If 2020 was a horrible year due to the global outbreak of COVID-19 triggering a downturn in the world economy, 2021 turned out to be worse for Sri Lanka. The combo of factors from the second and third waves of the virus, and a multiplicity of avoidable mistakes, not least the fertiliser ban topped with [...]


2022: Quo Vadis the ship of state?


If 2020 was a horrible year due to the global outbreak of COVID-19 triggering a downturn in the world economy, 2021 turned out to be worse for Sri Lanka. The combo of factors from the second and third waves of the virus, and a multiplicity of avoidable mistakes, not least the fertiliser ban topped with paying for the sins of foreign borrowings in the past, has now made 2022 look even bleaker than 2020 and 2021.

It seems only the Central Bank and its Governor are confident the country is not on the brink of bankruptcy. And any critical comment would lead to the Governor being axed like what happened this week to the Agriculture Secretary who got the boot unceremoniously by WhatsApp for predicting a food crisis by March 2022. Or was it over the fertiliser shipment from China? However much the Central Bank may try pumping self-confidence and a feel-good factor into an anxious nation, the base question remains not so much how well the economy will fare, but if the country can avoid defaulting in repaying its debts next year. What a pitiful state to be in.

The Central Bank was blamed for over-regulating when the chips were down somewhere in the first quarter of this year as the foreign exchange crunch began to grip the economy. The regulating is only getting aggravated with regular fiats to commercial banks — micromanaging macroeconomic issues whilst pushing even honest businesses to seek alternate ways and means of circumventing the rules merely to stay in business. It is the worst possible message for genuine investors with shrinking inflows of foreign currency getting further depleted as door after door gets shut in an otherwise open economy. Only local oligarchs are able to get favoured treatment from state banks through political directives while others have to bypass the regular banking system. Those with influence and access to the roaring underground exchange market are plying their trade with gusto.

The question whether the Central Bank alone should be able to dictate the fiscal policy of the Government is now being debated even within the Administration, and rightly so. Whether the country must seek refuge in an IMF bailout is bugging the higher-ups. If expecting currency swaps and bilateral loans by mortgaging future generations, then so be it.

But the Government has amply proven that it does not have either the fiscal management skills to manage the economy nor the political will to bite the bullet and take drastic measures for long-term gain. It is looking only to clear the next hurdle; the next shipment of fuel, the next debt repayment, and the next election. Countries like Pakistan, Lebanon and Argentina have gone for bailouts however contentious the conditions imposed. An IMF pill is a bitter, but probably necessary one if the home front cannot put its house in order. It seems this Government’s fiscal wizards do not want to be bossed about however inept they may be in handling this unprecedented crisis.

The Government’s ineptitude on the economic front extends to its inability to take high level corruption seriously. State institutions like Lanka Sathosa; the sugar scam earlier in the year and the recent gas blunder tantamount to criminal negligence on the part of the importers have gone without punitive action against the perpetrators. That has been the hallmark of the poor, almost pathetic performance displayed by the Government this year, over and above its stubbornness to listen to scientific advice on the fertiliser ban. If it does not course correct itself, the ship of state is heading for the rocks for a certainty.

Turning the Northern Province into a geopolitical football

It was only last week that we made reference to the aggressive nature of China’s assertiveness to announce it has well and truly arrived as a world superpower.

It did not allow the United States of America to have monopolistic rights in dividing the world into two camps — democracies and non-democracies — through a virtual summit. Sri Lanka was lumped with the latter. China took advantage of that exclusion to slam the US through the local media.

This new approach from Beijing dovetailed into its envoy in Colombo making an official tour of the Northern Province. An official statement from its embassy said it was a long overdue, oft postponed visit, but the timing cannot be coincidental.

Only the previous week, the embassy had issued another statement on Sri Lanka declining a Chinese project to start a solar power plant blaming “another country” being behind the refusal. There was no need to third-guess the reference. China had clearly decided it would no longer be thrown under the bus by another country that had taken the Northern Province as its own turf.

The Chinese made a show of the envoy’s visit, asking for security from the Government and taking with them their military attaché in full uniform and a drone for good measure to take aerial footage. They asked for a naval vessel to take them to Sri Lanka’s islets on Adam’s Bridge, a stone’s throw from the Indian coast. They cultivated the local fishermen who are having a longstanding dispute with the southern Indian fishermen poaching in their waters of the IMBL (International Maritime Boundary Line) and gave a voice cut to a local TV station at the end of the visit saying; “This is not the end. This is the beginning.”

The beginning of what?

Clearly, the Chinese were miffed at being jettisoned from getting a foothold in the North of Sri Lanka. That China wanted to be a provocative irritant to “another country” was obvious. On the other hand, is the Northern Province the fiefdom of “another country?”

The fact that the fishermen — and the Fisheries Minister — welcomed the delegation with jasmine garlands and the newly appointed provincial Governor jumped the bandwagon while the TNA MPs kept a safe, silent distance was ample proof that the Jaffna peninsula is fertile ground for geopolitical rivalry in the days ahead.

Fears of whether the North will be turned into another Arunachal Pradesh or Assam where border disputes prevail have already emerged to worry the local populace. While no country can expect any province of Sri Lanka to be another of its Union’s states, by proxy or otherwise, turning the region into a geopolitical football is fraught with danger.


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