Postcard from Sri Lanka

When I wrote my first “postcard from Sri Lanka” for the UK web newsletter, The Daily Sceptic in 2020, I was at pains to point out the gross over-reaction to COVID that was on display. 

This last week, with the toppling of a President here, and a South Asian equivalent of the “storming of the Bastille”, so much of it still flows from that period when so much of the world lost both our wits and our way.

I was asked to send on an “updated postcard” to the UK. And so, thinking readers here may be intrigued to receive the perspective shared with an overseas audience, I provide a slightly edited version below, updated with Gota’s “flight to and from the Maldives.”

In the hopes that repetition is the mother of conviction, here is a recitation of the vertiginous fall from economic grace and the madcap medley of the recent past.

Sri Lanka: The slippery slope

President Gotabaya Rajapaksa (who was scheduled to resign on Wednesday 13th, the monthly full moon “Poya Day” by the Buddhist calendar, and whose wayward Saudi Airlines flight to Singapore was as of this writing “the most tracked flight in the world”), was elected in 2019 to an already indebted nation, which had not built up its export sector, emaciated its manufacturing sector, and was living off imports brought in on borrowed money.

Anyone who tuned in to Gota’s manifesto, should have heard intimations of economic ruin in the garbled economic manifesto. Instead, he was treated to obsequious corporate swoons.

The ruinous impact on the key source of foreign exchange, the tourism sector, from the Easter 2019 terrorist bombings, was just being recovered from (in early 2020, the once hailed “world’s favourite destination” as per Lonely Planet was back at pre-Easter tourist numbers).

However, facing unmanageable short-term debt, the President cut taxes! It was economically incoherent, but this was the beginning of a pattern. 

Then, COVID hysteria hit. There was no curve to flatten in Lanka, there were a trickle of cases, and ascribed deaths were inconsequential. Sri Lanka responded by having the world’s most repressive (as per the Oxford Stringency Index and other measures) 24/7 “curfew” (not just “lockdown”) for several months.

While neighbouring South Asian countries built up their reserves over the COVID period by 30 to 40%, the President and his cabal of cronies depleted national forex reserves in Sri Lanka by over 80% in the same period! 

The curfews had numerous consequences. The “body blow” to the economy from the virtual outright cessation of all economic activity for almost two months was over $ 1 billion by very conservative estimates.

Thereafter, the COVID regime and its costs, imposed for “safety” reasons yet to be enumerated or validated, made key industries like garments temporarily uncompetitive. Garment manufacturers began to go offshore to Bangladesh and Vietnam with all the flow of capital that entailed.

At every whiff of a COVID surge, back came the curfews. No government proclamation could be trusted as to when a modicum of normal life might resume. 

“Testing” became big business and the still unremarkable “ascribed” death certificates were riddled with comorbidities. A senior army official who was asked how many death certificates revealed COVID as the primary cause of death in total, indicated “about 200-300” at a time when 500+ daily deaths were being attributed.

Bangladesh, reliably less zealous and alarmist, emerged with a booming economy, and in fact was in a position to offer Sri Lanka $ 250 million by way of a currency swap and deferred repayment terms. Bangladesh is a far less developed country with a lower GDP, but far greater economic health and sobriety.

The COVID alarmism, with delusions of “COVID zero” never far from the national consciousness, kept tourism at bay with fantasy “bubbles” and quarantines that made visiting far from attractive. This while neighbouring Maldives was racking up historic tourist numbers. 

And not just Maldives. As outlined recently, Morocco (38 million compared to Sri Lanka’s 22 million by population), in 2021 saw plummeting tourist numbers, but still managed 6 million! Sri Lanka at its tourist “height” had a peak of 2 million, and barely managed 194,000 in 2021.

Further economic bungles

Following the global pandemic delirium, the Government went into massive money printing, for which in inflationary impact (above 50% now) we are now paying.

Then, despite advice from agronomists and specialists, the President decided to “overnight” go to organic fertiliser exclusively, a feat not pulled off by the greenest of jurisdictions. EU countries who have been flailing in this arena for decades, have at most approached 20% organic. 

To avoid $ 250 million in imported fertiliser, the multi-billion-dollar iconic tea industry was devastated, as well as having multiple harvests undermined – creating a food crisis as well.

The rupee had been artificially sustained against the US dollar from September 2021, and rather than having a “managed float” or a gradual readjustment as debt was restructured, a bungee jump without a bungee was undertaken. And so the rupee was floated, again in one day, losing over 30% of its value overnight, with multiple businesses suddenly no longer viable – wreaking havoc in the markets and more. 

The escalating forex crisis metastasized into a fuel crisis, and an electricity crisis, in time an essential medicine crisis and the aforementioned food crisis. 

The blackouts with diesel shortages making generator use problematic, made it difficult to operate tourist establishments again “just” as a tourism rebound was being mounted. 

It also had an impact on manufacturing, and then supplies not reaching businesses due to fuel issues, or necessary ingredients and supplies not being received on the island due to payments not being made.

Sri Lanka had delayed for years going to the IMF, which it had been urged to do, when it was in a much stronger position. Wanting to avoid scrutiny and succumbing to the global malaise of “magical thinking” it held off, until literally it couldn’t. 

There is the old saw, “How do you go bankrupt?”

The reply is: “Gradually…then suddenly.” 

The economic devastation is hard to properly assess. Taking the longer view, Sri Lanka had over $ 7 billion in foreign exchange reserves at the end of 2019, and by May 2022, could not rummage up $ 500,000! 

And so, Sri Lanka finally defaulted, being the only country in this regional ‘hood’ to do so, and for the first time since it achieved independence. This was perhaps inevitable, as funds outlaid, it was concluded, should go to short-term essentials. The overall debt should now be part of the restructured debt agreement, being still cobbled together with the IMF.

The protests

So, with no way forward and no way out, and with credible claims of national plunder and looting by the ruling junta, the “Aragalaya” began as a protest against power cuts in March 2022. It was essentially leaderless, but unified in wanting the President’s resignation.

It was remarkable in that young and old came out, camped out on the main artery of Colombo, the Galle Face Green. Women, for the first time in the history of this nation, came out in public protests, and all the religions represented here, were unified.

On 9 May, Mahinda Rajapaksa, then Prime Minister, the President’s brother (former President himself of course, most memorably at the time the civil war was concluded), enabled thugs and goons to attack the protestors. 

The army intervened, and stockpiled anger erupted. Protests went national, and politician’s homes were burned. Sri Lanka teetered towards the lawless but fortunately, fairly quickly regained its equilibrium.

Mahinda resigned, and a past premier, Ranil Wickremesinghe was appointed. He had been defeated in the last election, but was considered an elder statesman, and had a pacifying influence on the IMF, the United States, the EU, Japan (who had more than a few bones to pick with the current regime) and others.

Despite members of other parties jumping ship to join the interim Cabinet, everything took longer than hoped. The 21st Amendment to the Constitution to reduce Executive Powers slalomed hither and thither before eking out a highly edited passage. 

Donors understandably focused on medicine and food, and after the Indian credit line for fuel wasn’t extended on a credit basis, the Prime Minister began to be construed as someone propping up the President without significantly improving the life of the nation.

Ranil was at pains to point out he inherited a shattered economy and progress was being made, and it has been, but a few key excruciating delays on various fronts, brought things to a head.

Just as fertiliser from India was landing and diesel and fuel shipments are on the horizon (the latter in part from a large World Bank supported relief package), time ran out, as the iconic 9th of the month arrived.

9 July 

Oblivious as ever the President got himself publicly hooted out of Parliament in the run up to the 9th – something optically and actually without parallel here. 

And then the Javert like Inspector General of Police tried to impose a “police curfew” on the eve of the protest day. This was incendiary. It was also illegal as numerous legal groups pointed out without a corresponding “state of emergency” declared. 

As Sri Lanka is at its core, law abiding, the curfew was called off, but it stoked ire, and people had decided to flout it anyway and to descend upon the nation’s capital en masse. 

The later burning of the Prime Minister’s residence (which he had donated to his alma mater, Royal College) was the low point of this protest, as outliers responded with carnage to alleged police attacks on journalists. 

The President was away from his residence, and though water cannons and tear gas were initially deployed, it was clear the army and police did not have the heart to use more decisive measures against ordinary citizens whose lives have been savaged and the young, students and workers alike.

And so they streamed (rather than stormed) into the Presidential residence. People swam in the pool, cooked, lounged, took tours, it was surreal. Not much damage happily, and trains ran, and many restaurants stayed open, and it was a large, if emphatic street party everywhere else in Colombo away from these two hotspots.

The day after was a relatively calm Sunday. In Galle, the Test Matches with the Australians have continued, though the “people” reclaimed access to the matches by getting past police barriers on the protest day. But no one has felt unsafe there, no real incidents. 

In the words of Les Mis, which has been sung here more than once, in more than one language, the spirit and the energy reflected an ardour for something better, truly “It is the music of a people who will not be slaves again.” 

What next and what about visiting Lanka now?

Of course, hot on the heels of this the IMF intoned their hope that things would be restored to normalcy so talks can continue, assuring everyone “technical discussions” with Ministry of Finance and Central Bank would be unaffected. The US State Department chimed in, urging a return to “normalcy.” 

The media, in its licentious abandon has been showing and reshowing the few inflammatory shots, suggesting real danger and upheaval on the ground. 

UK travel advisories, indifferent to the impact on the economy here, urge “only essential travel” due to the impact of the economic crisis, on a page that still has references to COVID, and “terrorism” (from 2019) splattered there.

Let us unpack this, and I say this as an American on the ground, with a family, having lived in all kinds of fascinating places at volatile moments of their history.

First of all, if the President had resigned on the 13th as he had indicated, the Prime Minister Constitutionally would have become President, without having to be “appointed” by Gota and “gazetted” accordingly. 

The hysteria about the PM also stepping down while Parliament is attacked and public buildings occupied and populist oracles claim to divine “the will of the people” has been unfortunate and myopic. 

Gota wasn’t above the law. Neither are the protestors, and most know and respect that, but they mustn’t give cover for other elements, with clearly divisive, political, militant agendas. 

And so we must respect Constitutional barricades here. Ranil has requested a consensus choice for PM for the key parties in Parliament. 

Either way, if this much awaited resignation letter is finally received, and/or the Chief Justice and Speaker legally declare the President unable to fulfil his duties, then Parliament would elect by simple majority an interim President who can serve out the remaining term or until elections are called. 

If this Constitutional procedure is followed, unrest ceases, public buildings are peacefully restored – and all this is being “ravelled” as we speak – then that would indeed be a demonstrable restoration of “order.” 

Following a Constitutional path would be the epitome of the democratic process. And, taken overall, it is hard to believe the resignation or removal by overwhelming national consensus of someone with a 3% approval rating who has by all accounts pillaged the country is not democratic progress. 

Ergo, IMF, USA, UK, EU, take some smelling salts. This is not being done at the barrel of a gun, but, by and large, following the legal procedures enshrined in the law of the land, which the majority are keen to follow. 

Let us look forward to this taking place. That would be more “legality” than we’ve seen in much of the planet as civil rights were summarily stripped over an overhyped pathogen with a 99%+ recovery rate over the last few years.

As to danger, there really isn’t any, except in extremely sporadic and isolated pockets. This is a radiantly beautiful country; I urge the world to come and enjoy it. 

The Australian cricketers were overwhelmed by the Sri Lankan welcome. Those videos have gone viral. The Sri Lankans gushed their gratitude for the Australians having continued with the tour. 

The “unrest” has been rare, infrequent, and even this last Saturday (9 July), 99% of the protests were fully peaceful. And even more to the point, nothing untoward in the tourist sites. 

I love South Africa. However, Sri Lanka is far safer. Any travel advisories issued? I love South America. Any for Brazil recently? Or for that matter, Chicago? 

No, we just exercise basic perspicacity and care, and you can still enjoy these locales and sites, and should, lest we all become permanently walled off from each other.

Braving power outages and fuel lines? Well, power cuts are down to 2-3 hours. All the tourist hotels and establishments have generators. Tour operators will guarantee your tour, as they have been deemed “essential services.” There are challenges, but they will only be resolved and outgrown by engagement, not isolation.

Industries that trade in dollars have now also been cleared to buy fuel directly from oil rich suppliers, without going through the national exchange. Very few people here rent their own cars, that may require some navigating, but tourists and visitors being taken around by a car and driver, no issues.

And now that there is so much more oversight, under increasing scrutiny, it is increasingly likely every dollar or pound foreign travellers spend helps the locals. That foreign exchange is not “exploiting” the poor, it is helping them, as that is what is most needed by this economy. 

And we can invite people to spend that, while having the trip of a lifetime, among some of the warmest and most welcoming people in the world. And they will get better “bang for your buck” right now, whether going the eco route, or staying at an Aman, a Shangri-La, a Relais & Chateau or other boutique equivalent. 

No vaccination requirements, no PCR tests, no quarantine on arrival, and if worried about fuel, they can have a marvellous time in a key geography without going from one end of the island to the other. 

And niche travellers may be positively shocked: Golfer’s Sri Lanka (3 gorgeous courses), Food lover’s Sri Lanka (a riot of cuisine, indigenous, eclectic, global), Trekkers Sri Lanka (spellbinding hikes), Historical Sri Lanka (layers of historical and cultural appeal), Wellness Sri Lanka (Ayurveda, natural herbs, yoga, sites for mindfulness), and so on. 

How about Taphophile’s Sri Lanka as Paul Topping who writes with such passionate zeal about his adopted home highlights? 

What? A Taphophile is someone who enjoys visiting cemeteries and their associated history, and there are hundreds of thousands of these enthusiasts. 

Lanka has endless such sites and historical churches and enchanting locations where you can even indulge this interest. I say this, tongue only slightly in cheek, to show the range of appeal of this resplendent isle.

So, we can with pride invite others to help a beautiful country, a strategic asset on key shipping lines (if they need left brain rationale), undone by silly leadership (not alone on this front), and where they can do very “well” in terms of their leisure time and much needed getaways while doing “good” at the same time.

Reflections

Sri Lanka is now seeking to determine what it will be. It has to be willing to “lead” via citizens and not just be “led” via despots. It has to leverage its high rate of education, its diversity, its ability to be a potential IT hub and service centre like Singapore.

To do that, it has to vastly reduce its bloated governing bureaucracy, remove useless regulations, get past the numerous White Elephant projects that have returned nothing to the nation and invest in real infrastructure. 

And it has to tap the genius of its people and give them a chance to generate their future via their enterprise. Not a bad prescription for any country.

Touchdown

This has to go to press, so there are doubtless twists and turns we’ll miss. Gota has landed in Singapore.

Ironically, the Maldivians announced his resignation before our local press did, having gotten wind of it, and wanting to show they “helped” move the democratic process in Sri Lanka along by being a conduit for his departure.

The Speaker here has held off on an official announcement, because the “email” resignation has to be legally authenticated! So, another night of twists and turns, as a hard copy is collected by the Sri Lankan High Commission in Singapore, and that is validated and “escorted” home. 

Hopefully though the Attorney General will clear the way for this to be a “formal” resignation so the Parliamentary process can begin, and the passion of the protestors can be requited alongside that. And we can be spared another week from certain deranged quarters of frothing, chest-pounding and bloviating…and the long, hard trek back for this beleaguered yet, at its root, beatific island can begin in earnest.

(The writer is the founder and CEO of EPL Global and founder of Sensei Lanka, a global consultant with over 30 years strategic leadership experience and now, since March 2020, a globally recognised COVID researcher and commentator.)