© Reuters. FILE PHOTO: A damaged bust of D.A Rajapaksa, father of former Sri Lankan Prime Minister Mahinda Rajapaksa, is pictured at a museum, following violent clashes between pro and anti-government factions and police, in Weeraketiya, Sri Lanka, May 11, 2022. REU
By Alasdair Pal and Uditha Jayasinghe
WEERAKETIYA, Sri Lanka (Reuters) – His beloved villa has been daubed in graffiti by protesters, and a museum dedicated to his father ransacked. Now former Sri Lankan Prime Minister Mahinda Rajapaksa is in hiding in a heavily fortified military base, protected by the armed forces.
The reversal of fortunes for the island nation’s most powerful politician for decades has been giddying. A scion of the Rajapaksa family beloved by many Sri Lankans for ending a protracted civil war, the 76-year-old is now a pariah.
An economic crisis, caused by the COVID-19 pandemic and economic mismanagement, has drained the country of money to pay for fuel, medicine and other vital supplies, meaning lengthy blackouts and long queues for gasoline. Food prices are soaring.
Weeks of largely peaceful demonstrations demanding the prime minister and his younger brother, President Gotabaya Rajapaksa, stand down, turned violent on Monday in the deadliest unrest so far – nine people were killed and over 300 injured.
The turmoil is the worst to hit Sri Lanka since the war ended in 2009. The small southern town of Weeraketiya, where Mahinda liked to stay while visiting the family stronghold of Hambantota district, was not spared.
Shortly after the prime minister resigned on Monday, hundreds of people attacked a small group of police officers guarding his modest villa, vandalising an outhouse containing family memorabilia and sports trophies.
At the main house, graffiti reading “Gota Go Home” – a rallying cry of anti-government protests across the country – has been sprayed on the walls in red.
In Mahinda’s bedroom, windows were smashed but otherwise it looked untouched: television remotes were within reach of a comfortable armchair and a book on Sri Lankan cricketer Muttiah Muralitharan lay nearby.
According to interviews with half a dozen eyewitnesses and police officers, the villa was the first stop on a night of vandalism targeting Rajapaksa properties. No family members were at the residences when they were attacked.
“I have never seen anything like it,” a member of the family’s security detail said, adding that his wounded colleagues did not dare go to hospital to be treated as they feared doctors and nurses would turn against them.
FUTURE IN QUESTION
The worst financial crisis since Sri Lanka’s independence in 1948 has thrown the future of the Rajapaksas into doubt. A family of rural landowners based in Hambantotoa district, the fortunes of the Rajapaksas started flourishing when Mahinda became prime minister in 2004.
After he won the presidential election in 2005, Mahinda and Gotabaya, who defence secretary at the time, ended the civil war with Tamil separatists in the north and east of the country with a brutal government offensive that killed tens of thousands of people.
Mahinda was denied a third term as president in 2015, but the family came back to power in the 2019 presidential election, this time with Gotabaya at the helm.
Two of the nine deaths across the country in Monday’s violence occurred in Weeraketiya, after a crowd attacked the offices of a local lawmaker and his security detail fired on them in response, according to police.
Squads of soldiers and police, who have been given the authority to shoot to prevent looting and damage to public property and when lives are threatened, now guard the vandalised sites.
From the villa, the group proceeded to a museum dedicated to Gotabaya and Mahinda’s late father, parliamentarian D.A. Rajapaksa, where they demolished exhibits and torched the interior.
Little was left when Reuters visited on Wednesday except a golden bust of their father face down on the blackened floor. Houses and shops linked to ruling party lawmakers were also heavily damaged.
Some locals continue to support the Rajapaksa brothers, who are seen as heroes among the island’s Sinhalese Buddhist majority for snuffing out the Tamil insurgency.
Ratnaweera Nandasiri, a 67-year-old paraplegic storekeeper and longtime supporter of the Rajapaksas, said they had provided him with a disability allowance that helped him survive during the pandemic.
On Tuesday evening, he watched as a separate group of around 20 men carrying iron bars destroyed a statue of D.A. Rajapaksa in the nearby town of Tangalle.
From his shop backing on to the memorial garden, he said he remonstrated with the men.
“This is the father of the men that ended the war,” he told them.
Analysis-Alarmed by Solomon Islands-China pact, NZ finds its voice on security
© Reuters. FILE PHOTO: A car with a New Zealand flag waits for New Zealand Prime Minister Jacinda Ardern outside the Great Hall of the People during her visit in Beijing, China, April 1, 2019. REUTERS/Jason Lee
By Lucy Craymer
WELLINGTON (Reuters) – New Zealand has long been seen as the moderate, even absent, voice on China in the “Five Eyes” western alliance, so much so that its commitment to the group was questioned just 12 months ago.
The recent signing of a security pact between China and nearby Solomon Islands appears to have changed that.
New Zealand’s tone on both security and Beijing’s growing presence in the South Pacific has toughened, a shift analysts say reflects concerns the agreement will give Beijing a strategic foothold and potentially a military presence in the Pacific that could destabilise Western influence.
“It’s a real challenge to New Zealand’s sense of where the Pacific is heading,” said Robert Ayson, Professor of Strategic Studies at Victoria University of Wellington.
Prime Minister Jacinda Ardern described the pact as “gravely concerning” and called on Solomon Islands to discuss it within the Pacific Islands Forum.
“What is really changing around us is the level of assertiveness and aggression we see in the region,” Ardern said later at a United States-New Zealand Business Summit.
New Zealand has previously often shied away from such criticisms, which analysts put down to the country’s heavy trade reliance and close economic relationship with China.
Both China and the Solomon Islands have said the new pact will not undermine peace in the region. Details of the final agreement have not been released but Chinese foreign ministry spokesman Wang Wenbin said the agreement called for China to help the Solomon Islands maintain social order and cope with natural disasters, and did not pose a risk to the United States.
But statements by Ardern and Foreign Minister Nanaia Mahuta were a clear signal they shared U.S. and Australian concerns about Chinese security engagement in the Pacific, said Anna Powles from the Centre for Defence and Security Studies at Massey University.
“It also sent a signal to the Pacific that New Zealand supported regional collective security initiatives, and to third parties, specifically China, that regional crises in the Pacific would be managed by the region,” she said.
While small and with limited military capabilities, New Zealand’s soft power in the Pacific is arguably stronger than its allies. It has a large Pacifika population and strong family, business, sporting and cultural ties along with territories in the region.
New Zealand sees itself as a Pacific country and wants stability and prosperity for its neighbours, and needs a free and open Indo-Pacific to protect trade and telecommunication connections.
David Vaeafe, programme manager at non-governmental organisation Pacific Cooperation Foundation, said the relationship with the Pacific was not all about money but about listening and understanding what the region needs.
“New Zealand’s foreign policy towards the Pacific is slowly evolving and engaging from being ‘you shouldn’t do this’ to consulting and being part of that process,” he said.
FIVE EYES CRITICISMS
A year ago, there were questions over Wellington’s commitment to the Five Eyes alliance with Australia, Britain, Canada and the United States, after Mahuta said Wellington was uncomfortable with expanding the role of the group.
There had been criticism after New Zealand opted not to sign joint statements from other Five Eyes members, including one on Hong Kong and another on the origins of COVID-19.
White House Indo-Pacific coordinator Kurt Campbell told a business summit earlier this month that New Zealand’s underestimation of security risks in the past appeared unlikely to be an issue.
“I think there is an understanding that the challenges that are presenting themselves on the global stage are not so distant – they’re closer and they have direct implications,” he said.
Already New Zealand and Japan have announced plans to increase security ties and other moves are afoot.
Mahuta visited Fiji at the end of March and signed an agreement that among things will facilitate information on shared security challenges.
At the start of the month, a partly New Zealand-backed tuna processing plant for the Solomon Islands that is set to create more than 5,500 jobs was announced.
The Ministry of Foreign Affairs and Trade has quietly shuffled more money into Pacific development cooperation budget for 2021-2024, according to changes made on its website. The fund has been increased since December by nearly NZ$120 million ($75 million) to $1.55 billion.
New Zealand’s budget on Thursday will likely give further detail on Pacific spending with New Zealand’s defence minister previously highlighting the region as a priority.
“New Zealand is quite strongly aligned to the United States and Australia,” VUW’s Ayson said. “That doesn’t mean we always see eye-to-eye and it doesn’t mean the we’re as closely aligned as Australia, but New Zealand’s security alliance is quite strong.”
($1 = 1.6038 New Zealand dollars)
After delay, U.S. Senate edges toward passing $40 billion Ukraine war aid
© Reuters. FILE PHOTO: Military aid, delivered as part of the United States’ security assistance to Ukraine, is unloaded from a plane at the Boryspil International Airport outside Kyiv, Ukraine February 13, 2022. REUTERS/Serhiy Takhmazov/File Photo
By Patricia Zengerle
WASHINGTON (Reuters) – The U.S. Senate voted on Monday to advance $40 billion more aid for Ukraine in its war against Russia, setting the stage for a vote on the bill possibly later this week, after the military and humanitarian assistance was delayed due to opposition from one Republican senator.
The tally was 81 to 11 on the first of a potential three procedural votes paving the way for final Senate passage of the funding, requested by President Joe Biden’s administration to keep aid flowing and boost the government in Kyiv nearly three months after the start of the Russian invasion.
All 11 “no” votes were from Republicans.
The House of Representatives approved the aid on May 10. But it stalled in the Senate after Republican Senator Rand Paul refused to allow a quick vote. Biden’s fellow Democrats narrowly control both the House and Senate, but Senate rules require unanimous consent to move quickly to a final vote on most legislation.
Paul said he wanted an inspector general to be appointed to oversee the funds, but declined an offer from Senate leaders to hold an amendment vote on his proposal. Changing the bill would force the House to vote on it again, causing further delay.
There is strong support from both parties for assisting Ukraine. The House passed the measure by 368 to 57, with substantial Republican support, despite all 57 of the “no” votes in the House coming from Republicans.
Mitch McConnell, the top Republican in the U.S. Senate, led a small delegation to Ukraine this weekend. He said on Sunday the Senate could approve the aid on Wednesday.
The Biden administration had said additional money for Ukraine must be approved by Thursday in order to avoid a lapse in U.S. assistance.
Dollar slips from 2-decade highs; yuan falls on weak China data
© Reuters. FILE PHOTO: U.S. dollar banknotes are displayed in this illustration taken, February 14, 2022. REUTERS/Dado Ruvic
By Sinéad Carew
NEW YORK (Reuters) – The U.S. dollar index was lower on Monday after hitting a 20-year peak last week, with the global economy in focus after weak economic data from China highlighted worries about the prospects for a global slowdown.
Creating a risk-off mood on Monday, China’s retail and factory activity fell sharply in April as extensive COVID-19 lockdowns confined workers and consumers to their homes. But Shanghai did set out plans for the return to more normal life from June 1.
Following the release of China’s data, Bipan Rai, North America head of FX Strategy at CIBC Capital Markets, said trading was focused on macro economic data on Monday.
“It’s important to highlight that the risks are towards a stronger dollar and primarily, that’s because if you look at the macro economic climate, the fundamentals don’t look good. From a risk-off perspective that should still support the dollar against most currencies,” Rai said.
But he said the greenback was consolidating after its recent strength and that more range-bound trading sessions were possible: “It makes sense for some period of consolidation before the next leg higher.”
Trading in the dollar may be muted partly because a lot of bad news has already been priced in but also because investors are waiting for events such as the U.S. retail sales data release and a public appearance by Fed Chair Jerome Powell both scheduled for Tuesday, according to Mazen Issa, senior FX strategist at TD Securities. [nL2N2X52F6]
Still Issa said he doesn’t “think we’re in a market where we’re going to see the dollar weaken … It’s going to take a lot to get investors out of the dollar.”
The euro was pulled from its earlier lows after European Central Bank policymaker Francois Villeroy de Galhau said the common currency’s weakness could threaten the ECB’s efforts to steer inflation towards its target.
The Australian dollar, which is highly exposed to the Chinese economy, reversed course as the day wore on and was last up against the dollar after falling as much as 0.9%.
The dollar index was last down 0.37% at 104.16, after briefly crossing the 105 level on Friday – its highest level since December 2002, after six successive weeks of gains. Weekly positioning data showed that investors had built their long dollar bets.
The euro was up 0.26% at $1.0438 but not far from last week’s low of $1.0354, its lowest level since early 2017. Analysts see $1.0340 as a crucial level of euro support.
HSBC strategists expect the euro to fall to parity against the dollar in the coming year. “Much weaker growth and much higher inflation leave the ECB facing one of the toughest policy challenges in G10 (central banks),” they said.
Crypto markets, which trade around the clock, had a quiet weekend after turmoil last week driven by TerraUSD, a so-called stablecoin, which broke its dollar peg. An affiliate of the company behind TerraUSD said it had spent the bulk of its reserves trying to defend its dollar peg and would use the remainder to try to compensate some users who had lost out.
Bitcoin was last trading at around $29,881, down more than 4%, after having dropped to $25,400 on Thursday, its lowest mark since December 2020.
Currency bid prices at 3:03PM (1903 GMT)
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