Tharoor Line | No end to Lankan misery
23/July/2022
The situation in Sri Lanka seems to show no signs of easy resolution. On Wednesday, the Sri Lankan Parliament elected six-time Prime Minister Ranil Wickramasinghe as President. But it is far from certain that an election by the present Parliament will solve the problems that have arisen in recent months, or heal the gaping divisions in a deeply divided and fractured society. How did this beautiful and once prosperous island, which reminds so many of Kerala, descend to this state? The unravelling of Sri Lanka is an object lesson in political and economic mismanagement which all developing nations, including ours, should read as a cautionary tale. The first problem was the concentration of power in one family. Former President Mahinda Rajapaksa, on returning to an electoral majority two years ago after being ousted by a former ally five years earlier, became Prime Minister this time, unable under the Constitution to serve another term as President. But he found a simple expedient to fill the President’s slot for which he was now ineligible: he appointed his brother, Gotabaya, to the job. For good measure he also strewed the government with more Rajapaksas: his brother Basil, as finance minister; yet another brother, Chamal, as Speaker and his son, Namal, as another minister (for sports and youth affairs). RELATED ARTICLES UK's Truss sacrifices finance minister, scraps tax plan in fight to survive WORLD UK's Truss sacrifices finance minister, scraps tax plan in fight to survive India, one of the world's fastest growing large economies: IMF NEWS India, one of the world's fastest growing large economies: IMF SRI-LANKA-CRISIS Anti-government demonstrators set fire on the house owned by minister Sanath Nishantha of resigned Prime Minister Mahinda Rajapaksa's cabinet after ruling party supporters stormed anti-govt protest camp, amid the country's economic crisis, in Arachchikattuwa, Sri Lanka, April May 9, 2022. REUTERS/Stringer Even that was not enough for the Rajapaksas: Chamal’s son, Shashindra, was given the Agriculture portfolio, Mahinda’s brother-in-law, Nishantha Wikramasinghe, was appointed head of Sri Lankan airlines, and Mahinda’s other son, Yoshita, became the all-powerful Prime Minister’s chief of staff. If, in India, many have frustrations about dynastic politics, this was family rule taken to an extreme. It helped, of course, that the Opposition was in total disarray and unable to resist this sweeping takeover of the country by a single family. But the general public watched in growing dismay as the Rajapaksas added economic incompetence to their political domination. The government started accumulating unpaid debts, amounting to over $54 billion by the beginning of the year. One of the Rajapaksas got the brilliant idea of saving money by adopting the fad of “organic farming” to eliminate expensive fertiliser imports. SRI-LANKA-CRISIS Demonstrators gather outside the office of Sri Lanka's Prime Minister Ranil Wickremesinghe, amid the country's economic crisis, in Colombo, Sri Lanka July 13, 2022. REUTERS/Adnan Abidi Without taking the trouble to study the practice and the economics of organic cultivation, the government switched the nation’s agriculture system overnight. Of course, this brought Sri Lanka’s massive imports of chemical fertilizer to a halt, reducing the government’s import bills. But it also had a disastrous impact on agricultural productivity, particularly reducing rice cultivation, the staple of the Sri Lankan diet (as it is ours), resulting in a dramatic increase in food prices. As a corollary, lack of fertiliser also slashed the production of a major source of Sri Lanka’s export earnings and foreign exchange – tea. None of the Rajapaksas had bothered to understand that while organic farming is good for the environment, it is more expensive than conventional agriculture, because organic produce is always lower in quantity of crop per acre than fertiliser-aided crops, even if it is better for the consumer’s health and the local ecology. In parallel to this economic setback came two events beyond the government’s control that virtually eliminated Sri Lanka’s principal source of income -- tourism. First were the “Easter Sunday bombings” of churches by terrorists, which kept frightened Westerners away, and then came the Covid pandemic, whose handling was so badly botched by the central government that it spread widely and rapidly across the island and tourism inevitably ground to a halt. SRI-LANKA-CRISIS Protestors celebrate after entering the building of Sri Lanka's Prime Minister Ranil Wickremesinghe's office, amid the country's economic crisis, in Colombo, Sri Lanka July 13, 2022. REUTERS/Adnan Abidi Meanwhile, with all the bad news and the effects of Covid lockdowns abroad as well, remittances from Sri Lanka’s significant expatriate community also went down. The government, in order to attract money, foolishly issued US dollar bonds at 6 per cent interest, the highest rate paid for dollar deposits anywhere in the world. And unsustainable borrowings from China meant Sri Lanka could not afford to service its debt, resulting in the state handing over Hambantota Port (a vanity project in Mahinda Rajapaksa’s own constituency) to China instead of continuing to pay interest on the loan to build the port. In the midst of all this, the finance minister had the brainwave of giving affluent voters a generous tax cut. The results of these decisions were not hard to predict. The government had little income and limited foreign exchange. They could not afford to maintain the required levels of imports of oil and petroleum products. Before long, winding queues began to develop at petrol stations and food stores. The government started printing money, which inevitably led to rampant inflation, exceeding 50 per cent a year (Indians rightly complain when inflation touches 10 per cent). Ordinary Sri Lankans found they had no money in their pockets, no jobs, no fuel to go anywhere and not enough food to eat that they could afford. Restlessness and frustration turned into open revolt, with lakhs of people thronging public spaces demanding the ouster of the government. They could not be placated, driving the Rajapaksa family from office and into exile. Sri Lanka swears in new president amid worst economic crisis in decades Ranil Wickremesinghe sworn in as the new president of Sri Lanka by the Chief Justice Jayantha Jayasuriya at the parliament, amid the country's economic crisis, in Colombo, Sri Lanka July 21, 2022. Reuters/Channa Kumara The election of a new President will do little to address the basic economic crisis. The Sri Lankan central bank has reserves of around $25 million, while needing at least a billion dollars a month to survive. There is so little fuel on the island that Sri Lankan Airlines are refuelling in Thiruvananthapuram. Even India’s generous $3.8 billion in emergency aid may only last three to four months to cover imports of essential supplies of fuel, milk, medicines and even food items from India. The Rajapaksas had at first refused to go to the IMF, but the government is now there, cap in hand, and must negotiate a loan that will again come with stringent conditions -- which may add to popular unrest. Let us keep our fingers crossed for the long-suffering people of this beautiful but benighted island, shaped appropriately like a teardrop. Population issue The United Nations has announced that India is now expected to surpass China as the world’s most populous country during 2023. The estimate date keeps getting closer! It was 2034 two decades ago, then 2026, now revised to 2023. This is a global first rank of dubious value for India. But the picture is more complicated than the total figure. I’ll return to the population question next week.
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The situation in Sri Lanka seems to show no signs of easy resolution. On Wednesday, the Sri Lankan Parliament elected six-time Prime Minister Ranil Wickramasinghe as President. But it is far from certain that an election by the present Parliament will solve the problems that have arisen in recent months, or heal the gaping divisions in a deeply divided and fractured society. How did this beautiful and once prosperous island, which reminds so many of Kerala, descend to this state? The unravelling of Sri Lanka is an object lesson in political and economic mismanagement which all developing nations, including ours, should read as a cautionary tale. The first problem was the concentration of power in one family. Former President Mahinda Rajapaksa, on returning to an electoral majority two years ago after being ousted by a former ally five years earlier, became Prime Minister this time, unable under the Constitution to serve another term as President. But he found a simple expedient to fill the President’s slot for which he was now ineligible: he appointed his brother, Gotabaya, to the job. For good measure he also strewed the government with more Rajapaksas: his brother Basil, as finance minister; yet another brother, Chamal, as Speaker and his son, Namal, as another minister (for sports and youth affairs). RELATED ARTICLES UK's Truss sacrifices finance minister, scraps tax plan in fight to survive WORLD UK's Truss sacrifices finance minister, scraps tax plan in fight to survive India, one of the world's fastest growing large economies: IMF NEWS India, one of the world's fastest growing large economies: IMF SRI-LANKA-CRISIS Anti-government demonstrators set fire on the house owned by minister Sanath Nishantha of resigned Prime Minister Mahinda Rajapaksa's cabinet after ruling party supporters stormed anti-govt protest camp, amid the country's economic crisis, in Arachchikattuwa, Sri Lanka, April May 9, 2022. REUTERS/Stringer Even that was not enough for the Rajapaksas: Chamal’s son, Shashindra, was given the Agriculture portfolio, Mahinda’s brother-in-law, Nishantha Wikramasinghe, was appointed head of Sri Lankan airlines, and Mahinda’s other son, Yoshita, became the all-powerful Prime Minister’s chief of staff. If, in India, many have frustrations about dynastic politics, this was family rule taken to an extreme. It helped, of course, that the Opposition was in total disarray and unable to resist this sweeping takeover of the country by a single family. But the general public watched in growing dismay as the Rajapaksas added economic incompetence to their political domination. The government started accumulating unpaid debts, amounting to over $54 billion by the beginning of the year. One of the Rajapaksas got the brilliant idea of saving money by adopting the fad of “organic farming” to eliminate expensive fertiliser imports. SRI-LANKA-CRISIS Demonstrators gather outside the office of Sri Lanka's Prime Minister Ranil Wickremesinghe, amid the country's economic crisis, in Colombo, Sri Lanka July 13, 2022. REUTERS/Adnan Abidi Without taking the trouble to study the practice and the economics of organic cultivation, the government switched the nation’s agriculture system overnight. Of course, this brought Sri Lanka’s massive imports of chemical fertilizer to a halt, reducing the government’s import bills. But it also had a disastrous impact on agricultural productivity, particularly reducing rice cultivation, the staple of the Sri Lankan diet (as it is ours), resulting in a dramatic increase in food prices. As a corollary, lack of fertiliser also slashed the production of a major source of Sri Lanka’s export earnings and foreign exchange – tea. None of the Rajapaksas had bothered to understand that while organic farming is good for the environment, it is more expensive than conventional agriculture, because organic produce is always lower in quantity of crop per acre than fertiliser-aided crops, even if it is better for the consumer’s health and the local ecology. In parallel to this economic setback came two events beyond the government’s control that virtually eliminated Sri Lanka’s principal source of income -- tourism. First were the “Easter Sunday bombings” of churches by terrorists, which kept frightened Westerners away, and then came the Covid pandemic, whose handling was so badly botched by the central government that it spread widely and rapidly across the island and tourism inevitably ground to a halt. SRI-LANKA-CRISIS Protestors celebrate after entering the building of Sri Lanka's Prime Minister Ranil Wickremesinghe's office, amid the country's economic crisis, in Colombo, Sri Lanka July 13, 2022. REUTERS/Adnan Abidi Meanwhile, with all the bad news and the effects of Covid lockdowns abroad as well, remittances from Sri Lanka’s significant expatriate community also went down. The government, in order to attract money, foolishly issued US dollar bonds at 6 per cent interest, the highest rate paid for dollar deposits anywhere in the world. And unsustainable borrowings from China meant Sri Lanka could not afford to service its debt, resulting in the state handing over Hambantota Port (a vanity project in Mahinda Rajapaksa’s own constituency) to China instead of continuing to pay interest on the loan to build the port. In the midst of all this, the finance minister had the brainwave of giving affluent voters a generous tax cut. The results of these decisions were not hard to predict. The government had little income and limited foreign exchange. They could not afford to maintain the required levels of imports of oil and petroleum products. Before long, winding queues began to develop at petrol stations and food stores. The government started printing money, which inevitably led to rampant inflation, exceeding 50 per cent a year (Indians rightly complain when inflation touches 10 per cent). Ordinary Sri Lankans found they had no money in their pockets, no jobs, no fuel to go anywhere and not enough food to eat that they could afford. Restlessness and frustration turned into open revolt, with lakhs of people thronging public spaces demanding the ouster of the government. They could not be placated, driving the Rajapaksa family from office and into exile. Sri Lanka swears in new president amid worst economic crisis in decades Ranil Wickremesinghe sworn in as the new president of Sri Lanka by the Chief Justice Jayantha Jayasuriya at the parliament, amid the country's economic crisis, in Colombo, Sri Lanka July 21, 2022. Reuters/Channa Kumara The election of a new President will do little to address the basic economic crisis. The Sri Lankan central bank has reserves of around $25 million, while needing at least a billion dollars a month to survive. There is so little fuel on the island that Sri Lankan Airlines are refuelling in Thiruvananthapuram. Even India’s generous $3.8 billion in emergency aid may only last three to four months to cover imports of essential supplies of fuel, milk, medicines and even food items from India. The Rajapaksas had at first refused to go to the IMF, but the government is now there, cap in hand, and must negotiate a loan that will again come with stringent conditions -- which may add to popular unrest. Let us keep our fingers crossed for the long-suffering people of this beautiful but benighted island, shaped appropriately like a teardrop. Population issue The United Nations has announced that India is now expected to surpass China as the world’s most populous country during 2023. The estimate date keeps getting closer! It was 2034 two decades ago, then 2026, now revised to 2023. This is a global first rank of dubious value for India. But the picture is more complicated than the total figure. I’ll return to the population question next week.
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