No short-cuts to ease Sri Lankan crisis

Sri Lanka is neck deep in crisis. The current political denouement has arrived in the wake of an economic crisis that began when the nation defaulted on payment of $7 billion of the foreign debt –of the total $51 billion—in May.

Since then there has been no end to the woes of the 22 million residents of the island nation due to rising cost of food, shortage of fuel, fertilisers and medicines. With virtually no alternative source of energy, severe power cuts submerge major parts of the island during nights allowing criminals to have a free run. The downward spiral of the currency has been relentless.

The popular ire which initially manifested in street protests assumed violent overtones and has finally resulted in the homes of the prime minister being set aflame and official residence of the President being ransacked by angry protestors.

Prime Minister Mahinda Rajapaksa who resigned two months ago was replaced by veteran politician Ranil Wickremsinghe who is being asked to resign. President Gotabaya Rajapaksa has fled his official residence and is reportedly under the protection of the Navy in a ship moored away at a safe distance. His exact whereabouts are not known even as these lines are being written.

Political uncertainty looms large over the island which had stamped out the last remnants of the insurgency in the northern province only 13 years ago. The crisis has long been in the making. The end of the insurgency had boosted the morale of politicians and parties championing the Sinhala majoritarian interests thereby causing dents in the emotional integration of an essentially ethnically diverse nation where Tamilians constitute nearly 20% of the population and Muslims and Christians make up over eight per cent.

An attack by the Islamist fundamentalist organization with links with ISIS on churches in Colombo in 2019 sent shock waves and scared away tourists, the main source of foreign exchange for the tiny nation. The Rajapaksas rode to a landslide victory in 2020 promising a thorough cleansing of malcontents.

Gotabaya who won a two-thirds victory in the Presidential election, appointed his older brother Mahinda as the Prime Minister. With several important portfolios concentrated in the hands of members of the extended families, hubris kicked in. Several unnecessary infrastructure projects were taken up which stand as testimony to the fiscal profligacy of the family-based regime, albeit popularly elected. Populist tax concessions to cronies deprived the Government of revenue to the tune of $1.4 billion.

The Russian invasion of Ukraine affected import of wheat and cut supplies of fertilisers leading to failure of paddy and other staple crops. Mismanagement, cronyism and corruption had had a field day in the country and stemmed mainly from the absolute control of the nation in few hands.

As of now Sri Lanka needs $6.5 billion to stay afloat by servicing the $51 billion debt and seeks further loans from the world nations. It has been negotiating a $3 billion bailout loan with the International Monetary Fund (IMF). It will have to oblige the Fund by raising interest rates and withdrawing cuts in taxes. India has committed $1.9 billion to finance necessary imports.

Whatever turn the politics of the tiny nation may take in the days ahead, the new incumbents will need to ensure democratization of the decisionmaking process and prioritize popular needs over ego-boasting megalomaniac projects. There are simply no short-cuts for the crisis to ease.