how the tiny island nation in the Indian Ocean ended up in such a mess

The chaos in Sri Lanka worsened after the country’s president, Gotabaya Rajapaksa, fled to the Maldives. The president and his family left Colombo on a military plane just hours before his resignation in the face of massive popular protests that culminated on July 9 with crowds of protesters storming the presidential palace.

Rajapaksa is believed to be heading to the United Arab Emirates where it is believed he will step down from his post. Ranil Wickremesinghe, the country’s prime minister, took over as interim president and declared a state of emergency. It is believed he will also step down under pressure from the Sri Lankan people who blame the country’s deep economic crisis on the mismanagement and corruption of Sri Lankan political elites.

Over the past three months, the small Indian Ocean nation has descended into economic malaise. Inflation is over 50% and is expected to continue to rise. There are food and fuel shortages and the country defaulted on its external debt in May.

There are also political unrest. In this situation, the role of the army will be highlighted. Troops reportedly fired on protesters as they stormed the presidential palace, but army leaders insisted they only fired into the air in the purpose of maintaining order. But many wonder whether the military will step in to run the government, at least until order is restored and a new government is formed.

Will the army take over?

But while military intervention could restore order to the streets, army leaders are unlikely to want to take a direct part in government.

There are two reasons for this. The first is cultural. There were occasions when the country could have bowed to the power of the military. These were the years of ethnic civil war between 1983 and 2009. Many believe it was the military that kept the nation from falling apart during this period before winning a decisive, albeit controversial, victory over the separatists.

Yet despite the oversized role played by the country’s military establishment, years of hardship, war and human rights abuses, Sri Lankans have steadfastly retained their democratic civilian government. There were coup attempts in 1962 and 1966 and again in 1991, but they were all thwarted by the civilian government.

The other reason is economic. The main problems facing Sri Lanka are the result of economic mismanagement and corruption. A new administration will need to quickly secure international loans or other support to stabilize the economy and resume the import of food and fuel. This can only be possible with a civilian leader leading such negotiations.

The problem a military government would face is that the military is still discredited in the eyes of the international community due to the massive human rights violations committed during the civil war against the country’s Tamil separatists. If an army general were to take power now, Sri Lanka would become a pariah – and find it next to impossible to increase the foreign investment it so desperately needs.

The importance of choosing someone who can negotiate loans from international institutions such as the IMF, World Bank and AfDB was underscored when Rajapaksa appointed Wickremesinghe, the prime minister, to the finance portfolio. Wickremesinghe had already announced a package of reforms aimed at stabilizing the economy and planned to present a debt restructuring plan to the IMF by August.

Hocked in Beijing

Sri Lanka’s economic misfortune can largely be blamed on the corruption of the country’s political elites as well as government mismanagement: unaffordable tax cuts and grandiose infrastructure projects have drained the treasury, while a huge trade imbalance has emptied the country’s foreign exchange reserves.

The problem was compounded by the decision to repay debts rather than restructure. China has been one of Sri Lanka’s biggest creditors and has been reluctant to make any concessions, fearing that reducing Sri Lanka’s debt – racked up mainly as a result of the Belt and Road projects – will not urges other debtor countries to do the same and put the Belt and Road program at risk.

In 2017, when Sri Lanka failed to repay its $1.1bn (£920m) Hambantota port development loan on Sri Lanka’s south coast, it was forced to sign the port – and thousands of acres of land around it – on a 99-year lease. China already owns 43% of the massive Colombo Port City development on another 99-year lease.

Delhi-based think tank Red Lantern Analytica said on July 9 that China had “used its devious ‘debt trap diplomacy’ to gain a strategic advantage over the nation and hold its economy hostage.” This should be a wake-up call for all other non-Western countries that have borrowed heavily from China. Beijing should also take some responsibility for Sri Lanka’s difficult financial situation. But there are few signs, so far, that this will be the case.

Amalendu Misra, Professor, Department: Politics, Philosophy and Religion, Lancaster University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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