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Bad politics, bad management, bad luck: Why Sri Lanka reels

The Roots Of The Country’s Troubles Are Deep. Getting Rid Of The Rajapaksa Clan Won’t Be Enough To Get Sri Lanka Out Of Its Predicament.

A person holds a placard demanding Sri Lanka's President Gotabaya Rajapaksa to resign on April 5, 2022. PHOTO: REUTERS

In the last years of the quarter century of civil war that ended in 2009, it is said the fish in the seas around Sri Lanka used to die of old age - to control arms smuggling fuelling the insurgency, Colombo had banned boats with outboard motors from putting out to sea.

These days, the boats aren't going out for another reason.

Thirteen years after the Tamil insurgency was put down in near-genocidal circumstances, leading to hope that this beautiful island in the Indian Ocean will finally redeem its promise and leap to upper middle-income status, there is no fuel for fishermen. That's because the government's foreign exchange coffers are bone dry amid escalating oil prices, and it doesn't have the money to pay for the oil in tankers waiting to discharge.

What little diesel is available is so pricey. Ditto for petrol and cooking gas. People have dropped dead waiting in line to buy fuel. Thirteen-hour power brownouts are the norm. Cellphone towers cannot transmit signals because they cannot function without power. Doctors are unable to treat patients for lack of drugs. Scenes of an unprecedented popular uprising are being relayed from the nation's streets.

Read Also: Sri Lanka crisis entirely of its own making

The person responsible for the situation then and now is the same: the former defence secretary, now President Gotabaya Rajapaksa, who comes from the nation's first family of politics.

In a time of acute shortages, only the Rajapaksas seem plentiful. Until last week, when there was a mass resignation of the Cabinet in a bow to public opinion, no fewer than three siblings and a nephew of the President had Cabinet positions. They included the President's older brother and predecessor in office, Mahinda, now Prime Minister. One Mahinda son, Yoshitha, is his father's chief of staff, while another son was also his Cabinet colleague as sports minister.

Some time ago, Sri Lanka went through a constitutional amendment so that presidential brother Basil, who has dual United States citizenship, could be a minister. Basil held the finance portfolio formerly held by Mahinda.

President Gotabaya Rajapaksa, popularly known as Gota, was once admired as the focused strategist who, as defence secretary, ended the Tamil insurgency.

The victory he fashioned along with the army chief, General Sarath Fonseka, was a decisive one, albeit effected with horrific mass casualties. It set the Rajapaksa clan, who are from the island's southern tip and removed from Colombo's snobbish political elite, for a long run in power.

Today, the island is paying a steep price for this family dominance of politics, and by extension, the patronage-oiled levers of the economy. Cries of "Gota, go home" rent the air - Gotabaya was a US resident until he returned to help Mahinda in the war effort. While he once lined up Tamil insurgents in his cross hairs, today the public is taking aim at Gota himself.

When the rot started

Yet, the Rajapaksas are not the only ones to blame for the morass. Others were equally inept.

The national government that ousted Mahinda after an inner-party coup and took power in 2015 proved rickety from the start and was paralysed by feuds. Under it, the economy slowed and the trade deficit widened.

Capture while

While the current situation is stunning for its disarray - the finance minister who this week replaced Basil quit a day later - macroeconomic instability has been endemic to the island for the past four decades. During this period, the country spent two-thirds of the time hand-held by the International Monetary Fund's (IMF) stabilisation programmes. In its neighbourhood, only Pakistan's economy has spent more time under the Fund's supervision. Bangladesh, which has had IMF programmes for about half of those years and proved to be a strong pupil, has even extended a series of credit lines to Sri Lanka lately.

Then, there was the island's tiresome ethno-religious politics.

Sri Lanka's best chance to emerge from its quagmire was its crushing of the Tamil revolt - made possible because of material and intelligence help from India, at the time run by a coalition presided over by Congress Party chief Sonia Gandhi whose husband had been assassinated in 1991 by a suicide bomber dispatched by the Liberation Tigers of Tamil Eelam.

Rather than use the opportunity of the war's end to try to heal national divisions over ethnicity and language, the Rajapaksas went the other way, encouraging a wave of Sinhala triumphalism. Alongside, they opened fresh economic and strategic channels with Beijing, triggering age-old insecurities in New Delhi about having to deal with threats from its southern flank.

With the Tamils vanquished and sullen, hardline Sinhala Buddhists looked for new enemies and found them in the island's Muslims, who form about a tenth of the population, influenced in part by Myanmar's crackdown on Rohingya Muslims. Violence between the communities has simmered since 2012. In 2014, communal riots displaced thousands of people and left four dead. In the first quarter of 2018, a series of religious riots targeting the Muslim community was reported. A violent response ensued and the government briefly imposed a state of emergency.

The pity's that Sri Lankan Muslims have always been loyal citizens, even as they are Tamil speakers, and had stayed away from the ethnic conflict between Sinhalas and Tamils. Now, the community found itself in an unfamiliar place, looked upon with suspicion at a time when, internally, it was struggling with Salafi and Wahhabi influences.

That may have led to the 2019 Easter Day bombings of churches and hotels in Colombo that claimed 250 lives. The Rajapaksas were not in charge at the time but the brothers surely share responsibility; their actions in office had lit some of the fires.

Sri Lanka's external economy rests on something of a tripod: tourism receipts, tea exports, and remittances - the last principally from the oil-rich states of West Asia where thousands of Sri Lankans have found jobs.

The Easter bombings hammered tourist arrivals and earnings. From 2.52 million visitors and US$5.6 billion (S$7.6 billion) earned from them in 2018, the figures slid to 2.03 million and US$4.7 billion the following year. Then came the pandemic; arrivals in 2020 dropped to 540,000 and earnings to less than US$1.1 billion.

The economy's wheeze began to be pitiable.

However, the bombings gave the Rajapaksas a political windfall with majority Sinhalas in the late-2019 polls. This time the campaign was led by Gotabaya, who came through handsomely. Unsurprisingly, he chose to take his oath of office not in the capital Colombo, but in a Buddhist temple in the heartland city of Anuradhapura, erected for a Sinhala king who defeated Tamil invaders two millennia ago.

Gota remained popular through the first year of the pandemic - his image of well-intentioned, efficient do-gooder stuck with the people. But things began to sour last year. If the devastation to tourism can be blamed on a concatenation of circumstances, the damage to the tea industry - and agriculture in general - was an out-and-out self-goal.

The stunning ban on the import of chemical fertiliser, ostensibly to turn Sri Lanka into a hub of organically grown commodities but possibly triggered by the need to conserve scarce foreign exchange, devastated tea and other agricultural produce by slashing crop yields. The previous government of Maithripala Sirisena had toyed with similar ideas but Gota followed through on them. Meanwhile, the pandemic played its part - remittances plunged as West Asian businesses cut staff and sent expatriate workers home. Sri Lanka was now in a perfect storm.

Who will save Sri Lanka?

It is not clear what options exist for the country of 22 million. Clearly, public anger is so deep that it has become untenable for the Rajapaksas to stick around; brother Basil's exit from the Cabinet suggests a deliberate distancing that could lay the groundwork for an eventual bid for the top job.

There is talk that the brothers are even willing to offer the prime minister's slot to Mr Ranil Wickremesinghe, their nemesis in the United National Party, who has held the job before. But Mr Wickremesinghe is in no hurry to accept the poisoned chalice that is Sri Lanka and is said to want a repeal of the 20th Amendment that confers sweeping powers on the executive presidency before he will consider being prime minister. Some think a stop-gap leader until fresh elections could be Mr Dinesh Gunawardena who was, until recently, Gota's education minister.

Neither the US, nor India, is in a hurry to bail out Sri Lanka, thanks to the pro-Beijing turn that the nation took in recent years. The US has been pursuing a visiting forces agreement with Sri Lanka for some years.

China is said to be considering up to US$2.5 billion in credit support for the stricken Sri Lankan economy.

The eventual solution may include a return to the IMF - which would be the 17th time since 1965 that Sri Lanka has needed IMF funding. The Fund would no doubt insist on seeing the budget deficit trimmed and perhaps recommend holders of Sri Lankan bonds taking a haircut.

A US$1 billion Sri Lankan note due in July was trading at 57.6 cents to the dollar as these words were written, suggesting the market expects such a turn. Among the principal holders of the paper is said to be a Chinese-owned entity based in the Caribbean.

India has helped to an extent, with some US$2.5 billion of assistance, but it also has extracted a price. Recent deals on a key port terminal in Colombo harbour and power projects in northern Sri Lanka have gone to companies controlled by Indian tycoon Gautam Adani, who is well connected in New Delhi.

Sri Lankans are asking if India could not dip into its 21/2 months' of oil reserves and US$634 billion of forex reserves to aid a neighbour in distress. A more sentimental government in New Delhi may have obliged, but Mr Narendra Modi runs one of the most transactional administrations India has seen.

Most people who travel around the Indian subcontinent come away thinking of Sri Lanka as the most attractive spot in the region, a fairy tale land of glades, forests, hills and beaches. Sadly, the fairy tale extends to the myths that continue to bedevil its people.

Genetic studies show that Sri Lankan Sinhalese and Tamils share a large gene pool, but the hegemony of a Sinhala race myth prevails, nevertheless. The minority Muslims sway to an Arab myth and call themselves "Moors" and "Malays", forgetting that South Indian blood courses through their veins.

They do so because the figures who seek to aggregate their numbers into vote banks find it convenient to fuel the fantasy, often triggering the violent instincts that seem to lurk below the surface of an outwardly warm and friendly people.

Two hundred years ago, the poet Reginald Heber sang that while every prospect about Ceylon, as it was then called, was a pleasing one, "only man is vile".

You could say that again today. The nation that once fetched comparisons with Scandinavia's social indices is increasingly looking like a Peronist nightmare.