Dilrook Kannangara

Sri Lanka suffered from and overcame multiple disasters since 1971. However, those helpful conditions are no longer valid after 2009. Post-2009 disasters are difficult or impossible to overcome as a result. The country is yet to overcome the effects of the 2019 Easter Sunday attacks, economic impacts of the 2020 COVID-19 pandemic and economic bankruptcy of 2022. For this reason, I hold grave fears over Sri Lanka’s ability to overcome the latest disaster.

The Example of the Industrialist and Factory Fire

If a fire gutters the factory of an industrialist, he would not restore his factory to how it was before. Instead, he will only restore profitable sections of the factory. Machinery that used to produce less profitable or unprofitable stuff will not be replaced. This is because he knows that economic hard times are about to hit him after the fire disaster. If he restores the profitable sections, he is prepared for hard times. Otherwise, he will be staring down bankruptcy.

With a history of budget and trade deficits, Sri Lanka does not have the money for post-disaster recovery. Funds must be rationed and must be used for priority sectors. Otherwise, the whole economy tanks, national security collapses and territorial integrity comes under threat.

Not all communities in Sri Lanka are equally valuable for Sri Lanka. One community is far more valuable than others due to their disproportionate contribution to national security, disaster response, community support operations, blood donation campaigns, tax contribution to the state, counter separatism and counter terrorism campaigns, etc. Protecting and restoring the interests of this single community is the deciding factor in Sri Lanka’s recovery.

In the current context, the tea industry is not helping but is the main cause of the crisis and environmental destruction. Care must be taken not to invite repeat landslides, and worse, by helping the tea industry recover. It’s not worth it.

How Sri Lanka Overcame Disasters Before 2009

For good or bad, before 2009, Sri Lanka prioritized the recovery of its most important community following a disaster. At times others were even disregarded. From around 1975 when violence broke out, it was not possible to help the north and east. It was physically not possible. This actually helped Sri Lanka. All funds were used for the rest of the nation which are far more productive in terms of national security, government taxes and exports. As a result, Sri Lanka quickly recovered.

Over 30 years of war damage of the north and east was not restored until 2010. This meant these funds went to provinces outside the north and east. It sped up the recovery from disasters.

These include the 1971 JVP insurrection, 1973 famine, 1977 riots, late 1970s floods and cyclone, 1978 bombing of AirCeylon passenger plane and resultant impact on tourism, the war from 1975 to 2009, July 1983 incidents, Indian invasion from 1987 to 1990, JVP second insurrection from 1987 to 1990, Gulf War and its impact from 1990 to 1991, collapse of the communist bloc and its impact from 1989 to 1995, a number of natural disasters till 2009, the tsunami of 2004, 1998 to 2000 Asian financial crisis, Tamil terrorist attacks on the airport in 1986, 2001 and 2007, Global financial crisis of 2008 to 2009 and Central Bank and oil refinery bombings of 1995 and 1996. Sri Lanka overcame all these massive disasters with ease. They could have bankrupted Sri Lanka but they didn’t.

It was because all recovery efforts and funds went to the most important community of the country, not by choice but due to facts on the ground. Although PTOMS agreement tried to share post-tsunami reconstruction aid with the north and east, a successful disruption by way of a court ruling avoided that which channeled all funds to the rest of the country. As a result, Sri Lanka, as a nation overcame the disaster with ease.

Following massive JVP and IPKF destruction from 1987 to 1990, many an economist predicted the collapse of the Sri Lankan economy. They seemed correct when the Gulf War erupted in mid-1990 with the invasion of Kuwait which was the biggest source of forex for Sri Lanka then. But the contrary happened – Sri Lankan economy did way better than before. Why? In 1990 Sri Lanka imposed a total economic embargo on the north and parts of the east. As a result, those provinces were denied imported goods. Since those provinces had no exports to lose, the economic embargo and war saved billions of dollars of imports from those areas annually. Not pretty but nationally beneficial.

In fact, the average economic growth rate of Sri Lanka during the 30 plus years of war was way better than the pre-war average economic growth and post-war average economic growth. It’s no accident. A good byproduct of the war was that it forced the government to disproportionately invest in the most valuable community of Sri Lanka, and not equally distribute recovery funds.

Post-2009 Lingering Disasters

However, this changed since 2009. The government spends recovery funds throughout the nation. No discrimination is seen between the most nationally valuable community and other communities. However, available funds are very limited. If they are equally distributed, the productive sections suffer low investment.

This is the main reason why post-2009 disasters linger on. Sri Lanka never really recovered from the 2019 Islamic terror attacks on Easter Sunday. Its impact was put on to the COVID-19 disaster. But 2019 had a poor tourism season after 4/21 attacks for 11 months before COVID lock-downs affected the economy. It also affected post-COVID recovery. A number of airlines stopped servicing Sri Lanka altogether and a US travel warning is still in place. Even the 2016 flood is still haunting Sri Lanka as most of the affected people were not relocated from repeat floods, didn’t receive assistance more than a banana with a printed name and damaged infrastructure was not restored. COVID crisis was the same. While other countries recovered from the crisis by 2021, Sri Lanka continued with repeated economic shrinkage till 2024. The Sri Lankan economy has still not come back to its 2018 value. The 2022 economic crisis is the same. The temporary period of relief is not due to overcoming the crisis but solely because loan repayments were postponed until 2028. Therefore, the crisis is not over yet. Going by this trend, I hold grave fears for Sri Lanka’s recovery from the 2025 cyclone and floods.

Economic realities don’t follow morality, religion or karma. Unless economic realities are addressed or if Sri Lanka is lucky to have them automatically addressed (as happened from 1971 to 2009), economic repercussions will punish the nation.