At the height of India’s involvement in its southern neighbour’s domestic affairs, newly-elected Sri Lankan President Ranasinghe Premadasa, just nine months in office, declared in a speech in 1989 that “we will never compromise our sovereignty or sell our independence to anyone”. He made sure his message hit home when he in the same breath declared: “However far, however close, or however powerful any nation may be, it has no right to maintain an unwelcome presence on our soil.”

That things have come full circle 34 years later is obvious to any discerning student of regional geopolitics. Today, based on what appears to be a unilateral decision of the current President, vast swathes of the Eastern Province, including the ‘apple’ of Big Brother’s eye for long – Trincomalee – are being earmarked to be ‘developed’ by various Indian entities. As is to be expected, the collective Opposition is up in arms over the secrecy surrounding this vast ‘development’ that is being envisaged – second only to the mega Mahaweli project, to quote the President himself – with both Cabinet as well as Parliament claiming no knowledge of it.

However, from what has been revealed thus far through the media, a Government-to-Government deal has been reached on renewable energy projects in Mannar and Pooneryn, which in fact have been on the drawing board for quite some time. However, what is intriguing is that this supposedly Government-to-Government project is to be executed by the controversial, privately-owned Adani Group, sans any competitive bidding process – understandably raising quite a few eyebrows. It is speculated, based on the President’s statements so far, that not only Trincomalee, but the entire eastern coastal stretch down to Panama in the south east, including the popular tourist destination of Arugam Bay, have been earmarked for ‘development’.

It doesn’t take a genius to figure out that Big Brother is flexing its diplomatic muscle to counter the Chinese-led ‘development’ of the south, more specifically in Hambantota. The widely-held belief that the Chinese intentions were less than noble are being confirmed, with ‘research’ vessels turning up on a regular basis. Therefore, what used to be a cloak-and-dagger game of geopolitics between the two Asian Tigers, is now an open battle of wits being fought not only in the corridors of power in Colombo but also in the seas around the country and the negotiating tables of the regional powers.

That the Chinese are less than pleased with the status quo, namely the IMF-driven debt restructuring programme, is evident from their continued disagreement with the roadmap in place, with Beijing non-committal on a haircut as well as insisting on agreed upon repayment timelines compared to the flexibility of other bilateral lenders. The cat-and-mouse theatrics appear to be reaching a climax, with VIPs from both nations competing with each other for Colombo’s attention.

That Sri Lanka is well and truly caught up in a diplomatic wrangle born out of its economic crisis is now beyond argument. As a result of Sri Lanka’s capitulation to the external debt crisis, exacerbated by Chinese credit on white elephant projects, the unlikely beneficiary of the crisis appears to be New Delhi, which sniffed an opportunity and sprang to Sri Lanka’s rescue following its declaration of bankruptcy.

All indications are that payback time has arrived, with Big Brother going to the extent of even specifying what pleases it – from a bridge connecting the two nations and power supply from South India, to dominance in the north and east through thinly-veiled ‘development’ endeavours. Our political establishment, bar late Foreign Minister Lakshman Kadirgamar, who had the knack to see through most things and could zoom out in order to see the big picture, has been no match for the viceroys of the new world, who specialise in political opportunism that delivers far greater value than raw military power of the past.

It is in this backdrop that Sri Lanka now has its work cut out to put its house in order so that it can stand on its own someday. However, that will be easier said than done, with every ploy being employed by those with vested interests to prevent this nation’s economic independence. After all, an economically-dependent Sri Lanka will be far more ‘useful’ than an economically-independent one. Therefore, the billion-dollar question is whether our leaders are equal to the Herculean task at hand.

A quick glance at the economic performance dashboard over the course of this year is all that is required to confirm that that is not the case. The nation is still plunging deeper into debt with no sign of the brakes being applied. To underline the fact, Sri Lanka’s public debt that stood at $ 84 billion at the end of 2022 has within six months shot up to $ 96 billion by end June 2023 – a growth of 14% in just 180 days.

Add to that a budget deficit that has increased by Rs. 34 billion in the first half of this year compared to the same period last year, in a scenario where the economy shrank by 11% in the first quarter this year despite zero debt repayments. Yet, the domestic debt ceiling has increased by Rs. 9 trillion during this period despite entities such as the World Bank and the EU having provided substantial grant aid in the first half to assist those most vulnerable to the crisis, meaning that the State saved on payments to the poor.

Therefore, the big question is, notwithstanding the veneer of ‘normalcy,’ what is being done to fix the problem, short of the same old strategy of extending the begging bowl? Income expenditure disparity is currently estimated to be averaging close to Rs. 1 billion a day, which is bridged through ballooning domestic debt in a contracting economy. Industry and manufacturing data shows a continuing decline, with hundreds of jobs on the line. While there is minimal data available on unemployment, inflation is supposed to be down to single digits, despite there being no corresponding reduction in consumer prices.

During negotiations for the bailout package, the IMF drew attention to the UNHRC resolution adopted in 2022 that called for the Government to identify and prosecute those responsible for what it termed as ‘economic crimes’ – the root cause of the country’s bankruptcy. With the first IMF review post bailout now just a week away, there has been no action to investigate any of the officials who held office in the run-up to bankruptcy. Further highlighting the state of apathy in ensuring financial discipline, it has been reported that hundreds of vehicles have been imported, defying the import ban yet in place.

Policy inconsistency and ad hoc decision-making are further ruining prospects of long-term economic recovery. Take for instance the decision to import 92 million eggs at a time when the regime is discouraging imports. The least it could have done was import chicken feed instead of eggs, which would have helped the local poultry industry get back on its feet and fulfil the market requirements as before. Now the local industry is on life support and what of the thousands whose livelihoods are at stake?

If Sri Lanka is to stand on its own and free itself from the shackles of external domination, then there is only one way to go about it: wean itself off of debt. A tried-and-tested method is to facilitate local industries that will not only fulfil domestic requirements but also bring in export revenue. The nation’s sovereignty is therefore dependent on its economic independence – the achieving of which is in the hands of its policymakers.