Editorial

The goal of a democratic Opposition is to bring down a democratically elected Government and secure political power.  How they do it is their business. The incumbents in power and place have done it when they were in the Opposition.  The red line that cannot be crossed is the breach of the peace and the destruction of public property which belongs to neither side, but to the people.

The Opposition flexing its muscle comes in the backdrop of its hugely successful May Day rally of last year when the Government misjudged its organisational skills and ability to fill the Galle Face Green in Colombo. This was the morale booster the Opposition had wanted at the time and what propelled it to a convincing electoral triumph at the local council elections that followed.

Governments in mid-term are usually unpopular. And if an Opposition can get its act together, it has the advantage. When Governments are elected to office, hopes rise, and with it, expectations, only to wither away to disappointment and frustration when these are not met at the speed anticipated.

Government speakers keep straining every sinew to compare the past with the present. They speak of the freedom that is in the air and cite the regular street demonstrations as proof. Others don’t see it that way. They think the Government is weak and unable to instill discipline. Prices of consumer goods are compared then and now – from food stuffs to gas, and kerosene and pharmaceutical drugs, but how much the message reaches where it matters seems a concern as it does not seem to translate into votes.

The Opposition has got galvanised as the heat begins to sting it over corruption trials beginning to mature and Permanent High Courts start to hear trials over their shenanigans while in office not so long ago.

Within the Opposition camp itself, there were rumblings that Wednesday’s mass rally was not the best organised and lacked the efficiency and enthusiasm of the 2017 May Day rally. Expectations here, too, were high. Social media and the rumour mill gave it a life of its own. Some said Colombo would be “surrounded” by hundreds of thousands marching from the provinces to the capital. Candle-lit, or torch-lit overnight sit-down protests were going to be the order of the night. With their chief organiser sorting out personal matters in the United States, this was a trial run by the next generation of Opposition leaders to cut their teeth in paving their way to office.

All in all, both the Opposition and the Government can be given credit that the day passed without much ado. The ‘noise and chaos’ of democracy was very much there on show and the citizens of Colombo wisely took the afternoon off from work to avoid the roads that are chaotic even on normal days.

The politics of debt trap

Not entirely unrelated to the above mentioned domestic political events in Sri Lanka was the meeting of leaders from several African states who came to Beijing this week as guests of the Chinese Government. That summit was to discuss China’s massive financial investment in infrastructure projects in Africa totalling USD 136 billion so far, with USD 60 billion in the pipeline.

The summit discussed what the West was once accused of – the ‘debt trap’ of economically developing nations being tied down to loans a.k.a. debt servitude. The gathering also gave rise to arguments whether political leaders in these countries were eating the cream off the Chinese cake while the people were getting the crumbs. And if this cream was going to the financing of political agendas and electioneering campaigns to ensconce those leaders in power.

That is what is relevant to Sri Lanka as well, in the midst of this ongoing debate about Chinese loans to the country and Chinese cheques to Sri Lankan political leaders.

At the end of last year, the Central Bank said 89% of Government revenue went to repay the total foreign debt at the end of 2016. Today, this percentage has risen to a phenomenal 95% of total Government revenue. In simple terms, for every Rs. 100 the Government earns, Rs. 95 is spent on repaying a loan taken earlier (please see Page 2 for a graphic account). It is a case now of borrowing from Peter to pay Paul, or from Chang to pay Ching.

There is a credible argument that not all the blame can be put at the door of Chinese loans. Out of Sri Lanka’s total debt of USD 40.2 billion, China’s component is 4.6 billion or a little more than 11 per cent of the total.  Project loans from the World Bank, Asian Development Bank, Japan, Korea, India and China, total USD 19.3 billion or 48 percent i.e. half the total loans.

Commercial loans from international banks to the Government total USD 9.9 billion (24.6%) while commercial loans to the private sector is USD 9.0 billion (22.4%) and currency deposits with banks — USD 2.0 billion (5.0%).

Put bluntly, the commercial loans of nearly USD 20 billion by the end of 2016 with a loan period of 10 years or less, and interest rates of 4 percent of more, are the ones which are sinking Sri Lanka into a debt trap.

These are the years when repayment of loans taken under the previous Government starts to kick in. The amortisation of Chinese loans is not the only issue. The more Sri Lanka hungers after this type of loans, the deeper the country will descend into a debt trap. It is the Chinese who are willing to write off debt in exchange for real estate in which it has a strategic interest – something that could be even worse than the debt trap. That was one of the worries that was debated in Beijing this week vis-a-vis Africa with the Chinese President reassuring his guests that his country had no vested interest in the loans it gave.

It would have been a good idea for Sri Lanka’s political leaders, both from the Opposition and the Government who met face-to-face, so to say, on Wednesday on the streets of Colombo and on behalf of the suffering people of Sri Lanka (to whom they say they owe their allegiance) to have attended that summit in Beijing as observers. They would have then learnt of the criticism that Chinese project loans, often unsolicited, are being siphoned off for political campaigns – including funding of street demonstrations, and how foreign loans keep their countrymen and countrywomen in poverty – in perpetua.