Sri Lanka has told hundreds of thousands of Russians and some Ukrainians staying in the country to escape the war that they must leave in the next two weeks, immigration officers said.

The immigration controller issued a notice to the tourism ministry asking Russian and Ukrainian people staying on extended tourist visas to leave Sri Lanka within two weeks from 23 February.

Just over 288,000 Russians and nearly 20,000 Ukrainians have traveled to Sri Lanka in the last two years since the war began, according to official data.

Commissioner-General of Immigration said the “government is not granting further visa extensions” as the “flight situation has now normalised”.

However, the office of president Ranil Wickremesinghe ordered an investigation of the notice to the tourism ministry in an apparent bid to prevent diplomatic tensions.

The president’s office said that the notice had been issued without prior cabinet approval and the government had not officially decided to revoke the visa extensions, reported the Sri Lankan newspaper Daily Mirror.

The exact number of visitors who extended their stay beyond the typical 30-day tourist visa duration remains unclear.

However, concerns have been raised over thousands of Russians and a smaller number of Ukrainians staying in the country for an extended period of time and even setting up their own restaurants and nightclubs.

Tourism minister Harin Fernando told Daily Mirror that the ministry has been receiving complaints of some Russian tourists running unregistered and illegal businesses in the southern part of the country.

Raids were conducted by the authorities following discussions with the Immigration Department, he said.

It comes amid a furious social media backlash over Russian-run businesses with a “whites only” policy that strictly bars locals. These businesses include bars, restaurants, water sports and vehicle hiring services.

In a bid to boost tourism and recover from its worst economic crisis since 2022, Sri Lanka began granting 30-days visas on arrival and extensions for up to six months.

In April 2022, the nation defaulted on its $46bn (£36 bn) foreign debt. The economic crisis triggered violent street protests for several months and ultimately culminated in the resignation of then-president Gotabaya Rajapaksa three months later.

Source: Independent

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London, (16/11 – 57)

Sri Lanka President Ranil Wickremesinghe has laid out the bankrupt country’s budget for 2024, drawing mixed reviews as he strives to meet the demands of an International Monetary Fund bailout program without sowing further public resentment ahead of expected elections.

Some observers applauded the proposals, not only for what they included but also what they did not, no new taxes on top of hikes already announced. But others expressed concern that the budget seemed designed to placate certain voters, and only temporarily, while not doing enough to help the struggling masses.

Sri Lanka’s election-year budget was presented on 13 November, and it straddles line between IMF and its voters. The 2024 plan is praised for ‘sticking to reform,’ but criticized for the apparent contradictions not doing enough to help the struggling masses.

Wickremesinghe unveiled the budget on Monday, announcing his government’s plan to increase tax revenue to 3.82 trillion rupees ($11.67 billion), up from this year’s estimated 2.6 trillion rupees. Two weeks ago, the government had announced a value-added tax (VAT) increase to 18% from 15%, effective from January, as part of efforts to meet targets set by the IMF.

The fiscal deficit target is estimated at 2.85 trillion rupees, or 9.1% of gross domestic product, higher than the revised 8.5% of GDP for the current year. “We are aware of the difficulties faced by the people of this country. The path toward a stable and developed economy is not beautiful. It is difficult, hard and challenging,” Wickremesinghe said in his budget speech, following a recent uptick in protests demanding salary hikes to overcome high living costs.

The president described a country at a crossroads as it attempts to climb out of bankruptcy. “If we successfully navigate through this challenging period, we can create a free and decent society. Instead, if we continue to build sand castles by giving relief to the people based on political motives, the country will again be bankrupt.”

Still, Wickremesinghe proposed new relief measures for civil servants and pensioners. The plans call for handing out an additional 10,000 rupees in cost-of-living allowances to 1.3 million government employees, while raising allowances for 730,000 public pension recipients to 5,025 rupees from the current 2,500 rupees.

Sri Lankans are reeling from an economic crisis that has driven up the costs of essentials, although inflation has slowed.   Meanwhile, in a nod to the IMF, Wickremesinghe proposed a massive 3 trillion rupee allocation for foreign debt restructuring and the settlement of international sovereign bonds under the program. After Sri Lanka defaulted on its foreign debt in 2022, the fund came to the rescue earlier this year with a $2.9 billion bailout.

The country failed its first review of the program in September, but reached a staff-level agreement to unlock a new tranche last month.

According to Wickremesinghe, under the debt restructuring supported by the IMF, public debt is expected to decline from 129% of GDP in 2022 to 95% by 2032. He emphasized the benefits of this shift toward sustainability — greater macroeconomic and financial sector stability — for the nation of about 22 million people.

Wickremesinghe reported that reform measures implemented over the last 18 months have already resulted in significant improvements in Sri Lanka’s macroeconomic position. A primary budget deficit of 5.7% of GDP at the end of 2021 turned into a primary budget surplus in the first half of 2023, he said. Tax revenue grew 50% in the first six months of 2023, despite a deep economic recession. The inflation rate has dropped from 70% in September 2022 to 1.3% in September 2023, and foreign exchange reserves have recovered to above $3.5 billion.

“The economy is being healed due to the correct procedures and methodologies we followed during the past year, building the foundation of this system,” Wickremesinghe argued.

The budget receives much of both applauses and criticism.

Murtaza Jafferjee, chair of the Colombo-based Advocata Institute think tank, praised the president’s budget. “He is sticking to the reform and economic restructuring pathway and is not being excessively political,” he told Nikkei Asia. “This is the kind of budget that we always needed, and the language is not sugarcoated and it is factually correct.”

Mujibur Rahman, a member of parliament representing the opposition Samagi Jana Balawegaya alliance, pointed out what he sees as an inherent contradiction in the plan. “From January, they are increasing VAT, which means the cost of living will increase further, and at the same time they say they will increase the allowance for government workers. So, he is giving from one hand and taking it from the other.”

Sunil Adihettige, a driver employed by a private company in Colombo, was also disappointed. “I was hopeful that the president will announce some relief so that the prices of food items and our monthly bills will reduce. But he only said government employees will be getting a salary increase, but as we are in the private sector, we won’t even benefit from this.”

“Overall, businesses were significantly affected by extensive taxation, but people are adjusting to these increases as they had no other choice and also because they understood the country’s situation,” said Imtiaz Buhardeen, an entrepreneur and investor in Colombo. “The only fear was the possibility of additional tax increases on Monday, but it’s a big relief that there are no new increases.”

Ranjan Jayalal, a trade union leader, suggested the support for government employees was little more than a ploy. “The allowance is expected to be paid from April onwards, but after another couple of months, there will be elections, and then everything will change,” he said.

The next election must be called by September 2024.

Jayalal added that poor people are facing such hardship that many don’t even switch on the lights in their homes due to high electricity costs.

Source

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When Ranil Wickremesinghe took over as Sri Lanka’s president in July after a popular uprising ousted his predecessor, the South Asian island nation was engulfed in its worst economic meltdown in 75 years.

Since then, President Wickremesinghe has managed to a keep a lid on mass protests, improve supplies of essentials and on Monday, secured a nearly $3 billion bailout from the International Monetary Fund (IMF) that opens the door to restructuring about $58 billion of debt and receive funding from other lenders.

On March 20, the IMF approved a $3 billion Extended Fund Facility (EFF) to support Sri Lanka amid its economic crisis. The approval is expected to pave the way for other financial institutions to extend support to the bankrupt South Asian country.

He has done that despite a deeply unpopular government, his own party commanding just one seat in the 225-member parliament and having to rely for support on the party of the man he replaced.

Hours-long power cuts and queues for fuel that led to the downfall of former President Gotabaya Rajapaksa are gone, thanks partly to a fuel rationing system. Tourists are returning, remittances are recovering and foreign exchange reserves are rising, though the economy is still contracting. But due largely to significant hikes in income taxes and power tariffs that were needed to get the IMF on board, the government of the 73-year-old is no favourite of the people. According to a “Mood of the Nation” poll run in February by private think-tank Verité Research, the government’s approval rating was 10%, the same as in October but higher than an all-time low of 3% in June, when Rajapaksa was in power. Only 4% were satisfied with the way things were going in Sri Lanka, down from 7% in October but higher than 2% in June.

There are no known approval ratings for Wickremesinghe as president. “He’s ready to face the people’s anger in the short term, to ensure long-term stability and growth in the country,” said Dinouk Colombage, Wickremesinghe’s director of international affairs. “Even though the president only has one seat in parliament, him carrying forward his agenda, bringing forth the reforms, once the results start showing, I think the people will come out in open support of him.”

Born into a prominent family of politicians and business-people with large interests in the media, the lawyer and six-time prime minister has little support beyond wealthy urban voters. His ability to make policy depends to a great extent on the support of the Sri Lanka Podujana Peramuna party, largely controlled by the Rajapaksa family.

For now, Wickremesinghe is enjoying that support, and he said on Sunday that his country was on the right track There’s fuel now, there’s electricity, there’s fertiliser and by April, there will be enough rice and other foodstuff,” he said at an event in Colombo. “We will no longer be declared a bankrupt nation, but a nation that can restructure its debts.”

The bailout is expected to catalyse additional external support, with funding expected from the World Bank and the Asian Development Bank to the tune of $3.75 billion, the IMF said in a statement.

In recent months, Wickremesinghe successfully negotiated economic support from top lenders China, India and Japan, culminating in the IMF bailout. He flew to Japan in October to apologise for the cancellation of Japanese-funded projects under Rajapaksa, which convinced Tokyo to back Sri Lanka’s request for the IMF bailout.

The Paris Club of creditors, which includes Japan, earlier this year gave financing assurances to support the IMF deal. A Japan-funded $1.8 billion light-railway project, which was suspended in 2019, is among infrastructure projects that Sri Lanka is now trying to restart.

But Sri Lanka still needs to renegotiate its debt, a potentially drawn-out process where Wickremesinghe, who is also the finance minister, will have to deal with demands from China, India and other creditors. He still has to turn around the economy, which shrank 7.8% in 2022 and is expected to contract by 3% this year.

Implementing further reforms under the IMF programme, reducing record-high interest rates and controlling inflation will also continue to pose challenges for Wickremesinghe, who has faced trade union strikes after the tax and power hikes.

Critics say Wickremesinghe’s economy-first approach ignores political and systemic reforms – like stronger anti-corruption measures and more transparency in government decision-making – as demanded by mass protesters who banded together as the “Aragalaya” movement last year.

“One year on, there is no real structural change in governance or system change,” said Bhavani Fonseka, senior researcher at Colombo-based Centre for Policy Alternatives. “The president does take this line that his priority is addressing the economy over everything else, but you can’t have that silo-ed approach and think people are going to be okay with it.”

A crisis-weary public may still have to absorb years of continuing hardship as Sri Lanka tries to fix its economy during the four-year IMF programme, warned Jayadeva Uyangoda, a senior political analyst. “Wickremesinghe has managed to neutralise the Aragalaya and that was a major success, but the economic and social crisis goes on,” he said.

“Economic stability will take at least another couple of years.”

Source : Reuters

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France and the United Kingdom (UK) have jointly made a request in favour of Sri Lanka to the court of the Southern District of New York, for a six-month freeze on any litigation in the Hamilton Reserve Bank case until Sri Lanka’s external debt restructuring is completed, the Financial Times reported.

Accordingly, last week the two countries filed a joint “amicus curiae” to the New York judge hearing the case, arguing in favour of Sri Lanka’s request for a six-month freeze on any litigation.

The co-signatories in their “amicus curiae” want the judge to grant Sri Lanka the six-month stay it has requested, because they worry that the lawsuit by Hamilton Reserve Bank/Benjamin Wey could wreck ongoing restructuring talks.

France and UK have jointly made a request to the court of the Southern District of New York, for a six-month freeze on any litigation in the Hamilton Reserve Bank case until Sri Lanka’s external debt restructuring is completed.

“A judgement in favour of the plaintiff before the completion of the debt restructuring process would risk disrupting the ongoing negotiations by creating an incentive for holdout creditors, thereby jeopardising the comparability of treatment between different categories of creditors,” the filing said.

It also said that the relevant principle is at the core of all sovereign debt restructuring processes, as it is key to securing the consent of all creditors, and that disruption would lead to delays in the negotiations, delaying the cash disbursement by the International Monetary Fund to the debtor country and resulting in significant costs for Sri Lanka and the official creditors’ taxpayers.

France is naturally interested in the Sri Lanka lawsuit as it hosts the so-called Paris Club, where government-to-government debts are restructured. The UK is part of the Paris Club but presumably cosigned the amicus brief because it historically oversaw the London Club, the less formal group for private creditors to negotiate with sovereign borrowers.

Last month, the Financial Times also reported that the United States (US) Government has also intervened in the matter where “the US is actively considering whether to file a Statement of Interest with respect to the pending motion to stay”.

The Hamilton Reserve Bank vs. Government of Sri Lanka case was filed in June 2022 after Sri Lanka declared bankruptcy and defaulted on $ 1 billion of this particular bond issue, of which Hamilton Reserve Bank holds $ 250 million.

Source : The Morning

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Brussels (08/11 – 50)

On March 20, the IMF approved a $3 billion Extended Fund Facility (EFF) to support Sri Lanka amid its economic crisis. The approval is expected to pave the way for other financial institutions to extend support to the bankrupt South Asian country. IMF program was made possible largely due to the untiring efforts of the President Ranil Wickremesinghe.

The IMF links financial assistance to a country to policy reform, a conditionality that usually imposes political as well as economic changes in the recipient nation. The logic behind IMF conditionality is multifold. It is supposed to prevent moral hazard by governments that receive loans. These conditions allow the IMF to monitor the behavior of the recipient states and allegedly promote best practices and good governance.

Sri Lanka has been to the IMF 16 times before; five of these since 2000. The full amount of the IMF loan was not disbursed on six occasions because Sri Lanka did not fully comply with the conditions of the loans. This included the previous EFF in 2016, when the conditions imposed by the IMF built additional pressure on the domestic economy. There has been much skepticism about Sri Lanka adhering to the more stringent IMF conditions this time around.

Despite the skepticism that prevails among journalists and economists, the IMF is very happy about the progress Sri Lanka is making on the commitments it made as a part of the IMF’s four-year EFF to the country.

An IMF delegation, which was in Colombo recently to assess the progress of the agreement, is optimistic. IMF Director of Asia and Pacific Department Krishna Srinivasan told a press conference in Colombo on May 15 that the Sri Lankan government has shown “commitment to the reform effort” that is a part of the agreement with the IMF.  He added that the “authorities are making good faith efforts to negotiate with all the creditors, both private creditors and official creditors.”

Ranil Wickremesinghe took over as President of Sri Lanka in July 2022 when the country was in the middle of its worst economic and political crisis since independence in 1948. On March 20, 2023, the IMF approved a $3 billion Extended Fund Facility (EFF) to support Sri Lanka amid its economic crisis.

Peter Breuer, IMF’s Senior Mission Chief for Sri Lanka, Asia, and Pacific Department said they “see things developing more or less in line with expectations.”

Srinivasan added that Sri Lanka had to complete a number of prior actions before the IMF approved its bailout package. These actions were extensive and required a significant commitment from the Sri Lankan government.

Among these are cost-reflective of a number of goods and services that the government had subsidized for decades.  Sarwat Jahan, the IMF Resident Representative in Sri Lanka said the Ceylon Petroleum Corporation (CPC) and Ceylon Electricity Board (CEB) would have to recover their costs until the end of the IMF program.

The government met all these requirements, which shows that they are serious about implementing the reforms necessary to address the country’s economic crisis, Srinivasan said.

The conditions attached to IMF loans often involve actions aimed at discontinuing industry subsidies, avoiding exchange rate manipulation, adjusting budget priorities, and regulating wage levels. Leaders, who face diverse political limitations, differ in their willingness to engage in an agreement with the IMF and make compromises in these four areas.

Considering that IMF loan conditionality agreements usually involve implementing fiscal austerity measures, leaders with larger winning coalitions will encounter more challenges when attempting to negotiate an agreement for IMF financing.

On the other hand, when a regime maintains power through a narrower network of closely-connected supporters, he or she finds it easier to enter into an agreement with the IMF.

Miles Kahler, a senior fellow for global governance at the Council on Foreign Relations in Washington, DC, in his 1993 book chapter titled “Bargaining with the IMF: Two-Level Strategies and Developing Countries,” outlines two key aspects of domestic politics that influence the process of loan negotiations: firstly, the degree to which a technocratic elite is insulated from economic interests, and secondly, the frequency with which elites face political challenges like elections.

Another factor that can impede the formation of a loan agreement is the presence of multiple veto actors, such as a separation of powers or the existence of multiparty governing coalitions.

Kahler says that when a country has a higher number of veto actors capable of obstructing a loan agreement, the scope of domestic political consensus becomes narrower, resulting in increased negotiation costs for the IMF. Typically, the count of veto actors is determined by assessing the number of parties in a government coalition in countries where genuine political competition exists.

This explains why it was extremely difficult for former President Gotabaya Rajapaksa, who came into power through a coalition of populism and with the support of a number of interest groups, from big businesses to professional associations, to enter into negotiations with the IMF.

On the other hand, Wickremesinghe is the head of the United National Party, a political party that obtained around 250,000 votes from 15 million eligible voters. He has one MP in Parliament, Wajira Abeywardana, who is a staunch loyalist. Wickremesinghe is backed in parliament by the Sri Lanka Podujana Peramuna (SLPP), whose MPs depend on him for political survival and would vote for any legislation that he brings forth.

Sri Lankan legislators are entitled to several perks at the end of the full tenure of five years and most of the SLPP MPs that back Wickremesinghe are adamant on completing their terms. Wickremesinghe has also indicated that there will be no elections until the economy is stabilized and it is likely that the first election Sri Lankans will see is a presidential election, probably in 2024.

Therefore, Wickremesinghe can implement the IMF recommendations completely, as he is not answerable to any political coalition or interest groups. Neither does he face an election. Wickremesinghe’s personal ideology also aligns with that of the IMF. It is unlikely that these factors were ignored by the IMF when the loan was approved and when they evaluate whether Sri Lanka will adhere to IMF conditionalities.

Source

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London (05/11 – 44.44)

Benjamin Wey, a Chinese-American financier, founder of Fintech Holdings and a history of legal trouble, is suing Sri Lanka for $250 million. Wey claims that he was assured by Sri Lanka’s central bank governor that the country would repay a $250 million bond. However, Sri Lanka defaulted on the bond in April 2022.

Wey is seeking to collect the full amount of the bond, plus interest. He has filed a lawsuit in the US District Court for the Southern District of New York.

The lawsuit is a major setback for Sri Lanka, which is already facing a severe economic crisis. The country is struggling to repay its debts, and the lawsuit could make it even more difficult to secure a bailout from the International Monetary Fund (IMF).

The US government has intervened in the lawsuit, and it is unclear how the case will be resolved. However, it is likely to drag on for several years, and it could further destabilize Sri Lanka’s economy.

Notorious financier, Benjamin Wey wants to collect from Sri Lanka, the full amount of the $250 million bond plus interest. He has filed a lawsuit in the US District Court for the Southern District of New York.

Wey is a controversial figure. He was arrested in 2015 on charges of fraud, but the charges were dropped. He was also sued for sexual harassment, and he settled the case for $5.65 million.

Wey is the founder of Fintech Holdings, a holding company that owns several businesses, including Hamilton Reserve Bank (HRB). HRB is the entity that is suing Sri Lanka.

Sri Lanka is facing a severe economic crisis. The country is struggling to repay its debts, and it has been forced to default on several bonds. The crisis has led to widespread shortages of food, fuel, and other essential goods.

The IMF has offered to bail out Sri Lanka, but the government has been slow to agree to the IMF’s terms. The lawsuit filed by Wey could further complicate the negotiations with the IMF.

It is unclear how the lawsuit will be resolved. However, it is likely to drag on for several years. The case is complex, and there are many legal issues that need to be resolved.

The lawsuit could also have a significant impact on Sri Lanka’s economy. If Wey is successful, it could force the country to default on even more debt.

This could further destabilize the economy and make it even more difficult for Sri Lanka to recover from the crisis.

The lawsuit is a major setback for Sri Lanka, but it is also a test of the country’s legal system. If Sri Lanka is able to defend itself against the lawsuit, it will send a message to other investors that the country is a safe place to do business.

The outcome of the lawsuit will also have implications for the IMF. If the IMF is seen as being unable to protect its borrowers from predatory lawsuits, it could discourage other countries from seeking bailouts from the IMF.

The lawsuit is a complex and far-reaching case. It will be interesting to see how it is resolved and what impact it has on Sri Lanka, the IMF, and the global economy.

Source : Lanka News Line

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The massive mobilization and sustained pressure jolted the Sri Lankan presidency of the previously all-powerful Gotabaya Rajapaksa, prompted mass resignations from the government at the time, and solidified existing spaces and created new spaces for dissent and discussions on much-needed reforms. Sri Lanka is facing an exceptional political and economic crisis that has sparked months-long protests across the country.

The new leadership under President Ranil Wickremesinghe struggles with the economic situation and seemingly failed to uphold basic human rights and pursue accountability for grave crimes towards the people of Sri Lanka.

Months since the popular uprising ousted Sri Lanka’s president in July 2022, Sri Lankans are bearing the brunt of its economic crisis. Tax hikes, subsidy cuts, and heightened living costs provide bitter medicine for a population that thus far lacks confidence in its government.

Despite troubling trends of authoritarianism, democratic backsliding, and ethnomajoritarianism sweeping across Sri Lanka, key moments in recent history have united diverse groups in a show of peaceful pushback. These events have enabled the most recent wave of citizen mobilization, which has the potential to significantly transform Sri Lanka.

SRI LANKA’S HISTORY OF POLITICAL ACTIVISM

This recent upswell of mobilization builds on Sri Lanka’s rich history of political activism attributed to multiple actors, including victims’ groups and civil society organizations from across Sri Lanka, trade unions, and political parties. Activism has focused on a range of issues, including civil and political rights as well as socioeconomic issues on which street protests, legal challenges to public statements, and political debates have been used to press for progressive reforms.

Throughout the 1980s and 1990s, opposition groups, civil society, trade unions, and victims of political violence worked to oppose state-sponsored violence and enforced disappearances. These efforts include the powerful work of the Mothers’ Front, whose members mobilized in raising awareness of enforced disappearances and pushing for accountability. This mobilization came at huge personal cost to the participants, with many protesters facing sustained harassment and violence. For instance, after the country’s civil war, which ended in 2009, the families of disappeared victims have held continuous protests for more than 1,900 days. Other issues have also received attention including farming and fishing communities whose members’ livelihoods were affected by disastrous government policies, communities opposing government-initiated land grabs, and teachers and trade union members who opposed attempts to militarize higher education, among many other causes. These and many other protests have contributed to a rich history of opposition mobilization in Sri Lanka.

Authoritarian practices and impunity under former president Mahinda Rajapaksa (who was in office from 2005 to 2015 and is the older brother of current President Gotabaya Rajapaksa) sparked new levels of activism by victims of political repression, civil society, and opposition groups. These critics of the government called out the atrocities committed during the civil war and creeping authoritarianism such as threats to freedom of the press and the wrongful impeachment of the country’s chief justice who dared to rule against the Rajapaksa government. Democratic backsliding during this period prompted groups to coalesce under a common cause, leading to movements such as the National Movement for a Just Society, which demanded regime change.

Notably, the first movement to unify both Tamil and Muslim citizens during Gotabaya Rajapaksa’s presidential tenure was a February 2021 march from Pottuvil in eastern Sri Lanka to Polikandy in the north. Thousands united to march and demand equality and justice for minority communities. The protesters faced surveillance and intimidation and defied court orders to cease and desist.

As protests in Sri Lanka have evolved, so have government efforts to quell dissent with violence, intimidation, and other tactics including arbitrary restrictions. For example, during the height of the coronavirus pandemic, public health challenges were used to suppress protests. Scenes of protesters violently attacked and dragged to military-run quarantines were widely broadcast, sending a chilling message to potential protesters. The government also used broad regulations under the guise of pandemic control measures to stop opposition rallies. Yet these attempts failed to deter activists as protesters stayed resolute in their opposition to the government.

THE LATEST CRISIS

Much of the recent crisis can be blamed on Gotabaya Rajapaksa’s presidency and his family, with several family members holding multiple government portfolios. The Rajapaksa family has dominated Sri Lankan politics for several decades, carving out a massive constituency among the majority Sinhalese community by espousing populist ethnomajoritarianism and touting the defeat of the Liberation Tigers of Tamil Eelam, a separatist group that was involved in Sri Lanka’s nearly three-decade-long civil war. Even after losing the January 2015 presidential election while facing allegations of corruption and nepotism, Mahinda Rajapaksa returned to politics later that year as a member of parliament. Since winning a seat in the August 2015 parliamentary elections, he has, with the help of family members, built a new political party (the Sri Lanka Podujana Peramuna or the Sri Lankan People’s Front) and entrenched the Rajapaksa family as the most powerful political family in Sri Lanka.

In the wake of the devastating Easter Sunday terrorist attacks that rocked Sri Lanka in 2019, Gotabaya Rajapaksa emerged as a presidential candidate, projecting himself as a strong leader capable of restoring security, stability, and economic growth. Within months, he was elected president by a margin of more than 1 million votes, despite having held no prior elected office and facing allegations of serious human rights violations linked to the civil war.

Many of his policies have had catastrophic effects on Sri Lanka’s democracy and economy. For example, the 2019 tax cuts he enacted significantly reduced government revenues, hindering Sri Lanka’s ability to purchase essential items such as food, medicine, gas, and fuel. Further, a ban on chemical fertilizer in 2021 harmed the agricultural sector and food security, leaving many Sri Lankans to struggle with securing meals and their livelihoods. The ban also impacted the country’s tea trade and other industries. The pandemic and subsequent lockdowns also shriveled the economy, which is heavily dependent on the tourism sector. Government mismanagement on a range of other areas has contributed to high inflation and has compounded the crisis, leading to uncertainty, instability, and new triggers for violence.

Sri Lanka has experienced decades of unrest, violence, and uncertainty punctuated by a lengthy civil war, several humanitarian disasters, and a constitutional coup in 2018. However, the country was still ill-prepared for the current crisis; thousands of citizens have been affected, and many are struggling to find essential items and manage long power cuts brought on by fuel shortages, problems that have disrupted essential services, education, and people’s livelihoods. In a sad indictment of the dire conditions, multiple people died after collapsing following long waits under the hot sun for basic goods and services. There are also increasing concerns about the impact of malnutrition and medication shortages on Sri Lankans.

Amid this unprecedented crisis, Sri Lankans’ political activism has reawakened, prompting months-long peaceful protests. Rallies have protested shortages of essential items and long queues to obtain such items, the skyrocketing cost of living, and the disruptive power cuts. After several weeks of peaceful protests, however, violence erupted on March 31, 2022. On this day, a peaceful protest outside the private residence of Gotabaya Rajapaksa turned violent, resulting in mass arrests and prompting an ongoing police investigation. The government responded by declaring a state of emergency and imposing a curfew. Despite these measures, the energy of the protests did not dissipate; thousands continued to peacefully protest, resulting in the largest outpouring of civil disobedience in recent times. The protesters continued with their demands of a systemwide change in Sri Lanka including political accountability, transparency in governance, the resignations of the Rajapaksa family from government posts, and an end to corruption. In response, the cabinet resigned en masse on April 3. For a time, however, President Gotabaya Rajapaksa, who still holds the presidency, and then prime minister Mahinda Rajapaksa remained in office, resulting in renewed calls for them to leave their posts.

The Rajapaksas’ refusal to heed these calls for their resignations and the country’s deteriorating economic situation further energized protesters. On April 9, protesters launched the largest protest site at Galle Face Green in the heart of Colombo. The occupied area was renamed “GotaGoGama,” reinforcing the demonstrators’ demand for the president’s resignation. After now being occupied for more than seventy-five days and counting, the GotaGoGama campaign has become the epicenter of the protest.

In Sri Lanka’s larger history of protests, this mobilization is remarkable for its diversity, perseverance, and relatively peaceful methods (except for some instances of violence largely sparked by government supporters, including deadly attacks on protesters on May 9). Much of the energy and creativity of the protests can be attributed to youthful participants, yet the protests have attracted demonstrators from a wide range of ages, including some in their eighties and nineties. The movement also has united members regardless of ethnicity, religion, class, gender, sexual orientation, and profession, all demanding that the Rajapaksas resign. The protests also have displayed an unprecedented level of organization, with food, water, and healthcare being provided by well-wishers and space being made for creative forms of resistance like public discussions, a library, legal aid, street dramas, and memorials for past violence.

With pressure mounting and government officials fearing that a continuous hartal (strike) would bring the country to a standstill, a state of emergency was declared yet again on May 6, soon after the previous state of emergency had been revoked. As was already evident from the demonstrations in April, the state of emergency did not deter the many who continued to peacefully protest. On May 9, supporters of Mahinda Rajapaksa attacked the peaceful protesters, unleashing new waves of violence. The violence targeting the protesters subsequently spread to other areas, causing several deaths alongside looting and the torching of properties belonging to members of parliament from the ruling party. The violence did not abate, despite Mahinda Rajapaksa’s abrupt resignation from his post as prime minister, one of the protesters’ key demands. A national curfew was soon imposed, but it took several days for the tensions to subside.

The peaceful protests’ descent into violence was worrying for multiple reasons. Mobs took over streets and neighborhoods, raising concerns about the inability of the police and military to guarantee order amid the state of emergency and curfew. Investigations have since led to the arrests of several perpetrators including those who attacked peaceful protesters and those involved in the subsequent deadly violence across Sri Lanka. These arrests have also prompted questions about the potential culpability of key government officials, former officeholders, and those responsible for maintaining law and order.

Following Mahinda Rajapaksa’s resignation, Sri Lanka had neither a prime minister nor a cabinet for three days. The president was isolated, and the opposition remained divided. The country’s deepening political, economic, and security crisis was alarming. On May 12, seasoned politician Ranil Wickremesinghe was appointed prime minister, and some individuals allegedly linked to the crisis were subsequently appointed to the new cabinet, sparking questions about the new government’s legitimacy.

DIVERSE FORMS OF PUSHBACK

Sri Lankan politics has evolved in recent years beyond traditional street protests. Nowadays, protests include diverse initiatives such as litigation, public statements, debates, art, theater, and social media campaigns. For example, social media have injected new levels of energy and creativity into protests and helped increase engagement among participants from all age groups and geographic areas.

Citizens’ use of public interest litigation has also grown in recent years, with many activists filing cases to challenge proposed amendments to Sri Lanka’s constitution and legislative proposals as well as unjust and arbitrary government practices. Public interest litigation has also informed broader debates among policymakers and ordinary people, raising awareness on important contemporary issues through, among other things, social media updates on developments in relevant courtrooms and the implications of related rulings.

Some instances where public interest litigation and other forms of pushback have shaped debates and have propelled change are worth noting. In 2012, the Supreme Court, which had been considered pro-regime, struck down the Divineguma Bill, which attempted to consolidate executive power and remove checks and balances on governance. In a move now widely seen as government retaliation, the then chief justice was unceremoniously and swiftly impeached. Yet the move united a diverse range of activists and ultimately helped form a broad-based opposition that defeated then president Mahinda Rajapaksa in the country’s 2015 presidential election.

This is not the first time these figures have been at the forefront of political transitions in Sri Lanka. The country’s 2018 constitutional crisis, which involved an undemocratic power grab by Mahinda Rajapaksa and the arbitrary ouster of the sitting prime minister, also united political parties, civil society, trade unions, and academics, sowing political chaos in Sri Lanka. In a rare moment of unity, many took to the streets to challenge this development and litigated their cause in the Supreme Court and the Court of Appeal. Weeks of activism and litigation resulted in a historic judgment: the Supreme Court ruled that the actions of the sitting president were unconstitutional and brought an end to the crisis in December 2018 with the resignation of Mahinda Rajapaksa as prime minister and the reinstatement of Wickremasinghe to the post.

More recent examples also capture moments when different forms of protest forced powerful Sri Lankan government officials to change course. In 2020, a diverse range of actors united against the Twentieth Amendment proposal to amend the country’s constitution, a move that was designed to further consolidate the powers of the presidency and weaken independent institutions. These critics filed legal challenges in the Supreme Court. Activists also used protests, social media campaigns, and political debates to express their dissent, forcing the government to introduce several changes. Despite having a majority in the parliament, the ruling party was forced to incorporate several revisions to the amendment.

Protesters also responded in 2021 to the proposed Colombo Port City Economic Commission Act with vociferous opposition, as many critics saw the proposed legislation as another government attempt to cede control of Sri Lankan assets to external actors without accountability or transparency. Activists again took to the streets to show their dissent and challenged the proposed legislation in the Supreme Court. Opposition to the legislation was fueled by China’s increasing footprint in Sri Lanka, which protesters perceived as a threat to Sri Lanka’s sovereignty and economic wellbeing. The legal challenges and debates around the bill generated awareness among Sri Lankans of the problems inherent in the proposed measure and prompted the government to amend its terms and enact the law with changes.

These are a few examples when different forms of pushback chipped away at authoritarian practices. As these examples show, such political activism must also be considered in the context of Sri Lanka’s fragmented political parties and weak trade unions. The shortcomings of these groups coincided with the emergence of new entities and groups for protesting government actions, such as citizen-led initiatives and youth mobilization.

POTENTIAL FOR TRANSFORMATION IN SRI LANKA

These months-long peaceful protests reflect the resilience and creativity of Sri Lankan citizens. In a matter of weeks, a powerful government collapsed, and a previously untouchable political family was forced into hiding. Amid the bleakness engulfing Sri Lanka, the power of citizen mobilization and resistance has captured global attention and injected much-needed energy, ideas, and perspectives into the Sri Lankan opposition. These protests have also redefined the role of citizens and their relationship to the state.

But many challenges remain for protest groups, including intergroup suspicions, deeply entrenched and polarized political viewpoints, and societal fissures. While these protests have highlighted the need to address minority rights and a reckoning for past wrongdoing linked to the war, these questions are perceived by some people as secondary to today’s crisis. Thus, while the present crisis offers a promising opening for future social movements, there is also much to aspire to.

Additionally, the change of government in May 2022 coupled with protest fatigue has contributed to a decline in the number of protesters. While some people have adopted an accommodating stance toward the new prime minister, many others including younger protesters still argue that change can only occur if Gotabaya Rajapaksa resigns as president and systemwide change happens. They see the new government as a continuation of the old guard and a lifeline for the Rajapaksas and their supporters. These dynamics will continue to affect the direction of the protests, help determine whether they can be sustained, and have a bearing on their effectiveness.

Regardless of the setbacks and uncertainties, Sri Lankan citizens have an opportunity to build on this moment and create a new vision for their country. They can address structural inequalities and violence while demanding social and economic justice, political accountability, and a new culture of governance. This task will not be easy, nor will the results be immediate. However, the changes brought about in the last few weeks give hope that sustained, innovative, and inclusive citizen mobilization has a chance to transform Sri Lanka.

Source : Carnegie Endowment

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The streets in Colombo, Sri Lanka, erupted into celebration on July 13, 2022 after weeks of peaceful protests forced then-President Gotabaya Rajapaksa to flee the country. Rajapaksa, long implicated in war crimes when he was defense secretary, had presided over an economic catastrophe amid allegations of widespread corruption and impunity.

But a year later, despite some superficial changes, there is no sustained improvement in the country’s economic situation that impinges many people’s human rights. The acute shortage of fuel that was the most visible feature of the economic crisis has eased. But more than six million people – nearly 30 percent of the population – are food-insecure and require humanitarian assistance, according to the United Nations. Seventeen percent of children under age five have stunted growth.

A year after Rajapaksa, Sri Lanka remains in crisis. The new leadership under President Ranil Wickremesinghe struggles with the economic situation and seemingly failed to uphold basic human rights and bring accountability to the country.

Meanwhile, the new president, Ranil Wickremesinghe, has used the police and military to crack down on protests. While the previous government had announced a moratorium on the use of the draconian Prevention of Terrorism Act, Wickremesinghe used the law to detain student protest leaders.

A revised counterterrorism law proposed by the new administration would have handed sweeping powers to the police, the military, and the president and created a set of new speech-related offenses. The government was forced to pause the legislation amid widespread outrage, but authorities are nevertheless using other laws to clamp down on free speech.

The government also continues to pursue abusive policies against minorities, such as “land grabs” in the north and east, targeting Tamil and Muslim-owned land, including places of worship, on a variety of pretexts.

Tamils seeking to memorialize people who died in Sri Lanka’s 1983-2009 civil war are subject to intimidation and banning orders. Relatives of victims of enforced disappearance, who are campaigning for truth and accountability, are kept under surveillance by the intelligence agencies. Minorities in the north and east face restrictions on expression and association far greater than in the rest of the country.

Sri Lanka remains in an economic, political, and human rights crisis. President Wickremesinghe should recognize that upholding rights and pursuing accountability for grave crimes is essential to addressing the country’s problems.

Source: Human Rights Watch

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Colombo Supreme Court rules that former President Gotabaya Rajapaksa and his brother, former Prime Minister Mahinda, were among several government officials whose conduct contributed to Sri Lanka’s worst economic crisis in decades.

Sri Lanka’s top court says ex-president Gotabaya Rajapaksa and his brother, former PM Mahinda are amongst those who contributed to the country’s worst economic crisis in decades.

The court was ruling on a petition filed against 13 former officials by rights group Transparency International Sri Lanka (TISL) which said the Rajapaksa brothers and others were responsible for the crisis. “Their actions, omissions and conduct contributed to the crisis,” the ruling said. The court did not order any punishment, according to a statement by TISL.

The two Rajapaksa brothers, two former central bank governors and President Ranil Wickremesinghe were among those named in the landmark TISL petition. Wickremesinghe was prime minister at the time of the crisis.

“Looking forward, we hope that this acts as a warning to elected representatives and public officials as they make critical decisions that have serious implications on the lives of citizens,” said Nadishani Perera, TISL Executive Director.

Sri Lanka’s economy collapsed as it shrank 7.8% last year, pummelled by long power cuts, soaring inflation, a plunging rupee and record high interest rates caused by the worst financial crisis in over seven decades.

Source : Reuters

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US district judge, Denise Cote yesterday granted Sri Lanka’s request for a six-month halt on a creditor lawsuit against the country. Hamilton Reserve Bank, an obscure and tiny St Kitt’s bank with interesting ties, says it has accumulated a big chunk of one of Sri Lanka’s now-defaulted bonds and had been suing it for immediate repayment.

Sri Lanka had asked for a stay on these legal proceedings to let it restructure its overall pile of debt in some peace and quiet, and had gotten heavyweight support from the UK, France and the US government.

Judge Cote ruled, “The Court recognizes that a stay will prejudice the plaintiff’s ability to obtain a prompt judgment. The requested stay, however, is not indefinite. Sri Lanka seeks a six-month stay of this litigation while it conducts sovereign debt restructuring negotiations with sovereign and commercial creditors. Moreover, if Hamilton prevails on its claim at some future date, any judgment will be subject to pre-judgment interest. Accordingly, the prejudice to the plaintiff is limited.”

The judge also implicitly recognised that the public interest in an orderly restructuring trumped HRB’s legal rights for a summary judgment.

While Hamilton’s rights are unquestionable as it really is a jilted Sri Lankan creditor, the court is willing to slow-walk things for the sake of other creditors, Sri Lanka and the amorphous principle of orderly workouts.

“The private interests of and burden on the defendant are significant — a judgment for Hamilton would likely threaten the complex debt negotiations and, hence, the successful economic rehabilitation of Sri Lanka. Hamilton’s claim that any such prejudice is “wholly speculative and implausible” must be rejected. A judgment for Hamilton would provide an incentive to other bondholders to engage in line-jumping litigation and deter commercial creditors from participating in the restructuring negotiations. As France and the UK explain, a decision in favor of Hamilton would provide a “strong incentive” for holdout creditors to forgo participation in voluntary restructuring. Moreover, the IMF funding is contingent on “a sovereign debt restructuring that meets debt sustainability targets.” A breakdown in restructuring negotiations could threaten Sri Lanka’s progress towards these IMF targets, its economic recovery, and the well-being of its citizenry.

This supports the interests of persons not parties to the civil litigation, including Sri Lanka’s official bilateral creditors and private commercial creditors. If judgment were entered for Hamilton, the plaintiff may assert that it has priority in recovery while the debt restructuring negotiations are ongoing. As described in the Paris Club Amicus Brief, “the implementation of comparability of treatment among creditors is of the utmost significance, as it serves as the bedrock for obtaining creditors’ consent to the debt restructuring.”

“In August 2021, Hamilton began to purchase the bonds at issue here. Hamilton asserts that it is the beneficial owner of over $240 million in principal amount of Sri Lanka’s international sovereign bonds that were due in July 2022 (the “Bonds”). The Bonds provide for interest payments of 5.875% per annum, paid semi-annually on January 25 and July 25 of each year, from January 25, 2013 through July 25, 2022. Following Sri Lanka’s moratorium on foreign debt repayments in the Spring of 2022, Sri Lanka failed to pay the principal and interest amount due to the plaintiff when those bonds matured on July 25, 2022. Hamilton alleges that, as a result of Sri Lanka’s default, it is owed $242,990,000 in principal and $7,137,831.25 in accrued interest (before accounting for pre- and post-judgment interest). Hamilton represents that it has not participated, and does not wish to participate, in Sri Lanka’s restructuring negotiations.”

This indicates that Hamilton does not control enough of the bond in question to block the use of collective action clauses, which radically change things.

HRB had said that it held $250mn of the bond in question. The collection action clauses embedded in the bond stipulate that if a restructuring deal is struck by 75 per cent of holders it is binding on all of them, so $250mn would give HRB enough votes to block any deal it didn’t like. But $243mn is narrowly short.

The bank could get someone else to join it, or might be sitting on another sliver that gives it a blocking stake. Or maybe this is just wrong. But if this is true, then Sri Lanka’s situation will look much better.

Source: Financial Times

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