Sri Lanka bleeds, yet again

Sri Lanka did not have it this bad even at the height of its ethnic conflict.

That war, which began in 1983 and ended in 2009, tore apart the once idyllic island nation, turned one ethnic group against another, led to external meddling, and left tens of thousands dead and huge numbers as refugees all around the world.

But even those horrific decades did not derail the tourist inflows or caused the kind of food shortages and power outages which have left Sri Lankans gasping for breath. True, the military did impose bans in a bid to cripple the LTTE’s war machinery. The Tamils suffered but somehow managed, partly due to an efficient system of smuggling from both within the country and Tamil Nadu.

Now, unfortunately, there is nothing to smuggle – for the simple reason that no one seems to have anything to spare. The crisis is so acute and so painful that the Sinhalese who had worshipped the Rajapaksa family for crushing the Tigers are now rooting for their political eclipse.

When Shanthan and Kala visited Jaffna from London to see an ailing relative, they badly wanted to have a cup of tea. Yes, they can get tea, their host affirmed. But it will be “plain tea”, not “milk tea”, because there was no milk powder in the market; when found, the rates were so high that the hosts had stopped buying it.

In the absence of a strong domestic dairy industry (unlike India), Sri Lanka imports, like it does with so many things, milk powder. With no foreign exchange to pay, milk powder has stopped coming.

Today, many Sri Lankans across the island are doing more than one job, working formally in one place and moonlighting in another, in a desperate struggle to make both ends meet. For a country which had strong economic fundamentals for a long time, this can be both painful and humiliating, so to say. But with Sri Lanka suffering its worst meltdown since independence in 1948, the country is in the grip of unprecedented fuel shortages, power outages and scarcity of medicines besides soaring food prices to such zooming levels that numerous families have been forced to either eat twice a day as opposed to thrice earlier or parents are skipping one meal a day so that their children can have two meals – even if it means just boiled rice and a sprinkling of fish or vegetables.

Believe it or not, many Sinhalese now say this is divine retribution, argued Gamini Ratnanayake, a resident of a posh Colombo neighbourhood whose family has never known scarcity – until now.

With a deep-rooted belief in the karmic theory, Sinhalese Buddhists say the entire country is now facing what Colombo did to the Tamils for years. There was a time when, in the name of battling the LTTE, the State banned a huge number of items from LTTE-controlled territory in northern Sri Lanka –batteries, cement, fuel, fertilizers, iron and steel items, even simple medicines like Panadol tablets, excess food and more.

“We were told that the LTTE used these to build up its arsenal. True or not, the fact is that the entire Tamil community suffered enormously because of the ban on various items. Call it an irony, many of the things the government banned in Tamil areas have become items of island-wide shortages now. People hailed the military even when it was alleged that innocent Tamils had suffered terribly in the war. Now everyone in Sri Lanka is suffering,” said Ratnanayake. “If this is not divine punishment, then what is it?”

Sri Lankans across the country now queue at fuel stations for six to nine hours daily to get a limited quota of petrol and diesel. Even as this piece is being written, a cargo ship carrying diesel is berthed at the Colombo port, unable to offload because Colombo has no foreign exchange to pay. Everyone is awaiting the first week of April when a ship is expected with diesel from India. When that arrives, there will be temporary relief. There is also a huge paucity of cooking gas, forcing many to again embrace firewood.

Lack of fuel has virtually killed both private and public transport in a country where tourism gets killed minus affordable transport. A short ride of just two kilometers on a Bajaj auto-rickshaw now costs equivalent of 100 Indian rupees! Traditional weak government finances, collapse of tourism (starting from Covid-19) and a sharp fall in foreign remittances from Sri Lankans abroad have led to a serious foreign exchange crisis. The government’s enforcement of a crippling lockdown to overcome the pandemic virtually killed the service industry which accounts for 60 percent of employment in a country of 22 million.

After four elderly persons lost their lives while standing in queues for hours to buy fuel and one person was knifed to death during a row, Sri Lanka on March 22 deployed the military at all petrol and diesel stations across the nation. With no dollars to pay for newsprint and ink, newspapers and magazines have ceased publication; the government has postponed school examinations for millions of students. The crisis has pushed more Sri Lankans into the poverty bracket.

Towns and cities, Colombo included, suffer hours of power cuts as there is no diesel to run generators or power stations. Food inflation is running at 25.7 percent; prices of even simple vegetables and fruits are now beyond the reach of most Sri Lankans. A cup of tea without milk now costs – hold your breath – 100 rupees! A kilo of sugar costs Rs 290-300, 400 grams of milk power (if available) is for Rs 790-800 while the price of rice, still available at controlled rates, is steadily climbing. A litre of coconut oil sells for Rs 1,000. A loaf of bread comes for Rs 120.

With a $51 billion sovereign debt, Sri Lanka has been forced to approach the International Monetary Fund (IMF) for a bailout – after again seeking loans from China and India. Colombo has swapped its currency for US dollars from Dhaka. It has now free-floated its rupee, pushing down its value. From the time when the Chinese bankrolled the Rajapaksas’ election campaign, Beijing is now widely seen as a blood-sucker although –thanks to its deep pockets -- it still wields a lot of influence among political players. Sri Lanka recently cancelled business proposals it had offered to China in islands off Jaffna, not far from the Indian coast, and handed them over to India.

There is now a huge difference in how much a US dollar fetches officially in Sri Lanka and how many rupees it can command in ‘hawala’ -- the illegal but popular South Asian system of money transfer. Because of this, Sri Lankans working in foreign countries, particularly in the Middle East, now send money mostly through hawala; importers also prefer to keep a sizeable portion of their dollars abroad. Both further accelerate the Sri Lankan foreign exchange crisis. It is a vicious cycle.