) torpedoed and sank
a Iranian navy warship IRIS Dena, barely 40 Km from Sri Lanka coast on March 4,
a week after the war started. The Sri Lankan Navy carried out a search and
rescue mission to pick up 32 survivors and 87 dead bodies of Iranian sailors.
Sixty of them were reported missing.
Sri Lanka has had friendly relations with Iran for
decades. It had signed a barter agreement with Iran for continuing the earlier
“tea-for-oil” settlement mechanism. It was designed to reduce outstanding
petroleum debts of Sri Lanka by exchanging Ceylon tea, during foreign currency
crisis. By mid‑2025, Sri Lanka had cut its debt to Iran’s National Iranian Oil
Company from about $191 million to $130.6 million through this arrangement. So
the sinking of the Iranian frigate so close to Sri Lanka by the US submarine
created an embarrassing political storm for President AK Dissanayake’s
government. As March ends it will be a month since the US and Israel started
the war against Iran. During the month, U.S. and Israeli forces claim to have
hit over 11,000 to 15,000 targets within Iran, targeting their military
infrastructure, Islamic Revolutionary Guard (IRGC) bases and industrial sites.
Israeli strikes have targeted Iranian proxy forces -
Hezbollah and Radwan Force in Southern Lebanon. The US expectation of regime
change after the decapitation of Iran’s head of state and top military and
intelligence leadership by Israelis has been belied. Iran's leadership change
was smooth, despite Trump’s appeals to the Iranian population to rise up
against the Islamists.
Iran’s missile and drone attacks on American
military bases in the six GCC countries have surprisingly yielded results. The
Al Udeid Air Base in Qatar where 10,000 US troops and the forward headquarters
of the US Central Command (CENTCOM) are located suffered multiple Iranian
strikes that damaged buildings and communication infrastructure. Troops are now
housed in hotels and Iran has warned those also can become targets.
According to Al Jazeera’s estimate of March 30,
2026, the ongoing conflict has resulted in over 3,200 fatalities and
approximately 33,000 injuries across the Middle East with Iran and Lebanon
bearing the brunt. Iran has closed the world’s most critical choke point –
Strait of Hormuz – for marine traffic. The Strait normally handles 138 ships
per day. Roughly half of them are tankers carrying oil and gas. According to the International Energy Agency
(IEA), normally the Strait facilitates the transit of about 21 million barrels
of oil daily. That represents roughly 35% of global seaborne oil trade. Iran's
parliament has passed a resolution that introduces a toll system to cross the
Strait.
POTUS Trump has massed troops and threatened to launch operations against Iranian oil facilities in Kharg Island unless Iran opens the Strait of Hormuz for international marine traffic. The US is also after recovering Uranium reserves of Iran. However, Iran seems to be in no mood to accept US terms for a ceasefire. Pro-Iranian Houthis in Yemen have also joined the operations against Israel; if they become more active the alternate Red Sea route can become unsafe for marine traffic. So, we can expect the war to continue even if Americans escalate the scale of their operations by landing troops on Kharg Island to forcibly try to open the Strait of Hormuz. We can then expect Israelis to intensify their operations against Iranian proxies in Southern Lebanon and Houthis to keep the Red Sea route open.
Effect of war
Prolonged war in the Middle East and the closure of
the international marine and air traffic is playing havoc with global supply
chains, already frayed by four years of war in Ukraine. The choking of marine
traffic in Strait of Hormuz, particularly of tankers carrying petroleum and
gas, is hitting South Asian countries' economy hard as they are dependent on
imported energy resources. They have to find alternate sources of oil and gas
and take measures to curb surge in energy costs; rework disrupted trade routes
and strategize for likely fall in tourist traffic. There is also likely to be a
fall in remittances from expatriates living in GCC countries. In short, they
have to manage an inflationary economy with the attendant negative political
impact while the war in Iran shakes up the strategic world.
The continuation of the war in Iran is affecting the
lives of 62 million people living in GCC. It includes 35 million foreigners
(who form the 56% majority of the population). South Asians form the bulk of
the foreign population. Sri Lankans form a significant share of the workforce,
particularly in retail, domestic work and service sectors. Remittances from Sri
Lanka expatriates in 2025 reached a historic record of $7.8 billion, marking a
19% increase from the previous year. Sri
Lanka runs the risk of their remittance drying up in the coming days.
There are 100,000 to 120,000 foreign workers in
Israel at present. They are mainly from Thailand, Philippines, India, Sri
Lanka, Nepal, Moldova, and Eastern Europe. Indian and Thai workers dominate
agriculture. Large numbers from Sri Lanka, Philippines and Nepal are involved
in caregiving. Construction and services are dominated by Indians, Chinese and
East Europeans. As of early 2026, 15,000 to 20,000 Sri Lankans are estimated to
be employed in Israel. About 8000-9000 Sri Lankans are employed in home-based
caregiving for the elderly. Nearly 2,000 workers departed in the first three
months of 2025 alone to be employed in construction jobs. with thousands more
following after Israel extended re-entry visas for Sri Lankan workers until
April 30, 2026. In 2025, Sri Lanka and Israel signed agreements to expand
employment opportunities in caregiving, agriculture, construction, hotels,
house-keeping and manufacturing.
Despite ongoing regional tensions, the Sri Lankan
Embassy in Israel reports that most workers have chosen to stay due to high
wages—often ranging from Rs. 800,000 to Rs. 1 million per month—and strong
social welfare. While employment opportunities go up in Israel for Sri Lankans,
their safety will always be an added concern for the Sri Lanka government in
the coming days. Sri Lanka is one of the world’s top tourist destinations.
Tourism industry not only earns foreign exchange but provides employment to a
host of other service sector industries in hospitality and transport. GCC
countries have emerged as hubs of tourist air traffic from the West. The war is
already affecting it as evidenced by 17.3 percent less tourist arrivals
recorded during the first 22 days of March 2026 when compared with the figures
for the same period last year.
Government in action
President AK Dissanayake will have to cope with all
these issues, while implementing the conditionalities of the International Monetary Fund (IMF) being
followed for recouping the bankrupt economy. The IMF Team is already in Sri
Lanka for the Fifth and Sixth Reviews under the Extended Fund Facility (EFF)
programme. Once completed, this could potentially release around $ 700 million.
The President held a meeting of ministers and officials on March 15 to discuss
the disruptions to global energy supply networks caused by the War. The meeting
examined measures to deal with interruptions to coal, gas and oil supply
chains. After that the government has taken a number of measures to minimise
the adverse impact on the national economy. Some of these are listed below.
President Dissanayake spoke to PM Narendra Modi to
seek India’s help in overcoming Sri Lanka’s petroleum shortage due to
non-arrival of supplies. Within four days India sent two ship loads, one
carrying 38,000 MT of oil and the other carrying 18,000 MT of diesel and 18,
000 MT of high-octane petrol to Sri Lanka. The government has reintroduced the
‘Fuel Pass QR code’ system, a rationing mechanism first implemented during the
economic crisis in 2022. This system limits private motorists to roughly 15 litres
of fuel per week. To conserve energy, the government has introduced a four-day
week for work in government institutions, schools, universities and the
judiciary with Wednesday as a mid-week holiday.
As expected in any democracy, the government has
come under flak from opposition leaders, right from the sinking of an Iranian
warship by USN submarine. But AK Dissanayake seems to be the best choice among
the political leaders; at least he is pursuing old cases of political
corruption and misuse of power by many political leaders. They will probably
welcome the four-day week for the judiciary so that they can buy time.
Tailpiece – War
and cuisine: Sri Lankan cuisine is suffering from the war in Iran. Two essential
commodities for a Sri Lankan meal - sprat and dhal – bulk of which imported
respectively from Iran and Canada have become scarce. Before Vesak is
celebrated, we can expect the AKD government to ensure these culinary
essentials are back on the table.
[Col R Hariharan VSM, a retired MI specialist on
South Asia and terrorism, served as the head of intelligence of the Indian
Peace Keeping Force in Sri Lanka 1987-90. He is associated with the Chennai
Centre for China Studies. Website: https://col.hariharan@net Email: haridirect@gmail.com,]
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