Syed Ata Hasnain | India must act with care amidst Lanka imbroglio

Sri Lanka’s slow descent into an abyss is evident from the developments over the past few weeks. Let down by corrupt and inept politicians who had no idea about running a country’s administration, the public is now up in arms. However, once a nation reaches such a low state of governance, nothing can be predictable. Fortunately for it, it is neither in a state of civil war nor of extremist terrorism, but only sheer ineptness, cronyism and nepotism, all of which attempted to make Sri Lanka a family fiefdom of the Rajapaksa family.

A $51 billion debt, with debt servicing of $7 billion needed this year, is proving unmanageable. President Gotabaya Rajapaksa, the LTTE slayer of 2009, fled the country early Wednesday, leaving on a military jet for the Maldives hours before his resignation took effect. With his inexperience in administration, he took a series of decisions like the ban on chemical fertiliser in favour of organic farming. Rice and tea production collapsed, creating a food and forex crisis as tea is such an important export item. The government then printed money to prop up the Sri Lankan rupee -- which sent the rupee tumbling from 205/US$ to 370/US$. Gulf remittances fell as workers held on to their money in the Gulf in the hope of a further weakening of the rupee. The nation’s credit ratings had already taken a beating, 2020 onwards, eventually locking the country out of international financial markets. The Islamic State’s April 2019 Easter bombings had ruined all tourism, with the Covid-19 pandemic finally the last nail in the coffin.

Thus, the issues at stake are first the financial mess, which must be resolved. Second, political stability which is vital so that the international community knows who it is talking to and can pursue a strategy of recovery with a legitimate leadership. Third, social stability, to allow people to resume some semblance of normalcy.

Fourth, neutralisation of any lurking internal threats involving ethnic and ideological issues which could take advantage of the prevailing chaos.

For India there is much at stake: lots of it evident and lots under the surface. To begin with, India has already extended almost $4 billion in assistance to Sri Lanka to tide over its crisis. This has been largely utilised to stave off complete bankruptcy and provide essentials in food, fuel and medicines. Very few other nations have come forward to assist. Colombo had asked Beijing for help -- including a $1 billion loan to meet repayments and a $1.5 billion credit line to buy Chinese goods -- but no significant progress has been made even after months of negotiations. China too is watching the situation very carefully and could make its economic moves with strategic timing. Besides the four issues of concern mentioned above, a very important issue for India remains the exclusion of China’s influence and cultivation of presence in the island nation.

On the political side, India has been wise in not getting involved and becoming a kingmaker or otherwise. There is anger on the streets in Sri Lanka and any attempts by India towards interference will be taken quite negatively by the people. There exists a long-standing trust deficit due to the events of 1987-90, which saw the conduct of Operation Pawan in northern and eastern Sri Lanka by the Indian Army. Although India then acted at Sri Lanka’s request, it was projected as India’s intervention. Sri Lanka’s Parliament Speaker is reportedly making efforts to bring about a leadership change through some form of consensus in the next week or so: Sajith Premadasa, son of former President Ranasinghe Premadasa, has made clear his intent of running for President. Interestingly, the Sri Lankan Army (SLA) has remained outside the nation’s political crisis except for a brief statement which was more an appeal for peace in the streets. The SLA does not have any history of political intrigue or attempts to usurp power. If it chooses to seize power on grounds of being the only institution which can bring a semblance of stability, it risks placing the nation on the pariah list; the IMF and other institutions will need much convincing to actually do business of recovery with the SLA in command.

India has to be worried about the nature of government emerging by the democratic process or otherwise. An overly pro-China commitment by any government is obviously not desirable. China’s silence during this crisis situation has been ominous and therefore highly unpredictable. India’s hard work over the last few years has led to some gains and its current handling through the economic route has been just right. However, it should be remembered that Sri Lankan political leaders get cheers and votes when they are perceived as standing up to India. Should India work quickly to exploit the situation and take measures to cultivate and win over more friends for the future? For that it will need to open its coffers because it is money that will ultimately make a difference and will also be remembered.

Unfortunately, the world is now in a tizzy on the economic front and India is obviously not isolated from it. Energy prices, effects of the pandemic and the changing dynamics of the world order are not making it easier for India’s finance ministry either.

There’s also the Buddhist clergy to contend with. It is against the misrule of the Rajapaksas, but it also suffers from an insecurity that is described as being a “majority with a minority complex”. It shouldn’t do anything to upset the tenuous balance between the majority Sinhala and minority Tamil population. Any insensitive step can open up old wounds, towards which the Sri Lankan leadership has displayed no sentiment to heal. If a government is to be formed by political consensus, the Tamil National Alliance must also be included. We must remember Sri Lankan politics has a cascading political effect in southern India, especially when some decisions go against Sri Lankan Tamil interests. India could examine investing in some of the government assets in Sri Lanka like the airlines, ports, airports and even hospitals, to help bring stability in societal functioning as all measures need to be near simultaneous because each depends on the other. International monetary institutions may demand cuts in the size of the SLA, which at 200,000 strength is a luxury that Sri Lanka cannot afford. Yet it would be wise counsel if this was allowed to remain if it can be helped. The potential contingency of social implosion leading to intense violence can be staved off by the SLA’s professional presence, with cuts effected progressively.