Gas lines and fighting: Sri Lanka faces a humanitarian crisis | business news

By BHARATHA MALLAWARACHI and PAUL WISEMAN, Associated Press

COLOMBO, Sri Lanka (AP) — Chamila Nilanthi is tired of waiting. The 47-year-old mother of two spent three days queuing for kerosene in the Sri Lankan town of Gampaha, northeast of the capital Colombo. Two weeks earlier, she spent three days queuing to buy cooking gas, but she came home with nothing.

“I’m totally fed up, exhausted,” she said. “I don’t know how much time we have to do this.”

A few years ago, the Sri Lankan economy was growing strong enough to provide employment and financial security to most. It is now in a state of collapse, dependent on help from India and other countries as its leaders desperately try to negotiate a bailout with the International Monetary Fund.

What is happening in this South Asian island nation of 22 million is worse than the usual financial crises seen in the developing world: it is a total economic collapse that has left ordinary people struggling to buy food, fuel and other necessities and has led to political unrest and violence. .

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“It’s really fast becoming a humanitarian crisis,” said Scott Morris, a senior fellow at the Center for Global Development in Washington.

Such disasters are more common in poorer countries, in sub-Saharan Africa or in war-torn Afghanistan. In middle-income countries like Sri Lanka, they are rarer but not unheard of: 6 million Venezuelans have fled their oil-rich home country to escape a seemingly endless political crisis that has devastated the economy.

Indonesia, once touted as an “Asian tiger” economy, endured depression-level deprivation in the late 1990s that sparked riots and political unrest and swept away a strongman who had held power for three decades. The country is now a democracy and a member of the Group of 20 largest industrial economies.

Sri Lanka’s crisis is largely the result of staggering economic mismanagement combined with the fallout from the pandemic, which along with the 2019 terrorist attacks devastated its important tourism industry. The COVID-19 crisis has also disrupted the flow of payments home from Sri Lankans working abroad.

The government took on huge debts and cut taxes in 2019, depleting the treasury just as COVID-19 hit. Sri Lanka’s foreign exchange reserves have plummeted, leaving it unable to pay for imports or defend its beleaguered currency, the rupee.

Ordinary Sri Lankans, especially the poor, are paying the price. They wait for days for cooking gas and gasoline, in lines that can stretch more than 2 kilometers (1.2 miles). Sometimes, like Chamila Nilanthi, they go home with nothing.

Eleven people have died so far waiting for gasoline. The latest was a 63-year-old man found dead inside his vehicle on the outskirts of Colombo. Unable to get gasoline, some have given up driving and turned to bicycles or public transport to get around.

The government has closed urban schools and some universities and is giving civil servants every Friday off for three months, to save fuel and give them time to grow their own fruit and vegetables.

Food price inflation is 57%, according to government data, and 70% of Sri Lankan households surveyed by UNICEF last month reported reducing food consumption. Many families rely on government donations of rice and donations from charities and generous individuals.

Unable to find cooking gas, many Sri Lankans are turning to kerosene stoves or cooking over open fires.

Wealthy families can use electric induction ovens for cooking, unless there is a power outage. But most Sri Lankans cannot afford those stoves and higher electricity bills.

Sri Lankans, furious over fuel shortages, staged protests, blocked roads and clashed with police. Fights have broken out when some try to overtake fuel lines. Police have attacked rebellious crowds.

One night last week, a soldier was seen assaulting a police officer at a gas station in a dispute over gasoline distribution. The policeman was hospitalized. The police and the army are investigating the incident separately.

The crisis is a crippling blow to Sri Lanka’s middle class, which is estimated to represent between 15% and 20% of the country’s urban population. Until everything fell apart, they enjoyed financial security and an ever-increasing standard of living.

Such a reversal is unprecedented. In fact, it resembles what happened to Indonesia in the late 1990s.

The US Agency for International Development, which runs aid projects for poor countries, was preparing to close its doors in the Indonesian capital, Jakarta; the country did not seem to need the help. “Like one of the Asian tigers, he had fallen off the aid list,” recalls Jackie Pomeroy, an economist who worked on a USAID project in the Indonesian government before joining the World Bank in Jakarta.

But then a financial crisis, triggered when Thailand suddenly devalued its currency in July 1997 to combat speculators, spread across East Asia. Plagued by widespread corruption and weak banks, Indonesia was particularly hard hit. Its currency plunged against the US dollar, forcing Indonesian companies to spend more rupees to pay off dollar-denominated loans.

Closed businesses. Unemployment skyrocketed. Desperate city dwellers returned to the countryside where they could grow their own food. Indonesia’s economy shrank by more than 13% in 1998, a Depression-level performance.

The desperation turned to anger and demonstrations against the Suharto government, which had ruled Indonesia with an iron fist since 1968. “It very quickly turned into scenes of political instability,” Pomeroy said. “It became an issue of political transition and Suharto.” The dictator was ousted in May 1998, ending autocratic rule.

Although they live in a democracy, many Sri Lankans blame the politically dominant Rajapaksa family for the disaster. “It is their fault, but we have to suffer for their mistakes,” said Ranjana Padmasiri, who works as a clerk in a private company.

Two of the three leading Rajapaksas have resigned: Prime Minister Mahinda Rajapaksa and Basil Rajapaksa, who was finance minister. The protesters have been demanding that President Gotabaya Rajapaksa also resign. They have camped outside his office in Colombo for more than two months.

Resignation, Padmasiri said, is not enough. “They can’t easily escape,” he said. “They must be held accountable for this crisis.”

Wiseman reported from Washington.

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