The Great Chinese White Elephant of Sri Lanka

The Great Chinese White Elephant of Sri Lanka

International and Arab News

Sri Lanka’s President Gotabaya Rajapaksa has a fetish for fiasco. The Indian Ocean island is a basket case for several reasons. Covid-19 decimated dollar earnings from tourism; the resulting increase in social spending ballooned public debt. Then came the war in Ukraine, worsening shortages of food, fuel and foreign currency. But the lion’s share of the blame must go to the strongman’s quixotic policies.

Rajapaksa has presided over the economy’s undoing: It began with an expensive tax cut soon after taking office in 2019; that was followed by an ill-conceived enthusiasm for organic farming, which destroyed production of both rice, the local staple, and tea, a crucial export; and then there’s the bizarre embrace of a Chinese-built tax haven as a ticket to growth. Sri Lanka now has Asia’s fastest inflation rate of almost 19%; widespread power outages; and nearly $5 billion in dollar-denominated borrowings due this year and next with just a little over $2 billion left in the foreign-exchange kitty. The administration threw in the towel Tuesday, announcing its intention to default on foreign debt.

Emblematic of this mess is the white elephant Rajapaksa got from China: the Colombo Port City project, envisioned as a playground for