Written by Harsh V Pant
Finally, the President of Sri Lanka, Gotabhaya Rajapaksa, delivered the speech and he spoke under pressure. After months of refusing to take decisive action to stem the tide of impending economic and political collapse, the Sri Lankan people forced him to come out of his slump and reach for land development. Although he himself refused to resign, he had to accept the demands of the new prime minister as well as the promise to introduce major constitutional reforms to curb his power. His elder brother, Mahinda Rajapaksa, was forced to resign as prime minister earlier this week after violence erupted after his supporters attacked anti-government protesters and his residence was set on fire at the Trincomalee naval base.
The anger of the people of the island state is directed towards the Rajapaksa dynasty and it is unlikely that Gotabaya will be able to escape their wrath. But he has few options left because he is involved in a divisive politics of his divided nation that is looking for anarchy if the political leadership does not unite quickly. Sri Lanka’s central bank governor Nandalal Warasinghe has suggested that the country’s economy would “collapse beyond redemption” unless a new government is appointed in a few days and if political stability is not achieved within two weeks, they are reportedly considering resigning. This is happening even as the country’s military has had to shell out reports of an impending coup. The military is returning to the center of a rapidly evolving political and economic crisis.
The worst economic crisis that Sri Lanka has faced in post-independence history and the real tragedy is that for weeks no one seemed to be in charge. The Rajapaksa dynasty is blamed for the mismanagement of an economy that was relatively good only a few years ago. Mahinda and her son, Namal, as well as her brothers, Basil and Chamal, all had to go, and yet they are unlikely to feel betrayed by the cruelty of this dynasty on the streets of Sri Lanka. Gotbayer’s political future is on the line and so far, he has performed miserably in the face of a crisis that has shown no signs of abating.
The current anarchy in Sri Lanka is certainly an act of economic mismanagement by successive governments over the past few years, although it was pronounced by an untimely tax cut promised by Gotabaya in the 2019 elections. Then came the Covid-19 epidemic that proved disastrous for a nation that relied on tourism for economic sustenance as well as being one of its largest foreign exchange earners. As foreign exchange reserves plummeted, economic decision-making in Sri Lanka went from bad to worse. The government decided to ban chemical fertilizers in 2021 only to reverse that decision later, but it had a detrimental effect on agricultural production. With the Sri Lankan rupee depreciating, provoking acute shortages of basic items such as food, fuel and medical supplies, frustrated people have no choice but to take to the streets and voice their grievances to the administration. Tone deaf
Another aspect of this story of gross economic mismanagement is China’s role in the crisis. Colombo had to suspend its foreign loan disbursement, mainly due to its inability to lend from China, which was used extensively for financing, rather than for useless, infrastructure projects. China, using its friendship with Mahinda Rajapaksa, has signed an agreement to build the port of Hambantota and the adjacent airport in its constituency Mattala. Mahindra’s successor, Maithripala Sirisena, came to office seeking to reduce Sri Lanka’s dependence on China, but gave the port of Hambantota to China not only with a 99-year lease but also with a provision to extend it for another 99 years.
Sri Lanka owes $ 6.5 billion to China, which today emerged as a textbook example of China’s debt trap diplomacy. Negotiations with China on debt restructuring have not been very fruitful. Although China agreed to strengthen Sri Lanka’s foreign exchange reserves by exchanging the Sri Lankan rupee for its currency, the renminbi, it was reluctant to move forward after the International Monetary Fund came into the picture and withdrew its hand rather than Sri Lanka. So far the Sri Lankan crisis.
Political stalemate made it difficult for Sri Lanka to negotiate a bailout package with the IMF. After Vikramasinghe’s former deputy Sajith Premadasa refused the presidency, Gotabaya rushed to appoint former Prime Minister Ranil Wickremesinghe as the 26th Prime Minister of Sri Lanka. The main invitation to become the Prime Minister. Sri Lankan politics remain divided, but it is hoped that Vikramasinghe will be able to restore global confidence in the island nation’s ability to manage its economic future.
Indian diplomacy has so far been quite flexible compared to Sri Lanka. It has adapted to the rapidly changing ground realities প্রথমে first by reaching out to the Rajapaksa administration when they voted with an absolute majority in 2019 and more recently by helping Sri Lanka cope with the economic crisis. The aid includes a খেলা 2.4 billion loan default to help Colombo, a diesel shipment under the $ 500 million credit line, and a $ 1 billion credit line for importing essential items, including food and medicine. Ignoring some irresponsible suggestion that India should consider sending troops to Sri Lanka, New Delhi is right to claim that they remain “fully supportive” of Sri Lanka’s “democracy, stability and economic recovery” and its promotion is “driven by the best interests” Revealed through the process.
This is a crisis that Sri Lanka will have to respond to in the end. New Delhi may lend a helping hand as a responsible neighbor, but Sri Lanka’s future will be determined by the political establishment of the island nation, which has its own responsibility to adequately respond to the aspirations of its people.
Vice-President of Author Studies, Observer Research Foundation, New Delhi; Professor, International Relations, King’s College London