A sudden rupture demands choices about the foundations the society will establish for the future. The authorities in Colombo ignored the brewing economic factors for months and this led to a sudden rupture in Sri Lanka’s political arena. Thousands of people protested against the severe economic crisis. They fought to remove the autocratic rule of President Gotabaya Rajapaksa and his family.
By Asanga Abeyagoonasekera*
From its inception, Sri Lanka’s leadership under President Gotabaya Rajapaksa was a perfect fit for Moises Naim’s definition of a ‘3P Autocrat’ where “political leaders who reach power through a democratic election and then set out to dismantle the checks on executive power through populism, polarisation and post-truth”. Removing checks and balances through constitutional amendment and using populism and ultra-nationalist sentiments to polarise the society are centrifugal forces further exacerbated by post-truth, which deteriorated the nation’s political economy.
The people’s protests outside the President’s house had a ripple effect on the entire nation. The situation was further aggravated when the regime labelled the protesters as extremists and made multiple arrests. The false national security pretext backfired, with hundreds of lawyers appearing on behalf of the detained protesters. Many, including students, judiciary members, farmers and families, were voicing the same slogan, “No more Rajapaksas”. After the initial protest, the immediate social media block fumed hate towards the regime, seeing it as an attempt to further suppress democratic rights. The public turned to using virtual private networks to access social media, multiplying domestic outreach and global support. Within days, all the Cabinet ministers handed their resignation; nobody wanted to own the mismanagement of the political-economic dysfunctionality. Senior ministers feared the influence of the Rajapaksa family, with the President’s brother as the prime minister, another sibling as the finance minister and several family members holding key positions. This time, people’s power has dislodged the family reign. Some of the family members and their financiers are already fleeing the country.
In an attempt to instil stability, Gotabaya reappointed four new Cabinet members. This backfired with protestors calling his attempt “a game of musical chairs” and continued demands for a fresh start with new faces and new leadership. The newly appointed finance minister submitted his resignation a day after being appointed. An immediate response for the people would be for Gotabaya to step down rather than assign the handling of mismanagement to others. Another plausible option is for the parliamentary majority to dissolve the government and call for an election. If the protestors’ demands are unmet, the situation could spiral out of control and potentially lead to anarchy. South Asia is a place where military regime instalments have been exercised, and Sri Lanka is not far from this if the democratic wheels do not turn in the right direction.
The economic crisis has, however, overshadowed everything else. Currently, Sri Lanka faces its worst economic crisis, a by-product of the COVID-19 pandemic and the snowballing of disastrous policy prescriptions from regime to regime. It finally resulted in a liquidity problem with minimum foreign reserves and insolvency and the inability to repay accumulated debt. According to The Economist, “a quieter disaster is breaking out in smaller international locations…Sri Lanka, Tunisia, Lebanon and Ghana are all candidates for mortgage programmes from the International Monetary Fund [IMF]”. The pandemic has crippled most of these nations, especially their loss of tourism income and remittances from overseas employees. Other factors in Sri Lanka, such as the accumulation of a massive debt percentage and inward-looking economic policies like the chemical fertiliser ban, are direct factors contributing to the crisis.
Weeks before the crisis, Sri Lanka secured multiple loans worth US$2.5 billion (S$3.4 billion) from China while also requesting assistance from the IMF. The Chinese loans could increase the debt portfolio and dependency, putting Sri Lanka’s balanced foreign policy at risk. Chinese Ambassador to Sri Lanka, Qi Zhenhong, mentioned that Beijing is considering billion dollars’ worth of buyers credit to help the country. Since 2020, China has provided the country US$2.8 billion (S$3.8 billion), including US$1.5 (S$2 billion) billion in currency swap in 2021. Chinese companies have invested nearly US$1.05 billion (S$1.4 billion) in Colombo Port City, and 43 companies have signed agreements to start businesses in the industrial zone in Hambantota.
While the ‘debt-trap diplomacy’ is debunked with narrow presumptions based on quantifying the volume of Chinese loans, Gotabaya’s regime has allowed for Chinese ‘strategic-trap diplomacy’ in Sri Lanka. This trap was on Chinese involvement in three areas. First, Sri Lanka’s political sphere altered the democratic model by accepting autocratic sentiments. Second, China and Sri Lanka have mutually expressed support for each other in the face of their respective allegations of human rights violations from the United Nations. Third, Beijing has provided much military and surveillance assistance to the island state.
Last year, I warned that the economic and political dysfunctionality would brew out of control. The soaring essential food prices have become unbearable to many individuals. Parliamentarian Harsha De Silva cautioned of a possible state bank default and that the dollar could not be sold above LKR200. His warning became a reality as the dollar rate has reached close to LKR300. The chain effect will be unbearable to the domestic banking sector. Unfortunately, little has been done to address the impact.
Several people have died while waiting in long queues for fuel. Island-wide electricity blackouts have impacted manufacturing industries and the middle class, heightening the social narrative against the regime. The demonstrations and unhappiness have reached a threshold beyond governmental control. Against this backdrop, the Gotabaya regime has finally abandoned its inward-looking economic policies and appointed an advisory committee to address the debt crisis and seek IMF assistance.
Moving forward, what is required is an immediate course correction to engage the IMF, instil relevant economic measures and pursue restructuring efforts to stabilise the country. Political stability requires an overall approach to end autocracy, restore democracy and build accountability measures to fight corruption. The rupture in Sri Lanka’s political economy is also an opportunity to pursue objective choices and prudent economic policy that will strengthen the foundation of democracy.
About the author: Mr Asanga Abeyagoonasekera is an international security and geopolitics analyst and strategic advisor from Sri Lanka. He can be contacted at [email protected]. The author bears full responsibility for the facts cited and opinions expressed in this paper.
Source: This article was published by ISAS