Sri Lanka, A Cautionary Tale

Economic liberalism facilitated Sri Lanka’s (Colombo’s) development into a modern state. However, corruption, plus an inability to repay its debts or replenish its stock of foreign reserves, has damaged Columbo’s credibility, and compromised its sovereignty. Sri Lanka is currently on its 17th IMF bailout despite the fact that it has not yet fulfilled the terms of any of its 16 predecessors. The Westernised institutions of the Bretton Woods system have pressured Colombo into adopting radical changes—at breakneck pace. Economic influence from the East has also come with strings attached. Mercantilist lenders from the People’s Republic of China, trusting in geopolitics more than in usurious interest, have established a network of special economic zones. These zones provide an invisible screen of securities implicitly backed by sea power. If Sri Lanka is to craft policy in the light of its most recent economic crisis, then it must chart a middle course between East and West; between short-term solvency, and long-term sovereignty.