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Sri Lanka’s Economic Crisis May Be the First of Many

What’s happening?

This week, Sri Lanka’s Prime Minister, Mahinda Rajapaksa, resigned after facing months of protests in response to the country’s worst economic crisis since it gained independence in 1948.

Rajapaksa’s resignation came after clashes between anti-government protesters and police escalated on May 9th, resulting in five deaths and 190 people injured. Protests started in late March and had been largely peaceful since early April.

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Why are people protesting?

According to experts, Sri Lanka’s economic crisis has been building for years primarily due to government mismanagement. 

This has involved a heavy borrowing spree from foreign lenders to fund public services. The Sri Lanka government also cut taxes as a response measure, which only decreased government revenue and reserves, minimizing access to essential imports like fuel and food.

Other factors include natural disasters, the COVID-19 pandemic, and a chemical fertilizer ban that have all impacted Sri Lanka’s agriculture and tourism industries.

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For Sri Lankans, the crisis has meant:

  • Staggering inflation rates and basic consumer goods prices
  • Long lineups and rationing for basic goods like food and fuel
  • Business closures
  • Power cuts lasting 10+ hours 

The government has implemented states of emergency (which allows detaining without a warrant), curfews, social media blackouts, and violent police action in response to public protests. Social media blackouts are often viewed as a human rights violation, enabling governments to limit public organization and expression of grievances.

The Prime Minister’s resignation will dissolve the government. But according to a BBC article, the public’s main target is the President—Gotabaya Rajapaksa—and protests will likely continue until he also resigns.

What’s the impact?

Economic groups like the International Monetary Fund (IMF) and the World Bank see Sri Lanka’s crisis as an early sign of what’s to come for global low- and middle-income nations. 

These countries will likely be hit hard economically in the coming months and years. In addition to the pandemic and debt costs, rising food and energy costs caused by Russia’s invasion of Ukraine are major factors. According to the UN, 107 countries are facing the shock of food prices, energy prices, and/or tight financial circumstances.

The UN names Egypt, Tunisia, and Turkey—among others—at high risk for economic collapse. Economic crises often cause civil unrest and conflict escalation, which could expand beyond Sri Lanka as more countries face financial hardship.

“Food crises are bad for everyone, but they are devastating for the poorest and most vulnerable. There are two reasons. First, the world’s poorest countries tend to be food importing countries. Second, that food accounts for at least half of total expenditures in household budgets in low-income countries, so it hits them hardest.”

David Malpass, President, World Bank

How Can OSINT Help?

As the Russia-Ukraine conflict continues and global food and energy prices increase, governments must monitor economic and civil conditions in areas of interest. Maintaining this information advantage will be key to predicting and responding to economic crises and related conflicts.

Open-source intelligence (OSINT)—which is generated from publicly-available sources like social media—is valuable for gathering more comprehensive and timely insights for target regions. For example, a robust OSINT strategy can help analysts:

  • Gather insights from proxy sources like decentralized networks and the dark web, which netizens may use during social media blackouts
  • Access networks relevant in specific regions of interest for more comprehensive intelligence
  • Monitor emerging trends in public sentiment within a target population directly from social media users
  • Predict and detect events, like on-the-ground violence, in real-time

To learn more about using OSINT for crisis intelligence and information environment assessments, contact Echosec Systems today.