By Ravi Velloor (Associate Editor, The Straits Times)

Some years before his death in 2008, I sat in the modest Colombo home of Mr Harry Goonatillake, a retired chief of the Sri Lankan Air Force, listening to his reminiscences about flying Mr Lee Kuan Yew around the island when the Singapore leader visited the South Asian nation in the 1970s.

With its strategic perch in the Indian Ocean, natural beauty, deep water ports, ease of English use and a warm and welcoming people, the land was one of great promise. Mr Lee, always wary of potential competition to Singapore, was keeping a quiet eye on the fellow Commonwealth nation whose emigres, bearing names such as Pillay, Perera and Shanmugaratnam, had provided him so much talent as he went about building his own island.

But every silver lining has its clouds and Sri Lanka's feuding politicians handily served up their share. Majoritarian politics, which had reared its head soon after Independence, came to the fore more vigorously from the early 1970s, spreading disaffection among the Tamil minority, which tended to dominate the professions and higher bureaucracy. The country went through a name change - Ceylon got a Sinhala name - and the Sinhala lion appeared on the flag. Buddhism was constitutionally given "the foremost place".

Faced with shrinking opportunities, Tamils, who are mostly Hindus and Christians, grew sullen. In 1975, the Mayor of Jaffna town, Mr Alfred Duriappah, was assassinated by a postmaster's son named Velupillai Prabhakaran, who would go on to found the Liberation Tigers of Tamil Eelam, in its time the most-feared terrorist group in Asia.

Then things got more complicated. In 1977, the country elected J.R. Jayewardene, a proud Sinhala politician, to the presidency. "J.R." set the nation on a Western trajectory at a time when subcontinental heavyweights such as Indira Gandhi of India and Zulfiqar Ali Bhutto of Pakistan were spewing socialism. Free market policies began to be introduced. An oil tank farm in the strategic Trincomalee Harbour was handed to a company with alleged connections to the United States Central Intelligence Agency.

Voice of America was allowed to set up a powerful transmitter at the country's northern tip in Jaffna, the cultural headquarters of the nation's Tamils, its reach covering southern India.

India, then close to the Soviet Union and with hostile neighbours to its west and east, looked askance at having to open a third security front in the south. It could have been assuaged if only Sri Lankan leaders had kept it posted about their intentions, but J.R. felt no such necessity.

To pressure Colombo, Indira Gandhi covertly began to fund and arm Tamil groups.

The rest is history. The Tigers would not only turn on their own state, but on India as well , and even Tamils themselves - wiping out rival groups and key political leaders. They would assassinate Indira's son, Rajiv Gandhi, as he campaigned to return to power in 1991. The civil war would rage for more than a quarter-century until it was finally put down in 2009 with jaw-dropping brutality, this time with India's covert assistance for Colombo.

Not for nothing was Sri Lanka created in the shape of a teardrop.

More than 100,000 would die in the conflict. Mr Goonatillake died in his bed but his pilot son, Group Captain Shirantha, was shot down by the Tigers while he flew to investigate another crash.

The other son, Air Chief Marshal Roshan Goonatillake, is now Chief of Defence Staff.

Brink of Opportunity

The Tamil insurgency ended in 2009 and Sri Lanka once again stood on the brink of unprecedented opportunity. Tourism rebounded: Last year, the island received 1.5 million visitors, a threefold increase in five years. Fisheries improved as fisher folk were once again allowed use of outboard motors, banned during the war to prevent arms smuggling. The economies of the North and Eastern provinces stirred to life as people began cultivating their lands, although much land still remains in the hands of the military.

Economic growth, which had touched its lowest of 1.5 per cent in the first quarter of 2009 as the war approached its denouement, soared to a record 8.6 per cent in the fourth quarter of 2010.

Unfortunately, President Mahinda Rajapaksa proved to be a triumphalist in victory. Soon after the Tigers were wiped out, he fired, then jailed, General Sarath Fonseka, a true Sinhala hero who had survived an assassination attempt on him by a Tamil Tiger woman bomber. He was evacuated to Singapore, where expert surgeons patched him up. After several weeks, the army chief had gone home - and straight into battle.

Some of Mr Rajapaksa's brothers, all of whom held high government positions, were widely alleged to have had sticky fingers.

On top of all that, the President sought to move Sri Lanka's centre of political and economic gravity to his own political base on the southern tip of the island, Hambantota, in an attempt to trim the wings of the Colombo elite.

To do this, he enlisted Chinese help after being turned down by India. Beijing, ever eager to gain a foothold in a strategic Indian Ocean island, was only too obliging. It funded and built the Hambantota port, airport and surrounding infrastructure. Sure enough, India's old insecurities surfaced, and the tipping point came when Chinese submarines called at Colombo, once when Japanese Prime Minister Shinzo Abe was in the city.

In January this year, Mr Rajapaksa was bounced out in the snap election he had called to extend his rule.

He would later accuse India's intelligence agencies of working with Britain and the US to oust him. A comeback bid as prime minister failed this summer. Aside from the fact that Sri Lanka owes China billions in loans, Mr Rajapaksa left a dismal fiscal situation that may require Colombo to seek a bailout from the International Monetary Fund (IMF). Last month, the IMF projected gross domestic product (GDP) growth of between 5 per cent and 5.5 per cent for the second half of this year, meagre given its potential.

Picking up the Pieces

Now Prime Minister Ranil Wickremesinghe, J.R.'s nephew, has the task of picking up the pieces, a responsibility he shares with President Maithripala Sirisena, the executive president. The Western Province, which includes national capital Colombo and accounts for nearly half of the nation's GDP, will continue to be the centre of Sri Lanka's gravity. Indeed, he plans to turn it into a megalopolis of eight million and is eyeing high-income service industries such as back offices of multinationals and outsourcing operations. Already, the island's service sector contributes nearly 60 per cent of GDP and is four times the size of its manufacturing industry.

Aware of his late uncle's experience and Mr Rajapaksa's, Mr Wickremesinghe has sought to tread carefully with India. Yet, to pass up the China opportunity would be foolish, he knows. As the Indonesians demonstrated recently on the high-speed rail project, playing off Big Power competition can help you get badly needed infrastructure at bargain-basement rates.

In an interview he gave me on Oct 17, Mr Wickremesinghe gave me the impression that while he will pay heed to India's security interests and largely keep the Chinese away from the North and the East, provinces closer to India, Beijing would have more room to invest around Western Province and elsewhere, such as the South.

More importantly, he seemed to be aware that a lasting peace on the island can be achieved only when the Tamil community is brought on board. For that, some credible investigation of war crimes is in order. So, too, a proper devolution of power to the provinces so the North and East can feel more in control of their destiny. If he gets it right, the talented Tamil diaspora will doubtless chip in to do their part for Sri Lanka. But how far should a war tribunal go? It is not an easy question. The brutality was immense - on both sides. And no political leader in the nation can go after people like Gen Fonseka. Indeed, much of the misery the nation, including its Tamils, suffered was because of the late Tigers leader Prabhakaran, who had become a monster to his own people. This writer's memories are full of people who fell to his blood lust - the list is long.

Now, Sri Lanka has one more chance. Perhaps its last one.

It is by no means an easy task and the Rajapaksas have enough money and muscle to queer Mr Wickremesinghe's pitch. If  Mr Wickremesinghe and the national unity government find the sagacity to pull it off, the land whose startling beauty gave us the word "serendipity" may rediscover its magic and throw up a new Asian Tiger. Undoubtedly, that would fetch more visits by Singapore prime ministers.

(The Straits Times)