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FACE TO FACE: Lanka’s Finance Minister Basil with Indian Finance minister Nirmala Sitharaman discussing ‘four pillars’ for short and medium term cooperation plan

As Finance Minister Basil Rajapaksa headed off to New Delhi last week bowl in hand to beg brother India’s Prime Minister Narendra Modi for money to buy a few months stock of fuel from Oman, it brought starkly home, more than any bleak Fitch or Moody report ever could, the perilous state of Lanka’s hand-to-mouth existence.

The anticipated meeting with Modi did not take place nor did the Indian officials drop any instant offering to the proffered beggar’s bowl as the Finance Minister had prayed for but sent him home with a four pronged agreement that envisaged a line of credit to cover the import of fuel from India and not from any other source, an early modernisation of the Indian run Trincomalee Tank Farm; an offer of a currency swap to help  Lanka pay its foreign debt and  facilitation of Indian investments in different sectors, all  ‘four pillars’ of the package loaded in India’s favour.

Obtaining goods on credit from a country producing it is normal practice between governments but begging money from one country to buy goods from another or pay its global debt, akin to borrowing from Peter to pay Paul, reveals the depths to which the Lankan economy has sunk.

And this has not been the first time in the recent months that Lanka had sought neighbourly assistance. Twice this year we beseeched Bangladesh to lend us money to buy essential imports and twice we received grace, disguised as Bangladeshi currency swaps or direct investments. Call it what you will, embellish it with highfalutin names but a spade remains a spade, no matter the glossy nomenclature.

A few months ago, China had been only a phone call away from dishing out multimillion credit lines but this time, perhaps peeved at the rejection of its Erwinia ridden fertiliser, the help hotline at the Embassy seems to have gone unanswered. The vessel carrying the offending cargo stalked, like a tramp ship with no fixed schedule, the Lankan coastline, traversing its territorial waters for over seventy days, claiming, perhaps, the right of innocent passage, though its motives were far from innocent and its brooding presence distinctly ominous.

Only after the Chinese Ambassador had another round of talks with the Lankan Primer Minister at Temple Trees last week, while the Finance Minister was in New Delhi with Indian officials, did the Chinese ship reluctantly raise anchor and set course to Singapore, jettisoning the goodwill between two nations as its parting jetsam junk in the Lankan sea.

In Singapore — the Chinese Global Times, a newspaper published in Beijing under the auspices of the ruling President Xi Jinpin’s Chinese Communist Party, reported on Tuesday – the Chinese fertiliser company, Seawin Biotech, has already begun international arbitration proceedings against Lanka. Another is to be launched in Colombo shortly with the total value of the claim against Lanka amounting to US$ 49.7 million.

The scathing report stated that, ‘new information obtained by the Global Times and interviews with sources and officials showed that Sri Lankan officials backtracked on the deals and lacked any sincerity in solving the issues.’ Seawin had also claimed ‘the bidding involving the dispute over imported fertiliser from China was dubious and shady, and it involved breaking business rules and hiding the truth from the public.’

The report also published a statement made to it by the Chinese Embassy in Colombo which said, “The Sri Lankan Ministry of Agriculture has backtracked and has no sincerity in solving the problem, therefore, enterprises can only use judicial and arbitration channels.” It said it attached great importance to this trade dispute, given that Sri Lanka’s imports of organic fertilisers this time are a government procurement project, and the amount is relatively large.

And there was more to come, hinting, possibly, at a souring of relations between the two countries.

In January this year the Lankan Government awarded China the contract to install a hybrid renewable energy system in three islands off the Jaffna coast near Tamil Nadu. The Indian Government lodged a strong protest against awarding the project to China, considering the presence of Chinese on their door step a threat to their nation security. The protest was, however, bluntly ignored by both Lanka and China.

However, last Friday. China announced the sudden cancellation of the project on the three Lankan islands, namely, Nagadeepa, Delft and Analthivu, with the Chinese Embassy in a tweet, citing ‘security concerns from a third party.’  Furthermore the tweet said it has already ‘inked a contract with the Maldivian Government on 29th November to establish solar power plants in 12 islands in the Maldives.’

With India fuming and in no mood to pander to Lanka’s implorations, with China irked and sending signals to convey her displeasure, is Lanka’s gravy train soon to hit the buffets? Is it the end of the road for Lanka’s ‘shuttle’ begging, the end to flitting between the two regional giants both coveting her hand, to make capital out of their historical enmity, and common strategic interest in the island, and fleece them both in turn? With a foreign policy rooted in folly, based on playing one nation against the other to scrounge the maximum from them both, will it be of any wonder if it should end in disaster?

The doors of the International Monetary Fund still remain open for the Government to seek a bailout but it stubbornly refuses to walk through the door fearing strict conditions that attaches to it. But can beggars be choosers? Especially spendthrifts who bust received aid on razzmatazz as if there were no tomorrow?

Certainly, says the man who sees silver linings in hovering dark clouds that bar vistas of castles in the air. Ever the optimist, Central Bank Governor Nivard Cabraal was in an upbeat mood this week when he gave the keynote note address at the ‘Sri Lanka Economic Summit 2021’at Shangri-La.

He told leading business figures at the event, organised by the Ceylon Chamber of Commerce:

“Every crisis has a silver lining and we should never waste a crisis. A crisis provides an opportunity and you are looking at revival. In reviving, you can always revive better. After tsunami, we built better and after the global financial crisis, we made our systems and our financial sector stronger

With an IMF team in Colombo, this week, to hold bilateral discussions and review economic development, giving rise to an opportunity brought to our doorstep to explore possible IMF aid, he spurned the prospect in advance when he declared on Monday that reaching out to the IMF would not solve the current crisis

“The people think that the only solution is to go to an outside agency and ask for their advice on bended knees. I think it’s time for us to understand there are ways, which we can do ourselves. There’s nothing wrong in doing it by yourself, the Government is equipped with tools and expertise to find the solutions for the current economic woes within the country.”

An example of this new ‘do it yourself’ method to increase dollar reserves was presented last week by the Central Bank Guv himself when he unveiled his 10 for 1 offer to Lankans working abroad. In a bid to lure dollar remittances, the DIY plan is to raise the present incentive of Rs. 2 for every dollar sent to Rs. 10. No doubt the Governor’s promise can be happily kept  since, though there’s a severe shortage of American dollars, Lankan rupees abound aplenty with the Government printing machines made ready to print Lankan rupees at a moment’s notice.

But why the Central Bank ten buck carrot to lure dollars when the Finance Ministry has wielded the  stick and made it mandatory by gazette for all dollar remittances to be converted to Lankan rupees?

Rather than have the Finance Minister bending the knee and begging money from India or China, why fear to seek IMF help? Is it because the IMF bailout package will include strict mechanisms to monitor spending and demand greater transparency in tender procedure when awarding all government contracts? Why drag on a nation’s agony by delaying the inevitable, why wait for the water to rise above the nation’s mouth, when, on the verge of drowning, the Government will be forced to clutch the IMF lifeline?

The question on the public lip is how much longer before the squeaky wheels of the economy come grinding to a halt. After the budget, Sajith Premadasa told al Jazeera, ‘we are facing economic Armageddon. It’s an apocalyptic situation’.

Lanka’s economic Armageddon’s shadow may have already fallen, except none appears to have discerned its outline in the developing darkness. What a pity, in the fading light to find that, with the nation in the gutter, its leaders are not aiming at hope’s star to transcend the squalor but searching the trough for sewer-fed solutions.

British Queen dumped as Barbados goes Republic At the stroke of the midnight hour last Tuesday, the tiny Caribbean isle of Barbados kept her tryst with destiny to emerge before the civilized nations of the world as a truly independent sovereign republic, having ditched Britain’s Queen Elizabeth as her constitutional monarch in the process. Stepping into the Queen’s shoes – even as William Gopallawa had done in 1972 when Mrs. Bandaranaike’s SLFP Government had turned Ceylon into a republic – was the former Governor General, Dame Sandra Mason, who had been elected to the office of the republic’s first President by Parliament in October. MADAM PRESIDENT: Dame Sandra Mason The final severance of the colonial cord on December eve was witnessed by the British Queen’s representative Prince Charles who flew in for the last rites and flew out without overstaying his visit. His ancestors had, however, not been in such haste to leave when they first set foot on its shores nearly 400 years ago. The first English setters had landed in the 167 square mile island – smaller than Colombo – in 1625 and had claimed it in the name of the British Monarch. Later, as part of its unsavoury colonial past, people had been brought from Africa by Dutch merchant ships  as slaves to work on the lucrative sugarcane plantations, with a’ special slave code’, the Barbados Slave Act, enacted in 1661 to give legal basis to slavery in Barbados. Slavery was finally abolished in 1834 but the scars left behind still crease the descendents’ foreheads. The rise of the Afro-Barbadian spring in colonial politics eventually led to the grant of independence by the British in 1966. The island did not, however, sever all ties with the British but chose to remain a parliamentary democracy with a constitutional monarchy and retained, as its titular head, Britain’s Queen Elizabeth as the presiding Queen of Barbados. But the winds of change, heavy with nationalistic fervor, had begun to blow over the sun kissed island and mood swings towards a republican state were growing more frequent with calls for a referendum to decide the issue becoming more persistent Though no referendum was held, the catalyst of change came in 2018 when the nationalistic Labour Party’s Mia Mottely, a 56 year old LSE graduate, as the first female Prime Minister. The rest is now history as it unfolded last week. Ominously, while Britain said her last farewell to the isle, another foreign wave has already rolled in to lap her sunny shores. As another expansion of her global influence, China has poured in nearly 500 million pounds of goodwill by building roads, homes, drainage systems and even a hotel.  The scene’s the same in Jamaica, where smothered by a Chinese investment of 2.6 billion pounds, she is tipped to kick out the British Queen and soon go republic in Barbadian style. As Barbados savours, in the new winds that blow, the first rum sip in calypso celebrations of her new found republican status and the shedding of the last remaining shackle that tied her to her best forgotten unsavoury past; with patriotic joy rising in tempo to ecstatic pitch in every Barbadian breast and brimming from each Barbadian eye, one subdued word of warning is in due from a fellow traveller of experience. The caution is: To guard herself against politicians unscrupulously exploiting the swell of nationalistic fervor and turning it to a permanent flood whenever elections are called or patriotic distractions are politically required; and never to let such emotive shibboleths drown her in its tidal surges in the manner Lankans swallowed the dangled jingoistic bait, hook line and sinker, in patriotism’s deluge. And, of course, to say, to be very wary of the tenacious grip of the panda bear’s seemingly innocuous hug.