Features
Can we have good economics and bad politics?

Edited by Amaya Vershuur
On Sunday, July 3, a week prior to President Gotabaya Rajapaksa’s resignation, I wrote an article called ‘’ in which I reflected on the proposed economic reform programme, the role of the International Monetary Fund (IMF) and argued for a broad coalition of activists, political leaders and professionals to come together to provide a more just and decent economic reform plan for all Sri Lankans.
I received a response the very next day from Shanta Devarajan, former Chief Economist of the World Bank, familiar with Sri Lanka and knowledgeable about the workings of the IMF. While much has changed since President Gotabaya Rajapaksa’s resignation, much remains the same – in particular Sri Lanka’s need for an IMF bailout. Below is our frank discussion of the impact of an IMF bailout on Sri Lanka’s economic situation.
Shanta D:Thanks for sharing the article. Since you asked for reactions, I will share mine with you. While your proposed “Next Steps” are perfectly sensible, I think your characterization of the economic reform program and the role of the IMF and other IFIs is incorrect (and perpetuates some myths from the 1970s). Furthermore, a closer look at the current situation in Sri Lanka provides an opportunity for the economic and political agendas to come together.
Is the government strong enough to implement the necessary reforms?
Shanta D: In your article you state that, “Even if this government (the previous government headed by Gotabaya Rajapaksas with Ranil Wickremesinghe as Prime Minister) lasts it would be too weak to carry out the stringent economic reforms that the IMF is likely to impose on Sri Lanka.” However, the government has already undertaken most of the reforms proposed in the programme. So it’s hard to see how the government is too weak to carry out the reforms. Furthermore you mention “Caught between the economic pressure of IFIs and lenders…” The only pressure is coming from the Sri Lankan government, which took the decision to call for a debt standstill and embark on a debt restructuring program and an IMF program. In order to achieve a debt restructuring (i.e. get the creditors to agree to take a haircut on their bonds and debts), the Sri Lankan government has to show that it has a credible fiscal policy that will ensure that it can pay back the (reduced) level of debt. So all of the economic reforms in the IMF program are reforms needed to restore stability to Sri Lanka’s fiscal policy so that it can reduce its debt. The pressure is self-imposed because without a debt restructuring, the economy would simply collapse and be unable to recover for a long time (just look at Lebanon).
Ram M:In terms of government weakness/strength, I do think the government may be strong enough to carry out some of the reforms – such as flexible exchange rates and some tax increases. Getting rid of subsidies though maybe trickier. And I am not convinced they can reduce expenditure on State Owned Enterprises (SOEs) in the face of strong public sector unions. Even a vanity project like Sri Lankan Airlines is still to be privatized, leave alone the Petroleum Corporation and the Ceylon Electricity Board. For this to happen, you need a strong government with the support of the people willing to take on entrenched interests.
Shanta D:Currently, the government is working on schemes to provide alternative employment options for the laid-off workers in the privatized SOEs. One of them is to use the government-owned land to give these workers shares in the land, which they could then farm themselves or lease to other farmers. In any event, there is a lot of experience around the world in managing worker resistance to privatization. Programs such as voluntary retirement schemes and even cash transfers (as in Brazil’s Bolsa Familia) have overcome the much-feared resistance from workers. I don’t think having a strong government is either necessary or sufficient. It takes a creative plan and excellent public communication. The current situation in Sri Lanka helps because of the widespread antipathy to the status quo.
Ram M:I take your general point that worker resistance can be reduced by creative schemes. But I just do not see how a government that lacks support can be effective at coming up with creative ideas or good public communication. At a minimum there should be a plan and the government should communicate it. And preferably, the plan should be viewed as fair and that the money saved as not wasted – for example on SUVs for ministers. I do not see the current conditions reflecting that. Very few people – other than SLPP politicians – will see whatever the government does as legitimate.
My point is that a politically weak government is more likely to agree to external measures and lender/IMF pressure that leads to an agreement that is not as good, as one that could be achieved with a government that is strong. I do not really buy your point that this restructuring is self-imposed by the government. Yes we chose an orderly default instead of a disorderly default, as is the case in Lebanon. But we still have to agree on a debt restructuring programme. And I do not think there is only one type of debt restructuring programme that is given simply by our level of debt and ability to pay it off. In theory, yes. In practice, the programme will depend a lot on how effective the government is at coming up with options, negotiating its position and winning over friends and convincing detractors.
Shanta D:What is this “better agreement” that a strong government would agree to? The economic policies that are being agreed to in the Sri Lanka program are not that different from those agreed to by Korea during the Asian financial crisis of 1997, Argentina during its many crises, and Chad and Republic of Congo in the recent oil price decline of 2014. So extremely weak and extremely strong governments negotiate more or less the same policy package. This tells me that the policy package has to do with the economics of the situation rather than the politics (as it should be).
Ram M:On your comparison between the current Sri Lankan program and those implemented in other contexts, I am sceptical about the argument that short term pain is necessary for medium to long term gain. Most IMF programmes are associated with austerity – at least in the short term. Greece, Spain, not to mention many parts of Latin America. These measures end up punishing the people for the blunders or worse corruption of their leaders. And bilateral and multilateral lenders end up imposing these restrictions, not just because of good economics (balance the budget and reduce wasteful expenditure), but because of politics – a kind of morality play where rich countries (and their public) feel that someone should pay for this. That someone ends up being the poor, or at least the lower middle class and salaried folk – who had nothing to do with the bad decisions of their governments. They gained nothing from it. And indeed suffered from those decisions to begin with.
Shanta D:Let’s separate appearances from reality. Of course, these IMF programs are associated with austerity and when there is austerity, everybody suffers and in some cases, the poor suffer more (incidentally, the recent evidence is that the poor don’t suffer more than the non-poor). And in many cases, the middle class takes a hit. But you have to always compare this outcome to the counterfactual. What would have happened in the absence of the IMF program? In almost all cases, the economy would have collapsed and the poor would have suffered immeasurably. Since (by definition) we don’t observe the counterfactual, most people observe the hardship associated with the IMF program and blame the Fund. But the reality is that the Fund is trying to avoid an even bigger disaster from happening.
Furthermore, for a given austerity program, whether the poor are hurt more than the non-poor depends on the existing policies and institutions in the country. Typically, in these countries, the policies and institutions are captured by the elites. In Egypt, the energy-intensive industries are owned by government cronies who therefore keep energy prices low. Since these are powerful people, they make sure that the burden of an austerity program doesn’t fall on them, which is why they get off Scot free. World Bank programs try to dislodge these entrenched elites (subsidy reform, targeted cash transfers, SOE reforms, etc.) but, as you observed, there are limits given the existing political situation. And a program is needed to avert the bigger collapse. So the Fund and Bank compromise and allow some of the anti-poor distortions in the economy to continue, in order to get the program delivered. But the underlying problem is the policy and institutional framework in the country rather than the IMF program.
Who is to blame?
Ram M:The problem we are in is certainly self-inflicted, in that our corrupt governments borrowed more than we could pay off for non-productive projects. Those who pushed debt on the SL government, or for that matter any other badly run third world government, and lent money for corrupt projects do not pay a price. Sure some of them take a haircut, but many others have already recouped their investments.
Shanta D: Every loan has a risk associated with it. That is why lenders do a cost-benefit analysis of the project before financing. If they made a mistake with their cost-benefit analysis, then they do pay for it in the case of default. Of course, if the borrower doesn’t want to default and continues paying back the loan when it’s gone bad (just like Sri Lanka did paying off the bondholders when the country lost access to capital markets), that’s the borrower’s fault, not the lender’s.
Ram M:But there is “self dealing” or at least backroom dealing going on that leads to a country like Sri Lanka taking on more debt than it can pay back. Consider the Central Bank under Cabraal paying bond holders even after we lost access to capital markets. There is a private complaint in courts alleging that either through corruption or gross negligence he is responsible for the economic crisis in the country. But it is exactly this leap from Cabraal to Sri Lanka that I am pushing back against. Let us – only for the sake of argument – say that senior officials had a deal with bond holders. And promised to pay them back no matter what the consequences for Sri Lanka’s people. That is exactly the kind of “debt pushing” and back room deals by lenders and key officials in debtor countries that I am concerned about here. Why should the Lankan people pay the price for this? OK we elected President Gotabaya, and he appointed these officials. So it is our fault in the end. But isn’t that a bit of a stretch when it comes to accountability. Since we did not really elect President Gotabaya to undermine the economy in this way. Moreover, this lets bond holders off the hook – when they knowingly invest in shaky bonds on the basis of assurances given by “dodgy” officials. So my concern here is about “odious” debt where debt pushers not only fail to pay a price, but actually make a profit.
Shanta D:I’m still not convinced that the creditors did anything wrong. Anyone who buys an ISB is taking a risk. The bond can be paid back at face value or, if the economy gets worse, it could be worth a lot less on the secondary market. In Sri Lanka’s case, the ISBs were trading at a discount in 2021 because everyone saw that the economy was declining and Sri Lanka would probably not be able to pay back. However, the Sri Lankan government took the decision in January 2022 to pay back $500 million ISBs in full (starving the people of much needed imports). The bondholders who bought these ISBs at a discount in 2021 made a killing but that was because of the Sri Lankan government’s decision. Now, you could say that the people who bought Sri Lankan ISBs in the secondary market in 2021 may have had some inside information that Sri Lanka was going to pay in full, but I would think that even this information was not reliable and they were taking a risk. So I would put the blame for the current crisis squarely on the government.
What will be the impact of the economic reform measures for normal Sri Lankans?
Shanta D:In your article you state that, “Even if this government (then headed by Gotabaya Rajapaksa) lasts, it would be too weak to carry out the stringent economic reforms that the IFIs are likely to impose on Sri Lanka.” How do you know that the economic reforms are “stringent”? The program that is currently being negotiated between the government and the Fund includes tax increases, subsidy cuts, targeted cash transfers, interest rate increases, and exchange rate flexibility. They are not what any of us would call stringent.
Tax increases and subsidy cuts
Ram M:Tax increases and subsidy cuts can work in a “normal” situation. But in the context of an economic contraction they have the potential to move us in a downward economic spiral. In terms of tax increases, my concern is not about income tax, property tax or taxes on business profits. But particularly regressive taxes – such as VAT – that have a significant impact on the poor.
Shanta D:First, the international evidence on whether the VAT is regressive or progressive is ambiguous, leaning towards neutral or mildly progressive. Second, in the Sri Lankan case, note that the Rajapaksa administration reduced VAT rates by seven percentage points in November 2019. Did the poor benefit from this? I think the reduction was to benefit some powerful business interests. So the increase in VAT will also likely hurt those interests. Third, in the current situation in Sri Lanka, an increase in taxes, including VAT (which by the way is one of the most efficient ways of increasing revenues), is likely to reduce inflation, which helps the poor and, by making the fiscal balance more sustainable, will bring in foreign exchange, both through the IMF program and the debt restructuring.
Ram M:I want to just focus on whether or not VAT is regressive – not the repercussions of reducing the fiscal deficit on the poor. That is a bigger and separate debate – where the answer I think is that it depends on what the money is used for. Of course VAT is an effective way to increase revenues. And yes – the rich spend more – so VAT will lead to a larger share of taxes on the rich. But it leaves untaxed – income, wealth, property and savings. So isn’t the answer a combination of VAT and other taxes. And shouldn’t we be shoring up our capacity to tax, not just look at VAT?
Shanta D:Yes, of course we should be looking at other tax instruments as well but in the short run, the VAT is the most effective instrument we have to raise revenues. The other tax that we should be considering is rescinding all the tax incentives given to investors. This to me is the biggest scandal. A number of rich investors, foreign and domestic, pay no taxes because they received tax holidays when they invested in the country. First, the international evidence is these tax incentives don’t result in higher investment. Secondly, at this time of acute revenue shortage, when ordinary Sri Lankans are having to tighten their belts, it is unacceptable that this group of rich people get away Scot free. To be sure, taxing them would mean abrogating the agreement that they pay no taxes. But we have already abrogated a series of debt contracts (ISBs, etc.), so I don’t see why we shouldn’t do the same for these investment contracts.
That said, we should keep in mind two things. First, the VAT has proven to be a really effective instrument around the world, and especially in developing countries, as a minimally distorting form of taxation. Second, we should be trying to achieve our equity objectives through the fiscal system as a whole rather than separate the revenue and expenditure sides. Most developing countries try to achieve a neutral tax system and achieve their redistribution objectives through the expenditure system (it’s the reverse in developed countries). So I think you should focus on the impact of the fiscal system on the poor rather than looking at each tax instrument. The latter is in fact dangerous. I’ve seen many countries that introduce a highly progressive income tax system but one that doesn’t generate much revenue (Sri Lanka is a bit like that). They then don’t cut expenditures so they run huge fiscal deficits that lead to inflation, debt crises and the like which end up hurting the poor very badly.
Interest Rates
Ram M:On the increase in interest rates, while you need to fight (hyper) inflation, what about a situation where the poor are indebted and spend significant parts of their income servicing debt. How is this affected by inflation – positively or negatively. If I am poor and heavily indebted, would inflation be a good thing?
Shanta D:In general, inflation helps debtors and hurts creditors (because the real value of what they have to pay back is eroding). If there are genuinely poor people who have high debts, there are ways of forgiving their debts. But you need to be careful here. Many of the people who claim to be poor and indebted are not poor (that’s why they were able to take on the loans in the first place). For instance, many tuk-tuk drivers borrowed to buy their tuk-tuks. But these are mainly urban dwellers in Colombo who come from the 80th percentile of the income distribution. In general, we should avoid giving relief to specific types of workers or sectors. The cash transfers should be given to poor people regardless of which sector they work in.
Now to the opportunities from the current crisis
.Shanta D:The two main differences with the current crisis are: (i) the people are already suffering from a government-imposed austerity program (because of the shortage of foreign exchange) before the IMF program has been concluded. To the extent that the IMF program will bring in $4-5 billion in foreign exchange, it will relieve the shortages rather than exacerbate them. So the effect of the IMF program is to put Sri Lankan fiscal policy on a path that can, over time, enable the country to bring in foreign exchange (and pay less to creditors). So I don’t see the IMF program as necessarily “aggravating the crisis”. On the contrary, it is likely to relieve it. (ii) the people in the Aragalaya movement clearly see the link between the government’s failed economic policies and their dire economic situation today. They don’t blame Covid or the Ukraine war–they know it was the misguided policies of the administration (including the delays in going to the Fund and undertaking a debt restructuring) that got us into this mess.
Some of them seem to understand that subsidies are not helpful when you run out of money to pay for them. This is a huge improvement in thinking from, frankly, what I hear from Sri Lankan politicians from the left and the right. The logical extension of this argument is that, if the government’s policies led to the current situation, then to get out of the situation, we must reverse those policies. That is exactly what the economic reform program is doing–reversing the tax cuts of November 2019, reducing regressive subsidies, expanding targeted cash transfers, cutting government borrowing from the central bank, raising interest rates, making the exchange rate flexible, and approaching the IMF and embarking on a debt restructuring. So the demands of the Aragalaya movement are consistent with the IMF program. We should seize this unique opportunity to galvanize the support of the Aragalaya movement in order to counter the usual objections from senior politicians to the economic reforms on grounds that they will not be politically acceptable. Most of these objections stem from an effort to protect the rents accruing to their particular political base. This is a chance to call their bluff.
Ram M:I agree that just because the IMF helps bailout Sri Lanka, need not mean then President Gotabaya (and now President Wickremesinghe) will continue in power. Whether or not a President or government continues, depends on the opposition and the protesters and their ability to out manoeuvre those in power, politically. And making people suffer in order to get a government out is not only unconscionable, but also not likely to succeed (again look at Lebanon). In this regard, I do think that we should separate these two issues, even as we use, to the extent possible, the economic pressure to press for political reforms.
(Ram Manikkalingam is the Director of the Dialogue Advisory Group and a Visiting Professor at the University of Amsterdam.
Shanta Devarajan is a former Chief Economist of the World Bank and a Professor at Georgetown University.)
Features
Trump tariffs and their effect on world trade and economy with particular reference to Sri Lanka

In the early hours of April 2, 2025, President Donald Trump stood before a crowd of supporters and declared it “Liberation Day” for American workers and manufacturers. He signed an order imposing a minimum 10% tariff on all US imports, with significantly higher rates, ranging from 11% to 50%, on goods from 57 specific countries. This dramatic policy shift sent immediate shockwaves through global markets and trade networks, marking a profound escalation of the protectionist agenda that has defined Trump’s economic philosophy since the 1980s.
The implications of these tariffs extend far beyond America’s borders, rippling through the intricate web of global trade relationships that have been carefully constructed over decades of economic integration. While Trump frames these measures as necessary corrections to trade imbalances and vital protections for American industry, the truth is, it’s way more complicated than that. These tariffs aren’t just minor tweaks to trade rules, they could totally upend the way global trade works in the global economic order, disruptions that will be felt most acutely by developing economies that have built their growth strategies around export-oriented industries.
Among these vulnerable economies stands Sri Lanka, still recovering from a devastating economic crisis that led to sovereign default in 2022. With the United States serving as Sri Lanka’s largest export destination, accounting for 23% of its total exports and a whopping 38% of Sri Lanka’s key textile and apparel exports, the sudden imposition of a 44% tariff rate threatens to undermine the country’s fragile economic recovery. Approximately 350,000 Sri Lankan workers are directly employed in the textile industry. These tariffs aren’t some far-off policy, they are an immediate threat to their livelihoods and economic security.
The story of Trump’s tariffs and their impact on Sri Lanka offers a compelling window into the broader tensions and power imbalances that characterise the global trading system. It illustrates how decisions made in Washington can dramatically alter economic trajectories in distant corners of the world, often with little consideration for the human consequences. It also raises profound questions about the sustainability of development models predicated on export dependency and the adequacy of international financial institutions’ approaches to debt sustainability in developing economies.
This article examines the multifaceted implications of Trump’s tariff policies, tracing their evolution from his first administration through to the present day and analysing their projected impacts on global trade flows and economic growth. It then narrows its focus to Sri Lanka, exploring how the country’s unique economic circumstances and trade profile make it particularly vulnerable to these tariff shocks.
Finally, it considers potential mitigation strategies and policy responses that might help Sri Lanka navigate these turbulent waters, offering recommendations for both immediate crisis management and longer-term structural adaptation.
As we embark on this analysis, it is worth remembering that behind the economic statistics and trade figures lie real human lives and communities whose futures hang in the balance. The story of Trump’s tariffs is ultimately not just about trade policy or economic theory but about the distribution of opportunity and hardship in our interconnected global economy.
TRUMP’S TARIFF POLICIES: PAST AND PRESENT
Historical Context of Trump’s Protectionist Views
Donald Trump’s embrace of protectionist trade policies did not begin with his presidency. Since the 1980s, Trump has consistently advocated for import tariffs as a tool to regulate trade and retaliate against foreign nations that he believes have taken advantage of the United States. His economic worldview was shaped during a period when Japan’s rising economic power was perceived as a threat to American manufacturing dominance. In interviews from that era, Trump frequently criticised Japan for “taking advantage” of the United States through what he characterised as unfair trade practices.
This perspective has remained remarkably consistent throughout his business career and into his political life. Trump views international trade not as a mutually beneficial exchange but as a zero-sum competition where one country’s gain must come at another’s expense. This framework fundamentally shapes his approach to tariffs, which he sees not as taxes ultimately paid by American consumers and businesses (as most economists argue) but as penalties paid by foreign countries for their supposed transgressions against American economic interests.
First Term (2017-2021) Tariff Policies
When President Trump took office in January 2017, he quickly began implementing the protectionist agenda he had promised during his campaign. His administration withdrew from the Trans-Pacific Partnership on his third day in office, signalling a dramatic shift away from the multilateral trade liberalisation that had characterised American policy for decades.
The first major tariffs came in January 2018, when Trump imposed duties of 30-50% on imported solar panels and washing machines. While significant, these were merely the opening salvos in what would become a much broader trade offensive. In March 2018, citing national security concerns under Section 232 of the Trade Expansion Act, Trump announced tariffs of 25% on steel and 10% on aluminium imports from most countries. These tariffs initially exempted several allies, including Canada, Mexico, and the European Union, but by June 2018, these exemptions were revoked, straining relationships with America’s closest trading partners.
The most consequential trade action of Trump’s first term, however, was the escalating tariff war with China. Beginning in July 2018, the administration imposed a series of tariffs on Chinese goods, eventually covering approximately $370 billion worth of imports. These measures were justified under Section 301 of the Trade Act, based on allegations of intellectual property theft and forced technology transfer. China responded with retaliatory tariffs on American exports, particularly targeting agricultural products from politically sensitive regions.
By the end of President Trump’s first term, the average US tariff rate had risen from 1.6% to approximately 13.8% on Chinese imports and 3% overall, the highest level of protection since the 1930s. While a “Phase One” trade deal with China in January 2020 paused further escalation, most of the tariffs remained in place, becoming a persistent feature of the international trading landscape.
Current Tariff Policies (2024-2025)
President Trump’s return to the White House in 2025 has brought an even more aggressive approach to tariffs. During his campaign, he promised tariffs of 60% on all Chinese imports, 100% on Mexico, and at least 20% on all other countries. While the actual implementation has not precisely matched these campaign pledges, the scale and scope of the new tariffs have nevertheless been unprecedented in modern American trade policy.
The centrepiece of Trump’s current trade policy was announced on April 2, 2025, dubbed “Liberation Day” by the administration. The executive order imposed a minimum 10% tariff on all US imports, effective April 5, with significantly higher tariffs on imports from 57 specific countries scheduled to take effect on April 9. These country-specific tariffs range from 11% to 50%, with China facing the highest rate at 145% or rather 245%, effectively cutting off most trade between the world’s two largest economies.
The formula for determining these “reciprocal tariffs” remains somewhat opaque, but appears to be based primarily on bilateral trade deficits, with countries running larger surpluses with the United States facing higher tariff rates. This approach reflects Trump’s persistent view that trade deficits represent “losing” in international commerce, a perspective at odds with mainstream economic thinking, which generally views trade balances as the result of broader macroeconomic factors rather than evidence of unfair trade practices.
For Sri Lanka, the formula resulted in a punishing 44% tariff rate, the sixth highest among all targeted countries. This places Sri Lankan exports at a severe competitive disadvantage in the American market, threatening an industry that has been central to the country’s economic development strategy for decades.
The stated objectives of these tariffs include reducing the US trade deficit, revitalising American manufacturing, punishing countries perceived as engaging in unfair trade practices, and generating revenue that Trump has variously suggested could fund infrastructure, childcare subsidies, or even replace income taxes entirely. However, economic analyses from institutions like the World Trade Organisation, the Penn Wharton Budget Model, and numerous independent economists suggest these objectives are unlikely to be achieved, and that the tariffs will instead reduce economic growth both domestically and globally while raising prices for American consumers.
After a violent reaction in financial markets, the administration announced a 90-day pause on the higher country-specific tariffs for all nations, except China. However, the baseline 10% tariff remains in effect, and the threat of the higher tariffs continues to create significant uncertainty in global markets. This uncertainty itself acts as a drag on economic activity, as businesses delay investment decisions and reconsider supply chain arrangements in anticipation of potential future trade disruptions.
GLOBAL ECONOMIC IMPACT OF TRUMP TARIFFS
The imposition of sweeping tariffs by the Trump administration has sent ripples throughout the global economy, with international organisations, economic research institutions, and financial markets all signalling significant concerns about their far-reaching consequences. What began as a unilateral policy decision by the United States threatens to fundamentally alter global trade patterns, disrupt supply chains, and potentially trigger a broader economic slowdown that could affect billions of people worldwide.
WTO Projections on Global Trade Contraction
The World Trade Organisation (WTO), the primary international body overseeing global trade rules, has issued stark warnings about the impact of Trump’s tariffs. In its latest assessment of the global trading system, the WTO dramatically revised its trade growth projections for 2025. Prior to the tariff announcements, the organisation had forecast a healthy 2.7% expansion in global trade for the year. Following Trump’s “Liberation Day” declaration, it now projects a 0.2% contraction, a negative swing of nearly three percentage points.
This contraction in trade is expected to have direct consequences for global economic growth as well. The WTO has downgraded its global GDP growth forecast from 2.8% to a more anaemic 2.2%. While this may seem like a modest reduction, in absolute terms, it represents hundreds of billions of dollars in lost economic activity and potentially millions of foregone jobs worldwide.
Of particular concern to the WTO is the potential “decoupling” of the world’s two largest economies. Ngozi Okonjo-Iweala, the WTO’s director general, has expressed specific alarm about this phenomenon, noting that trade between the United States and China is expected to plunge by 81-91% without exemptions for tech products, such as smartphones. Such a dramatic reduction in bilateral trade between these economic giants would be “tantamount to a decoupling of the two economies” with “far-reaching consequences” for global prosperity and stability.
The WTO has also modelled more severe scenarios that could materialise if the currently paused “reciprocal tariffs” are reimposed after their 90-day hiatus. In such a case, the organisation projects a steeper 0.8% decline in global goods trade. Should this be accompanied by a surge in “trade policy uncertainty” worldwide, as other countries adjust their own policies in response, the WTO suggests an even more severe 1.5% contraction in trade could occur, with global GDP growth potentially falling to just 1.7%, a level that would place many countries perilously close to recession.
by Ali Sabry
(To be continued)
Features
The Broken Promise of Lankan Cinema: Asoka and Swarna’s Thrilling Melodrama – Part I

“‘Dr. Ranee Sridharan,’ you say. ‘Nice to see you again.’The woman in the white sari places a thumb in her ledger book, adjusts her spectacles and smiles up at you. ‘You may call me Ranee. Helping you is what I am assigned to do,’ she says. ‘You have seven moons. And you have already waisted one.’” The Seven Moons of Maali Almeida by Shehan Karunatilaka (London: Sort of Books, 2022. p84)
The very first Sinhala film Broken Promise (1947), produced in a studio in South India, was a plucky endeavour on the part of the multi-ethnic group who powered it. Directed by B.A.W. Jayamanne, it introduced the classically trained Tamil singer and stage actress in the Minerva Theatre Company, Daisy Rasamma Daniels, as Rukmani Devi, (who was the only real star of the Lankan cinema at the height of its mass popularity), to an avid cinephile audience of Ceylon who had grown up enjoying Hindi, Tamil and Hollywood films. The producer of the film, S. M. Nayagam, an Indian of Tamil ethnicity, skilfully negotiated the production of the first Lankan film in Sinhala in his South Indian film studio in Madurai because Ceylon had neither the film infrastructure nor the technical know-how to do so. A Tamil singer/actress and a Sinhala director were the Ceylonese ‘capital’, both of whom had to learn on the run, the craft of filmmaking.
Rukmani Devi and Swarna Mallawarachchi
There is a rather strange parallel between the Tamil Rukmani Devi, playing Sinhala women throughout her entire career with impeccable professionalism, great devotion and love, and the Sinhala Swarna Mallawarachchi, playing a Tamil woman for the first time, in Rani, but quite late in her career. In terms of their careers as independent, self-made film actors these are, undoubtedly, professional achievements of cultural significance for our multi-ethnic, highly stratified, Island nation with its 28-year war. But Rukmani Devi’s career began with the very inception of Lankan cinema when she was quite young and ended all too soon, when she was no longer young enough to play lead roles. However, she continued to earn a living singing at live carnival variety shows, until her tragic death in her 50s.
But Asoka Handagama’s Rani arrives in the era of digital cinema when the mass audience for cinema had diminished greatly, given the easy access online. Also, the Sinhala cinema as an Industry, such as it was, with production, distribution and exhibition of films in cinemas across the country, at scale, and the film-culture that sustained it for several decades does not exist any longer. It’s mostly only Hollywood blockbusters and a handful of films that draw an audience to a theatre. Scandal and controversy play well to draw folk into a cinema sometimes and a brilliant actor can also do this. The example of Australian actress Cate Blanchett becoming a Hollywood star, in Tar (2023), comes to mind. Now most Hollywood films go straight to Netflix and other streaming services with a short theatrical season. And Indian independent cinema and TV series do get on to Netflix with their high production values, unique genre traditions, star systems and a large diaspora for films in several Indian languages – Tamil, Hindi, Telugu.
Swarna’s over 50-year acting career, now in her 70s, has had a very rare boost going by the controversial public reception of the film and its related box office success. However, that this success is the result of having played a remarkable Lankan Tamil woman, a professional, appears not to be of much interest to the many Sinhala critics I have read or heard online. Apart, of course, from a mention in passing that Manorani Sarvanamuttu was a doctor with a patrician, Tamil, Anglophone ancestry, her Tamil ethnicity does not figure centrally in the discussions of the film and of Swarna’s performance itself. In fact, apart from the adulation of her performance as Rani, I have not found as yet any substantive intellectual discussion of her choice of a style of acting and of its aesthetic quality and indeed the politics it implies. As an actress with a highly distinguished filmography, beginning with Siri Gunasinghe’s Sath Samudura (66), with major auteurs of Lankan cinema, this is indeed a strange omission.
In this piece I am particularly interested to explore Swarna and Asoka’s choice of ‘a Melodramatic Style’ of acting, to represent Dr Manorani Saravanamuttu as Rani. She who was a Tamil, Christian, professional woman who, after her son’s assassination, chose to become a public figure, leading a movement of largely Southern, Sinhala-Buddhist women in ‘The Mothers’ Front’ demanding justice for their ‘disappeared’ loved ones during a period of terror in the country.
Tear-Gas Cinema People
I am also thinking of the 2022 ‘Aragalaya/Porattam/Struggle-generation’ in particular, who would have a keen interest in Rani for political and ethical reasons and more specifically all those brilliant protestors who joyfully constructed the ‘Tear Gass Cinema’ in the heart of Galle Face, which was torn down by thugs instigated by Mahinda Rajapaksa himself who appears in Rani as an aspiring politician who cunningly uses the Mothers’ Front to power his political future. As cinephiles, they would no doubt be also interested in the film’s aesthetics, its realpolitik, gender politics and psycho-sexual violence, in an era of all-pervasive terror.
Manorani’s Tamil Ethnicity
Manorani’s Tamil ethnicity and its implications will be at the forefront of my inquiry, especially because her Tamil identity appears to be central to Swarna’s own fascination with her and desire to perform the role of Manorani as the bereaved mother of an assassinated charismatic son. ‘Fascination’ and ‘desire’ are dynamic, complex, psychic energies, vital for all creative actors who take on ‘difficult’ roles, especially female ones, in theatre and film. Consider the generations of distinguished Western actors who have played roles, such Lady Macbeth (Shakespeare’s Macbeth) or Medea (Euripides’ Medea) who killed her children to avenge her husband for abandoning her or Clytemnestra (Aeschylus’ Oresteian Trilogy) who killed her husband Agamemnon to avenge his killing of their daughter Iphigenia in the Classical Greek tragedy. These are not characters one can like, but an actor who incarnates them must find something fascinating in them, to the point of obsession even, so as to inhabit them night after night in the theatre credibly, in all their capacity, as the case might be, for passion and profound violence.
Perhaps not incidentally, Manorani Sarvanamuttu did play the role of Clytemnestra at the British Council with Richard de Zoysa, her own son playing either the role of Aegisthus, her lover or her son Orestes who is duty bound, fated, to kill her because she killed his father the king. I saw this production of The Libation Bearers (the second play of the Trilogy), but can’t remember the exact year, perhaps 1988 nor the role Richard played but do remember Manorani’s powerfully statuesque presence, her poise and minimalist gestures, performed in an open corridor with high pillars, facing the audience seated on chairs arranged on a very English lawn modulated by a setting tropical sun. The texture of her voice was soft but strong, the timbre rich, I recall. She didn’t need to shout to project her voice, though it was an open-air show. She was an experienced amateur actor working with the playwright and director Lucien de Zoysa, who she married and had Richard with.
Modulating a Gift: A Female Actor’s Voice
But now that I have heard, while researching this piece, Manorani’s speaking voice (not her theatrical poetic voice as Clytemnestra the regicide) on a documentary film made after Richard’s death, I do think that hers was a singular ‘Ceylonese’ voice. That ‘Ceylon’ ceased existing once upon a time, except in memory, a memory popping up by chance on hearing a voice, that most fragile of memory traces with the power to make palpable, time lost.
Rukmani Devi is the only actor in the Lankan cinema of the early period who had a deep, textured, resonant voice with perfect pitch that perhaps reached the famous two octave range in singing, as Elvis Presley famously possessed. A star of the Hindi cinema once said that with that voice, had Rukmani Devi been an Indian she would have had quite a different career and that she did have an ‘operatic voice’, that is to say one with considerable power, range and texture which she was able to modulate to create feelings that we Lankans still respond to hearing her songs. The problem was that the dialogue written for her in the popular genre films was melodramatic in the extreme, formulaic, often laughable, and the delivery also similarly stilted. Her singing created and sustained the intensity of the films despite the slight lyrics. Radio, records and cassettes spread her voice and also Mohidin Baig’s, right across the country. She spoke an ‘accent-less’ Sinhala, without a trace of her Tamil mother tongue inflecting it.
The Aging Female Actor
It’s a fact well known that when female film-actors pass their youth, their roles diminish rapidly. But in striking contrast, male actors do go on acting until they are quite old and even have romantic scenarios written for them with young women old enough to be their granddaughters. Feminist film theorists have written about this stuff and brilliant leading female Hollywood stars have spoken out about this and taken productive action, on occasion, to rectify it. There simply are no film roles for female actors when they reach maturity of age, experience and technical skill, unlike in theatre, unless playing the role of an ‘aging actress’ of 50 refusing to accept career death so soon, as in All About Eve with Bette Davis.
Kadaima, the recent film Swarna performed in, directed by a surgeon on leave, Dr. Naomal Perera, was promoted as sequel to Vasantha Obeysekera’s classic Dadayama. Kadaima appears to have fizzled out trying a feeble pun on Dadayama with typical melodramatic plot contrivances of coincidences. But in Dadayama Swarna created an unforgettably powerful performance directly related, it should be emphasised, to Vasantha’s brilliant direction, script based on a notorious crime and complex editing of sound and image. Like Sumithra Peiris, Vasantha was also trained in filmmaking in France. After Dadayama’s success in 1983, the chance to perform a challenging role so late in her career, linked to yet another ‘true crime’, would have been an irresistible opportunity for Swarna as a mature and highly experienced award-winning actor.
An analysis of her style of performance follows, in relation to the Rani script and direction because they are integrally linked.
But at first, I want to create a historically informed, intellectual framework irrespective of whether I like the film or not. By ‘history,’ I mean Lankan film history, a history of film acting within the context of the history of political violence, especially the political terror of 1987-1990 and its aftermath during the civil war years. I do so because Rani has created what the Australian Cultural Studies scholar Meaghan Morris has theorised as ‘a Mass-Media Event’.
“An event is a complex interaction between commerce and ‘soul’; or, to speak more correctly, between film text, the institution of cinema and the unpredictable crowd-actions that endow mass-cultural events with their moment of legitimacy, and so modify mass-culture”.
The crowded discourse on Rani in the South is noteworthy, and appears to be unprecedented. This fact alone warrants a considered analysis beyond simply stating our individual likes and dislikes of the film, defending the film or criticising it. As a scholar working within the field of Cinema Studies, one is ethically bound to explore and analyse such ‘Media Events’ rationally and imaginatively, making clear one’s theoretical and other assumptions. In doing so, others may engage with the terms of my argument without being abusive. In such work, aesthetic and ethical values are not, in the final analysis, separable categories even as one is cognisant of the monetary value of films at this scale of production and the importance of box office revenue and the advertising machine that powers it. Often, in the history of cinema, these values have been in conflict with each other but as an ‘industrial art’, its very condition of possibility. I am drawn to filmmakers who burn so much time and energy to capture on film a few moments of intensity, intimate vitality that enriches life … all life, that propels us to think the unthinkable. This is why cinema matters, this is why the history of cinema has many, too many, martyrs. (To be continued)
by Laleen Jayamanne
Features
Towards a new international order: India, Sri Lanka and the new cold war

Will a peaceful and sustainable multipolar world be born when the rising economic weight of emerging economies is matched with rising geopolitical weight, as argued by renowned economist Jeffrey Sachs in his recent Other News article?
There is no question that, as the US-led world order collapses, a new multipolar world that can foster peace and sustainable development is urgently needed. BRICS (Brazil, Russia, India, China, South Africa) was established to promote the interests of emerging economies by challenging the economic institutions dominated by the West and the supremacy of the US dollar in international trade. Asia alone constitutes around 50% of the world’s GDP today. China is expected to become the world’s leading economy and India, the world’s third largest economy by 2030.
But does economic growth alone reflect improvement in the quality of life of the vast majority of people? And should it continue to be the central criteria for a “new international order”?
Unfortunately, BRICS appears to be replicating the same patterns of domination and subordination in its relations with smaller nations that characterize traditional imperial powers. Whether the world is unipolar or multipolar, the continuation of a dominant global economic and financial system based on competitive technological and capitalist growth and environmental, social and cultural destruction will fundamentally not change the world and the disastrous trajectory we are on.
Despite many progressives investing hope in the emerging multipolarity, there is a deep systemic bias that fails to recognise that the emerging economies are pursuing the same economic model as the West. This means we will continue to live in a world that prioritises unregulated transnational corporate growth and profit over environmental sustainability and social justice. China Communications Construction Company and the Adani Group are just two examples of controversial Chinese and Indian conglomerates reflecting this destructive continuity.
Is India, as Professor Sachs says, providing “skillful diplomacy” and “superb leadership” in international affairs? Look, for example, at India’s advancing vision of “Greater India,” Akhand Bharat (Undivided India) and behaviour towards its neighboring countries. Are these not strikingly similar to US strategies of hegemonic interference?
While India promotes its trade and infrastructure projects as enhancing regional security and welfare, experiences in Nepal demonstrate how Indian trade blockades and electricity grid integration with India have made Nepal dependent on and subordinate to India in meeting its basic energy and consumer needs. Similarly, Bangladesh’s electricity agreement with the Adani Group has created a situation allowing Adani to discontinue power supply to Bangladeshi consumers.
Since the fall of the Sheikh Hasina regime, there have been widespread demands to cancel the deal with Adani, which is seen as unequal and harmful to Bangladesh. Similarly, recent agreements made with Sri Lanka would expand India’s “energy colonialism” and overall political, economic and cultural dominance threatening Sri Lanka’s national security, sovereignty and identity.
During Indian Prime Minister Narendra Modi’s visit to Sri Lanka, April 4-6, 2025, according to reports in the Indian media, some seven to ten agreements were signed to strengthen ties in defence, electricity grid interconnection, multi-product petroleum pipeline, digital transformation and pharmacopoeial practices between the two countries. The agreements have been signed using Sri Lankan Presidential power without debate or approval of the Sri Lankan Parliament. The secrecy surrounding the agreements is such that both the Sri Lankan public and media still do not know how many pacts were made, their full contents and whether the documents signed are legally binding agreements or simply “Memoranda of Understanding” (MOUs), which can be revoked.
The new five-year Indo-Lanka Defense Cooperation Agreement is meant to ensure that Sri Lankan territory will not be used in any manner that could threaten India’s national security interests and it formally guarantees that Sri Lanka does not allow any third power to use its soil against India. While India has framed the pact as part of its broader “Neighborhood First” policy and “Vision MAHASAGAR (Great Ocean)” to check the growing influence of China in the Indian Ocean region, it has raised much concern and debate in Sri Lanka.
As a member of the Quadrilateral Security Dialogue (QUAD)—a strategic alliance against Chinese expansion that includes the United States, Australia and Japan—India participates in extensive QUAD military exercises like the Malabar exercises in the Indian Ocean. In 2016, the United States designated India as a Major Defense Partner and in 2024, Senator Marco Rubio, current US Secretary of State, introduced a bill in the US Congress to grant India a status similar to NATO countries. In February 2025, during a visit to the USA by Modi, India and the US entered into a 10-year defence partnership to transfer technology, expand co-production of arms, and strengthen military interoperability.
Does this sound like the start of a new model of geopolitics and economics?
Sri Lankan analysts are also pointing out that with the signing of the defense agreement with India, “there is a very real danger of Sri Lanka being dragged into the Quad through the back door as a subordinate of India.” They point out that Sri Lanka could be made a victim in the US-led Indo-Pacific Strategy compromising its long-held non-aligned status and close relationship with China, a major investor, trade partner and supporter of Sri Lanka in international forums.
The USA and its QUAD partner India, as well as China and other powerful countries, want control over Sri Lanka, due to its strategic location in the maritime trade routes of the Indian Ocean. But Sri Lanka, which is not currently engaged in any conflict with an external actor, has no need to sign any defence agreements. The defence MOU with India represents further militarisation of the Indian Ocean as well as a violation of the 1971 UN Declaration of the Indian Ocean as a Zone of Peace and the principles of non-alignment—which both India and Sri Lanka have supported in the past.
Professor Sachs—who attended the Rising Bharat Conference, April 8-9, 2025 in New Delhi—has called for India to be given a seat as a permanent member in the UN Security Council gushing that “no other country mentioned as a candidate …comes close to India’s credentials for a seat.” But would this truly represent a move towards a “New International Order,” or would it simply be a mutation of the existing paradigm of domination and subordination and geopolitical weight being equated with economic weight, i.e., “might is right”?
Instead, the birth of a multipolar world requires the right of countries—especially small countries like India’s neighbours—to remain non-aligned amidst the worsening geopolitical polarisation of the new Cold War.
What we see today is not the emergence of a truly multipolar and just international order but continued imperialist expansion with local collaboration prioritising short-term profit and self-interest over collective welfare, leading to environmental and social destruction. Breaking free from this exploitative world order requires fundamentally reimagining global economic and social systems to uphold harmony and equality. It calls on people everywhere to stand up for their rights, speak up and uplift each other.
In this global transformation, India, China and the newly emergent economies have significant roles to play. As nations that have endured centuries of Western imperial domination, their mission should be to lead the global struggle for demilitarisation and the creation of an ecological and equitable human civilization rather than dragging smaller countries into a new Cold War.
by Dr. Asoka Bandarage
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