FirstFT: Sri Lanka’s president flees to the Maldives

President Gotabaya Rajapaksa has fled Sri Lanka on a military aircraft for the Maldives, according to the country’s air force, leaving behind a deepening economic and political crisis in the island nation on the day he was expected to resign in the face of mass protests.

The 73-year-old leader was forced to offer his resignation on Saturday by a street revolt in which tens of thousands of protesters angered by rising prices and shortages of fuel and food converged on Colombo, the commercial capital, and over-ran the presidential palace.

Rajapaksa’s downfall marks the end of one of Asia’s most powerful political dynasties, which many Sri Lankans credit with winning a long-running and brutal war against Tamil separatists in the north of the country.

However, they now blame him for borrowing heavily to build China-backed Belt and Road spending projects and for a series of failed economic policies that caused Sri Lanka to default on its debt in May. “This has been a train wreck in slow motion,” said one investor who holds Sri Lankan debt.

Thanks for reading FirstFT Asia. Here is the rest of today’s news — Emily

Five more stories in the news

1. Euro falls to parity with US dollar for first time in two decades The risk that aggressive interest rate rises could tip the US into recession, combined with the likely damage to the European economy stemming from its dependence on Russian energy, have shoved the euro down to parity against the US dollar for the first time in 20 years.

2. US employs ‘tuna politics’ to resist China’s Pacific push The US has signed a vital fishing agreement with a group of Pacific islands that will help strengthen security ties in Oceania to counter China’s campaign for influence in the region. Vice-president Kamala Harris appeared by video link at the Pacific Islands Forum as she detailed a renewed diplomatic push into the region.

3. Central banks around the world react to inflation The Bank of Korea, the Reserve Bank of New Zealand and Canada all raised interest rates as inflation continues to roil the globe. The US consumer price index published today hit an annual pace of 9.1 per cent, a fresh 40-year high that cements expectations of another historically large 0.75 percentage point Federal Reserve interest rate rise this month.

4. Trafigura sells stake in Putin-backed oil project to obscure HK outfit
The commodity trader has sold its multibillion-dollar stake in Vostok Oil, a giant Russian oil project, to a the obscure Hong Kong company Nord Axis Limited, which was set up just nine days before Russia invaded Ukraine. The sale shines a spotlight on a new group of traders in Russian oil that has emerged since the invasion.

5. Kim Jong Un regime blames balloons for Covid spread For a country that has sought for decades to isolate its population from the outside world, balloons sent from neighbouring South Korea represent an unacceptable incursion — and even a bearer of Covid-19, according to North Korean state media.

The day ahead

Second ballot in UK Conservative leadership contest Conservative MPs will reduce the number of candidates further in a second round of voting on Thursday — the contender with the lowest level of support will fall out of the race. Rishi Sunak and Penny Mordaunt have become the frontrunners.

Biden meets with Israeli officials During his Middle East tour, US president Joe Biden is expected to sign a joint declaration with Israel enshrining strategic co-operation, committing both countries to preventing Iran from getting a nuclear weapon. Biden is also expected to push Saudi Arabia on a timeline for upgrading ties with Israel.

Join FT journalists on Friday July 15 at 1pm BST/8pm HKT for a virtual briefing for FT subscribers on what awaits Britain and business after Boris Johnson as rival Conservative candidates battle to succeed him as prime minister. Register for free.

What else we’re reading and listening to

Inside the fall of Celsius The decline of Celsius has been labelled the crypto community’s “Lehman Brothers moment”. It loaned deposits from retail investors to large crypto companies and promised exceptionally high interest rates. But it now has a hole in its balance sheet of as much as $2bn and is facing collapse. This week the FT is launching a cryptocurrency newsletter to help guide you through the crash. Premium subscribers can sign up here.

How we became a Covid high-risk family On a recent Friday morning in Beijing, a man arrived at FT reporter Ryan McMorrow’s door to seal him and his family inside; they had been classified as a “high-risk” needing at least four days of home quarantine. For the next four days Ryan, his wife, their 11-month-old and his wife’s parents remained holed up in the apartment.

A new era of astronomy has begun The maiden image of deep space shows a vanishingly small piece of the night sky, equivalent to the size of a grain of sand held at arm’s length. Each dot or disc represents a galaxy that itself is made up of millions, even billions, of stars. Each grain of sky contains more worlds than it is humanly possible to contemplate.

India takes political gamble on $1.3bn fight with satellite firm The ruling Bharatiya Janata party says India’s original contract with Devas Multimedia was fraudulent and refuses to pay damages ordered by tribunal. Now the issue has become politicised as the BJP uses the battle to attack the Congress party, its chief political rival, which struck the contract.

Why companies could soon pay for climate change In this week’s episode of the Behind the Money podcast, listen to the story of a David vs. Goliath battle: How one man is taking on one of the world’s biggest polluters in a landmark case that could one day force companies to pay for damage they’ve done to the environment.

Books

The Work & Careers team select what to read this month, including the lessons for business from Alabama’s American football coach Nick Saban and a guide on how to succeed in a changing world by Seamus Gillen.