Author: Branita

Amid shortages, families are forced to ration tea, meals

As Sri Lanka’s economic crisis makes global headlines, estate worker B. Sundararajan is watching it manifest in his teacup.
In recent weeks, he has cut his usual, two cups of tea a day to one. “Milk powder is not easily available. When it is available it is not affordable. There is no other option but to cut down our tea,” said the resident of Doloswala village in Sri Lanka’s southern Ratnapura district. Besides the irony of a tea plantation worker, producing the famed ‘Ceylon tea’, rationing his own tea intake, Mr. Sundararajan’s reality lays bare the severity of Sri Lanka’s current economic meltdown.

Rising inflation

The country’s fast-depleting foreign reserves — $3.1 billion at the end of 2021 — have pushed the Rajapaksa administration into a corner. The government needs dollars to import basic food items, fuel, and medicines, which have frequently been in shortage in recent months. As has milk powder, which Sri Lanka mostly imports and widely consumes in place of fresh milk.
Scores of consumers are struggling to afford essentials such as rice, pulses, vegetables, fish, and meat whose prices are soaring, amid import restrictions imposed to save foreign exchange. Consumer price inflation hit 14% last week. Finding LPG cylinders, in short supply, remains a challenge.
And if the consumer is a daily-wage worker like Mr. Sundararajan, where his hard-won LKR 1,000 (₹366) wage is tied to tedious production targets, forgoing a cup of tea or even a meal, like in the case of many poor families, is the only option.
The story of Sri Lanka’s economic crisis came to the fore amid the pandemic, which dealt a severe blow to the country’s crucial, foreign exchange earning sectors. Colombo has foreign debt obligations totalling nearly $7 billion this year, and Sri Lanka is “trying all options’” to avoid a default, Finance Minister Basil Rajapaksa recently told the Financial Times.
India and China have extended emergency assistance by way of loans and currency swaps, but Sri Lanka is still on the edge. The national polity, policy makers and think tanks are debating if the country should opt for an IMF bailout. Some analysts are even arguing that Sri Lanka must prepare to default, and subsequently restructure its debt, although the government is determined to keep the country’s unblemished record in foreign debt servicing.
Meanwhile, Sri Lanka’s plantation workers, like the nearly 900 employed in tea and rubber estates in Doloswala village, did not have to wait until the pandemic to know deprivation.
“Over the last few years, the 1,000 rupee-wage struggle of our workers was in focus. They won the wage, but there are 1,000 other problems facing the community for decades,” said Anthony Masilamani, who works at the local administrative authority. He was speaking at a recent event organised by the catholic church in the village, to remember local heroes who had died fighting for the community’s rights.
“Our people are still living in crammed line room housing, no matter how big their families are. Our schools don’t have mathematics and science teachers for higher classes. We don’t have enough toilets. This is our reality,” he said, pointing out that the country’s recent economic downturn aggravated the workers’ misery, and didn’t create it.
Several youth who were employed in shops and restaurants in capital Colombo have returned to the village jobless after the pandemic struck, said Fr. Jeewantha Peiris, who organised the event. “Physical distancing is impossible in their line room accommodation. Many children were already malnourished. The situation has only got worse due to the current shortages.” Speaking of the event, he said it was “just to remember our local figures” who asserted the community’s rights in the past. “They didn’t fit into big movements, so they aren’t usually commemorated the same way,”he added.
Even otherwise, Sri Lanka’s rubber estate workers get much less attention, compared to their counterparts working in the tea estates largely in the central highlands. This, despite rubber being the third largest item in Sri Lanka’s exports basket, after apparels and tea, and fetching nearly $1 billion in exports last year.
Lourde Manila works in a local rubber factory and says she must put in three people’s work to earn the maximum wage. “I have three children, and their education and future depend on what I am able to spend today,” she said. “But when cost of living is so high and wages are stagnant, how are we supposed to feed our children and pay for their education?”
Workers also spoke of long-denied land rights of the community that has left them economically vulnerable for generations. “If we had a piece of land to call our own, we might build a small home, grow some vegetables, seek a bank loan showing our documents to start a small business. With no ownership, we can’t do any of that. We can’t even cut the branches of a tree in front of our house to make a roof,” said A. Anton.
Most NGOs working on plantation sector rights tend to focus on the tea estates in the upcountry districts, according to Mr. Masilamani. “We live here, down south amidst a majority of Sinhala people. Sometimes even our own people elsewhere don’t consider us Malaiyaha [hill country] Tamils. It’s like we are invisible,” he said.

Sri Lanka’s finance minister Basil Rajapaksa revealed how his government illegally purchased weapons from North Korea during the height of the armed conflict, using money sourced from the “black market”.

Rajapaksa, who holds US citizenship, told The Sunday Divayina this week that during the peak of Sri Lanka’s military offensive, he and other Sri Lankan officials would personally visit the ‘Pettah’ Business District in Colombo to speak with traders and obtain dollars in the black market.

The money would then be used to purchase arms from North Korea, he continued.

The revelation has sparked an outcry from around the world, following years of denials from Sri Lankan officials over any such purchases.

North Korea has been subjected to several United Nations-backed sanctions which ban the trade of several arms and military equipment. Not only is the Sri Lankan finance minister openly admitting that his government may have breached United Nations sanctions, but Rajapaksa himself is now potentially open to prosecution.

Sri Lanka has been accused of breaching sanctions on North Korea by purchasing weapons in the past.

In May 2009, when Sri Lanka’s military was heavily engaged in an offensive that saw hospitals bombed and tens of thousands of Tamils killed, a leaked US embassy cable said Sri Lanka was negotiating an arms deal with Pyongyang. Rajapaksa’s elder brother Mahinda Rajapaksa was Sri Lanka’s president at the time, whilst his other brother Gotabaya was defence secretary. Both have been accused of war crimes. Gotabaya has since become Sri Lanka’s president, whilst Mahinda now sits as prime minister.

The cable cited intelligence reports as noting Sri Lanka was looking to purchase “RPG-7 Rocket Propelled Grenade Launchers (RPGs) and Multiple Rocket Launchers (MRLs) from North Korea’s primary weapons trading firm”.

The army had used Czechoslovakian-built RM 70 MBRLs during its military offensive – a weapon capable of firing 40 rockets packed with 256 kg of explosives in just 30 seconds – to devastating effect during the armed conflict. In February 2008, at the height of the killings. Slovakia reportedly sent 10,000 rockets to Sri Lanka amidst criticism that the sale had broken European Union regulations. Unconfirmed sources speculated that Sri Lanka paid just $180 per rocket.

A Sri Lankan military parade showcases MBRLs purchased from abroad and deployed to deadly effect.

“Some of these proposed arms imports appear to violate UNSCR 1718,” the cable continued.

It made clear that Sri Lanka had previously been accused of breaching other UN Security Council sanctions through seeking to purchase weapons from Iran, and Colombo had been “demarched” by the US government.

“As part of our ongoing dialogue on nonproliferation, we would like once again to express our concern over Sri Lanka’s potential procurement of lethal military equipment from Iran and North Korea,” it continued.

“We also want to remind the GOSL of possible sanctions under the Iran, North Korea, and Syria Nonproliferation Act (INKSNA). The INKSNA requires regular reports to Congress identifying individuals and entities who have transferred to or acquired from Iran, North Korea, or Syria certain items related to weapons of mass destruction, ballistic or cruise missiles or advanced conventional weapons.”

At the time, Sri Lanka strenuously denied it had made any purchases.

Sri Lanka’s UN ambassador, Palitha Kahona, told Turtle Bay in 2011, “at the time, the government issued a denial, a total denial to these allegations”. “I think the position remains the same,” he concluded.

A 2017 UN Panel of Experts report on North Korea however said that the “Democratic People’s Republic of Korea is flouting sanctions through trade in prohibited goods, with evasion techniques that are increasing in scale, scope and sophistication”.

It went on to detail how two North Korean diplomats “travelled together to Sri Lanka three times (between 2014 and 2016) to discuss shipbuilding projects”.

“Described as boat-building experts, they reportedly met with the State Minister of Defence of Sri Lanka on 5 November 2015 to discuss building naval patrol vessels at a Sri Lankan shipyard prior to sale to its navy,” the report continued.

Though the UN experts wrote to the Sri Lankan government, it noted that at the time of publication “the Panel has yet to receive a reply from Sri Lanka”.

Rajapaksa’s latest remarks are the first time that a senior government official has confirmed the reports of purchases from Pyongyang. One of the starkest aspects of Rajapaksa’s interview though, was how the finance minister had now opened himself up for prosecution from US authorities.

Just last year, a US-citizen pled guilty in court to helping North Korea evade US sanctions through the use of cryptocurrency. He is to be sentenced later this month and faces a lengthy jail term. In 2020, the US government also charged 28 North Korean and five Chinese individuals with facilitating more than US$2.5 billion in illegal payments for North Korea’s nuclear weapons program.

The US has already placed travel bans on several Sri Lankan soldiers over war crimes, but dual-citizen Rajapaksa may have made himself liable to prosecution.

And whilst the minister did not elaborate on which weapons were purchased or when, his remarks have led to questions over the legality of such trades and how any arms would have been used.

“This is the tip of the iceberg,” said Jan Jananayagam, director of Together Against Genocide (TAG).

“We have long believed that Sri Lanka’s genocide of Tamils was accomplished using, among others, weapons purchased from sanctioned parties including North Korea and Iran. Some of these unlawfully acquired weapons, such as cluster munitions and chemical weapons were unspeakably brutal toward the Tamil civilian population who were their targets.”

In recent years, states around the world have come under pressure over military assistance and the supply of weaponry to Sri Lanka, given the island’s chequered human rights record.

“Never forget that an estimated one in five of the civilians in the so-called ‘No Fire Zones’ (where these weapons were used) were children at or under the age of twelve,” added Jananayagam.

Sri Lanka has refused to hold anyone to account for crimes committed during the time and consistently pushed back against efforts for an international investigative and accountability mechanism. Rajapaksa’s latest remarks however shed more light on the international support that Sri Lanka sought at the time, possibly breaking UN sanctions whilst doing so.

“I look forward to justice for these and other mass atrocity crimes,” Jananayagam concluded.

Dinner time has become Susila Irangani’s least favourite time of the day. Nowadays, the 62-year-old never knows whether she will be able to put food on the table for her two daughters.

The price of essential foodstuffs – from dhal to eggs – have doubled in her village of Dummalasuriya in Sri Lanka’s northwestern province over the last year alone.

“We used to have three meals a day but now we are having to skip dinner because of the little income that we have. This is all because of the increase in prices of essential goods,” said Ms Irangani.

“The cost of living is such that we cannot even think of having a balanced meal.”

The housewife says her family can no longer afford to purchase meat or vegetables when they do eat and that the extortionate price of kerosene has sent her husband into the nearby forests to collect firewood.

“How can a family like us survive with the soaring prices of essential items?” asks Ms Irangani. “Does the government want us to starve and die?”

Impoverished Sri Lankans say they cannot purchase enough food to eat, as the country endures the worst economic crisis in its history, which was compounded by a disastrous decision to switch to organic farming last year.

Colombo in May announced that it was banning the use of all chemical fertilisers, pesticides and herbicides in a shock move that was praised by environmentalists.

The Sri Lankan government said it would encourage more sustainable farming practices and would also reduce cases of kidney diseases among farmers, which it blamed on exposure to the chemicals.

But, the sudden switch resulted in one-third of Sri Lanka’s agricultural land being left dormant as farmers said they would be unable to suddenly cultivate land using organic fertilisers alone.

The policy was scrapped in November after farmers took to the streets in protest but its impact will be felt long into 2022.

Jeevika Weerahewa, a senior lecturer at the University of Peradeniya, predicts that the short-lived ban will reduce this year’s paddy harvest by an unprecedented 50 per cent.

“I wouldn’t consider it a bad move in principle but it should not have happened in such an abrupt manner, the government was too quick to go ahead with a switch to organic fertilisers,” said Ms Weerahewa. “In addition to the rice crop, the maize harvest was reduced and its prices went up and the cost of other goods, including chicken and eggs also rose. We anticipate that the food insecurity situation in the country will get worse over the next few months.”

When a harvest fails in a country it is usually the job of its government to purchase extra food stocks from abroad. But, that hasn’t been possible in Sri Lanka.

Colombo owes £21 billion to lenders over the next five years. This includes repayment of over £5 billion of high-interest loans to Beijing, as well as to international financial markets and the Asian Development Bank, after borrowing beyond its means to fund exorbitant infrastructure projects.

Already Sri Lanka has been forced to lease the use of its new deep water port, Hambantota, to China in lieu of previous payments.

This week, Dr Wijeydasa Rajapakshe, a prominent Sri Lankan MP, accused China of economic invasion, debt diplomacy and sowing corruption in the country.

“It is a total disaster. The country has never faced the kind of food poverty as it does now and I think the finger of responsibility rests almost entirely on the government,” said Charu Lata Hogg, Associate Fellow in the Asia Program at Chatham House.

“There were also enough examples out there from the many African countries who have over borrowed from China and Sri Lanka could have learnt from this.”

Sri Lanka has imposed a blanket ban on imports since March 2020 to protect its foreign currency reserves which have dwindled to around a mere £1 billion.

Rather than stabilise the market this has instead caused chronic shortages of foodstuffs and hoarding by shopkeepers, many of whom have been subject to raids by the police.

A further decision to print over £470 million of new currency in 18 months has contributed to soaring inflation rates, currently the second highest in Asia.

The price of rice is predicted to skyrocket to Rs300 (£1.10) over the upcoming months. One kilogram was sold at around Rs120 (£0.40) in December, 2020.

One resident of the city of Kandy, who wished to remain anonymous for fear of their safety, said shortages had already become so severe that they could only purchase rice three times a week.

“The transition from chemical to organic fertilisers should take a lot of time, at least a decade. The present food crisis is mainly due to the government’s ill thought out decisions,” they added.

Approximately 75 per cent of Sri Lankans are dependent on agriculture for their livelihoods. This drop in yields has also caused a direct loss in earnings while food prices are simultaneously at their highest.

Over 500,000 of Sri Lanka’s 22 million citizens have been pushed into poverty since 2020 and the Covid-19 pandemic has further reduced earnings. Border closures have caused an estimated £10.5 billion loss in tourism revenue over the last two years.

“It has been the perfect storm of events and living has become totally unaffordable for many lower and middle class people who can no longer afford to feed their families,” said Ms Lata Hogg, “We are now looking at a severe humanitarian crisis.”

Mr Rajapaksa has admitted that his government is “not delivering” and this week, despite the grave financial situation, he agreed to pay £150 million compensation to the country’s farmers over a loss of earnings during the chemical fertiliser ban.

A proposed bailout is unlikely to include China. Thousands of protesters recently took to the streets of Colombo in an unprecedented protest against Mr Rajapaksa and some raised anti-China slogans, echoing recent rallies in Nepal and the Maldives, two other South Asian countries in significant debt to Beijing.

Relief could instead come from India and last week, Mr Rajapaksa made a surprise announcement that the Sri Lankan military would return land seized from Tamils during the civil war.

The announcement is likely to be warmly received in India as the country has a significant and politically influential Tamil minority.

Last month, the Sri Lankan government announced that it would pay off a $251m (£188m) Iranian oil debt by sending the country millions of dollars worth of tea every month.

The country will ship $5m of leaves to the country every month to settle the debt, in what is believed to be the first example of the beverage being used to settle a bill between governments.

The Sri Lankan Tamil parties have sent a letter to the Indian Prime Minister Narendra Modi seeking his help to establish a Federal Constitution in Sri Lanka in place of the present Unitary one on the plea that the minority Tamils are not able to realize their aspirations under a centralized, Unitary set up.

It is learnt that they have done this despite advice that they should seek an achievable goal, that is the full implementation of the 13th Amendment of the present constitution because it flows from the India-Sri Lanka Accord of July 1987.

Despite intense debates in which the parties of the Indian Origin Tamils from the Up country and the Western Province maintained that the majority Sinhala community would never envisage a federal setup because it equates federalism with separatism, the 11 Sri Lankan Tamil parties representing the Northern and Eastern provinces, adamantly stuck to the stand that they would not deviate from their long-standing demand for a federal structure.

India’s Limitations

But the question that the Sri Lankan Tamil parties failed to ask themselves is whether the Indian Prime Minister can push for federalism in Sri Lanka when India itself is not federal State in the way the United States is. India has been slowly but surely centralizing governance since independence in 1947. And the process has intensified under Modi’s watch. Therefore, the pertinent question is: Can Modi support demand for federalism in Sri Lanka?

Eating into the States’ Share

The Central Indian government has been encroaching on the States’ rights even in regard to subjects assigned to the States by the Constitution. The financial dependence of the States on the Centre arising from asymmetric taxation rights, enables the Centre to dictate to the States. National policies on various subjects are made without systematically consulting the States. Formal and informal institutions set up for consultations are in disuse.

The Communist Party leader, D.Raja, points out in an article in Indian Express that the Planning Commission, a non-political body of experts that drew up policies in consultation with the States and the Union government, has been scrapped. The Inter-State Council has met only once in the last seven years. And the National Development Council has not met at all.

The tenure of the 15th Finance Commission (meant to divide the levies collected by the Centre between the Centre and the States) was mired in controversy and many states expressed apprehensions about the evolving pattern of financial devolution, Raja says. The All India General Sales Tax (GST) has taken away much of the financial autonomy of the States. The country’s federal indirect tax regime has become unitary.

Recently, parliament legislated on agriculture, an item in the State list, to enact the three contentious farm laws, which led to a year-long agitation by farmers in Punjab and a few other North Indian States. Students in Tamil Nadu have committed suicide over the discriminatory nature of the national examination (NEET) conducted for admission to medical colleges, when “education” is a devolved State subject. The right of States to determine the standards required for entry into professional colleges has been violated and sacrificed at the altar of national uniformity. The principle of uniformity does not recognize differences in the educational levels prevailing in States in a diverse country like India. Recently, the Centre arrogated to itself the power to withdraw from the States, officers belonging to the All India Administrative Services, thus severely handicapping the States.

Until the Supreme Court put an end to it, the Centre could sack a State government on trumped up charges under Art.356. Recently, the Centre reduced Jammu and Kashmir State to the level of a Centrally administered “Union Territory” citing terrorist threats. New States are carved out of existing States without consulting the affected States. The States have no control over the Central armed forces deployed in their territories. In the border States, the jurisdictions of these Central forces are determined solely by the Centre. The discriminatory policy on citizenship is affecting Muslim and Sri Lankan Tamil refugees.

Constitution is Unitary

All this has been made possible by the Unitary character of the Indian constitution. The Constitution was drafted between 1946 and 1949, when India was in turmoil. The country was violently partitioned into a mainly Hindu India and a Muslim Pakistan. There were hundreds of theoretically independent Princely States which needed to be integrated with India. Therefore, the primary concern of the makers of the Constitution was controlling separatism by making the Centre strong if not omnipotent. The Constitution did recognize India’s diversity but it also provided for a Centre with over-riding powers.

During the Constituent Assembly debates, the first Prime Minister, Jawaharlal Nehru, cautioned that “it would be injurious to the interests of the country to provide for a weak central authority which would be incapable of ensuring peace, of coordinating vital matters of common concern and of speaking effectively for the whole country in the international sphere.” Other prominent members of the Assembly also demanded a stronger Union government necessary for India’s survival and political stability, given its vast diversity in religion, language, caste and ethnicity.

The Constitution gives the Union parliament discretion to reconstruct the boundaries of the States. The Union list of subjects contains more subjects than the State list. In case of a deadlock between the Union and the States over subjects in the Concurrent List, the Union law prevails. The Union parliament can also legislate on any State subject under extraordinary circumstances.

The Union Government has power to appoint State Governors and dissolve State governments by proclaiming President’s Rule if it deems fit. Institutions of governance like a single system of courts, all-India public services and integrated audit machinery and election machinery help the Centre exercise power over the States.

When States Can Assert Themselves

However, even as the Indian Constitution is biased in favor of the Union government, States have room to assert their interests under certain political conditions. When the liberal Jawaharlal Nehru was Prime Minister and the Congress was the dominant party, the States enjoyed autonomy because he believed in consultation and consensus and the Congress leaders in the States were men of stature. But when his daughter, the imperious Indira Gandhi, was PM, she brooked no opposition. She held the States on a tight leash, even sacking State governments which did not toe her line.

However, when weak coalition governments ruled India from New Delhi, the States were assertive, especially when they were ruled by opposition parties or regional parties.

Currently, the States are under the thumb of the Centre because the Centre is ruled by the Bharatiya Janata Party (BJP) which not only believes in Centralization and uniformity, but also has a brute majority in parliament to enforce its will.

The government in New Delhi is flexing its muscles by using the Centrally-controlled investigative agencies to rein in State leaders who are either from the opposition parties or are from the regional parties. The BJP is also using State Governors appointed by it, to act, not as constitutional figureheads as they are meant to act, but as an arm of the Centre in the latter’s schemes against the States. In Tamil Nadu, Governor R.N.Ravi, who has an intelligence background, started communicating with State government officials bypassing the State Chief Minister, against well-established norms.

This being the case in India, the Sri Lankan Tamil parties’ bid to get the Indian Prime Minister to press Colombo to replace the present Unitary constitution by a Federal one is doomed to fail. The move can only serve one purpose: winning elections. The Tamil voter is still wedded to the demand for Federalism despite dismal failure to get it in 74 years of struggle, both peaceful and armed, and with and without foreign help.

Sri Lankan Finance Minister, Basil Rajapakse, speaking to a Sunday Newspaper this week, noted that he cared less about the method in which dollars came into the country, as long as they flowed in.

Commenting specifically about the ‘Undial’ informal black-market system currently being widely used in Sri Lanka to transfer dollars, he noted that while this was disadvantageous to the Central Bank and the government, it benefitted the country.

When questioned about the fact that only official dollar-inflows from sectors such as tourism and exports would be counted as Foreign Reserves, the Minister noted that the reserves were important only for “Rating Agencies” and there was no difference between the dollars that came in through these official channels and those that didn’t.