The causes of the current societal, economic, and political crisis in Sri Lanka are complex. The immediate roots of the crisis are the local and global economic factors, fuelled by the popular protests against the corruption of the governing political elites. What does the ongoing crisis have to do with catastrophic or distant events like the COVID-19 pandemic or Russia's war of aggression in Ukraine? What role does foreign debt, especially indebtedness to China, play in the crisis? How does the fragile architecture of Sri Lanka's political economy and its dependence on remittances survive when funds are being siphoned off into foreign investments by the national elites? What are the prospects of civil society-led democratic reforms in the face of Sri Lanka's militarized political structures?
Guests featured in this episode
Neloufer de Mel, Senior Professor of English at the University of Colombo in Sri Lanka. Drawing on feminist scholarship, postcolonial and cultural studies, she has published extensively on Sri Lankan society, gender, justice. Neloufer has been awarded numerous prestigious fellowships and grants from the MacArthur Foundation, a Fulbright Scholarship at Yale, and the IWM in Vienna. Some of her books are: Women and the Nation’s Narrative: Gender and Nationalism in Twentieth Century Sri Lanka, Gendering the Tsunami: Women’s Experiences from Sri Lanka, and Militarizing Sri Lanka: Popular Culture, Memory and Narrative in the Armed Conflict (2007).
GLOSSARY:
Who are the Rajapaksa Family?
(04:10, p. 1 in the transcript)
The Rajapaksa Family: Sri Lankan family, which has dominated the country’s politics for much of the past two decades. During Mahinda Rajapaksa's presidency, it was seen as one of the most influential families in the country with many of its members holding senior governmental positions. The Rajapaksas were briefly out of the government after losing in the 2015 elections, but they returned to power with Gotabaya Rajapaksa as their presidential candidate in 2019. He won and soon after brought his elder brother, Mahinda Rajapaksa, back to the government as prime minister and handed key positions to several other members of the family. The popularity of the Rajapaksa family collapsed after their actions caused the economic crisis that started in 2019, resulting in Sri Lanka defaulting on its debt for the first time in its post-independence history. Source
What are the 2022 Sri Lankan protests?
(04:50, p.2 in the transcript)
Spring 2022 Sri Lankan Protests (also known as ‘Aragalaya’ – Sinhalese for ‘struggle’): A mainly youth-led mass protest movement over Sri Lanka’s worst-ever economic crisis. During the period, the protesters forced a president and a prime minister to resign, with President Gotabaya Rajapaksa even fleeing the country to escape the uprising. Tens of thousands of people hit the streets in Colombo, occupying important government buildings, including the official residences of the president and the prime minister. Source
What was the Sri Lankan Civil War?
(05:50, p.2 in transcript)
Sri Lankan Civil War: Political unrest, which escalated in the 1980s as groups representing the Tamil minority moved toward organized insurgency. Tamil bases were built up in jungle areas of the northern and eastern parts of the island and increasingly in the southern districts of the Indian state of Tamil Nadu, where Tamil groups received official and unofficial support. The Liberation Tigers of Tamil Eelam (LTTE) — popularly known as the Tamil Tigers — was the strongest of these, but there were other competing groups, which were sometimes hostile to each other. The Sri Lankan government responded to the unrest by deploying forces to the north and the east, but the eruption of insurgency inflamed communal passions, and in July 1983 there were extensive organized anti-Tamil riots in Colombo and elsewhere. Sinhalese mobs systematically attacked Tamils and destroyed Tamil property, and the riots forced refugees to move within the island and from Sri Lanka to Tamil Nadu. Source
What is the Galle Face Park?
(08:10, p.2 in transcript)
The Galle Face Green Park: a five-hectare ocean-side urban park, which stretches for a half kilometre along the coast. The area was occupied during the 2022 Sri Lankan Protests with the protesters establishing a ‘village’ named ‘Gotagogama’, or ‘Gota go village’, in Sinhala. Gota-Go-Gama has been set up (similarly to Occupy Wall Street) like a small model village, providing basic necessities, including free food, free water bottles, toilets as well as limited free emergency medical services. Source
DiQ S5E3 – Neloufer de Mel
S.R.: Welcome to "Democracy in Question," the podcast series that explores the challenges that democracies are facing around the world. I'm Shalini Randeria, rector and president of Central European University in Vienna, Senior Fellow also at the Albert Hirschman Centre on Democracy at the Graduate Institute in Geneva.
I'm delighted to welcome Neloufer de Mel, senior professor of English at the University of Colombo in Sri Lanka. Drawing on feminist scholarship, post-colonial and cultural studies, Neloufer has published extensively on Sri Lankan society, gender, and justice. Let me just mention three of her books here, "Women & the Nations Narrative: Gender and Nationalism in Twentieth-Century Sri Lanka," "Gendering the Tsunami: Women's Experiences from Sri Lanka," and most recently, "Militarizing Sri Lanka: Popular Culture, Memory and Narrative in the Armed Conflict."
She has been awarded numerous prestigious fellowships and grants, including from the MacArthur Foundation, a Fulbright scholarship at Yale, and at the Institute of Human Sciences in Vienna.
I discuss with Neloufer, the complex causes and unfolding trajectory of the current societal, economic, and political crisis in Sri Lanka. Beginning with the immediate roots of the crisis, we address the local and global economic factors that fueled popular protests against the corruption of the governing political elites.
What does the ongoing crisis have to do with catastrophic or distant events like the COVID pandemic or Russia's war of aggression in Ukraine? What role does foreign debt, especially indebtedness to China, play in the crisis? Another question we will discuss is the fragile architecture of Sri Lanka's political economy, its dependence on remittances, and the siphoning off of funds into foreign investments by its national elites. What are the prospects of civil society-led democratic reforms in the face of Sri Lanka's militarized political structures?
Neloufer, welcome to the podcast, and thanks for making the time to talk to me in the midst of the current crisis in Sri Lanka.
N.M.: Thank you, Shalini. It's a pleasure to be talking to you.
S.R.: So, let's start, Neloufer, by discussing the causes of the intense domestic turmoil in Sri Lanka. President Rajapaksa was recently forced to flee the country under pressure of massive public protests. And it's not immediately clear whether the main cause of the crisis is political, or economic, or a combination of the two. The corruption of the Rajapaksa family is certainly an issue, which was brought up again and again in the protests, but members of the family have had to even earlier escape the country to escape from prosecution and accountability. So how do you explain the monopoly on political power this family has held for so long, and why do you think it's been broken so decisively this time?
N.M.: You're right to say that it's both economic and political. Two crises that came together to make the unmaking of the Rajapaksa family. Both these crises were long time in the making. If I were to start with the fiscal crisis first, successive Sri Lankan governments borrowed money but the modality of that borrowing traditionally was through bilateral loans or loans from the World Bank and the Asian Development Bank. And what happened from about 2010 onwards was that Sri Lanka was able to, as a middle-income country, access the global capital market, which itself had expended at the time on the back of stimulus packages from western governments. And Sri Lanka then developed its own bond market, giving international sovereign bonds from about 2013 onwards.
And to attract creditors, it gave a slew of incentives, including tax holidays. However, rather than using this borrowed money to invest in industries and diversified exports towards further economic growth, the Sri Lankan Government, particularly led by the Rajapaksa family, spent it on infrastructure and vanity projects, which ranged from highways to airports, and even a cricket stadium close to family territory.
These investments produced little yield. So, by early this year, Sri Lanka had notched up an unsustainable public debt of 110% to GDP. And this economic crisis really weakened the political power of the Rajapaksas because people directly made the link to their economic mismanagement and corruption with the economic crisis that is currently going on in the country.
S.R.: So, were the protests this spring, then, motivated by just a bleak economic outlook and outrage at corruption, as well as petrol and electricity shortages, or if we look behind the proximate sources of discontent at the larger systemic fault lines in governance, both politically and economic, do you see alternative political visions emerging from those who are engaged in these protests?
N.M.: Definitely, the fault lines were the second part of the twin crisis that was also in the making for a very long time. And this had become evident in Sri Lanka in the institutional decay that had set in, whether it was our bureaucracy, or our judiciary, or our politicians who had become increasingly corrupt and thuggish.
At the same time, there had been a steady militarization of society, something that grew out of the long civil war in Sri Lanka between the government forces and the LTT, all of this really affected every strata of society. And it was the institutional decay and fault lines in governance was one of the major reasons why the protesters came out. But it was that economic crisis that really hit you. I mean, when there was no food on the table, when there were the gas shortages and you had to spend days in a queue to get a little bit of petrol, that was the situation, the catalyst, if you like, that allowed the political protests to happen in the way they did.
Now, the actual protest itself, which we call the Aragalaya, or the struggle, was really also a culmination of a series of protests that had taken place in various parts of the country by farmers, teachers, and health workers, demanding transparency, better governance, and a system change. The protesters were largely youth, and they were saying, "We are a new generation, don't mess with us. We don't want that divisive ethnic politics that has been played before that led to communal violence and a civil war." They wanted young people with expertise and technical knowledge in parliament. They wanted transparency, and, of course, no fraud and corruption.
So, these were the kinds of slogans that really galvanized a very heterogeneous group of protesters at first. And we had never seen these large numbers come out, whether they were families from a particular neighborhood, or groups of artists, or student unions, or trade unions, all come together at Galle Face, that then became renamed Gotagogama towards this kind of vision that they were holding.
S.R.: But Neloufer, if we look at the Sri Lankan case, it's a good reminder of the fact that today, no political or economic crisis can be exclusively traced back to domestic policies, right? So, the high food prices and the petrol shortages, which you are experiencing, are also related to the Russian invasion of Ukraine, which has severely disrupted the supply of both grain and fuel in the global markets. And Sri Lanka has been dependent on imports of both food grains and fuel. And, of course, the COVID pandemic has hit the country's economy hard due to the restrictions on travel, leading to a fall in foreign exchange revenues from tourism, which was a major economic source of the country's budget. Many of your tourists were Russians, who are now unable to travel due to sanctions on top of the COVID restrictions, so could you situate the current crisis within this larger global context?
N.M.: Yes, Shalini. So, there were both external and internal reasons for this crisis. And we've talked a bit about the internal reasons. Before the war in Ukraine, we also had the 2019 Easter bombings in Sri Lanka, that put paid to the tourist arrivals in 2019, then followed by the COVID-19-related lockdowns, and now, the war in Ukraine. And it's not just tourists from Russia, because after India, which occupies first place, Russia and Ukraine come second and third, respectively, as the countries from which most tourists arrived to Sri Lanka.
So, the cancellation of charter flights from Russia and Ukraine, and the sanctions that you spoke of, hit this market very badly. At the same time, on the orders of Gotabaya Rajapaksa, there was a very sudden shift to organic agriculture and a ban on fertilizer, which created a severe shortage of rice and grain in the country. And these commodities had then to be bought on the world market at a time when we know that the war in Ukraine has affected global food prices. So, it was really a perfect storm of both internal and external factors that also has led to this particular situation in Sri Lanka.
S.R.: So, speaking of these external shocks, Neloufer, I think it would be important to discuss the role of foreign debt. The director of the IMF recently singled out Sri Lanka as a warning case – sign that other countries with high levels of indebtedness and limited scope for flexible economic policy should take seriously because Sri Lanka's bankruptcy could well point to similar problems of capital outflows and dwindling sources of credit on the international market elsewhere.
So, I think it would be interesting to hear from you something about the whole question of indebtedness, who are the main creditors apart from international donors? What role do Western private banks play, but especially what role does China play in all of this? And could it be that domestic elites, and this is something we have seen in Argentina, as in other countries, too, that these domestic elites hold a substantial part of this public debt through investments abroad, and they thus have a vested interest in debt servicing at the cost of harsh austerity, which is foisted on ordinary citizens, so that the decision of local Sri Lankan elites, as Argentinian elites earlier, to invest abroad, rather than at home has been another factor, which has compounded the crises along with the relatively high dependence on remittances from Sri Lankans working abroad?
N.M.: Absolutely. So, you mentioned China, and, yes, China is a central player in this, although it owns only an estimated 10% of Sri Lanka's debt, the same as Japan, while the Asian Development Bank owns about 13%, and the World Bank 9%. However, the largest share, around 47%, is owned by international capital markets, and various banks headquartered in the West. So, as total debt goes, China does not hold the majority of the debt. But what China did finance in Sri Lanka were those low-yielding investments that I spoke of earlier. And the close relationship of Mahinda Rajapaksa to China, and the opaqueness of the loan agreements with lots of confidentiality clauses, became a real question.
Now, China has so far been fairly non-committal on the debt restructuring. It was not happy at first that Sri Lanka approached the IMF because it was worried that the Sri Lankan case would be a precedent, paving the way for other countries it has lent money to, to demand a similar restructuring. So, having said that, the most recent Chinese participation on a multi-creditor committee, as in the case of Zambia, is being looked at by Sri Lanka with great interest as perhaps a favorable sign.
Now, India's role is also significant. So far, India has assisted Sri Lanka to the tune of $4 billion in loans, and currency swaps, and other aid, and right now, it is Sri Lanka's top lender. And, of course, geostrategic interests are at play, given Sri Lanka's geographic location in the Indian Ocean, which is also why China is interested. So, we have this really difficult balance that we have to tread between both India and China. And, on the other hand, the IMF that now has told the Sri Lankan government that it wants China to also sign on to a debt restructuring if the talks are to proceed, because it wants everybody, all the creditors to come together. And this has taken time. The Sri Lankan government says it's working on it, but it has meant delays.
And, in the meantime, there is no obvious alleviation to the economic crisis that the people are feeling. Also, because the Sri Lankan government printed money to pay for government expenditure and keep the Sri Lankan rupee at a kind of a rate, the Sri Lankan rupee is estimated to have devalued as much as 32%. And as a result of this, there's very little confidence in the Sri Lankan economy or the banking sector, and both political elites and anybody who can has actually tried to keep their money overseas, or what they do is they use informal methods of remittances because in the informal market, you get more Sri Lanka rupees for $1. So, that has also had an impact on the income that the Sri Lankan government has had, or is able to get through worker remittances, which in any case has fallen drastically.
S.R.: So, let's turn to one point Neloufer, which you mentioned on which you have done a lot of work yourself. And that is this prevailing political culture of hyper-militarization due to the Civil War. Could you say something about how that militarization has affected the current concentration of wealth, especially inland, after the decades of violent armed conflict until 2009, 2010? So, the major question here is, did you see a successful restoration of democratic norms and institutions from 2010 onwards, or did you see a militarized system, which had a thin formal layer of elections, but otherwise, was still not the earlier liberal democratic institutional system that you were used to?
N.M.: So, this is a really interesting question, Shalini, because the then President, Gotabaya Rajapaksa, appointed many retired army personnel who he knew and trusted to key state ministries and institutions. And, in fact, quite a lot of them are still in place. So, you felt you had a classic case of militarization with this military stepping more and more into civilian life and its institutions. But what is really interesting is that when the protests began, the army pretty much stayed in their barracks. They did not shoot live rounds at protesters, and they were not given that order.
And it was largely the police that was tasked with maintaining law and order. When it came to the protests, I would say, by and large, there was this sense of a liberal democracy at play. And this is why it was so surprising that when President Ranil Wickremasinghe, who has that liberal image about him took oath on the 21st of July, and on the 22nd, very early in the morning, there were a huge number of troops that went and beat up and dispersed a few protesters, the stragglers, actually, who were at Galle Face. So, there was this kind of disproportionate use of the military after President Wickremasinghe came into office, but the Rajapaksas resisted that. So, it's interesting, and I think we need to have a little bit more insider information as time goes on to really analyze what happened.
S.R.: So, let me turn to the protesters themselves, because you've referred to the protest as not just concentrated in the Capital, but the protests have been all over the country, protests also by farmers, students, trade union members, but also just by ordinary people, and a rather heterogeneous mass of people without strong central leadership. So, it seems as if these are sort of uncoordinated, rather ad hoc, spontaneous protests, which then get channelized into force, which has been able to bring down the government, and eventually forced the president to leave office. So, was this scale and this kind of mobilization unexpected for you?
N.M.: Completely unexpected. So, what you had before leading up to the Galle Face protests were actually trade union actions, and farmers who had been badly affected by that sudden shift to organic farming, where they did not have fertilizer, and their harvests were going down. And they were really desperate. So, they came out first, and then you had teachers and the public health workers who were organized unions. But these protests took fairly conventional forms of a protest march, of placards. What was different with the Galle Face protests, or the Gotagogama protest, was the sheer heterogeneity of it, at the beginning, and the scale, right, with thousands of people in Galle Face.
And it was different also in form. There was street theater. There were concerts, there were tents. There was something called the People's University tent. There was a tent called the Tear Gas Cinema, in which a documentary film was shown. There was food sharing. There were interfaith commemorations that took place. We had never seen this form of association before. And that really captured the imagination of the entire country, the tents, the young people, the music, just that sense of joy, at least which was there in, I would say, April, May, and June, was really infectious. But what happened, I would say, by end of June, July, was that the protesters that had said they did not belong to political parties or did not have a leader, they began to have political formations.
And so, the Inter-University Student Federation became very powerful and aligned to a frontline Socialist Party, the JVP, the Janatha Vimukthi Peramuna, became a very central presence. So, by July, the protest had begun to morph into what was more visible on political party lines.
S.R.: So, one remark and one question, the kind of protest you are describing, this joyous effervescence and lots of different kinds of events from Peoples University to cinema, to performances reminds me very much of the Maidan in Ukraine in 2014. And then suddenly, we saw the storming of the presidential palace, which reminded one of the January 6th, storming of the Capital, but nothing could be more different from the Washington case orchestrated by Trump and his supporters to the protest here, in Colombo, of people occupying then the presidential palace.
So, these were sort of two associations I had in mind when I was watching these images. And the one question I would have to you, when you see people storming the presidential palace, it's mostly men. But on the grounds, we were seeing a lot of women. Could you say something about the whole question of gender in the protest movement, and how the whole question of gender is also now being discussed as part of the austerity politics, which will be forced onto ordinary households?
N.M.: I mean, if you take the university student associations that were there, women are very active. They're there in large numbers in those associations. And they were very much there in Galle Face. They were part of storming the presidential house and secretariat, but much less in number. And I think this was because there was a lot of force. The protesters knew they would have to meet the army, the special task force. And the Air Force was called upon at one point, the Navy was called upon, and the security forces. And I think the women were far less in number in the actual storming. But what happened was, after the protesters occupied presidential house Temple Trees, which was the Prime Minister's residence, and the presidential secretariat, women were there in droves, and women were there as mothers, they were taking their children.
There was a lot of tourism to those places, and it was the general public that would never have had access to these places before going in and seeing all of that. So, you did have the women, except for when that violence was actually occurring, and then their numbers decreased. Now, as to the impact of all of this on women, it's extremely worrying because there's a situation of food insecurity. In fact, the World Food Programme and UNICEF have made a call for humanitarian food assistance to Sri Lanka because we're worried about malnutrition. And we know that the girl, child and women are going to be particularly affected when a food shortage or when food is so expensive, and people won't be able to get the amount of protein they need.
We also know that where there's a severe shortage of medicine, women's health-seeking behavior will take a step back. Year-on-year, food inflation is currently at 90%. So, with those kinds of figures, we are going to see a terrible impact on women, whether it's on their nutrition, their health, or their employment and general wellbeing.
S.R.: So, let me wrap up with my last question to you, that is, the civil society movement has succeeded in bringing about political change for the moment. And the question is, can it mount an electoral challenge? Does it even want to contest elections and come to power? And can the civic groups monitor and influence the ongoing negotiation of the current government with the IMF? Because, at the moment, there is still political instability. There is economic uncertainty as the credit restructuring is being negotiated, and the loan agreement with IMF is yet to be signed.
N.M.: I would say that there has been no transformative political change. Yes, the protesters were successful in getting rid of the Rajapaksas as president and prime minister, but what happened was that Ranil Wickremasinghe’s ascendancy to position of president, which came entirely through a legal parliamentary process as set down in the constitution was on the back of the Rajapaksa political party, which is the SLPP.
So, they are still in power, even though the figureheads may have gone. And the general opinion is that the figureheads are actually behind the scenes. So, there has not been a transformative political change. And what people are calling for, certainly, the Janatha Vimukthi Peramuna, the JVP is calling for is an early election because there is a gap between the aspirations and the vision of the people on the ground and who is representing them in Parliament. So, they're calling for a fresh election, and a fresh mandate, and a fresh set of people to Parliament. So, elections are very much part of the demand at the moment.
A recent poll by the Center for Policy Alternatives on trust in leadership has given the highest place, that's about 48.5%, to the leader of the Janatha Vimukthi Peramuna. Now, the JVP has refused to participate in the all-party government that President Wickremasinghe has called for. And they're also very organized on the ground. So, what this shows is that there is a shift to wanting politicians there who have nothing to do with the current government. With this whole protest movement, one of the things that happened was many watchdog groups extremely active on social media. And the mainstream media also gave more space for commentary on economic and political reform.
So, there's certainly not currently anything in place to know the nitty-gritty of the negotiations that are going on with the IMF. In fact, I understand the staff-level agreements with the IMF are not public documents. So, while we know what the broad recipe will be like, because this recipe will be no different than what the IMF has proposed to other countries in the situation, we really do not know the details. So, we have to wait and see.
S.R.: Thank you very, very much, Neloufer, for this really fine-grained analysis of both the causes of the dual crisis, political and fiscal, in Sri Lanka, the complexities of the current situation and also thoughts about how it may develop in the near future. So, thank you for being with me today.
N.M.: Thank you so much, Shalini. It's been a real pleasure talking to you.
S.R.: Let me wrap up some of what we have just heard. The ongoing political and fiscal crisis in Sri Lanka have been long in the making. The current crisis is caused by a mix of domestic and external factors, foreign borrowing, which provided little yield, as most of it was invested in vanity projects, but also, a reduction in remittances coming from abroad led to an unsustainable level of public debt, and thus to the recent sovereign default.
This was compounded by a steady militarization of the country during the Civil War, then institutional decay into the country's bureaucracy, its judiciary, and its political elites, many of whom were accused of corruption.
The present protest movement was initially one of farmers hit by the government's policy of organic farming, which banned fertilizers all of a sudden. This led to a huge downfall in agricultural production, leading to food shortages, which were compounded by the problems caused by the Russian aggression in Ukraine, since Ukraine and Russia were both supplying food grains to Sri Lanka.
The more recent protests were a much more heterogeneous mix of young people, students, unemployed, self-employed, middle-class families coming out with children to protest against, not only the corruption of the government but shortages of food and fuel.
The external causes of this crisis can also be found in the downturn in tourism, which led to a massive fall in foreign exchange. The crisis in tourism was not only caused by COVID but also domestic acts of terrorism, compounded then, by Russian and Ukrainian tourists staying away. These were the countries from which most of Sri Lanka's tourists came. And, therefore, the Russian war of aggression in Ukraine has affected Sri Lanka in many, many ways, both political and economic.
China only owns 10% of the debt to the country, however, a lot of those are opaque loan agreements, about which little is known, and the Chinese government is non-committal about restructuring its debt to Sri Lanka as to other countries.
India has played an interesting role in the current crisis by becoming a top lender to the country and an important ally for geostrategic reasons as well because it has assisted Sri Lanka currently to the tune of $4 billion.
The scale and the form of the current protests in Colombo were unexpected and different from earlier protest movements in the country. The scale of the protests was massive, but the form was different because it included street theater, so-called Tear Gas Cinema, People's Universities, interfaith commemoration, in which a large number of actors came forward with educational, aesthetic, artistic forms of protest, all of which captured people's imaginations across the country. Yet, the political changes that we are seeing currently may prove to be ephemeral. They are certainly not yet transformative.
The protest movements are at a crossroads. It's unclear if they will participate in the forthcoming elections, whether elections will be pre-pawned, and whether fresh parliamentary representation, which is needed, can be brought about through a new set of people contesting these elections.
This was the third episode of season five. Thank you very much for listening. Join us again for the next episode in a fortnight, when I'll be speaking with Mykola Gnatovskyy, a Ukrainian legal scholar who has now been elected to the European Court of Justice about the legal means available to deal with war crimes in Ukraine.
Please go back and listen to any episode you might have missed. And, of course, let your friends know about this podcast if you're enjoying it. You can stay in touch with the work of the Central European University at www.ceu.edu and the Albert Hirschman Centre on Democracy at www.graduateinstitute.ch/democracy.