Fourteen countries, including the United States and the United Kingdom, have called on Sri Lanka to directly oppose Russia’s military aggression against the Ukrainian people.
Diplomats, including Ambassadors and High Commissioners representing the respective countries in Colombo, have issued a joint statement containing this request.
Relevant diplomats have called on the Sri Lankan government to provide verbal support for Russia’s invasion of Ukraine in accordance with UN Charter and international law.
Diplomats from the United States, Great Britain, Australia, Canada, France, Germany, Italy, the Netherlands, New Zealand, Norway, Japan, Romania, Switzerland and the European Union have issued this joint statement.
The Indian subcontinent is the largest target market for the $ 1.12 billion Port City Colombo, which will build on ongoing political alignment between Sri Lanka and India to offer key opportunities to Indian businesses, said the Head of the Commission overseeing the project.
The Colombo Port City Economic Commission Director General Saliya Wickramasuriya told Hindustan Times in an interview that the project will offer opportunities to Indian players that already have a presence in Sri Lanka and to those making their maiden foray into the island nation. He highlighted the separate laws being enacted for the Port City and bespoke business solutions as its main attractions for Indian investors.
“With the changing economic circumstances both here and overseas, our target market is shifting slightly and the value proposition has to change accordingly… While there is recovery, there are still economic constraints everywhere and there are political disturbances everywhere,” Wickramasuriya said.
“So, what we’re looking at here is building on the relationships that already exist with entities who have invested in Sri Lanka. In particular, the Indian subcontinent is by far our largest target market,” he added.
The Commission wants the “Port City to be an international city” but it is also looking at more detailed, bespoke and customised solutions to “create value propositions for key anchor investors,” Wickramasuriya said.
Port City Colombo is being implemented by China Harbour Engineering Company, part of the China Communications Construction Company, to create a city on 269 hectares of land reclaimed from the sea and extend Colombo’s central business district. The developers of the project are hoping it will benefit from a recent increase in economic cooperation between India and Sri Lanka.
The Indian side has provided Sri Lanka a $ 500 million line of credit for purchasing fuel and a currency swap of $ 400 million under the SAARC facility. It has also deferred the payment of $ 515 million due to the Asian Clearing Union.
The two sides also finalised the long-gestating project to refurbish and develop the Trincomalee oil farm, a storage facility with a capacity of almost one million tonnes.
Saliya Wickramasuriya acknowledged the economic problems currently being faced by Sri Lanka but was upbeat that the growing political alignment with India will benefit the project.
“I think bridges are being strengthened on the political front, which is good because it’s something we should do and keep doing with India, our oldest and biggest trading partner and also home to our largest contingent of arriving visitors,” he said.
Highlighting the port city’s potential for commercial and retail activities, he added: “There’s a lot of potential for Indian businesses to move one step closer to the world by coming to Sri Lanka, because a lot of Indian goods get trans-shipped through Sri Lanka… So, this is why we are offering an international financial centre concept in a very convenient physical location for businesses that are in the goods and services movement business.”
The Colombo Port City Economic Commission is currently working on a set of 10 key policy frameworks and regulations – including regulations for banking and finance, setting up and winding down businesses, immigration, and dispute resolution.
“Those regulations are being drafted and we are sealing up the ease of doing business indicator types. I would say by the end of April, we should be able to roll out our drafts to the market…,” Wickramasuriya said.
When Gotabaya Rajapaksa became president of Sri Lanka in 2019, he inherited an economy in bad shape. Terrorist attacks and political crises had hit the country hard. Growth was at its lowest since 2001. Tourist arrivals—a big source of foreign currency—were down by nearly a fifth after steadily rising for a decade
The new president quickly got to work. He and his ministers—the most influential ones are his brothers and nephews—cut taxes and started printing money. Inflation duly rose, tax collections plummeted and the budget deficit widened.
In the meantime tourism was hit by an even bigger shock than terrorism, in the form of covid-19. Even as foreign-currency receipts plunged, import bills were climbing, thanks to the global rise in commodity prices. A man of action, Mr Rajapaksa responded forcefully, albeit quixotically, prohibiting the import of motor vehicles in 2020. Last year he banned (imported) chemical fertilisers, ostensibly for public-health reasons, before the impending collapse of farming forced a reversal.
With inflation already high and the government’s prestige on the line, the central bank resisted a devaluation, instead burning through its foreign-exchange reserves. Dollars became hard to come by, impeding imports. That, in turn, led to shortages of diesel and cooking gas. The lack of fuel also crippled electricity generation which, because of a drought that has diminished output from hydropower plants, is increasingly dependent on oil and coal. The electricity board initiated rolling blackouts in February of up to seven-and-a-half hours a day. Many small businesses stopped work, unable to cope with gas shortages, power cuts and rising prices.
On March 7th the central bank gave up: having maintained a rate of 200 rupees to the dollar for five months, it devalued by 15%. A few days later it allowed the rupee to float. The currency slumped by a further 15%, to 265 rupees to the dollar.
By raising the cost of imports, the devaluation will exacerbate the main way in which this fiasco impinges on the lives of ordinary Sri Lankans: inflation. As it was, prices rose by more than 15% year-on-year in February, a 13-year high. Food prices leapt by more than 25%, double the rate six months earlier.
The cost of everything has shot up, including basics such as lentils, milk powder, sugar and wheat flour. Fares on planes, trains, buses and even autorickshaws have surged. State-mandated prices of dozens of medicines, including paracetamol, have been raised by 29%. The most shocking increases are for fuel. On March 12th the state-run oil-and-gas body pushed up the price of petrol by 43.5% and that of diesel by 45.5%. “I don’t blame the rulers. I blame the people who voted for them,” says Gayan Prasad, who works as a driver.
Further upheaval is inevitable. Sri Lanka’s dollar reserves shrank to just $734m at the end of February. Yet it is supposed to come up with $6.6bn, mostly denominated in dollars, in debt and interest payments this year. Multiple credit-rating downgrades have left it unable to borrow. After months of resistance, the government is seeking the imf’s help. A debt restructuring looms.
Anger is mounting. Candlelit vigils demanding “Gota go home” have taken place in several towns. “How come we are the only country in South Asia to show negative growth?” asks Sahan Wiratunga, a social worker who organised one of them. “It is because of economic mismanagement and corruption.” On March 15th thousands attended a protest rally in Colombo. On social media people are railing at Mr Rajapaksa and his government in all three of the country’s languages.
Many Sri Lankans are trying to leave. Perched outside the immigration and emigration department, M. Perera, a 57-year-old mason, waited for his wife to return with her new passport. She will go to Saudi Arabia to toil as a domestic worker because it is “impossible to survive on our earnings”. He voted for “Gota”, he says, then shrugs. “What to say now?”
The International Energy Agency (IEA) has presented a ten-point proposal to reduce daily fuel demand in the face of the global oil crisis.
According to the agency, if the proposal is implemented expeditiously, the demand for petroleum could be reduced by 2.7 million barrels in the next four months.
At present, the global daily production of petroleum is 88 million barrels, however, the daily global demand for petroleum is 97 million barrels. Accordingly, there is more than 10% more demand than production and this high demand has also contributed to the rise in oil prices.
Reducing demand is the best solution to this situation and the International Energy Agency is proposing a ten-point proposal accordingly.
Reduce speed limits on highways by at least 10 km/h Work from home up to three days a week where possible Car-free Sundays in cities Make public transport cheaper and incentivise walking and cycling Alternate private car access to roads in large cities (eg every other day) Increase car-sharing and adopt practices to reduce fuel use Promote efficient driving for freight trucks and delivery of goods Using high-speed and night trains instead of planes Avoid business air travel where alternative options exist Reinforce the adoption of electric and more efficient vehicles
Sri Lanka’s tea crop suffered its lowest yield in 13 years, official data showed Friday, reducing output in its main export commodity as the island grapples with its worst economic crisis in seven decades, industry sources complained.
The country’s agriculture sector was hit hard by a ban on agrochemicals imposed last April as the Government introduced an ambitious plan to make Sri Lanka the world’s first nation to rely solely on organic farming.
Tea exports brought in $ 1.3 billion annually before the fertiliser ban Industry officials added that around 10% of Sri Lanka’s exports had also been affected by Russia’s invasion of Ukraine. Both countries are top buyers of Sri Lanka’s aromatic black tea.
ri Lanka’s Ceylon Tea exports fell 6.91 percent in January 2022 to 19.38 million kilograms from 20.82 million kilograms from a year ago, with Russia and Iraq being the top buyers, industry data showed.
Purchases by China dropped from 1.5 million kilograms last year to 738,000 kilograms in January 2022.
The island’s tea production dropped 0.36 percent in January 2022 to 22.82 million kilograms from 23.18 million kilograms in 2021.
“Elevation wise analysis shows that for the month of January 2022 Low Growns had recorded a decrease of 1.53 million kilograms whilst High & Medium Growns recorded an increase of 0.59 million kilograms and 0.58 million kilogram increase respectively when compared to the same period in 2021,” Ceylon Tea Brokers, a Colombo-based brokerage said in a report.
The free on board (FOB) price per kilo for the month of January 2022 was 948.24 rupees, up from 923.99 rupees a year earlier.
The January monthly average price for tea was 3.50 US dollars (704.67 rupees) compared to 3.30 US dollars (645.02 rupees) in January 2021, according to Ceylon Brokers data.
“Total export earnings shows a decrease of 0.86 Billion rupees (-4.46%) for the month of January 2022 as against the corresponding month in 2021,” Ceylon Tea Brokers said as the volume drop outpaced price gains.
The average price was 4.70 dollars a kilogram in January from 4.62 a year earlier.
Iraq was the top buyer of Ceylon Tea in January buying 3.80 million kilograms, up from 1.79 million a year earlier.
Meanwhile, Russia remained in second place buying 2.56 million kilograms higher than previous year’s 2.46 million kilograms.UAE bought 2.03 million kilograms, up from 1.11 million last year.
The crisis-hit Libya bought 1.13 million kilos in January 2022.Turkey which was a key buyer in 2021 slipped to 10th place buying only 0.52 million kilograms from the corresponding years 3.82 million kilograms.
China, which had been an emerging key buyer, bought only 0.74 million kilograms compared to 1.51 million kilograms last year. CIS countries bought 1.06 million kilos, down from 1.07 million last year.
The fertilizer ban was lifted in October following backlash from the industry but farmers were left unable to access imported fertiliser as the country simultaneously ran out of dollars to finance imports with the pandemic battering Sri Lanka’s tourism sector.
Monthly tea crops dropped to 18.16 million kilos (39.95 million pounds) in February, down nearly 20% from the corresponding period last year, the Sri Lanka Tea Board figures showed
Indian Prime Minister Narendra Modi’s visit to Sri Lanka scheduled for the end of this month has been canceled. Indian authorities have not yet commented on the reason.
The Indian Prime Minister was scheduled to arrive in Sri Lanka from the Palaly Airport in Jaffna and was scheduled to attend several events in the North, including the opening of the Jaffna Cultural Center.
It was reported that he would then address the BIMSTEC Summit in Sri Lanka.
However, the Indian Prime Minister has decided to suspend his visit and address the BIMSTEC summit online.
The Central Bank of Sri Lanka (CBSL) says the government has decided not to implement the proposed scheme for additional incentives for remittances by expatriate workers and net earnings of exporters.
In a statement, the CBSL says the exchange rate seems to have now reached a level surpassing the level of incentives that was intended to stimulate expatriate workers’ remittances and conversion of export earnings, as a result of its decision.
Accordingly, the current exchange rate provides a higher return on the foreign exchange remittances of expatriate workers and a higher rupee value on the net earnings of exporters.
In view of these recent developments, the government decided not to implement the proposed scheme for additional incentives, the CBSL said further.
“With the notable upward adjustment in the exchange rate, the conversion of foreign exchange earnings through formal channels by expatriate workers and exporters has already shown a marked increase during March 2022, according to the latest official data.
Remittances by Sri Lankans employed abroad have been an important flow of foreign exchange into the country, with an annual average value of over US dollars 7 billion in the past five years.
Considering the importance of this steady non-debt inflow, the Government and the Central Bank of Sri Lanka (CBSL) are in the process of taking steps to ensure that remittances reach their full potential in a manner that is beneficial to the worker as well as to the country.
In this regard, the CBSL is currently working in collaboration with the Ministry of Labour, State Ministry of Foreign Employment Promotion and Market Diversification and Sri Lanka Bureau of Foreign Employment, the banking sector and several other stakeholders to introduce an incentive package for migrant workers, which includes pension/superannuation benefits, accident/life insurance benefits, banking facilities including low interest loans for housing and / or self-employment on return to Sri Lanka, and enhanced duty-free concessions.
In order to ensure that the country reaps the intended benefits of providing such incentives, this package of benefits would be made available only to those who remit their earnings to Sri Lanka through the formal banking system or any other formal money transfer system routed through banking channel.
The incentives are expected to be linked to the amount of foreign exchange so remitted to Sri Lanka. Operational details of proposed incentive package will be informed to the public in due course, in consultation with relevant Government authorities and the banking sector.
In the meantime, the CBSL urges the Sri Lankan community living abroad to ensure that their remittances to Sri Lanka are being made through formal banking channels to a designated bank account in Sri Lanka so that the value of foreign exchange so remitted to Sri Lanka could be easily tracked for the above mentioned purpose
Opposition leader Sajith Premadasa has said that the country needs a government that does not sleep and that only a working government can recover from the current situation in the country.
He said that the task of building the country should begin with a continuous service to the people, adding that the government was only playing with the lives of the people.
The Leader of the Opposition said that no matter how much the government lied, the turn of the people would come soon and he was sure that the people would teach the government the right lesson.
Premadasa said this addressing a farmers’ meeting held at Kamburupitiya yesterday (18) afternoon.
Each day brings new horrors to Ukraine, where Russian artillery fire echoes like thunder across cities and towns. The metropolis of Kharkiv lies in ruins, victim of two weeks of bombardment. Mariupol, on the coast, has been destroyed.
It is too soon to know if a winner will emerge from the fighting. But, on the other side of the planet, the world’s emerging superpower is weighing its options. Some argue that China will build on a pre-war friendship with Russia that knows “no limits”, to create an axis of autocracy. Others counter that America can shame China into breaking with Russia, isolating Vladimir Putin, its president. Our reporting suggests that neither scenario is likely. The deepening of ties with Russia will be guided by cautious self-interest, as China exploits the war in Ukraine to hasten what it sees as America’s inevitable decline. The focus at all times is its own dream of establishing an alternative to the Western, liberal world order.
Both China’s president, Xi Jinping, and Mr Putin want to carve up the world into spheres of influence dominated by a few big countries. China would run East Asia, Russia would have a veto over European security and America would be forced back home. This alternative order would not feature universal values or human rights, which Mr Xi and Mr Putin see as a trick to justify Western subversion of their regimes. They appear to reckon that such ideas will soon be relics of a liberal system that is racist and unstable, replaced by hierarchies in which each country knows its place within the overall balance of power.
Hence Mr Xi would like Russia’s invasion to show up the West’s impotence. If the sanctions on Russia’s financial system and high-tech industry fail, China will have less to fear from such weapons. If Mr Putin lost power because of his miscalculation in Ukraine, it could shock China. It would certainly embarrass Mr Xi, who would be seen to have miscalculated too, by allying with him—a setback when he is seeking a third term as Communist Party leader, violating recent norms.
For all that, however, Chinese support has its limits. The Russian market is small. Chinese banks and companies do not want to risk losing much more valuable business elsewhere by flouting sanctions. A weak Russia suits China because it would have little choice but to be pliant. Mr Putin would be more likely to give Mr Xi access to northerly Russian ports, to accommodate China’s growing interests in, say, Central Asia, and to supply it with cheap oil and gas and sensitive military technology, including perhaps the designs for advanced nuclear weapons.
Furthermore, Mr Xi seems to believe that Mr Putin does not need to win a crushing victory for China to come out ahead: survival will do. Chinese officials confidently tell foreign diplomats that Western unity over Russia will splinter as the war drags on, and as costs to Western voters mount. China is already trying to prise apart Europe and America, claiming that the United States is propping up its power while getting Europeans to foot the bill for high energy prices, larger armies and the burden of hosting over 3m Ukrainian refugees.
China’s approach to the Russo-Ukraine war is born out of Mr Xi’s conviction that the great contest in the 21st century will be between China and America—one he likes to suggest that China is destined to win. For China, what happens in Ukraine’s shelled cities is a skirmish in this contest. It follows that the success of the West in dealing with Mr Putin will help determine China’s view of the world—and how it later has to deal with Mr Xi.
The first task is for nato to defy Chinese predictions by sticking together. As the weeks turn into months that may become hard. Imagine that the fighting in Ukraine settles into a grim pattern of urban warfare, in which neither side is clearly winning. Peace talks could lead to ceasefires that break down. Suppose that winter draws near and energy prices remain high. Ukraine’s example early in the war inspired support across Europe that stiffened governments’ sinews. The time may come when political leaders will have to find the resolve within themselves.
Willpower can be linked to reform. Having defended democracy, Western countries need to reinforce it. Germany has decided to deal with Russia by confronting it, not trading with it. The European Union will need to corral its Russia sympathisers, including Italy and Hungary. The British-led Joint Expeditionary Force, a group of ten northern European countries, is evolving into a first responder to Russian aggression. In Asia, America can work with its allies to improve defences and plan for contingencies, many of which will involve China. The joined-up action that shocked Russia should not come as a surprise to China if it invaded Taiwan.
And the West needs to exploit the big difference between China and Russia. Three decades ago their two economies were the same size; now China’s is ten times larger than Russia’s. For all Mr Xi’s frustration, China has thrived under today’s order, whereas Russia has only undermined it. Obviously, Mr Xi wants to revise the rules to serve his own interests better, but he is not like Mr Putin, who has no other way of exerting Russian influence than disruptive threats and the force of arms. Russia under Mr Putin is a pariah. Given its economic ties to America and Europe, China has a stake in stability.
Shanghai on the Dnieper
Rather than also push China “outside the family of nations, there to nurture its fantasies, cherish its hates and threaten its neighbours”—as Richard Nixon wrote years before his famous trip to Beijing five decades ago—America and its allies should show that they see the rising superpower differently. The aim should be to persuade Mr Xi that the West and China can thrive by agreeing where possible and agreeing to differ where not. That requires working out where engagement helps and where it threatens national security.
Might China yet start down this path by helping bring the war in Ukraine to a swift end? Alas, barring the Russian use of chemical or nuclear weapons, that looks unlikely—for China sees Russia as a partner in dismantling the liberal world order. Diplomatic pleading will influence Chinese calculations less than Western resolve to make Mr Putin pay for his crimes. ■
This article appeared in the Leaders section of the print edition under the headline “The alternative world order”
In another move to solve the prevailing forex crisis in Sri Lanka, renowned businessman Dhammika Perera has tendered a proposal to the government to declare the National School of Business Management (NSBM), the Kothalawala Defence University (KDU), the Sri Lanka Institute of Information Technology (SLIIT), the Northshore University and the Horizon University as ‘universities.’
The number of students who have applied to study at foreign universities amid the crisis situation in the country has increased to about 30,000 and the number of Sri Lankan students who are already spending their first and second years in foreign universities are about 50,000.
Estimatedly, Sri Lanka spends about US$ 2 – 2.5 billion a year on these 80,000 some students. Another huge portion of dollars is being paid to foreign countries to pursue courses at foreign universities and the aforementioned private institutions of higher education in Sri Lanka.
Given attention to the above circumstance, Mr. Perera has proposed that the name ‘university’ be officially bestowed upon these institutions in order to retain this huge portion of dollars in Sri Lanka, whilst giving Sri Lankan students the opportunity to pursue foreign university courses in the country as well as bringing in foreign students and earning a dollar-based income through it.
It is hoped that these five private institutions of higher education may receive the approval of the University Grants Commission (UGC) as well as the opportunity to initiate new private universities with that approval, making the ultimate goal of converting Sri Lanka into a hub of higher education a reality.
