Five sins that brought down Sri Lanka

Sri Lanka wasn't destroyed in a day. Lopsided decisions, dynastic mindset and populist policies slowly ate into the country and now the world needs to take its lessons from its past and assist towards rebuilding it

The recent spate of violent incidents, continuing anarchy and outbreak of mass anger and frustration on the streets of Colombo, may have come as a surprise to the uninitiated. However, for those reading between the lines, ominous signs were visible for long, indicating a sure disaster waiting to hit the beleaguered island nation.

Broadly, there are five reasons responsible for the recent seismic events in the country. Close engagement with China has left Sri Lankan economy bone dry. The fake wokes, peddling lost causes, have ruined country's agriculture leading to acute shortage of most of the essential commodities and food items.

Years of dynastical rule, coupled with crony capitalism, have sapped country's entrepreneurial talent and mired the economy in corruption and nepotism. Reckless populism too has taken its toll and impoverished the country to insolvency. A yet another reason is that Sri Lanka has been living beyond its means for long.

China is undoubtedly an archetypal modern day Shylock, ruthless in extracting its pound of flesh. Within China, the regime is an oppressive communist dictatorship and its economic policies are, ironically capitalistic, marked by exploitation and denial of human rights to its hapless labour. For the rest of the world, it's an imperial power with an expansionist agenda, an upgraded version of East India Company of the yore.

Sri Lanka fell into the Chinese trap, borrowed heavily to meet the budget shortfall and trade deficit. The borrowed money was spent recklessly on projects which hardly made any economic sense.

The kingpin of the infrastructure drive, sponsored by China, was a deep seaport that has been losing money from day one. The Hambantota port was unable to service its Chinese loans, losing USD300 million in six years. In 2017, China took over the sea port on a 99-year lease and managed to have a foothold in strategic Indian Ocean. Today, Sri Lanka has neither any control over the much publicised port, nor on the land on which it is built.

Yet another white elephant, a USD15.5 million conference centre close to the Rajapaksa Airport, has largely been unused since it opened. Then there is the Chinese-funded Port City Project in Colombo, an artificial 665-acre island set up with the aim of becoming a financial hub rivaling Dubai, lying non-functional.

Under pressure of fake wokes (both Indian and local), and on the pretext bringing down its chemical fertiliser import bill, Sri Lankan Government suddenly decided to make a complete shift to organic fertilisers and ban imports of chemical fertilisers. To meet its requirements of organic nutrients, Sri Lanka selected China's Qingdao Seawin Biotech Group Co. Ltd. as a supplier. However, Chinese samples failed quality tests.

Sri Lanka rejected the consignment and refused payment for the sub- standard fertiliser supplies. China, in an arm twisting move, blacklisted People's Bank of Sri Lanka, citing a 'vicious' Letter of Credit 'default'. In the absence of availability of any fertilisers, chemical or organic, agricultural output plummeted, triggering runaway inflation.

For long the island nation has lived beyond its means. Since 1965, the country has received 16 IMF bailouts. There are hardly any domestic savings to fund government debts. In fact, Sri Lanka has depended on multilateral borrowings since 1960s to sustain its welfare projects. The country also started issuing International Sovereign Bonds, borrowing money globally at high interest rates, to fund its consumption needs. The Rajapaksas oversaw the fastest transformation of the external debt composition, the share of the costlier commercial debt increasing from 7% in 2006 to 55% in 2019.

Mindless pursuit of populism, further corroded the economy. The decision to reduce taxes in November 2019, a toxic move that severely dented Colombo's revenues, put Sri Lanka in a difficult position.

Why did Sri Lanka make such fatal mistakes? Why couldn't its leaders see the writing on the wall? Why were there no checks and balances in place? Why didn't any whistleblower warn the country of impending disaster? Answer: dynasty politics.

With one brother president, another prime minister and three more family members as cabinet ministers, the Rajapaksa clan (now on the run) had a vice like grip on the system. For decades, the family has been in and out of government, and in control of levers of power. Following huge public outrage, the three Rajapaksas resigned Cabinet posts in April and prime minister Mahinda Rajapaksa stepped down in May. President Gotabaya Rajapaksa, not seen outside his heavily guarded compound in months, too has announced his resignation.

What are the takeaways from Sri Lanka's sordid experience, for India and rest of the world? One is to stay away from China, the country is an unreliable friend and a mean enemy. Two - be careful of fake wokes, their harebrained schemes can spell a disaster for community. Three - reckless populist regimes can push a nation to a precipice, with dangerous consequences. Four- remember, there is nothing like a free-lunch in this world- either for individuals or for countries. There is a lot of wisdom in the old adage-cut your coat, according to your cloth.

Fifth, dynasty politics in present era is an anachronism, and not workable in the long run. Crony capitalism is its natural offshoot. Sooner or later, a dynasty-based regime degenerates into a set-up in which wealth is not generated, by hard work, innovation or by entrepreneurial skills, but through collusion, conspiracies and outright corruption. Incestuous governance, by its very nature, is incapable of preventing it.

What will happen in Sri Lanka next? One hopes the country doesn't slip into anarchy, a situation that it experienced when the ultra-Left Janatha Vimukthi Peramuna staged a violent insurrection in the 1980s. The Rajapaksa clan is gone. The core issue is, how to ensure political stability in the island nation, at war, with itself.

Foreign assistance, which is right now critical to rebuild a collapsed nation, would be possible if there is peace and sanity. Care has to be taken to ensure that extremist groups don't take advantage of the present disturbed situation. Rest of the world, particularly, the US, India and Japan must take initiative in this respect. Rebuilding Sri Lanka is crucial to stability in the region - the world just can't afford another failed state in South Asia after Afghanistan.

(Mr. Balbir Punj is a Former Member of Parliament and a Columnist. He can be reached at: [email protected])

Disclaimer: The opinions expressed in this article are the personal opinions of the author. The facts and opinions appearing in the article do not reflect the views of OneIndia and OneIndia does not assume any responsibility or liability for the same.