Editorial: Moment of reckoning for Sri Lanka
It’s a tumultuous moment in the history of Sri Lanka whose fall from grace — from a reasonably stable economy, despite decades of ethnic war, to being caught in the worst financial crisis since independence — has shocked the world. The en masse resignation of all the 26 federal ministers amidst the raging public protests […]
It’s a tumultuous moment in the history of Sri Lanka whose fall from grace — from a reasonably stable economy, despite decades of ethnic war, to being caught in the worst financial crisis since independence — has shocked the world. The en masse resignation of all the 26 federal ministers amidst the raging public protests reflects the seriousness of the situation. A nationwide curfew has been imposed and tough laws have been invoked to allow the military to arrest and detain suspects while Internet service providers were ordered to block access to all social media platforms to stem the tide of public anger. It is a moment of reckoning for the ruling political clan comprising the Rajapaksa brothers who are being widely blamed for the unprecedented crisis. With depleting foreign currency reserves to pay for fuel imports, increasing power cuts lasting half a day or more, and shortages of food, medicines and fuel, the public fury has reached a new high. A critical lack of foreign currency has left the island nation struggling to service its ballooning $51-billion foreign debt, with the Covid-19 pandemic torpedoing vital revenues from tourism and remittances. Tourism, the bedrock of the Sri Lankan economy, was hit badly, first by the Easter bombings in 2019 and then, the pandemic. An ill-timed plan to promote organic farming has fuelled fertilizer shortages and a fall in agricultural output. From the geopolitical strategy point of view, the crisis has provided an opportunity for Sri Lanka and India to reset and deepen their relationship which had suffered a dent in recent times.
Apart from extending a $2.4 billion financial assistance, New Delhi has started work on a series of joint projects including the Trincomalee Oil Tank Farms, renewable power projects, and a cultural centre in Jaffna. This has generated a lot of goodwill for the country and strengthened its image as a dependable friend in the hour of crisis. However, a clear distinction must be made to send across a message that India’s involvement in helping the neighbouring country in clearing the economic mess is for the sake of the Sri Lankan people and not to bail out the discredited Rajapaksa clan. India’s initiatives have been commendable, given the fact that Colombo has been tilting towards China over the years. In fact, the island nation has become a victim of China’s debt trap policy. Sri Lanka’s foreign debt has increased steadily since 2014, reaching 41.3% of the GDP in 2019. The foreign exchange crisis has increased manifold because of its inability to meet its monetary obligations to China on several projects. Beijing’s Belt and Road Initiative (BRI) also allowed Sri Lanka to borrow commercial loans on infrastructure projects without strict conditionality, thus luring the island country into massive forex debt. The growing debt problem of Sri Lanka would certainly impact India’s security interests.
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