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Sri Lanka's new strongman promises tolerance

Colombo

GOTABHAYA Rajapaksa, who won Sri Lanka's bitterly contested presidential poll, promised tolerance for all religions and cultures in a nation where racial tensions have divided communities for decades.

"All minorities' right to practise religion and culture will be assured," Mr Rajapaksa said at his swearing in ceremony at a highly venerated Buddhist site in the north central district of Anuradhapura on Monday. "Now we have a duty to rebuild the nation."

The former defence secretary brings with him a family of strongmen that could shift the island nation back towards China, although he was quick to commit to neutral foreign relations. His government will not tolerate corruption, Mr Rajapaksa said, noting the administration would be based on merit.

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Mr Rajapaksa, 70, won 52.3 per cent of the vote, while the ruling alliance candidate Sajith Premadasa trailed with 42 per cent at the final count, according to state-run television station Rupavahini. He will face a parliament led by rival and current Prime Minister Ranil Wickremesinghe, potentially setting off another constitutional standoff that may not be resolved until parliamentary elections due after February 2020.

There are fears a Rajapaksa victory could threaten the country's fragile democratic progress and see a return to the old authoritarian ways. Mr Gotabhaya was defence minister during his brother Mahinda Rajapaksa's 10-year-rule, when Tamil politicians were murdered, thousands of Sri Lankans were forcibly disappeared and dozens of journalists were killed or forced into exile.

Faced with a choice between the man with a reputation for getting things done at any cost and an incumbent government that's drifted through the last four years with little to show for it, voters took a chance on Mr Rajapaksa. He will inherit an economy in which growth has slowed to a more than five-year low of 1.6 per cent in the quarter through June and a debt level hovering at 83 per cent of gross domestic product.

The Colombo All-Share Index jumped 1.6 per cent after the election - the biggest gain since July 29 that saw the index reach the highest level since Nov 2, 2018. Sri Lanka's dollar bonds due 2030 are up 0.6 cent to 101.6 cents on the dollar, ending a nine-day losing streak, according to Bloomberg-compiled prices, the sharpest move in the security in almost four weeks. The rupee also rose the most since Nov 4 to 179.67 per US dollar on Monday from 180.20 on Friday and is at its highest level since Aug 30.

"Gotabhaya's economic strategy is likely to focus on more populist measures", as he prepares for parliamentary elections due early next year, said Akhil Bery, South Asia analyst at risk consultancy Eurasia Group. "We're also likely to see a much friendlier posture towards China, but not as antagonistic to the West as some might believe," Mr Bery said. "Gotabhaya is pragmatic and likely to recognise that he will need US support if Sri Lanka's debt troubles resurface."

Mr Wickremesinghe, who leads the United National Party and the ruling coalition, made a brief statement now that his rivals have won the presidency. "We who value democracy will discuss with the speaker, party leaders and members of parliament of the government about the next general election and come to a decision," he said Sunday evening.

Mr Wickremesinghe has little room to manoeuvre - he could attempt to stay on as prime minister until parliamentary elections, step down and pave the way for the former president Mahinda Rajapaksa to take over, agree to an early election or form an interim government with the Rajapaksas.

His government is already teetering - Mr Premadasa, along with Finance Minister Mangala Samaraweera, Telecommunications Minister Harin Fernando, Trade Minister Malik Samarawickrama and junior Defence Minister Ruwan Wijewardene all tendered their resignations on Sunday. BLOOMBERG