22 July 2022, NIICE Commentary 8141
Shradha Arjyal Joshi
Once known as one of the most developed countries in South Asia, Sri Lanka lately has gone through a lot of turmoil. The steady letdown of the country can be analyzed with the tenure of the four Rajapaksa brothers who took over the helm of the country like a family enterprise. What lies behind the fall of this dynasty has been reflected by the country’s economic and political crisis for the past 2-3 years.
The Rajapaksas were once seen as heroes of a nation who overcame a bloody civil war in 2005. But past year has been tumultuous to the dynasty eventually leading to escape of Gotabaya Rajapaksa on 13 July 2022. The videos got viral when the protestors entered the President’s residence, got hold of swimming pool, enjoyed and wandered the lavish premises, and took selfies in the office. The enraged protest was apparent that all of them wanted the President’s resignation who ruled with an iron fist.
Rajpakshya’s Emergence and Downfall
The first amongst the four – Mahinda Rajapaksa came into power with a win in a democratic election in 2005, gaining utmost trust of its citizen with the declaration of victory in 26-year-long civil war against the LTTI in 2009. This also helped Rajpakshya’s brothers rise as heroes, especially among Sinhalese majority in Sri Lanka.
His initial tenure of over a decade as a president gained greater political height which made him supreme to further rule the country of 22 million population more as a family business. The key positions in the government such as defense secretary, economic development expert, speaker of the parliament were all given to his brothers. The economic growth at its inception favored Rajapaksa’s cronyism at utmost in every governing body. Mahinda Rajpakshya was conducive in forming the dynasty politics in Sri Lanka.
In 2019 when Gotabaya Rajpakshya became president, he started to indulge in various policy failures amongst which adopting organic farming led to import of chemical fertilizers and tax deduction added fuel to the fire. It proved to be disastrous for Sri Lankan farmers as they were unable to grow agricultural products, hence maximum of which had to be imported. In the same year his decision to cut taxes aimed to stimulate economy, brought a loss of 25 percent revenue to the government. Sri Lankan started to lose access to overseas in the international market with downfall in the credit ratings. The country then started to imply its foreign reserve to pay the government debt. This had an adverse effect upon the import of essentials like food and fuel with soaring prices. Sri Lankans now started to face difficulty with shortage of food and fuel. The mismanaged government backed by failed political dynasty ultimately led to hardship in the daily life of every Sri Lankans. The newly elected president Ranil Wickremesinghe has now an essential role in bringing country out of economic and political crisis but the days ahead aren’t easy for Sri Lanka
Analogy between Sri Lanka and Nepal
The ongoing crisis in Sri Lanka has definitely put Nepal on red alert. Some of the national and international media have speculated Nepal is following the path of Sri Lanka. Scrutinizing Nepal’s scenario, it doesn’t have such hefty debt as the other countries, however, other variables are likely to raise alarms.
Absence of Self-Reliant Economy
In terms of trade and economy, both of these countries have failed to expand their exports. Nepal was largely involved in exporting grains, medicinal herbs, hand-woven carpets, etc. whilst Sri Lanka exported in terms of rubber, coconut, and tea during the era of colonialism. In recent times, both these countries are over-dependent upon imports of essential items like food and fuel. By the size of the economy, both remain as poor and possess little power in the international market. Compared to manufacturing, the service sector has taken a leap. Tourism and remittance have been major sources of foreign reserve in both these countries. In Nepal and Sri Lanka, tourism sector suffered as badly as it could have been during the pandemic, contributing to merely 7.9 percent and 12.6 percent respectively, during the year 2019. Overall economic performance has been dissatisfying for a few years down the line which shows the inability of private and public sectors in sustaining growth.
For both the countries, exports have to be emphasized to promote self-reliance in economy. Nepal has been highly dependent upon remittance; though it cannot support the economy in the long run. Both of these countries need to diversify from agriculture and tourism. In order to move toward manufacturing sector, investment in physical and non-physical infrastructure is a must.
Currently, in Nepal, cement industry has been able to capture export market, however, the country still fails to have structural transformation for its other industries to revive. In order to establish as a self-reliant economy, Nepal needs to embrace the concept of land-linked and center on building economic corridors inside and beyond the borders. Similarly, export of hydropower to India is a positive sign.
Nepotistic Politics Raise Alarms
Rajapaksa brothers have been in power claiming the defeat over three-decade Tamil insurgency and gaining popularity amongst the Sinhalese nationalist constituting about 70 percent of the population in Sri Lanka. In Nepalese context, after the restoration of multiparty democracy in 1992, there have been many political instances that led to further turmoil with the fall of monarchy and declaration of the country as a federal democratic nation in 2005. Both Sri Lanka and Nepal have witnessed decades-long civil war and have tried to look for economic transformation. However, the situation is such that due to a lack of a proper governing body these counties have been time and again badly affected by political and economic crisis. The tendency of hiring majority of family members and relatives in the key governing positions has led to malfunction in every sector.
Sri Lanka and Nepal both need visionary and efficient leaders who could reform country to gain economic and political stability. Long-term economic structuring has to be backed by strong political leadership. Transparency and accountability mark a great deal of importance to eradicate corruption deeply rooted in these two countries.
Nepal’s geopolitical position is equally important to its strategic and diplomatic dealings. With its neighboring giants India and China, the country must maintain its neutral stand with them. Favoring one over another definitely puts Nepal in a difficult position, hence we must maintain our diplomacy and foreign relations remaining multidisciplinary. How the country responds to this political and economic crisis will have a long-term impact.
Shradha Arjyal Joshi is a student of International Relation and Foreign Affairs.
