“Default 2022 looks like it was staged to bring Sri Lanka more under the control of the West and the IMF.” — Author of a brand-new book in an exclusive interview.

"Default 2022 looks like it was staged to bring Sri Lanka more under the control of the West and the IMF." — Author of a brand-new book in an exclusive interview.
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Professor Asoka Bandarage served on the faculties of Brandeis University, Georgetown University and Mount Holyoke. She is the author of Colonialism in Sri Lanka;Women, Population and Global Crisis;The Separatist Conflict in Sri Lanka; Sustainability and Well-Being and Crisis in Sri Lanka and the World: Colonial and Neocolonial Origins: Ecological and Collective Alternatives (De Gruyter, 2023).

The two Rajapaksa brothers ruled Sri Lanka as presidents for many years until the people’s anger at the Rajapaksa family could no longer be contained. What were the reasons for the popular uprising and what did it achieve?

Asoka Bandarage: Yes, the ongoing debt and economic crisis is often attributed to corruption and mismanagement under the Rajapaksa regime, especially the extensive tax cuts and sudden ban on agricultural fertilizer they enacted. Global developments, the Covid crisis and Ukraine war worsened inflation and shortages of imported food, fuel and medicine. These were behind the popular uprising – the aragalaya

The uprising led to the resignations of the Rajapaksa brothers – democratically elected leaders considered nationalists. Wickramasinge  – a close ally of the U.S. rejected in previous elections by Sri Lankans – was installed as president, and  an IMF bail- out package was imposed.  

Before the protests, the situation had worsened to the point that even school exams had to be cancelled because of a lack of paper. How bad was the economic situation then, and has it improved since then?

Asoka Bandarage: Yes, the situation was dire and, although a semblance of normalcy has returned with the release of funds for import of fuel and food, insecurity continues and poverty and inequality have worsened. There is a severe shortage of medicines and, due to lack of employment opportunities, a massive exodus of workers and professionals, including doctors, out of the country. 



It seems that Sri Lanka has not made much economic progress since its independence from Britain in 1948, as it has not been able to reduce its dependence on foreign buyers of its low-quality products and use them as a basis for building a manufacturing industry. What are the reasons for this stagnation?

Asoka Bandarage: I would not say that that Sri Lanka’s exports are low-quality – Sri Lanka is known for the best cinnamon and tea! Also quality garment exports, such as Nike and Victoria’s Secret.

However, as I discuss in my book, the export-import model, unequal exchange and dependency have to be understood in relation to the history of colonialism and more recent policies of neoliberalism. Countries of the Global South such as Sri Lanka have not been allowed to develop self-sufficiency in food production and import substitution industries. They have been tethered to the global economic system through repeated cycles of debt, so-called aid and the false ideology of development. 

When the country was suffering from a debt crisis, the government asked the IMF for financial support, which came with strict conditions. What were these and what impact did they have on the economy and the population?

Asoka Bandarage: Sri Lanka went to the IMF 16 times prior to 2022, but this was the first time that Sri Lanka declared default. The IMF bail-out comes with familiar conditionalities: deregulation, privatisation, cut backs in social safety nets, etc. The privatization of state-owned enterprises in the energy and telecommunications sectors, as well as their sale to foreign government-owned entities, poses threats to Sri Lanka’s sovereignty and security. Cut backs in social services have accompanied drastic legislation curtailing political freedom, and the law and  order situation is deteriorating.

A small portion, estimated at about 10% of Sri Lanka’s external debt, is owed to Chinese companies, while four to five times as much is held by Western banks and investment companies such as BlackRock, JP Morgan Chase, Prudential (United States), and HSBC (United Kingdom). Nevertheless, there have been reports claims by Western and Indian sources that “China is behind the crisis in Sri Lanka.” What is behind these “China debt trap” claims?

Asoka Bandarage: Sri Lanka’s economic crisis has to be understood in the context of geopolitical rivalry over its strategic location in the maritime trade route in the Indian Ocean. Sri Lanka is part of China’s Belt and Road Initiative and the USA and India – along with the “Quad” (Quadrilateral Security Dialogue), this includes Australia and Japan – have been competing to bring Sri Lanka under their dominance. 

As I indicate in my book, there are some indications that the 2022 debt default may have been staged to bring Sri Lanka more firmly under the control of the west and the IMF. There is evidence that bilateral loans were available, including from China, and that Sri Lanka therefore did not have to declare default on April 12, 2022 – for the first time in its history! However, as you say, the dominant western narrative blames ‘China’s debt trap diplomacy’ for the Sri Lankan crisis.

The title of your book, “Crisis in Sri Lanka and the World,” clearly describes the crisis as a global one – what are the key elements of the global system behind this?

Asoka Bandarage: Key elements include the historical inequality and exploitation in the Global North-South relationship, local collaboration and the ideology of development, propaganda and media control. As I discuss in the book, some 60 countries around the world are in or near a debt crisis. While corruption and mismanagement of local rulers are major factors, these crises must be understood as systemic crises rooted in the history of colonialism and neo-colonialism

What do you see as the way forward?

Asoka Bandarage: Given the reality of ecological and social collapse in both Sri Lanka and the world, an alternative “Middle Path’” – which puts the environment and people before profit, domination and power – is clearly needed. Bioregionalism and local self-sufficiency in food can be achieved with changes in political leadership and global solidarity.  

Most countries in the Global South deemed poor, such as Sri Lanka, are rich in natural and human resources, talent and creativity. We need an awakening of people to the challenge of human and ecological survival, a questioning of the dominant values and of the destructive economic system, and a transformation of consciousness. 

We thank you very much for this interview.

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The questions were asked by Felix Abt and Paul Mayhew, an experienced and award-winning academic editor based in New Zealand.

In this Eastern Angle article, Professor Asoka Bandarage explains the unprecedented political and economic crisis that has hit Sri Lanka since early 2022.