Sri Lanka political crisis splits allies

Violence erupted after the shock dismissal of prime minister Ranil Wickremesinghe by the country’s president on Friday

Sri Lanka's newly appointed prime minister Mahinda Rajapakse, left, smiles next to president Maithripala Sirisena during a party members' meeting on Saturday. Reuters

Sri Lanka President Maithripala Sirisena is under increasing pressure to uphold the constitution and reconvene parliament after his decision to replace the prime minister triggered political turmoil on Friday.

The island nation was plunged into the crisis when Mr Sirisena sacked Ranil Wickremesinghe and swore in former president Mahinda Rajapakse to replace him, breaking up a fragile coalition government.

Mr Wickremesinghe says his sacking was illegal and unconstitutional, and maintains he is still prime minister, leading to a stand-off between his party and labour unions loyal to Sirisena.

On Sunday, Arjuna Ranatunga, petroleum minister in the ousted cabinet, tried to re-enter his office, leading to clashes in which one person was killed and two were injured.

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The crisis has important ramifications in a battle for influence in South Asia between Sri Lanka's traditional ally India and China, a country that is playing an increasing role in the region.

China, long seen as a supporter of Mr Rajapakse, has already congratulated him on becoming prime minister.

But India, the European Union and the United States have all urged Mr Sirisena to abide by the constitution.

"We call on the president, in consultation with the speaker, to immediately reconvene parliament and allow the democratically elected representatives of the Sri Lankan people to fulfill their responsibilities to affirm who will lead their government," US State Department spokeswoman Heather Nauert said in a statement.

Sources in diplomatic missions said most foreign envoys are employing a wait-and-watch policy.

The political turmoil comes at a critical time for a Sri Lankan economy struggling with slow growth and a weakening currency.

If tensions continue, the country could struggle to refinance government debt that is due in early 2019 at an affordable rate, credit rating agency Moody's said.

The country's bonds sold off on Monday, while the Sri Lankan rupee fell 0.58 per cent to an all-time low.

"The president's sudden appointment of Mr Rajapakse significantly heightens policy uncertainty," said Matthew Circosta, an analyst at Moody's Sovereign Risk Group

"Additionally, the possible social tensions that may unfold in the next few weeks would have a negative impact on the economy, which is already growing slowly."

India and western countries have previously expressed concern about Mr Rajapaksa's ties to China, after he ushered in billions of dollars of investment from Beijing to rebuild the country following the end of a 26-year war against ethnic Tamil separatists in 2009.

That investment has since put Sri Lanka deep in debt and forced it to hand over control of a strategic port to China.