Where are Sri Lanka’s friends during crisis?

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While the rest of the world is talking about Sri Lanka’s financial problems, only India, the World Bank, and the International Monetary Fund (IMF) are coming to help (IMF anticipated). Sri Lanka’s current financial crisis and political turmoil have reached a tipping point, with food prices increasing and hunger levels rising due to a gas, food, and fuel shortage. The ‘anticipated’ IMF and World Bank loans may satisfy all of the country’s immediate needs, but because there is no self-sufficiency in place, the hardship is likely to persist in the long run.

It is surprising that, despite the island nation’s vital location on the East-West maritime corridor on the Indian Ocean, the country has descended into an unanticipated state of chaos. The Government tried to capture the benefits of the island’s strategic location, but corruption and incompetence took their toll.

The current predicament is frightening, and it explains why no country wants to bail out Sri Lanka. It is because they cannot collect their loan repayments when the country is in debt.

Indian funding

India has provided the government’s energy sector with a USD500 line of credit as well as a USD200 line of credit. India is anticipated to provide another USD 500 credit line. According to the Sri Lankan administration, it cannot continue to rely only on Indian funding.

Sri Lanka owes USD 51 billion to foreign lenders, with private bondholders bearing the lion’s share, followed by multilateral lenders and countries such as Japan, China, and India.

Sri Lanka had widespread support at the 49th session of the Human Rights Council in May of this year, with 47 Council members voting in its favor. Saudi Arabia, Egypt, the Philippines, Nepal, Kenya, Ethiopia, the Maldives, China, Cuba, Japan, the Syrian Arab Republic, Viet Nam, the Democratic People’s Republic of Korea (DPRK), Venezuela, Nigeria, Pakistan, Cambodia, the Russian Federation, Lebanon, Uganda, Belarus, Zimbabwe, Eritrea, South Sudan, Lao PDR, Yemen, Iran, Niger, Kazakhstan, Bangladesh, and Azerbaijan were among the 31 countries that spoke in support of Sri Lanka during the interactive dialogue.   Of fact, many of the countries listed above are poor African states.

Sri Lanka is still in talks with many countries, although only Bangladesh on the list above has provided financial aid to Sri Lanka twice during a financial crisis. Saudi Arabia could easily share some of its wealth with Sri Lanka. State Minister for Regional Cooperation Tharaka Balasuriya paid an official visit to the Kingdom of Saudi Arabia from March 19 to March 21, 2022. He spoke with the Federation of Saudi Chambers, the umbrella organisation for the Kingdom’s 38 chambers, about economic opportunities in Sri Lanka. Nonetheless, the Kingdom of Saudi Arabia has not vowed to aid Sri Lanka at a time like this.

Many Islamic countries have spoken openly about the prejudices meted out to Sri Lankan Muslims, in addition to the government’s mismanagement and failings. The foreign missions in Sri Lanka have exposed them to the rest of the globe. They have been tweeting about both the failures and the violence on nonviolent protestors stationed at the Galle Face demanding   President Gotabaya to quit.

Japan’s silence

Japan has also been relatively silent after the Sri Lankan government revoked Japan’s agreement to develop the East container terminal and light rail transportation (LRT). Last week, Foreign Minister Prof. G. L. Peiris asked Japan for sustained assistance, both bilaterally and through multilateral channels, to alleviate Sri Lanka’s economic woes. Following its decision to work out a debt restructuring plan with the International Monetary Fund, the Government of Sri Lanka told Japan it would seek assistance from Paris Club lenders, G7 countries, and other creditors.

Japan addressed how to strengthen future collaboration with Sri Lanka. In this context, the Japanese envoy emphasized the Japanese government’s support for finding long-term solutions to stabilize Sri Lanka’s economy. It is unknown how Japan will support Sri Lanka.

China, on the other hand, has been quietly watching Sri Lanka and its plans to resurrect its economy. The government has urged China to restructure debt repayment, although the government has not yet been informed of their intention. The proposal was made by President Rajapaksa during a meeting with Chinese Foreign Minister Wang Yi in January of this year. Approximately the last decade, China has loaned Sri Lanka over USD 5 billion for highways, ports, airports, and coal power plants, but some of these projects have had little success.

The government is still battling to repay China’s debts, as several of the megaprojects have failed to generate cash for the country. The lotus Tower, the Lotus Theatre, the Mattala Airport, the Hambantota port, and the port city all cost Sri Lanka a large sum of money because they were not revenue-generating enterprises.

The Chinese envoy in Colombo paid a visit to the north, causing a big uproar because it was a pure geopolitical shakeup with India. The same Chinese ambassador recently paid a visit to the East, promising a slew of benefits to the inhabitants of the region. China has distanced itself from the current financial crisis, but it continues to visit communities to demonstrate its unwavering support for Sri Lanka by handing out goodies. They’ve spoken with local lawmakers and government officials to assess the situation in certain provinces, and it’s all part of their strategy.

Through a gazette announcement, Sri Lanka’s President has taken control over Sri Lanka Telecom, the Board of Investment, and the Port City Economic Commission. All of these entities, he claims, are under the control of the Defence Ministry. Since the crisis in Sri Lanka, India has made significant contributions. Tamil Nadu’s government has also expressed their worry by sending aid.

Add to this scenario, former Sri Lankan President Chandrika Bandaranaike Kumaratunga stated last year that China now controls Sri Lanka’s Trade Unions and that the country has effectively become a “colony of China.” She claimed that trade unionists and others in Sri Lanka who were outspoken in their opposition to a recent deal with India have said nothing about China. “The parties that opposed the Indian deal are keeping mum about every national asset allegedly being handed over to China,” she added. “If you look at their bank accounts – those in trade unions and others – how they become millionaires overnight – you have to wonder,” said Kumaratunga.

The trade unions protested vehemently when the East Container Terminal was ceded to India and finally it was cancelled. Today, they are continuing to argue that the Trincomalee oil tanks offered to India should be revoked. So the covert conflict has been between India and the Sri Lankan trade unions, and one can see where it is coming from.

(The views and opinions expressed in this column are author’s own and do not necessarily reflect the official policy or position of CeylonToday)

By R.R.M. Lilani