The Guardian: 10 May 2022

Sri Lanka’s prime minister, Mahinda Rajapaksa, resigned on Monday with his country in economic free fall, bowing to months of protests in a significant blow to the fortunes of a family dynasty that has dominated the island’s politics for nearly two decades.

Mr. Rajapaksa made the move hours after his supporters instigated fierce clashes with government opponents on the streets of Colombo, the capital, a portentous turn in the protracted unrest that left dozens injured and prompted the police to call a nationwide curfew.

It was not immediately clear whether Mr. Rajapaksa’s decision to resign would satisfy the protesters, who have been demanding the resignation of his younger brother Gotabaya Rajapaksa, 72, the president and currently the more powerful of the two.
But the concession by the elder Mr. Rajapaksa, who is 76, moved the protesters a step closer to their goal of ridding the government of the Rajapaksa family and reversing what they call its ruinous policies, even as the prime minister unleashed violence and chaos on his way out.

The attack by his supporters on the peaceful protesters unleashed widespread violence and anger that continued late into the night on Monday.

Mobs surrounded Mr. Rajapaksa’s official residence in Colombo and set buses on fire on the streets of the capital. Local news media reported widespread burning of homes and property belonging to members of Mr. Rajapaksa’s cabinet, as well as the ruling family’s ancestral home and their father’s memorial.

“Effective immediately I have tendered my resignation as prime minister to the president,” Mr. Rajapaksa, the family patriarch and a former president, said on Twitter. It was unclear whether Gotabaya Rajapaksa had accepted his brother’s offer to step down.

As food prices have soared and the island of 22 million people has struggled with shortages of basic necessities like medicine, fuel and electricity, protesters have taken to the streets across the country in largely peaceful demonstrations.

Sri Lanka’s usable foreign exchange reserves have shrunk to below $50 million, the finance minister said, and in recent weeks the country has been relying on credit lines from allies like India for basic necessities.

The demonstrators’ anger has been particularly aimed at Gotabaya Rajapaksa, a defense official during Sri Lanka’s three-decade civil war, who was accused of human rights abuses during that conflict before being elected president in 2019.

Mr. Rajapaksa had been rumored in recent weeks to be seeking to calm the protests by asking his brother to resign as prime minister and open the way for a new government. Those rumors intensified over the weekend after the prime minister was jeered by protesters as he paid one of his few visits to a Buddhist temple during the economic crisis.
But as of Monday morning, Mahinda Rajapaksa was still holding on to his post, addressing hundreds of supporters who had been bused in for a meeting at his residence. The supporters then walked out and charged on peaceful protesters camped along Colombo’s scenic Galle Face and outside the presidential secretariat, attacking them and dismantling their protest sites.

Video showed supporters of Mr. Rajapaksa thrashing the anti-government protesters with poles. Health officials said that more than 100 people had been taken to hospitals with wounds. Sajith Premadasa, the leader of the opposition in Parliament, was among those assaulted. Two of the main campsites were burned down.

“I saw my friend get hammered. He was taken to the hospital. They burned down several tents,” said Thimira Malinda Pathirina, 27, a university student. “The police and riot squad watched and waited. They didn’t do anything when we were getting assaulted, and our tents were set on fire. We are peaceful protesters.”

Just what Mr. Rajapaksa told his supporters at the meeting is not clear. But a video clip circulating on social media showed one of his former cabinet ministers, Johnston Fernando, addressing the same meeting urging the crowd to action.

“We are going to end this anti government protest,” Mr. Fernando, whose own home was reportedly burned in the night of violence that ensued, is heard telling the gathering in the video clip. “This is the beginning of the battle. If the president can’t do it then we will stop it.”

Condemnation of the violence was swift from diplomats as well as opposition leaders, who tried to urge calm.

“Mahinda Rajapaksa, who just resigned, must be arrested and brought before the law along with all others who organized and brought the attackers to Colombo today,” M. A. Sumanthiran, an opposition lawmaker, said.

Jayadeva Uyangoda, a Colombo-based political analyst, said he feared the country could face difficult times as both the protesters who had remained peaceful for weeks and the supporters of Mr. Rajapaksa are angry. The protesters are incensed by the use of violence against them, and Mr. Rajapaksa’s supporters feel their leader was wrongfully forced to resign.

“The president might think that his resignation might create a vacuum of power and that it might not be helpful for political stability,” Mr. Uyangoda said. “He might look toward the military. But I think the military leaders, political leaders and civil society leaders all have to think about how to prevent further escalation of violence and also protection of this movement as a peaceful movement.”

Mahinda Rajapaksa, the eldest of the Rajapaksa brothers, who have held a number of top government roles, served first as prime minister and then as a two-term president. During his time as president, he ended the civil war through an aggressive military push against the separatist Tamil Tigers.

The elder Mr. Rajapaksa was defeated in his bid for a third term as president in 2015, but he mounted a campaign to take over as prime minister in a messy episode that dragged on for months in 2018.

He was appointed to the post in a deal with the president who had succeeded him, but his claim was challenged by the sitting prime minister, who said he still commanded a parliamentary majority. After weeks of protracted dispute, which included open brawls inside Parliament, Mr. Rajapaksa retreated from his claim.

A security lapse in 2019 led to Sri Lanka’s worst terrorist attacks in recent years — a spate of bombings on Easter Sunday that left more than 270 people dead. That created an opening for the family to return to power. Gotabaya Rajapaksa, pitching himself as the strongman the wounded nation needed, secured a landslide victory and then appointed Mahinda as prime minister.

With the two brothers at the helm, and several other members of the family holding key positions, the government has been accused of mismanaging the country’s economy.

They announced big tax cuts, which affected the country’s balance sheet at a time when it faced shrinking foreign reserves and was already struggling to repay mounting debt. They also introduced a contentious ban on chemical fertilizers in a push for organic farming, which backfired and left a deep impact on the harvest and the country’s food securThe departure of Sri Lanka’s prime minister, Mahinda Rajapaksa, follows weeks of protest and a deepening crisis. There is no bankruptcy system for states but if there was then the south Asian country – down to its last $50m (£40m) of reserves – would be first in line to use it.

A team from the International Monetary Fund (IMF) this week started work with officials in Colombo over a bailout that will include a tough package of reforms as well as financial support. But as the IMF and its sister organisation, the World Bank, know full well, this is about more than the mismanagement of an individual country. They fear Sri Lanka is the canary in the coalmine.

Across the world, low- and middle-income countries are struggling with a three-pronged crisis: the pandemic, the rising cost of their debt, and the increase in food and fuel prices caused by Russia’s invasion of neighbouring Ukraine.

David Malpass, the World Bank’s president, explained his concerns at the organisation’s spring meeting last month. “I’m deeply concerned about developing countries,” Malpass said. “They are facing sudden price increases for energy, fertiliser and food, and the likelihood of interest rate increases. Each one hits them hard.”

Demonstrators and government supporters clash outside the president’s office in Colombo
Sri Lanka’s PM resigns after weeks of protests over economic crisis
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The UN has sought to quantify the problem. Its trade and development arm, UNCTAD, said in a recent report that there were 107 countries facing at least one of three shocks: rising food prices, rising energy prices or tighter financial conditions. All three shocks were being faced by 69 countries – 25 in Africa, 25 in Asia and the Pacific, and 19 in Latin America and the Pacific.

The list of countries that look vulnerable is long and varied. The IMF has opened rescue talks with Egypt and Tunisia – both big wheat importers from Russia and Ukraine – and with Pakistan, which has imposed power cuts because of the high cost of imported energy. Sub-Saharan African countries being carefully watched include Ghana, Kenya, South Africa and Ethiopia. Argentina recently signed a $45bn debt deal with the IMF, but other Latin American countries at risk include El Salvador and Peru.

For months there has been speculation that Turkey would be the first domino to fall, but despite an annual inflation rate of 70% and an unconventional approach to economic management, it is still standing. Unlike some other countries under threat, Turkey is able to feed its own people.

Richard Kozul-Wright, director of the globalisation and development strategies division at UNCTAD, said: “Countries have domestic problems but most of the shocks have nothing to do with those. The pandemic and the war had nothing to do with these countries, but have led to a huge increase in borrowing.”

The World Bank said almost 60% of the lowest-income countries were in debt distress or at high risk of it before Russia’s invasion of Ukraine, while the cost of servicing borrowing is rising steeply, particularly for those countries that have amassed debts in foreign currencies. The war in Ukraine has led to investors seeking out the haven of the US dollar, pushing down the value of emerging market currencies. Higher interest rates from the Federal Reserve, America’s central bank, have compounded the problem.

Emerging market crises are nothing new, but Kozul-Wright said the international community was ill-prepared to deal with a looming debt problem. “The system can only deal with these problems country by country,” he said. “But these are systemic issues and currently there is no way of dealing with them systemically.”

That may prove costly. Sri Lanka is the first country to buckle under the mounting economic pressures triggered by the war in Ukraine. It is unlikely to be the last.

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