Sri Lanka is in crisis – and it’s not just the country’s leaders who are to blame

All too often, international institutions grant nations credit without paying heed to the leadership’s abuses and lack of democratic accountability, writes Borzou Daragahi

Over the last few months, the economy nosedived and inflation exceeded 50 per cent. (EPA)

Just a few years ago, Sri Lanka was a promising bright spot in South Asia. It had a thriving economy, boasting a GDP growth of as high as 9 per cent. It drew tourists to its beaches and mountains, as well as investors to manufacturing hubs. It had begun to put the legacy of a years-long civil war behind it.

But this month the world witnessed what appeared to be the economic and political collapse of the island nation, with the country’s elite fleeing abroad and the country descending into chaos.

Certainly, Sri Lanka’s entrenched political elite, in particular president Gotabaya Rajapaksa and his family, deserves the lion’s share of the blame for the calamity, which has been years in the making. But the international community must also be held to account.

The Wall Street Journal reports that Sri Lanka knew it was in trouble at the beginning of the Covid-19 pandemic, but took up a Chinese scheme to take on more loans rather than restructure its finances. In May, the country defaulted on the $50bn debt it owes China, as well as international banks and creditors, including western financiers, the Asian Development Bank and the World Bank.

Over the last few months, the economy nosedived and inflation exceeded 50 per cent. Sri Lankans describe daily life as a struggle to obtain enough food and fuel to survive. Milk, rice and sugar are being rationed. Power cuts, and shortages of medicine and basic staples have angered the public and fueled months of protests. Meanwhile, Rajapaksa blithely downplayed what he described as “inconveniences”.

All it came to a head in recent days. Eye-popping videos showed ordinary people swarming the presidential compound. The president, a chauvinistic autocrat, fled the country to Singapore, resigning via email.

When a nation falls off a cliff in the way Sri Lanka has, critics are quick to cast aspersions on the country’s leaders and their political patrons abroad. But the same standard should be applied to world institutions, including banks and government lenders, who had a hand in creating the mess.

All too often, international institutions grant nations credit without paying heed to the leadership’s abuses and lack of democratic accountability. In Sri Lanka, signs of corruption and abuse of power within Rajapaksa’s ruling clique have been apparent for years. As Human Rights Watch bluntly put it: “Respect for fundamental human rights in Sri Lanka has been in serious jeopardy under the Gotabaya Rajapaksa presidency.”

Political abuses included human rights violations and curtailing of press freedoms. But the problems extended to the economy, as Sri Lanka became rife with the kind of corrupt crony capitalism favoured by right-wing nationalists around the world.

Though the government recorded years of growth following the civil war, it masked corruption and the allocation of public resources on expensive signature projects that yielded few rewards for the public. Still, creditors loosened their purse strings, essentially bankrolling a ruling clique’s abuses and a country’s demise.

“Large scale infrastructure projects such as highways, an airport, and a lotus tower that were tainted with corruption, provided low returns, and filled the pockets of a politically connected, protectionist, and parasitic class of businesspeople,” wrote Sri Lankan analyst Amita Arudpragasam in April. “Meanwhile the president’s critics were intimidated, and journalists were killed or disappeared, generating widespread fear and a climate of self-censorship.”

China, too, deserves some blame for Sri Lanka’s failures. It attempts to portray itself as a benign world power that spreads its largesse and expertise through its “Belt and Road Initiative”, helping developing countries build up their infrastructure with development loans.

But there is nothing new about China’s imperial gambits. In the 19th century, too, Europe’s imperial powers extended credit to rulers across the world, and then, when they failed to cough up the payments, showed up in gunboats demanding concessions in the form of real estate, military bases or access to key industries

Likewise China’s velvet-gloved outreach to the world sheaths an iron fist. A Pentagon report has predicted China is planning to build a string of military bases all around the world, including the Arctic Circle, and countries to which it has extended credit, including Pakistan, Myanmar, Kenya, Angola and, of course, Sri Lanka.

“China is trying to be perceived as a positive global partner, a powerhouse that is all about good,” says Wylie McGraw, a US-based commentator on international affairs. “Underneath that we see people who crave power. China is very good at being kind of a silent imperialist. Most western countries will go abroad and fight for peace and democracy. China hasn’t had to do that yet. They do it in a different way.”

Whether by dispatching gunships or by lending cash, empire-building is an ugly business. One nation conquers another, exploiting its resources and establishing itself as morally and politically superior.

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Nations subject to imperial conquest often spend bloody years fending off the outsiders and then decades more overcoming the social or economic impact. Just look at Algeria, which remains traumatised by its lengthy subjugation to France, even 60 years after it won independence.

The conquerors themselves build up chauvinistic, quasi-fascistic ideologies to justify their violent suppression of others, damaging their own development as a people.

What’s more, imperial conquerors often give themselves way too much credit for bestowing their vassals with railroads and other accoutrements of civilisation and do not hold themselves accountable for the harm they cause by emptying out coffers, hollowing out institutions, and empowering corrupt ruling elites like the Rajapaksa clan.

But whether in the 19th century or in the 21st, it is ordinary people who are left suffering without power or food, while the culprits themselves bask in palaces or luxury villas, seemingly oblivious to the extreme harm they have done.