Ifyou look around the crime scene of my life, you can get a sense of what happened to Sri Lanka. I have a car, imported goods, was educated abroad, and pay very little taxes. Rich people like me cause a huge trade imbalance, while also pushing for conservative policies that gut public services and laugh at the very idea of state-led industrialization and agriculture. And so here we are. The colonial comprador elites finally murdered the whole country.
Now everything has broken down, and in the wreckage you can see the path we could have taken. My family is surviving because I earn dollars. The country could have earned dollars with state-led industrialization like East Asia (or any country that actually developed). My family is getting eggs from the chickens next door for eggs, and the country could have been eating if we’d invested in agriculture (which is widely subsidized in places like America and the EU). My house avoids power cuts because we run on solar and battery power, and the country could have been running if we’d invested in renewable energy earlier (like China is doing).
Instead, Sri Lanka tried to live like a middle-income country before even earning a middling income. We tried to live like westerners, not realizing we were falling into a western debt trap we’d never get out of. All the cars, all the fuel, all the imports, it was all paid for in dollars. If you dust the crime scene for fingerprints, they’re all greasy with petrol and look like dollar signs. If you open the nation’s wallet, you’ll find no money left. Just a bunch of credit cards from BlackRock (US), Ashmore Group (UK), Allianz (Germany), UBS (Switzerland). Someone’s left a Chinese flag on the floor, but that’s a red herring.
Only around 10% of Sri Lanka’s debt is to China, and that’s for infrastructure. As Multipolarista counts, “As of 2021, a staggering 81% of Sri Lanka’s foreign debt was owned by US and European financial institutions, as well as Western allies Japan and India.” And a lot of that was for onerous interest payments, consuming huge amounts of government revenue. Sri Lanka died in a western, capitalist debt trap, not a Chinese one.
As the economist Dr. Ahilan Kadirgamar says, “[Sri Lanka] was the first country in Southasia to undergo structural adjustment and be set on a neoliberal trajectory. Those economic changes brought about by the JR Jayawardena government, locally called the ‘open economy reforms’, were pushed through with authoritarian power used not just for repression of minorities, but attacks on trade unions and the Left more broadly.” Just as every American leader since Reagan has followed the same basic capitalist path, so too have Sri Lankan leaders since Jayawardena. Ranil is JR’s nephew and he’s continued these policies in his six terms as Prime Minister. Most of our bank debts came under his governments, not the Rajapaksas (using one card to pay off another).
JR was called ‘Yankee Dickie’ and Sri Lanka really tried to develop like the west, which should worry western readers too. We followed your model and the model doesn’t work. What makes you so sure you’re immune? America has also neglected public services, deindustrialized, engaged in financial speculation, and suffered from widespread corruption, especially through your military. Sri Lanka had to face the consequences of these bad decisions because we can’t money-print our way out of it, but at some point the piper will come calling for debt-fueled western economies too. To invert Marx, there is a spectre haunting the entire western world — the collapse of capitalism.
In this way, Sri Lanka is just the canary in the coal mine. We followed neoliberal economics in the 1980s just like you did. We settled for cheap consumer goods instead of producing things. We covered up our trade deficits with loans, and by the 2010s we were using one credit card to pay off another. Then we got sick, relatives abroad stopped sending money, tourists stopped coming, and our meager exports couldn’t cover even interest payments. We got cut off by the banks, the IMF is coming in again to take what’s left of our organs, and it’s all falling apart.
Our ruling elites were fools, corrupted by the latest imperial powers, and they led us to this debt-fueled ruin. They violently crushed the youth that asked for something different and now they’re just doing it again, blaming communists and violently attacking protestors. And they call this all defending ‘democracy’, which is really just the latest state religion of empire, not power to the people. Not even close.
The Sri Lankan people got led down the primrose path by an oligarchy masquerading as a democracy, exploitation masquerading as an economy, and what’s the solution when the whole thing collapses? More of the problem. The nephew of the guy who most caused this comes in as dictator, and promises to do the same as his uncle. So we get more militarization and capitalism, the same two boots that have been stomping on the Sri Lankan face forever. Neoliberalism is a hell of a drug, and our ruling class is addicted to it. They keep shooting the country full of it, even after we’ve OD’d.