the eye of the storm has arrived in sri lanka

Sri Lanka, Serendip in old Persian, the pearl of the Indian Ocean, is plunged into a serious political-economic crisis.

It is a multifactorial crisis, which has deepened in the last two years under the combined effects of Covid, climate change, the debt crisis, the role played by chemical fertilizer producers in the debt, the greenhouse gas emissions and climate fragility.

By Dr. Vandana Shiva

The protests we witnessed were sparked by an insatiable trade, by the discovery of the debt trap, the collection of rent, the rising cost of living, a vital economic crisis faced by the ordinary citizens. We can observe similar protests in the world in 2019, before the Covid and containment. Look at Beirut and Chile. When the cost of living becomes unbearable, people rise up. All over the world, there are countries that have been trapped in debt, which has had the effect of generating billions for billionaires and bankers.

Sri Lanka is facing a serious debt and currency crisis. It is a direct consequence of the policies of neo-liberal corporate globalization that led these countries to contract increasingly large credits for port infrastructure, power plants, highways, tourist resorts and forced them to increase their expenses for basic needs.

Sri Lanka’s external debt reaches 12.55 billion dollars; the most important lenders are the Asian Development Bank, Japan and China.

Over the past decade, Sri Lanka has borrowed more than $5 billion from China to build highways, a port, an airport and a coal-fired power plant.

International capital markets account for 47% of Sri Lanka’s debt, multilateral development banks 22% and Japan, the third largest lender, 10%; 30% of foreign direct investment (FDI) in major projects in Sri Lanka between 2012 and 2016 came from China.

According to data from Gateway House, these Chinese equity and debt investments are financing more than fifty projects worth more than $11 billion. In most cases, it is about roads and sewage treatment plants; the largest projects are the port of Hambantota, the port city of Colombo (an ambitious project that includes a special economic zone built on land reclaimed from the sea and an international financial center with offshore banks, editor’s note) and the thermal power plant of Lakavijaya. – all three financed by Chinese state banks and built by Chinese proxies.

As Amit Bhandari and Chandni Jindal of Gateway House write: “In 2017, to repay its debt, the Sri Lankan government spent 83% of its revenue to repay its debt, a quarter of which was foreign borrowing. Between 2017 and 2022, the annual repayment of the country’s external debt will almost double, going from 2.1 billion to 3.3 (or even 4.2) billion per year. It is not surprising that Sri Lanka has decided in 2017 to turn part of that debt into equity and hand over Hambantota to China Port Holding.

In February 2022, the foreign exchange reserve available to the country amounted to an amount of 2.31 billion dollars, an insufficient reserve to cover its import costs and the repayment of its debt, which amounts to $4 billions a year.

This currency crisis has meant that the government is no longer able to pay for the imports of basic needs, not even fuel. Dependence on imported fossil fuels has caused an economic crisis with rampant inflation following currency devaluation and power cuts of up to thirteen hours a day.

The 22 million citizens of Sri Lanka are fighting for their survival and have expressed their dissatisfaction to the government, the ministers have retired, a state of emergency has been declared. The country lives on credit.

Sri Lanka’s ability to repay its debts with interest has been seriously impaired by Covid, which has deepened the crisis. While tourism and remittances made by foreign workers were one of the main sources of foreign currency for Sri Lanka, the pandemic has dried up at the same time and foreign exchange reserves have shrunk by almost 70% in two years .

In 2019, the contribution to GDP (in % of GDP) of the travel and tourism sectors reached 12.6% for Sri Lanka compared to 6% in the year 2000. This contribution increased from an average of 4.28% per year. Tourism, which had gone from 6% in 2000 to 12.6% in 2019, fell by 70% due to Covid.

The Ukrainian crisis has greatly aggravated the domestic crisis by increasing the prices of oil and fertilizers. Sri Lanka approached the IMF, India and China for credit. The devaluation of Sri Lanka’s currency is part of the restructuring requirements set by the IMF.

In February, India planned to supply fuel up to 500 million dollars. Sri Lanka and India have also concluded a line of credit of up to two billion dollars for the import of basic necessities, food and medicine among others.

China has made available to Sri Lanka’s central bank a $1.5 billion swap and a $1.3 billion syndicated loan. It is expected to offer the island state credit facilities of up to $1.5 billion and a separate loan of up to $1 billion.

The weather catastrophe that has affected South Asia has also worsened the food crisis in Sri Lanka.

South Asia is ecologically and economically rich, thanks to the monsoon. Climate change has significant effects on the monsoon and, therefore, on agricultural production. According to the latest IPCC report, extreme and intense events related to the South Asian monsoon will increase by 7% for every one degree increase in temperature.

Since 2009, I have shown in my contributions to the Copenhagen climate summit (cf. Soil not Oil ) that 50% of greenhouse gas emissions that disrupt the climate and threaten agriculture come from a system of agriculture and food, whose raw materials come mainly from chemicals. and capital, from 11 to 15% from agricultural production, from 15 to 18% from deforestation, from 15 to 20% from processing and long-distance transport from global logistics chains and from 2 to 4% from waste.

We cannot face the problem of climate change and its very concrete consequences if we do not recognize the central role of the globalized industrial food system, which contributes more than 50% to greenhouse gas emissions, both for through the deforestation of the forests, and the industrial agriculture of batteries. , raw material and aluminum packaging, long-distance transport and food waste.

The effects of this diet and climate work in both directions. Climate change poses considerable risks to the food system, as rising temperatures and changes in weather patterns are likely to cause enormous damage to crops, supply chains and basic needs. [1] [2]

Unstable weather contributed to the crisis in Sri Lanka.

Chemical fertilizers emit nitrous oxide, which is 300 times more harmful to the climate than CO2. Imports of synthetic fertilizers have also severely strained Sri Lanka’s foreign exchange reserves.

The war in Ukraine only worsened the situation. Fertilizer, fuel and food prices are everywhere. The “poison cartel”, which makes a profit by selling its fertilizer at very high prices, also takes advantage of the crisis to cancel all the initiatives that countries have taken to implement an agricultural policy free of fossil fuels (and chemicals that they are). used to develop) and likely to resist climate change, to which the industrial and globalized food system, which has few resources to oppose, contributes up to 50%.

In Europe, the chemical industry is doing everything possible to cancel the “Farm to Fork” program.

About the crisis in Sri Lanka, she says that it must be linked to a stop on the import of chemical fertilizers in April 2021 and that it will last several months. But the delivery ban has its origins in Sri Lanka’s debt crisis. A stoppage of imports does not necessarily lead to a policy of food sovereignty. Food sovereignty requires ecological agriculture and, in practice, research and political action. If Cuba overcame the fertilizer and fuel crisis triggered by the fall of the Soviet Union, it is because it entrusted politicians and researchers with a transition to ecological agriculture.

The Covid, the weather and the chemicals have triggered a real cyclone in Sri Lanka. This cyclone could affect any of the countries that are recolonized by the overdebt trap. The solution to pandemics, climate resistance, but also the release of debts, fuels and chemicals, all this requires the recapture of economic sovereignty that comes from food sovereignty.

The crisis in Sri Lanka highlights the high costs of Covid, those that the population had to pay, while, in passing, the billionaires got richer by 1.5 billion dollars.

Sri Lanka illustrates the price of climate injustice.

It also clarifies the high cost of dependence on foreign investment and credit for the construction of ruinous infrastructure, which benefits a privileged few, while the majority of the population pays a very high price due to the destruction of vital infrastructure – both ecological. infrastructure for a stable climate and the economic infrastructure that guarantees basic supplies.

Localization rather than corporate globalization, ecological sustainability and sovereignty rather than fossil fuels and capital and debt intensive trades, this is the path to peace and freedom, resilience and self-sufficiency – for individuals , communities, countries and for the entire planet. .

Sources:

[1] Mbow et al. “Food Security”, in Climate Change and Land (IPCC, 2019), https://www.ipcc.ch/srccl/chapter/chapter-5/.

[2] Sandalow D. et al., Food and Climate Change InfoGuide, Columbia SIPA – Center on Global Energy Policy, May 2021, https://www.energypolicy.columbia.edu/research/article/food-and-climate-change-infoguide

Main Print:

The Colombo skyline in January 2022, as seen from the Colombo Port City Project gallery by XKillSwitchXxx via Wikimedia Commons, licensed under a Creative Commons Attribution-Share Alike 4.0 International License.

Translated from German by Didier Aviat

The original article can be accessed here

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