Sri Lanka is experiencing an economic crisis like never before. The country is teetering on the edge of total economic collapse. The latest news from the island nation is that it has invoked sovereign default on its debt obligations, this is the first time a developing economy in South Asia has been forced to invoke sovereign default. On the ground, this crisis manifests itself in runaway inflation in all goods, devaluation of the currency, hospitals running out of equipment, and power stations shutting down due to supplies running out. The consequence of this is mass unemployment, incomes and savings being wiped out. 

By Adhiraj Bose – Mazdoor Inquilab India

The Rajapakse government, which has been the ruling government since 2019, has shown that it has no idea of how to handle the crisis, except to negotiate debts, beg for bailouts and impose austerity measures. This campaign is yielding nothing except to push Sri Lanka deeper into the debt trap, while the economy continues to spiral into oblivion. 

Sri Lanka had been hailed as a model for economic growth and was the first South Asian country to embrace neo-liberal reforms. Despite being engaged in a war against its Tamils to the North, the country had continued to grow on the backs of trade and tourism income. The exports of Sri Lanka reflect its economic woes, of the top ten items of exports, most of it dominated by agricultural goods like tea, or textiles. The neo-liberal economy failed to hoist a sophisticated and diverse economy in the island nation, and only fuelled inequality, and kept Sri Lanka vulnerable. Despite this, no one in the mainstream media dares call out the failure of the neo-liberal system. 

Background

The present ongoing economic crisis began with the Easter Sunday bombings in 2018 which affected the island nation’s tourism sector, which accounts for 12% of the country’s GDP. This in turn affected the country’s ability to finance its burgeoning debts. The external debt of Sri Lanka increased to $56 billion representing 61% of the GDP in nominal terms. The situation with the country’s national debt appears worse, with the national debt to GDP ratio being 101% of GDP. The situation was only worsened by gross mishandling by the Rajapakse government. The government responded to the impending crisis by lowering taxes, thus reducing government revenues, and pushing through an ill-conceived and ham-handed attempt at turning farming organic, which hindered the tea plantation industry, one of the country’s biggest revenue earners. These compounded Sri Lanka’s problems, which were building up on dead-end mega projects like the Hambantota port, built with Chinese loans. To add salt to Sri Lanka’s wounds, the country found itself in the midst of the Covid pandemic which all but wiped out tourism revenues and threw an ailing economy into the abyss, one it is finding impossible to climb out of. 

While the present crisis has its roots in the situation caused by the pandemic, we must not forget the economic and political history of Sri Lanka, which has been building up to the point where such a crisis would happen. This would take us back to the 19th century and the economic system created by the British, with the sole aim to exploit Sri Lanka’s rich agricultural and mineral resources. Tea was introduced to Sri Lanka in 1867 and in a relatively short time, Sri Lanka became one of the prime exporters of tea in the world, and remains so till today. Rubber cultivation was started in 1876 and has remained one of the major cash crops of the island, and the backbone of the rubber industry in Sri Lanka. 

Sri Lanka won independence from the British in 1948 after a series of revolutionary strike actions initiated by the Lanka Samsamaj Party, led by the Trotskyist revolutionaries like Philip Gunawardena and N.M Perera. The general strike by the All Ceylon United Motor Workers’ Union barrelled into a larger general strike throughout the island. The British responded with repression, but the strike made it clear to the British that holding the island was untenable. 

The revolutionary fervour of the late 1940s did not die, but continued and peaked in 1953. That year the newly independent Sri Lankan government raised the price of rice nearly three times, from 25 cents to 70 cents. The LSSP responded with the massive nationwide ‘hartal’. The hartal was so widespread and successful, the cabinet was forced out and sought shelter in a British warship HMS Newfoundland and the Prime Minister’s resignation.  The conditions for the seizure of power were there, however, the LSSP shied away, and resorted to electoral strategies to push for reforms. This would prove to be a Faustian bargain, and saw the once-revolutionary party slowly lose its power and be relegated to the margins of Lankan politics where they remain today. 

One of the consequences of the upsurge of 1953 was the election of the Sri Lanka Freedom Party (SLFP) on an agenda for the socialist transformation of the state. The first SLFP formed in 1956 saw a hard turn towards statism but retained a policy of Sinhala nationalism. It was during his time, that the Sinhala language was made official throughout the island, downgrading the role of English, but also furthering the marginalization of Tamil adding to the discrimination of the Tamil community. In 1958, Tamils would be attacked in a pogrom which killed and injured hundreds throughout the country. This proved to be a pivotal event destroying the relations between the two communities. 

The statist policies set in place by the Bandaranaike government continued till the late 70s. During this time, Sri Lanka remained trapped in a commodity economy system, with up to 93% of its exports being plantation crops in 1970. This changed dramatically after 1977 when the United Nationalist Party took power and initiated a programme of deregulation of trade, privatization and free trade. Sri Lanka became the first state in South Asia to undergo neo-liberal reforms, alongside this, the government also turned towards hardline majoritarianism to politically consolidate itself. The UNP government under J.R Jayawardene imposed harsh policing measures under the Prevention of Terrorism Act of 1979 which gave the police wide powers to arrest and detain perceived rebels. Till then, Tamil secessionists had begun a low-intensity insurgency in the North and East, it was during this presidency that the insurgency became a full-blown war, beginning with the infamous assault on Four Four Bravo company in 1983. The ambush was followed by a massive pogrom against Tamils which took the lives of thousands throughout the country. 

The Lankan economy opened up, but it did so on vulnerable foundations, being a backward nation with few essential industrial resources, and lacking much manpower, military power, or political autonomy, the opening up to the world economy would open Sri Lanka to fundamentally unequal relations with world imperialism. At the same time, Sri Lanka was perennially under the shadow of Indian hegemony, which would intervene with a large-scale military intervention under the Indian Peace Keeping force, following the Indo-Lankan accord. The intervention did not solve the war situation, and simply resulted in more deaths, and the continuation of the civil war, it did, however, prove India’s ability to project military power over the island, and would influence future relations between Sri Lanka and India. Over time, India’s earlier supportive stance on the Tamil Tigers would change completely, during the Sri Lanka government’s final offensive campaign against the LTTE, India emerged as one of the major suppliers of military weaponry and funds for the Lankan government, as well as a source for intelligence on the enemy. India and China would work in the UN to shield Sri Lanka from war crimes investigations, effectively protecting Mahinda Rajapakse, and his brother Gotabaya Rajapakse, who is now the Prime Minister of Sri Lanka. 

From the Jayawardene government onwards, successive governments would negotiate their relationship with India, usually pivoting to another great power to establish some distance from India. For J.R Jayawardene, that power was the United States of America, for the Rajapaksas it was China. Such manoeuvring came with a price. For the Jayawardene regime, that price was met with neo-liberal reforms and opening up, for the Rajapaksa regime, it was Chinese loans for big infrastructure projects. The loans remain a burden for Sri Lanka. Though it has been over a decade since the Tamil Eelam war ended, the economy remained sluggish and prone to international crises. From 2008 onwards the world has been in a state of a long depression, and Sri Lanka remained trapped in unfavourable economic relations, which haven’t fundamentally changed since its independence. Whatever little protection statist policies and Soviet aid could give in earlier decades no longer exists, and neo-liberal reforms, along with the dead-end of reactionary nationalist politics have led the country to a dead end, and both worked hand in hand. The government of Gotabaya Rajapakse and his brother, the Prime Minister and former president, Mahinda Rajapakse, epitomize the system of neoliberal economics, and reactionary hate-filled politics. 

Protests during the crisis 

Throughout Sri Lanka, the masses are mobilizing. Protests are happening every day, in some part of the island or another, and these have brought together every member of Lankan society. The most prominent slogan visible on the streets is ‘Go Gotta go’ , calling for the resignation of the President of Sri Lanka and the removal of the Rajapakses from power. Public anger is focused on the ruling cabinet and the present government, whose mishandling and autocratic style has only worsened an already bad situation. 

The protestors are not always seen with banners of their party, but rather with the national flag, and placards with their demands written on them. Over the last month, many spontaneous protests erupted throughout the island, prompting the government to impose a state of emergency and even deploy the army. That was soon done away with as the protests only swelled in size. On the 28th of April, a day-long general strike was organized against the government. This was the first general strike in four decades and represents an acutely pre-revolutionary situation in Sri Lanka. 

The mainstream oppositional parties, being as sold as they are on the same economic policies which have brought Sri Lanka to the brink, have little to show to give leadership to the people of Sri Lanka. The Lanka Samsamaj party which was once filled with revolutionary potential, is today little different than most mainstream parliamentary left parties in South Asia, their politics almost mimicking that of the various Stalinist ‘Communist’ parties, seeking electoral alliances rather than focussing on revolutionary mobilizations, which it did in the 50s. 

The potential for another revolutionary mobilization similar to the hartal of 1953 is present in Sri Lanka and we are seeing this unfold before our eyes on live tv. The one-day general strike was a token action, but it sent out a powerful message, that the workers of Sri Lanka are capable of mounting a general strike, and in conjunction with the wider popular mobilizations going on in the country, this has the potential to become a nationwide revolutionary mobilization. 

What must be done

The chief agenda for any revolutionary force in Sri Lanka today, must be to wrench the island nation out of the hands of imperialist finance. This means nationalizing essential infrastructure and repudiating the external debt. Only on the foundations of these economic conquests, can the major political and social conquests be achieved.

 For Sri Lanka, this must mean the weakening of the army, and dismantling of all Sinhala nationalist parties, and beginning a process of reconciliation with the Tamil. This can only be done if the aspiration for self-determination of the Tamil people is respected. As of now, that may not come in the form of secession of Tamil majority regions, but in the form of federal autonomy. It must also be stressed that a revolutionary mobilization in Sri Lanka cannot succeed if it remains trapped within a national bourgeois-democratic framework, one has only to look at Nepal and the aftermath of its national revolution to see where it stands now. Nepal remains a semi-colony, under the hegemony of India, primed for exploitation by foreign capital, and many of its major social and economic problems remain unfulfilled. 

Sri Lanka cannot afford to make the same mistake. The workers of Sri Lanka must also look to their own past, and see where reformism has led them. While some important immediate gains were made, reformism ultimately did not solve the problems of Sri Lankan capitalism, nor did it help in resolving the ethnic divide. Many of the key reforms such as the nationalisation of ports were eventually reversed, proving that only the seizure of power can secure the gains of struggle. 

Sri Lanka was one of the shining beacons of revolutionary politics in South Asia, whose revolutionary leaders also fought for Indian independence, with a spirit of internationalism and commitment. It is this spirit that must be rekindled today. Should a revolution happen in Sri Lanka, its fire must spread across South Asia.

REPUDIATE THE DEBT! 

DOWN WITH THE RAJAPAKSES! 

LONG LIVE THE WORKERS OF SRI LANKA! 

OUT WITH THE IMPERIALISTS! NO TO IMF! NO TO ADB! NO TO INDIA OR CHINA!    

FOR A SOCIALIST SRI LANKA IN A SOCIALIST SOUTH ASIA! 

 

Further reading : 

https://en.wikipedia.org/wiki/2019%E2%80%93present_Sri_Lankan_economic_crisis

https://www.indiatoday.in/diu/story/sri-lankan-economic-crisis-explained-five-gotabaya-rajapaksa-1933514-2022-04-04

https://tradingeconomics.com/sri-lanka/unemployment-rate

https://en.wikipedia.org/wiki/Economy_of_Sri_Lanka#Independence_to_1977

https://en.wikipedia.org/wiki/J._R._Jayewardene

https://www.cetri.be/Will-the-Neoliberal-Economy-Change?lang=fr

https://www.worldstopexports.com/sri-lankas-top-10-exports/

https://en.wikipedia.org/wiki/Gotabaya_Rajapaksa

https://www.ceicdata.com/en/indicator/sri-lanka/external-debt–of-nominal-gdp#:~:text=What%20was%20Sri%20Lanka’s%20External,66.4%20%25%20in%20the%20previous%20year.

https://en.wikipedia.org/wiki/1958_anti-Tamil_pogrom

https://en.wikipedia.org/wiki/Philip_Gunawardena#’T-Group

https://en.wikipedia.org/wiki/S._W._R._D._Bandaranaike