It’s possible that I shall make an ass of myself. But in that case one can always get out of it with a little dialectic. I have, of course, so worded my proposition as to be right either way (K.Marx, Letter to F.Engels on the Indian Mutiny)
Pakistan’s fishing industry holds an export potential worth $4 billion if it follows the proper procedure that India has adopted, according to an expert.
In an interview with DawnNewsTv show ‘All Things Money’, Al-Karam Investments Director Faraz Zafar said that Pakistani fish farmers could produce a “dollarised output” if a proper ecosystem was developed for them, emphasising that the fishing industry had the potential to reach $4 billion if the proper procedure was followed.
Zafar pointed out that despite the volume of the country’s fishing industry, fish farmers were unable to export as much as other countries in the region — such as India and Sri Lanka — in the absence of proper guidelines.
“We export quite a bit of seafood in terms of volume, however, most of our trawlers don’t have proper processing on board and so what you get is essentially almost spoiled fish by the time we get to the harvest,” he said
He cited the example of his interaction with a Sri Lankan entity which was shocked by the amount of catch in Pakistan’s harbours.
“You have to go back to changing the regulations on how trawlers work,” he said, adding that fish and shrimp farms could be high-value items if developed properly in the country.
Comparing India’s fishing industry to Pakistan, he said that the latter faced export bans from countries such as the US for not having turtle extrusion devices. He said that India faced similar prohibitions, however, it had found a way to navigate through those bans.
“There is a proper procedure for you to have a certified product from a farm rather than the ocean,” he stated, adding that currently, the country exported around only $37 million worth of fish so they had to “catch up” with the rest of the region.
As for cotton, when asked why textiles were still being imported, he said it was easier because “there was less trash”.
“It just makes so much more sense that you can solve these issues simultaneously, the quality of cotton, pricing of the cotton, and the availability of the cotton.
“You have to remember that we are now a water-scarce country and cotton is a very water-intensive crop,” he said.
When compared to rice, which is also a very water-intensive crop and is still exported, he replied that cotton manufacturing involved a lot more stages compared to rice, which resulted in more spoilage.
As for using drones for irrigation, he said there was little regulation when it came to drones and the first thing to do was devise regulations to avoid red tape.
“As a drone operator, what you’re doing is you’re scanning over large farms, it will come back and tell you everything from weed count to termination rates to plant count,” he said, “It can come back and feed that data into a computer.
“A different drone with pesticides can get up go to exactly where the weeds are, spray just there, and if a farm has less than 3 per cent pesticide used in the area, it can be certified organic,” he said.
“All of a sudden you have the machinery to make almost any good farm certified organic.”
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Monday, August 26, 2024
India's green energy wind drive hits desert herders hard
Jaisalmer (India) (AFP) – Whirring wind turbines in India's Thar desert supply critical green energy for the world's most populous nation, but those living in their shadows say it comes at their expense.
Issued on: 26/08/2024 -
The deserts around Jaisalmer district are dotted with hundreds of turbines, one of India's largest onshore wind farms
It illustrates the hard balance faced as India, the third-largest greenhouse gas emitter, scrambles to boost its non-fossil fuel capacity to stem the rising impacts of climate change.
"The big companies have come here and built the windmills, but they're useless to us," said 65-year-old livestock herder Nena Ram, describing an age-old farming system upended by the giant turbines.
The country is suffering increasing devastation from heatwaves, floods and droughts, events that climate scientists say are exacerbated by rising global temperatures.
But those from areas used for renewable energy production say their needs have been sacrificed for the greater good.
In western Rajasthan state, where most of the Thar desert lies, that includes the loss of grazing lands and damage to sacred groves called "orans".
Desert oases, protected by the community for centuries, collect water critical for herders' livestock-based economy of camels, cattle and goats
The desert oases, protected by the community for centuries, collect water critical for their livestock-based economy of camels, cattle and goats.
But herders say heavy construction trucks damage the water sources, reducing grasslands and further drying the land.
What farmers like Ram contribute to greenhouse gases is very far from the fume-belching giants of India's coal-hungry heavy industry.
He is struggling from a brutal one-two punch.
First he was hit by the consequences of climate change. Then he was knocked by mitigation efforts to combat them. 'Paying the price'
The deserts around Jaisalmer district in Rajasthan are dotted with hundreds of turbines, one of India's largest onshore wind farms.
Rajasthan is capable of providing five gigawatts (GW) of wind power to the grid, according to government figures.
Wind turbines in India's Thar desert supply critical green energy for the world's most populous nation, but those living in their shadows say it comes at their expense
Many turbines are owned by Indian conglomerates, including the Adani Group and Suzlon.
The companies say they are supporting India's national drive to transition to renewable power while supporting communities impacted by the construction.
Suzlon says it provides "sustainable development to the villages around its wind farms", including health, education and livestock support projects.
Adani says it is "deeply committed" to the community, supporting schools and clean water programmes.
But farmers complain bitterly that the turbines were built on community grazing land.
Residents say power is channelled to feed surging demand in industrial centres and big cities.
"We are leading our lives in darkness," local environmental activist Sumer Singh Bhati said.
"We have power for barely two hours a day... We are desperate for light."
Power cuts are unbearable during summer. Temperatures sometimes sizzle at 50 degrees Celsius (122 Fahrenheit).
India this year baked in its longest heatwave on record, according to government weather experts.
They warn steadily more oppressive temperatures will be seen increasingly in the future.
India aims to boost non-fossil fuel power capacity to 500 GW by 2030 and is committed to achieving a net-zero-emissions economy by 2070 -- two decades after most of the industrialised West.
Renewable energy plants are being built at breakneck speed, rising from 76 GW to 203 GW in the past decade, according to government figures. Around a quarter of that is from the wind.
But reaching the 500 GW renewable target requires expansion on a vast scale. 'How will we survive?'
Such statistics mean little to villagers living near the towering turbines, slamming them as an "incursion of the white structures".
Environmental activists say that while outsiders see the desert as a dead zone, they are areas rich in biodiversity.
Locally revered species, such as the critically endangered Great Indian Bustard, are facing extinction.
The once common giant brown-and-white birds fly into the mesh of overhead power lines.
Parth Jagani, an environmental activist in Jaisalmer, said numbers had plummeted in the past 25 years -- with just 150 left nationally.
"Once the windmills and the high-tension wires were installed, their mortality increased," Jagani said.
The current economic landscape shares striking similarities with the late 1920s,
marked by high debt, wealth inequality, and low energy consumption growth.
Historical data suggests a strong correlation between energy supply growth, economic growth, and income equality.
The world economy may be transitioning from growth to shrinkage due to declining energy resources, potentially leading to financial instability and political conflict.
Today, there is great wage and wealth disparity, just as there was in the late 1920s. Recent energy consumption growth has been low, just as it was in the 1920s. A significant difference today is that the debt level of the US government is already at an extraordinarily high level. Adding more debt now is fraught with peril.
Figure 1. US Gross Federal Debt as a percentage of GDP, based on data of the Federal Reserve of St. Louis. Unsafe level above 90% of GDP is based on an analysis by Reinhart and Rogoff.
Where could the economy go from here? In this post, I look at some historical relationships to understand better where the economy has been and where it could be headed. While debt levels and interest rates are important to the economy, a growing supply of suitable inexpensive energy products is just as important.
At the end, I speculate a little regarding where the US, Canada, and Europe could be headed. Division of current economies into parts could be ahead. While the problems of the late 1920s eventually led to World War II, it may be possible for the parts that are better supplied with energy resources to avoid getting into another major war, at least for a while.
[1] Government regulators have been using interest rates and debt availability for a very long time to try to regulate how the economy operates.
I have chosen to analyze US data because the US is the world’s largest economy. The US is also the holder of the world’s “reserve currency,” allowing demand for the US dollar (really US debt) to stay high because of its demand for use in international trade.
Figure 2. Secondary market interest rates on 3-month US Treasury Bills and 10-year US Treasury Securities, based on data accessed through the Federal Reserve of St. Louis. Amounts for 1940 through 2023 are annual averages. Amount for 2024 YTD is average of January to July 2024 amounts.
Comparing Figure 1 and Figure 2, it is clear that there is a close relationship between the charts. In particular, the highest interest rate in 1981 on Figure 2 corresponds to the lowest ratio of US government debt to GDP on Figure 1.
Up until 1981, the changes in interest rates were either imposed by market forces (“You can’t borrow that much without paying a higher rate”) or else as part of an attempt by the US Federal Reserve to slow an economy that was growing too fast for the available labor supply. After 1981, the same market dynamics no doubt took place, but the overall attempt at intervention by the US Federal Reserve seems to have been in the direction of speeding up an economy that wasn’t growing as fast as desired.
In Figure 2, the 3-month interest rates correspond fairly closely to government target interest rates. The 10-year interest rates tend to move on their own, perhaps somewhat influenced by Quantitative Easing (QE), in which the US government buys back some of its own debt to try to hold down longer-term interest rates. These longer-term interest rates influence US long-term mortgage interest rates.
Recent monthly data show that 10-year interest rates started rising very quickly after reaching a minimum following the Covid response in early 2020. The lowest 10-year average rates took place in July 2020, and rates started moving up in August 2020.
Figure 3. Monthly average secondary market interest rates on 3-month US Treasury Bills and 10-year US Treasury Securities, based on data accessed through the Federal Reserve of St. Louis.
This suggests to me that market forces play a significant role in 10-year interest rates. As soon as people started borrowing money to remodel or to move to a new suburban location, 10-year interest rates, and likely the related mortgage rates, started to drift upward again. If this observation is correct, the Federal Reserve has some control over interest rates, but it cannot adjust the 10-year interest rates underlying mortgages and other long-term debt by as much as it might like.
The apparent inability of the Federal Reserve to adjust longer-term interest rates to as low a level as it would like is concerning because the US government debt level is very high now (Figure 1). Being forced to pay 4% (or more) on long-term debt that rolls over could create a huge cash flow issue for the US government. More debt could be required simply to pay interest on existing debt!
[2] An analysis of actual growth in US GDP over time shows how successful the changing strategies in Figures 1 and 2 have been.
Figure 4. Three-year average US inflation-adjusted GDP growth rates based on data of the US Bureau of Economic Analysis.
In the 1930s, the US and much of the rest of the world were in the Great Depression. Interest rates were close to 0% (not shown on Figure 2, but available from the same data). Various versions of the New Deal under President Roosevelt were started in 1933 to 1945. Social Security was added in 1935. Figure 4 shows that these programs temporarily increased GDP, but they did not entirely solve the problem that had been caused by defaulting debt and failing banks.
Entering World War II was a huge success for increasing US GDP (Figure 4). Many more women were added to the workforce, making munitions and taking over jobs that men had held before they were drafted into the army.
After the war was over, the total number of jobs available dropped greatly. Somehow, private sector growth needed to be ramped, using debt of some kind, to provide jobs for the returning soldiers and others left without work. An abundant supply of fossil fuels was available, if debt-based demand could be put into place to pull the economy along. Programs were put into place to get factories running again making goods for the civilian economy. Additional jobs and energy demand were created by upgrading the electrical grid, increasing pipeline infrastructure, and (in 1956) starting work on an interstate highway system.
During the period between 1950 to 2023, the average growth rate of the US economy gradually stepped downward, despite all of the debt-based stimulus that was being added after 1981, as shown in Figure 5.
Figure 5. Average annual US GDP growth rates based on data of the US Bureau of Economic Activity.
[3] While growing debt is important for pulling an economy forward, a growing supply of energy is essential to actually produce physical goods and services.
Economic growth involves producing physical goods and services. The laws of physics tell us that energy supplies of the right types, in the right quantities, are necessary to make the goods and services that the physical economy depends upon.
The rate of growth of world energy supply has been stepping down over the years, as the easiest (and cheapest) to extract fossil fuels tend to get extracted first. The average rate of increase of all energy supply (not just fossil fuels) is shown in Figure 6:
Figure 6. Annual rate of increase in energy consumption growth for the earliest grouping is based on data provided by Vaclav Smil in the Appendix to Energy Transitions. Average rates of increase for later periods are calculated from data of the 2024 Statistical Review of World Energy, by the Energy Institute.
Comparing Figures 5 and 6, we can see that average annual US GDP growth approximately matched growth in world energy supplies in the first two periods: 1950-1970 and 1971-1980.
In the period 1981-2007, average US GDP growth (of 3.2%) soared above world energy consumption growth (of 2.1%). I would attribute this primarily to outsourcing a significant share of the US’s industrial production as the economy shifted to becoming more of a service economy. There were multiple advantages to moving to a service economy. US oil supply had become restricted, and a service economy would use less oil. Also, the costs of imported goods would be much lower than those made in the US for several reasons, including more efficient newly built factories, lower-wage workers, and the use of inexpensive coal as a fuel instead of oil.
The encouragement of increased use of “leverage” under Ronald Reagan in the US and Margaret Thatcher in the UK no doubt added to the effect of using more debt shown in Figure 1. The US government started borrowing more money, rather than increasing taxes. Businesses became larger and more complex. International trade started playing a larger role.
Recent low growth in energy supplies has created an economic problem that added debt has only partially been able to hide. (In the latest period (2008-2023), both US average GDP growth (at 1.8%) and world energy consumption growth (at 1.5%) were very low.) Figure 1 shows that the US added huge amounts of debt, both after the 2008 financial crisis, and at the time of the Covid response in 2020. If it weren’t for these huge debt infusions, US GDP growth would no doubt have been much lower. GDP counts the quantity of goods and services produced, not whether added debt has been used to manufacture these goods, or whether customers have used debt to purchase these goods.
[4] In some ways, the world economy today is like the economy of the 1920s.
The 1920s were characterized by both the rising use of debt (especially consumer credit), and wide wage and wealth disparities. This was a time of innovation. Some farmers had modern new equipment that greatly enhanced efficiency, while most farmers could not afford this equipment.
Figure 7 shows a pattern of wage disparity that operates in precisely the opposite direction from the interest rate pattern shown in Figure 2. The lower the interest rates, the more the concentration of wealth among a very small portion of the population. The higher the interest rates, the more evenly wage and wealth is divided.
Figure 7. U. S. Income Shares of Top 1% and Top 0.1%, Wikipedia exhibit by Piketty and Saez.
A comparison of Figure 7 with Figure 6 and Figure 5 shows that (at least for the years since 1950), faster energy consumption growth seems to lead to faster economic growth. With faster economic growth, the economy can support higher interest rates and higher wages for lower-paid workers. There is less push for “complexity” to try to replace workers with machines.
When energy consumption growth is low, the economy tends to grow more slowly. The interest rates that corporations and individuals can afford to pay are relatively low. With low interest rates, asset prices of all kinds soar because monthly payments to buy these assets fall. The prices of stocks, bonds, homes, and farms tend to soar. The already rich become richer and richer, as the poor are increasingly squeezed out of the economy.
Physicist Francois Roddier has said that physics dictates the outcome of widely diverging incomes when energy supply is low. It takes much less energy to supply an economy of a few rich people and many poor people than it takes to support an economy with relatively equal incomes. The vast majority of the supposed wealth of the rich exists as promises that can only be fulfilled in the future if there is enough energy of the right kinds to fulfill these promises. Their promised future wealth does not affect today’s energy use. While the energy use of rich people is somewhat higher than that of poor people, much of the difference disappears when a person considers the fact that much of their wealth is essentially “paper wealth” that may or may not actually be present as the future actually unfolds.
Both the 1920s and the latest period (2008-2023) are very low energy-growth periods. The fact that (2008-2023) is a low energy growth period (at 1.5% per year) can be seen on Figure 6. Energy supply was growing even slightly more slowly in the 1920s (based on data from Vaclav Smil’s Energy Transitions). Population was growing by 1.1% per year in both the 1920s and in the latest period (2008-2023.) Net energy consumption per capita growth was slightly negative (-0.1%) in the 1920s and only a very small positive percentage (0.4%) in the 2008-2023 period. Per capita consumption had been growing much more quickly between 1950 and 1980.
[5] The economy becomes very fragile when the growth of energy supply is low, compared to the growth of the world’s population.
Hidden beneath the surface is the problem that there is not enough energy to go around. This problem doesn’t manifest itself in high prices; it manifests itself in unusually large wage disparities. Very rich individuals (such as Bill Gates and Elon Musk) gain excessive influence. Special interests and their drive for profits also become important. At times, this drive for profits can come ahead of the well-being of citizens.
Citizens become more quarrelsome. Differences between and within political parties become greater. Political candidates no longer treat other candidates with the respect we would have expected in the past. The problem is, in some sense, the problem of a game of musical chairs.
Initially, the game has as many players as chairs. The players walk around the outside of the group of chairs as the music plays. In each round, one chair is removed and the players must scramble for the remaining chairs. The person who does not get a chair is eliminated from the game.
[6] It seems to me that major parts of the world economy are transitioning from a growth mode to a mode of shrinkage.
Figure 9 gives a representation of how the world’s growing economy can be visualized, and how it may change in the future.
Figure 9. Representation of an economy that is growing up until not long after 2020, and shrinking thereafter, by Gail Tverberg.
The fact that growth in the consumption of fossil fuel energy supplies has been retreating to lower levels should be of concern (Figure 6). At some point, the world economy will be in a situation in which the amount of fossil fuels we can extract is falling. While we have some add-ons to the fossil fuel system (including hydroelectric, nuclear, wind, and solar), they are all manufactured using the fossil fuel system and repaired using the fossil fuel system. These add-ons would stop producing not long after the fossil fuel system stops producing. They need fossil fuels to make replacement parts, among other problems.
The amount of growth in energy supply determines the growth in physical goods and services that can be produced. In periods of rapid growth, borrowing from the future, even at a high interest rate, makes sense. In periods of low growth, only loans with a very low interest rate are feasible. When the economy is shrinking, very few investments can repay loans requiring interest.
Needless to say, repaying debt with interest becomes much more difficult in a shrinking economy. In the US, our underlying problem is that since 1981, the US’s financial policy has been “throw every tool in the tool box” at stimulating the economy. We are now running out of tools to stimulate the economy to grow faster. Adding more debt isn’t likely to work very well, or for very long.
At this point, the many government-funded investments aimed at providing green energy and offering transportation by electricity are not paying back well. Citizens are repeatedly being told that there is a need to move away from fossil fuels to prevent climate change. But world CO2 emissions continue to rise. They simply moved to a different part of the world.
Figure 10. Carbon dioxide emissions for Advanced Economies (members of the Organization for Economic Co-Operation and Development) versus all others, based on data of the 2024 Statistical Review of World Energy published by the Energy Institute.
[7] What does history since 1920 say may be ahead?
It is hard to see that things will turn out well, but we do know that historical civilizations have collapsed over a period of many years. We can hope that if we are facing the collapse of at least part of the world’s economy, this collapse will also be slow. Some intermediate steps along the line likely include the following:
(a) Stock market collapses. After excessive speculation in the stock market in the late 1920s, the stock market collapsed on October 29, 1929, starting the Great Depression. Another major crash occurred in 2008, during the Great Recession. Both of these speculative bubbles seem to have been fueled by low short-term interest rates.
(b) Drops in the prices of homes, farms, and other assets. The Great Depression is noted for major drops in the prices of farms. The Great Recession is known for major drops in the prices of homes. We are now facing a situation with far too much Commercial Real Estate. Its price logically should fall. Farmers are also having difficulty because wholesale food prices are too low relative to the various costs involved, including interest payments relating to equipment purchases and mortgages. The problem is especially acute if farm property has been purchased at currently inflated prices. The prices of farms logically should fall, also.
(c) Debt defaults, related to asset price drops. Banks, insurance companies, pension plans and many individuals owning bonds will be badly affected if defaults on loans or bonds start increasing. (In fact, even if the market interest rates simply rise, the carrying value on financial statements is likely to fall.) If commercial real estate or a farm is sold and the sales price is less than the outstanding debt, the bank issuing the loan will be left with a loss. This debt is often resold, with credit rating agencies falling short in indicating how risky the debt really is.
(d) Failing banks, failing insurance companies, and failing pension plans. Even bankrupt governments defaulting on their loans.
With failing banks, there is less money in circulation. The tendency is for commodity prices to fall very low, putting farmers in worse financial shape than before. They cut back on production. Food production and transport use considerable amounts of oil. Reduced food production leads to less need for oil consumption and thus, falling oil prices. With low oil prices, production tends to fall.
(e) If a government survives, it may try to issue much more debt-based money to try to raise prices. This might work if the country is able to produce all goods locally. But the huge amount of new money (and debt) will not be honored by other countries. The result is likely to be hyperinflation, and still no goods to buy.
(f) Persecution of the wealthier people blamed for society’s problems. If people are poor, and there aren’t enough goods to go around, there is a tendency to find someone to blame for the problem. In Europe, prior to World War II, the Nazis persecuted the Jews. The Jews were often rich and worked in finance or the jewelry business.
(g) War. War gives the possibility of obtaining resources elsewhere. Figure 4 shows that going to war can greatly ramp up GDP. It is a way of putting laid-off workers back to work. It is an age-old solution to not-enough-resources-to-go-around.
[8] Can any political approach put off the bad impacts suggested in Section [7] above?
A country that can provide complete supply chains based on its own resources, completely within its own borders can be somewhat insulated from these problems, as long as its resources are adequate for its population. I don’t think that any of the Advanced Countries (members of the OECD, which is similar to the US and its allies) can do that today. The US is closer to this ideal than Europe, but it is still a long way away. The central and southern part of the US, which is where Donald Trump’s support is strong, is closer to this ideal than elsewhere.
Trump is advocating adding tariffs on imported goods. Such tariffs would work in the direction of independence from China, India, and other industrialized nations. Trump also seems to advocate staying out of wars, wherever possible. If an area is doing well in terms of energy supply (including food supply), this would be a good strategy.
Kamala Harris is advocating capping today’s food prices. This would please city-dwellers, but it would encourage farmers to quit farming. Capping today’s food prices would also discourage the importation of food from elsewhere, leaving many empty shelves in grocery stores. Indirectly, it would also have an adverse impact on the world’s oil production and the quantity of food grown elsewhere.
Giving more money to poor people would almost certainly lead to more government debt. If countries in Europe were to do this, it would almost certainly devalue their currencies. They would find it harder to import goods from anywhere else in the world.
In fact, the US would likely also encounter difficulty in importing as many goods from elsewhere, if it chooses to give more money to poor people (and fund this generosity through more debt). China and Russia would have even more motivation to abandon the US dollar for trading purposes than they do today. The US, Europe, and other Advanced Economies would increasingly find imported goods unavailable.
Wind, solar, and electric vehicles are not fixing the economy now. Adding more debt to subsidize these efforts would likely have the same bad effects as adding more debt to subsidize poor people.
[9] A guess as to what could be ahead for the US, Canada, and Europe.
Donald Trump is suggesting tariffs and other policies that might be helpful for the parts of the US, Canada, and Mexico that think they might have enough resources to more or less get along on their own in the near future. This includes much of the central and southern part of the US. Central Canada would fit into this pattern, as well. Mexico is connected by pipeline to this area, too. At least in the US, Trump is favored in these areas.
In the highly populated areas along both US coasts, the debt-based policies of Kamala Harris will seem more reasonable because these sections have limited resources to rely on, but lots of population. The only solution they can imagine is more debt. I expect that Europe and the coasts of Canada will follow Kamala Harris’s strategies, but with their own leaders.
I can imagine a scenario in which after the US election, the US will break apart into two sections: a Trump section in the center of the US, and a Harris portion consisting mostly of the two coasts, and perhaps a few northern states. The Trump section will band together with Central Canada and Mexico and try to keep operating for some years longer. The Harris portion will join together with the coasts of Canada and most of Europe to get into war with Russia and China. The Harris portion will issue lots more debt. The Harris group will forget that their areas cannot really make many armaments without a huge amount of international trade. As a result, the Harris group will have great difficulty in being successful at war.
For Sri Lanka, Some Uneasy Parallels In Bangladesh Bangladesh protest is a reminder of Sri Lanka’s 2022 ‘Aragalaya’ (struggle), especially the departure or escape of the elected leaders amid people’s struggle for sovereignty. Kusum Wijetilleke Updated on: 23 August 2024
Island in Crisis: A view of the GotaGoGama camp during Sri Lanka’s economic crisis in 2022 Photo: Getty Images
We find ourselves in a moment where western countries, bastions of laissez-faire capitalism and global free trade, have turned to protectionism, most notably the electric vehicle tariffs recently imposed by the US and the European Union (EU) on Chinese exports.
This is not the first time. The 1974 Multi Fibre Arrangement (MFA) was aimed to protect the textile industries of developed nations, which had a long-lasting impact on some economies of Southeast Asia. In Sri Lanka, it would spawn the famous garment factory project of former President Ranasinghe Premadasa, part of what scholars like Saman Kelegama have called Sri Lanka’s “second wave of liberalisation”. To this day, Sri Lanka’s garment industry remains one of its top foreign exchange earners, a vital pillar of the economy.
The quota system imposed by the MFA also benefited Bangladesh, which began its industrialisation process in the early 1980s. Some 40 years later, despite relatively robust post-pandemic growth and macroeconomic stability, the last few weeks have revealed the underlying desperation of the Bangladeshi people, and there are certainly parallels to be drawn with Sri Lanka’s 2022 ‘Aragalaya’ (struggle), especially the departure or escape of democratically elected leaders. In both cases, the consolidated student body was central to the protest movements and over-represented at the sharp end of confrontations with security forces.
Protesters seeking the ouster of the acting president of Sri Lanka,
Ranil Wickremesinghe, on July 13, 2022 in Colombo Photo: Getty Images
In Sri Lanka, there is a tendency to breakdown the Aragalaya into two distinct phases—an idealistic, non-violent, people-centric, urban-cosmopolitan movement generating open-debate and progressive values; and, random acts of violence encouraged by political parties in an attempt to overthrow the State and take over its institutions. From the 2018 Yellow Vests movement in France to the pro-democracy protests in Hong Kong, peaceful protest movements can morph into violent uprisings. The fact of a movement devolving into violence should not in itself de-legitimise the movement or its ethos.
In many ways, there seems to be a more complex set of circumstances that led to the violence witnessed in Bangladesh—a staggering single-day death toll of 97. Compare this with the death toll in Sri Lanka over the 7-8 month period of the protest movement: 10 protestors, one Member of Parliament, one state official and one policeman.
Both Sri Lanka and Bangladesh suffer from an under-diversified and under-developed export sector, with a very low proportion of their respective exports being categorised as ‘high technology’.
The economic reality in Sri Lanka was, however, much worse than Bangladesh. At the peak of the crisis, Sri Lanka had among the top five highest rates of inflation in the world, and was among the top three most acute currency depreciations. Sri Lanka’s debt to GDP was over 125 per cent, external debt to GDP was over 75 per cent.
When the Gotabaya Rajapaksa government took over, Sri Lanka’s treasury had over $7.5 billion in reserves; a significant buffer. From 2019 to the end 2021, Sri Lanka’s foreign exchange reserves collapsed by $6 billion or 79 per cent. In contrast, many regional peers saw increases in their overall reserves during the same period, with Bangladesh being one of the better performers increasing its reserves by 41 per cent.
Bangladesh presents a case study for Sri Lanka on not only how to avoid the pitfalls of late-stage industrialisation, but also reveals the contradictions of the neo-liberal era. Bangladesh is a poster boy for the success of the free trade regime; GDP per capita has grown and the economy has developed as multinationals shifted manufacturing plants to take advantage of lower labour costs. Despite the burgeoning garment sector, like Sri Lanka, Bangladesh also still depends on remittances from its migrant worker population and has an agricultural sector dependent on government subsidies.
Both Sri Lanka and Bangladesh suffer from an under-diversified and under-developed export sector, with a very low proportion of their respective exports being categorised as ‘high technology’. Like Sri Lanka, Bangladesh too suffers from low tax revenues with tax to GDP in single digits at around eight per cent in 2022.
Despite these similarities, the two countries have very different debt profiles. An International Monetary Fund (IMF) review in November 2023 stated that “Bangladesh remains at a low risk of external and overall debt distress”. Critically, Bangladesh has one of the highest rates of extreme poverty in the region—around 10 per cent of the population lives in near destitution, while it also scores poorly on the Multidimensional Poverty Index. A recent report suggested that some 28 per cent of children under five are stunted, indicating chronic under-nutrition. The contributing factors for this situation are rising income inequality, rural-urban divide and the COVID-19 pandemic that exacerbated these dynamics.
Bangladesh and Sri Lanka have both failed to invest in public services, education, health and social assistance. Even as their economies grew and the per capita GDP increased, the notoriously-elusive ‘trickle-down’ did not materialise.
Among the lower-middle income countries, Sri Lanka is a low spender on social expenditure (health, education and social assistance): at around five per cent of GDP, while Bangladesh spends under three per cent. Sri Lanka and Bangladesh both spend around 0.7 per cent of GDP on social assistance, which is lower than the South Asian average, which is itself lower than the global average. Sri Lanka and Bangladesh are also among the lowest spending countries per student on primary and secondary education.
The Aragalaya was a reaction, not just to the failures of the political class, but also to the lack of accountability. The upcoming cycle of elections will be an opportunity for the Sri Lankan people to demonstrate their frustrations at the political classes through the ballot. The outcome of the election will only add to the post-mortem of Sri Lanka’s mass protest movement. Has the average Sri Lankan voter simply moved on from “systemic change”? The very fact that the Rajapaksa scion, Namal, is contesting the upcoming Presidential election is a statement from a political dynasty that just two years ago needed to flee abroad for their safety.
The elections will also answer questions related to the incumbent president’s handling of the economic crisis, the popularity of Sri Lanka’s Marxist-Leninist Janatha Vimukthi Peramuna (JVP) party, and whether the people view the main opposition party, the liberal Samagi Jana Balawegaya (SJB), as a desirable alternative. The main election dynamic might well be a protest vote against the Rajapaksa political dynasty, but it could also reveal dissatisfaction with the political classes as a whole, if the JVP grows its voter base significantly, as some pollsters suggest they might.
The protests in Bangladesh emanated partly from a longstanding quota system for government jobs. Sri Lanka is also undergoing a period of prolonged stagnation alongside a decimation of its middle class.
Power cuts and fuel queues made life unlivable for the middle class, broadening the Aragalaya’s base of support. As the protests intensified, it gave a tacit permission to the upper-middle classes to join in. Soon, it was not uncommon to see CEOs and other industry titans walking the streets of Galle Face Road in Colombo alongside protesters and activists. Indeed, the central streets along the main business district became a sort of symbolic shrine to the movement, a place to mark the people’s struggle. GotaGoGama or GGG was the epicentre of the wider Aragalaya movement, and in many ways, the star attraction.
However, the Aragalaya was not born on the Galle Face Road. Instead, it was the farming community in the far-flung corners of the country that first began protesting en masse as early as in mid-2021 over the government’s organic fertiliser policy. The currency collapse resulting from the free-float of the Rupee saw teachers, nurses and a number of civil servants join the struggle as the cost of living skyrocketed. The coalescing of the working classes, farmers and peasantry—the traditional Mahinda Rajapaksa base—should have been a warning.
At its peak, during its most expansive ideological formation, the Aragalaya came to encapsulate a mood for deep, structural changes in how Sri Lanka is governed. There were strains that called for constitutional reform and the inclusion of a people’s chamber in Sri Lanka’s governance structure. A significant section of the Aragalaya also called for the abolishing of the Executive Presidency.
The Sri Lankan Aragalaya was not a uniform, singular animal. Like all movements, it was a collection of moving parts, some working in coordination, others dancing to their own tune. It is fascinating that we celebrate the diverse and eclectic nature of the Aragalaya, but find it difficult to reconcile its many faces when they show up bruised and bloodied.
Critics of the Aragalaya insist that it was a fleeting, idealistic but ultimately incoherent movement which devolved into violence, alienating the middle classes. The violence linked the Aragalaya to Leftist political organisations such as the Inter University Students’ Federation (IUSF) and its political arm, the Frontline Socialist Party (FSP). The JVP’s own history of violence linked it to less desirable aspects of the Aragalaya; the attempted insurrections in the 1970s and 1980s still causes the average Sri Lankan to disengage from any form of overt ‘Leftism’.
The wider base of middle and lower-middle classes that were integral to the legitimacy of the movement seemed dismayed by the violence from both sides. By the time Ranil Wickremesinghe was elected President through a Parliamentary vote in July 2022, the wider Aragalaya had been in place for over four months, but the energy was beginning to dissipate. The wider community began to grow suspicious of the more revolutionary streak the movement was starting to display; a brutal crackdown by the Wickremesinghe government also led to some part of the movement going underground.
With regards to violence and dissent, philosopher Noam Chomsky noted in 1967 that “any rational person would agree that violence is not legitimate unless the consequences of such action are to eliminate a still greater evil”. Whereas historian Hannah Arendt viewed violence from the perspective of ‘political legitimacy’, there are nuances that were lost on the wider participants of the Aragalaya who simply sought a return to normalcy.
The protests in Bangladesh emanated partly from a longstanding quota system for government jobs, indicating that the Bangladeshi people perceive a lack of meritocracy in a system that for decades has under-invested in their futures.
Sri Lanka is also undergoing a period of prolonged stagnation alongside a decimation of its middle class. In both countries, protest movements were a direct reaction to the dilution of people’s sovereignty. Due to being Indo-European languages from different branches—with influences from Sanskrit and Pali—Bengali and Sinhalese have many similar sounding words with similar meanings. ‘Jatiya’ in Bengali and ‘Jatika’ in Sinhalese both allude to the word ‘national’; a characteristic of a nation.
The question remains: what good is a nation if it cannot live up to the hopes and dreams of its people?
(Views expressed are personal)
Kusum Wijetilleke is a political commentator and foreign affairs analyst
(This appeared in the print as 'Bruised And Bloodied')
