What led to the socio-economic crisis in Sri Lanka?

A bit of history first: Rajapaksa family is from the majority Sinhalese Buddhist community. In 2005 when Mahinda Rajapaksa was the president, he elected his younger brother Gotabaya to defence secretary post and the other brother his advisor.

The majority 70% Sinhalese Buddhists felt endangered from 13% Tamil Hindus.
Because Tamil Tigers or LTTE was vehemently against Sinhalese dominated Sri Lankan govt since 1983, as the majority had always been discriminatory against Tamil Hindus. They also demanded separate nation in Sri Lankan northeast.

Prior to Rajapaksa family obtaining power, Tamils and Govt signed ceasefire agreement, leading to normalcy. But, normalcy would not create political benefit, if you are a political science student you’d know.

The Rajapaksa brothers were supported by Buddhist monks. In East Sri Lanka, an operation was launched to oust Tamils and in 2009, LTTE was crushed. As per UN report, along with LTTE terrorists, 40,000 Tamil civilians also killed in final phase. International community tried to investigate this war crime but not allowed by Mahinda Rajapaksa.

Rajapaksa still won Lanka’s heart after victory over LTTE. His strong-man image was appreciated and revered. In 2010 elections, Rajapaksas won again and Mahinda became president, Chamal Rajapaksa became speaker, Basil rajapaksa the minister of economic development. 5 ministries among three brothers! (So almost 50% of Sri Lankan budget under their control.)

So much power in one person or one family is never ideal. It is a recipe for disaster. In their second term, many infrastructure projects began, such as the Colombo lotus tower, with help from China. When politicians want big towers constructed, China is always ready to satisfy their ego. At that time, this building was the tallest self-supported structure in Asia.

Ports, airports and cricket stadiums also built. Progress was made visible in the eye of public, but unbeknownst to them was the source of money. GDP was also projected as up by 7%, but how much debt was also increasing? And this image was painted by fixing the formula.

Opposition parties opposed but to no avail. The public was smitten by Rajapaksa and family. Behind the scenes, corruption was obvious. Basil Rajapaksa was even nicknamed Mr.10% for the commission in every project.

Then in 2015 elections, Maithripala Sirisena became opposing Presidential candidate, a common man with no political background. Maithripala Sirisena was a war veteran and son of school teacher. The opposition had 3 electoral issues: Nepotism, corruption and authoritarianism.

Maithripala Sirisena alleged corruption on Rajapaksa and surprisingly won in the election. Gotabhaya Rajapaksa was charged with corruption under newly formed Govt. Many members of Rajapaksa family fled the country. A great turnaround from 2010 when the Rajapaksas ruled.

But politics of fear once again brewed, after Easter bombings in 2019, which killed 200+ people, ~500 injured. Once again, the majority feared minority, this time not Tamil Hindus, but 10% Muslims. An Islamic terror group claimed responsibility of the attack and people once again turned to Rajapaksa family.

As Rajapaksas had acted strongly against Tamils and once again strong action had to be taken. So Rajapaksa benefited from this politics of fear. Younger brother Gotabaya Rajapaksa, who had fled in 2015, won the election in 2019. A year later, after 2020 parliamentary election win, Mahinda Rajapaksa became the prime minister.

5 other members of Rajapaksa family won, so 7 Rajapaksas in power, 9 ministries under family control! Control of one family to such large extent in a democracy is unheard of. That is why Lanka is in a crisis. Reasons leading to the crisis include but not limited to corruption and crony capitalism.

Tourism is one of Sri Lanka’s major industries, contributing 12% to GDP. 2019 Easter bombings and 2020 pandemic had negative impact on tourism. Forex crisis also added insult to injury.

As Gotabaya Rajapaksa had promised surge in organic farming over period of 10 yrs before election, importing chemical fertilizers was banned overnight, without any time to cope. As a result, rice production fell by 20%. Reserves then were used to import rice to help consumers.

After 6 months, ban on importing chemicals had to be lifted, as Sri Lanka junked organic farming initiative. Other thing was massive tax cuts. The Gotabaya govt raised tax-free threshold. According to estimates, in 2020 there were 15 lakh direct tax payers. New rule reduced this number by 10 lakh tax payers! How can a Govt change tax structure overnight?

Overnight decisions led to rapid decline in Govt income. So to meet the expenses, more currency was printed and hence leading to skyrocketing inflation.

Surely there was signs, before the crisis began. Rating agencies downgraded Sri Lanka whereas Sri Lanka termed Fitch rating a hasty move. Then IMF report also alerted that money printing could lead to economic implosion. Their own finance minister cautioned that tax cuts move was a dangerous one. One agricultural scientist worried about hasty shift to organic farming then Govt suspended the person. How can one democratic Govt not tolerate criticism?

So there were many warnings. But what about the people? Could they not see the ongoing crisis in making? That is where majoritarian politics comes into play. After Easter bombings, Rajapaksa brothers banned cow slaughter, then the Govt banned burqa, shut down 1000 madrasas and harassment of Muslims ensued. Focus was on minority, not on economy.

That is how, the majority, distracted, was a mute witness to all and it led ultimately to their own crisis. Ultimately, it reminds one of Rahat Indori’s famous words: This fire of hatred will consume all.

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