What’s going on in Sri Lanka?

Three years after a terrorist assault that was deemed one of the world's most horrific disasters, Sri Lanka is once again facing a deep crisis and widespread instability

Recent events in Sri Lanka reminded the population of the challenge of achieving long-term peace in a country that doesn't seem to understand what peace is. Three years ago, on Easter Sunday, Colombo, Sri Lanka's capital was devastated by a series of suicide bombings that targeted three churches during religious services and three luxury hotels. Over 350 people have been killed and over 500 have been injured. Three years after a terrorist assault that was deemed one of the world's most horrific disasters, Sri Lanka is once again facing a deep crisis and widespread instability.

The effects of Covid-19 and the war in Ukraine on Sri Lanka

Sri Lanka is a south Indian country with a population of roughly 22 million people that gained independence from the United Kingdom in 1948. Both domestic and international factors are dragging the country to its knees today. The Covid-19 pandemic is clearly one among them, especially when considering that tourism is one of the country's primary sources of revenue, which is, understandably, damaged by the pandemic. Furthermore, the rise in energy, food, and raw material prices, aggravated by the present conflict in Ukraine, has undoubtedly inflicted another devastating blow to the system. Sri Lanka is indeed one of the first 'victims' of the global economy's economic consequences following Russia's invasion of Ukraine.

As a result, the government declared default on April 12th, saying that payments on the $35 billion it owes international creditors will be suspended. In addition to this, in the last month, the Sinhalese rupee has lost more than 60% of its value. In the energy sector, the cost of gasoline has climbed by 90% since the beginning of 2022, while the cost of diesel, which is used in public transportation, has increased by 138%. Furthermore, for months, the population has suffered from a lack of essential goods (including medicines) and electricity. On April 18th, Ali Sabri, the country's finance minister, flew to Washington to steel himself for pivotal talks with the International Monetary Fund (IMF) in hopes of a desperate bailout. As a result of these sessions, the IMF pledged to support Sri Lanka's efforts to overcome this unprecedented economic instability since independence.

The origins of the crisis

However, the country's default was not solely due to the war and the pandemic. In reality, looking further back in time is required to identify the origins of the country's issues. Indeed, governments have been increasingly borrowing from foreign private capital markets through the issuing of sovereign bonds since the early 2000s, aggravating the country's already unstable balance of payments. Furthermore, since the announcement on April 12th, the market price of these bonds has plummeted. The majority of these foreign obligations are government bonds, with China and Japan being the primary borrowers. The obligations that the state will not be able to repay amount more than 20 billion euros, with more than 6 billion euros due to be reimbursed this year. Meanwhile, Sri Lanka's President, Gotabaya Rajapaksa, has requested assistance from India and China in the delivery of economic aid, food, and fuel.

It is also critical to recognize how the Sri Lankan public views the situation in order to comprehend the true scenario. In actuality, the country has been witnessing street protests for days, urging for the government to take quick action to address the economic crisis. The protests in Colombo have resulted in violent battles, with demonstrators setting fire to two buses parked in front of the president's home and throwing stones at police, who have intervened with tear gas and water cannons. To prevent further demonstrations, the government declared a state of emergency and then enforced a curfew without accomplishing much.

The current situation, according to demonstrators, is the product of the Rajapaksa political dynasty's ineptitude and chauvinism, which has held tight control over Sri Lankan public institutions for nearly two decades. Rajapaskas' political ascension coincides with the conclusion of the tragic 26-year Civil War between the central government and the so-called Tamil Tigers (Liberation Tigers of Tamil Eelam). The present president's election in 2009 is at the foundation of the difficulties. Since then, indeed, the situation on the island has been marked by the government's strong control over public life, as well as intimidation and discrimination against the minorities. The Rajapaksa's dictatorship has been notable for its relentless persecution of human rights campaigners and independent media, as well as the militarization of society and a tightening of civil freedoms to handle the pandemic.

Sri Lanka's political framework reveals how, over the course of a decade, the centralization of institutions in a tiny family circle has threatened the country's constitutional balance. Economic stagnation appears to be intimately related to political deadlock, as a result of the lack of a system of balancing and control of the executive by the rest of the constitutional framework. An incisive political and structural transformation that supports transparency and accountability of the political elite while allowing citizens to participate actively and democratically is necessary.

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