By Tarun Perera
The current distribution of power in the international system is best described as unbalanced multipolarity, also known as polycentricity. Several great powers coexist alongside regional hegemons, joined by middle powers exhibiting varying degrees of revisionist tendencies expressed through either unilateral power balancing or multilateral coalition building, in groupings such as BRICS and formal alliance structures such as NATO. This is further complicated by supranational institutions like the EU, which exercise collective rather than unilateral agency. This results in a system which is neither reducible to the unipolar moment of the 1990s when American preponderance went unchallenged, nor to the clean bipolar rivalry representative of the Cold War.
Structural realist scholarship holds that a form of bipolarity will gradually re-emerge from the growing US-China rivalry, exacerbated by regional proxy conflicts over resource extraction and concerns over nuclear proliferation in the Middle East, bringing the current polycentric arrangement to a close in the coming decades. Neoliberal institutionalist scholarship, by contrast, contends that the United States is weakening under the combined pressure of revisionism among coalitions of emerging economies such as BRICS, ongoing deglobalisation trends fragmenting the global south from the north, and the zero-sum transactionalism of the current Trump administration’s foreign policy, which is corroding the transatlantic institutional architecture on which the liberal international order has depended.
For small states such as Sri Lanka, this consolidating trajectory carries urgent implications as the two poles organise their spheres of influence to pressure smaller states to bandwagon with them. The range of foreign policy options available to those caught in the bandwagon will progressively narrow. Power-transition theory identifies the current period as a zone of contention: the period in which a rising power’s capabilities approach those of the dominant state. This zone is characterised simultaneously by maximum systemic risk and maximum strategic fluidity for smaller actors. The Dissanayake administration has inherited its opening phase, and the policy choices available today, including the option of principled hedging between the great powers, may not be structurally available in the same form a decade hence. The narrowing of that window, and what Sri Lanka does before it closes, will largely determine whether it can retain meaningful agency in an era of consolidating bipolarity.
Why the current system is polycentric and how it will change
In polycentric systems, power is disaggregated across several domains outside the state, including supranational organisations like the European Union, coalitions of emerging economies such as BRICS, and non-state actors ranging from transnational corporations to militant groups. This dispersion weakens the monopoly that individual states once held over international power, creating structural space in which smaller actors can exercise influence by playing competing centres against one another. Yet this fluidity, while it creates opportunity for small states to manoeuvre, also creates instability as the absence of clear hierarchical order means small states cannot rely on predictable patterns of alliance and protection.
The European Union remains the world’s largest single market and its foremost regulatory authority, yet it lacks military autonomy. Russia retains a nuclear arsenal that rivals the American one whilst sustaining an economy smaller than that of Italy. India is a regional security hegemon with growing naval reach but limited capacity to project power beyond the Indian Ocean. The Gulf states command energy markets without commanding much else. Each functions as a meaningful pole within its own arena, which is precisely what keeps the present system fluid and also greatly unbalanced. This disaggregation of power across multiple domains creates structural space within which smaller states can manoeuvre by exploiting competition among the great powers, yet it offers no guarantee of security. The absence of a clear hierarchy means smaller actors enjoy autonomy but also face unpredictability and the risk of marginalisation when great power interests collide.
Despite the ongoing polycentric distribution, states remain the supreme arbiters of the legitimate use of force, a monopoly that non-state actors cannot circumvent given their lack of sovereign attributes such as territoriality and nationhood. The fluidity of the current polycentric system is therefore unlikely to endure. The intensification of great power rivalry between the United States and China is gradually pulling the disaggregated centres of power toward a more consolidated configuration, drawing the international system away from polycentrism and toward asymmetric bipolarity: a structure in which two powers dominate the central balance even though their capabilities are not symmetrical and the rest of the system has not fully aligned behind either.
However, it is not a mere repetition of the twentieth century. The current rivalry differs from Cold War bipolarity in two important respects. First, it is regional rather than globally totalising. The contest between Washington and Beijing is centred on the Indo-Pacific, and has not yet produced rival alliance systems and ideological projects on every continent. Second, it is a competition over technological and economic primacy rather than over competing visions of how societies should be organised. There is no equivalent of the capitalism-communism cleavage that once gave non-aligned states a recognisable third position to occupy.
What does this mean for small states like Sri Lanka?
Structural realist scholarship has long held that worlds with two clear poles are more predictable, and therefore safer, than multipolar ones, because the source of threat is never in doubt and miscalculation is less likely. However, the source of stability was always a property of great powers in the core of the world system, which was not privy to the small states of the periphery. The Cold War’s long peace held in Europe while between ten and twenty million people died in proxy conflicts across the global south, in Korea, Vietnam, Guatemala, Angola, and elsewhere. The structural calm of the bipolar centre was attained through the displacement of violence to the margins, where local autonomy movements were habitually reinterpreted as moves in a global zero-sum game. The consolidation of bipolarity does not promise safety, but rather that the externalities of great power competition will once again be exported to states not powerful enough to refuse them.
This is what gives the current window its dual character. Power-transition theory observes that a zone of contention emerges when a rising power’s capabilities approach those of the dominant state, and that this zone is simultaneously the period of maximum systemic risk and maximum fluidity for smaller actors. The current administration of Anura Kumara Dissanayake which came into power in late 2024, has inherited the opening phase of that zone. Therefore, its foreign policy choices are more consequential than they would have been in former regimes, and the time in which they can be made freely is limited.
For Sri Lanka, that question has rarely been as urgent as it is now. Within the first eight weeks of 2026, the world received two demonstrations of how the strong do what they can and how the weak suffer what they must. On 3 January, more than two hundred United States special forces descended on Caracas and seized the Venezuelan president in an operation that ended with him in a Brooklyn detention cell. On 28 February, the United States and Israel launched coordinated strikes across Iran and killed its supreme leader, opening a war that effectively closed the Strait of Hormuz and sent energy markets into disorder. Within a few short days, the war arrived in Sri Lanka’s own waters, when a United States submarine torpedoed the Iranian frigate IRIS Dena off the coast of Galle, killing at least eighty-four sailors.
These events of great power aggression are not isolated. They are signals of a system in transition, one drifting from the diffused polycentric arrangement of the past two decades towards a more intense rivalry between Washington and Beijing. This transition has opened a narrow window of strategic opportunity for small states, a moment in which their choices carry unusual weight, before the security environment hardens and the scope of agency contracts. For Sri Lanka to use that window deliberately, the state must move away from its long habit of reflexive non-alignment into a doctrine of principled hedging, institutionalised so that it is retained in successive administrations.
Why the former Cold War strategy will not work
Sri Lanka navigated the last era of bipolar pressure successfully by virtue of being a founding member of the Non-Aligned Movement at Belgrade in 1961. The state positioned itself outside both blocs and extracted aid and recognition from each without committing fully to either. Non-alignment was both a moral stance and a workable strategy during that generation of Sri Lankan statecraft. The temptation at the current moment is to reach for that same instrument, but this same option is no longer feasible as the three structural conditions that made non-alignment viable have all disappeared.
The first condition was an ideological binary, as the capitalism-communism divide gave small states sufficient reasoning to remain uninvolved. To refuse both was to claim a recognisable third way, and that refusal carried moral and political leverage. The United States-China rivalry offers no comparable choice. Because the competition revolves around material power accumulation rather than about opposing doctrines of human socio-political organisation, there is no ideological middle ground to occupy. Non-alignment has consequently shifted from a normative commitment into a bare functional necessity, through which the value of a state is measured by its material utility rather than by the principles it professes.
The second condition was the economics surrounding ideologically motivated concessional aid. During the Cold War, the superpowers used unconditional loans as instruments of influence-buying, often tolerating inefficiency in order to secure a geopolitical ally. That model has been replaced by transactional conditionality, where infrastructure financing now arrives at commercial rates and with strategic strings attached. Therefore, small states must increasingly manage their external relationships as exercises in commercial risk assessment rather than as long-term political partnerships. The economic crisis in 2022 taught Sri Lanka this lesson in the harshest possible form.
The third condition was the role of India. India served as a regional hegemon operating within an environment permissive enough to allow a tilt towards the Soviet Union despite policies of supposed non-alignment without breaking the system. That permissive environment is now long gone, and India has been moved away from non-alignment, and is now clearly aligned with Euro-American alliance formations in the Indo-Pacific security architecture as it is a member of the Quad alongside the United States, Japan, and Australia. Therefore, its integration into one pole’s security framework removes the regional umbrella under which smaller South Asian states once sheltered, thereby greatly narrowing the former neutral middle ground.
The implication is uncomfortable but apparent: that non-alignment as a nostalgic declaratory posture inherited from the Bandaranaike era, is no longer adequate in Sri Lanka’s current situation. What the current moment demands is a behavioural strategy calibrated to a system in which loyalty is transactional, and neutrality must be continuously defended rather than merely declared.
What hedging actually means
It is worth being precise about vocabulary, because instruments of foreign policy such as non-alignment and neutrality are routinely conflated in the contemporary Sri Lankan case. Neutrality is a legal status, codified in the laws of armed conflict and binding under international law, of the kind Switzerland and Austria have maintained for generations. Conversely, non-alignment is a political movement which emerged as a result of decolonisation and the rejection of bipolar bloc logic, with no formal legal basis. Hedging on the other hand, is strategic behaviour which is neither a legal status nor an ideological orientation. Hedging in particular has risen to prominence in the scholarly literature precisely because it describes how small states actually conduct themselves under conditions of great uncertainty.
To hedge is to seek insurance against an unknowable future by pursuing a set of deliberately ambiguous policies. A hedging state cooperates economically with one great power while maintaining security ties with another, declines to foreclose its options, and sends signals calibrated to avoid a final commitment to either side. The objective is to remain in a position to prosper whichever way the systemic contest resolves. In a polycentric world, where power is disaggregated and the outcome of great power competition is genuinely undetermined, hedging is not merely one option among several. It is the most rational posture available to a state that cannot afford to commit everything on a single prediction.
But it is imperative that states are aware that what they pursue is principled hedging, and not inadvertent hedging emerging from policy ambiguity due to an inability in managing foreign policy commitments. A state can arrive at an ambiguous posture by accident, oscillating between partners as governments change and circumstances shift, without any guiding strategy. This is merely drift, and it produces the appearance of hedging without its benefits, because the ambiguity is read by other states as incoherence rather than as deliberate insurance. Alternatively, a state can hedge by design, grounding its ambiguity in a stable doctrine that remains consistent across different administrations. The difference between the two is the difference between a state that great powers respect as a consistent actor, and one they treat as available to whoever applies the most pressure. Sri Lanka seems to fall into the latter category, as it unintentionally follows a hedging strategy under the guise of non-alignment and neutrality, both of which are already mutually exclusive themselves. It is not only policy ambiguity, but policy incoherence and amnesia that is affecting Sri Lanka.
Sri Lanka’s record and the test of the Iran moment
The pattern in Sri Lankan foreign policy attitudes since the end of the civil war has been to follow domestic politics rather than national strategy. The Rajapaksa governments of 2005 to 2015 turned toward China for non-interfering infrastructure capital that allowed them to bypass Western pressure over human rights. The Sirisena-Wickremesinghe administration of 2015 to 2019 attempted a corrective rebalancing toward India and the United States, only to struggle against the path dependency of debt projects already in motion. The return of the Rajapaksas in 2019 enabled them to revert to a pro-China orientation in a far more volatile global environment, and the absence of a coherent long-term strategy left the state without an economic safety net when the 2022 economic crisis arrived. Each shift reflected the worldview of the government in office rather than a durable conception of the national interest.
The Dissanayake administration came to office promising something different, a posture of principled neutrality intended to institutionalise strategic ambiguity as formal doctrine rather than as a reactive tool. The war in Iran became its first genuine test under acute pressure, and the way in which the administration handled it is the most instructive moment in recent Sri Lankan statecraft. On 26 February, two days before the war began, the government received two requests on the same day. The United States sought permission to land two combat aircraft at Mattala Rajapaksa International Airport, which were reportedly armed with anti-ship missiles and flying from a base in Djibouti. Meanwhile, Iran sought permission for three naval vessels to make a goodwill port call. The Dissanayake administration refused both. Refusing the United States alone would have appeared as a tilt toward Iran, and refusing Iran alone may have appeared as a deference to the United States. Refusing both was neither, but rather an explicit operationalisation of hedging.
The maritime sequence that followed showed the same doctrine under further strain. When the IRIS Dena was torpedoed off Galle, the Sri Lankan navy rescued thirty-two survivors and recovered the dead, an act that was humanitarian and obligatory rather than optional under the law of the sea. When the IRIS Bushehr, a second Iranian vessel, requested assistance with more than two hundred crew aboard, the government took custody of the ship and moved it to Trincomalee for safekeeping, having consulted both Iranian officials and the ship’s captain. To bring an Iranian naval vessel into a Sri Lankan port without seeking American or Indian pre-authorisation was a subtle but authentic assertion of interdependence sovereignty, and the president framed it explicitly as a matter of impartiality by insisting that the state would be neither biased toward any state nor submissive to any.
However, it would be misleading to present this as an uncomplicated success due to the domestic political costs. At parliament, the opposition argued that the government could have anticipated the crisis, and there were pointed allegations that Sri Lanka’s hesitation over the Iranian port-call request had left the IRIS Dena exposed in the waters where it was eventually sunk. Refusing the United States carried its own risks, including the prospect of a trade backlash at a moment when Sri Lanka remains acutely dependent on access to Western markets. The situation therefore indicates not only that principled hedging is operationally viable under pressure as it demonstrably was, but also that it is politically costly. Sri Lanka was not alone in paying such costs. In the very same week, Switzerland refused American requests for military access linked to the same war, citing its own long-established neutrality. This is an indication that even long-established neutral states must actively defend their position when great powers make demands.
What future policy prescriptions could Sri Lanka consider?
If the Iran moment proves anything, it is that no single strategy drawn from the canonical menu of balancing, bandwagoning, sheltering, and buck-passing is by itself adequate. What the situation appears to reward is a combination of four elements that could be considered.
The first is to treat principled neutrality as a standing doctrine rather than a reflex. Grounding each decision in international law, sovereignty norms, and humanitarian obligation gives Sri Lanka the most defensible position available to it, and the double denial showed that this is workable even under acute pressure. The value of articulating it as doctrine, rather than improvising it case by case, is that doctrine can be anticipated by others and remain consistent across governments.
The second is active sheltering: small states have always sought political, economic, and societal shelter from larger partners, and the question is whether they receive it by default or seek it deliberately on their own terms. For Sri Lanka, the most structurally available shelter is the relationship with India. Deepening that relationship would reduce the cost of resisting American and Chinese pressure simultaneously.
The third is strategic diversification, reconceived as a matter of national security rather than of economic policy. The closure of the Strait of Hormuz and the resulting energy shock demonstrated that single-source dependency in any critical sector is a vulnerability. Diversifying energy supply, trade partners, and remittance corridors is therefore not idealism but risk management, and the 2022 crisis already exposed the catastrophic cost of failing to do it.
The fourth is to make room for the costs of neutrality. Principled neutrality is not free, as refusing the United States at Mattala and caring for stranded Iranian sailors resulted in a loss of favour with Washington. A declining hegemon faces rising costs in maintaining the system it built, and small states that resist its pressure must expect to bear costs of their own. The ideal response is to identify those costs explicitly and account for them in national planning and pay them deliberately rather than absorb them reactively when a crisis arrives.
The window now open to Sri Lanka will not remain open indefinitely. As the contest between Washington and Beijing consolidates, the space for ambiguity will contract and the price of indecision will rise. Sri Lanka has demonstrated that it is capable of acting with doctrinal seriousness when compelled under difficult situations, as shown in the Iran case.
Therefore, the ideal policy prescription is to make that seriousness cohesive by institutionalising hedging as the permanent strategy of the state rather than the instinct of a temporary regime. The solution for small states in an age of emerging great power rivalry is neither exclusive commitment to one power nor availability to all, but a disciplined and deliberate plurality conducted on the state’s own terms and defended as a matter of principle.
Tarun Perera is a Junior Research Analyst at Verité Research, working primarily in its Law and Governance Unit. He is also a visiting lecturer at Royal Institute Campus, where he teaches modules in International Relations and Security Studies. His research interests include Critical Security Studies, International Political Theory, Comparative Foreign Policy Analysis, and Historical Sociology. He can be reached at tarunperera2003@gmail.com
Factum is an Asia-Pacific-focused think tank on International Relations, Tech Cooperation, and Strategic Communications accessible via www.factum.lk.
The views expressed here are the author’s own and do not necessarily reflect the organisation’s.
