Sri Lanka 2024: Bangladesh 2026?

A political earthquake has struck the island at the southwestern edge of the Bay of Bengal. The Big Establishment Parties have been blown away. An upstart left-leaning alliance elected a President from a small left-wing party (JVD) a few weeks ago. He brought forward Parliamentary elections. The party of new President Anura Kumara Dissanayake (AKD) previously held just three seats out of 225. On November 14th, his National People Power alliance of small parties won 159 seats, with a two-thirds majority.

Do Colombo and Dhaka have some things in common? In both capitals, protestors stormed the ‘palace', leaders fled in fear, and hope permeated the population. People Power won. Or so it was thought. Activity intensified in July, four months ago in Bangladesh. The Sri Lankan ‘Arayagala’ (struggle) protestors tasted victory in July 2022 (its unrest kicked off in March). President Rajapaksa (dubbed The Terminator) scrambled aboard a plane. Prime Minister Sheikh Hasina jumped on a helicopter. Confusion reigned for a while about resignation letters before departure. Rajapaksa eventually sent one from Singapore.

Tamil Guardian editor Thusiyan Nandakumar wrote in The Diplomat (Feb 2, 2023): “Failing to recognise the wider causes of the crisis, the (Arayagala) movement also proposed no solutions for the island's financial turmoil or an envisioned governance structure going forward. The movement coalesced around a singular demand…” Does this sound familiar?

Let us also note some differences. The Sri Lankan uprising was primarily based on the economic travails, the default on debt and serious shortages of essentials. The ‘Monsoon Revolution’ on the Bengali delta was predicated on freedom of expression, liberty from repression and end to fifteen long years of one-party rule, commonly labelled ‘fascism'.

Bangladesh’s death toll of anything between one to two thousand dead and wounded of ten thousand dwarf anything seen on the Emerald Isle in 2022, where the security agencies decided very early on to not use live ammo. Sri Lanka had suffered a brutal civil war from 1983 to 2009.

The Terminator returned to the island after 52 days, “welcomed by supporters at the airport”. Unscathed, unbowed. Dhaka is unlikely to see that. Unlike in Sri Lanka, the ex-leader and her party leaders have been scattered. Rajapaksa’s MPs remained. Parliament soldiered on. Dhaka is somewhere else altogether. An uprising, followed by a surprising NGO-led ill-defined team with no official sell-by date and no Parliament.

Revolution betrayed

Sri Lanka’s ‘revolution’ was immediately betrayed in the sweltering summer heat of 2022. Parliament appointed veteran liberal Ranit Wickremesinghe. The country was in financial meltdown. It had defaulted on its foreign debt. A pro-western politician, he willingly went down the road of neoliberal austerity, at the behest of the IMF and Western creditors. State assets were sold off. The rich continued to avoid paying taxes. The political and economic structure remained intact.

In Dhaka, (some) students called for Muhammad Yunus to return from Paris and take the reins of power. Also pro-Western, he has assembled a neoliberal-oriented team. Its ex-IMF employees, in key portfolios, have appealed for $3 billion dollars more from the IMF (on top of the near $5 billion already agreed). The World Bank, USAID and ADB are all promising a few billion dollars on top. The legacy mainstream media has hailed this as success, amidst a ‘Mandela Moment’.

Bangladesh did not default, unlike Sri Lanka. Yet, with a population of 170 million compared to Sri Lanka’s 22 million, it too is facing financial distress. Its people are struggling with high prices, serious lack of jobs, all amid a continuation of obscene levels of wealth inequality.

I wonder how the three student advisers view all of this.

What is the beef with the IMF?

Atul Chandra and Vijay Prashad of the Tricontinental: Institute for Social Research claim that ex-President Wickremesinghe ignored the ‘underlying issues of the protests”. That in 2023, he signed up to a $2.9 billion dollar loan from the IMF. This involved “removal of subsidies for items such as electricity and with a doubled rate of VAT to 18 percent.”. These were regressive moves.

The core point was that “the price of the debt was to be paid by the working-class in Sri Lanka and not the external lenders.” Dissanayake, known as AKD, says that he would like to reverse this equation, renegotiate the terms of the deal, put more pain on the external lenders, increase the income-tax threshold, and exempt several essential goods (food and healthcare) from the increased taxation regime.”

Academics Kelegama and Ruwanpura explain that with the IMF measures, “spending 4.5 per cent of GDP every year on servicing its external debt…amounts to 30 per cent of all government revenue going to service debt”.

The Western agency, the International Crisis Group, warned of the dangers of the IMF overreaching, publishing an article by Alan Keenan on 18 July 2022. He counselled: “the IMF…must be careful not to press for austerity measures that will too deeply undercut popular acceptance and fuel further political unrest”. It seems the IMF didn’t care for caution and did what it always does. The people have responded.

AKD had been waiting for the Parliamentary elections to strengthen his power base. However, many believe he is following the Syriza route in Greece where the leader Tsipras overrode the radical Finance Minister Yanis Varoufakis, and capitulated, condemning his country to austerity and depression. The NPP alliance will probably proceed softly, though it now has an overwhelming mandate. There may be pushback eventually but that would need an alternative source of capital and finance, from, say, China for example. No signs so far.

The China factor

This issue is critical. South Asian media (including editors in Dhaka) have invariably blamed this as a ‘China Debt Trap’ story. But is it?

Reuters figures show that Chinese debt is $4.7 billion. Indian debt is at $1.7 billion and Japan’s is at $2.7 billion. In other words, bilateral debt is near $11 billion. However, total external debt is $37 billion. There is World Bank and ADB debt. It thus covers up the real villains of the piece. The largest chunk of external debt belonged to mainly Western private creditors. According to Reuters, “commercial loans, comprising of sovereign bonds and other time-bound loans, accounted for $14.7 billion”. During the crisis, the price of their bonds plummeted. The IMF formula was designed primarily to bail out Western and Japanese creditors.

Put it this way: the QUAD countries hold the majority of Sri Lanka 's debt, not China. Going forward, in both countries, China will and should eventually be a big player, economically.

Pointers ahead?

Conditions imposed on Dhaka may be less onerous than that unfairly imposed on a vulnerable Colombo, but beware of complacency.

For Bangladesh, the Sri Lankan experience offers two points to deliberate upon:

Firstly, there needs to be more critical awareness in Dhaka about the near $8 billion it expects from the IMF as well as $2.5 billion extra from the World Bank. Conditionalities and obligations must be scrutinised. Right now, they aren’t. At the moment, Dhaka elites paint the Foreign ‘donors’ as professional medics offering paracetamol to alleviate your pain. If only.

Beyond the IMF, there is no debate about the permanent neoliberal economic framework (predating 2009). Most domestic think-tanks and international financial institutions sing the same tune. Economic sovereignty is an unknown concept in Dhaka. The problems start at home, allowing an IMF entry later, after things have fallen apart. Student leaders seem unaware and altogether too trusting of ‘their elders’.

Secondly, the Sri Lankan backlash by one political alliance – fringe a year ago, but now prominent – should be inspiring. When an ancien regime is overthrown, it releases new forces and changes political dynamics. New movements have the chance to think outside the box.

Meanwhile, old school politicians in Bangladesh believe they can sloganise their way to office, if there is any election by end-2025 or early-2026. That might hold today but a year or so from now, will people really flock to a lethargic, ‘nameplate’ party? As an adjunct, the International Crisis Group has just matter-of-factly commented about a possible military takeover. Was there supposed to be a message somewhere? Bangladesh in 2026 is a difficult one to call.●

Farid Erkizia Bakht is a writer and analyst.