It’s tempting to look at Sri Lanka and then look away. To think that it can’t happen to you. To say that we were just ruled by idiots, didn’t plan ahead, and made our own fate. This is true, but look at America, or the UK, or any supposedly safe country. Look at the trajectory you’re on. We were following you. Where do you think you’re headed to? How do you feel about your own government? Are you not floating on debt? Have you not also deindustrialized? Are your energy prices and inflation rates not rising too? Everybody’s gossiping at our funeral, but jokes on you.
Sri Lanka was the first country to neoliberalize after the 1970s. As former Central Bank Governor Indrajit Coomaraswamy said,
“We got away with this for years living beyond our means because from 1977 we liberalized the economy in 1977. We were the second country after Chile to liberalize our economy of those countries that went down the autarchical route. So the traditional donors were extremely keen to demonstrate good development outcomes in a country which had a liberal polity and a liberal economy so they gave us very generous amounts of foreign aid at that time when we were a low-income country so that’s how we managed because we lived beyond our means.”
Hence what’s collapsing here is the liberal order, that Francis Fukuyama said was supposed to mark the end of history. This was not how anyone actually developed (including the west) but was in fact a debt trap. Sri Lanka became ineligible for much foreign aid and then got passed onto vulture capitalists at credit card rates. It is that financing which has completely dried up, and taken the country with it. And we’re just the canary in the capitalist coal mine. Liberalism has just been a debt trap for poor countries, and that trap is clanging shut.
As more and more countries completely collapse into western debt traps, those loans simply won’t get paid. Poor countries will simply crash out of the petrodollar system, while America actively pushes Russia out, rattles sabers at China, and even threatens India. At some point, they’ll sanction themselves into a corner. It’s already happening. Sri Lanka is now settling loans in Indian Rupees while India is buying Russian oil in rubles and selling it back to us (and Europe too). In a truly multipolar world, America won’t get free credit from the developing world holding dollars anymore. We may be going bankrupt, but you’re the bank. It affects you too.
Sri Lankans have seen many incarnations of the same White Empire come and go, rising and crashing on our shores. First the Portuguese, then the Dutch, then the British, and now the Americans. We used their currencies, gave our lives and land, went into fraudulent debt to them, then saw the whole thing implode. Each empire overextended itself with bloodlust and debt and collapsed under its own weight. Only a fool would say when this will happen to the American Empire, but only a greater fool would say never. It’s inevitable. It’s samsara.
In a truly multipolar world, America is just another country with worse debts than Sri Lanka, worse public services, and not especially high productivity. Then your country will face consequences too. This seems impossible, but everything about my life seemed impossible just a year ago. Your own life today would have seemed impossible in 2015. Back then Donald Trump had been cast as President in Sharknado 3: Oh Hell No and masks were something you wore for Halloween. This is just what history ‘restarting’ feels like.
We are all living through the end of the ‘end of history,’ the triumph of western values that Fukuyama called “liberal democracy in the political sphere combined with easy access to VCRs and stereos in the economic.” From supply chains to ideological bonds, it’s all coming undone. The great wave of globalization that swept the world in the 1980s is now rushing out and as Warren Buffet said “when the tide is out you see who’s swimming naked.” Sri Lanka was certainly swimming naked, but as any Sri Lankan can tell you, if the tide rushes out all of a sudden, run. A money-print swimsuit might cover your nakedness, but it won’t protect you from the global tsunami that’s about to come.
If you sit in judgment of Sri Lanka you’re really missing the point. There is a cruel and bitter reckoning coming for us all. If COVID-19 taught us anything, it’s that problems on the other side of the world rarely stay contained, that we’re all connected. This is no less true for economic and ideological contagion. That’s why Sri Lanka’s story is important for you, as much as it pains and honestly shames me to tell it. We didn’t die of natural causes, we were murdered by history, and the killer’s still on the run.