On the cover image the moment in which U.S. Navy and Marine Corps began exercise Cooperation Afloat Readiness and Training (CARAT)/Marine Exercise (MAREX) Sri Lanka 2023 with the Sri Lanka Navy (SLN) and Sri Lanka Air Force (SLAF) in Colombo, Jan. 19, 2023 (photo US Embassy in Sri Lanka) 

by Darini Rajasingham-Senanayake

Dr. Darini Rajasingham-Senanayake, is a Social and Medical Anthropologist, based in Colombo, Sri Lanka. All links to Gospa News articles have been added aftermath.

It is increasingly clear that an economic proxy war between the fading and rising superpowers, the US and China, is currently unfolding in what Kishore Mahbubani termed the “Asian 21st Century” in strategically located Sri Lanka, sitting front and centre of Indian Ocean energy, trade, and submarine or undersea data cable routes.

Sri Lanka, after all, is a test case for 54 other Global South countries caught in post-Covid-19 Euro bond debt traps, given an international financial system that seems to be no longer fit for the purpose. Despite efforts by various International Monetary Fund (IMF) “advisors” to blame the economic crisis on Ceylon/Sri Lanka’s once envied welfare State culture and a lack of neoliberal economic reforms in addition to obvious corruption, it is very clear that the island’s first-ever debt default was directly related to increased private market borrowing from predatory hedge funds in the past four years when a series of exogenous economic shocks were administered to the country.

read more – A Staged Default: Sri Lanka’s Sovereign Bond Debt trap and IMF’s Spring Meetings amid hybrid Cold War

Thus, there are calls from civil society groups in Sri Lanka for a constitutional amendment banning official borrowing from private capital markets by corrupt politicians and their Central Bank officials and cronies who conveniently pass odious International Sovereign Bonds (ISB) debt to citizens.

Alternatives to the IMF ‘bailout business’

While the endgame of IMF debt restructuring appears to be, rather illogically, enabling a country that had accumulated odious amounts of debt to the point of default to return to borrowing again from the same odious private capital markets that charge predatory interest rates and are the main source of its economic crisis, it is increasingly apparent that long-term solutions and alternatives to the Washington twins’ and the colonial Club de Paris’ “bailout business” are needed for Sri Lanka to extricate itself from the clutches of Euro bond money lenders.

In this context, China appears to be hedging its bets and working with Brazil, Russia, India, China, and South Africa (BRICS) while seeking the reform of the highly inequitable, un-transparent and conflict-of-interest-ridden international financial architecture. Alternatives to returning to borrowing from capital markets include de-US dollarisation, currency swaps, trading in a basket of currencies, borrowing from the New Development Bank or the Asian Infrastructure Investment Bank, given an increasingly weaponised US dollar with high interest rates, and US-European Union sanctions.

read more – Alternatives to the IMF and the Future of the Welfare State in Asia: Beyond the Blame Game between Superpowers

Simultaneously, diversifying export products and markets while leveraging Sri Lanka’s valuable rare earth minerals and extensive living and non-living marine resources through the transfer of technology and industrialisation would enable growing the economy to escape the US dollar debt trap. 

Sri Lanka, after all, is a wealthy country with a geostrategic resource boon and was listed as South Asia’s only upper middle-income country (MIC), with the best human and social indicators just four years ago in 2019 by the World Bank.

read more – IMF Bailout of BlackRock amid Adani Greenwash. Indian Ocean Region Economic Nightmare after Argentina one

That same MIC listing by one of the Washington twins disabled the country’s access to concessionary borrowing after the mysterious Islamic State-claimed Easter Sunday attacks on its tourism-dependent economy, which begs the question: Was the strategic Island pumped and dumped into a US dollar debt trap to enable Washington, DC, to make inroads, and if so, why now?

The environmental costs of hybrid war games

Distracted by the China-US standoff over IMF debt restructuring, there was little corporate media focus on the US-led Cooperation Afloat Readiness and Training (CARAT)/Marine Exercise (MAREX) war games that lasted over a week, or their environmental impacts on land and in the seas of Sri Lanka. These saw pods of whales beached with some animals dying given strange seismic tremors in the sea with earthquakes on land.

The US Ship Anchorage and Poseidon P-2 advanced marine surveillance planes, which Indonesia had denied landing rights to a couple of years ago, were also involved in CARAT/MAREX Sri Lanka 2023 that ran for nine days and concluded on 29 January – highly symbolically in the run-up to the strategic island’s lost Independence day on 4 February of this year.

There were sea and land engagements to enhance collaboration between the Sri Lankan and US militaries with Japanese and Maldivian sailors for “inter-operability”. Last year (2022), during the US “sea vision” training and simulation exercises in June, the island was subject to an air-sea blockade of vital oil and gas supplies, and hence the economy shut down ex-ante the default while deepening the US dollar debt trap.


Darini Rajasingham-Senanayake

Dr. Darini Rajasingham-Senanayake is a social and medical anthropologist with research expertise in international development and political economic analysis. She was a member of the International Steering Group on “Southern Perspectives on Reform of the International Development Architecture”


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