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COLOMBO — As Sri Lanka’s dollar scarcity worsens, a fresh crop of unusual signs has surfaced about spreading shortages of basic goods. “Candles not available due to gas shortage” was one. It was placed at St. Anthony’s church, located in a mixed commercial and residential quarter of Colombo.

The significance of the announcement was not lost on regular worshippers. “Lighting candles is very much part of one’s worship in this church,” said a disappointed mother of two following her visit to the church this week. “I have been visiting this church for over 25 years — never have they not had candles!”

As homes seek light in the wake of rolling power outages, candles are one of a growing list of domestic items that have vanished from the shelves of supermarkets. They also include powdered milk, a favorite addition to a cup of tea, the national drink. Those lucky enough to get access to a few remaining packets share details of their find in whispers, as if discussing contraband items.

The lack of candles is not the only indication of the debt-strapped South Asian nation’s inability to cough up foreign exchange to pay for imported oil to run generators of the state’s energy utility. Government ministers in the ultra-nationalist administration of President Gotabaya Rajapaksa have kept the country on edge about dark nights ahead with public spats over the country’s energy security.

“I have instructed the Ceylon Petroleum Corporation to give 10,000 tons of oil to the Ceylon Electricity Board,” Energy Minister Udaya Gammanpila told reporters on Wednesday, referring to a state utility that uses the Indian Ocean island’s former name. “The CEB needs about 1,500 tons a day and this will be enough for eight days.”

In return, Power Minister Gamini Lokuge has been spinning another message, assuring the public that his officials are committed to uninterrupted power supplies. The country will be free of “power cuts” by the end of the month, he told the local media.

But power outages are in the cards, seasoned observers warned, in the wake of the Rajapaksa government’s decision this week to dip into the country’s dwindling foreign reserves to pay a $500 million sovereign bond, which matured on Jan. 18. That cut off the flow of limited foreign exchange to pay for a long list of imports, including oil, they said.

“We were already short of fuel but we decided to pay the debt,” said Nishan de Mel, executive director of Verite Research, a Colombo-based think tank. “In any kind of tough situation you should share the pain … you shouldn’t frontload the pain on the country — putting more pain on the country and less on the creditors.”

The government’s decision to favor creditors has brought Sri Lanka’s dollar dilemma into sharp relief. Finance Minister Basil Rajapaksa, the younger brother of the president, has said the country’s total external debt for 2022 is $6.9 billion, including a $1 billion sovereign bond maturing in July. The country began the year with only $1.6 billion in usable foreign reserves, with an additional $1.5 billion drawn from a swap with the People’s Bank of China, which, commercial banking sources say, cannot be used to pay debts to non-Chinese entities.

A new report by the World Bank suggests stronger headwinds in 2022, challenging the government’s exaggerated growth forecasts. Officials in Colombo have estimated that this year’s gross domestic product growth to hit 5.5% on the back of a revived tourism sector. That comes in the wake of claims that the country will reach an expected 4.5% growth in 2021.

But the World Bank places Sri Lanka as an economic laggard among its South Asian peers, forecasting growth of 2.1% in 2022, down from an expected 3.3% in 2021. This is the worst 2022 growth estimates in the region, which includes India, expected to grow by 8.3%; Bangladesh, to grow by 6.4%; and Nepal, to grow by 3.9%. South Asia’s regional projected growth will accelerate to 7.6% in 2022, the World Bank says in its “Global Economic Prospects” report, released last week.

The early signs that Sri Lanka was running out of dollars first surfaced in mid-2020, when the country was shut out from accessing international capital markets to raise dollars through sovereign bonds to refinance its bulging foreign debt, an estimated $35 billion in the $81 billion economy. It followed a massive tax cut by the newly elected Rajapaksa government in late 2019 to boost the economy, which in turn worsened the budget deficit. That spooked international ratings agencies, according to analysts.

“Ever since the ratings agencies’ downgrade in mid-2020 to CCC the alarm bells should have gone off, because we lost access to the markets so we could not refinance and roll-over the debt,” said Murtaza Jafferjee, managing director of JB Securities, a financial consultancy in Colombo. “The scarcity of dollars will only get worse from now on.”

Several key numbers illustrate that the inflow of foreign exchange is far from stellar. Foreign direct investment, which the Rajapaksa government flagged as an alternative to foreign borrowing, has only trickled in, with the first half of 2021 attracting a mere $398 million, according to the Central Bank of Sri Lanka. The country’s Board of Investment had set its sights on securing $1 billion by the end of 2021, an ambitious target by the state’s premier foreign invest agency after a sub-par record of attracting only $550 million in 2020, down from $793 million the previous year.

A host of factors have added to the dollar woes. The country’s persistent trade deficit has been averaging $10 billion annually in recent years; tourism has slumped due to COVID-19; and a government plan to raise $1.5 billion by offering high-value properties in Colombo to foreign investors has struggled to attract interest. “We have never felt such a dollar crunch like this,” remarked a veteran commercial banker. “Importers have been running around the last three months to check which commercial banks have dollars.”

The Port of Colombo affirms that sentiment. Containers loaded with goods are piling up as importers are unable to secure dollars to clear them, according to shipping industry sources. Oil shipments at the country’s busiest harbor are also tied up, waiting for the dollar tap to open.

While claiming that all attempts made by the Catholic Church to get justice for the Easter Sunday terror attacks of 21 April 2019 within the country have failed, Colombo Archbishop His Eminence Malcolm Cardinal Ranjith said that they are currently exploring the possibilities to reach out to the international community, including the United Nations (UN), to seek justice for the said terror attacks.

Speaking during a virtual forum on 23 January, he said: “We have tried our best to get justice from our people within our own context, but all these attempts have failed. Therefore, it does not leave us much room but to explore the possibilities of going international. That means that we will also be going to the UN.”

Noting that they, as the Catholic Church, have links all over the world, the Archbishop said that they would also try to influence some pertinent and powerful countries that are in contact with the church. In addition, he said that in case they would be reaching out to the international community, such efforts would also be supported by his fellow Cardinals around the world.

“Not only going to the UN, but we will try to influence some of the more pertinent and powerful countries that have a relationship with us, because, as the Catholic Church, we are an international organisation and we have our links all over the world. Also, at my level as a Cardinal, I have my fellow brothers who are Cardinals in different and important cities and countries with whom we will be able to do that.” Archbishop Ranjith said.

Archbishop Ranjith further said that while he did not seek to go for such action so far as he had hoped that this issue will somehow find a local solution, it has now become apparent to them that nothing is happening.

“In fact, the legal system operated by the Attorney General (AG) does not seem to consider the recommendations of the Presidential Commission of Inquiry (PCoI) into the Easter Sunday terror attacks. Therefore, we are left with no other option but to go to the international community.”

On 21 April 2019, Easter Sunday, three churches (St. Sebastian’s Church in Katuwapitiya, St. Anthony’s Church in Kochchikade, and Zion Church in Batticaloa) and three luxury hotels in Colombo (Cinnamon Grand Colombo, The Kingsbury Colombo, and Shangri-La Colombo) were targeted in a series of co-ordinated suicide bombings. Later that day, another two bomb explosions took place at a house in Dematagoda and the Tropical Inn Lodge in Dehiwala. A total of 269 people excluding the bombers were killed in the bombings, including about 45 foreign nationals, while at least 500 were injured.

Later, a PCoI was appointed to investigate the said terror attacks and the PCoI, in its final report, has made several recommendations including the filing of criminal charges against former President and incumbent Government Parliamentarian Maithripala Sirisena, former Defence Ministry Secretary Hemasiri Fernando, former Inspector General of Police Pujith Jayasundara, former State Intelligence Service Director Nilantha Jayawardena, former Chief of National Intelligence Sisira Mendis, and several others. However, most of the recommendations made by the said PCoI have not yet been implemented. As a result, several parties including the Catholic Church have been insisting on the need to implement the PCoI’s recommendations.

The leader of 43rd Brigade, Patali Champika Ranawaka, MP, says he will immediately halt militarisation in Sri Lanka if he becomes the head of state.

However, he says he has no regrets about supporting the Mahinda Rajapaksa presidency in 2005. In his opinion, it was the need of the hour to defeat terrorism.

The Samagi Jana Balawegaya parliamentarian made these remarks while speaking with Saroj Pathirana for ‘Sandeshaya by Saroj’ YouTube channel.

Ranawaka, who held cabinet portfolios during Mahinda Rajapaksa and Maithripala Sirisena tenures, says the island nation doesn’t need a 300,000 strong army personnel as the country is no longer at war.

Urging all concerned to “forget” wounds of the decades long civil war, he says it is practically impossible in Sri Lanka to punish anybody for war crimes.

However, the ’43rd Brigade’ would support the abolition of the executive presidency, says Patali Champika Ranawaka, only if the previous election system re-introduced.

2022 would be the “Unlocking Year”. If so, there will be no more fear and anxiety; the masks would disappear; cosmetics and business suits would once again be out on display; work-from-home-battalions would go back to the usual hustle and bustle and to the intimidating presence of their bosses in offices; webinars and zoom meetings sans live presence would cease; more and more pompous grumblings about jet-lag would resonate in clubs and board-rooms; MBA brains would get overstressed; ‘ambitious-graphs’ for operational targets of corporates would peak; bank accounts in tax havens will swell; computers at the income tax and enforcement departments will overwork; and the Central bank officials will break their heads to deal with the complexities of an overheated economy showing high consumer demand, supply chain disruptions, excessive money supply, asset bubbles, inflationary pressure, low interest rate, reduced purchasing power that affects savings and investment, foreign exchange volatility, widening income inequality, malnutrition and a surge in the BPL numbers.

This sort of an economic concoction, in which all sorts of positive as well as negative socio-political-economic elements would certainly be a challenge for policymakers to get the macroeconomic fundamentals aligned with democratic realities of the polity, especially, in the context of high expectations from citizens and businesses, who hope their leaders can pilot them out of the Covid-19 induced socio-politico-economic muddle.

These challenges and expectations would be an enticing topic of debate for the so-called ‘aandolan-jeevis’, trade union leaders and political and economic pundits, in the media and on the political platforms that might even impact the future electoral outcomes. This also would have its own international ramifications as the world continues to remain economically multipolar, with its own complexities of competitive economic whims and fancies. These ramifications would be even more intense in the middle-income economies with high economic aspirations, especially if the macro-economic fundamentals of their domestic economies are not strong enough and if they are dependent on external resources to fulfil the economic aspirations of their citizens. Moreover, it becomes progressively worse along with the periodical auctioning of the non-existent resources by politicians in the name of an egalitarian democracy.

These economies are typically those that become easily vulnerable to the geo-strategic susceptibilities that are increasingly becoming polarised into a bipolarity between the USA and China. This bipolarity is the outcome of a decade-long lingering dispute between these two nations over the traditional global economic governance structure, which has been by and large under the dictation of the Western-led, neo-liberal multilateral institutions based on Western values such as strict governance conditionalities, fundamental rights and religious freedoms. This, according to many Third World nations, is designed to interfere in the internal affairs of a nation and therefore imperialistic. China challenged this with its monetary fund – the Global Stability Mechanism – modelled after their governance model based on tech-authoritarianism combined with state-led capitalism and most importantly without any governance conditionalities. China’s political stability, unilateral quick-decision-making mechanism and stronger economic power not only further complemented this model but also harmonised the consolidation of their dominance over the global financial system with their long-term foreign policy interest, while the US has been stumbling with its arbitrary and heedless military-power based foreign policy.

However, the positive development of this geostrategic dimension is the launch of the ‘Global Gateway’ strategy by the EU with an ambitious 300 billion Euros of investments between 2021 and 2027 in various socio-economic sectors across the world with the intention of countering the Chinese global investments and attaining ‘strategic autonomy’ for EU.

When it comes to South Asia, the region which is a vital intersection of maritime trade, connecting the Indian Ocean to the Pacific in the East and the Mediterranean in the West, the geo-strategic bi-polarity becomes a chaotic-tri-polarity. The third polar being dominated by India, the regional superpower, which wields regional superiority over the other two powers due to its geographic and economic dimension, technological capacity, geo-strategic location, cultural identity and most importantly its military power.

Nevertheless, China’s ‘pervasive economic investments’ in the key strategic sectors in South Asia, such as infrastructure, high-tech, information technology, data management, green economy and artificial intelligence, and their assertive border disputes have created a sense of ‘neo-security-threat-perception’ in India, which has not only led to Indo-China face-to-face military stand-off and arms race both in conventional and cyberspace, but also to both India’s as well as China’s discrete meddling in the internal decision-making processes of some of the South Asian nations. In this context, it should be noted that the cornerstone of India’s foreign policy in the South Asian region has always been this so-called ‘security-threat-perception’.

Sri Lanka, with its unique geo-strategic position in the centre of the Indian Ocean, is the worst affected in this regard, as the global geostrategic stakeholders today view Sri Lanka primarily through the prism of Indo-Sino-American geo-strategic competition. Therefore, going forward, Sri Lanka will need to navigate cold-blooded power competition between Beijing, Washington, and New Delhi as much as it did during the Cold War as well as during the thirty years of civil turbulence.

Sri Lanka has the experience as well as plenty of institutional memory with the dynamics of great power competition. Moreover, Sri Lanka has a proud history of safeguarding its sovereignty and integrity even during the most difficult period of its political history.

Therefore, Sri Lanka’s most difficult task lies not at the geo-strategic level, but at the national level, where it must adapt to highly professional governance skills to manage a mix of economic, health, foreign exchange, environmental, and internal socio-political stability challenges. Most importantly, to get the macro-economic fundamentals at the internationally accepted levels.

However, the Sri Lankan diplomatic dispensation has to be mindful that any sort of outreach to China to address Covid-19 economic distress would perpetuate the inaccurate perception that Sri Lanka is prone to advancing Beijing’s geostrategic ambitions.

These post-pandemic challenges are nothing unique to Sri Lanka alone, but also applicable to most other (Covid-19) pandemic hit countries.

(Valsan Vethody is the Consul General of Sri Lanka in Mumbai, India)

A Sri Lankan government minister criticised a letter that Tamil parliamentarians addressed to Indian Prime Minister Narendra Modi this week, denouncing their call to New Delhi for assistance.

“They should have conveyed their concerns to our President instead of the Indian Prime Minister because we are a sovereign country and not a part of the Indian Union,” said Sri Lanka’s energy minister Udaya Gammanpila.

Gammanpila, himself a staunch Sinhala nationalist and leader of the extremist Pivithuru Hela Urumaya party, went on to add that “if our Tamil brothers have any issues with regard to implementation of the 13th Amendment they should have talked to our elected government, instead of outsiders”.

The nationalist leader has repeatedly rejected the 13th Amendment, which calls for limited devolution of powers to the Tamil North-East, and call for it to be abolished.

The letter was handed over by politicians from the Tamil National Alliance to the Indian High Commission earlier this week.

It calls on India to ensure that Sri Lanka abides by its commitments under the 13th Amendment and devolve power to the Tamil provinces as a starting point “towards a federal structure”.