As the West Asia conflict continues into its fifth week, Sri Lanka may feel it has avoided diplomatic wrangles and has not become a target of hostility from warring nations. Colombo has strived to maintain neutrality and avoid being coerced into taking sides. But the challenges are far from over.
The island, an unlikely participant in the US-Israeli-Iran war, grabbed headlines when the US Navy torpedoed IRIS Dena, an Iran-flagged vessel in the Indian Ocean, close to Sri Lanka. During the Raisina Dialogue 2026 last month, Sri Lankan foreign minister Vijitha Herath was repeatedly questioned about the repatriation of Iranian sailors, but he kept his answers simple: Colombo’s response to the distressed Iranian vessels IRIS Dena and IRIS Bushehr was guided by the United Nations Convention on the Law of the Sea and the principles of international humanitarian law. He sidestepped attempts to extract further explanations.
Proof of Colombo’s stance was also in the refusal to permit two American warplanes to land. Around the same time when Iranian vessels requested permission for three naval vessels to dock in Sri Lanka, a US request to deploy two warplanes equipped with anti-ship missiles to land at the Mattala Rajapaksa International Airport was refused to maintain neutrality, President Anura Kumara Dissanayake told parliament recently. Colombo has been lauded for navigating such choppy diplomatic waters with aplomb.
Maintaining neutrality is difficult, whether a party to the conflict or not. Colombo understands it should prioritise neighbouring India and balance China, while also not provoking the US and Israel, two old allies. But Sri Lanka’s real test may lie elsewhere, in how the island faces the full force of an energy crisis.
The theatre of war is elsewhere; Colombo has no direct role but always has strong interests. The US is Sri Lanka’s main trading partner, and Iran imports high volumes of Ceylon tea. Thus, for Sri Lanka, the impact of the West Asia conflict is very real and economic. The disrupted global supply chains, disrupted shipping activities and rising oil prices are already having an impact that will worsen, even if the war ends soon. The entire world may soon need to start over, and for Sri Lanka—which has been struggling to herald an economic comeback after the debilitating 2022 collapse—short-term fixes are unlikely to help turn things around.
Colombo is heavily energy-dependent and to meet its annual demand of 14,150 GWh, a steady supply of coal and petroleum is required. Even as Colombo reassures the public of steady fuel and gas supplies, people are already feeling the weight of the war. Colombo received 38,000 MT of fuel from India last week and is locked in discussions with Russia, after sanctions on Moscow were temporarily lifted.
Meanwhile, Colombo has taken urgent measures in response. Fuel is now rationed via a QR code system, and the country has a four-day workweek. People are now grappling with fuel quotas, electricity and gas price hikes, which are driving up food and transport costs and adding to the already prohibitive cost of living. The surge in prices and inflation will slow down tourism and impact remittances from the war-hit Gulf countries. Sri Lanka’s Petroleum Distributors Association, meanwhile, will hold a silent protest on April 6 over unresolved issues affecting their operations. To cap it all, the government has also imposed water cuts as the nation prepares to herald the Sinhala-Hindu New Year in a few days.
As Sri Lanka braces for water and power cuts with a distant war’s impacts reaching home, the National People’s Power administration is facing its first proper test of credibility following the country’s energy minister, Kumara Jayakody, being indicted in the Colombo High Court over allegations of corruption dating back to his tenure as a senior public official.
While the matter dates back to his tenure as procurement manager of the Ceylon Fertiliser Company, the issue has raised strong criticism against the government which came to office on a strong anti-corruption platform, for not asking Jayakody to step down, and is willing to entrust the vital energy sector to someone who is now under a corruption probe. Sri Lanka’s Commission to Investigate Allegations of Bribery and Corruption filed corruption charges against Jayakody for a questionable procurement that caused millions in losses. The more recent controversy is linked to a coal purchase under his watch as energy minister, denting the administration’s reputation.
The government has so far managed to oversee diplomatic matters and maintain neutrality despite challenges. However, the government’s real challenge will be its response to the impending energy crisis and bolstering the island’s energy security. The country lacks a national energy policy and mechanisms to weather crises and shocks, which has increased public questioning of its capacity.
It is also not acceptable to use war as an excuse for failing to ensure energy security, as industries will require reliable energy supplies to keep the economy moving, even as it slows due to external shocks.
It is indeed healthy to take no sides in this war or any other. Colombo has a well-defended position of non-alignment. It is prudent to have avoided offering Sri Lankan soil to be used as anyone’s base or its waters. The Gulf Cooperation Council countries offer a classic example of being made collateral damage, and Sri Lanka must avoid such an alignment that can prove expensive, both in terms of finances and national security. In these extremely challenging times, Sri Lanka should prioritise its economic interest and energy security, drawing important lessons from 2022. Political stability is strongly linked to economic stability, and in the absence of normalcy and the weight of hardships, people tend to turn against governments. It is time to put the house in order and to clear its stable. It can start with the energy minister.
Dilrukshi Handunnetti | Award-winning journalist and lawyer; founder and director of Colombo-based Center for Investigative Reporting
(Views are personal)
(dilrukshi@cir.lk)