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The Collapse of Sri Lanka: An Abject Lesson in Kakistocracy

Protesters stand on a vandalised police truck at the entrance to the president's official residence in Colombo, Sri Lanka, on Saturday, July 9, 2022. PHOTO: The Guardian/Eranga Jayawardena/AP

An enormous angry mob stormed Sri Lanka’s presidential palace in Colombo on Saturday as its leaders, born of wealth and priviledge, abandoned their posts. Sri Lankan-American President Gotabaya Rajapaksa fled the country and Prime Minister Ranil Wickremesinghe resigned amid the nation’s economic collapse. Rajapaksa will resign on July 13.

Democratic Socialist Republic of Sri Lanka recently defaulted on its sovereign debt and now has zero fuel  stockpiled and zero cash in its coffers to pay the salaries of government employees, including police and military. Most businesses have closed.

Heading back to the United States perhaps? One has to wonder what’s in those bags.

Sri Lanka has been under the control of a dynastic sub-zero kakistocracy that has engaged in a series of policy decisions and ruling “errors” that are straight out of the Davos playbook. To our eyes, this regime is a dead ringer for the Biden posse.

Going forward, the obvious and central question is who will replace this regime, and can the Sri Lankan people hope to overcome the downfall of their economic systems and critical infrastructure. Right now, it appears they are out of essentials.

One measure that led to its downfall was the application of modern monetary theory (aka money printing) as a response to the scamdemic. “Stimulus spending” entered the equation as well as big tax cuts for the wealthy, which gutted its fiscal stability and generated hyperinflation.

The regime initially resisted measures related to Covid but ultimately succumbed to intense pressure to institute economically damaging restrictions.

Sri Lanka is officially a failed state. The environmentalist maggots ramming through their green agenda Trojan Horse in pursuit of a New Underworld Order played a big role. The country went all-in on “green” and destroyed its economy.

Mindbogglingly bad “zero carbon”/environmentalist leadership decisions were made. Organic farming was instituted but before the agriculture sector was equipped and skilled enough to handle such a transition. Its sudden ban on chemical fertilizer has consequently led to large-scale food shortages and exacerbated food inflation.

In 2019, newly elected Sri Lankan President Rajapaksa — whose political party is described as socially right-wing and economically left-wing — unveiled his grand “Green New Deal” vision for Sri Lanka.

Called “Vistas of Prosperity and Splendour,” it outlined a 10-year transition to fully organic farming in Sri Lanka. But what was supposed to be a slow-and-gradual transition turned into a sudden shock (classic sub-zero kakistocracy) when, in April 2021, Rajapaksa announced that starting in one month, the import of chemical fertilizers and agrochemicals would be completely banned. Within seven months, the government had to back down on its “great” reset and revoke the ban; however, significant damage was already done.

Nearly a third of Sri Lanka’s agricultural land remains unused due to the ban, with rice production falling by 20%. Sri Lanka, which previously achieved self-sufficiency in rice, is now forced to import nearly half a billion dollars worth of the food staple. Meanwhile, rice prices for citizens have increased 50%.

The tea industry, which is Sri Lanka’s major commodity for export, has also sustained a massive hit. Thus far, economic losses are estimated at $425 million, further worsening the country’s foreign exchange situation.

Following current world trends, prices of petro have increased three fold in the last eight years, rising from Rs157 per litre in 2014 to Rs470 per litre in 2022.

Sri Lankan leaders also hitched the nation’s economic wagon to costly solar energy and imported large quantities of panels of products from China. As we have seen elsewhere, this is insufficient to deliver sustained energy needs at reasonable prices.

With no food for export, and a plunge in tourism due to Scamdemic lockdowns, Sri Lanka was forced to rely on imports to make ends meet and created large trade-deficit borrowing.

Another sub-zero “error” was borrowing in U.S. dollars. During the last 50 years, the IMF has given Sri Lanka 16 loans. The country has $51 billion in international debt. It also borrowed from the Chinese to build corrupt white elephant projects. This includes a port since foreclosed. Chinese collateralized loans constitute about 10% of Sri Lanka’s debt. In 2015, China renovated Sri Lanka’s presidential palace. Nothing to see here, move along.

Read “White Elephant Projects Provide Boundless Looting Opportunities for Corrupt Kleptocrats”

Fidelity, Lord Abbett & Co. and T. Rowe were among the overseas holders of the island nation’s foreign debt, holding $12.6 billion, according to recently disclosed data compiled by Bloomberg. These are stuffed in emerging-market debt funds that have been butchered of late.

One such project shows the debt-trap vulture capitalism involved. The Hambantota International Port is a deep-water port that opened Nov. 18, 2010. In 2020, it handled 1.8 million tonnes of LPG and dry bulk cargo.

Construction of the port commenced in January 2008. By 2016, it was considered economically unviable. As debt repayment got difficult, the newly-elected government decided to privatize an 80% stake of the port to raise foreign exchange in order to repay maturing sovereign bonds unrelated to the port. Of the two bidding companies, China Merchants Port was chosen, which was to pay US$1.12 billion to Sri Lanka and spend additional amounts to develop the port into full operation. That stop gap sum is long gone.

Here are 15 more developing and emerging countries facing similar fates.

Farmers in Netherlands protest “great reset” restrictions measures levied against agriculture production.

On the insolvent list above comes large protests.

7 Comments on The Collapse of Sri Lanka: An Abject Lesson in Kakistocracy

  1. I’m waiting to hear if the u.s & britain along with the usual “n.g.o” sorro’s types are lurking somewhere in the shadows.

  2. COnVID-1984 plandemic crippling supply chains, food plants on fire, farmers hamstrung by Climate Change hoax quotas, presidential orders not to produce more oil and give away reserves, high oil prices, inflation and now gas plant explosions. Orchestrated Cyberattacks will ramp up. They certainly plan on “Building Back Better” by destroying and killing billions of people.

  3. Thanks for writing a realistic piece on Sri Lanka. I live here for the past 8 years and have been watching systematic and deliberate distraction of economy. I would only add the terrorist attack carried out by the West and blamed on Muslims in 2019 which brought back Rajapaksa family into power. They have imposed military style lockdowns while they printed money for themselves. They have given rescue package to very poor families in April of 2021 which they’ve added to our water bills. So all the money printing was shared along the elite only. They have also destroyed tourism industry beyond belief. US puppets trying to use the country in a similar manner to Ukraine but as a Cold War proxy.

  4. Another sub-zero “error” was borrowing in U.S. dollars.

    Of course this is a mistake, but for developing countries that borrow from organizations like the IMF, there is usually no choice (of currency) — this is also what enabled vulture capitalist Paul Singer to go after Argentina — appropriately, from the Jewish Business News:

    Paul Singer’s $1.3 Billion Judgment Against Argentina Upheld By New York Court Of Appeal

    However using the cricket test match barometer, maybe things aren’t as bad as they seem in Sri Lanka — there is an ongoing test match between Sri Lanka and Australia in Galle:

    Sri Lanka v Australia

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