Far from Ukraine, Sri Lanka is the epicenter of a global crisis

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The war in Ukraine could still make international headlines. But it is a country far from the battlefield that has turned into a kind of melting pot of the global moment. For months, Sri Lanka has been in a deadly economic spiral: a public debt crisis, exacerbated first by the toll of the pandemic and then by the disruption caused by the Russian invasion of Ukraine, has led to shortages of food, fuel, cooking gas, medicine, money and other essentials.

In a United Nations survey, some 70% of Sri Lankan households said they had reduced their food consumption, with food price inflation standing at around 57% (compared to around 10% in the United States compared to the last year). The country of 22 million people is more or less out of fuel and new expeditions are still days away.

Growing public anger and protests brought down Prime Minister Mahinda Rajapaksa’s government in May, but crisis conditions persist and fears are growing over the possibility of renewed clashes between security forces and angry ordinary civilians. Power outages have become part of everyday life, as have long queues for fuel. Schools and offices have been closed for at least the week in a bid to keep Sri Lankans off the roads.

Last week, doctors, medical staff, teachers and bankers in the capital Colombo marched to protest their inability to get the petrol or diesel needed to carry out essential work. “Things have become unbearable for the common man,” a teacher’s union official told Reuters.

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Sri Lanka in May defaults on its debt for the first time in its history as an independent nation. A caretaker government led by seasoned and savvy Prime Minister Ranil Wickremesinghe is trying to pull the country out of its troubles, including seeking help from regional powers India and China.

But the road ahead remains bleak for a country unable to pay for its imports. The government resorted to rather desperate pleas: it introduced a scheme to give government employees an extra day off to grow crops in their backyards and also offered all 1.5 million public sector workers in the country the opportunity to take five years of unpaid leave so they can find jobs abroad, emigrate and send much-needed funds home.

Queues at passport offices are also long, and the country’s online application system has been on hold for months. The most desperate try to flee by boat to neighboring countries like India. Analysts have compared the collapse of the Sri Lankan economy to the financial chaos of the late 1990s in major Southeast Asian economies. Others warn that Sri Lanka is turning into the debt-ridden and dysfunctional “Lebanon of South Asia”.

Ten days of negotiations that began on June 20 between the country’s caretaker government and officials from the International Monetary Fund over a potential bailout package concluded last week without a resolution. “In the past we have had discussions as developing countries,” Wickremesinghe said on Tuesday. “But now the situation is different. We are now entering the negotiations as a bankrupt country. Therefore, we have to face a more difficult and complicated situation.

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Sri Lanka’s problems are in many ways unique to its situation and self-inflicted. Yet the country’s astonishing collapse is also inextricably linked to a series of larger and intertwined global phenomena: the war in Ukraine has caused global food and energy prices to skyrocket and difficult in Sri Lanka.

“Sri Lanka would be in crisis even if there was no war in Ukraine, but that makes everything worse,” Alan Keenan, an analyst at consultancy International Crisis Group, told my colleague Gerry Shih earlier this year. . “It’s the Ukraine effect: a fuel line of credit that you thought could last two months now lasts one. Even if you get a bailout, you buy less food, less fuel, less medicine.

Similar pressures exist elsewhere. A joint report by international aid groups Oxfam and Save the Children in May found that one person dies of hunger every 48 seconds in drought-ravaged Kenya, Ethiopia and Somalia. The conflict in Ukraine has driven prices to record highs and made food “unaffordable for millions” of people in East Africa.

“The number of people suffering from extreme hunger in the three countries has more than doubled since last year, from more than 10 million to more than 23 million today,” the organizations noted in a statement. “This comes against a backdrop of crippling debt that has more than tripled in less than a decade – from $20.7 billion in 2012 to $65.3 billion by 2020 – sucking resources from these country of public services and social protection.”

The organizations also cajoled major Western powers not to do more:[Group of Seven nations] and other wealthy countries have turned inward in response to various global crises, such as COVID-19 and most recently the Ukraine conflict, including reneging on their promised aid to poor countries and driving them to the brink of bankruptcy with debts.

Indeed, for the United States and many of its European partners who rally behind Ukraine, Sri Lanka is far from their objective. But leaders elsewhere are more concerned. Indonesian President Joko Widodo reportedly traveled to Kyiv and Moscow last week with the situation in Sri Lanka in mind. He called for an end to hostilities and urged Russian President Vladimir Putin to ease terms that have stifled crucial grain and fertilizer exports.

“Indonesia’s main objective is … for the war to end in Ukraine,” Andrew Mantong, an international relations researcher at the Jakarta-based Center for Strategic and International Studies, told Nikkei Asia. “If this cannot be achieved, the second – and most achievable – goal is to find a way to reintegrate Russian and Ukrainian food and fertilizer supplies into the global supply chain.”

In an interview with The Associated Press last month, the beleaguered Wickremesinghe said his government would consider sourcing Russian oil regardless of Western sanctions. He lamented how the war in Ukraine had accelerated Sri Lanka’s “economic contraction” and warned his country would not be alone.

“I think by the end of the year you could see the impact in other countries,” he said. “There is a global shortage of food. Countries do not export food.

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