Sri Lanka’s Catch-22: The Marxist dilemma of Anura Kumara Dissanayake

Caught between domestic desperation and the manacles of foreign debt, Sri Lanka’s Marxist leader and newly elected president Anura Kumara Dissanayake finds himself in a predicament that Karl Marx never envisaged. As the leader of the Janatha Vimukthi Peramuna (JVP), Dissanayake champions a red-tinted vision of social welfare, redistribution, on anti-capitalist afterburners. However, Sri Lanka’s fiscal realities stall the engine.

Bereft of capital reserves and plagued by an anaemic foreign exchange situation, the island nation faces a bitter truth: ideological fervour cannot replenish the coffers. It’s a classic Catch-22 situation where Dissanayake’s Marxist agenda promises populist appeal but risks exacerbating the very economic malaise it seeks to cure. Far from a solution, his leftward lurch risks consigning Sri Lanka to an even deeper quagmire.

Marxist Ambitions, Economic Realities

The appeal of Marxism in Sri Lanka is understandable, given the historical inequities and public disillusionment with market-orientated policies only fattening the elite. Dissanayake’s rhetoric taps into a deep ocean of discontent.

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Yet Sri Lanka’s current fiscal environment renders such promises dangerously utopian. The nation’s depleted foreign reserves, which oscillate perilously close to insolvency, offer no cushion for grandiose social spending.

The promised cancellation of contracts, including port concessions to India, will unsettle foreign investors and set back desperately needed growth.

Sri Lanka exports goods worth $6.7 billion to India, dwarfing the mere $2 billion exported to China. This asymmetry underscores a broader economic imbalance: India, with its proximity and complementary market dynamics, offers Sri Lanka a far more viable trading partner than China.

Tamil Nadu has a nominal GDP of $200 billion, dwarfing Sri Lanka at $80 billion. It’s a no-brainer.

Then there is the debt. Sri Lanka owes China a staggering $20 billion over the last decade—four times the amount owed to India. These debts are not merely figures on a balance sheet; they are the hangman’s noose around the nation’s neck, tightening with every missed repayment and restructuring.

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So Dissanayake’s ascent to power also comes with the unenviable task of navigating the delicate geopolitical tightrope between India and China.

Another major problem is that without foreign direct investment, the nation cannot grow on the organic path. There is simply not enough sophistication in its financial market nor a big enough consuming class.

For Sri Lanka, the path to organic growth is riddled with roadblocks. The nation’s key industries—textiles, tourism, and agriculture—are under severe strain. The tourism sector, once a buoyant source of foreign exchange, has been decimated by years of political instability, the 2019 Easter bombings, and the pandemic. Textile exports, though still a significant economic driver, face stiff competition from regional players like Bangladesh, Vietnam, and India.

Dissanayake’s predicament is clear: Marxism may galvanise the dissatisfied, but it cannot substitute for sound economic policy. For Sri Lanka, the only viable route out of its malaise lies in market integration, particularly with India. This path, though unpalatable to Dissanayake’s ideological base, offers access to a vast, growing market and the potential for economic synergy that Chinese debt simply cannot replicate. India can wait it out.

When the tsunami hits, heading to higher ground is the only option, as Sri Lanka well knows.

The writer is a senior journalist with expertise in defence. Views expressed in the above piece are personal and solely those of the author. They do not necessarily reflect Firstpost’s views.