Not long ago, the Rajapaksha brothers were seen as war heroes by the Sinhalese majority. Mahinda Rajapaksha was elected president of Sri Lanka in 2005. Under his administration, the military managed to stop the South Asian nation’s almost three-decades-long civil war, ending in 2009. The conflict between the Sinhalese-dominated Sri Lankan government and the Liberation Tigers of Tamil Eelam insurgent group, which had expected to establish a separate state for the nation’s ethnic Tamil minority, who make up about 15% of the population of 22 million.
Mahinda remained in office until 2015, when he lost elections to the opposition. But the family made a comeback in 2019 when Gotabaya announced that he would run for president and promised to restore security. After Gotabaya assumed the presidency, he appointed Mahinda as prime minister. Not only this, but the family consolidated their control over the country by distributing various key positions to several other members of the family, making his brother Basil, finance minister, and another sibling Chamal, irrigation minister. His son Namal was appointed minister of sports and youth affairs. Instead of exponential growth, which Rajapaksha’s family was expecting through power dominance, what happened was the complete opposite, a series of failed and unpopular policies.
In 2019, the Rajapaksas enforced huge tax cuts to nurture political support, which eventually did hit the government finances. The Rajapaksa government’s decision to ban all chemical fertilizers in 2021, a move that was later inverted, also hit the country’s farm sector and initiated a drop in the critical rice crop. According to experts, such a forced push towards organic farming could halve the production of tea and other crops and lead to a food crisis that is actually more destructive than the existing one.
The tourism industry, which represents over 10% of the country’s Gross Domestic Product and brings in foreign exchange, has been hit painfully by the COVID-19 and 2019 Easter bombings. As a result, forex reserves have sunk from over $7.5 billion in 2019 to around $2.8 billion. With the supply of foreign exchange drying up, the amount of money that Sri Lankans have had to shell out to purchase the foreign exchange critical to import goods has increased. The country hinges laboriously on imports to meet even its necessary food supplies. So the price of food items has risen with the depreciating rupee. The Rajapaksa’s economic plan turned out to be a series of blunders and inaccurate bravado that led to the collapse of a once dynamic and economically promising South Asian nation.
“Knock Knock” Chinese are on the door! Chinese are already infamous for their debt trap strategy across Asia as well as in Africa. The Red Dragon, along with “wolf warrior” diplomats, targets vulnerable countries with a line of credits they also know the country won’t be able to pay back on them. In the case of Sri Lanka, you don’t need to be an expert to judge the importance of Sri Lanka’s geopolitical location, which diverged from the Indian subcontinent by the Gulf of Mannar and the Palk Strait. Making it strategically very important. Under China’s ‘Belt and Road initiative, the Chinese government has pumped billions into Sri Lanka in the form of both foreign investment and loans in contemporary years. This reliance on Chinese money is part of a long-standing Sri Lankan problem. With a major trade deficit, as well as crippling levels of debt, the country needs foreign money. China has rushed to fill the gap more exuberantly than anyone else. Each successive government proceeds for Chinese money just to quench current crises but does not focus on the consequences of it, which often makes the situation much worse. As a matter of fact, not only was Gotabaya responsible for such a high pile-up of debt but all the regimes that held the office prior.
In the face of severe economic misfortunes marked by power blackouts, and depletion of fuel, cooking oil, and food, protesters were demanding the resignation of the Rajapaksa-led government since March 2022. Tens of thousands of Sri Lankans took to the streets of Colombo, and while that included some opposition politicians, most protesters were average Sri Lankans from all ethnic backgrounds. While concentrated in Colombo, there were small protests in solidarity across Sri Lanka as almost all citizens were facing tough challenges. While largely peaceful, sporadic violence broke out, notably the burning of the prime minister’s residence and the occupation of the ceremonial presidential palace. After Gotabaya departed from Sri Lanka, protests continued against Wickremesinghe when he became president. Several protesters were injured after military and police action against them.
Sri Lanka’s economic and political doom sends a wake-up call to other countries and spotlights the menaces of sovereign debt in an era of geopolitical competition. Sri Lanka has been an arena for competition for India and China (and to some extent Japan), all of whom have chronological relations with the island nation. The Rajapaksa regime pleaded close relations with China, but ultimately India was most helpful in the crisis. The World can contribute to improving the current Economic condition of Sri Lanka right now through 2 major measures. The twofold measures start with primarily negotiating with Sri Lanka to restructure loans held by countries like China, India, Japan, and commercial lenders. Another measure that can be taken is providing adequate FDIs, which can help rebuild the country. More elevated levels of FDI would also intensify exports, foster growth, and assist the government in putting its debt on more bearable ground. For that, too, the upcoming government in Sri Lanka must take action to ease the business operations in the country and tempt the companies who would like to invest, using their admiringly literate workforce and prospects for investment in tourism.
Members of the QUAD alliance (India, United States, Australia, and Japan) have declared various levels of support for the Sri Lankan economy. At the G-7 Summit, President Biden announced a $20 million dollars of relief package, bringing the total U.S. commitments in 2022 for economic and humanitarian assistance to $32 million. India has sent over $3.8 billion in the form of currency swaps, loans, food, and fuel aid. Further, Sri Lankan president Ranil Wickremesinghe announced that he hopes to visit New Delhi to discuss the crises soon.