Following months of protests over government mismanagement and the country’s economic collapse, embattled Prime Minister of Sri Lanka, Mahinda Rajapaksa has announced his resignation. Violent clashes broke out in the capital city, Colombo, on May 9, 2022 between anti-government protesters and supporters of the Rajapaksa regime, which is headed by the PM’s brother, President Gotabaya Rajapaksa.
At least 150 people were taken to hospital after authorities used heavy-handed tactics to try to disperse the demonstrators. This political shake-up comes amid unrest over soaring fuel and food prices and constant blackouts. Sri Lanka’s foreign currency reserves have entirely dried up, prompting Colombo to print more money, which further pushed prices up and the currency value down. The Rajapaksa brothers had overseen the country’s warming ties with China in recent years, which has seen Sri Lanka become embroiled in a relentless debt trap set out by Beijing.
On May 9, big news from Russia’s war on Ukraine was that Vladimir Putin delivered a Victory Day speech with no big news in it. This “nothing to declare” speech could be revealing about Putin’s own uncertainty about where the war is headed. His refusal to declare an escalation of the fighting acknowledges a few basic realities.
One, the emerging stalemate in Ukraine leaves the Kremlin much less confident than at the beginning of the war about what can be achieved, and Putin doesn’t want to offer specific goals that Russia might not reach. Two, Putin’s “best friend,” Chinese President Xi Jinping, isn’t on board with a larger war. Chinese State TV reported on May 9 that Xi Jinping has told German Chancellor Olaf Scholz that “all efforts must be made to avoid an intensification and expansion of the conflict, leading to an unmanageable situation”.
According to anti-China analysts, COVID and a slowing economy give Xi Jinping “enough headaches” at home without a wider war pitting Russia against the West to make things more complicated.
Third, Putin knows that escalation in Ukraine means a lot more Russian men drafted into the army – and that any such announcement would test the limits of domestic support for his war.
Recently, Colombia extradited a notorious narco-kingpin known as “Otoniel” to the United States to face trial. By the weekend, supporters of his fearsome Clan del Golfo cartel had run amok in several regions of northern Colombia, blocking roads, imposing lockdowns, and torching cars in a wave of violence that drew in the military and left at least half a dozen people dead.
Meanwhile, Pakistan has lurched from one crisis to the next. There was the extended political turmoil caused by a no-confidence motion against Prime Minister Imran Khan. And ultimately, he had to go – kicking and screaming. But Pakistan is now facing an energy crisis. There are major power cuts taking place because the country can no longer afford to buy coal or natural gas from overseas in order to fuel its power plants.
The problem with Pakistan is that it’s heavily dependent on imported oil and gas for its power sector. The new Finance Minister, Miftah Ismail, has said that almost 7,100 megawatts of electrical capacity had been shut down owing to fuel shortages as of the 13th of April. Pakistan is already struggling with its economy. Inflation is at an all-time high of 13 percent, fuel prices are soaring and the country is also dealing with crippling debt. These were also key factors that drove the opposition to come together against Imran Khan and turn the army’s opinion against him as well.
And now, Nepal. Like Sri Lanka, Nepal’s economy is heavily dependent on tourism and imports. And like Sri Lanka, Nepal, is also facing a foreign exchange reserve crisis. Foreign exchange reserves have been declining since July of 2021. Soon after a political crisis in the country led to the fall of the KP Sharma Oli government. Exports declined sharply, while income from tourism was badly hit because of the pandemic.
Foreign exchange reserves fell over 18 percent to US$9.6 billion as of mid-March from mid-July – enough for around six months of imports. The Nepalese government has now appealed to its citizens living abroad to deposit funds in Nepalese banks. These remittances, or money earned by Nepalese citizens abroad and sent back home to their families, are crucial for Nepal’s economy.
In Nepal, remittances by overseas workers, which constitute nearly a quarter of the economy, are crucial for external payments. These fell 3 percent to US$5.3 billion between mid-July to mid-March, compared with a 5 percent increase in the same period a year earlier.
Nepal’s Finance Minister, who denies any comparisons with Sri Lanka, has said that if 100,000 Nepalese nationals living abroad deposit $10,000 each in Nepalese banks, it could go a long way to help the country overcome its current liquidity constraints. Forex reserves, though, at the moment are expected to last only until July of this year.
The country also depends on imports for essentials like fuel and medicines. As the crisis deepened, Nepal’s Central Bank also imposed curbs on the imports of luxury goods like cars, gold and cosmetics in order to conserve its forex reserves.
And the war in Ukraine has only complicated matters for many of the world’s economies. There will be severe energy crisis in the US and rest of the European nations, which would result in deeper economic recession, particularly during this extremely difficult post-COVID situation. As we know, energy crisis would have huge impact in any country’s economy as well as lives of the people. Americans are already feeling exhausted and frustrated at the skyrocketing prices of essentials along side unemployment crisis and border crisis. No one knows where Joe Biden is pushing the fate of a future America.
Analysts say the power of groups like the Clan del Golfo stems partly from the government’s failure to bring economic opportunity to vast swathes of the country relinquished by the FARC guerrilla group after a historic 2016 peace accord. For now, Otoniel’s goons have stood down, but the violence — some of the worst upheaval since nationwide protests over a tax reform in 2021 — has already filtered into the country’s ultra-polarized presidential campaign. Leftwinger Gustavo Petro, who leads the polls, blasted the government’s failed security policies and accused powerful rightwing former President Alvaro Uribe of fomenting the armed groups that later became the Clan del Golfo. Meanwhile, Fico Gutierrez, a rightwinger polling a distant second, called on Colombians to condemn the violence and pledged to strengthen extradition mechanisms to ensure justice for men like Otoniel and reparations for their victims. Colombians vote in the election’s first round on May 29.
Are we heading towards a confronting or complicated time ahead? The afore-mentioned three scenarios at least compel us in further analyzing these matters.
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