An Analysis by Dr Darini Rajasingham-Senanayake with Pascal Lottaz at Neutrality Studies. Full Interview: Watch here

COLOMBO, Sri Lanka | 6 May 2025 (WorldView) — Dr Darini Rajasingham-Senanayake discusses the ongoing crises in South Asia and Sri Lanka, highlighting the impacts of digital colonialism and the role of international financial institutions, such as the IMF. She also discusses the recent face-off between nuclear-armed India and Pakistan that started during the visit of US Vice President J.D Vance and his Indian Diaspora wife Usha and their children to India and the ensuing Disinformation Game.

She argues that Sri Lanka’s economic struggles are tied to a broader geopolitical conflict, particularly the hybrid economic proxy war, which is part of a New Cold War between the United States and China, also manifesting in the South Asian region. The geostrategic county’s Eurobond Debt trap is due to the predatory nature of private creditors. She calls for a re-evaluation of the country’s debt situation and its foreign policy, as well as the cancellation of odious debt.

In a recent discussion, Dr. Darini Rajasingham-Senanayake, a social and medical anthropologist with a focus on international development and political economy, provided an in-depth analysis of the current situation in Sri Lanka. She argues that the country is experiencing a form of digital colonialism, characterised by hybrid economic and cyber operations, as well as international financial lawfare, which is exacerbated by economic crises and geopolitical tensions.

In an era of Digital Colonialism, cyberwar operations and Debt Data manipulation by interested external parties pose a significant concern for national data security in the context of the Sri Lanka Government’s Cloud Storage system wipe.

The Current State of Sri Lanka

Dr Rajasingham-Senanayake describes the situation in Sri Lanka as relatively calm but warns that this calm may be the “calm before the storm.” The country is currently trapped in a cycle of debt, particularly with US dollar and euro bond obligations, which are set to come due in the next few years. This looming financial crisis is compounded by discussions of establishing a US spaceport and maritime security hub in Sri Lanka, given its strategic location in the Indian Ocean.

During the previous Cold War between the US and the Soviet Union/Russia, Sri Lanka had sought to adopt a Non-Aligned Foreign Policy.

Geostrategic Importance: Submarine Date Cable Routes in Seas of Sri Lanka

Sri Lanka’s position at the centre of Indian Ocean energy, trade, and Submarine Data Cable routes makes it a focal point for international interests and a three-way competition between the United States, India, and China at this time. Almost 50% of global container traffic passes through its waters, leading to increased foreign interest and potential military presence. The country has effectively lost its economic sovereignty and policy autonomy to the International Monetary Fund (IMF) and the Washington Consensus following the 2022 Staged Default.

Discussions regarding a Space Port are to be contextualised alongside the Eurobond debt trap, as the US has always sought to establish military bases in Sri Lanka, which is at the Centre of the Indian Ocean. US bases have proliferated and already ring both the Eastern Indian Ocean region, including the South China Sea, and the Western Indian Ocean, including the Persian Gulf

Currently, the US and UK have a large military base on Diego Garcia, located southwest of Sri Lanka.

The Regime Change and Its Implications

The regime change in Sri Lanka, which saw the ousting of the Rajapaksa family, was part of a broader pattern of political upheaval in South Asia. Dr. Rajasingham-Senanayake notes that the protests leading to this change and the Staged Default were funded by external entities, including the US Agency for International Development (USAID), the National Endowment for Democracy (NED), and the Soros Foundation. The new government, led by President Anura Kumara Dissanayaka, continued to pursue policies that align with IMF directives despite the previous administration’s corruption.

The ruling NPP government, led by President Anura Kumara Dissanayaka, failed to conduct due diligence and review agreements drafted with Bondholders and other private creditors, the largest being BlackRock and the IMF, by the previous US-backed Ranil Wickramasinghe government, which it had accused of corruption.

The Role of External Forces

The discussion highlights the interconnectedness of regional politics, particularly the simultaneous regime change in Pakistan, where Prime Minister Imran Khan was ousted and later imprisoned amid allegations of US involvement. Prime Minister Khan named Donald Lu, then the US. Under Secretary for South and Central Asia. Similarly, Bangladesh experienced a regime change last year. This pattern suggests a coordinated effort to reshape political landscapes in South Asia, often at the expense of local governance and sovereignty.

India, the regional hegemon, now appears to have a policy of ‘beggar thy Neighbourhood First” while capitalising on Over the Horizon regime change operations and militarising the Indian Ocean, which was declared a ‘Zone of Peace’ free of nuclear weapons during the Cold War.

BlackRock and Adani Group, which are close to the regime in Delhi, have profited from Sri Lanka’s staged Default in 2022. Meanwhile, in the wake of staged Islamist Terror attacks in Kashmir’s Pahalgam, India is metering out collective punishment to impoverished farmers in Pakistan by withholding Indus River waters and threatening Pakistan’s food security.

However, as the example of ASEAN, in contrast to SAARC, shows, no country can develop when its neighbourhood is in crisis, and India may be digging its own grave while trying to maximise profit in South Asia.

Economic Crisis, Donor Darling, and Debt Dynamics

Dr Rajasingham-Senanayake challenges the narrative that Sri Lanka is bankrupt, arguing that it is one of the wealthiest countries in South Asia by all relevant metrics, including Purchasing Power Parity, GDP per capita, human development, and social development—such as the Physical Quality of Life Index, infrastructure, and others.

Stating that the 2022 Sovereign Default was staged due to a purported absence of exorbitantly privileged US dollars, she questions the adequacy of the US dollar, whose status as the global reserve currency is increasingly challenged by the BRICS, in measuring the real Wealth of Nations.

Indeed, the lush and fertile tropical island, with extensive fisheries and marine resources, is blessed with Mother Nature’s largess. This includes two monsoons for crop rotation and plentiful harvests, as well as renewable energy. Arguably, the country suffers from a geostrategic’ resource curse”. Rather than being bankrupt because of its strategic location, it has been a “Donor Darling”, which has generated a culture of Foreign Aid and Experts induced Dutch Disease. The colonial mentality of the political and business elites has led to a dependent economy lacking industrialisation and market diversification.

Staged Disaster and Shortages ‘Make the Economy Scream’

The geostrategically significant country’s first-ever Sovereign Default was coordinated and staged with international and internal actors and networks amid distracting Arab Spring-style, Aragalaya protests, and regime change. The shadowy offshore Hamilton Reserve Bank’s court case in New York and coordinated Rating Agency downgrades of the Sri Lankan rupee, leading to rapid depreciation, were part of a pattern of International Financial Lawfare.

Simultaneously, a blockade was imposed on ships bringing oil and gas to the country, reaching its peak during the Staged Protests and regime change operation in 2022, resulting in shortages and queues.

A series of Staged disasters to “Make the Economy Scream”, including Islamic State (ISIS), claimed terror attacks on Tourist Hotels and Churches to damage the economy and society in 2019, followed by two years of WHO-required economically devastating COVID-19 lockdowns caused the county which had been listed as an Upper Middle Income Country (MIC) by the World Bank in 2019 to borrow from Predatory Private Creditors when the disasters occurred and Default in 2022.

The World Bank’s Upper MIC listing meant that Sri Lanka could not access concessionary borrowings that are available to Less Developed Countries. Instead, it was forced to borrow from private creditors at predatory interest rates when the disasters struck.

The crisis is mainly due to the predatory practices of private creditors, which constitute the “Supply-side of Odious Debt”, and the IMF’s restructuring practices, which prioritise payments to these creditors over the needs of the Sri Lankan people.

The IMF’s Role: Mission Creep Turns Illiquidity into Insolvency

A liquidity crisis was transformed into insolvency, as the IMF does not recognise the distinction between illiquidity and insolvency. Meanwhile, the IMF’s EFF and its mission and mandate creep into domestic debt restructuring, enabling the transformation of an illiquidity crisis into insolvency as part of a wider disinformation game and psychological operation to claim that the country is ‘bankrupt.’ There is no alternative to the International Monetary Fund (IMF).

Moreover, the IMF’s involvement in domestic debt restructuring and the appropriation of retirement funds to pay bondholders while claiming to rescue local banks has been criticised as a mechanism that reinforces colonial structures rather than alleviating economic distress. Similarly, the privatisation of the Central Bank, the implementation of austerity measures, high taxation, and the sale of strategic infrastructure would shrink the economy and retard growth.

Dr Pascal Lottaz likened the situation to a drug addiction, where Sri Lanka is compelled to seek more US dollars from the Predatory Hedge Funds (the largest being BlackRock), private creditors and International Sovereign Bondholders (ISB) to pay off existing ISB debts, perpetuating a cycle of dependency and economic hardship.

The Need for Alternative Solutions

The discussion raises critical questions about the future of Sri Lanka’s economic policy and the need for reform of the international financial system and IMF, as well as the need to “De-dollarise to de-colonise. There are, after all, 56 other countries in the Global South that are in Eurobond debt traps and the IMF’s bailout business.

Dr. Rajasingham-Senanayake suggests that the country should explore alternatives to the IMF, such as engaging with China for currency swaps or seeking support from the BRICS nations and the New Development Bank. However, she notes that Sri Lanka’s historical ties to the West and colonial mentality may hinder such initiatives.

Meanwhile, Sri Lanka must look East and diversify its markets and products, especially by industrialising its fisheries and the Rare Earth Minerals Sector, including Graphite, Titanium, and Zircon.

The Geopolitical Landscape

The geopolitical dynamics in South Asia are complex, with India, China, and the US vying for influence. Dr Rajasingham-Senanayake warns that Sri Lanka’s attempts to maintain a neutral stance may be undermined by external pressures, particularly from the West, which has a history of intervening in the region.

There is an ongoing shift in power and wealth from the Global North to the Global South, from the West to the East. The current hybrid economic proxy wars, part of the new Cold War waged by the US against China, are contributing to the turbulence in South Asia.

Conclusion

In an era of Digital Colonialism and cyberwar operations, Sri Lanka’s Debt Data manipulation by interested parties and data security concerns are significant in the context of Data wipes and manipulation of the Sri Lanka Government’s Cloud Storage system at this time.

Dr Darini Rajasingham-Senanayake’s analysis of Sri Lanka’s current crisis highlights the complex interplay between local politics, international finance, and geopolitical strategy. As the country navigates these challenges, the need for a re-evaluation of its foreign policy and economic strategy becomes increasingly urgent. The discussion serves as a reminder of the broader implications of digital colonialism, particularly in the context of the Digital Economy and Surveillance, for the Full-Spectrum Dominance of countries and populations and the importance of sovereignty in the face of external pressure. (WorldView)

Image: Dr Darini Rajasingham-Senanayake with Pascal Lottaz in YouTube interview.