Asanga Abeyagoonasekera, a geo-political analyst from Sri Lanka, said that China’s loan model to Sri Lanka is ambiguous while no one knows the interest rate charged by Beijing for the money lent to the island nation.
While speaking with South Asian Voices Deputy Editor Sunaina Danziger and Associate Editor Isha Gupta on the current economic crisis in Sri Lanka, the advisor, “China is not the only cause of the economic crisis. But one of the concerns, which is a considerable one, is that China will give one billion dollars to Sri Lanka to settle their own loans. This is the first time I have heard this model where you give loans to settle your own loans. Even what interest rates are being charged are not known by anyone.”
He highlighted that Sri Lanka faces a strategic debt trap, missing from the existing discourse in the country on Colombo’s relationship with China. “The strategic trap has three elements to it. One is China’s assistance to the Rajapaksas’ political party, the Sri Lanka Podujana Peramuna (SLPP). China provides gradual assistance to move away from the democratic model to supporting an autocracy,” he said.
The analyst also stressed that another issue is the human rights aspect, of which the Sri Lankan case is a very clear example there. “China supported Sri Lanka in the Human Rights Council during accusations of war crimes, and Colombo supported Beijing against allegations of human rights issues in Xinjiang. The third is China’s support for the Sri Lankan military and surveillance system,” he added.
People are angry and sad about their living conditions, and past foreign policy decisions definitely had an impact, he replied while talking of the current situation in Sri Lanka.
He also said that India was one of the first countries to give Sri Lanka economic assistance. India provided about USD 2. 5 billion to Sri Lanka.
Sri Lankan President Gotabaya Rajapaksa on Monday appointed 17 Cabinet Ministers even while anti-government protests continue to pick steam following the economic and political crisis in the country.
Sri Lanka’s economy has been in a free-fall since the onset of the COVID-19 pandemic, leading to the crash of the tourism sector. Sri Lanka is also facing a foreign exchange shortage, which has affected its capacity to import food and fuel.
The shortage of essential goods forced Sri Lanka to seek assistance from friendly countries. The economic situation has led to huge protests with demands for the resignation of Prime Minister Mahinda Rajapaksa and President Gotabaya Rajapaksa.
Earlier, Prime Minister Mahinda Rajapaksa in a special address to the nation had requested people to remain patient and stop taking to the streets in order to enable the government to resolve the situation.