US-Iran tension will affect Sri Lankan economy : Dr. Priyanga Dunusinghe

US-Iran tension will affect Sri Lankan economy : Dr. Priyanga Dunusinghe

US-Iran tension will affect Sri Lankan economy : Dr. Priyanga Dunusinghe

Written by Staff Writer

06 Jan, 2020 | 10:24 pm

COLOMBO (News 1st) – Huge crowds packed the streets of the Iranian capital Tehran for the funeral of Iranian military commander Qasem Soleimani.

Iran’s Supreme Leader Ayatollah Khamenei led prayers and at one point was seen weeping.
Iran has vowed, “severe revenge” for the death of Soleimani and on Sunday pulled back from the 2015 nuclear accord.

Iran had been expected to announce its latest stance on the deal this weekend. But its announcement coincided with a major escalation of hostilities with Washington

State television said Iran would not respect any limits set down in the pact on the country’s nuclear work: whether the limit on its number of uranium enrichment centrifuges to its enrichment capacity, the level to which uranium could be enriched, the amount of stockpiled enriched uranium or Iran’s nuclear Research and Development activities.

Iran has steadily overstepped the deal’s limits on its nuclear activities in response to the United States’ withdrawal from the accord in 2018 and Washington’s re-imposition of sanctions that have crippled Iran’s oil trade.

In an exclusive interview with CNN, military adviser to Supreme Leader Ayatollah Khamenei, Hossein Dehghan, said that his country’s response to the killing by the United States of one its most influential commanders will certainly be a military response against military sites.

An $80 million bounty has been placed on US President Donald Trump’s head after General Qasem Soleimani was killed in US airstrikes last week, according to reports.
During the televised funeral procession of the top Iranian military commander, it was said on official state broadcasting channels on Sunday that $1 would be tabled for every Iranian in the country, with the cash going to whoever kills the US President, said in the report.

In the United States of America House Speaker Nancy Pelosi sent a letter to Democratic members of Congress announcing the House will introduce and vote on a “War Powers Resolution to limit the President’s military actions regarding Iran” amid rising tension.

President Trump has threatened severe sanctions against Iraq after its parliament called on US troops to leave the country.
“We have a very extraordinarily expensive airbase that’s there. It cost billions of dollars to build. We’re not leaving unless they pay us back for it,”

Speaking from the presidential plane, Mr Trump said that if Iraq asked US forces to depart on an unfriendly basis, “we will charge them sanctions as they’ve never seen before, ever. It’ll make Iranian sanctions look somewhat tame.”

The world market was also affected as a result of the middle east situation, Oil prices surged as much as $3 a barrel as gold, the yen, and safe-haven bonds all rallied.

Amidst all the tension, the  USA is heading for an election in November of this year.

In addition, Donald Trump is also facing the Senate hearing with regard to the impeachment that has been moved against him and has been voted in the house of representatives.

World over, superpowers seem to be adhering to a similar pattern when it comes to the election year.

Sri Lanka could also see a possible impact as a result of the tensions between Washington and Iran.

Sri Lanka exports a large quantity of tea to Iran Between the time period of January to November last year, Sri Lanka has exported over 20 million kilograms of tea to Iran, while that is 10 % of Sri Lanka’s total tea exports. This is a value close to Rs. 16 billion.

Against such a backdrop, what further effects will the escalating tensions in the middle east have on Sri Lanka?

Senior Lecturer Manik Wakkumbura, Department of International Relations of University of Colombo:

“Sri Lanka must be on alert over the ongoing tensions between the USA and Iran. Sri Lanka must act as an independent state, having no flaw in its foreign policy. Iran is one of the main suppliers of crude oil to Sri Lanka.

However, in 2018 when the USA and the European Union enforced sanctions on Iran, Sri Lanka was able to find alternatives without having to depend on Iran.

In terms of the tea export industry, Iran is one of the top five tea exports from our country. Our exports have been strengthened by Iran. However, against such a backdrop, Sri Lanka cannot be a looser, or compromise on its foreign policy.

The tensions between the USA and Iran will no doubt have an impact on our future economy due to the relations between our two nations. We can follow a positive and healthy foreign policy, by refraining from extending our support to the middle eastern crisis.”

Dr Priyanga Dunusinghe, Faculty of Economics of the University of Colombo stated that the US vs Iran crisis will not only affect Sri Lanka but all the other countries in the region.

He added that with the decline of oil supply, oil prices will further surge and if the tensions are further heightened trade in the middle east will also decline.

“Our expatriates in the middle eastern will also face elevated risks and people will be afraid to seek employment overseas” he added.


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