Sri Lanka sinks into chaos – Russia supplies urgently needed crude oil

For lack of foreign exchange reserves, Sri Lanka can no longer import important goods. Petroleum, medicines and even food are becoming scarce. Now Russia is supplying oil - and China is apparently paying.

Covid lockdowns, Sri Lanka sinks into chaos – Russia supplies urgently needed crude oil

RIO DE JANEIRO, BRAZIL – Government mismanagement, corruption, nepotism, and the critical global economic situation resulting from the Covid lockdowns and the consequences of Western sanctions against Russia for its invasion of Ukraine have plunged the island nation of Sri Lanka into chaos.

But while people from Washington to London to Brussels bemoan the “humanitarian crisis” in Ukraine and squander untold billions of taxpayer dollars, millions of people in Sri Lanka are suffering from rapidly deteriorating economic conditions.

The country’s gas stations have virtually run out of fuel, supermarkets have mainly been emptied, and pharmacies and hospitals lack vital medicines. The country is on the verge of collapse, and the citizens are now unloading their widespread anger on the politicians.

But while the West stands idly by and watches the collapse of the South Asian island nation, Russia and China seem to be taking up the cause and providing at least a little relief.

Bloomberg reports that Ceylon Petroleum Corp, the country’s only refiner, will begin shipping Russian grade Siberian Light on May 28. This will be the first time in two months that the refinery will process crude oil into high-value products such as gasoline and diesel.

Fuel supplies in the island nation are so low that the government has asked citizens to stop waiting in long lines at gas stations. The government has run out of foreign currency reserves to pay for key imports.

Bloomberg was not quite sure how Sri Lanka paid for Russian crude, as the country has more than US$50 billion in foreign debt. The government is seeking a US$4 billion loan from the IMF and has asked China to renegotiate at least US$3.5 billion.

According to the Financial Times, Beijing has also recently offered a few hundred million dollars in loans to help alleviate shortages of essential goods.

But Russia and China’s support does not seem to have gone unnoticed. As Sri Lanka’s Prime Minister-designate Ranil Wickremesinghe wrote on Twitter, “Quad” members India and Japan now appear to be working with the anti-China alliance (including the United States and Australia) on an aid package for the country.

It now remains to be seen whether the situation in Sri Lanka will stabilize at least somewhat in the coming weeks and months.