Alasdair Pa and Devjyot Goshal

COLOMBO (Reuters). COLOMBO (Reuters). It was the moment that two brothers, who had dominated Sri Lankan politics almost twenty years ago, finally parted ways.

When a mob of supporters from ruling parties marched toward activists to protest against the economic crisis that was ravaging their country, President Gotabaya Rajapaksa directed police to arrest them.

Nalaka Godahewa (ex-media minister) said that he heard the president yelling at police officers to disperse his crowd.

    Despite the president’s order, the demonstrations against inflation, power blackouts and shortages of essentials turned deadly. Nine people died, many were injured, and Rajapaksa loyalists’ property was attacked.

    The violence marked a pivotal point in the crisis. Gotabaya had earlier addressed government supporters by Mahinda Rajapaksa his older brother. A source who has direct knowledge of the events in Colombo at the home of prime minister Mahinda Rajapaksa, told him that he was seated for lunch and was then shown video footage of violence.

Source: “He knew exactly what he was going to do next.”

Sources said that the 76 year-old was one of Sri Lanka’s most well-known politicians. He finished eating and took a rest. He resigned as Prime Minister at 5.02 pm, declaring a split in the ruling dynasty of Sri Lanka.

A source who requested anonymity because of the fear of retribution said that the president had been pressing the prime minister to step down since April. This was in concession to protesters requesting the removal of the two men for their actions regarding the economic crisis plaguing the island.

According to another family source who asked anonymity and referred to the president or prime minister using their initials, “GR (had] told MR) to go.”

    Neither Mahinda Rajapaksa nor the president responded to requests for comment for this story. Both have not made public statements about their disagreements.   

    After he quit, Mahinda went into hiding at a naval base and stayed under protection of the armed forces for several days because of the wrath of the protesters. The 72-year-old Gotabaya continues to be president. Many Sri Lankans are deeply dissatisfied with his position, and political leaders debate a plan to end the executive power of his office.

    But the Rajapaksas are not done yet.

    A third brother, Basil, wields considerable influence over the country via his hold over the ruling party that dominates parliament, according to at least five people who spoke to Reuters, including Godahewa and two other former ministers.

Evidence of reforms

Ranil Wickremesinghe has become a heavily dependent member of parliament on the Sri Lanka Podujana Peramuna party (SLPP), to quickly pass an interim budget. This will include measures to repair public finances. As a response to the demands of protesters, he also suggested reforms to limit the presidency’s power and to strengthen parliament.

International Monetary Fund requires proof of reforms to agree to a bailout. These negotiations are continuing. Sri Lanka needs to reach an agreement with its bondholders, bilateral creditors and other stakeholders to restructuring its debt and to gain access to the global financial markets.

    Wickremesinghe belongs to a party that controls just one seat in parliament, while the SLPP and its coalition partners have a comfortable majority in the 225-seat legislature.

    All five sources said the ruling party remains loyal first and foremost to Basil, 71, who helped rebuild it when the Rajapaksas surprisingly lost power in a 2015 presidential election. Basil is said to be close by one of his sources who stated that the ex-finance minister would support him, but not at cost of the party.

In neighbouring India and China, South Asia’s top regional power, events are closely being monitored in Sri Lanka. China has spent billions of dollars over the past decade on infrastructure projects as part of their Belt and Road Initiative, linking them to the rest.

    Political scientist Jayadeva Uyangoda said Wickremesinghe faced a balancing act to meet the demands of the protesters and Sri Lanka’s international creditors, while placating the ruling party with an agenda that Basil would accept.

    “What Basil Rajapaksa wants will be what parliament approves,” Uyangoda said.

    Basil, who has not spoken publicly since he resigned in early April along with the rest of the cabinet, did not respond to requests for comment.

    BROTHERS UNITED

    Among the nine Rajapaksa siblings, Mahinda, Gotabaya and Basil were once a tight-knit political unit.

    Mahinda, a lawyer by training, became Sri Lanka’s youngest ever legislator when he entered parliament in 1970. Through a mixture of political charisma, charm and guile, Mahinda rose to be the prime minister in 2004. In 2004, he won the election to be president.

    The brothers’ popularity soared after Mahinda and Gotabaya, a retired infantry officer who was appointed defence secretary, crushed a decades-long Tamil insurgency in the north and east of the country in a brutal government offensive in 2009.

    Mahinda won a landslide re-election in 2010, promising to heal the country’s deep divisions. Inviting heavy investments like the $1.4billion Hambantota port, he also brought Sri Lanka closer towards China. This was a win for India which had feared losing its influence on its southern neighbor.

    Then, in 2015, a shock defeat for Mahinda in presidential elections threw the Rajapaksas into disarray.

    Basil, a U.S.-Sri Lankan dual citizen who served as a long-time adviser to Mahinda while he was president, was instrumental in reshaping a minor political party into the SLPP in 2016, making it the dominant player in Sri Lankan politics.

    In 2019, coordinated suicide bombings by Islamist militants that killed more than 250 people presented the Rajapaksas with an opening to return to power.

    With Basil unwilling to renounce his U.S. citizenship and Mahinda barred from standing due to term limits, Gotabaya ran for the presidency and won by a landslide.

    Mahinda was named prime minister soon after and Basil became finance minister in 2021, but things had started unravelling.

    DEBATABLE POLICIES, THEN PANDEMIC

    The start of Sri Lanka’s slide into economic chaos can be traced to 2019, when the Rajapaksas implemented populist tax cuts shortly after returning to power, shrugging off criticism from some advisers.

    Godahewa, the former minister, said he advised Gotabaya that the cuts would be a “disaster” because of the already precarious state of public finances, but was overruled.

    Government officials have previously said that the tax cuts were aimed at resuscitating the economy by putting more money in the hands of people.

    Then the COVID-19 pandemic hit, decimating tourism and with it a critical source of foreign exchange. The remittances of foreign workers have also fallen.

    A manifesto pledge to turn to organic farming and phase out the use of chemical fertilisers over the next decade was implemented abruptly in May 2021 by the president, throwing the country’s farming sector into turmoil and leading to food shortages as crop yields fell.

    By then, relations between Mahinda and Gotabaya had deteriorated, according to four of the sources.

    The two brothers differed over the president’s fertiliser ban, but a move by the prime minister in 2021 to reverse the decision was blocked by Gotabaya’s staff, according to the source at the prime minister’s residence.

    No such differences between the two have previously been reported.

    SPENDING BORROWED CASH

    Even when the country’s massive debt problems became apparent, the Rajapaksas dragged their feet about going to the IMF to seek financial aid. An official from the government stated that Basil (then finance minister) wanted to see the economy recover from the pandemic effects before he went to the IMF.

    Shortly after being appointed energy minister in August 2020, former Rajapaksa coalition partner Udaya Gammanpila began poring over the accounts of Ceylon Petroleum Corporation (CPC), the country’s biggest public corporation in terms of turnover, and said he was appalled by what he saw.

    CPC was selling petroleum products at a huge discount to consumers, and had run up a bill of some $4 billion with suppliers, despite not having adequate income to repay them.

    In October 2020, he said he warned a cabinet meeting the country was heading towards a foreign currency crisis and suggested restricting non-essential imports and an immediate free-float of the rupee to avoid a currency black market.

    Gammanpila told Reuters he also urged the Rajapaksas to seek the support of the IMF as early as possible. He said that his suggestions were rejected.

    “We can manage the situation,” Gammanpila quoted Mahinda as saying. Gammanpila & Godahewa say that Gotabaya seldom asserted his self during cabinet meetings.

    Last month, the government said its foreign reserves had dwindled to almost zero.

    But Gammanpila said his chief opponent was Basil.

    The two men clashed frequently, with arguments descending into shouting during at least five cabinet meetings, according to Gammanpila.

    His description of arguments over economic policy was corroborated by the source close to the family, who said Basil felt he knew what he was doing and shouted down objections.

    “Other countries spent what they earned,” Gammanpila said. We borrowed what we could. It was the difference.