Sri Lanka’s political-economic crisis and its new president

4 August 2022

In democracies, elections are an excellent technique for giving effect to the will of the majority. In 2019, Sri Lanka’s Sinhalese Buddhist majority proved the power of democracy by electing Gotabaya Rajapaksa as their president. In his inaugural speech, Gotabaya appealed to the minority community to join him, pointing out that the Tamil and Muslim community vote was substantially below what had been anticipated. In less than three years of the Rajapaksa regime, the Sinhalese Buddhist majority joined the minority community’s narrative and incited a massive protest to remove the democratically elected leader.

Liberal democracies have mechanisms that modify electoral democracy to limit majoritarian rule in both governance and institutions, such as constitutions and laws protecting minority rights, undercutting the majority rule. In Sri Lanka, this has been absent in many of its regimes. For example, Gotabaya maltreated the minority community through the forced cremation of Muslims during the pandemic and he used the Prevention of Terrorism Act (PTA) to intimidate and arrest the Tamilian community. He extended his militaristic rule to silence not only minority communities but also the Sinhalese, such as a police officer investigating the murder of a popular journalist, and many others who had to leave Sri Lanka fearing for their own lives.

President Gotabaya could not sustain this model, and most Sri Lankans saw him unfit for office. There is a disconnect between the current legislature and the public. The disconnect is that the majoritarian government that Rajapaksa formed in 2020 and its parliamentarians have lost the public’s confidence. Due to the unpopularity of the government, the electoral mandate has been nullified. At a certain point, the legislature, which has lost the people’s trust, must match its actions with the protestors’ demands. Without narrowing the trust deficit and accepting protestors’ demands, several new waves of protests may be triggered again, leading to complete anarchy.

Sri Lanka’s ‘Arab Spring moment’

Sri Lanka’s protest has stretched to over 100 days and it keeps going. The people's uprising on 9 July was historic and comparable to an ‘Arab Spring moment’, where protestors challenged the leadership’s autocratic rule, rampant corruption, and dire economic conditions. For the first time, a president elected for a popular majoritarian Sinhalese Buddhist mandate was removed by force, with protestors storming the president's house and office, demanding his resignation. The president fled the country in a military aircraft to the Maldives and then to Singapore, submitting his resignation to the Sri Lankan embassy in the latter. The protests continue, with people requesting newly appointed President Ranil Wickremasinghe to also resign.

While internal political maturity is required to emerge from the political-economic crisis with objective policy measures, Sri Lanka needs immediate regional and extra-regional assistance to help the country stabilise through the existing political model or through democratic elections in the coming months.

The initial challenge for Wickremesinghe will be to win the protestors’ trust and establish political stability. A daunting challenge, considering he is identified as being connected to the old regime, and that he used a backdoor entry to become Rajapaksa’s prime minister despite only having one seat in the legislature. Wickremesinghe depended heavily on Rajapaksa’s political party members’ votes from the parliament to become president. The dependence on the old regime will exacerbate the protests, since the new leadership will not take many measures to take accountability for addressing corruption in the Rajapaksa regime. After more than 100 protestors were injured and media personnel were beaten by security forces, Gotabaya Rajapaksa finally resigned on 9 July and the protestors celebrated their achievement.

Important lessons can be drawn from what came after the Arab Spring in order to minimise the harm that could come to Sri Lankan society in the process of establishing stability. In Egypt, after the 2011 Arab Spring, 11,700 people were charged with terrorism offences and detained from 2013 to 2020. Imprisoning people for their political views and claiming that it was necessary for stability should be a clear warning for the Sri Lanka people. The new president’s cyber crackdown measures for targeting activists who speak up against parliamentarians, the emergency rule, and the brutal crackdown on protestors on 22 July all raise serious concerns.

Such measures could open a path for the military to expand its grip, even wider than during Gotabaya’s regime. Although President Gotabaya fled the country, he left his appointed officers, including his head of intelligence, director general of defence research, defence secretary, and many others behind. His politically appointed ambassadors still function on foreign soil. Removing the autocratic legacy Rajapaksa left behind will take some time. Restoring the civil-military balance, demilitarising government institutions, addressing minority rights, restoring independent institutions (such as the judiciary and the bribery commission), and reintroducing checks and balances are several steps that could help this transition.

Sri Lanka’s worsening economic crisis

Apart from political challenges, there are also economic challenges that the new leadership should address. Sri Lanka’s economic crisis has worsened with the ongoing political crisis. According to the United Nations, 70 per cent of Sri Lankans miss one meal per day. 12 per cent of poor households are at crisis level, 3 million people need humanitarian aid, and 400,000 have lost their jobs. Daily wage earners, the most vulnerable in society, require humanitarian assistance. In a recent interview, the governor of the central bank Nandalal Weerasinghe warned that the country's political dysfunction may further exacerbate the economic crisis and result in a complete economic shutdown.

Sri Lanka has still not reached a staff-level agreement with the International Monetary Fund (IMF). As its managing director Kristalina Georgieva explained: “Countries with high debt levels and limited policy space will face additional strains. Look no further than Sri Lanka as a warning sign”. More than 30 per cent of emerging and developing countries are in or near debt distress. For low-income countries, that number is 60 per cent. Sri Lanka today has one of the highest inflation rates worldwide, second only to Zimbabwe. Rising commodity prices have a direct impact on social unrest and political instability. In the insolvency crisis, with no foreign reserves to service the debt, the country is seeking assistance from many nations.

India, Sri Lanka’s closest neighbour, has come forward to assist with USD 4 billion of mixed assistance. According to the Sri Lankan ambassador in Beijing, China is also considering donating USD 4 billion in financial assistance. "We are confident that at some point the Chinese system will agree to our requests because these are not unreasonable requests," explained Ambassador Palitha Kohona. Chinese Foreign Ministry spokesperson Wang Wenbin said that “China is ready to work with relevant countries and international financial institutions to continue to play a positive role in supporting Sri Lanka in overcoming difficulties, and easing its debt burden”.

This remark indicates Beijing’s possible willingness to assist with debt restructuring — a concern to Colombo due to China’s own reservations on restructuring the debt, which is an IMF requirement. Sri Lanka will not be able to move out of the present debt crisis without China. China is a large creditor, which requires agreeing to a common framework with the international community to assist Sri Lanka. US Treasury Secretary Janet Yellen explained this at the recent G20 meeting, where she requested that the Group of 20 major economies “put pressure on China to be more cooperative in long-stalled efforts to restructure the debts of countries in debt distress, including Sri Lanka”.

Geopolitical shocks

While the internal economic crisis has its challenges, the external geopolitical factors could further aggravate the crisis in Sri Lanka. The war in Ukraine has escalated fuel prices and ended the Eastern European tourist market from which the Sri Lankan economy benefits. Fitch Ratings predicts that in the coming months “the eurozone recession could negatively affect Sri Lanka’s export and tourism sectors”. This would have a devastating impact since Colombo heavily depends on export revenue from European nations and tourism. The EU is a substantial market for many South Asian nations, including Bangladesh, with 38 per cent, Pakistan, with 26 per cent, and Sri Lanka, with 24 per cent of exports. Sri Lanka has already faced shocks to its lucrative tourism industry due to the Easter Sunday terror attack in 2019 and the COVID-19 pandemic.

The recession in the EU and high inflation in the US will further impact the tourism sector. In the coming months, the economic instability will likely continue, with external shocks and instability adding to both the already ailing economy and the political situation. The fragile nation could invite multiple security threats, just like in its past. While internal political maturity is required to emerge from the political-economic crisis with objective policy measures, Sri Lanka needs immediate regional and extra-regional assistance to help the country stabilise through the existing political model or through democratic elections in the coming months.

DISCLAIMER: All views expressed are those of the writer and do not necessarily represent that of the 9DASHLINE.com platform.

Author biography

Asanga Abeyagoonasekera is an International Security and Geopolitics Analyst and Strategic Advisor from Sri Lanka. Presently, he serves as a Senior Fellow at the Millennium Project in Washington DC. He was the former founding Director-General of the National Security Think Tank under the Ministry of Defence (INSSSL) and former Executive Director at the Foreign Policy think tank (LKI) in Colombo. He is the author of ‘Conundrum of an Island (2021)’. Image credit: Flickr/Nazly Ahmed.