The world is facing a global debt crisis largely due to the COVID-19 pandemic, rising costs of food and fuel brought about by the Russian invasion of Ukraine, and impending threats of climate change. In the Asia-Pacific alone, 25 countries are exposed to the food, energy, and debt crisis. As low and middle-income countries experience debt distress, the people are impacted the most, with increasing prices for basic commodities and lack of support for social services. The situation has come to a head in Sri Lanka, labeled as the ‘first domino to fall’, serving as a warning to other developing nations, such as the Philippines, on what’s to come.
Who caused the first domino to fall?
All of the decisions and policies that facilitated the economic crisis of Sri Lanka are caused by one family, the political dynasty of the Rajapaksas. The Rajapaksa family originated from the Hambantota district, where they owned and managed plantations and started to establish their political dynasty by holding local positions for decades. The victory of Mahinda Rajapaksa in the 2005 presidential election and his subsequent re-election in 2010 allowed his brothers, Chamal, Gotabhaya and Basil, to hold key positions in the government. Due to their strategic positions, the Rajapaksa family was able to control 70% of the national budget, along with influencing economic and development policies.
The clan faced serious allegations– cronyism, corruption, human rights violations– which ultimately led to Mahinda’s loss in the 2015 presidential elections. However, they were able to resurrect their rule in the 2019 elections, as Gotabaya was declared president and his appointment of Mahinda as the prime minister. Under the Rajapaksa-led government, Sri Lanka has been subjected to increasing debt, benefitting the ruling family, while contributing to widening inequalities and deepening poverty.
By 2022, Sri Lanka has amassed USD 51 billion in debt, largely from bilateral donors such as China, Japan and India, and international finance institutions like the International Monetary Fund-World Bank (IMF-WB). Last April, it failed to repay USD 78 million, making it the first country in the region to undertake a sovereign default in decades. With the rising costs of food and fuel and as an import-dependent economy, the Sri Lankan government continues to seek a loan of USD 3 billion to cover these expenses.
This large debt was no surprise due to large borrowings by the Rajapaksa government to rescue state-owned companies from bankruptcy, pursuing populist policies, and promoting infrastructure-led development. The financial crisis of Sri Lanka manifests in rising costs and shortage of food, fuel, and medicine. Daily 13-hour power cuts have also affected livelihoods, leading to a decline in incomes, which were already insufficient to tide over this crisis. In the midst of this, the Rajapaksa government has decided to move towards the IMF-WB to solve its debt woes, forwarding a neoliberal approach of privatization and free trade.
Will the Philippines be the next domino to fall?
In the other part of the region, the Philippines also faces the re-establishment of the Marcos political dynasty, with Ferdinand Marcos Jr., son of the late dictator Ferdinand Marcos Sr., winning the 2022 presidential elections. Along with Marcos Jr. is the current president’s daughter, Sara Duterte-Carpio, who also won a landslide victory for vice-presidency.
Filipinos are anticipating that their administration will likely continue policies of their predecessors. Under the Marcos dictatorship, continued IMF-WB programs have accumulated a total of USD 26.7 billion in foreign debt, which the Filipinos are repaying until today. Under the current Duterte administration, debt is already at USD 232 billion. The Marcos-Duterte dynasties are known for their widespread corruption, cronyism, and human rights violations.
The May 2022 national elections is viewed as fraudulent, especially with numerous cases of vote-buying, defective vote-counting machines, and violence. The Marcos-Duterte camp is also known for their massive disinformation campaign, which enabled them to return to power. The reinstatement of Marcos-Duterte in the highest positions of the government further stalls the recovery of the Marcoses’ ill-gotten wealth, the investigation of the International Criminal Court for Duterte’s crimes, and justice for the victims of human rights violations under both regimes.
While the elections and their victory is founded on lies and deception, the superpowers, United States and China, were quick to congratulate Marcos Jr. as the new president of the republic. American and Chinese strategic political and economic interests are to reign supreme over democratic values and processes of developing countries, such as the Philippines.
The continuing competition between American and Chinese forces over the region has allowed for authoritarian and dynastic rule to survive in developing countries. While part of the debt crisis, both also present themselves as the solution to the problem – forwarding neoliberal solutions that will benefit their countries and large corporations. Dictators have historically turned to the IMF-WB to bail them out from large debts, subjecting their national economies to policy conditionalities that hindered people’s development. With the support of the major superpowers and international finance institutions, authoritarian regimes continue to survive and prosper, much to the detriment of democracy, human rights, and development.
Stopping the domino effect and the importance of people’s movements
Furthermore, the current administration of both countries took advantage of the pandemic to restrict freedom of speech and expression, and increase military presence. Under the Rajapaksa-led government, civil society organizations and human rights defenders are subjected to military surveillance and arbitrary detention. The Duterte administration is known for silencing and attacking its critics, jailing and killing activists, lawyers, and journalists. In light of these crises and the increasing trend of shrinking civic spaces faced by the region, people’s movements continue to forge on.
In Sri Lanka, as they faced the economic crisis, the people have undertaken peaceful protests, calling for the resignation of their president and sufficient response to the shortages and high prices of commodities. However, supporters of the Rajapaksa clan have violently attacked the protesters who were camped outside the office of the president. Despite this, they continued to hold protests and cultural nights to raise their demands.
In the Philippines, right after the elections, protests were held to denounce the irregularities and the Marcos-Duterte tandem that was leading the polls. In different parts of the archipelago, people have continued to call out the lack of response of the Commission of Elections towards voters’ complaints, which have hindered them from casting their vote. Victims of human rights violations under the Marcos and Duterte administration have also condemned the return to power of these political dynasties, built on disinformation and historical distortion.
The Reality of Aid-Asia Pacific stands in solidarity with the people of Sri Lanka and the Philippines as they continue to face an economic and political crisis. We support the calls of the Sri Lankan civil society as they pursue accountability from the Rajapaksa government and international finance institutions, who have largely caused the debt crisis and succeeding impacts on the people. The network is also one with the Filipinos in their fight for democracy, rights, and social justice.
Furthermore, we call on donor countries and development actors to put human rights and people-centered development above strategic interests and preservation of diplomatic ties. The network maintains that a democratic country, like Sri Lanka and the Philippines, will remain fragile if not for a people-powered democracy.
Photos from Reuters.