Sri Lanka's new President Ranil Wickremesinghe took office last weekend, as the country grapples with economic collapse, political instability and food and fuel shortages.
Wickremesinghe has been considered one of the pillars of government in Sri Lanka for decades, and a supporter of the Rajapaksa family with extensive political influence, as he served as prime minister 6 times, the last of which was during the era of ousted President Gotabaya Rajapaksa.
Wickremesinghe's house was burned by protesters, but his leadership of the National Party, which has a majority in Parliament, enabled him to assume the presidency, in a clear indication that the political crisis in the country did not leave its first square, but rather is a candidate to continue.
New President Ranil Wickremesinghe faces a heavy political and economic legacy (Reuters)
What reality will the new president inherit?
The new president is facing a heavy legacy of economic and political crises, and he is required to address them under the pressure of the protesters and the almost bankrupt financial situation of the state, and within negotiations that will be difficult with external creditors, in addition to the negotiations on the International Monetary Fund program.
With his assumption of power, Wickremesinghe ordered the security forces and the army to disperse the demonstrations in the center of the capital, Colombo, and to evacuate government headquarters, including the headquarters of the State and the Head of Government.
His speech before Parliament - which is controlled by a majority in support of the Rajapaksa family - did not contain any clear pledges of political reform. Rather, he pledged to observe the demonstrators and prevent a recurrence of what happened, which increases doubts about the credibility of any new government that he forms in front of the public and protesters to restore calm in a permanent way, especially since he had He appointed his colleague Dinesh Gunawardena - also Rajapaksa's ally - as Prime Minister and a partner in his difficult mission to save the country from its predicament.
What is the reality of the economic crisis and its causes?
Sri Lanka is suffering from a major economic collapse, which experts attribute to the spread of corruption on a large scale, and the decline in tourism revenues due to the large closures that accompanied the Corona pandemic, so that the Russian-Ukrainian war came and worsened the situation with the rise in fuel prices.
The government was forced to impose a ban on sales of gasoline and diesel to owners of private cars, which led to the formation of queues that extended for days in order to obtain this energy, as well as blackouts.
As foreign exchange reserves approached zero in mid-April, the government announced that it would suspend repayment of foreign debts totaling more than $50 billion.
Since this default - the first of its kind in Sri Lanka - the economy has virtually stalled and the inflation rate has reached more than 50%, with rising food prices forcing 70% of families to limit eating, and nearly half of the country's children need help. In an emergency, the United Nations and the Red Cross launched urgent appeals for funding for food and other humanitarian aid, with UNICEF warning of a "full humanitarian emergency".
Demonstrations in Sri Lanka call for the dismissal of the new president and a solution to the economic crisis (Anatolia)
Will renewed negotiations with the International Monetary Fund solve the crisis?
The failure of negotiations with the International Monetary Fund - where the Rajapaksa government sought to obtain a rescue package worth between 3 and 4 billion dollars - led to the country's entry into a state of "near bankruptcy".
The government announced that its foreign exchange reserves no longer exceed 50 million dollars, which has not happened to any Asian country for decades.
In order to resolve this unprecedented crisis, the new president must again begin negotiations with the International Monetary Fund, but his approval of the new government’s request is subject to carrying out the necessary reforms to obtain the required rescue plan of 3 billion dollars, as the Fund will not disburse any money until the external debt is considered. Sri Lanka is "sustainable".
For that to happen, Sri Lanka would have to reach an agreement to restructure its external debt, and here international creditors would have to accept lower bond payments, lower interest rates, or extend repayment periods.
The closest possible date for the IMF to release the funds would then be early 2023.
However, this - if Wickremesinghe succeeds in achieving it - will not be enough to get out of the crisis;
The president also faces tough negotiations with international creditors, most notably China, India, Japan and some European countries.
Wickremesinghe had failed in this during his tenure as prime minister, due to the absence of sufficient financial and economic guarantees to convince these parties to reschedule their debts.
What are the options for the government, then?
This complex landscape may force the new government to adopt tax policies that will increase pressure on the people.
The authorities may be forced to increase corporate income taxes, personal income taxes, value-added tax, special duties, and import surcharges.
While the income tax increases are expected to take effect from October 1, as expected, the value-added tax increase (from 8% to 12%) took effect last June.
The new government has the option of calling a donor conference, an idea espoused by Wickremesinghe, where he hopes that India, China and Japan - among others - will pledge support, and a massive infusion of humanitarian support will be urgently required for "phased funding" to allow for the payment of fuel and other essential supplies needed to get the economy back on track, avert a humanitarian catastrophe, and get past the present moment.
Popular protests in Sri Lanka forced President Rajapaksa to flee the country (Getty)
Does Wickremesinghe have a reformist vision, especially with his low popularity?
The election of Wickremesinghe came as a protectionist move by members of Parliament loyal to Rajapaksa who see the election of Wickremesinghe as a guarantee for the continuation of the current system of government, their control of Parliament and the promotion of elections for as long as possible.
The electoral system allows Wickremesinghe to remain in power until the elections scheduled for November 2024.
Wickremesinghe is a divisive and unpopular figure among Sri Lankans who bear the crisis of food, fuel and medicine shortages. Last week, protesters torched his private home, and his critics accuse him of protecting members of the Rajapaksa family, whom he blames for leading the country to ruin.
Despite his long experience in politics, there are great doubts about his desire and ability to present political reform visions, and his speech after assuming the presidency was met with chants calling for him to leave.
Two women stand on a street in Colombo, waiting for food aid at the height of the Corona epidemic (Reuters)
What is the solution to the political crisis?
The political solution to the crisis is centered on the new government clearly agreeing that it is operating on a temporary basis, and committing to holding new elections before the end of 2022, as many in the opposition and protest movement have called for.
But there is a big challenge that the new president and his prime minister do not agree to new elections in response to the pressures of the parliamentary majority representing the ethnic Sinhalese, and instead seek to remain in power for the current term, which will be disappointing to the protesters that may push the country to another wave of protests, but It is more political than economic.
Overcoming the political crisis also requires that the current government also commit to amending the constitution to abolish the executive presidency, which since 1978 has concentrated a great deal of power in the president's hands, weakening other government institutions and seriously damaging Sri Lankan democracy.
The demands of the opposition and the protest movement center on the 20th amendment pushed by ousted President Gotabaya Rajapaksa and the Sierra Leone People's Party in October 2020.
According to a ruling by the Supreme Court in June, any amendment that restores the executive branch of the government and the cabinet would need to hold a popular referendum, but this could push the political situation in the country into severe ethnic polarization, and take the crisis to levels that have not yet appeared.
Some reports indicate that Sinhalese nationalism still widely supports the Rajapaksa family, due to his role in eliminating the Tamil Tigers in 2009 in an achievement considered the main lever of the Rajapaksa family.
Does the new government have the ability to fight corruption and overcome the crisis?
The current government’s ability to demonstrate the seriousness of criminal investigations into allegations of corruption by previous governments will be a real test of its ability to persuade protesters to move past the current crisis, which requires the re-establishment of specialized police investigation units that were active from 2015 to 2019, providing full support to the Independent Anti-Bribery Authority, and cooperating with Parliamentary oversight committees, and legislative support to establish an independent public prosecutor's office in the prosecution.
This means that investigations will target the current seasoned elite in Parliament, as Parliament is expected to seek to block these measures or limit their impact.
The current situation of the new government indicates that it needs the approval of external parties, especially creditors, donors and the International Monetary Fund, which is a very complicated matter.
It will also remain hostage to the same ruling elite that supports ousted President Gotabaya Rajapaksa, and is keen to manage the crisis rather than solve it.
On the other hand, the economic and living crisis will continue to cast a shadow for months to come, and the protests will remain present and may be strengthened if the current government fails to achieve convincing economic and political reforms, which the current realities suggest.