The Sri Lankan imbroglio persists as President Gotabaya Rajapaksa, under Article 37(1) of the Sri Lankan Constitution, appointed Prime Minister Ranil Wickremesinghe to officiate in his place. This may delay the selection of a regular president by the parliament, scheduled on July 20. Multiple issues emerge from this scenario. One is the role of the Sri Lankan military, currently maintaining law and order. Some are calling it de facto army rule under the façade of a civilian government. Perhaps not fully so yet but if the current standoff between the protesters and the Wickremesinghe dispensation continues, and the army is forced to use lethal force for deconfliction, it may get entrenched as the power broker, instead of the parliament. The gameplan of the runaway president is unclear. His party Sri Lanka Podujana Peramuna (SLPP) holds 100 out of 255 seats in the parliament. Their backing or veto would be critical to deciding who heads an all-party government. Wickremesinghe may want to hold either his new or old position. But the protesters want him out.
Gotabaya Rajapaksa may still be hoping to position someone he trusts. Speaker Mahinda Yapa Abeywardena has been a Rajapaksa clan loyalist. However, reports are emerging of the son of former president and prime minister Mahinda Rajapaksa, elder brother of outgoing president, positioning himself by laying all the blame on the ousted president. He has been quoted saying that Gotabaya did not listen to his elder brother on two crucial policy changes considered as having caused the economic collapse. These were the ban on import of chemical fertilisers in April 2021 and the raising of taxes this year. The first led to food shortages and the second to the public ire mushrooming.
Next is the question of relative roles of India and China. India has quietly given to Sri Lanka $ 3.8 billion of assistance consisting of fuel, food, and medicines. China has been reticent over its debt created by infrastructure development that has not produced adequate returns. Out of Sri Lanka’s $ 35 billion foreign debt, the Chinese component is $ 11.7 billion, plus another $ 3 billion transferred to avoid loan default. But popular perception is of China being the main culprit behind Sri Lanka’s financial crisis. This brings the focus on Chinese lending practices under its Belt and Road Initiative (BRI). Similar financial stress is visible in Pakistan, Zambia, Ethiopia, Cambodia, Laos etc. China is a hurdle in the path of debt restructuring under the Paris Club rules which enable the writing down of debt after calculating the revenue potential of the debtor nation. All lenders take an appropriate haircut.
The Paris Club is a combination of 22 major creditor nations, including some from Asia like Japan and Republic of Korea. Since its inception in 1956, it has restructured national debts 433 times of 90 nations. China is not a member of the Paris Club but is a major creditor nation, having lent indiscriminately for BRI projects. China is not known to write off debts. In the case of Sri Lanka, in 2017 it had a Chinese state company convert debt into a 99-year control over Hambantota port and related facilities. This reversed what colonial powers did to China in the 19th century, commencing what China calls a century of humiliation. The Sri Lankan default is the first in Asia after Pakistan’s in 1999.
Thus, the path forward has opportunity for India and the Paris Club nations to beat China at its game and win back a crucial island nation to the side of liberal order. There is a lesson for India too. The Rajapaksa clan’s power grab began after they militarily eliminated the Tamil Tigers in 2009. They chose the easy route of jingoism and majoritarian politics, laced with support of religion and radicalised Buddhist clergy. Their return to power in 2019 was facilitated by the Easter bombings and a frightened nation again buying the old Rajapaksa bigotry, now targeting the Muslims. During the Covid epidemic Muslims were even banned from burying their dead on dubious medical grounds. Bad politics was worsened by poor decision-making like overnight conversion to organic farming, crippling a food self-sufficient state. Covid worsened the external environment causing tourism and workers’ remittances to fall.
The lesson is that illiberal politics can work up to the point a nation’s economy collapses. Then the streets will rise in protest and destabilise even a clan-controlled government in firm grip of the army. General Shavendra Silva, the Chief of the Defence Staff, was appointed despite serious allegations of human rights abuses against him. Sri Lanka has a path open to return to liberal democracy with power balanced between the executive and the legislature. Alternatively, the power may pass to a junta in uniform.
The writer is a former secretary, Ministry of External Affairs