Tag Archive for: Sri Lanka

Sri Lanka’s long road to recovery

The economic and political upheavals Sri Lanka has faced in recent years, including its 2022 debt default and the mass protests that ousted former President Gotabaya Rajapaksa, serve as a stark reminder of the dangers posed by poor governance and rampant inequality.

A 2023 report by the International Monetary Fund attributes the country’s ongoing crisis to widespread corruption and fiscal mismanagement, underscoring the urgent need for the new president, Anura Kumara Dissanayake, to implement bold structural reforms aimed at restoring public trust and promoting social justice.

At the heart of Sri Lanka’s ongoing crisis is a deeply flawed institutional framework, plagued by inefficiencies and susceptible to political interference. The IMF report highlights the erosion of independent institutions such as the Public Service Commission, the National Police Commission, the Audit Service Commission, the Commission to Investigate Allegations of Bribery or Corruption (CIABOC), the Finance Commission and the Delimitation Commission, which led to the mismanagement of public resources and a chronic lack of transparency. Unless, and until, these fundamental governance issues are addressed, economic recovery will remain out of reach.

To revive Sri Lanka’s economy, Dissanayake, the leader of the left-wing National People’s Power alliance, should pursue three major reforms. First, he must strengthen institutions like the CIABOC and improve oversight of public appointments. Second, improving fiscal transparency and procurement policies could reduce inefficiencies and increase trust in public spending. Lastly, limiting government officials’ discretionary power over tax incentives would curb corruption, boost revenue and promote fiscal responsibility.

Dissanayake must also confront the deeply entrenched structural inequalities that have long impeded Sri Lanka’s GDP growth. In his 2012 book The Price of Inequality, economist Joseph E Stiglitz argues that inequality is ‘not just a moral issue, but an economic one’, with the potential to stifle growth and trigger social unrest. Sri Lanka, where rising income inequality has been a major cause of socioeconomic instability, is a prime example of this dynamic. As the IMF report suggests, corruption-fuelled financial mismanagement and opaque tax policies have deepened Sri Lanka’s income disparities.

Reducing inequality is critical for Sri Lanka’s long-term economic and political stability. Building on Stiglitz’s insights, the new administration must pursue progressive tax reforms to ensure that the burden does not fall disproportionately on lower-income households. This approach also aligns with the IMF’s call for greater transparency in tax incentives and exemptions.

Another way to reduce inequality is to invest in public goods such as education, health care and infrastructure. Sri Lanka must redirect resources from the inefficient capital investments favoured by the Rajapaksas toward projects that directly benefit underserved communities. Establishing a transparent and competitive investment process could help direct resources to where they are most needed, in line with the IMF’s recommendations.

Labor-market reforms are equally important. Sri Lanka’s economic recovery hinges on creating equitable job opportunities by guaranteeing fair wages and safe working conditions, particularly in sectors like manufacturing and services, where inequality is most pronounced.

Weak, poorly designed institutions often allow wealth to be concentrated in the hands of a few. As the IMF report reveals, the lack of independent governance structures in Sri Lanka has caused corruption and inefficiency to flourish. To reverse this trend, Dissanayake’s administration must bolster regulatory frameworks, protect independent agencies and the judiciary from political interference, and create a level playing field that provides equal opportunities to everyone.

Civil society can play a pivotal role in this transformation. As Stiglitz notes, inclusive governance holds the key to reducing inequality. The IMF report criticises the absence of platforms for public participation, emphasising the importance of citizen engagement in holding institutions accountable.

A vibrant civil society and a free press are crucial to restoring trust in the country’s institutions. But reforming Sri Lanka’s draconian and outdated security and anti-terrorism laws—remnants of the decades-long war against the Liberation Tigers of Tamil Eelam—Dissanayake could encourage greater public participation and promote accountability.

In sum, to accelerate its economic recovery, Sri Lanka must revitalise its institutions and tackle the systemic inequities that have fuelled much of its recent turmoil. Implementing the IMF’s technical recommendations would help stabilise the country’s finances, while drawing on Stiglitz’s insights could help reduce income and wealth gaps.

But long-term growth will require bold leadership. Fostering transparency, accountability, and meritocracy would help Sri Lanka build a stronger, more resilient economy, laying the groundwork for a more just, prosperous and sustainable future for all its citizens.

Sri Lanka’s next test

In a win for democracy, mass protests in Sri Lanka recently led to the resignation of President Gotabaya Rajapaksa and Prime Minister Mahinda Rajapaksa. A strongman who won popularity for overseeing the end of Sri Lanka’s civil war in 2009 (while his older brother, Mahinda, was president), Gotabaya was elected in November 2019 and promised to safeguard national security and deliver prosperity. He failed miserably.

Despite allegations of corruption, war crimes and attacks on journalists, the Rajapaksa government had a powerful mandate, which was reinforced nine months later when the brothers’ party, Sri Lanka Podujana Peramuna (the Sri Lanka People’s Front), won a two-thirds majority in parliament. Yet, during his short tenure, the Rajapaksas drove the country into bankruptcy, food insecurity and spiralling inflation.

Gotabaya announced his candidacy just days after the 2019 Easter Sunday bombings, promising a strong response to terrorism. In the months that followed, newspapers’ and radio stations’ frenzied coverage heightened people’s fear of Muslims (who comprise 10% of the population), and attacks on them increased. Gotabaya capitalised on this environment, portraying himself as a defender of the Sinhala Buddhist majority who would transform Sri Lanka into a Singapore of the Indian Ocean. The clergy, media, military, political elites and local business tycoons all adopted the same rhetoric, tying their fortunes to his.

The Buddhist clergy, for example, continuously reaffirmed their trust in Gotabaya throughout his presidency. In return, he established a Buddhist advisory council of notable monks to help guide his policy decisions. Even in January of this year, as families began rationing food, and as the central bank sold its remaining gold reserves to pay back an international bond, the Buddhist establishment spoke up for Gotabaya, arguing that he was still the only leader who could save the country.

By March, hospitals were reporting shortages of essential medicines, and two elderly men died while queuing for gasoline. Unable to pay for fuel to produce electricity, the government instituted rolling blackouts that culminated in 13-hour power cuts at the height of a suffocating heat wave. That was the final straw. Protesters stormed the streets and demanded the Rajapaksas’ resignations.

The political class responded by playing musical chairs within the cabinet of ministers, while demonstrators occupied the area surrounding the Presidential Secretariat. The space that Rajapaksa had set aside as an ‘agitation area’—a move heavily criticised for limiting people’s freedom of assembly—was renamed GotaGoGama (Gota Go Village). It became the home of the Aragalaya (struggle) against the government, which has now raided the site and arrested protest leaders.

The Aragalaya was unusual in that it welcomed Sri Lankans from all ethnic backgrounds. In April, protesters outside the Presidential Secretariat included activists from the Muslim community—a direct rejection of the chauvinist sentiment Gotabaya had stoked. Demonstrators also cooked a mixture of water and rice (kanji) to commemorate Tamil civilians who died during the last stages of the war, when indiscriminate shelling made it impossible for them to secure other food.

The Aragalaya thus became a place where people lived out the alternative to the Rajapaksa brand of politics. The protesters celebrated unity amid diversity, demonstrating that hope comes not from leaders but from the power of people.

But does this solidarity reflect a mere marriage of convenience? Just two and a half years ago, many of the current anti-government protesters endorsed the Rajapaksas’ brand of majoritarian politics. Today, they complain that parliament is full of cheats and liars. Yet it is they who voted for the charlatans in free and fair elections.

The Rajapaksas were given a mandate despite their well-known record of corruption, authoritarianism and violence. The protests began not when the family stole public funds or trampled on minority rights, but when Sinhalese were called extremists and terrorists just for demanding food.

The institutions that underwrote Gotabaya’s power have now lost credibility. Businesses and others who aligned with the Rajapaksas are being shamed on social media, and any elite Buddhist clergy who dare to show up at protests are lambasted. The military and the police, once praised for their service, are now seen as vehicles of state repression, and major media organisations have been condemned for whipping up anti-minority sentiment.

The question now is what will fill the vacuum. Sri Lankans have a rare opportunity to build a new identity based on this struggle for dignity. After being tear-gassed and battered by the police, Sinhalese protesters have caught a glimpse of the violence and mistreatment that Tamils have suffered. After watching their businesses collapse from lack of electricity, they now have a sense of what Muslims feel when their businesses are torched by angry mobs. And after feeling the effects of sharply rising inflation, all households now recognise that plantation workers cannot live on US$3 a day.

In each case, the Sinhala Buddhist majority has been given a window onto the decades of deprivation suffered by minorities. Sinhala Buddhists are connecting with their inner Tamils and Muslims. But only by building on this shared trauma can Sri Lankans transform resentment against the Rajapaksas into a new social contract. By renegotiating our communal bonds and relationships, we can construct a new collective identity. That means rejecting majoritarianism and corruption, and embracing our shared struggle for a free and prosperous future.

The fall of Sri Lanka’s house of Rajapaksa

For nearly two decades, the four Rajapaksa brothers and their sons have run Sri Lanka like a family business—and a disorderly one, at that. With their grand construction projects and spendthrift ways, they saddled Sri Lanka with unsustainable debts, driving the country into its worst economic crisis since independence. Now, the dynasty has fallen.

Mahinda Rajapaksa was instrumental in establishing the dynasty. After becoming president in 2005, he ruled with an iron fist for a decade, attacking civil liberties, expanding presidential powers (including abolishing term limits) and making bad deal after bad deal with China. Throughout this process, he kept his family close, with his younger brother Gotabaya holding the defence portfolio.

But in 2015, Mahinda narrowly lost the presidential election and the Rajapaksas were briefly driven from power. During that time, parliament restored the presidential term limit, ruling out another Mahinda presidency. Yet the family quickly devised a plan to restore their dynasty: Gotabaya would renounce his US citizenship and run for president.

Gotabaya was well-positioned to win. After all, he had been defence secretary in 2009 when Mahinda ordered the final military offensive against the Tamil Tiger rebels, bringing a brutal 26-year civil war to a decisive end. With that, the Rajapaksa brothers emerged as heroes among Sri Lanka’s Sinhalese majority.

To be sure, the final offensive killed as many as 40,000 civilians and sparked international accusations of war crimes. The United Nations described it as a ‘grave assault on the entire regime of international law’. According to wartime military commander Sarath Fonseka, Gotabaya ordered the summary execution of surrendering rebel leaders. In California, where he was previously domiciled, Gotabaya faces civil charges over alleged war crimes.

But the Rajapaksa brothers simply presented themselves as hardheaded custodians of Sinhalese interests. And, thanks largely to his ethno-nationalist credentials, Gotabaya won the 2019 election—at which point he immediately appointed Mahinda as his prime minister. Mahinda then appointed his two sons, his other two brothers and his nephew as ministers or to other government positions.

The same year, 277 people were killed, and hundreds more wounded, in bombings carried out by Islamist extremists on Easter Sunday. The attack highlighted tensions that had been simmering since 2009: though the military offensive marginalised the Hindu-majority Tamils, the war’s end sowed the seeds of religious conflict between the Buddhist-majority Sinhalese and Sri Lanka’s Muslims, who constitute a tenth of the country’s population. The Easter Sunday terrorist bombings provided new ammunition for the Rajapaksas to whip up Sinhalese nationalism.

Beyond deepening ethnic and religious fault lines, Gotabaya followed his brother in establishing an imperial presidency, exemplified by the passage in 2020 of a constitutional amendment expanding the president’s power to dissolve the legislature. And he helped to push Sri Lanka further into the economic death spiral that his brother had helped create, not least through his dealings with China.

During Mahinda’s rule, as China shielded the Rajapaksas from war-crime charges at the UN, it won major infrastructure contracts in Sri Lanka and became the country’s leading lender. Debt to China piled up, incurred largely over the construction of monuments to the Rajapaksa dynasty in the family’s home district of Hambantota.

Examples include ‘the world’s emptiest’ airport, a cricket stadium with more seats than the district capital’s population, and a US$1.4 billion seaport that remained largely idle until it was signed away to China in 2017 on a 99-year lease. The most extravagant China-backed project is the US$13-billion ‘Port City,’ which is being built on land reclaimed from the sea close to the centre of the capital, Colombo.

China’s modus operandi is to cut deals with strongmen and exploit their countries’ vulnerabilities to gain a strategic foothold. China’s larger aims in Sri Lanka were suggested in 2014, when two Chinese submarines made separate unannounced visits to Colombo, docking at a newly built container terminal owned largely by Chinese state companies.

So, China gained leverage over a country located near some of the world’s most important shipping lanes and Sri Lanka became increasingly mired in debt, including ‘hidden debt’ to China from loans whose public disclosure was prohibited by their terms. But hubris prevented the Rajapaksas from recognising the looming crisis. On the contrary, they enacted a sweeping tax cut in 2019 that wiped out a third of the country’s tax revenues.

Then the Covid-19 pandemic hit, crushing the tourism and garment industries—Sri Lanka’s two main foreign-exchange earners. More recently, the war in Ukraine, by triggering soaring international energy and food prices, helped to drain Sri Lanka’s foreign reserves, creating fuel, food, medicine and electricity shortages. It was the final straw for many Sri Lankans, who took to the streets in droves.

On 9 May, Mahinda reluctantly resigned from his post as prime minister, in an effort to appease protesters. But protests continued to rage, culminating in the storming of the seaside presidential palace by demonstrators. Gotabaya fled minutes earlier before conveying his decision to resign.

Within Sri Lanka, photos of protesters lounging on the president’s bed and cooking in his backyard have become a symbol of people’s power. But they should also serve as a warning to political dynasties elsewhere in the world, from Asia to Latin America. When a family dominates a government or party, accountability tends to suffer, often leading to catastrophe. This can cause even the most entrenched dynasty to fall—and swiftly.

There is also a lesson for other heavily indebted countries. Unless they take action to make their debts sustainable, they could quickly be overwhelmed by crisis.

As for Sri Lanka, its next leaders will have to address shortages of basic necessities, rebuild a wrecked economy, re-establish the rule of law and hold responsible those who caused the current disaster. But in a country where politics is a blood sport, one should not underestimate the challenge of overcoming the Rajapaksas’ corrosive legacy.