USAID Head Samantha Power, who made a whistle-stop tour of the island over the weekend, dishing out humanitarian grant aid totalling USD 60 million in the process, in an interview with a local TV channel on Sunday said, “The US, a creditor of Sri Lanka and a member of the Paris Club – are willing to roll up our sleeves and work with Sri Lanka in helping support the country on its road out of this crisis. And we would hope that the People’s Republic of China and that all other creditors would do the same.”
She was referring to the need to be agreeable to restructure Sri Lanka’s debt by its creditors in order to obtain a USD 2.9 billion bailout package from the IMF. The Paris Club, which includes the US and the West, Japan, Russia and South Korea, with India as an observer, have in principle agreed to restructure their credit to Sri Lanka and/or the IMF is comfortable in working with them, the unknown entity however is China which is not a member of the Paris Club.
According to The Washington Post, “China and Japan each hold about 10 percent of Sri Lanka’s foreign debt, but the latter’s money came at much lower interest rates and longer maturities. China also operates separate from the Western-backed Paris Club of official creditors which makes transparency about the loans it has extended elusive.”
Of late, China has been making noises about working with international lenders in restructuring Sri Lanka’s debt, but nothing tangible has taken place on the ground thus far, with China’s apparent aim being ‘debt for land’ swaps, similar to that which took place in regard to the Hambantota Port a few years ago.
China’s opaque lending, where much of the borrowings by the island took place during the Mahinda Rajapaksa era, has the ulterior motive of expanding its military presence by forcing Sri Lanka to make such swaps when it’s unable to service those borrowings.
It takes two to tango, on the one hand a lender (China), where the good and wellbeing of the borrowing country being the last thing in their mind and the other to have corrupt leaders governing such countries, who, like the creditor country, has as their least priority the wellbeing of the country they govern in their mind when committing themselves to make such opaque borrowings.
While Sri Lanka is currently battling the ‘China Syndrome’, Power, in that interview also made suggestions to preempt the recurrence of such a disease in the future. She said, “The crisis here has generated global headlines, there is a lot of soul searching and a lot of questions in other countries about how we can avoid those scenarios for ourselves. So, others are learning, unfortunately, the hard lessons that Sri Lanka is learning as well. But, I think that this is a time where if we could combine more global solidarity with the Sri Lankan people with domestic solidarity, where political divisions can give way to some unity to get through this – this really difficult time and get these reforms on track. Then, one can see Sri Lanka getting to the other side.
It’s the reforms and cutting down on some of the more wasteful programmes, but even wasteful programmes have beneficiaries and there are winners and there are losers. And so, I think, this is why it is so important to keep an eye on the legitimacy of the entire enterprise, and do everything, all authorities, to do everything in their power, to be transparent and candid about the difficult choices ahead.”
It’s therefore not just economic reforms, Sri Lanka should also be cognizant of actioning political reforms as well, the cause for the country’s current socioeconomic malaise and by an extension political unrest, due to exclusive power being delegated to one man as per the Constitution. President Ranil Wickremesinghe, since his election two months ago, has been talking of transferring those powers to Parliament, but this is yet to happen. The sooner he translates words into deeds it would be a step taken in preventing Sri Lanka from going on the road to ‘Somalia’.