By Dharisha Bastians
Dealing a further blow to the country’s stumbling economy, the government of Sweden has decided to phase out its development assistance to Sri Lanka in the next two to four years, commencing 2009, the Embassy of Sweden told The Bottom Line yesterday.

The phase-out follows a decision by the new Swedish government that assumed power last year, which reviewed the countries to which it extends development support, in line with commitments made at the Paris Declaration, Acting Head of Mission at the Embassy of Sweden in Colombo, Goran Schill said.

Under the terms of the phase-out, the government of Sweden, through its bilateral development agency, the Swedish International Development Cooperation Agency (SIDA) will not make any further commitments to development projects in Sri Lanka, Schill added. “SIDA is globally involved in about 70 countries and this is a big job for a small bilateral agency. The Paris Declaration, signed by Sweden and several other countries, agreed that bilateral and multilateral agencies would focus their assistance on fewer countries,” Schill explained.

Claiming that he could not say which criteria was used by politicians in his home country, to decide which countries would remain on Sweden’s donor list, Schill said that he believed that Sri Lanka’s ranking as a middle income country, would have been a factor in the decision, with Sweden choosing to help poorer countries instead. The fact that Sweden accounts for less than 1% of bilateral aid to Sri Lanka, also may have played a role, he said.

While Sri Lanka will exit the list come 2009, Bangladesh and Afghanistan will remain in Sweden’s bilateral portfolio and the two countries will be the main focus of the Swedish government’s development assistance to South Asia, the Embassy official said.

Embassy Spokesman and Second Secretary, Urban Sjöström told TBL that the government of Sweden would carry out its phase-out in a responsible manner and that the recent decision would not affect ongoing projects in Sri Lanka. “It will not happen too quickly and we will honour all ongoing projects,” Sjöström said.

In the year 2007, the total value of Sweden’s ongoing projects in Sri Lanka is 100 million Kroner (US$ 15 million), of the Swedish government’s annual global budget of 20 billion Kroner (US$ 3 billion).

Sweden’s development assistance to Sri Lanka has been in three key areas: democratic governance, conflict transformation and human rights and pro-poor economic programmes, while it also extends research support.

The Swedish aid pullout follows a series of European diplomatic setbacks for Sri Lanka. Both Germany and Denmark have lost interest in Sri Lanka, with Germany freezing aid and the Danes deciding to close down their consular office in Colombo, despite initial plans to upgrade to a fully fledged mission in the island. The government’s policy of antagonising the international community, its general mismanagement of the economy and lack of commitment to good governance principles, might result in similar disenchantment in other parts of the world as well, analysts predict.