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).