 Hello and welcome to NewsClick on our show Mapping Fault Lines. Today we are going to go into Sri Lanka and mapping the fault lines in Sri Lanka itself. As we know, there are huge protests which have taken place. The government is on the back foot. We have had resignations of the whole cabinet. We also have demands for the resignation of the president and we will have to see whether the new prime minister, who has been appointed after the earlier cabinet resigning, Ranil Vikramasinghe will be able to get the country out of the crisis. So the question is, what started this crisis in which Sri Lanka is currently engulfed in? If we look at the approximate reason, the immediate reason for what has happened, it is that there were protests which were taking place against the government, against Mahindra Rajapakshi who was the prime minister. The country had seen a large upsurge of such protests and there were camps which had been set up not only in front of his house but also at certain distances. It seemed that when the prime minister gave a call to his supporters to come and extend the supports to him publicly, when the supporters came from reports about 3000, Mahindra Rajapakshi addressed them and it seemed the violence that started, really started after this. His supporters went and attacked protesters, attacked the camps of the protesters. There was violence against the protesters and a large scale attacks that took place on these protesters led to a huge upsurge against Mahindra Rajapakshi, his family, the party which he heads, all of that culminated really in the, even the ancestral house of Rajapakshi's being burned down in Hambantota. And finally Rajapakshi resigning as prime minister and taking shelter in naval facility. Now this is completely unusual in Sri Lanka's recent history where protests have not been violent and even the protests against the president, Gotabaya whose Mahindra Rajapakshi's brother and Mahindra Rajapakshi have not been violent, it has been peaceful protests. So this was a really a sharp departure leading to the question, can Sri Lanka come out of this crisis, the political crisis in which it is now engulfed in. So let's look at what led to the crisis and what are the fault lines in Sri Lanka. Let us start first with what have been the cause of the crisis which led to the government actually seeking IMF loan, World Bank loan, loan from China and India because it's foreign exchange position has come to a state where it has only about 50 million dollars in the kitty. It's unable to import gas, it's unable to import petrol, it's unable to import foodstuffs, it's unable to import medicines all of which are necessary essentials for running a country. So it is this kind of crisis in which Sri Lanka's ability to import is become virtually zero as of now that has led to the large scale protests and this has not happened in one day, it has happened over a period of time. Of course if you don't have electricity in the house, if you don't have cooking gas for cooking food, if you don't have supplies of food grains, if you don't have medicines, if your schools are shut because there is no way to even transport people to the school, the students, all of this is a kind of crisis which should never happen in a country particularly because it cannot happen in a day, it has to happen over a period of time and of course the sign should be out there that you have to take action, do something about it and not let it come to this pass. Why did this happen? For looking at that we need to go a little further back. Of course as we know Mahindra Rajapakshi was the president for two terms after defeating what would be called the Tamil insurgency in the north. He got accolades for running a strong government military campaign which had finally put pay to 27 years of insurgency in the country. So all of that meant that Rajapakshi had come with a strong mandate in 2009. Mahindra Rajapakshi, this was his second term, he had come with a strong mandate. So what went wrong? Why is it the entire country today is united against the Rajapakshis? And the reason for that if you want to go back into that history is because it took a number of financial measures which led to what we see as the current crisis. If we look at what has happened it can't be understood till we understand why the Rajapakshi, Mahindra Rajapakshi who at that point of time was somebody who was expected to lead a strong government. His brothers, his family, all of whom were in the cabinet, Gotabaya Rajapakshi in the last election was elected as the president, Mahindra Rajapakshi after two terms of being the president became the prime minister. Why is it that somebody who had that kind of authority that he got from having defeated the insurgency, why is it that this disappeared and why is the crisis so severe today? And that is essentially the story of Sri Lanka that repeatedly it has gone to the IMF, World Bank, listened to policy prescriptions which have said reduce taxes, let capital come up, go into easier trading relationships meaning lower taxes on imports, cut not only taxes on imports but also cut taxes on the rich. So all of the prescriptions which meant that the governments kitty how it supports the people in different ways and Sri Lanka had a strong support system for the people in terms of medicines, the health systems in terms of education all of that then weakened because your finances are not there. Second, Sri Lanka had an economy which also has a huge problem that is it is really an economy based on tourism as one item and the second export of tea. Now if either of the two or both have a problem then of course there is a huge impact on its ability to import goods. The third of course is that its borrowings under IMF advice what I call the neoliberal policies which of course stretch back a long way. It has meant that the government has imported much more than what has been able to export. It has met that by taking loans. The loans have meant increasingly onerous conditions of how they have to liberalize further getting into a vicious cycle of more money being taken as loans and less ability to service those loans. If you look at the loans, the financial crisis which is what is the primary crisis at the moment, if you look at the financial crisis you will see that in spite of what the western newspapers may be saying, the media may be saying, oh this is because of Chinese loans and so on. The bulk of Sri Lanka's loans are from essentially western private capital. It is financial companies in the west, banks in the west and as well as IMF and World Bank particularly the World Bank, then you have Japan and only 10 percent of the total loans that Sri Lanka has is from China, 3 percent is from India, 87 percent are from western financial institutions or western governments mostly from western financial institutions including the World Bank. Now if we put all of it together you will also find that private capital is almost holds almost 52 percent of the loans that Sri Lanka has taken. Again that means high interest rates and today when your, if your exports do not support these outflows that are being demanded for repayments of loans, then of course you get into what is called a fine fiscal crisis or a financial crisis and that is the essential crisis we see today. Why is Sri Lanka not able to service the loans? One of course is the interest rates, of course the amount of loans they have taken all of that is okay but the other part of it that if your money is income is linked to tourism then you have a serious problem if tourism collapses. The second of course if the price of tea collapses in the national market which is again one of your major exports then also you will have a problem and here the major problem that Sri Lanka has had is if you regard tourism as a major source of supply to your economy tourism is what collapsed first because of the bombings that took place in 2019 in the church if you remember then the second of course is the COVID-19 pandemic which in 2020 and 2021 devastated the tourism industry world over but Sri Lanka was particularly hit because it was a major source of their income and this is one part of the problem. When the crisis hit Sri Lankan economy and you didn't have money to pay for your imports then Rajapakshi looked at how they could cut imports and one thing they fixated on was well you know fertilizers are a major part of our imports as well. Let us stop all chemical fertilizers and use only biological fertilizers as could be called or green policies for agriculture and that had a huge impact because it ultimately meant that Sri Lanka which was almost self-sufficient in rice its rice production fell to almost 50% of what it was producing earlier which meant that Sri Lanka was forced to import rice and that meant further flow of foreign exchange. So all of this is combined to the situation to the situation we now have but this again was in the making for three to six months we saw cutbacks taking place in electricity production supplies to the petrol pumps cooking gas all of this were slowly coming but nothing seems to have happened the government seems to have believed that it could ride over this without taking any harsh measures and finally they had to go to IMF they had to go to World Bank and World Bank is negotiating a large loan at the moment but there must be a government which it can negotiate such a loan and it should have the a confidence that such a loan if it is extended to Sri Lanka this Sri Lankan government will be able to extend it. Now while this is the immediate cause the financial crisis there is also another issue to it why did this government believe it could ride roughshod over protests why did it believe that it could actually do what it wanted and there would be no consequences and with this in this we must also think about what happened earlier when the Sri Lanka faced insurgency that it enabled a government which was at that time headed by Rajapakshi Mahindra Rajapakshi headed the government and at that time Gotabaya Rajapakshi who is now the president was the defense minister defense secretary they put together a policy in which there was large-scale attacks on minorities of course the Tamil Tigers, Litte they had they were defeated in military operations but it also meant large-scale atrocities against the minority population in the north all of this was really whitewashed the Sri Lankan government never accepted what international bodies had said they have been large-scale atrocities and civilians all those were swept under the carpet and the strong man Mahindra Rajapakshi became the symbol of majoritarian nationalism also this changed again after the bomb blast that took place in Sri Lanka and it turned against also minority Muslim minority so one side the Tamil minority second side the Muslim minority both were attacked and all those civil rights people who could speak out their voices were silenced and large-scale civil liberties being attacked was what we saw in Sri Lanka not letting people speak not letting the voice of resistance be heard against such policies not trying to unify society but to divide and a majoritarian agenda combined with an authoritarian agenda and particularly which attacks minorities this is what is also the longer-term issue behind what we see as a crisis in Sri Lanka so it's not a simple financial crisis alone but the crisis of the polity the financial crisis we see is the reason for this is the complete sense of impunity which the Rajapakshis handled the governance particularly for the last 10 years in 2009 when they had the victory against the liberation of Tamil Tigers the late day the sense of impunity with which the Rajapakshis have handled they had n number of Rajapakshis in the cabinet the president is a Rajapakshi the prime minister is a Rajapakshi the various ministerial portfolios with the Rajapakshis and Naman Rajapakshi Mahinda's son was anointed as essentially the next in line so this kind of dynastic policies of course we know that very well in India as well also breeds this kind of authoritarian impulses and distance from the people unwillingness to listen to people who are differing with you and only listening to people who are trying to tell you what you really want to hear and that kind of isolation is what builds up ahead of steam which is what we see now coming out when we go from here is it possible to stabilize this government? Vikram Asinghe is not who has become the prime minister now he is not somebody who holds a huge amount of political capital in the country he is not disliked yes he is a person who has been relatively lightweight so given that the only possibility is if there is an all-party government in Sri Lanka and if in the all-party government you get people who would have some credibility and you try and take all sections along with you in this would the opposition unite? Yes opposition forces are now saying that they want the end of executive presidency by which the president holds a lot of powers he cannot be removed under any circumstances they want that executive presidency to be abolished can it be done under conditions where you virtually have no government and you have no money in the kitty whether there is a possibility to have a credible government which can tell the people okay stay at home we are addressing your immediate problems and we will also solve the problems of the polity on which you have been agitating for which you have asked various things so how does the government of Sri Lanka get back its lost legitimacy is the crux of the issue today how can it resolve the fault lines that have opened up between itself and the people and also getting all the people to come together to fight the crisis that it is in