GR’s Gamble With RW

By Ameer Ali –JUNE 1, 2022

Dr. Ameer Ali

When Mahinda Rajapaksa’s plot to end aragalaya with mob violence misfired and ended in his own resignation, President Gotabaya Rajapaksa (GR) was left alone to face the mounting anger against the troubled regime. The beleaguered president looked for an escape route to deflect this anger away from him and picked Ranil Wickremesinghe (RW), at least to share that anger, and appointed him as replacement premier. RW had his own credentials to that position, not from his past career but from his recent performance in the parliament. Firstly, when there was strong demand for fresh elections for a new government from inside and outside the legislature, which could have ended in a historic rout for Rajapaksa’s SLPP, it was RW who persistently reminded the nation that it was not the right time for elections but time to join hands to revive the economy. Secondly, he was among the earliest to insist that MR government should approach IMF for assistance before situation became intolerable. Thirdly, he was calling for a reformulation of Sri Lanka’s foreign relations with stronger tilt towards India and the West without damaging relations with China. And finally, he was also talking about seeking help from a consortium of countries to get out of the dollar crisis. In sum, while other party leaders were prioritizing political change ahead of economic reparation, RW was taking an opposite view. His words were music to GR, and the President took the gamble in appointing WR as the new Prime Minister. As expected, the focus of criticism has begun to shift towards RW giving some badly needed respite to GR to plan his future moves. To that extent the gamble has worked. But will it produce political stability and economic relief?

On a positive note, however, there is fresh hope for additional economic support from international quarters. For instance, the US-India-Japan-Australia Quad, and within that Quad India and Japan in particular have come forward with special programs of assistance to overcome Sri Lanka’s immediate needs such as food, fuel and medicine. US for her part would be expected to work through IMF and World Bank to provide generous assistance. This new resolve from Quad is more geopolitical in intent than altruistic. Sri Lanka’s geographic location in the context of the US-China cold war, and China’s penetration deep into Indo-Pacific waters meant that the declining super power could not afford to sit tight watching Sri Lanka turning into a strategic theatre of action to China. The latest security deal between China and the Solomon Islands obviously had sent shock waves to the US and her allies in the region. To India especially, which has been practically surrounded by China along the northern border, any attempt to encircle her from southern waters would be deadly to India’s territorial sovereignty. Hence, India’s extra readiness to rescue the island’s economy. When looking from another angle, Sri Lanka’s economic crisis is a God’s end to India, because it provides a golden opportunity to drag the island into India’s zone of influence. Kachchativu may soon fall into India’s hands in return for economic assistance. In a way, India is now trying to recover what she missed to capitalize on opportunities that opened up soon after the civil war. It should also be noted in passing that the Sinhala Buddhist demagogues who endlessly preached anti-Indian hatred by exhuming buried memories of medieval Tamil invasions from the south, are now forced to eat humble pie and receive food charity from Tamil Nadu. This is history’s punishment for misreading and misusing its lessons.e Siunh

RW government has also built high hopes for assistance from IMF, World Bank (WB), Asian Development Bank (ADB) and other international institutions. To these lending institutions, and to the first two in particular, what matters when a country approaches for assistance is not who governs that country but how efficient and clean its governance is. Therefore, subject to certain stipulated conditions, IMF would assist in overcoming balance of payments difficulties while WB would extend help for long term development projects. For the moment however, IMF had insisted that Sri Lankan authorities should pursue policies to achieve macroeconomic stability as precondition for assistance. Such policies would involve adoption of tight monetary policy with higher interest rates and flexible exchange rates, which the new CBSL Governor had announced already; undertaking fiscal reforms by way of increased taxes, cutting public expenditure and subsidies; and reforming loss-making public enterprises, among others. RW as the new minister of finance had announced some of these measures to be implemented from October 1st. Would these be enough for IMF to expedite assistance?

WB has denied agreeing to a $700 million bridging fund, but said instead, to consider, “repurposing resources from previously approved projects to help the government with some essential medicines, temporary cash transfers for poor and vulnerable households, school meals for school children of vulnerable families, and support for farmers and small businesses”. But to extend this assistance and receive funds from IMF, RW government should show evidence that it has an accountability mechanism in place to prevent the funds being wasted. This is where GR’s gamble to revive the economy through RW would fail, because the existing administrative mechanism is so rich in corruption that funds coming from outside are systematically siphoned off by intermediaries and they rarely reach in full intended destinations. This is a perennial problem and that is why aragalaya demands systemic change, which IMF and WB are aware of. Quite a number of the present 225 in parliament are past masters in benefiting from foreign help.

On top of these is the issue of debt sustainability and debt restructuring. This is going to be an expensive and drawn-out affair that may delay IMF assistance by months if not a year at least. Whether IMF would release some emergency funds before that without an overhaul of existing local distributive agencies as part of a systemic change is doubtful. Even with such funds, economic recovery in the medium or long-term is not guaranteed. RW is completely silent on accountability mechanism while proposing a number of commissions and committees, which are time consuming devices unaffordable in present context. A government without a mandate from people would not have the strength to change the system. Aragalaya demands systemic change.

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COPE Inquiry Reveals the People Who Brought Sri Lanka to its Knees

Photo courtesy of NewsRadio

ATHULA KUMARA-06/01/2022

Last week’s Committee on Public Enterprises (COPE) inquiry into the Central Bank (CB) and the economic situation revealed some rather distressing, but not surprising, revelations. The complete politicization of the CB is no surprise to any Sri Lankan; after all it is not always one leaves their ministry portfolio and is rewarded with the governorship of the Central Bank to tweet angrily at ratings agencies.

In December 2019, Dr. Indrajit Coomaraswamy resigned from his role as Governor of the CB and Prof. W.D. Lakshman was appointed by the president to take over. On May 2020, Nihal Fonseka and Dr. Dushni Weerakoon both resigned from the Monetary Board (MB), both well before the end of their six year fixed appointment periods. Dr. Harsha De Silva claims they were both forced out of the MB.

Mr. Sanjeeva Jayawardena PC was appointed into the MB in February 2020, Dr. Ranee Jayamaha and Samantha Kumarasinghe were appointed on June 26, 2020 by approval of the Constitutional Council that existed after the eighth parliament had been dissolved on March 2, 2020. The chair of this council was Speaker Karu Jayasuriya and included such members as Prime Minister Mahinda Rajapaksa, Mr. Bimal Ratnayake, Ms. Thalatha Atukorale, Mr. Javed Yousuf, Prof. Naganathan Selvakumaran and others who unanimously approved the appointment of both nominees.

Perhaps it was getting too hot for Prof. Lakshman because in September 2021 he stepped down and Mr. Ajith N. Cabraal, who had recently vacated his seat in parliament (which would otherwise disqualify from being a part of the CB), was appointed as the Governor of the CB and by extension the chair of the MB.

Prof. Lakshman is now the chair of Econsult Asia, although the website seems to have been updated and he is no longer featured on it. Suspicious, but fear not as the internet never forgets. He is alongside none other than Dr. P.B. Jayasundera as the Deputy Chairman. Other representatives of Econsult such as Dr. Kenneth de Zilwa are vocal proponents of Modern Monetary Theory (or printing away debt), of import substitution-led industrialization and have written extensively about not going to the IMF.

Dr. Ranee Jayamaha is a career central banker and in fact her PhD is in monetary economics, so her appointment to the MB is sensible, regardless of any political loyalties. The chair of the MB during the past 2.5 years was either Prof. Lakshman or Mr. Cabraal. Mr. S.R. Attygalle, who was appointed as the secretary to the Treasury in November 2019 by the president, was the third member throughout. The fourth and fifth members were Dr. Jayamaha and Sanjeewa Jayawardena.

Mr. Sanjeeva Jayawardena is not an economist; he is a lawyer and the closest relationship to economics he seems to have is that his father was a member of the MB in 90s. He does have quite a stellar record of legal representations having represented a hodgepodge of colourful characters like former president Maithripala Sirisena during the constitutional coup in 2018 and a bunch of petitioners challenging the Millennium Challenge Corporation and Status of Forces Agreement agreements in 2019.

Interestingly in May 2020, he appeared on behalf of notorious monk, Muruththettuve Ananda Thero to defend him against eight fundamental rights petitions challenging the decision made in March 2020 by President Gotabaya Rajapaksa to dissolve parliament early to hold parliamentary elections.

Mr. Samantha Kumarasinghe is also not an economist. He is a businessman with a chemistry degree and claims to be an alumnus of the Harvard Business School. He is a typical mercantilist, repeatedly calling for protectionism in trade and to close borders for multinationals and foreign investors. He is walking contradiction; he owns factories all around the world but he does not wish any foreigners to set up their factories in Sri Lanka.

In an interview on Ada Derana in November 2019 he chastised governments “which try to satisfy the World Bank and IMF and ignore local industrialists” and said that such governments have “repeatedly shown that the strategies [..] won’t help the local economy”. In December 2021, Mr. Kumarasinghe gave an interview to the Lankadeepa paper in which he states that “there is a theory that when interest rates rise, the demand for money falls. I do not believe in this theory”.  Suffice to say he is no monetary policy expert.

Prof. Charitha Herath, Chair of COPE, summoned officials of the Central Bank and the Treasury to inquire into the current economic situation in the country. So damning was the revelations made at this inquiry that Prof. Herath, who is otherwise quite happy to cheerlead the Rajapaksas, has recommended a Parliamentary Select Committee (PSC) be appointed to inquire into the causes of the economic crisis and to determine the role of the involved officials who neglected their responsibilities.

Upon MP Patali Champika Ranawaka’s questioning, it was revealed that the President Gotabaya Rajapaksa-led government had made a request to IMF in March/April 2020 for a Rapid Financing Instrument (RFI) but the IMF had refused on the basis that Sri Lanka’s debt was unsustainable. In November 2019, when the IMF submitted its sixth review of Sri Lanka, the report clearly states that “external debt is sustainable, but rollover risks remain high over the medium term in the context of relatively low reserve coverage”. So, what happened between these two periods?

President Rajapaksa’s tax cuts of 2019 ended up costing the government Rs. 600 billion. As Dr. Harsha De Silva points out correctly, between the span of five months, and before Covid-19 had fully gripped Sri Lanka, the IMF had deemed Sri Lanka’s debt to have become unsustainable. The only significant measure that had been implemented by this time was the Gotabaya-Viyathmaga “trickle-down” tax cuts.

Interestingly, Dr. Nandalal Weerasinghe also points out that it was President’s Secretary Dr. P.B. Jayasundera who had held the senior level discussions with the IMF at the time, and that Treasury Secretary Mr. Attygalle played second fiddle although he is the senior treasury official who is entitled to lead such discussions. Dr. Jayasundera had, at that point, told the IMF that Sri Lanka will not restructure its debts and will instead manage somehow. Who empowered Dr. Jayasundera to make such a decision?

Mr. Sanjeeva Jayawardena, who also chairs the MB Level, External Debt Monitoring Committee, said that Dr. Jayamaha and he had, on several occasions, urged the MB to consider gradually floating the exchange rate in conjunction with the prevailing market demand. Mr. Jayawardena says that due to the lack of dollar liquidity in the banks, the CB had spent $2.2 billion of its reserves to defend the rupee at this rate. Dr. Jayamaha states that Prof. Lakshman, Mr. Attygalle and Mr. Kumarasinghe formed the majority in favor of defending the rupee and disregarded Dr. Jayamaha’s and Mr. Jayawardena’s warnings.

Now, $2.2 billion is not a trivial amount. It is nearly one-third of the forex reserves Sri Lanka had at the end of 2019 ($7.5 billion). It is about seven months of fuel imports. Our annual fertilizer imports are one-tenth this amount (~$200 million). We could have bought about four years’ worth of medicines and pharmaceuticals with that amount. We must also consider the fact that this fixed exchange rate caused about $1.6 billion of worker remittances to not flow into the banking system.

On March 7, the day the rupee was floated, Mr. Jayawardena states that the MB decision was to allow flexibility on the rupee up to Rs. 230 per dollar but that Mr. Cabraal, the governor at the time, had met on his own with the banks and it had somehow turned into a complete free float, confusing the markets and causing the rupee to rapidly depreciate. Well, it is too late to tell us now, when the dollar is over Rs. 350 rupees.

Mr. Jayawardena states that the MB made several assertions to gradually reduce the CB’s exposure to government securities. Regardless, in the two years in which Mr. Jayawardena continued to function as a member of the MB, CB’s exposure to government securities grew from Rs. 310 million by end 2019 to Rs. 1,565 million by end 2021. If it was the MB’s decision then who authorized such large purchases of government securities?

Although both Mr. Jayamaha and Dr. Jayawardena claim no responsibility for the decisions to float the rupee or in the act of printing money, both have served continuously on the MB throughout this period. Surely Dr Jayamaha, who is well versed on the subject of monetary economics, knew the damage it would cause to the economy. With low interest rates, forced low fixed exchange rates and the CB acting like the governments ATM, it was obvious to a rational observer that the rupee was going to depreciate rapidly once the flimsy chains that bound it were removed.

In this context it is fair to ask, if Dr. Jayamaha and Mr. Jayawardena objected to these decisions that would severely damage Sri Lanka’s already fragile economy, why did neither of them step down from their roles? Resign and indicate that things were going awry. They claim their arguments were dismissed, if so, then why stay on in a board on where one’s ideas, which are objectively correct, are dismissed, particularly as it pertains to the lives of 22 million people? Were they willing to sit by while knowing what devastating consequences would ensue?

As Dr. W.A. Wijewardena points out in his column this week, “It is the state which is sovereign and not the government. Both the government and the Central Bank are two arms of the sovereign state created for a purpose.” He is right of course; it is not the role of the CB to accommodate every request of the government or be subservient to political whims but to act in the best interest of the state and preserve its mandate of delivering price stability and financial system stability. It is for this reason that MB members are appointed for six year fixed terms so that political changes cannot superimpose on the independence of the MB’s functions.

But both price stability and financial system stability are now in complete shambles. Inflation is almost 40%, food inflation is unbearably high, close to 60%. The local banks, especially state owned banks, are under significant distress due to the sheer amount it has lent to underperforming state owned enterprises such as the CPC and CEB. At a high level, it is the Rajapaksas and their close advisors such as Dr. P.B. Jayasundera who are responsible for avoiding and delaying IMF and debt restructuring until it was too late. At a level below, it is the members of the MB responsible for the excessive money printing, the fixed exchange rate fiasco and low interest rate regimes.

The COPE committee has requested for the minutes of the MB’s meetings to be tabled to the committee to ascertain the truth of Dr. Jayamaha and Mr. Jayawardena’s statements. These findings must be revealed to the general public because it is the life of the general public that is in disarray. We shall find out more but it is undoubtably true that the MB, regardless of what opinions were held, are responsible for the politicization of monetary policy decision making and the decisions that have led to the complete erosion of the value of the rupee and the standards of living.

Every life that is lost without essential medicines, every life lost in a queue and every life lost in the future due to the sheer mismanagement of the economy is because of the Rajapaksas and their appointed officials.

 Ontario's lawyers defend the Tamil Genocide Education Week Act

The Tamil Genocide Education BIll being signed last year.

Melvin Mariathas-01 June 2022

The province of Ontario’s lawyers effectively argued to dismantle the legal case filed against Bill 104 – the “Tamil Genocide Education Week Act”, at the Superior Court of Ontario by Tamil Genocide deniers.

It is a well-known fact that the Sri Lankan government is working extremely hard against any efforts undertaken in the struggle for justice for Tamil people in Sri Lanka and around the world. Even today despite facing an economic crisis, triggering political and financial instability, the Sri Lankan government continue to engage in Tamil Genocide denial and distortion.

In Canada, the Tamil Genocide deniers has filed a case against Bill 104 – the Tamil Genocide Education Week Act, at the Superior Court of Ontario, saying that the bill is unconstitutional and violates the Charter of Rights and Freedoms. This bill was brought forward by MPP Vijay Thanigasalam and unanimously passed May 21, 2021 in the midst of great challenges. This case was taken up for hearing on May 24th.

The Tamil Genocide Education Week Act (Bill 104) proclaims the seven-day period in each year ending on May 18th as Tamil Genocide Education Week. During this week, Ontarians are encouraged to educate themselves about and maintain their awareness of, the Tamil genocide and other genocides that have occurred in world history.

The opposing party argued that the Ontario provincial government is within the Canadian federal government and therefore has no right to talk about matters pertaining to foreign affairs such as genocide.  They further argued that the Ontario provincial government’s passing of the Tamil Genocide Education Week Act was wrong as the Government of Canada did not officially recognize the genocide of Tamils.

The Ontario government’s lawyers who argued for defending the legitimacy of the Tamil Genocide Education Week did an excellent job citing several examples to prove that the “Tamil Genocide Education Week Act” is in fact legal and that the Ontario government has the authority to pass the act. In particular, they argued well that the act was passed to educate the people of Ontario regarding the Tamil Genocide, and that the government of Ontario did not violate any legal framework in passing the Bill-104.

It is important to note here that according to the Canadian federal and provincial structures, education rests within the responsibility of the provincial government and foreign policy matters rest within the responsibility of the federal government. The opposing party here argues that the provincial government’s interference in matters within the responsibility of the federal government is against the structural framework of Canadian politics.

The Tamil Genocide Education Week Act definitely recognizes the genocide. In legal terms, the declaration wasn’t “legally binding” in the sense that it wasn’t a referral to the International Court of Justice or a criminal indictment of anyone. It is a declaration. During the nearly 10-hour debate, the lawyers representing the Province of Ontario effectively argued and defended the Tamil Genocide Education Week act within the legal framework of Ontario’s constitution.

The Ontario’s Minister of Education, Stephen Lecce, has provided funding for workshops to address healing from the intergenerational trauma caused by the Tamil Genocide. Lecce also spoke on May 18th at the Tamil Genocide Remembrance Day Vigil as the Tamil community remembered and honoured the innocent victims of the Tamil genocide. He stressed the significance of Tamil Genocide Education Week and its importance of education in healing from trauma.

There is misinformation being spread on social media without context that only states parts of the argument by the Ontario lawyers.  It is extremely essential that during such crucial times, the people understand the legal case and identify who the opposers vs the defenders are.

Tamil Genocide Education Week, Act educates Ontarians about the genocide that were committed against the Tamil people by the state of Sri Lanka.  This act has already been passed by Ontario’s legislative assembly and received royal assent. Now the Tamil Genocide deniers are challenging this act in court. The Ontario government is defending the act.

The final verdict on this case is not out yet. A case like this, under normal circumstances will take up to three to six months.

_____

Melvin Mariathas is a human rights advocate and political organizer involved in Tamil rights and Canadian policy issues.

Can Ranil succeed in Sri Lanka Game of Thrones?

To set the record straight, it was Ranil as PM of the Yahapalana government, who ensured the 19A to whittle down executive presidency was passed in the parliament. Ranil as a seasoned wheeler-dealer in Sri Lanka’s convoluted politics, is perhaps one man who can pull such a rabbit out of his hat.

by Col R Hariharan-02 June 2022

The happenings in Sri Lanka’s turbulent month of May have many wheels within wheels of political intrigue and chicanery. It has set precedents in Sri Lanka history. Nationwide public protests against the Rajapaksas brought a change in government leadership with Ranil Wickremesinghe replacing Mahinda Rajapaksa as prime minister. The newly installed PM had neither proven parliamentary majority nor constitutional authority is perhaps an inconvenient detail. But the biggest loser was democratic polity with most people losing faith not only in the Rajapaksas, but in the country’s decaying political system as well.

American President Franklin D Roosevelt once said, “the future lies with those wise political leaders, who realize that the great public is more interested in government than in politics.” Apparently, the Rajapaksas have not read Roosevelt’s words of wisdom. They cogitated for over a month on how to manage the public protests that wanted them out of office for their miserable failure of governance. They tried various political moves but failed to satisfy the political class as well as the protesting public.  

PM Mahinda Rajapaksa’s resignation came about rather ignominiously. The last hurrah of Mahinda led by his acolytes and goons gathered to show their solidarity on May 9, misfired when they went on a rampage against protestors in Temple Trees area and the Gota Go Gama (Gota Go Village) at Galle Face Green in Colombo. With the police benignly watching from the side lines, the goons attacked everyone, including handicapped war veterans, destroying property and injuring scores.  

Apparently, the Mahinda-acolytes game plan had not factored deep sense of resentment among the public against them. Enraged anti-Rajapaksa protestors went on a meticulously planned retaliation, to chase and beat up the goons, damage the buses that ferried them and set fire to as many as 28 properties including houses of pro-Mahinda political leaders and parliament members. The retaliatory violence extended till early hours of May 10. Army called upon by distressed ruling party politicians arrived rather late, after arsonists reduced properties to ashes. It had one positive outcome: the President who was out of touch with the reality of the ground situation seems to have now realised that the Argalaya (struggle) cannot be wished away by politics; results beneficial to the public matters.  

Peeved Sri Lanka Podujana Peramuna (SLPP) MPs met the President on May 14 to complain about the failure of the armed forces to respond to their call for help to quell violence both in Mirihana on March 31 and on May 9 -10. A high powered military committee of former chiefs of three services has been appointed to look into lapses of the forces in these incidents. Going by the fate of such “high power committees”, nobody will be surprised if the administration fails to read its recommendations.

The bottom line in the whole sordid tale of Sri Lankan version of the Game of Thrones is, brothers Gotabaya and Basil have sacrificed PM Mahinda to pacify the public and install a more amenable leader to partly appease the protestors. So, what has been achieved by PM Wickremesinghe since he became PM on May 12?

Firstly, the five times PM, if we count his truncated tenures in the Yahapalana government, has partly relieved the pressure of public protests on the President. However, the protestors reminded everyone they were very much alive by taking out a huge procession of people from all sections of society in Colombo to mark the 50th day of protests on May 29. This shows the popular Aragalaya (struggle) movement has scored a success with the ouster of Mahinda. If led imaginatively, the Aragalaya has the potential to re-energize the movement demanding Gotabaya’s resignation. This factor will  have to be borne in mind by  not only the President or PM Wickremesinghe, but all other stakeholders.

Secondly, the President’s ploy of bringing in Ranil as PM, has confused the opposition which was vociferously demanding Gotabaya’s resignation. It also split the ranks of the main opposition SJB, after Ranil said his acceptance of office was conditional to replacing 20th Amendment to the constitution that concentrated all powers in the hands of the executive president. The SLFP led by former president Sirisena, after some posturing on the side lines, is supporting PM Wickremesinghe and the all-party government. The other parties, barring the weakened SJB and the JVP, which has questioned the constitutionality of installing Ranil as PM, are likely to support the government. That is likely to include the Tamil National Alliance, which would expect some palliative action from the President and PM to satisfy Tamil aspirations.

Thirdly, the biggest advantage PM Wickremesinghe enjoys is his positive equation, with better articulation, with India, the US, EU and the West.  Starting with India, they were among the first diplomats to call upon the newly anointed PM. Domestically, this may not be a great advantage. But internationally, it will help speed up the processing of financial restructuring proposals from International Monetary Fund (IMF) and assistance from Asian Development Bank (ADB) etc. Measures are also afoot for negotiating with creditors to restructure the loan terms.  

PM Wickremesinghe has also sought out China’s to help in seeing through the economic crisis.   During the fuel crisis, China had made an offer to provide diesel stocks for emergency use from stocks held in Singapore, but Sri Lanka did not react to the offer. PM Wickremesinghe is now said to have directed the officials to discuss with China regarding their offer which was made before he assumed office. The Finance Ministry’s discussions with the China Development Bank and the China EXIM Bank to postpone repayment of outstanding loans also appear to have not been followed up by the Ministry. The China International Development Cooperation Assistance (CIDCA) had offered RMB 500 million as emergency assistance. China has also dispatched a shipment of rice to reach Sri Lanka.   

In a televised address on May 29, the PM said the main issues in the country are not limited to the financial sector; in the political sphere there are two issues – one to do away with the 20th Amendment (20A) to the constitution reducing the executive president’s accountability to the parliament and implement the 19th Amendment once again which was abolished.  He said “the party leaders are currently preparing the 21st Amendment” to carry this out.”

He also identified abolishing Executive Presidency as the second issue. He left it to the party leaders to decide on when and how to carry this out. He added “The Executive President has been given more powers. The main allegation today is that the Parliament has not acted to prevent the economic crisis.” He said the structure of Parliament must be changed to create a new system by combining the existing system of Parliament or the Westminster system and the system of State Councils so that Parliament can participate in governing the country. His proposals include the setting up of several new committees as well as an all-party National Council with youth participation.

Politically, the PM’s rhetoric touched the right notes with democrats everywhere. But in Sri Lanka where political heavies play the game of thrones, can the PM implement such radical changes? As the JVP, perhaps only a new constitution can include incorporate changes. The priority is to empower the parliament to control the economy by abolishing 20A and reintroducing 19A. Nothing less will satisfy the agitated public unless it is the resignation of Gotabaya.

The moot point is, can PM Wickremesinghe with no political stake in parliament serving at the invitation (or pleasure) of President Gotabaya Rajapaksa, successfully implement his plan? A more apt question will be, will the President and his SLPP cohorts, who worked hard to restore full executive powers of the president, agree to the proposal to reinsert 19A?  

To set the record straight, it was Ranil as PM of the Yahapalana government, who ensured the 19A to whittle down executive presidency was passed in the parliament. Ranil as a seasoned wheeler-dealer in Sri Lanka’s convoluted politics, is perhaps one man who can pull such a rabbit out of his hat. But he is also a man who survives by making political compromises. So, the rabbit he pulls out may turn out to be a guinea pig, after political consultations of parliamentary parties give it a final form during the week.

[Col R Hariharan, a retired MI specialist on South Asia and terrorism, served as the head of intelligence of the Indian Peace Keeping Force in Sri Lanka 1987-90. He is associated with the Chennai Centre for China Studies. Email: haridirect@gmail.com]    

Only traitors won’t accept urgent economic reform agenda acceptable to IMF

 

Priyantha Mayadunne, Public Administration Ministry Secretary

 

Public Administration Secretary:

By Shamindra Ferdinando-2022/06/1

New Public Administration Ministry Secretary Priyantha Mayadunne has warned political parties represented in Parliament, state and private sector trade unions and the civil society that they will soon be categorised as traitors unless they agreed to a far reaching economic reforms agenda.

Attorney-at-Law Mayadunne issued the warning over the last weekend at a meeting of public administration officers held at the Postal Auditorium, near Lotus Tower.

One-time Justice Ministry Secretary Mayadunne replaced J. J. Ratnasiri as Secretary to the Ministry of Public Administration, following the appointment of the new Cabinet.

The normally soft-spoken Mayadunne declared that the country was in such a precarious situation, especially in the absence of a tangible recovery plan yet. Therefore, the government and other stakeholders didn’t need IMF’s intervention to undertake a wide ranging reform agenda on their own without delay.

The declaration was made close on the heels of the revelation at the recent sittings of parliamentary watchdog committee how the then Presidential Secretary Dr. P.B.J. Jayasundera rejected IMF’s intervention in March-April 2020.

During the COPE

(The Committee on Public Enterprises) proceedings on May 25, Governor of the Central Bank Dr. Nandalal Weerasinghe revealed how the then government callously dismissed IMF recommendations for immediate debt restructuring programme and advice not to implement large scale tax cuts.

Asked whether he had earned the wrath of the political authority for being critical of successive governments and the current dispensation for Sri Lanka’s predicament, Mayadunne said that he solidly stood by what he said at the forum. “There is absolutely no point

in suppressing the truth or making foolish efforts to deceive the masses. The public must be taken into confidence and told how to face the growing crisis. But, the crisis cannot be addressed unless the political parties, both in and outside Parliament, trade unions and civil society groups recognize and accept their responsibilities,” Mayadunne said.

Acknowledging his own shortcomings, Mayadunne told a public servants’ meet over the last weekend, those who served the public service for 30 years were responsible for varying degrees.

Mayadunne asserted that successive governments bear the responsibility for creating an oversized public service that was a very heavy burden on the taxpayer. Pointing out that the public service comprised staggering 1.5 mn members, Mayadunne declared that the country could have afforded 500,000. Sri Lanka could have managed 500,000 to 800,000 but today there were nearly double the amount of public servants the country could afford, Mayadunne said.

 Mayadunne recalled how he requested the then Secretary to the President in 2004 not to expand the public service by accommodating a large group of graduates as it could cause a catastrophe one day. As a result of following dangerous politically motivated policies, those now retiring from the public service faced the risk of not being able to receive a monthly pension. The situation was so bad the retirees couldn’t expect to receive gratuity, Mayadunne said, warning that all would have to forgo perks and privileges for a period of ten years.

The top official urged trade union leadership regardless of the sectors they represented not to make utterly irresponsible demands under any circumstances. The government lacked the wherewithal to meet basic requirements, such as salaries let alone addressing other demands.

Acknowledging the extreme difficulties experienced by a large section of public servants, Mayadunne strongly advised against a salary increase as it could create an extremely volatile situation. Mayadunne warned that salary increases to public servants at a time others didn’t have relief at all could result in violence being directed at the decision makers. Perhaps an appropriate transport allowance could be considered due to high cost of public and private transport.

Mayadunne said that the country was on the verge of a famine. Whatever various people said that the Yala season couldn’t meet the country’s requirement, he said, adding that crisis-hit countries in the region weren’t in a position to meet the shortfall. June would be far worse than May and the country couldn’t anticipate foreign food assistance either, Mayadunne said.

Recalling the hardships experienced by the people of the North during the conflict, Mayadunne warned that the way the financial crisis developed and the overall situation deteriorated, credit cards issued here would soon be useless.

The Ministry Secretary warned that the Western Province where about 90 percent of its paddy requirement had to be brought from outside would be the worst affected region.

Declaring that the vast majority of people found it extremely difficult to make ends meet, Mayadunne said that even having a glass of milk was a luxury.

The top Public Administration official said that there was nothing that the population here could do now to rectify waste, corruption, irregularities and mismanagement, if the country ended up in an unprecedented crisis.

Revealing that public servants were owed a staggering Rs 17 bn in gratuity payments, Mayadunne said the duty free car permit issued to them couldn’t be utilized now for obvious reasons.

Underscoring the responsibility on the part of the executive, the legislature and the judiciary to address the issues at hand, Mayadunne said that regardless of public standing all should be subjected to a common agenda. Water, electricity and other essential services shouldn’t be provided free of charge as the country struggled to cope up with extremely daunting challenges.

Mayadunne said that trade unions would have to align with the overall national plan meant to save and revive the economy.

Alleging that national policies developed at taxpayers’ expenses ended up in the dustbin, Mayadunne explained how irresponsible governance over a period of time ruined the country. He slammed successive governments over public sector recruitment, extravagant state-projects, and perks and privileges granted to lawmakers.

Mayadunne said that the establishment of Commissions wouldn’t change the public service overnight. As long as the politicians exercised power over officials, the current situation would continue, Mayadunne declared, insisting that key appointments should be handled by the Constitutional Council. Comparing a Secretary to a Ministry with a peon, Mayadunne said that since 2015, he had held 17 appointments and by the time he retired he would get an opportunity to serve in three other places.

Hunger, rage, and 21

Several generations will be lost, thanks to the imbecilic power hunger of one family - Pic by Ruwan Walpola 

“Alas poor country!

Almost afraid to know itself.

It cannot,

Be call’d our mother, but our grave.”

– Shakespeare (Macbeth)

By Tisaranee Gunasekara-Wednesday, 1 June 2022

Sri Lanka: 2019, a lower middle income country; 2020, a bankrupted, beggared land, dependent on international charity for survival. 

“Poor politics has shattered my life and this is my only hope to put food on the table for my children.” The speaker is a 33-year-old Sri Lankan woman who was forced by the unravelling economy to become a sex worker (The Telegraph – 28.5.2022).

Poor politics resulting in bad economics – that was what caused Sri Lanka’s dizzying slide from relative success to absolute failure. At a recent COPE meeting, Central Bank officials and Monetary Board members talked of the massive tax cut and the wasting of billions in foreign reserves to maintain the rupee at 203 to a dollar. Add mass money printing and an abracadabra-style fertiliser policy and you have it: How to ruin a country in four steps.

Dr. Ranee Jayamaha of the Monetary Board informed COPE that the IMF refused to give Sri Lanka a loan for balance of payment support under its Rapid Financing Instrument citing debt unsustainability. That was in the first half of 2020. That warning was swept under the carpet. The Rajapaksas, like the fox in the sour grapes story, cried, ‘Who needs the IMF!’

Why go over that old ground? The house is burnt, gutted; we should focus on putting up a basic shelter to shield ourselves from the worst of the storms. That is the Rajapaksa argument. But unless we understand why the house caught fire, how can we take measures to protect the new shelter from a similar calamity?

Bad politics breed bad economics. One family landed Sri Lanka in this mess. In February 2022, the pharmacy owners association warned that current medicine stocks were enough only for three months. By that time the Central Bank has already sold half of our gold reserves. The Government was too busy to take note. In February, Namal Rajapaksa inaugurated a water sports centre at the Colombo Port City “offering a range of exhilarating sea-borne experiences...aimed at filling an unmet need.” In the same month the President inaugurated the Dharmapala Park in Galle, renovated at Rs. 200 million, under his Strategic Cities Development Program. Even as late as end March, President Gotabaya was planning another visit to a State institution. A letter was issued to the staff of the Central Environment Authority telling them to get the COVID-19 booster shot and undergo an antigen test. The visit, scheduled for April Fool’s Day, was prevented only by the Mirihana protest. 

Compared to the Rajapaksas, Nero seems hands on. 

The concentration of power which enabled the Rajapaksa clan to bankrupt Sri Lanka must be ended. We must ensure that no one individual (with or without his family) can block our path to recovery and hurl us into ruin again. 

Thus the importance of the 21st Amendment. Good economics cannot be without good politics; a new policy framework to raise revenue, cut costs, curb inflations, create an adequate safety net for the old and new poor must go hand in hand with the 21st Amendment.

 

The ideal shouldn’t be the enemy of possible

The Rajapaksas never left. They merely retreated into the woodwork until public anger subsided. Now they are back. Basil Rajapaksa is as busy as ever, pulling strings. His main concern is to keep formal power in the hands of the family. To do that, he must prevent the 21st Amendment. 

The argument that economics must be given primacy over politics is a specious one, concocted in service of Rajapaksa power. The Rajapaksas who gutted the economy are now using the resultant pain to hang on to power. It is obscene but it may succeed, if the Opposition doesn’t get together to push the 21st Amendment through.

If we did not have a presidential system, one man and his family would not have been able to gut the economy with such ease and impunity. If we didn’t have a presidential system, the leader who set fire to the economy would be out of a job now. The executive presidency must go. The only question is how. Do we reject an amendment to reduce presidential powers immediately and hold out for a new constitution? Or do we go for a two-step solution, a 21st Amendment to be followed by a new constitution? 

The Rajapaksas know the truth the Opposition is refusing to acknowledge. A 21st Amendment is near-fatal to the family’s dream of making a comeback soon. That is why Basil – and probably Namal – Rajapaksa is rallying the SLPP to delay and destroy the 21st Amendment. If they succeed, there’ll be neither a 21st Amendment nor a new constitution.

A parliamentary election is necessary, but practically impossible in current conditions. The absolute majority of people are caught up in the daily battle for survival, battered by shortages, pulverised by inflation. An election campaign will be a parliamentary session re-enacted on a national stage for five or more weeks. While ordinary people suffer in hunger and want, politicians will be wasting scarce resources on propaganda. That spectacle is likely to cause not an eagerness to vote, but to gut the parliament, metaphorically and literally. An election might act as a spark to ignite public anger against the entire democratic system.

At best, an immediate election will have a low turnout; at worst we will have hungry and despairing people attacking politicians and their meetings. Such a situation will play into Rajapaksa hands since the election will be held with the 20th Amendment extant and presidential powers untrimmed. If expressions of public ire border on anarchy, it might even open the door to military intervention with or without the Rajapaksas. 

Realistically, the only option is to push for the best possible 21st Amendment as an interim measure and as a bridge to a new constitution. 

The beggaring of Sri Lanka has caused the de-sanctification of the Rajapaksas. Mahinda and Gotabaya Rajapaksa have lost their halos. The family is weak, and possibly politically divided. Until the events of 9 May, there was certain symmetry in the varying ambitions of different Rajapaksas, giving them an objective reason to work together as a family. Now there is no symmetry between their varying interests.

The Opposition can use this divergence of interests to undermine Basil Rajapaksa’s hold on the SLPP, and through that Rajapaksa power in Parliament (that power was on display during the election for a deputy speaker). If handled correctly, the 21st Amendment can be used to split the SLPP, giving a way out for those who still have some form of vertebrae to save themselves from a lifetime of slavering for Basil and Namal Rajapaksa.

If the SLPP splits, that might persuade Gotabaya Rajapaksa to look out solely for himself. After all, his best interests, as distinct from his family’s, lie in promoting the 21st Amendment and backing the abolition of the presidency. The Rajapaksa family has nothing to lose and a world to regain. Gotabaya Rajapaksa has something to lose, an orderly departure from presidency. He also has something to gain, a grain of redemption as the executive president who finally abolished the executive presidency. 

The recent deplorable arrests of leading Galle Face protestors point to the danger of renewed repression. The 20th Amendment re-politicised the police, enabling SLPP parliamentarians to appoint the area OICs of their choice, as was recently revealed. Such a system is particularly conducive to a new wave of repression. A 21st Amendment will act as a bar to the abuse of police powers and further strengthen the judiciary. An election held under the 21st Amendment will be more free and fair, and thus of benefit to all Opposition parties. Incidentally, an election and a referendum on the presidency can he held together. Going by the latest CPA opinion poll, most Lankans would vote to abolish the presidency. The incoming parliament can then turn itself into a constitutional council and draft a new democratic constitution.

In his comments on the lessons of 20th Century, Italian historian and anti-fascist fighter Leo Valiani said, “Our century demonstrates that the victory of the ideals of justice is equality is always ephemeral, but also that, if we manage to preserve liberty, we can always start all over again...” (quoted in The Age of Extremes – Eric Hobsbwam). The 21st Amendment is the essential first step in saving Lankan democracy both from a Rajapaksa power grab and a military intervention. 

The JVP has at least come up with their conditions for supporting the 21st Amendment. The SJB and other Opposition parties are yet to do even that. The battle for the 21st Amendment is for Opposition’s to lose. Will the Opposition hold out for the ideal, thereby preventing the possible and enabling the very worst to make a triumphant return?

 

Build back differently? 

Let’s face reality. Without India, Sri Lanka would have come to a standstill literally weeks ago. If India doesn’t grant us the new loan we are seeking, we may come to a standstill yet. This is not the time to embrace politics of anti-Indianism. It is impolite, and self-destructively stupid. If India washes her hands off us, can we eat Kachchativu or the Trinco oil tank farm? 

Similar help from China is unlikely for China is scaling back, having overstretched itself. Pacific and not the Indian Ocean is Beijing’s new focus. The West is focused on Ukraine. India and to a lesser extent Japan are our only hope.

There is something we can learn from China’s own economic troubles. According to Michael Pettis, a professor at Beijing University, President Xi has recently warned about the difference between genuine and inflated GDP growth: “Broadly speaking, genuine growth can be thought of as sustainable growth generated largely by consumption, exports, and business investment (with the last of these elements aimed mostly at serving the first two) whereas ‘inflated’ growth consist mainly of non-productive or insufficiently productive, investment in infrastructure and real estate” (The only five paths China’s economy can follow). 

Physical infrastructure development and stock market were what passed for growth and development in Sri Lanka for a long time. We piled up debt, with very little to show for it in terms of actual benefits to real people or lasting economic improvement.

Sri Lanka’s poverty rate is probably over the 50% by now. As Steve Hanks of John Hopkins University pointed out, “Inflation is crushing the poorest...” (Al Jazeera – 28.5.2022). Retrenchment will drive up unemployment, pushing entire families into poverty. According to the Stand Up Movement Lanka (SUML), an advocacy group for sex workers, “There has been a 30 per cent increase in women joining the sex industry in Colombo since January” (The Telegraph – 28.5.2022). The numbers can only increase. The Thriposha factory has been closed; its impact on child malnutrition levels will be devastating. There will be more babies born underweight, more children growing stunted, more students dropping out of school, more child and maternal deaths, more destitute elderly. Social achievements of seven decades will be wiped out. Several generations will be lost, thanks to the imbecilic power hunger of one family. 

 

Much will depend on the new economic policy framework and the budget Prime Minister

Wickremesinghe has promised. Will the Government stop pulverising the poor and raise revenue by increasing personal and corporate income taxes and introducing a wealth tax targeting our own 1%? Will military expenditure and capital expenditure be pruned and resultant savings used to protect the poor from starvation? Will there be focus on solar power and on improving public transport, as a way of alleviating the power and the fuel crises?

Or will there be just talk, and no action leading to a vicious cycle of oppressive economic policies and violent protests, State violence and popular violence?

Two examples, one new and the other old. BPPL Holdings PLC, a Lankan company which collects used plastic bottles and turns them into recycled polyester for international sports brands, was awarded a $ 15 million loan from the United States International Development Finance Corporation. While Sri Lanka’s failed state is hard pressed to obtain even a loan of a million dollars, innovative private and social enterprises can still access international grants and loans. 

When Ranasinghe Premadasa came up with the idea for a free midday meal program for schoolchildren, the cabinet of President Jayewardene turned it down due to lack of funds. The country was indeed in a politico-economic mire. But child malnutrition too was becoming rampant. PM Premadasa and Mayor Sirisena Cooray came up with the idea of implementing the program in Colombo, where around 50% of the people lived below or close to the poverty line. To find the funds, Sirisena Cooray replaced the CMC’s usual practice of increasing rates every five years by a large sum with an annual and much smaller rate increase. This program became the precursor of the free midday meal program implemented nationally during the Premadasa presidency.

Accept reality, think creatively, and don’t let better be the enemy of good. We need the 21st Amendment, higher taxes on the rich, and a safety net to stop the old and new poor from being driven to violence. Both together; both now.

Is The Aragalaya Failing?

By Vishwamithra –JUNE 1, 2022

“Success is the ability to move from failure to failure without losing your enthusiasm.”            ~ Winston Churchill

All sloganeering has fallen silent; defiance has lost its antagonists; crowds have thinned down; parents are too busy prepping their children for exams and the youth seem to be astray and for the umpteenth time, without an identified leader. Gota, instead going home is continuing to occupy the helm. A new Prime Minister who is neither new nor very able was sworn in. A Cabinet of Ministers whose resumes look woefully inadequate and physiques yet bloated are controlling the power-wheels of each of their Ministries.

Yet the long queues for fuel, petrol and diesel, decorate the streets; gas cookers in households are idle for want of cooking gas which is still in dire supply and in pharmacies and hospitals, inventories of essential medicines have reached their lowest reorder levels. A three-meal day has come down to two a day and in some homes just one- rice and one vegetable or pol sambol or kirihodi. Nourishment has become a thing of yesteryear’s luxury. A sole breadwinner cannot afford to buy his loving wife a new saree; the children’s growth has been impeded by lack of nourishing food for dearth of protein and starch. The day when one would see moving skeletons in every street corner would dawn without any prior announcement.

The Minister of Agriculture is asking the people to grow yams of all kinds; Media Minister is now declaring that the country is in severest of debt, stranglehold at the rate of 6000 million rupees a day. The treasury is printing money to pay the government servants and provide for pensions to retirees. What other misery would befall the nation in the next three months, they simply do not know. Sudden enlightenment seems to have dawned on them, yet none of them have even a rudimentary plan with who, what, where and when. Almost three decades of corruption-filled politics and seventy five year old shortsightedness has produced a nation of beggars and lotus-eaters.

An old woman who wakes up with the morning sun and fresh dew under her feet is looking at a cloudless sky and cursing her leaders, past and present alike. Her preoccupation with the wellbeing of her grandchildren is overwhelming and she knows that the current generation’s lot is beyond redemption indeed. Her eldest son, whose livelihood as a three-wheeler driver, has lost his income and living on borrowed cash from the village loan shark; her daughter-in-law is pregnant with her second child and finds it extremely difficult to cope with her steadily rising hypertension for which the medicine cost is beyond her affordability. A vicious cycle of poverty is spinning around their necks and the quiet murmur that’s emanating is not a lullaby a small baby would sleep to.

Reverting back to the ‘Struggle-Aragalaya’ which held enormous promise at the beginning and the potential it showed, especially amongst the youth of the day, is weakening substantially. A people strapped into an eternally grotesque pattern of life on the one hand and hard-pressed demands on day-to-day living on the other are increasingly becoming aware of the obvious limits and constraints imposed by a strangling socioeconomic system.

The Aragalaya, with its unfortunate consequence of being without a noticeable leader or a leadership council, is showing its inner vulnerabilities. Such inherent susceptibilities cannot be overcome by allowing events to take control of other sequential events. To transform a mere protest movement into a dynamic organism along scientific lines and sound SWOT (strengths, weaknesses, opportunities and threats)-analyzed process is no way easy and its leadership should not be held by amateurish sloganeers. It requires much more strategic and tactical inputs by any number of technocrats in whose hands the protesters are demanding to lay responsibility and leadership on.

There is no compelling reason for the on-looking spectators of the masses to buttress a political process and transform such a random process into a craftily organized mass movement. Such movements attain maturity not in three or four weeks; they consume a lot of planning; they need to be organized from top to bottom and vice versa. They need to be agonizingly patient and in the process would demand sacrifice of superior quality and unprecedented proportion.

The Rajapaksas are neither willing nor ready to abdicate political power which they, in their hearts of hearts, think is their private property. From the time Mahinda Rajapaksa assumed the mantle of the nation in 2005, except in the most forgettable period from 2015 to 2019 when the so-called Yahapalanaya government (mis)handled the affairs of the State, the nation’s journey was corrosively damaged, both in the sociocultural sphere and more so on the economic front.

Yet, with handing victories firstly in the Presidential Election and thereafter in the parliamentary elections, Sri Lankan electorate committed an unpardonable blunder- a massive judgmental error by electing Gotabaya as President and granting the Pohottuwa Party two thirds majority in Parliament. It was primarily the youth vote that carried these corrupt Rajapaksas and their political henchmen to an intoxicating win. It is the same youth that galvanized itself into a loud voice on the Galle Face Green last month.

Such volatility of political mind is not so rare in the Indian Subcontinent. India, Pakistan, Bangladesh and Nepal have all gone through this political windmill and except Pakistan all others have survived as working democracies in the midst of violent and raucous populations in their respective lands.

Sri Lanka’s situation is exceptional in that it is exclusively in Sri Lanka that the electors have chosen to elect one single family to govern the country. Therein lies our collective shame; therein dwells our indignity and disgrace. And when they reacted to the economic hardships and the brutal pain such hardships inflicted on their families, they demonstrated, in no unmistakable fashion, their single-mindedness and an unwavering fidelity to the cause of social justice and economic egalitarianism, the rulers themselves were gripped by fear and surprise.

A population which was so docile and apathetic to the vagaries of political and economic injustice turned into a coherent and articulate army of protesters. What was even more astonishing was their patience and ability to absorb insults and indignities hurled at them by the ruling clan. But May 9th changed all that and more was yet to come. As if for tit for tat, they responded, when their brethren were attacked by the Rajapaksa-goons, by spontaneous attacks on some dwellings of Pohottuwa parliamentarians and even killing of one of the Pohottuwa MP in broad daylight on a broad street in Nittambuwa. However, these violent activities that followed May 9th was an ominous sign for the Aragalaya. Wild rumors and willful critiques of the patience and the nature of being non-violent of the protesters took a hard hit at an abstract level and their effects are emerging only now.

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