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Saturday December 10th, 2022

Fun protests to toppling Rajapaksa; covering Sri Lanka’s unprecedented Presidential Palace storming

ECONOMYNEXT – Since May 9, Sri Lanka’s protest at the presidential secretariat had been gradually calming down.

The protest started to oust President Gotabaya Rajapaksa, was reduced to less than two people at the main ‘struggle area’ in front of the main entrance of the presidential secretariat.

Sometimes, the organizers had to play recordings of shouting slogans to show their presence.

However, political leaders misread the change.

They thought that protests died down after the appointment of seasoned politician Ranil Wickremesinghe as Prime Minister.

Middle income earners and urban dwellers were the most affected during the last two months since Wickremesinghe’s appointment.

They faced severe shortages of fuel and cooking gas, and saw food and transport prices hitting record high levels amid a sharp reduction in their real disposable income.

They had to change their transport mode, food habits, food intake, health and children’s educational expenses.

But political leaders never showed empathy about the suffering of the people in general.

President Rajapaksa, using the space he was given by Wickremesinghe’s appointment, said he did not want to resign as a “failed president” and that he will be the president until his tenure ends.

The president’s statement really angered protesters, most of whom believed Rajapaksa’s incorrect fertilizer and economic policies were the key reasons for the current food shortage and economic crisis.

Wickremesinghe’s frequent announcement of the reality – “the next two weeks will be the toughest” also added to the frustration.

And the announcement of no fuel until July 10 was the biggest shock for the people under the new Rajapaksa-Wickremesinghe government.

Results were evident on July 9. Tens of thousands of people, mainly middle class Sri Lankans, swarmed to the capital Colombo despite the fuel shortage, demanding the resignation of President Rajapaksa and Prime Minister Wickremesinghe.

Under the slogan #CountryToColombo, people from all over the island converged at the GotaGoGama (GGG) protest site which was set up three months prior on April 09.

Trains and buses were filled with people dressed mainly in black, chanting battle cries now familiar to all Sri Lankans.

Most of them chanted “Though Gota asked don’t, we came to Colombo”, referring to a sudden police curfew imposed the previous night and lifted at 0800 hours on July 9 amid pressure from the hundreds of lawyers who argued that there was nothing called “police curfew” under the law.

Some crowds came in trucks and lorries. Vehicles stopped to pick up strangers who were walking to the protest site. Not even a debilitating fuel crisis stopped the ocean of people who were all on the way to Galle Face, ready to give a final roaring push to protests that had been largely peaceful and non confrontational.

By around 10 am, there was a large crowd at the GotaGoGama site. Organized groups, families, groups of friends and individuals trickled in. The arrival of Field Marshal Sarath Fonseka caused a stir among the protestors.

“Even though you wear the uniform, in your heart, stay with the people,” Fonseka, the war winning army commander, urged the security forces who were ready to struggle with protesters if they breached into the presidential palace.

His words were met with great cheer and people rushed to shake hands or take photographs.

Elsewhere, the protestors from the Inter University Students’ Federation (IUSF) started to get tear gassed by the security forces. A voice on the speaker asked the crowds at GotaGoGama to go to their assistance, and protesters rushed to show extra support to their fellow comrades.

By 11 am, the real crowds started saturate in the main protest site.

The statue of S.W.R.D. Bandaranayke in front of the Chinese-owned Shangri-La hotel saw a tidal wave of people covering the whole of Galle Road, making their way to the protest site. For such a massive crowd, there was a strange hush in the air with everyone anticipating something historic to take place.

The security in the Presidential Secretariat was also beefed up. Armored, gas masked soldiers and the Special Task Force with riot shields formed an unbroken line in the garden as well as on the steps of the building.

GGG is tear gassed

The mood sobered up with the arrival of two water cannon trucks, but it proved a minor distraction for the crowd, as many of them were now seasoned protestors.

The first tear gas attack on GotaGoGama began at around 11.30 am. For some time, it was chaos, but rather than being cowed, protestors were enraged, and moved forward through the haze of gas to dismantle the barriers on the road that was leading to the central bank and the presidential palace.

The tear gas was ceaseless and protestors started hurling plastic bottles at the soldiers in the Secretariat.

A voice on a loudspeaker pleaded with the protestors “not to fall to their level” and eventually, the bottles stopped being thrown.

Furious chants of “Gota pissek” (Gota is a crazy man), and “Go Home” were chanted as a rallying cry.

Then, through the rain of canisters being thrown at protestors, one flew through the air and landed in the middle of the soldiers in the Secretariat. A protester had bravely lobbed the canister thrown at them like in a climax of a South Indian film.

There was a moment of shock before massive cheers erupted among the protestors.

The soldiers, fazed at first, threw the canister back again, and a strange game of “catch the canister” began.

That was the first victory of the day for the protestors.

The second was the ISUF taking over the water cannon trucks which were ready to disperse the protesters, at around 12.00 noon.

Solitary gunshots were heard shortly after, but protesters were determined and were on the point of no return in their solo mission – ousting President Rajapaksa, by hook or by crook.

There was a frenzy as protestors broke through barriers along Janadhipathi Mawatha. A protester with blood on his face after the clash with security force was rushed away in an ambulance at around 11.54 am.

The last tear gas attack was the most brutal, EconomyNext reporters witnessed, with people coughing and drooling uncontrollably as the gas hit their systems. Many ambulances were seen taking the injured for treatment as thousands of protestors made way for them.

Still the crowd pressed on, and by 12.20 the tear gas attacks subsided, and protestors had taken control of Janadhipathi Mawatha in which both the Central Bank and Presidential Palace are located.

More crowds poured in. Many of the people arriving from Lotus Road in front of the Finance Ministry had been tear gassed.

Fall of the Gates

The first gate at Janadhipathi Mawatha, near the Central Bank of Sri Lanka, was breached at 12.27 pm.

Some protestors climbed over the gates, and after shoving from either side, the first barrier to the President’s Palace was taken down.

The second gate was not breached so easily and multiple rounds of gunfire were heard at approximately 12.41 pm. The shots did not deter the protestors.

Two battalions of security forces attempted to force through the protestors, but the crowd was too large to handle. Near the second gate, protestors on top of the watchtowers and pillars were tear gassed in an attempt to get them to back down.

Some protestors climbed the iron bar fence of the central bank building, but no one was interested in storming the premises.

Nearing the President’s Palace, parts of the road were covered in water from the taps that were broken by protestors looking to wash off tear gas. People were asked to refrain from recording the event as protestors were wary of being identified and targeted.

Storming the Palace

By 1.00 pm, the crowds had entered the President’s official residence through two gates, the side and front. From the entrance hall, people climbed up the staircase and hooted in victory mood. The chandelier was not yet lit and most protestors were still getting their bearings.

“This is our money” protesters said, while some expressed anger after finding that the President had been living a luxury life while the people who elected him died in queues and starved. Protesters cautioned each other to respect the sanctity of the building.

Unanimous, continuous chanting of “Gota Pissek” (Gota is a crazy man) echoed through the walls of the building whose occupants had deserted it, and are still nowhere to be found.

The atmosphere was that of a cricket match stadium and protestors held up National Flags and hung anti-Government banners from balconies.

In the upper floors, protestors inspected every inch of the building.

Some stood on the conference table and held the National Flag.

There were people turning on the numerous air conditioners in the two-century old ancient building.

Some protesters drank king coconuts that were left by Rajapaksa in the Palace kitchen.

In the spacious sitting area, protesters perched on the sofas for a chat while some smoked on the creamy armchairs.

The protesters who were on the front lines and faced tear gas, flopped down to sleep on the presidential bed and floor.

“These bathrooms have AC,” people murmured.

There was amazement, anger, and some laughter about the extravagance with which Rajapaksa had spent his days, just a short distance away from the people who were chanting day and night to oust him for the last 92 days.

Protesters, particularly members of the Bar Association of Sri Lanka (BASL), ran about and urged protesters to stop littering and damaging public property.

A BASL member tried to prevent people from going upstairs, telling them to refrain from unnecessary actions.

There was minimum security in the premises, though some areas were made inaccessible by the Special Task Force.

The floor was strewn with empty biscuit wrappers and pistachio shells in the first 30 minutes after the protesters stormed in. A glass cabinet with china was smashed, but the pottery was intact.

Downstairs, protesters took a picture off of its frame. More glass littered the floor.

Many people ran about in a frenzy, asking protesters to conduct themselves decorously.

By 01.30 pm, people were walking in to observe the palace, and the earlier tension had completely eased.

Some bathed in the Presidential pool with a party around it. Many were seen taking pictures and one protester was seen bathing outside the pool with soap all over his body.

Some had their historic lunch at the Presidential Palace. Small groups dotted about the spacious grounds. The President’s sizable, wildly expensive vehicle collection was looked at with a mixture of awe and anger.

“This is what they’re doing with our money,” protesters said.

A short while after the President’s Residence was taken over, protesters entered Presidential Secretariat building where Sri Lankan presidents held cabinet meetings with ministers.

Then they headed towards Temple Trees, the official residence of the Prime Minister.

Heading back from the Presidential Palace was a task and people were simply dragged along by the tide of protesters who arrived en masse to visit the unoccupied official buildings.

There was a distinct taste of victory in the air that evening, but setting Prime Minister Wickremesinghe’s private house fire tainted the protesters’ claim of non-violent agitation.

The incident took place after the privately owned Sirasa TV’s journalists were attacked by security forces near Wickremesinghe’s residence, which contained thousands of historical books and artworks.

“Even while storming the palace, we tried to preserve the place. So for the day to end with violence is saddening,” a protester said.

Later, both President through the Speaker and Prime Minister directly announced that they will resign, the key demands of the people’s struggle.

The 92-day protest saw the protesters reaching their goal in the form of promises from the leaders, at the expense of over 100 protesters who were injured that day due to clashes with security forces.

Protesters are still holding on to the President’s Palace, President’s Secretariat and Temple Trees, saying that the places will not be vacated until President Rajapaksa officially hands over his resignation.(Colombo/July 12/2022)

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Sri Lanka opposition MP sees racist agenda behind behind pro-China demonstration

TNA MP Shanakiya Rasamanickam – Image credit: Facebook

ECONOMYNEXT – A protest held outside the Chinese embassy in Colombo against opposition legislator Shanakiyan Rasamanickam was likely the work of a paid group with little knowledge of Sri Lanka’s crisis and pushing someone else’s racist agenda, the MP said.

Rasamanickam told EconomyNext on Saturday December 10 that the protestors were peddling a familiar narrative of racism.

“These people are clearly on a racist agenda. We know how this agenda plays out and we know who is behind it from before, so it’s not anything new. People can connect the dots and figure out who might be behind this protest,” he said.

The hurriedly put together demonstration seemed to be against Rasamanickam’s controversial warnings of anti-China protests in Sri Lanka over Beijing’s purported reluctance to restructure the crisis-hit island nation’s debt.

A small group of protestors including a number of Buddhist monks had gathered outside the embassy premises on Friday December 09 condemning Rasamanickam’s statement in parliament that people will take to the streets against China in a “go home, China” wave of protests similar to the “go home, Gota” protests that unseated Sri Lanka’s powerful former president Gotabaya Rajapaksa.

“I was actually very happy to see a protest happening against me in Colombo. This is the first time there was a protest held against me,” said Rasamanickam.

I”f you look at the group that were protesting, they are quite unaware of the current economic situation in the island,” he added.

One banner displayed by the pro-China protestors contained the words “let us strongly condemn the ‘Go home China’ statement by separatist Rasamanickam” in Sinhala, though the organisers had been careful to omit the word ‘separatist’ in the English translation of the slogan.

It is unclear at present who was behind the protest, but a placard carried by one of the protestors read “is this going from anti-Gota to anti-China”, indicating the possible involvement of pro-Rajapaksa elements.

“It looked like a paid  group of people who came with no knowledge of the country’s situation and was completely under the agenda of somebody else,” said the MP.

The Batticaloa district lawmaker claimed that some people had offered to organise a counter-protest against the pro-China demonstrators but he declined the offer.

“I refused it because the citizens aren’t silly. They are aware of their surroundings and what is going on, so we need not protest in that way,” he said.

A commotion also ensued at the demonstration when a woman started recording it on her mobile phone, prompting some of the protestors to demand that she leave. Words were exchanged, with the visibly agitated woman yelling at the protestors that they were conspiring to sell Sri Lanka to China.

What triggered the protest was an explosive remark by MP Rasamanickam on December 02 that if China were a true friend of Sri Lanka’s, it would agree to either write off the island nation’s 7.4 billion dollar debt or at least help restructure it.

Nearly a fifth of Sri Lanka’s public external debt is held by China, according to one calculation.

“If China, who has nearly 20,000 billion dollars, is truly Sri Lanka’s friend… offering 9 million litres of diesel or half a million kilos of rice isn’t real help,” said Rasamanickam, speaking in Sinhala.

“I say to China and the Chinese embassy that, as 22 million Sri Lankans irrespective of ethnic or religious differences got together to say ‘Go home, Gota’, don’t push us to a place where we will be saying ‘China, go home’,” he said.

Whatever the agenda behind Friday’s protestors, they are not alone in their opposition to Rasamanickam’s strong words against China. Main opposition Samagi Jana Balawegaya (SJB) MP Harsha de Silva was strongly critical of the statement, insisting that Sri Lanka cooperate with all countries.

Rasamanickam told EconomyNext that his words were misrepresented.

“What I said was ex President Gotabaya Rajapaksa didn’t listen to the voices of the people and people ended up saying ‘Gota Go Home’ and if the Chinese fail to address the issues and act in the interest of the Sri Lankan community, naturally people will start opposing them also. If that happens, I simply said that I will support them because for us our country and our people are the priority,” he said, adding that his speech had raised awareness among the public of the situation.

The MP has been raising his voice in parliament and elsewhere in recent days over what he claims is a hesitance on the part of China to assist in Sri Lanka’s debt restructuring efforts. The 2.9 billion dollar extended fund facility (EFF) that the International Monetary Fund (IMF) has offered to extend to the island nation is contingent upon the successful restructure of this outstanding in addition some stringent reforms that experts say are long overdue.

Colombo has been vague at best on the status of ongoing restructure talks with Sri Lanka’s creditors, and opposition lawmakers and others have expressed concern over what seems to be a worrying delay. Rasamanickam and others have claimed that China, Sri Lanka’s largest bilateral creditor, is the reason for the apparent standstill.

Meanwhile, IMF Chief Kristalina Georgieva has called on China to speed up restructuring of debt in Sri Lanka and Zambia following a meeting with the leaders of the country.

“We had a very fruitful exchange, both on the G20 Common Framework and on some specific cases,” she said in a statement after the meeting.

“We need to build on the momentum of the agreement on Chad’s debt treatment and accelerate and finalize the debt treatments for Zambia and Sri Lanka, which would allow for disbursements from the IMF and multilateral development banks,” she said. (Colombo/Dec10/2022)

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IMF chief calls on China to speed up Sri Lanka, Zambia debt overhaul

ECONOMYYNEXT- International Monetary Fund Chief Kristalina Georgieva has called on China to speed up restructuring of debt in Sri Lanka and Zambia following a meeting with the leaders of the country.

“We had a very fruitful exchange, both on the G20 Common Framework and on some specific cases,” she said in a statement after the meeting.

“We need to build on the momentum of the agreement on Chad’s debt treatment and accelerate and finalize the debt treatments for Zambia and Sri Lanka, which would allow for disbursements from the IMF and multilateral development banks.”

Sri Lanka is discussions with the Export Import Bank of China as the lead lender to the island, State Minister Shehan Semasinghe told parliament.

China has informed Sri Lanka that they will also hold bilateral discussions with the IMF and World Bank he said.

China has been asking questions from Sri Lanka and lenders were trying to assess the impact on credits to other countries as well as the domestic economy, he said.

China is a top lender to Sri Lanka along with Japan, the Asian Development Bank and Japan.

Some of China’s infrastructure loans have also been questioned for lack of proper feasibility, though a coal plant is generally acknowledged to be best investment the country has made since the 1980s and is enough to cover many since.

But China gave several so-called ‘cover up loans’ to Sri Lanka which was not linked to infrastructure or economic reforms when the country ran into forex shortages under ‘flexible inflation targeting/output gap targeting’ compounding borrowings from sovereign bond investors.

Sri Lanka calls such monetary instability linked borrowings ‘bridging finance’.

The World Bank and Asian Development Bank or Japan does not give such ‘bridging finance’ or budget support loans without reforms to expand economic activities.

Sri Lanka central government net debt (after deducting foreign reserves) which was 17 billion US dollars after almost 65 years of foreign borrowings shot up to 32 billion US dollars over 7 years of extreme monetary instability. Meanwhile foreign reserves became negative.

Resorting foreign borrowings to meet foreign repayments comes from a Mercantilist fallacy known as the ‘transfer problem’, analysts have said.

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Sri Lanka debt crisis trapped in spurious Keynesian ‘transfer problem’ and MMT: Bellwether

Policy makers believe that a current account surplus is magically required to make foreign repayments and not higher interest rates to curtail domestic investments and consumption which make resources available to meet such payments which will in turn reduce the imports and any current account deficit. (Colombo/Dec10/2022)

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Sri Lanka has excess rice amid malnutrition: President

ECONOMYNEXT – Sri Lanka is to harvest a good rice harvest in the upcoming main (Maha) cultivation season but paddy stocks from two previous seasons are still with farmers and collectors, President Ranil Wickremesinghe said.

“I see now that we will get a good harvest in the Maha season,” President Ranil Wickremesinghe told parliament.

“That is also a problem, because we have some leftover rice stocks from the recent Yala (minor) season and the previous Maha season.”

“Now there can be situation of excess rice, we have to protect the farmers. On the other had we will have food to reduce malnutrition.”

Sri Lanka’s rice farmers do not grow and internationally traded grade of rice and bumper harvests do not lead to export booms but calls for trade restrictions on the hungry and helpless to ‘protect’ their incomes.

Rough rice (paddy) prices have fallen to around 80 rupees a kilogram, from over 120 rupees at the height of the crisis earlier in the year when large volumes of money was injected to the banking system to sterilize interventions and pay state workers.

Food Price Crisis

Though supplies are coming back to normal, because soft-pegging macro-economists destroyed the rupee from 200 to 360 to the US dollar by printing money for two years to keep interest rates down, prices are double before from the liquidity injections or ‘stimulus’ started.

The malnutrition is coming from monetary instability involving the collapse of the anchor-conflicting ‘flexible exchange rate and not a problem in the real economy as excess food supplies show.

Related Impoverished Sri Lankans are selling assets, eating less: WFP

Sri Lanka’s chicken farmers are also looking for export opportunities.

Related Sri Lanka chicken farmers eye exports as domestic prices drop

Sri Lanka is now in the worst the worst currency crisis triggered it the history of its intermediate regime (flexible exchange rate) central bank.

With salaries not keeping pace, incomes many sectors, mostly salaried workers including daily wage earners are too low to afford food whether or not they are plentiful, leading to malnutrition especially of the children of poor families.

The phenomenon has a been a recurring problem in the country after the soft-pegged central bank was set up 72 years ago.

Before 1980, when depreciation became fashionable in Washington policy making circles (now called a flexible exchange rate and BBC policy at that time), import controls were the main threat to food supplies, not soaring prices and lagging wages.

Food Trade Controls

In the 2022 currency crisis soft-pegging macro-economist in a mistaken strategy then banned ‘open account imports’ threatening food supplies ranging from lentils to onions and sugar to wheat that usually come from South Asia and Dubai, driving up prices.

But Wickremesinghe then opened account imports, preventing a real food crisis from taking place, allowing money flowing through traditional gross settlement systems (Undiyal/Hawala) to be easily prioritized for food.

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Sri Lanka can trigger food shortages as in medicines with new trade controls

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Food imports in Sri Lanka are only around 100 to 150 million dollars a month which is about third of monthly worker remittances and about 10 percent of total exports.

However the central bank under Governor Nandalal Weerasinghe took the required action to liberalize rates allowing credit to slow and stabilize the external sector.

The government also raised energy prices to keep in line with flexible exchange rate collapse (also a recurring phenomenon) and raised taxes to reduce domestic credit (also recurring action).

President Wickremesinghe and his advisors focused their efforts on getting loans from foreign lenders to buy fertilizer for farmers after he took over as Prime Minister and later President.

Fertilizer supplies are important in a currency crisis not just to produce food as normal but the construction sector usually has to be smashed to stop balance of payments deficits and to stop the rupee from falling further.

When rural workers engaged in construction return home to farming areas availability of fertilizer will help them keep in employment.

Open Market Injections

Construction and other sectors undergo an artificial boom when a soft-pegging central bank suppresses rates with its open market operations and sells downs reserves when the currency peg comes under pressure.

Selling reserves and printing money through open market operations to stop rates going up – an action called ‘sterilized intervention’ – effectively injects what classical economists called ‘fictitious capital’ into banks and artificially pushing up credit and imports further by effectively re-financing private sector activities with central bank credit.

The new money to sterilize interventions over-extending a credit cycle and encourages more imports.

In the current crisis Sri Lanka’s Consumer Affairs Authority, by imposing price controls, disrupted sectors like poultry sector and created black markets.

President Wickremesinghe has so far not taken any actions to abolish the CAA or its price controlling powers which goes against his ‘social market economy’ strategy. (Colombo/Dec09/2022)

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