Countries never fall in a day. There’s always a long chain of events that precedes something so catastrophic, a string of decisions and circumstances that lead to ultimate collapse. But there is often a day that is remembered as the day everything truly fell apart. For Sri Lanka, July 9 is that day.
The Times of India has been tracking the events in Sri Lanka today. Between about 1 p.m. and 10 p.m. local time:
- Protesters surrounded the home of President Gotabaya Rajapaksa, who had already fled.
- Police used tear gas on protesters.
- Protesters stormed Rajapaksa’s house.
- Prime Minister Ranil Wickremesinghe called an emergency meeting of party leaders.
- Sanath Jayasuriya, a cricketer who is one of the most famous people in Sri Lanka, joined the protest.
- MPs from Rajapaksa’s party and military personnel called for his resignation.
- An MP was attacked by protesters.
- Wickremesinghe resigned.
- Protesters broke into Wickremesinghe’s house and set it on fire.
Rajapaksa’s whereabouts are currently unknown. There were reports of a VIP motorcade heading to the airport in Colombo, Sri Lanka’s largest city, and reports of unknown people leaving on Sri Lankan naval vessels.
All of this in a country that was, until recently, on the rise and doing well for its neighborhood. Sri Lanka’s GDP per capita is about double that of India, and ordinary Sri Lankans have seen a significant increase in their quality of life since the country’s lengthy civil war ended in 2009. And in nine hours today, the president is missing, the government has collapsed, and the former prime minister’s house is on fire.
For a fuller discussion of the poor decisions and bad luck that led to Sri Lanka’s fall, see my piece from June 3. Sri Lanka had exceptionally poor leadership that hastened its collapse, but as central banks in wealthy countries raise interest rates to quell inflation, the cheap credit that many developing countries have relied upon in recent years will disappear. There has been a massive sell-off of emerging-market bonds as traders seek safer investments.
The U.S. must prepare for the fallout across the developing world. Sri Lanka is the first developing country to see widespread chaos and government collapse in an environment of higher inflation and retreating globalization. It won’t be the last.