China Blames America for Socialist Sri Lanka’s Belt and Road Debt Disaster
China’s state-run propaganda newspaper Global Times on Wednesday blamed American sanctions on Russia due to the war in Ukraine for Sri Lanka’s increasingly dire economic disaster – a disaster greatly exacerbated by the country taking out predatory loans from China.
The Global Times acknowledged the loans and Sri Lanka’s enthusiastic participation in the Belt and Road Initiative (BRI), a global plan to erode the sovereignty of impoverished states by offering predatory loans to be used to pay China for infrastructure projects. In Sri Lanka, the government was forced to hand over its critical Hambantota seaport to the Communist Party in 2017 after it defaulted on its prodigious debt to China, and still struggles to make its payments to Beijing.
Nationwide protests have rocked Sri Lanka in the past month as the price of living soared, hospitals ran out of medicine and canceled surgeries, gas stations ran out of fuel, and markets grew increasingly empty. Protesters have attempted to storm President Gotabaya Rajapaksa’s home and have now established a permanent protest camp demanding he, Prime Minister Mahinda Rajapaksa, and every Rajapaksa family member in government resign.
Regarding the Rajapaksa family, Gotabaya and Mahinda are brothers, and another 40 Rajapaksas have enjoyed national government posts in the past decade. They have dominated Sri Lankan politics since Mahinda, as president, ended the 26-year war between the government and the Tamil Tigers organization.
Protesters routinely condemn the Rajapaksa oligarchy for overspending, borrowing too much from China, and now failing to have enough money to secure basic food and medicine supplies. As Sri Lanka is a “democratic socialist” republic, Colombo – and not private corporations – is responsible for said purchases. No protest against the government has displayed any significant opposition to the United States, nor has the opposition movement cited America as a meaningful actor in the crisis in any way.
The Rajapaksa regime announced this week that it would default on its foreign debts to use the money that would have gone to those payments to buy food and medicine.
The Global Times made the effort to tie the Sri Lankan socialist crisis to Washington and, bizarrely, Kyiv, claiming that Russian sanctions had devastated the Sri Lankan economy.
“The Russia-Ukraine conflict and the US-led economic sanctions against Russia may have further aggravated Sri Lanka’s economic plight,” the Chinese state outlet asserted this week. “The deteriorating economic crisis in the South Asian nation is a typical example of how emerging economies, especially those small and vulnerable ones, are suffering from the shocks from the reckless Western economic sanctions.”
“While the West claimed their sanctions are against Russia, they are seriously harming the interests of developing economies and may even cause a widespread humanitarian crisis,” the Global Times claimed.
The outlet added that the Sri Lankan crisis should “serve as a wake-up call for the global economy, especially the developing world, that is exposed to the growing external risks from geopolitical turbulence instigated by the US-led West.”
“China certainly does not want to see Sri Lanka stuck in an economic crisis and would help wherever it can, especially when it comes to addressing its economic challenges,” it continued. “However, in a broader sense, developing countries, especially those in the Asia Pacific region, should step up and work jointly to fend off risks posed by toxic policies pushed by the US and its Western allies.”
The Global Times admitted that most objective international observers consider the BRI and China’s debt traps a meaningful contributor to the Sri Lankan economic crisis but called such an observation “shortsighted,” “unreasonable,” and “groundless.”
“The debt composition of the South Asian nation is very complicated and its outstanding external debt is mainly owed to international markets. China is only Sri Lanka’s fourth biggest creditor, behind international financial markets, the Asian Development Bank and Japan,” the state propaganda newspaper contended. “So it is unreasonable and groundless for some forces to hype up Chinese debt as a major cause of Sri Lanka’s economic crisis while turning a blind eye to other major creditors.”
The Global Times nonetheless acknowledged that Sri Lanka’s Belt and Road efforts were “massive.” However, rather than noting them as needless expenses, the Chinese outlet insisted the BRI was “crucial for the country to integrate into the global value chain.”
China’s defense of its relationship with Sri Lanka follows offering it a $1.2 billion loan in 2009 that directly resulted in the seizure of the Hambantota port – an especially important asset given that the island nation relies on imports of key supplies. The seizure grants China control of the port for at least 99 years but potentially as many as 198. It also follows reports that China is offering to “help” Sri Lanka with yet another predatory loan, potentially valued at $1.5 billion, according to Reuters.
The permanent protest encampment, now dubbed “Gota Go Gama” for its demand that President Rajapaksa and his relatives all resign, refused an offer from Gotabaya Rajapaksa this week to meet and discuss their concerns. In a letter to the president on Wednesday, the group notably omitted any references to America or the war in Russia; its main demand was for the Rajapaksas to leave power.
“[I]n a letter sent to Rajapaksa, a group of protestors said they were not ready to meet him unless President Gotabaya Rajapaksa resigns and all Rajapaksa members leave the government,” Sri Lanka’s Daily Mirror reported. “In the second demand, the protestors specifically ask for the Prime Minister and all other Rajapaksa members, namely Chamal Rajapaksa, Basil Rajapaksa, Namal Rajapaksa, Shashindra Rajapaksa and Nipuna Ranawaka to step down from all government posts immediately and also leave Parliament.”
Opposition journalists have similarly not included the Russian war in their complaints regarding government expenditures.
“Their [the Rajapaksa family’s] plunder has caused the country dearly,” columnist Vishwamithra wrote in the Colombo Telegraph on Wednesday. “[C]ommissions ill-earned from excessive borrowings from China for construction and improvement of infrastructure facilities in the country are not merely a catchword coined by the Opposition; it’s an authentic expression of a defined set of expenditures undertaken for and on behalf of the land they preside over.”
“Ever since Mahinda came to power in 2005, the unrestrained spending they committed to has now come to eat them alive,” Vishwamithra continued. “The fundamentals of balancing a budget have evaded them and instead of those who committed that mortal sin, it’s the country and its inhabitants who have to suffer scarcities and brutal living conditions.”
Outside of the protest movement, the health worker community has condemned the government for giving so much money to China that it can now no longer afford medicine – again not referencing the war in Ukraine in any way.
“They overspent on the Chinese [coronavirus] vaccine; thrice more than what the Chinese Government spent on other countries. As such, all these haphazard and hasty decisions have contributed to the prevailing crisis,”Government Medical Officers’ Forum President Dr. Rukshan Bellana told the Mirror this week.
“A sum of Rs. 61 billion [about $190 million] was allocated for health during the previous budget, but now former State Minister Prof. Channa Jayasumana reveals how much of this was spent on health,” another doctor, All Ceylon Medical Officers Association General Secretary Dr. Jayantha Bandara, told the Mirror. “Now he says there’s no money. Compared to other countries the per head expenditure for health in Sri Lanka is almost negligible. Almost all drugs, devices and reagents are being imported.”
“Almost all reagents are being imported. Even though we produce gauze and other items, the raw materials are being imported. Another 60 drugs are being locally manufactured, but here again, the raw materials are being imported,” Bandara observed.
As Sri Lanka is a “democratic socialist” state, there is no robust private healthcare system for those who do not belong to the wealthy elite.
The government has denied any concerns about medical supplies.
“There’s no acute shortage of drugs and the Ministry is managing the issue at the moment,” Health Minister Keheliya Rambukwella, who abruptly resigned this month along with all other cabinet members who are not Rajapaksas, claimed.
On Thursday, the Health Ministry, now under different management, finally acknowledged the shortages, which include both medicine and key hospital equipment.
