Towards a Nation in Crisis: Sri Lanka’s Economic and Political Turmoil

"The state’s mishandling of the protests and applying some of the tactics previously used only in the North and East (such as abducting journalists, brutalizing protesters, and sending in unidentifiable armed men on motorbikes) on Southern protesters primarily from the majority community, has pierced the veil of state propaganda. Of course, it’s hard to assess whether this is a unity born of convenience or if it’s a fundamental shift in attitudes."

Society & Culture

Apr 16, 2022

Alex Gunaseelan

Project Manager

Canada

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Sri Lanka, an island nation of over 22 million people and with a worldwide diaspora of at least 1.25 million people[1], has made headlines recently since it is currently facing the worst economic crisis since independence. There are massive shortages of basic goods such as electricity, fuel, food and medicine, and the costs of these have skyrocketed affecting practically every person in Sri Lankan society. The result is that inflation is at the highest Sri Lanka has ever seen, currently the worst among all Asian nations[2][3].

There are many reasons that analysts and experts can point to as the cause of the economic crisis; however, it ultimately is attributed to government mismanagement. Sri Lanka has borrowed large amounts of money from foreign lenders in the past decade to fund public services to rebuild after the end of the Civil War and to counteract the events that have impacted the country in recent years including monsoons, the 2019 Easter bombings and the COVID-19 pandemic that started in 2020[4].

President Gotabaya Rajapaksa slashed taxes in an attempt to stimulate the economy, but this affected government revenue and agencies, meaning that foreign exchange reserves were needed to pay off these debts. This happened at the same time as the Sri Lankan Rupee continued to worsen since its value was based on the demand and supply of foreign exchange markets. The unwillingness of the government to seek international aid and the President and Prime Minister’s unwillingness to resign also compiled onto the negative impacts of the economy, worsening the lives of Sri Lankans nationwide[5]. This has fueled protests throughout Sri Lanka, driven by societal anger towards the political elite imploding the country, with a call towards their mass resignation[6].

President to inaugurate Sri Lanka Economic Summit; Prime Minister to launch Day 2 | Daily News President Gotabaya Rajapakse (Left) and Prime Minister Mahinda Rajapakse of Sri Lanka

In the Northern and Eastern regions of the country, where the majority of the country's Tamil population resides, families have been spending thousands of rupees to flee Sri Lanka and seek refuge in nearby Tamil Nadu. Tamils from the Jaffna and Mannar districts have been arriving into Tamil Nadu in small groups, where they have been probed by the Indian Coast Guard and handed over to the local authorities for further action[7].

A group of Sri Lankan refugees who arrived in Tamil Nadu in the midst of the economic crisis in Sri Lanka. A group of Tamil refugees who arrived in Tamil Nadu in the midst of the economic crisis in Sri Lanka.

With the current economic situation being the worst ever recorded in Sri Lankan history and no clear end in sight, I have asked a few questions to members of the Tamil community who are on the ground and can see the impacts of the current economic crisis in Sri Lanka. Their responses are summarized below to get a better idea of the overall viewpoints on the situation.

Given the most recent effects of the crisis, what is life like for people on the ground?

Abarna Raj, the Founding Director and Chief Executive Officer of Palmera, which is working to ensure that vulnerable families are economically empowered to better care for themselves and their children, specifically in the Tamil regions of Sri Lanka, shared what this organization has seen on the ground.

Many of the rural poor travel as labourers for work. Without regular transportation, it is impacting their ability to access work. There has also been a significant reduction in job opportunities as many retailers and small to medium sized businesses are unable to access the required good to keep their businesses running. This is where many of the rural poor work as labourers and it has a significant impact on society as a whole.

Fertilizers required by many farmers are hard to access and too expensive. This can increase the risk of pests that could result in harvest loss. This would also result in lower productivity, impacting the income of these farmers and, ultimately, their livelihood.

The rural poor are used to these types of hardships, so while Sri Lanka is going through one of its worst crises in history, the poor are resilient since their lives have sadly been in constant turmoil. The crisis is a new hardship being faced by the middle and upper class, not being accustomed to power cuts and skyrocketing prices.

Since Sri Lanka is a country that relies on imports, the increasing prices has impacts across the board – from food for the general population to the equipment needed for the businesses of farmers and rural entrepreneurs.

Local stories from the field have been shared on Palmera’s Instagram page.

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Rukmankan Sivaloganathan, an entrepreneur in the travel and hospitality industry in Sri Lanka, has also shared what he has seen on the ground.

On the travel front, the ongoing crisis obviously makes it difficult to operate as potential tourists will look elsewhere for their holidays. We have also had existing bookings being cancelled. It’s a pity as the industry was showing signs of recovery.

On the hospitality front, I run a cloud kitchen business which has been impacted on multiple fronts. First, ingredients have all gone up in price, some more than doubling from last year. Second, we are reliant on third party delivery channels and while they have managed well so far, the lack of fuel makes this precarious. Demand so far has held but as the situation worsens, people are definitely going to make cutbacks on discretionary spending.

What can be done by the diaspora community to help?

Abarna has put it simply: donate. Palmera

This is a really important point. We, as the diaspora community, can sit around and talk about this all we want. However, as the diaspora, it is important that we recognise the important role we play to help those in Sri Lanka. That part of identity is service - service to those communities that have created that identity and provided us that heritage. While there is a resurgence of Tamil identity, there has not been a resurgence in giving amongst the next generation.

Palmera’s work is about longer term sustainability. They will engage with home gardening in this crisis; however, outside of the crisis, their work is holistic and long-term to improve resilience among the local population in times just like this.

A hand-out approach in the diaspora will not strengthen communities and ecosystems; rather, it would mean that we are at risk of creating a sense of dependency, reliance and a hand-out mentality.

More information on Palmera can be found here - Palmera - How we work on Vimeo.

For those unable to donate, they can share the initiative: (@palmeraprojects) • Instagram photos and videos

Rukmankan shares similar views and also sees this as an opportunity for the different diaspora communities to work together.

In situations like this, it is often the less fortunate who bear the brunt. While fuel and shortages impact everyone, it is not yet an existential crisis for the wealthy. It is the lower income groups that are hardest hit, with the middle class also feeling the pain.

The reality is that things will get worse, especially when we start implementing austerity measures to resuscitate the economy. Moreover, hospitals have started running out of medicines and basic but critical equipment, and there are reports of people dying due to these shortages.

The diaspora is already helping their families back home by sending money but can perhaps assist further by mobilising and working with reliable organisations on the ground in Sri Lanka to procure and ship medicine and essential medical supplies to stabilise the health system here. I also think this is a wonderful opportunity for the Tamil and Sinhala diaspora to work together since, through the massive protests against the government, this is an issue where both communities are in complete agreement.

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There have been island-wide protests in response to the current situation. In your opinion, what will the protests achieve and are they an effective means to make those goals a reality?

Rukmankan says that the protests have been unprecedented for a number of reasons:

· The protests have been organic and attempts by opposition parties to appropriate them have been spurned.

· The sheer number of protests has been surprising, including massive ones in government stronghold regions.

· The protests have so far had a secular framework, with even religious participation staying within this.

So far the protests have achieved quite a bit in two weeks, including the resignation of the cabinet, the firing of the Central Bank of Sri Lanka (CBSL) Governor (despite his attempts to position this as a resignation), created a sense of a secular Sri Lankan identity, mobilized people from different spheres to coalesce into one anti-Rajapakse movement, and, for the first time, demonstrated to elected representatives where power truly lies.

I feel that the genie is out of the bottle now and the people will not stop until the demands are met, i.e. the departure of the Rajapakse family from the political scene. However, once that happens, it’s anyone’s guess as to where this will end. Given the mood of the public, the ire may then be directed towards the political establishment.

Abarna believes that real change in the systems are needed.

I like to believe in mobilization, but I have little faith in Sri Lanka’s political institutions.

Protests are not enough, real change in systems are required. Overthrowing a government usually just paves the way for whoever is organized to fulfill the role - not what is needed for real change. We have seen that time and time again - Arab Springs, etc.

Social Media Blocked, Curfew In Sri Lanka As Protests Spread: 10 Points | Nrjsclub

The root cause of the crisis comes from many factors, including the end of the Civil War. Are ethnic tensions continuing to play a major role in the country's outlook, or is there possibly a united front being formed on an economic front?

Abarna points to nationalism over the past decade as playing a role in the current situation.

The country voted on a nationalistic agenda, like everywhere else around the world. The fear of the "other" and the need to reaffirm majority identity. The Easter bombings played into this fear as well.

I think the current situation allows educated people to realize that when you place over emphasis on one dimension (nationalism) at the expense of others (financial management, lack of corruption, etc) you end up with a crisis.

Rukmankan provides a cautiously optimistic view on the country’s outlook and relations among Sri Lanka’s ethnic tensions.

One of the most interesting, and heartening, aspects of the protests has been the shifting of the Overton Window on a number of issues. Issues such as repealing the Prevention of Terrorism Act, enforced disappearances, military involvement in civil issues, to name a few, were previously only taken up by the minorities and activists.

This wasn’t really an issue of interest to the majority as they disproportionately affected the minorities and many of them bought the government’s line that these measures were somehow important for ‘national security’.

However, the state’s mishandling of the protests and applying some of the tactics previously used only in the North and East (such as abducting journalists, brutalizing protesters, and sending in unidentifiable armed men on motorbikes) on Southern protesters primarily from the majority community, has pierced the veil of state propaganda.

Of course, it’s hard to assess whether this is a unity born of convenience or if it’s a fundamental shift in attitudes. If it’s the latter, it bodes well for Sri Lanka.

The Sinhalese majority opted for governments that were nationalistic in nature and focussed on the short-term economic growth of the country, whereas the Tamil minority was seeking justice for human rights abuses and independent investigations on the end of the Civil War to build a path forward. As successive governments continued to pull loans from other nations to pay off interest from existing loans and human rights related issues were barely being addressed, the current situation became inevitable. If not properly addressed, there is a high possibility that ethnic tensions in Sri Lanka will stay the same or potentially worsen[8].

With the population facing uncertainty each day, what are feasible next steps that can be taken to resolve the economic crisis? The government is now seeking aid from the International Monetary Fund (IMF) as well as a billion dollar line of credit from India and China; however, this may prolong the crisis rather than solve it[9]. The Office of the High Commissioner for Human Rights issued the following statement[10]:

“We urge the Government, political parties and civil society to engage in immediate, inclusive and meaningful dialogue to find a solution for the pressing economic and political challenges that Sri Lanka faces and to avoid further polarization of the situation.”

During this time, the diaspora community should continue to spread awareness of the current situation in Sri Lanka and to donate to charities and organizations where a real difference is being made such as Palmera and Comdu.it. Further planning on the part of the political institutions for long-term solutions is vital; otherwise, the economic crisis will continue even if measures are taken to reform other parts of Sri Lanka’s institutions[11].

[1] http://press-files.anu.edu.au/downloads/press/n4016/html/ch08.xhtml

[2] https://www.bloomberg.com/opinion/articles/2022-03-17/the-rajapaksa-brothers-power-isn-t-enough-to-stop-sri-lanka-going-broke

[3] https://www.cnn.com/2022/04/05/asia/sri-lanka-economic-crisis-explainer-intl-hnk/index.html

[4] https://www.cnn.com/2022/04/05/asia/sri-lanka-economic-crisis-explainer-intl-hnk/index.html

[5] https://fortune.com/2022/04/09/sri-lanka-debt-crisis-inflation-rajapaksa-protest-imf-ukraine/#:~:text=The%20island%20nation%20consistently%20imports,Sri%20Lanka%20is%20stomaching%20now.

[6] https://www.theguardian.com/world/2022/apr/09/sri-lanka-financial-crisis-protesters-call-for-gotabaya-rajapaksa-resignation-please

[7] https://www.firstpost.com/world/explained-how-economic-crisis-is-forcing-sri-lankans-to-flee-to-tamil-nadu-10481591.html

[8] https://www.britannica.com/place/Sri-Lanka/Reconstruction

[9] https://www.cnn.com/2022/04/05/asia/sri-lanka-economic-crisis-explainer-intl-hnk/index.html

[10] https://www.ohchr.org/en/press-briefing-notes/2022/04/sri-lanka-concern-measures-response-protests-amid-economic-crisis

[11] https://fortune.com/2022/04/09/sri-lanka-debt-crisis-inflation-rajapaksa-protest-imf-ukraine/

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