#SriLankanCrisis: Sri Lanka's economy ruined due to China's BRI
March 30, 2023
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#SriLankanCrisis: Sri Lanka’s economy ruined due to China’s BRI

By signing the BRI project with China, Sri Lanka had allowed itself to be placed on the chopping block. Coupled with Debt crisis, social unrest, Islamic radicalism, lopsided economic and farm policies have brought the Island Nation to its knees

Manish Anand by Manish Anand
Jul 18, 2022, 01:19 pm IST
in World, Analysis
c outrage against Sri Lankan Government and its administrative machinery is unprecedeented

c outrage against Sri Lankan Government and its administrative machinery is unprecedeented

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Popular anger against the Government of Sri Lanka was manifested on July 9 in Colombo resulting in protesters using their full energy in attacking the Presidential building. By then the Sri Lankan President Gotabaya Rajapaksa had fled. Before him, his brother Mahinda Rajapaksa, who was Prime Minister of the country, too had fled. The “Go Gotta Go” campaign led from Galle Face, the nerve centre of the protest against Gotabaya Rajapaksa, seems to have reached its conclusion.

The Galle Face protest, lasting more than 80 days, gave expression to the seething anger among the people against the financial collapse of the island nation, has largely been peaceful, barring the attack on Prime Minister Ranil Wickremesinghe’s private residence. It was torched in Colombo. There had been a few incidents of violence in the early days when Mahinda Rajapaksa had sought to bully the protesters in a clear sign of arrogance having overwhelmed the ruling family of the island nation.

Ruling Elites Flee

Five days after he went into hiding, Gotabaya Rajapaksa fled the country, with reports suggesting that his first stop would be the Maldivian capital Male and afterwards he would seek shelter in another Asian country. This was after the immigration officials at the airport refused to visit the VIP lounge to stamp his passport, which made him miss multiple flights out of the country. Gotabaya Rajapaksa was indeed afraid to get his passport stamped, fearing the people in the airport. At last, he had to flee in the Sri Lankan Air Force plane out of the country on the last day of his Presidency.

On July 13, Gotabaya Rajapaksa was support to finally give up the Presidency of the country, while the Sri Lankan Parliament is expected to elect his successor on July 20. Prime Minister Renil Wickremesinghe has also quit, while being in the office only for a few weeks, after an all-party meeting which agreed on the roadmap ahead following the Rajapaksa brothers fleeing Colombo.

Clinging On To His Chair

The diplomatic community is perplexed as to why Gotabaya Rajapaksa hung on for so long when he knew that the people didn’t want to see him in the office for even one day. And what exactly is the significance of July 13 that he waited to finally resign from his post. Yet, life seems to have come full circle for Gotabaya Rajapaksa, the former powerful Defence Minister of the island nation, who was hailed for victory in war against the Liberation Tigers of Tamil Eelam (LTTE). His popularity had been at peak not long ago, and now he has been reduced to the status of a national disgrace. This happened in a quick space, after the 2019 Easter terror attack and the COVID-19 pandemic.

Indonesian Parallel

Before we dig deeper into the Sri Lankan systematic malaise, it will not be out of place to appreciate the restraint of the people, who have been facing an unprecedented crisis amid shortages of essential goods for months. This is in contrast to what had happened in Indonesia on May 4, 1998.

Suharto had been the President of Indonesia for 32 years and ran the country with an iron hand, while his excesses were seemingly ignored, as the East Asian country roared with the economic advancements by reaping the early benefits of globalisation. But he was a despot and undemocratic. People there ran out of patience on May 4, 1998 and in the course of over a month more than a thousand people lost their lives, while several were injured and hundreds of women were raped, as arson and violence gripped the whole country. The people at last prevailed and Indonesia got democracy.

There’s a stark similarity between Gotabaya Rajapaksa and Suharto, both were forced out of their offices by the people. But the Sri Lankan people have ensured that the island nation escaped the fury of 1998 in Indonesia, and the police and the military establishment must not have taken the full orders from their President.

While the people of Indonesia had also gained from the early benefits of globalisation, Sri Lankans too enjoyed a good standard of life, with the human development indicators of the island nation being at par with some of the developed countries. The GDP per capita income was in excess of neighbours, including India. The economy was healthy, and the people enjoyed all the benefits of a middle income country after the war with the LTTE ended.

Economy Ruined Due To BRI

But the people ignored the malaise that had been taking the cancerous form, as the foreign debt piled up and populist policies became the norms of the political parties there, and the government went on a spree to collect easy money through loans at much higher rates of interest. Sri Lankan economy had turned into a sitting duck, which was slayed by the twin blows of the 2019 Easter terror attack and the 2020 COVID-19 outbreak. But the economy of the island nation was put to the chopping block when Sri Lanka signed the Belt and Road Initiative (BRI) of China. The diplomatic community world over has been well aware of the ways the BRI rolled on to crush the health of the finances of not less than 60 countries, spread over in Asia, Africa, Latin America and even Europe.

Dragon’s Debt Fire

The modus operandi of the BRI was simple – bribe the ruling elites, fund unproductive assets which will be built by the Chinese firms, trap the countries in debt by adding on to costlier loans, usurp the assets built for 99-year lease, and ultimately lord over a financial colony for strategic gains. Sri Lanka willfully walked into Beijing’s trap, which was indeed a part of the pearl of strings set up against India in the Bay of Bengal, Indian Ocean and the Arabian Sea. China controlled the ports, which were built as part of the BRI, in Pakistan, Sri Lanka, Myanmar and east Africa to throw a ring against India with the aim to choke its maritime autonomy and also dictate global trade.

Public anger against the island nations’s heads of Government is understandable given their indifference to the plight of the common man

China controlled the ports, which were built as part of the BRI, in Pakistan, Sri Lanka, Myanmar and east Africa to throw a ring against India with the aim to choke its maritime autonomy and also dictate global trade

In the pursuit of its objectives, China bribed the ruling elites in such countries. The Chinese bids to influence the economies and politics of Myanmar, Nepal, Maldives, Pakistan and Afghanistan are well-known among the strategic affairs commentators.

The 2019 Easter terror attack jolted the Sri Lankan economy out of its slumber, for the international tourists became hesitant to come to the island nation. The foreign currency reserves began dipping. The COVID-19 pandemic broke the backbone of the tourism industry, while also choking the remittances sent by the expatriates, as the Sri Lankans lost their jobs in other countries. The debt-funded economic comforts crumbled. The arrogance of power fooled Gotabaya Rajapaksa to go fully organic, banning the imports of fertilisers in May 2021, which was partially lifted within six months after the agricultural productions crashed. But by then the Sri Lankan economy had begun bleeding excessively, and Beijing had shut down half of China as part of its “Zero Covid Policy”, which gave its President Xi Jinping an alibi to turn the deaf ears to the pleas of the ruling elites in Colombo for additional loans. China by then became convinced that the financial defaults by countries trapped by Beijing in debts are on the cards, and extending additional financial commitments would become tough to recover. China is already known to be a Shylock in the financial world, as Beijing never forgives loans given to others.

India Is Friend Next Door

India, true to its tradition, rushed with humanitarian aid besides extending line of credits to help Colombo source oil, cooking gas, food and other essential goods. While Sri Lanka is negotiating a bailout package of about USD 4 billion, India has already committed USD 3.8 billion to the island nation. India’s Foreign Minister Nirmala Sitharaman has been keeping a close watch on Sri Lanka’s economic distress, while also reaching out to the multilateral agencies for the much needed financial help. India has shown by its deeds that New Delhi indeed swears by her neighbourhood first policy, which was seen much in action during the COVID-19 pandemic when vaccines and medicines were provided to Kathmandu, Thimphu, Dhaka, Colombo, Male, besides others on priority.

AatmaNirbharta Is The Key

The world is watching Sri Lanka closely and China indeed stands exposed for making countries financially weak and dependent. This is in contrast to India’s small island development partnership, as seen in countries like Mauritius, where New Delhi funds only such projects  which are desired by the local people to help them boost their livelihoods.

Demonstrators entering the residence of President Gotabaya Rajapaksa of Sri Lanka

While Sri Lanka sought to keep her economy afloat with excessive foreign debts, which included several bailout packages from the International Monetary Fund (IMF) in the last few decades, it’s evident that AatmaNirbharta is an insurance against external shocks

While Sri Lanka sought to keep her economy afloat with excessive foreign debts, which included several bailout packages from the International Monetary Fund (IMF) in the last few decades, it’s evident that AatmaNirbharta is an insurance against external shocks. The developing countries, including Sri Lanka, are dependent on imports of oil and food, which need to be bought in foreign currency and that in turn needs to be earned, while its absence could only lead to a situation where Colombo currently is stuck.

Topics: Sri Lankan CrisisPopular anger against the Government of Sri LankaLiberation Tigers of Tamil EelamBRI rolledChina controlled the portsInternational Monetary FundGotabaya Rajapaksa
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