By Ameer Ali –
The currency swap deal with China for $1.5 billion has boosted Sri Lanka’s dollar stock to exceed $3 billion and made CBSL chief Ajith Nivard Cabraal jubilant and confident of further injections from other sources, expected to materialize soon. Among them, India’s $1.9 billion assistance of which $400 million by way of currency swap with Indian Reserve Bank, $500 million credit from EXIM bank for petroleum imports and the balance one billion for food and medicine imports, is the most significant. In the meantime, Bangladesh also has given a three-month extension on its $200 million currency swap that is to mature by the end of December 2021.
However, no one knows the conditions attached to the Chinese swap and presumably it would imply that it would have been tied mostly to imports from China. This would be one way dumping into Sri Lankan market the unsold and substandard products made in that country – a dragon’s gift. The saga over the ship carrying bacteria filled natural fertilizer is still fresh in peoples’ mind. Yet, can a beggar be choosy?
Even then, these are all palliative measures and not solutions to cure the disease permanently. If Cabraal and the government think that they could totally avoid IMF partnership in the search for long-term solution they would only be fooling themselves. It appears that they have left the door ajar and not fully shut. The trade minister is reported to have said that if people would be willing to bear the consequences the government would be ready go to IMF. This with cerebral under capacity (there are a few more like him in the cabinet) who, only a few months ago, claimed that 7,500 rupees would be enough for a family of three to live comfortably, and is now advising those families to grow vegetables in the backyard, should remember that it was not the people who caused this tragedy in the first place. It was the corruption in and mismanagement of his government plus whimsical decisions on unachievable goals by the President that brought this economy to virtual bankruptcy. All that the regime achieved so far is to produce a new class of plutocrats headed by one family. This government has betrayed the trust placed upon by those who elected it. It is time that it packs up and leave allowing people choose an able and uncorrupt leadership that would first make the current managers and looters accountable for what they have done, before embarking on a mission of repairing and restructuring the entire administration and economy.
Be that as it may, the Indian and Chinese rush to offer economic and financial assistance to a beleaguered Rajapaksa regime took place in the background of tit for tat actions between the two regional giants, and the regime being caught in the middle trying to satisfy both masters. It started with China suspending its Sino Soar Hybrid Technology plan to build hybrid energy system in the northern islands of Analaitivu, Neduntivu and Nainativu, because of security threat from a “third party” implying India. China is now building 12 solar power plants in the Maldives. This happened in the middle of negotiations between India and Sri Lanka to create a joint venture corporation between the two to restore and operate the oil tank farms in the strategically important Trincomalee waters. Finally, the recent visit by the Chinese High Commissioner and his team to Jaffna, where they paid visits to the rebuilt Jaffna Library after it was burnt out in 1981, a seafood factory in Mannar built with Chinese investment, and took a boat ride to the legendary Adams Bridge closer to Indian shores before going barefooted with open chest while wearing veshti and carrying flowers and camphor to pay obeisance to the Hindu deity Kandaswamy in Nallur temple. This drama was obviously staged to irritate India. Otherwise, where was this love towards Tamils all this time? One should not be surprised if the same ambassador decides to visit a mosque in the East with the ACJU chief! To cap everything the Chinese Foreign Minister Wang Yi is expected to visit Sri Lanka in early January 2022.
Sri Lanka’s economic bankruptcy is pushing its government deeper and deeper into foreign policy difficulties. Both are the regime’s creations. Covid only aggravated the troubles. While the government refused to listen to experts on economic, financial and health matters and left them in the hands of the Viyathmaga cabal and the military, its foreign policy was left to amateurish politicians to handle. It was this amateurism that caused the debacle in Geneva in 2020. While Prime Minister and Rajapaksa family patriarch Mahinda Rajapaksa, prays Lord Venkateshwara in Tripathy to save his regime, his monkish backers are encouraging him to hold on to power regardless. Who could the despondent Sri Lankans pray to or turn to?
*Dr. Ameer Ali, School of Business & Governance, Murdoch University, Western Australia