Too little, too late

NEW DELHI: If the long overdue resignation of Sri Lanka’s Prime Minister Mahinda Rajapaksa is a step towards tackling the country’s severe economic crisis, it is, at best, a very small one.

At the same time, it is an absolutely necessary one given the Rajapaksa family’s responsibility for precipitating it.

The resignation came close on the heels of his brother, President Gotabaya Rajapaksa, declaring an emergency; it was also announced after bloody riots, which from all appearances were precipitated by Rajapaksa survivors.

What now? There is absolutely no clarity about this at the time of writing. In theory, the exit of Mahinda Rajapaksa, and the dissolution of his Cabinet, should ease the way for the constitution of a national unity government to tackle the crisis.

Such a government will go a long way in calming the protests in the country, which have been partly fuelled by the opposition. But there remain a couple of grey areas.

The first is whether Mahinda Rajapaksa’s resignation is enough to secure this. The opposition has been demanding that his brother step down as President before such a proposal is considered, so one resignation may not be enough.

The other is how effective a united government can be in tackling a crisis of this sort.

Unity governments are useful in times of war and external threats, but what Sri Lanka faces now is a full-blown economic emergency, fuelled by a grave balance of payments problem.

Setting the economy back on its feet, doesn’t require so much as unity, but solutions to manage the debt. With only around $50 mn in reserve, the answer does not lie in further loans but in the form of a massive financial rescue package.

Sri Lanka has already turned to the IMF for this, a move that has the support of India.

The Chinese, who have been massively lending to Sri Lanka for the Rajapaksa family’s ambitious but ill-considered infrastructure projects, are not so elated by this move.

China is a big lender in other countries as well and fears that Colombo’s move to suspend debt repayments may have a domino effect in other countries, including those in Africa, which are straining under Chinese debt. New Delhi has stepped forward to provide critical lifelines and has emerged as the better friend of Sri Lanka, which has traditionally played China and India to its advantage.

In the short term, Sri Lanka will have to deal with the sudden burst of anger that has split out on the streets, after weeks of relatively peaceful protests.

The divide between Rajapaksa loyalists who are incensed about his ‘forced’ resignation and those who feel that the family has held the country to ransom is deep and not easy to bridge.

The next few days will be critical as they will decide whether Sri Lanka can restore a measure of political stability, keep the violence off the streets, and remain focussed on extricating itself from the economic abyss it finds itself in.