The Monday morning meeting on “Political Instability in Sri Lanka” was held on 11 April 2022 at 10 AM in Seminar Hall I, Second Floor. Associate Fellow at the Manohar Parrikar Institute for Defence Studies and Analyses (MP-IDSA), Dr. Gulbin Sultana spoke on the subject and elaborated on the causes and implications of the crisis in Sri Lanka. The session was chaired by Dr. Anand Kumar, Associate Fellow South Asia Centre, MP-IDSA. Director-General, Ambassador Sujan R. Chinoy and Deputy Director-General, Maj. Gen. (Dr.) Bipin Bakshi shared their views. Coordinator South Asia Centre, Dr. Ashok K. Behuria also shared his views on the topic.

Executive Summary

Sri Lanka has been passing through a serious economic crisis that has also led to political uncertainty in the island nation. There have been peaceful protests for days and the protestors blame President Gotabaya Rajapaksa and his government for the economic crisis and want him to go. Though the crisis continues and some countries have offered help, that doesn’t seem enough. Assessing the gravity of the situation, India has offered timely help of US$ 2.4 billion, although it has avoided commenting on the political crisis as it is Sri Lanka’s internal matter. The overall situation remains volatile and uncertain.  

Detailed Report

Dr. Gulbin Sultana started her presentation by saying that political instability in Sri Lanka has been caused by the economic crisis in the country. In the latest major political development, the whole Cabinet except the Prime Minister resigned with immediate effect late on Sunday night (3 April). Most of the Ministries since then are being run by Secretaries. The country has had no Finance Secretary for some time.

Dr. Sultana said that the people of Sri Lanka believe that the economic crisis was caused by incompetence of the Gotabaya Rajapaksa Government. Sri Lanka was mired in various crises like health crisis, farmers’ protests, amongst others for a long time. However, the major breaking point was an 8-9 hour long power cut on 30 March, after which people from a wide spectrum of society hit the roads. They started protesting against the government in various parts of the country. In the last week of March there were protests outside the President’s House which were condemned by the President saying that extremists were behind these protests. He, in fact, declared an emergency. However, people defied the emergency and curfew and came in large numbers on the streets from 2 April onward, demanding the resignation of the President. They also demanded a change in the political system in the country.

Apparently, it was the scale and nature of the protests across the country that forced the Ministers to resign on 3 April. Once the Cabinet resigned, President Gotabaya Rajapaksa appointed four new Cabinet Ministers on 4 April. The President then proposed the formation of an interim government with the opposition, which was an earlier demand of the 11 coalition partners of the ruling party. The opposition refused the offer.

Dr. Sultana said that the protests were widespread and not led by any political parties; the protesters came from all walks of life and appeared united. They included every ethnicity, class and professionals and therefore such protests were unprecedented.  

The opposition and the coalition partners (41 in number) who have decided to sit as independents in the parliament, are neither united nor consistent in their demands. The opposition agreed to the formation of an interim government but on certain conditions, which include: one, that President Gotabaya Rajapaksa would have to resign and two, no more than two of the Rajapaksas would be there in the interim government.  

Meanwhile, while debating the issues in parliament on 5 and 6 April, the Sri Lanka Podujana Peramuna (SLPP) led ruling alliance asked that if the President resigns, what plan does the opposition have to deal with the situation. At the same time, the opposition seems to have realised that if it was unable to deal with the situation, it may also be blamed for the crisis. The Sri Lanka Freedom Party (SLFP) and the other 11 coalition partners of the government have proposed the formation of the national executive council.

The main opposition is also saying that if the President decided not to resign, it would bring a no-confidence motion against the President. Several political parties have said that they would support a no-confidence motion against the government. There are a total of 225 members in parliament out of which the government had the support of 156 members. Out of that, 41 have withdrawn their support and are sitting as independent members. At the moment, the government has only 114 seats. However, though the government enjoys a simple majority at the moment, the opposition is not sure how many would vote in its support. What happens next will be known only on 19 April when parliament meets. The overall situation, according to Dr. Sultana, is dynamic and unfolding with new developments taking place.

Dr. Sultana stated that a few factors that need to be taken note of include: First, with regard to the protests, despite them being widespread, united and peaceful so far, it is not clear how sustainable they are going to be. Especially when the President has made it clear that he is not going to resign. Second, the role of SLFP is going to be important. Will the party support the government or will it decide to join the opposition needs to be seen. Third, the issue of legitimacy is important. Some people in Sri Lanka say that the problem is with the Presidential form of government in the country, not only with President Gotabaya Rajapaksa. Therefore, perhaps the political system needs to be changed in order to address the issues. However, the change needs to be constitutional.

There are some issues with these demands. Even if the President resigns, any interim government cannot continue for too long. That is a problem especially because new elections will cost money and it is a difficult proposition at a time when the economy is doing badly and even foreign reserves of the country have come down to $1.9 billion in the month of March. The newly appointed Governor of the Central Bank of Sri Lanka has said that he has already tightened the country’s monetary policy. The country is also mulling over whether to go to the International Monetary Fund (IMF) for bail out packages. The Governor has said that it would take 8- months to bring about some kind of stability in the economy.

Given all these factors, Dr. Sultana concluded that it is difficult to predict how the political and economic crises in Sri Lanka are going to unfold in the coming days. 

Discussion

The Director General, Manohar Parrikar Institute for Defence Studies and Analyses (MP-IDSA), Ambassador Sujan R. Chinoy in his remarks started by pointing out that it is not a good sign for India to have two of its neighbouring countries, Sri Lanka and Pakistan facing political crises. Ambassador Chinoy said that any kind of turmoil in our neighbourhood essentially spells trouble for India. India must pose broad questions- whether such turmoil pushes Sri Lanka closer to China? Will they now rethink and open up to other possibilities other than China? Other than India? Will they also welcome the Millennium Challenge Corporation of the US? Or will it be viewed with the same kind of suspicion as it was seen as a zero-sum game or something that is a tactic against China or in more neutral terms, Ambassador Chinoy added.

Ambassador Chinoy said that to focus merely on political structure, like a change in the presidential system is like jumping out of a frying pan into the fire because in case of Sri Lanka no matter who is brought in, it is going to be an acolyte of the Rajapaksa family. That doesn’t address their fundamental issue which remains the economy.

Ambassador Chinoy said that there are three main prongs in the Sri Lankan economy. One, tourism which has dried up because of the COVID Pandemic. Instead of earning money, Colombo is spending money on stranded tourists in the country, especially from Russia and Ukraine. Second, because of the pandemic, remittances have dried up. This is important because Sri Lanka relies on remittances a lot. Third is the agriculture sector in which the country seems to have made some fundamental mistakes by putting bans on some fertilizers and is trying to form some half-baked notion of organic farming because agriculture has spiralled into a non-performing sector. The country can’t grow food for the country’s population, let alone for exports. Fourth is the undue reliance on external commercial borrowings to fuel the infrastructure spree. In this case borrowing from China and then unable to service the usurious rates of interest which puts Sri Lanka in debt, to the extent that the country has interest payments to the tune of $7.28 billion/year, an amount impossible for the country to pay. The only option here, Ambassador Chinoy pointed out, seems to be to turn to a country like India. India is doing what it can. India also has to make sure that it can’t open up too much just because the neighbouring country is in trouble. There have to be some conditionalities that India will also attach. There were some issues that troubled India. Some decisions taken by Sri Lanka were unfair in India’s view. There must be a review on all those matters.

But more broadly speaking Sri Lanka is turning to the IMF which raises some questions, Amb. Chinoy pointed out. Sri Lanka has been under scrutiny from the West on account of alleged war crimes and so-called human rights violations. Pressure on these matters is likely to increase if the country goes to the IMF because conditionalities that they attach for lending loans, like democracy, transparency, good governance, human rights, etc. will reflect those very same interests that had earlier tried to put Sri Lanka on the mat.   

Dr. Gulbin Sultana agreed with the issues raised by the Director General, Ambassador Sujan R. Chinoy. She said that the option of the interim government that was being discussed, if it comes about, would only be for a short period of time. What happens after that? The main problem is how to deal with the economic crisis? The Governor of the Central Bank of Sri Lanka has said that it would take 6-9 months to achieve some kind of economic stability. That means even if the new government is formed, it would have very little time to address various issues. But people are demanding change in the political system because they think the system has failed to address the issues.  On remittances, Dr. Sultana said that Sri Lankan expatriates are also protesting in many countries and they have said that they would not remit dollars to Sri Lanka until and unless the current government resigns. As far as undue commercial borrowing is concerned, it is a major problem but it seems that Sri Lanka doesn’t have much of an option but to go for loans. Though India is helping, how much assistance can it provide? Given the amount that Sri Lanka needs, one or two countries can’t help. Dr. Sultana said that some people say China was not as proactive as expected. But it would be wrong to say that Sri Lanka would move away from China. Finally, Sri Lanka is going to the IMF for help which is criticised by some sections in the country, as it would come with many conditionalities.  

Deputy Director General, Maj. Gen. (Dr.) Bipin Bakshi said that one needs to follow the crises in the two neighbouring countries carefully. Some observers are raising a question that there is a possibility of interference from the US. Both the countries are facing economic crises and have huge foreign debts because of mismanagement of the economy. Has the situation been engineered in a manner so as to create political instability is a question that needs to be looked into? Both countries have seen some unprecedented political developments. In this backdrop, how should India respond? Maj. Gen. (Dr.) Bakshi said that if Beijing was to play an active role by helping Sri Lanka that would push it further into a debt-trap. One needs to find ways so that India can establish long term economic relations with Sri Lanka while keeping China at bay. Maj. Gen. (Dr.) Bakshi said that the idea of imposing organic farming without proper data and any trial is a function of a centralised decision making system. Power in Sri Lanka is centralised in one individual which may not be good for the nation.

Dr. Ashok K Behuria said that the issue of the executive presidency has been there for a long time in Sri Lanka. They have been trying to remove it, though that necessarily may not address the situation on the ground. The concentration of power in one person is proving detrimental for the country. As far as India’s role is concerned, Dr. Behuria said that India has its limitations. India cannot pump in millions of dollars every year into the Sri Lankan economy to bring it out of crisis. At the same time, over the last 10 years, India’s influence in Sri Lanka has decreased. Other countries are securing their interests in Sri Lanka. India needs to look after its interests and act accordingly in the current situation. On the ethnic issue, Dr. Behuria said that India can join the international community and persuade the Government in Sri Lanka to go soft on the Tamil minority. But at the same time, it shouldn’t come at the cost of India’s reputation and influence. Some in Sri Lanka are mulling over bringing about a no-confidence motion against the present government. That would not remove the President, as according to the constitution, that would require 2/3rd majority in the parliament, Dr. Behuria added.  

Ms. Mayuri Banerjee asked that given the political instability in Sri Lanka, is it going to create a refugee crisis. If that is directed at India, how would India resist its interference?

Dr. Gulbin Sultana responded by saying that some people have come to India but only a few. Due to the conflict in Sri Lanka, people from Sri Lanka have come to India in the past as well. But it may not be like the situation in the 1980s when thousands came to India. But in any case if it happens, that would be a major crisis.

Ms. Saman Ayesah Kidwai asked whether the political and economic crisis in Sri Lanka is going to create a political vacuum that can be over taken by non-state actors. Is there a possibility of an armed conflict? 

Dr. Gulbin Sultana in response stated that Sri Lanka has been caught in armed conflicts for a long time. However, the current protests are unprecedented as they include every ethnicity and class. In fact the protests and the government response have united them. However, the ethnic problem remains unresolved. It can crop up again anytime.      

The report was prepared by Dr. Nazir Ahmad Mir, Research Assistant, MP-IDSA.