“As a small and open country, Singapore will always be vulnerable to what happens around us. As Lee Kuan Yew used to say: “when elephants fight, the grass suffers, but when elephants make love, the grass also suffers“. Therefore, we must be aware of what is happening around us, and prepare ourselves for changes and surprises.” – Prime Minister Lee Hsien Loong, during the debate on the President’s Address in Singapore Parliament on 16 May, 2018, commenting on the uncertain external environment during the first Trump Administration.
“When elephants fight, it is the grass that suffers”
is a well-known African proverb commonly used in geopolitics to describe smaller nations caught in the crossfire of conflicts between major powers. At the 1981 Commonwealth conference, when Tanzanian President Julius Nyerere quoted this Swahili proverb, the Prime Minister Lee Kuan Yew famously retorted, “When elephants make love, the grass suffers, too”. In other words, not only when big powers (such as the US, Russia, EU, China or India) clash, the surrounding “grass” (smaller nations) get “trampled” or suffer collateral damage but even when big powers collaborate or enter into friendly agreements, small nations can still be disadvantaged through unintended consequences of those deals. Since then, Singaporean leaders have often quoted this proverb to highlight the broader reality for smaller states, during great power rivalry and from their alliances. They did this to underline the need to prepare Singapore for challenges stemming from the uncertain external environment and to maintain high resilience against global crises.
Like Singapore, as a small and open country, Sri Lanka too is always vulnerable to what happens around us. Hence, we must be alert to what is happening around us, and be ready not only to face challenges but to explore opportunities.
When Elephants Fight
To begin with, President Trump’s “Operation Epic Fury”.
Did we prepare adequately for changes and surprises that could arise from the deteriorating situation in the Gulf region? For example, the impact the conflict has on the safety and welfare of Sri Lankans living in West Asia or on our petroleum and LNG imports. The situation in the Gulf remains fluid with potential for further escalation, with the possibility of a long-term conflict.
The region, which is the GCC, Iraq, Iran, Israel, Jordan, Syria and Azerbaijan (I believe exports to Azerbaijan are through Iran), accounts for slightly over $1 billion of our exports. The region is one of the most important markets for tea (US$546 million out of US$1,408 million in 2024. According to some estimates, this could even be higher). As we export mostly low-grown teas to these countries, the impact of the conflict on low-grown tea producers, who are mainly smallholders, would be extremely strong. Then there are other sectors like fruits and vegetables where the impact would be immediate, unless of course exporters manage to divert these perishable products to other markets. If the conflict continues for a few more weeks or months, managing these challenges will be a difficult task for the nation, not simply for the government. It is also necessary to remember the Russia – Ukraine war, now on to its fifth year, and its impact on Sri Lanka’s economy.
Mother of all bad timing
What is more unfortunate is that the Gulf conflict is occurring on top of an already intensifying global trade war. One observer called it the “mother of all bad timing”. The combination is deadly.
Early last year, when President Trump announced his intention to weaponise tariffs and use them as bargaining tools for his geopolitical goals, most observers anticipated that he would mainly use tariffs to limit imports from the countries with which the United States had large trade deficits: China, Mexico, Vietnam, the European Union, Japan and Canada. The main elephants, who export to the United States. But when reciprocal tariffs were declared on 2nd April, some of the highest reciprocal tariffs were on Saint Pierre and Miquelon (50%), a French territory off Canada with a population of 6000 people, and Lesotho (50%), one of the poorest countries in Southern Africa. Sri Lanka was hit with a 44% reciprocal tariff. In dollar terms, Sri Lanka’s goods trade deficit with the United States was very small (US$ 2.9 billion in 2025) when compared to those of China (US$ 295 billion in 2024) or Vietnam (US$ 123 billion in 2024).
Though the adverse impact of US additional ad valorem duty has substantially reduced due to the recent US Supreme Court decision on reciprocal tariffs, the turbulence in the US market would continue for the foreseeable future. The United States of America is the largest market for Sri Lanka and accounts for nearly 25% of our exports. Yet, Sri Lanka’s exports to the United States had remained almost stagnant (around the US $ 3 billion range) during the last ten years, due to the dilution of the competitive advantage of some of our main export products in that market. The continued instability in our largest market, where Sri Lanka is not very competitive, doesn’t bode well for Sri Lanka’s economy.
When Elephants Make Love
In rapidly shifting geopolitical environments, countries use proactive anticipatory diplomacy to minimise the adverse implications from possible disruptions and conflicts. Recently concluded Free Trade Agreement (FTA) negotiations between India and the EU (January 2026) and India and the UK (May 2025) are very good examples for such proactive diplomacy. These negotiations were formally launched in June 2007 and were on the back burner for many years. These were expedited as strategic responses to growing U.S. protectionism. Implementation of these agreements would commence during this year.
When negotiations for a free trade agreement between India and the European Union (which included the United Kingdom) were formally launched, anticipating far-reaching consequences of such an agreement on other developing countries, the Commonwealth Secretariat requested the University of Sussex to undertake a study on a possible implication of such an agreement on other low-income developing countries. The authors of that study had considered the impact of an EU–India Free Trade Agreement on the trade of excluded countries and had underlined, “The SAARC countries are, by a long way, the most vulnerable to negative impacts from the FTA. Their exports are more similar to India’s…. Bangladesh is most exposed in the EU market, followed by Pakistan and Sri Lanka.”
So, now these agreements are finalised; what will be the implications of these FTAs between India and the UK and the EU on Sri Lanka? According to available information, the FTA will be a game-changer for the Indian apparel exporters, as it would provide a nearly ten per cent tariff advantage to them. That would level the playing field for India, vis-à-vis their regional competitors. As a result, apparel exports from India to the UK and the EU are projected to increase significantly by 2030. As the sizes of the EU’s and the UK’s apparel markets are not going to expand proportionately, these growths need to come from the market shares of other main exporters like Sri Lanka.
So, “also, when elephants make love, the grass suffers.”
Impact on Sri Lanka
As a small, export dependent country with limited product and market diversification, Sri Lanka will always be vulnerable to what happens in our main markets. Therefore, we must be aware of what is happening in those markets, and prepare ourselves to face the challenges proactively. Today, amid intense geopolitical conflicts, tensions and tariff shifts, countries adopt high agility and strategic planning. If we look at what our neighbours have been doing in London, Brussels and Tokyo, we can learn some lessons on how to navigate through these turbulences.
(The writer is a retired public servant and can be reached at senadhiragomi@gmail.com)
by Gomi Senadhira
from The Island https://ift.tt/DsQIJ0m
