How Sri Lanka can benefit from emerging multipolar world and its policy options

by Shenal Senevirathna

Radical anti-imperialist theorists and the largest investment banks, such as Morgan Stanley and Rabobank, may appear to be on opposite sides of the political spectrum. However, they all appear to be embracing the emerging multipolar world order. Anti-imperialist theorists welcome it as an extension of their decolonisation theory, while environmentalists welcome it because they recognise that it is now a reality. For those interested in capital markets, I recommend reading Morgan Stanley’s paper on multipolarity, which explains how to calibrate capital in the new multipolar world. The investment banks embrace the new world order of multipolarity not because they are fans of it, but because their view of capitalism is more objective and reality-based, and they recognise multipolarity as a fact.The scope of this article is similar to how Sri Lanka can benefit from the emerging multipolar world, and it also proposes some direct policy moves.

First, in historical terms, the development of multipolarity should be necessary. Prior to the start of colonisation, the world was multipolar. Countries traded within their territories, and there were several major world powers, including India, China, and the Islamic world. With the rise of colonialism, the world became more imperialism-dominated while remaining somewhat multipolar. However, colonialists ruled India and China. Despite their independence, most colonial countries have yet to fully decouple from unipolar imperialism. With the rise of the Soviet Union, the world was somewhat power-balanced, but with its demise, the world became truly unipolar. The imperialist camp then wielded power over the military, technology, media, and, most importantly, finance. This new system was unilateral and enslaved the majority of the poor for its own benefit.

With the eventual development of countries such as Russia, China, and the Asian region, the unipolar world began to shift to the new multipolar world that is now the global reality. In today’s world, countries such as China and the rest of Asia are rapidly expanding their financial power. China already has military superiority over any imperialist country. And Chinese technology is several decades ahead of any Western country. So provide several examples. Self-driving vehicles are now a reality in China, whereas they are still being tested in the West. Robots are used in factories in China at a much higher rate than in the West. The Chinese are superior in all areas of science and technology. This provides enormous benefits to the poor developing world.

Countries that wanted to industrialise in a unipolar world had to borrow heavily from the West. However, in today’s multipolar world, there are numerous alternatives available. Mexico and Brazil are developing their first electric vehicles with the help of Chinese companies. Afghanistan manufactures its first solar panels with the assistance of Chinese companies.

Second, all poor countries are in desperate need of capital and markets. Today, Asia represents the world’s largest market and investor base. Countries with sound industrial policies and directionality are now benefiting from this situation.

The second section of this article focuses on some concrete policy options that Sri Lanka can implement to address the new emerging condition.

Joining BRICS-After announcing the new BRICS+ framework, many countries expressed their desire to join BRICS. The BRICS now collectively account for a significant portion of global oil production and are clearly larger than the G7. So the opportunities are immense for a country like Sri Lanka to join.

Join the SCO-Shangai Corporation organisation, which provides its member nations with security and defence assistance to protect their sovereign rights in a variety of ways.

To become an export-oriented country and diversify its existing export portfolio, Sri Lanka must integrate with the emerging world trade institutional framework. As a result, it should enter into free trade agreements with the RCEP, ASEAN, and China. Sri Lanka is already in talks about a China-Sri Lanka Free Trade Agreement, but it must be accompanied by a proper industrial plan or it may not provide the maximum benefits.

Cross-border settlement corridor with China-The Sri Lankan Central Bank should consider establishing a cross-border settlement corridor with China in order to reduce its reliance on USD while also expanding its new opportunities and exposure to alternative capital streams. The lack of diversification in Sri Lanka’s currency basket is one of the causes of the country’s current economic crisis.

Sri Lanka’s Central Bank should consider integrating its systems with multipolar cross-border systems such as Chinese CIPS, Russian SPFS, and Indian UPI. Currently, the Central Bank only operates using the unipolar and default SWIFT system. This reduces its capacity for innovation while also posing serious threats to its sovereignty.

Despite the current doom and gloom in Sri Lanka, a very optimistic global environment has opened up for Sri Lanka to move out of its current situation as a result of the emergence of a multipolar world. Sri Lanka needs to take a long-term, policy-driven scientific approach to the emerging multipolar world.