Last updated in April 2014
For the past 60 years, diplomatic relations between Germany and Sri Lanka have provided a sound basis for (political) cooperation.
Germany is engaged in a variety of ways in Sri Lanka (through a cultural institute, the Alexander von Humboldt Foundation, the German Academic Exchange Service (DAAD), the South Asia Institute and friendship societies) and is respected and valued as a reliable partner. The German political foundations that were active in the country terminated their local programme work in 2013.
Economic relations are also an important factor. The European Union is Sri Lanka’s principal trading partner, taking 35 per cent of the country’s total exports, with Germany accounting for 5 per cent. Bilateral trade was stagnant in 2013 owing to the low volume of imports from Germany. For many years, Germans have also made up a large portion of the foreign tourists visiting Sri Lanka. They numbered approximately 85,000 in 2013.
Together with its EU partners and other Western countries, Germany is closely monitoring respect for human rights and the development of the humanitarian situation in Sri Lanka. In the wake of a civil war that lasted nearly thirty years, the focus is on achieving a lasting reconciliation between the country’s different ethnic groups, especially between the majority Sinhalese and the Tamils.
In the war-ravaged north and east of the country, Germany is helping with reconstruction. Its contribution is provided through international organisations, the implementing agencies of German development cooperation – the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) and the KfW Development Bank – as well as through German non-governmental organisations.
Sri Lanka has concluded the following agreements with Germany:
- trade agreements (1950, 1955 and 1958)
- investment promotion and protection agreement (2000)
- framework agreement on Technical Cooperation (1973)
- air transport agreements (1973 and 1995)
- double taxation agreement (1979)
The cooperation agreement between Sri Lanka and the EU that entered into force in 1975 was superseded by a new agreement that came into effect on 1 April 1995.
In 2013, bilateral trade with Sri Lanka was worth EUR 701.6 million, down 2.7 per cent from 2012. German imports from Sri Lanka fell by 7.2 per cent, to EUR 447.4 million, while German exports to Sri Lanka grew by 6.4 per cent, to EUR 254.2 million. Germany’s main imports from Sri Lanka are textiles, rubber and tea, and its chief exports to there are machinery, electrical goods, chemical products and motor vehicles. For years, Germany has recorded a balance of trade deficit with Sri Lanka. In 2013, German exports to Sri Lanka amounted – in euro terms – to only about 50 per cent of German imports from there.
Germany has traditionally been one of Sri Lanka’s most important partners in the tourist industry. The slumps in the number of tourists in the wake of the tsunami and on account of the precarious security situation during the civil war that ended in 2009 are now over. Recent years have seen marked increases in the number of German visitors: 46,000 in 2010, 56,000 in 2011, 72,000 in 2012 and 85,000 in 2013.
The 51 German companies that have invested in Sri Lanka since 1978 have created around 11,700 jobs for the local population. German direct investment in Sri Lanka since 2005 amounts to an aggregate USD 61 million (USD 9.1 million in 2012). Founded in 1999, the Sri Lanka-Germany Business Council, in which businesspeople from both countries are seeking to promote bilateral economic relations, has 80 members.
Since the late 1950s, Germany has been one of Sri Lanka’s principal bilateral donors.
Following the 2004 tsunami, the Federal Government pledged substantial funding for emergency relief measures and reconstruction.
After the civil war flared up again in 2006, development cooperation was restructured to focus on conflict transformation and peacebuilding. German development cooperation with Sri Lanka currently follows the OECD principle of “staying engaged – but differently”, with a focus on social integration and conflict transformation.
Even after the end of the military conflict in May 2009, it remained the aim of bilateral development cooperation to help bring about a marked improvement in the situation of the Sri Lankan population. This includes in particular a more sustainable reconstruction of institutions and building trust between the people and the authorities. To this end, development cooperation with Sri Lanka concentrates on the following areas: social integration, education, promoting the private sector and vocational training, with a regional focus on the north and north-east of the country.
Technical Cooperation (TC) projects are currently in progress in the following areas and will continue beyond 2013:
- promoting social integration and transformation
- vocational education and training in the north and east of the country
- peace education
- development of small and medium-sized businesses
The TC projects on administrative support and the reintegration of internally displaced persons on the north and east of the country were concluded at the end of 2013 and are being handed over to the Sri Lankan government.
Currently, the largest German Financial Cooperation (FC) project is the construction of a new maternity hospital in Galle. Germany has made available a low-interest loan of EUR 28 million for this purpose.