Emerald is a metaphor for green. The precious stone is known to possess healing powers and the colour green symbolises harmony and relates to freshness. Sri Lanka, the planet’s famed Emerald Island, is burning and gasping for massive aid. Neither harmony nor freshness is alive in this island nation.
A Basket Case
Finally, the beleaguered Sri Lankan Prime Minister Mahinda Rajapaksa has capitulated and called it a day. He would never want to remember this darkest day in his career as Sri Lanka’s head honcho and one of the most popular political leaders of yesterday. Analysts say Sri Lanka will have to remain in economic crisis for more than two years, while staying now battered by life-breaking shortages. By defaulting on its billions of foreign debt, both principal and interest, Sri Lanka has transformed eminently into a basket case. Such a default has never happened before.
What brought Sri Lanka and the Rajapaksas to this dire pass? What has caused acute scarcity of food and fuel, pills and power, setting the otherwise peace-loving populace on an incendiary of rage and ravage?
Profligacy and over-dependence on China are cited by global analysts as the prime cause. The officially declared US $ 1.7 billion reserves too are largely represented by a Chinese currency swap, which are unusable against imports. In fact, Sri Lanka is woefully short of forex reserves.
A closer look at the island’s government debt is warranted. Sri Lanka’s debt to Gross Domestic Product was last recorded at 101 per cent. Considering the fact more than 35 per cent of Sri Lanka’s external debt is through sovereign bonds, the crisis has precipitated faster than expected. Much of this debt went towards financing mega infrastructure and vanity projects with no immediate returns.
Deleterious Dynastic Politics
Worse, Sri Lanka’s Minister of Finance (until 3 April 2022) was another incompetent dynast. This Sri Lankan-American politician Basil Rajapaksa (he holds an American passport) was inducted into the cabinet through a constitutional amendment allowing dual nationals to become ministers. Lanka is realising today it hasn’t got much from him. Lankans saw taxes slashed in a flush of populism when revenues were needed for rebuilding and rejuvenation.
Unpardonable procrastination deepened the fissures inflicted by profligacy. Excessive Chinese dependence did lull the Sri Lankan government into such complacency, it delayed sounding the IMF out for help in time. Finally, Sri Lanka sunk helplessly into a financial morass.
Adding to Lanka’s woes, Covid-19 could not have come at a worse time. Hit by a major drop in its lifeblood tourism revenues, coupled with a Rajapaksa-made financial crisis, Sri Lanka was thrown headlong into a payment problem. This led to an inability to pay for fuel imports and the resultant daily blackouts. Clearly, Lankans couldn’t help witnessing the paralysis of industrial and commercial activities in their own lifetime. Not the least, overt voter encouragement to dynastic-populistic electoral politics has done the island nation in. The fawning Sri Lankans happily loved and tolerated the Rajapaksas for long and this speaks tomes about Sri Lankan’s blind faith in dynastic politics.
On a last count, there were as many as seven Rajapaksas in Lankan national politics and the family has dominated Lankan politics since 2005. Not a fact to be overlooked. Penchant for hero worship leads to dictatorship, whatever form it may take. A no-brainer it is. In a way, grieving Sri Lankans should thus share the responsibility for pushing their country over the financial precipice.
Lessons for Many
These pathogens carry in them vital lessons for many global nations and their enfranchised nationals. Most significant of them is this. Prudent states should avoid depending on a single mentor-nation for supplies (food, medicine, industrial inputs and defence), technology and finance. Analysts feel strongly about the need to broad-base dependence, diversify supply sources and hedge the bets. Smart nations know well why playing the role of a smart and a dispassionately equitable buyer is vital in today’s geopolitics.
Not a time for prolonged deliberations when nations discover the first faint signs of a developing crisis. Avoid procrastinating, recognise the crisis at the door and make the right moves, Lankan watchers had warned. Alert nationals thus need to identify proactive politicians who will go on to build formidable defences in the larger interests of the nation and its denizens. Economic wisdom suggests states avoid over-dependence on a single sector of economic activity and go on to diversify. Faced with a pandemic-like situation, nations should know how to shift their bets quickly to pandemic-agnostic sectors.
Beyond doubt, enfranchised nationals should unblinkingly shun vote-bagging populism and repugnant dynastic politics. As democratically endowed responsible nationals, they should dismiss the dynasts outright and cast their votes for the most eligible and the most capable, regardless of caste, community and ideology. Right time now to appreciate political dynasts hurt democracy and breed corruption and mediocrity. People who forget the Bolsanaros of Brazil, the Kims of North Korea and the Gandhis of India, among many others, do so at their own peril. Just as the grieving Sri Lankans are realising today.