Raj Gonsalkorale

Sri Lanka: How Open Economies Can Backfire — Learning from Past Mistakes

Published on May 8, 2023

An Eastern analogue is found in the Suvannahamsa Jataka, which appears in the fourth section of the Buddhist book of monastic discipline (Vinaya). In this the father of a poor family is reborn as a swan with golden feathers and invites them to pluck and sell a single feather from his wings to support themselves, returning occasionally to allow them another. The greedy mother of the family eventually plucks all the feathers at once, but they then turn to ordinary feathers; when the swan recovers its feathers, they too are no longer gold ~ Wikipedia

The above analogue may be interpreted to describe the open economy policy introduced in 1977 as a misguided, short-term fix to address a situation that prevailed at the time where some hardships were being experienced by the population due to import restrictions and the local industrialisation policy prior to 1977. These hardships could have been temporary if the policy and practice were improved where improvements were required rather than abandoning it or causing it to be abandoned as a consequence of the easy, quick fix. A nation of traders rather than industrialists was the consequence of the open economic policy.

The regime that came to power in 1977 had two major failings amongst some positive development initiatives. Introducing a no holds barred open economy was one of them. Not pursuing a reconciliation path to nip the evolving armed struggle of the Tamil militants was the other.

The introduction of the local industrial development strategy of the previous regime was stopped on its tracks and the stable doors were opened fully to allow imports of virtually everything from pins, match sticks, to more complex engineering goods. Many industrialists, large and small became traders and the nation lost many of its industries and the evolving industrialization focus. Although not perfect, the local production of many items that had been imported hitherto had set the country on an import substitution path and had given opportunities for entrepreneurs to embark on new ventures.

The negative effects of the open economy continued to be felt as succeeding governments chose the open economy path rather than giving an impetus to local industrialists to improve their industries. One could say that the economic debacle being experienced today has its foundations in the 1977 decision to open the economy without any thought given to the future of import substitution industries considering the country has been dependent on imports since the advent of the open economy and the current debacle occurred as the country had no money to import even some essentials.

Opening the economy per se was not the sole issue. But, doing so without an economic and social analysis of the impact on many industries, industrialists and those employed in the industry directly or indirectly, and an assessment of the long-term effect on what should be imported and what should be made locally was the issue. It is disheartening to hear some leaders saying even today that opening the economy was a significant achievement,rather than talking about its weaknesses as it tends to demonstrate the country has not learnt from its past mistakes in introducing policies without any thought given to the long-term effects of such policies. The blow inflicted on the local industry, particularly the import substitution industry, was not addressed and is yet to be addressed. The country is yet to see a policy on local industrialisation and how inputs for it including technical education, incentives to promote quality improvements, and mechanisms to identify and promote the potential for exports of finished products and/or components for finished products being made elsewhere.

Import restriction forced on the country due to the economic debacle has given some thought to import substitution industries. This however is not strategic thinking but rather on the hop circumstantial thinking as had been done in the past. It is more than likely that an avalanche of imports would commence if the country had the money to do so, smothering the local industrialists who may have been misguided by a belief that opportunities they thought were there, and commenced some industries.

The 1977 regime also had a great opportunity to introduce policies and mechanisms to foster a better understanding amongst all communities in the country, especially amongst the Sinhala and Tamil communities. Its inaction led to consequences that the country is very familiar with. No doubt there were sensitive political issues and stakeholder resistance to avenues for compromise on individual positions. Perhaps, looking at the issue from a humanitarian point of view rather than a political or historical point of view, both closely interlinked, may have been the stumbling block. More than 40 years later, there is no significant advancement on stakeholder positions as politics still seem to define the path to a solution.

The challenge now is to look at the present rather than the past and look towards the future of the current younger generation and generations to come. Very few of the younger generation seems to have confidence in Sri Lanka and any faith on a future for them in the country judging by the numbers who have left the country last year and who are likely to leave the country given a chance to do so. Politicians of today do not inspire any confidence in the younger generation and more of the same is the last thing they would wish for. But, that seems to be what they are in for judging by the politicians inability to think of the country before them and their welfare.

However, could one lose hope as without hope there is no light at the end of the tunnel? Despite individual reservations, the President appears to be genuinely attempting to chart a new course for the country. As with all politicians, people do have scepticism about the President as a politician. There would have been less of this had the Opposition parties buried their hatchet and with it, at least for the time being, their politics, and agreed on a medium term (at least 3-5 years) program of economic and social governance, and even better, a national government where every party takes equal responsibility for the governance.

In order to generate the badly needed confidence in the minds of the younger generations, besides an agreement on an economic and social governance compact or a national government, a new political governance system needs to be introduced to replace the current system at the end of the 3–5-year period. If the same system producing the same calibre of politicians were to resume the same type of politics, the younger generations, who are certainly not insane, could well echo what Einstein said, quote” Insanity Is doing the same thing over and over again expecting different results” end quote.

The ball is therefore well and truly in the court of the politicians to rise above partisan politics and discuss ways and means of agreeing on an economic and social governance model. In such a model, there can only be a President and a small cabinet of ministers and perhaps some State ministers for specific subjects to assist the cabinet ministers, but not a Prime Minister nor a Leader of the Opposition. Both positions are irrelevant, unnecessary, and counterproductive to a unity model. Will the politicians have the guts to contemplate a model of this nature? Perhaps not.

In regard a futuristic governance model, readers are referred to an article the author wrote, and which was published including in the Daily FT titled “Contours for a new constitution with a difference, for the future, not the past”. This model was submitted in order to generate a discussion on what might be different to what the country has had for 75 years. Basically, it proposed the direct involvement of non-political experts in different fields of expertise in policy development and monitoring, a differentiation of political devolution and administrative devolution, political devolution to grass roots by strengthening the structure and role of local government so that the social compact between the people and the politicians will be stronger, the establishment of regional councils and the introduction of an electoral college to elect members of regional councils and even the national Parliament.

There is no evidence that the country has learnt from past mistakes. Successive governments have not continued the positive policies of past governments, with improvements where they were necessary. The import substitution industrialisation policy was one of them, with the open economy policy smothering it to nonexistence. There have been other major development projects begun by one set of politicians and abandoned or scaled down by others without proper assessments. Abandoning of the LLRC report implementation process, the Missing persons investigation and report presented by the Paranagama commission are just two others amongst many initiatives taken by one lot and abandoned by others purely for political reasons.

We can learn a lot from our mistakes if we have the guts and the courage to admit them and learn something positive from it. Your worst mistakes are your best teacher, making you better than before. The only real mistake is the one from which we learn nothing, and the successful man will profit from his mistakes and try again in a different way-azquotes

Revival Rhetoric Falls Flat for Struggling Sri Lankans

Published on April 3, 2023

Columns/Human Rights/Sri Lanka Debt Cancellation

Many Sri Lankans are concerned about their next meal, the high cost of living, deteriorating health, stagnant incomes, how to buy school requisites for their children, malnutrition and increasing poverty which they experience on a day-to-day basis. While restructuring the economy is a must, politicians must balance this with redress for the increasing poor. Large listed and non-listed companies could assist the neediest via a Corporate Social Responsibility (CSR)Fund.

What do poor people want? It’s a stupid question, because of course “poor people” aren’t a single homogenous group and everyone wants something different. But it’s also the only question that should matter. If what we are doing in development is trying to improve poor people’s lives, then their own definitions of what the problem is and how to fix it should be the starting point for what happens (https://www.theguardian.com/global-development/poverty-matters/2011/mar/17/what-poor-people-want)

No doubt many speeches and presentations, analysis of problems and challenges and suggested remedies would have been presented at the “Economic Dialogue – IMF and Beyond” forum held on the 30^th of March to facilitate a productive conversation among key stakeholders, including business leaders, policymakers, and economics experts. The deliberations and the outcome of this economic dialogue is now eagerly awaited, in particular the challenges facing Sri Lanka and solutions to overcome them. As the President said this might be the last opportunity to take the country forward from the precipice it is in.

The excerpt from the Guardian quoted above highlights a lacuna that exists between what people believe is the problem and their own view on solutions, and what is determined for them by governments, not just in Sri Lanka but in many countries facing situations likein Sri Lanka.

In this context, many opine that there are two challenges associated with the planned economic restructuring and measures being adopted to address the associated challenges. These two are about the lack of or inadequacy of the communication and consultation with the key segments of the society and secondly, how each segment helps, and could help each other.

Firstly, the segment to which a majority of Sri Lankans perhaps belong, many in poverty, and many increasingly experiencing malnutrition, burdened with an unbearable rise in cost of living, fuel, gas, electricity and water cost hikes, very high costs associated with sending children to school and buying their school requisites, and the challenges faced daily by them for whom, the IMF, and the 4 year bail out plan is of no interest. Weighty words being used to describe the challenges and possible long-term solutions mentioned very likely do not strike a chord with them as they are expecting and waiting for the government to deliver them relief for the economic suffocation they are undergoing, now, and not later. They may have their own views on possible solutions but it does not appear that there are mechanism to reach them and get them onboard with the tough decisions that the country will have to make to overcome the current situation in a sustainable manner.

The government has not been able to reach the minds of this segment and in the resulting void, they very likely feel that an alternative government will provide them the much needed relief virtually overnight. The government’s inability has, by default, propped the Opposition parties into a state of popularity although they have not indicated to this segment how they will provide the much-needed relief to this segment. The challenge for the government and importantly for the Opposition, if their concern is for the country and not their political fortunes, is to reach this segment with the truth, in a language that provides some clarity to them that neither the government nor the Opposition will be able to deliver the redress they are desperately seekingwithout fundamental economic structural reforms which incidentally are going to be long term measures.

A minority segmentof the population comprising of academics, professionals, business men and women, well to do people, officials holding high office, and others drawing high salaries, are people who understand the challenges, proposed solutions and the jargon that is being used. They regularly get an overdose of analysis published daily and through the many TV programs that are conducted. They have probably tuned off from the blitz of information although some continue to do their analysis and publish them as matters of academic interest. The question is whether this segment matters when it comes to delivering the goods and whether they will be able to introduce reforms without the support of the first segment.

Within this segment are another category of people making mega earnings in a cash economy without declaring their actual income, including some professionals, bribe takers, big and small at all levels of the society, and who very likely understand the plight of the country, although many of them would not care less about the reforms being mentioned, let alone supporting their implementation.They probably “look after” politicians and political parties to make sure they do not engage in any reforms that affects their income and luxury livelihood. This category is the cancer that affects the entire system and will continue to prevent the country from introducing necessary economic reforms.

The nature and composition of the political system of the country makes the first segment critical to economic reforms. It is this segment, the majority of people, who out of desperation believe and are cajoled to believe that an economic turnaround is round the corner even if how this will happen is never explained to them. In this context, it is highly irresponsible and unbecoming on the part of the Opposition parties, who have not presented an alternative plan, to give such hopes, simply because they are false hopes. Neither they nor the government will be able to provide a lasting short-termturnaround of the fortunes of the country as the country’s economic situation is that bad. The price reduction measures announced recently by the government will not be lasting measures unless serious economic structural reforms are introduced.

The second challenge is what these two segmentsneed as short term and longer-term support and encouragement and what they can do to help each other. The first segment needs immediate relief as their plight is very serious and they cannot wait fours years, or more, for an economic turn around to give them the relief they need now. Both the government and the Opposition parties would have to leave their political agendas outside the door and engage in serious discussions as to how and what could be done to this segment.

The second segment is necessarily the future engine of growth and upon whose shoulders lies the task of leading the rebuilding of the country. However, they cannot do this without the support of the first segment. So, ways and means will have to be found to see how the immediate support needed by the first segment could be provided by the second segment.Governments, either the current one or an alternative one cannot solely shoulder the responsibility of restructuring the economy. There is a need to share this responsibility by both segments referred to. However, considering the plight of the first segment, the greater share of the responsibility will have to be borne by the second segment.

From a government, this segment will need a policy certainty and the easing of rules and regulations pertaining to commercial operations. They need perform and outcome-basedconcessions, on tax and other imposts, for new undertakings that are export oriented, for industries that are undertaking import substitutions, information technology related industries, innovative teaching institutions, and importantly, those engaged in green economy industries. If the experience of some export oriented industries is anything to go by, it is unlikely that entrepreneurs will be attracted to this sector, as the indifference shown by government agencies, and their unhelpfulness, and government red tape has been anything but incentives to support the export sector. They also claim that periodic exchange rate fluctuations is a disincentive to them as they find it difficult to make commitments in respect of the locally sourced component of exports. They contend that exchange rates should be firm at least for 3–6-month periods.

The country needs this segment to shoulder more responsibility in assisting the first segment with their immediate day to day needs and to relieve the government from doing some of these at the cost of not doing structural reforms. For example, all listed and non-listed companies could voluntarily introduce a Corporate Social Responsibility (CSR)component to their businesses and set aside a portion of their turnover, to undertake specific activities within the CSR component. A tax regulation may have to be issued for this purpose by the government regularising the contribution each company makes to their CSR element making such a contribution an expense that is permitted when determining their net profit.

Several large companies are engaged in CSR activities on their own, but it may be necessary in the current dire circumstances to work with the government to agree on a few specific areas of support to the first segment of the community and provide some relief to the government to reduce its own expenditure that is spent on urgent necessities for people within the first segment.

Administering such an agreed framework of assistance will not be easy as reportedly, there is misuse of and even misappropriation of funds from ongoing assistance programs such as the Samurdhiprogram and the Mahapola scholarship scheme.

Listed and non-listed companies could either form a common CSR fund and engage collectively on providing redress to the neediest within the first segment, or they could do so individually. In order to make the operation smooth and without duplications and directed to assist the neediest within the first segment. Companies could engage in a dialogue with the government and Opposition parties to identify how best CSR funds may be employed to assist the community and in what areas of need.

The existing CSR operation in Sri Lanka, called CSR Sri Lanka, which appears to have 41 members could be the common entity that could spearhead the delivery of urgently needed assistance to the neediest within the first segment referred to. The amount so far spent on CSR activities and projects has been stated as Rs 4 billion annually by CSR Sri Lanka (http://csrsrilanka.lk/our-profile/). The webpage of CSR Sri Lanka does not show any activities since March 2020, and its status will have to be ascertained.

CSR Sri Lanka gives some interesting information on their website as key findings (http://csrsrilanka.lk/our-profile/).

Private sector in Sri Lanka is beginning to recognize the essential need for CSR
Sri Lanka spends over Rs. 4 billion annually on CSR through various avenues
Less attention is paid to the aspect of sustainability in most CSR projects.
Less than 25% of the Sri Lankan companies have a CSR division or a foundation.
72% of companies would like to put in more effort in relation to CSR
There are no clear mechanisms to determine the impact of CSR projects and their continuity in Sri Lanka
There is a clear need to develop specialists/experts in Sri Lankan companies to drive their CSR activities
The private sector run CSR activities in Sri Lanka are mostly nonaligned with national priorities
A majority agree to obtain services from a third party (eg. A CSR Council) for CSR development

It is quite likely that the collective yearly revenue of leading listed and non-listed private companies and banks are in trillions of rupees. It would be in their own interest to participate in a collective CSR activity by allocating a percentage from this for national CSR activities, to ensure their own stability, growth and profitability, by assisting a segment of the society in strife and which could potentially burst at the seams of their patience if assistance is not provided. Besides this, the economic growth of this segment and the market it will provide for large companies for their own expansion will be the return on the investment that a collective CSR operation could yield to all private companies.

Sri Lanka’s Economic Incompetence: Don’t Blame the IMF

Published on March 24, 2023

Business/Diplomacy

The IMF agreement is much more than the USD 3 billion that accompanies it. In the overall scheme of the country’s foreign debt (now estimated at around USD 48 Billion) and overall debt at 115% of GDP, with no funds for foreign debt repayments and no foreign exchange to purchase essentials, the USD 3 Billion is relatively miniscule in the face of the mammoth task before the country. In this context, it is the four-year plan that accompanies this agreement that matters. This plan may drive the country more towards the Western world led by the USA, and even more hardship as contended by some. This contention is however based on a hypothesis and without an appreciation of the political, social, and economic circumstances in other country’s that obtained similar bail out packages, and who reportedly were driven further into an economic and social abyss as a consequence of IMF bail outs.

The question to be asked is whether Sri Lanka has any other choice other than this assistance package from the IMF, and if there is, what that choice is. Criticising the overall thrust of this plan is like refusing to hold on to a tube thrown at an individual struggling in mid sea saying one needs to know more about the tube before grabbing it.

Sri Lankans are divided in their opinion whether to regard the IMF agreement as a lifeline or a cunning plan. They hover between the two phrases “Don’t look a gift horse in the mouth” and “Beware of Greeks bearing gifts”.

Don’t look a gift horse in the mouth is an admonishment to be grateful when receiving a present and not to find fault with that present. A horse’s teeth change as it ages, and looking in its mouth is a good way to judge the health and value of a horse. To question the value of a gift is an insult. The oldest example of this proverb in English dates back to the mid-1500s, where the equine in question is called a given horse. However, St. Jerome sent a Letter to the Ephesians in the year 400, with the admonishment “Noli equidentesinspiceredonati” which translates as “Never inspect the teeth of a given horse”. It is astonishing to consider how old this proverb truly is.https://grammarist.com/usage/dont-look-a-gift-horse-in-the-mouth/

The adage “Beware of Greeks bearing gifts is heard often and is normally used to refer to an act of charity that masks a hidden destructive or hostile agenda. But it’s not widely known that the phrase originates with a story from Greek mythology–specifically the story of the Trojan War, in which the Greeks, led by Agamemnon, sought to rescue Helen, who had been taken to Troy after falling in love with Paris. This tale forms the core of Homer’s famous epic poem, The Illiad (https://www.thoughtco.com/beware-of-greeks-bearing-gifts-origin-121368

Sri Lankans are good at looking for scapegoats. They are a nation of experts who think they know everything and are good at talking about these but not doing as much to put their opinions into action. All Opposition parties have been guilty of this, as the current Opposition is. People have consistently voted for political parties and elected them to power by not looking beyond their noses. Although no doubt said figuratively, a leader once said on a political platform to loud cheers from a mammoth audience that “if need be, I will bring rice even from the Moon”. Short term agendas rather than longer term policies have been the determinants since independence. Family and personality politics have dominated the political landscape. Allegations of corruption are rife although no politician or a high-ranking official has been indicted on corruption charges. Billions of dollars of ill-gotten money said to be stashed away in other countries are still stashed away, if indeed such funds are there. No serious effort has been made to uncover these although there are international agencies including a UN body (The Stolen Asset Recovery Initiative (StAR), a partnership between the World Bank Group and the United Nations Office on Drugs and Crime that supports international efforts to end safe havens for corrupt funds. StAR works with developing countries and financial centers to prevent the laundering of the proceeds of corruption and to facilitate more systematic and timely return of stolen assets- see https://www.unodc.org/unodc/en/corruption/StAR.html)

Many excel in hindsight analysis and criticism, but few learn lessons from mistakes. This writer and many others are no exceptions. We have all collectively led the country to where it is now. It is time to learn from mistakes and move on and look towards the future and stop scapegoat hunting.

The IMF bailout plan is not a gift. So, there is no horse nor a Greek to consider here. It is an economic strategy and an economic plan for a bankrupt country drowning in a debt vortex created by itself. It has been the only lifeline thrown at the country.

What can and should be done by political parties, organisations and individuals is to support this plan, but, if it is to be opposed, to come up with an alternate plan that would assure the country’s creditors that their loans will be repaid, how the country would generate enough foreign income to do so, how the country would generate enough foreign currency to purchase essentials like oil, coal, medicines etc, how the country would meet its domestic expenditure with domestic income and borrow only for development projects that will yield a return on investment. These critics must also spell out what they will do to stop the massive haemorrhaging that is going on subsidising entities like Sri Lankan Airlines, the Petroleum Corporation, the electricity board among others. They must either put up or shut up. What is desperately needed now is not political point scoring to continue duping the voters with no alternate plans but short-termpolitical hyperbole.

If indeed some countrieswho received similar IMF packages met with the an unfortunate fate as alleged, it is more than likely that they themselves were the cause of it. Sri Lanka too could face a similar fate if the stakeholders in the country do not own this plan and work together to make it a success. As suspected by some, if the IMF is playing a game as in Homer’s famous epic poem, The Illiad, the country needs an Odysseus to overcome such a challenge. While not suggesting or imputing that the IMF has any kind of a cunning plan, the challenge for Sri Lanka would be to demonstrate their ability to manage its economy well and do so with the assistance of all other development agencies and via bi lateral agreements but within the terms and conditions of the IMF agreement it has signed.

The IMF agreement is a four year agreement and neither the current President nor the government has four more years in office unless they are re-elected. It is imperative that a party or parties in Opposition who could well form a government at the next general election, and a future President, if the current President either does not stand for election or is defeated, works with the IMF over the next four years. An abrogation of this agreement will be the ultimate death sentence for the country. If the Opposition has contentious issues in the agreement, they should highlight these now, and work with the government to address them collectively with the IMF now, and not later. If they are opposing the agreement, they should submit an alternate plan to save the country from its current disastrous situation. Failure to demonstrate their concern for the country by not teaming with the government on this specific issue or not presenting an alternate plan to save the country from its economic abyss may even test Democracy itself and possibly the sovereignty of the country as well.

The AUKUS military alliance and the submarine deal; Foresight or Folly?

Published on March 19, 2023

Columns/Diplomacy

Former Prime Minister of Australia Paul Keating has labelled the AUKUS military alliance and more specifically the recently concluded submarine deal as the worst mistake Australia has done in its history. His national press club address has been widely publicised and does not need repetition here.

It is however interesting to discuss a few basic issues he mentioned as reasons for his criticism. Firstly, his assertion that the AUKUS alliance is all about maintaining US hegemony over the South China sea and containing, to the extent possible, China’s ability to move freely within and outside this area of the sea. Secondly, the futility of a few submarines, nuclear or otherwise, attempting to do this in the shallow, easily detectible sea off China and thirdly, the formation of a military alliance that includes Australia where Australia faces no threat militarily from China.

At the outset, in context, it is useful to mention Newtons third law that every action has an equal and opposite reaction. The formation of this alliance too could be looked at from this perspective. Accordingly, while trading profitably with each other, the three countries in the Alliance, the US, Australia, and UK, will strengthen their military and China will do their best to outdo, but more importantly outsmart all three. The already accelerated arms race will get to high gear now with billions of dollars being spent more on posturing than on any real military encounter by any of the constituents of AUKUS. Consequences for the ordinary people in all these countries and all other countries will have a flow on effect as funds available for the welfare of the people will be eroded and diverted to military expenditure.

Before Newton, Buddha came out with a truism called dependent origination or in Pali, paticca samuppada. As stated in a Buddhist enquiry article (https://www.buddhistinquiry.org/article/dependent-origination/, “what the dependent origination or paṭicca-samuppāda actually describes is a vision of life or an understanding in which we see the way everything is interconnected—that there is nothing separate, nothing standing alone. Everything effects everything else. We are part of this system. We are part of this process of dependent origination—causal relationships effected by everything that happens around us and, in turn, effecting the kind of world that we all live in inwardly and outwardly.”

This is the first reality one will have to understand and accept as a reality. Many actions will follow from the military alliance and the submarine deal. The alliance appears to not understand and to disregard the interconnected nature of these actions These will lead to ongoing consequences, most which will be negative rather than positive. Although not a military issue, Australia and the world witnessed the reaction of the Chinese government when some actions of Australia, including its role in the WHO attempt to carry out an inspection of Chinese facilities to ascertain whether the COVID virus originated in a Chinese laboratory. This attempt by Australia without any discussion with China, cost the country dearly with several commercial sanctions which incidentally are still in place. As Mr Keating said, diplomatic and commercial disagreements are being linked to non-existent military confrontations in the guise of foreign policy.

The distrust created with China by AUKUS and the submarine deal will have consequential reactions from China. It is hard if not impossible to see how trust can be restored in an environment where diplomacy has been superseded by militarism. It is unfortunate for the future generations that the current leadership of the two major political parties in Australia have consigned them, without any discussion with them, to an uncertain and confrontational future with China, the worlds next superpower in the not-too-distant future.

In any military conflict, irrespective of which side “wins”, there are no real winners or losers. It is just a scenario where the aggressors, the defenders and the bystanders play musical chairs, with each category moving around taking on each other’s roles in a cyclical manner. It is a futile, costly exercise that could have been avoided if disagreements were discussed and resolved through compromise and respect for each other. Many either ignore or are indifferent to the damage a war inflicts on the families and loved ones within each category, and a countless number of people who are not directly associated with a war.

According to the Wikipedia (https://en.wikipedia.org/wiki/World_War_I_casualties), the total number of military and civilian casualties in World War I was about 40 million: estimates range from around 15 to 22 million deaths and about 23 million wounded military personnel, ranking it among the deadliest conflicts in human history. The total number of deaths includes from 9 to 11 million military personnel. The civilian death toll was about 6 to 13 million.

During World War 2, estimates for the total number of casualties in the war vary because many deaths went unrecorded. Most suggest that some 75 million people died in the war, including about 20 million military personnel and 40 million civilians. Many civilians died because of deliberate genocide, massacres, mass-bombings, disease, and starvation. The Soviet Union lost around 27 million people during the war, including 8.7 million military and 19 million civilian deaths. (https://courses.lumenlearning.com/suny-hccc-worldhistory2/chapter/casualties-of-world-war-ii/

Outside of World War 1 and 2, the Korean war, the Vietnam war, the Afghanistan, Iraq and other military conflicts have witnessed the deaths of millions.

If a war is to be fought, and countries are indifferent to the death and destruction it causes, each side has to have the resolve, strength and the equipment to match the other side. As Mr Keating says, whether a few submarines, nuclear powered but firing conventional weapons does not seem to be indicative of parity. In the name of parity, if nuclear weapons are to replace conventional ones, the nuclear arms race will intensify, and more people will face death and destruction if a military engagement occurs and nuclear weapons are used. In such possible scenarios, it likely that China will enhance their defence capability in the face of AUKUS nations ramping their military capabilities. With technology advancements being what they are and potentially exponential advancements, the nuclear submarines being designed and built could well be obsolete when they are built and are seaworthy. The world does spend a lot of money to kill people.

Mr Keatings third point is about the military strategy Australia has chosen in association with the US and UK over a diplomatic strategy with China. He has maintained, rightly, that China is Australia’s largest trading country and therefore commercial considerations rather than military ones should underpin the relations between the two countries. Again, as he says, the country’s foreign policy should not be dictated by military requisites but diplomatic requisites and mutual trust and not distrust. A military build up as envisaged is bound to foster mistrust between China and Australia and eventually impact adversely on the trading relationship between the two countries.

According to the website Statista (https://www.statista.com/statistics/622568/australia-export-partners-by-value/), in 2021, China was Australia’s leading export partner, importing approximately 115 billion U.S. dollars’ worth of goods, followed by Japan and the European Union. Tensions have been building up in China-Australia relations and has impacted on trade.

Data released by the General Administration of Customs (GAC) showed that, in 2022, bilateral trade between the two countries reached US$220.91 billion, down 3.9 percent year-on-year, with Australia’s exports to China amounting to US$142.09 billion, a decrease of 13.1 percent from 2021. China remains a primary export market for many Australian products, such as coal, iron ore, and wine. However, several of these products lost their market share as domestic businesses looked for substitutes to lessen the risk of interruption amid thawing ties (https://www.china-briefing.com/news/china-australia-trade-relations-growing-stronger/). Besides this, the website also states that quote “notwithstanding the scope of market opportunities for China and Australia, bilateral ties have not always been favourable. Over the past five years, tensions have piled up on a range of issues related to technology, politics, and trade. In 2018, invoking concerns for national security, Australia became the first member of the Five Eyes intelligence alliance to prohibit Chinese tech giants Huawei and ZTE telecommunications gear from participating in its telecom infrastructure. In addition, Australia openly supported a number of US-led efforts aimed at containing China’s expanding influence in the Indo-Pacific, including the AUKUS alliance, the Indo-Pacific Economic Framework, the Quadrilateral Security Dialogue, and the Partners in the Blue Pacific. Early in 2020, amid tensions over the nature of COVID-19, bilateral ties took a sudden turn for the worst. China imposed import bans on a variety of Australian exports, including coal, barley, wine, cattle, and seafood. Australia responded by escalating the trade dispute to the World Trade Organization (WTO) and canceling the Belt and Road Initiative (BRI) deal previously agreed to between China and the state of Victoria.

Such occurrences have had a negative impact on trade. Australian exports of wine, barley, lobsters, cattle, and coal were severely impacted, while Chinese companies were subject to increased scrutiny, particularly for transactions involving crucial infrastructure. As a result of escalating diplomatic tensions, several Chinese companies adjusted their coal purchases from Australia to reduce potential risks. Consequently, China imported 66.37 million tons less Australian coal in 2021 than it did in 2020, a decrease of more than 85 percent year-on-year” unquote.

In summary, one cannot be but convinced that Mr Paul Keating is right that the AUKUS military alliance and the submarine deal will have a negative effect on Australia/China relations in the long term and that future generations will face the consequences of this serious mis step in military strategy camouflaged as foreign policy. The question the younger generations should ask themselves is whether Australia should overlook the misdemeanours of the US when it supports countries like Saudi Arabia and other dictatorships and argue that they, the USA, is a protector of democracy, and that they are taking on China because of its undemocratic policies and practices. Not much or in fact anything is said about the rise in living standards in China and the very significant drop in poverty levels in China. Nothing is also said about poverty in the USA, the citadel of democracy, where, according to https://www.census.gov/library/publications/2022/demo/p60-277.html, the official poverty rate in 2021 was 11.6 percent, with 37.9 million people in poverty. In contrast, as estimated by the World Bank, China’s poverty rate had fallen from 88 percent in 1981 to 0.7 percent in 2015, as measured by the percentage of people living on the equivalent of US$1.90 or less per day in 2011 purchasing price parity terms, which still stands in 2022 (https://en.wikipedia.org/wiki/Poverty_in_China).

It does appear that the US is driven by the fear that China will overtake them as the superpower of the world soon and they are garnering support from willing allies like Australia and UK to delay the inevitable as much as possible. The danger for Australia is that they will be like, to quote a pithy Sinhala idiom ‘Girayata ahuwechcha puwak gediya wage (an arecanut caught between the two levers of a giraya, a familiar object in most Sinhala homes, fashioned out of brass, steel, silver or gold and used to slice arecanuts) –a paradoxical situation from which there is hardly any chance of escape. Australia has chosen this path and to be in an Anglo/Indian world, away from South East Asia and China where its prosperity and future lies.

Sri Lanka: Is unbridled tourism the panacea for all economic ills?

Published on March 4, 2023

Business/Columns

Tourism, as it is well known, is a major industry in Sri Lanka. The foreign exchange it brings into the country and the hundreds and thousands of people who are directly and indirectly employed in this sector makes this industry a vital one for the country. It is one of the most effective windows to the world provided the country develops and displays an image that is both unique, culturally and geographically, and offers an interest based, value for money option for tourists.

It is evident that there is a renewed focus on tourism in Sri Lanka. Rightly so considering what it has to offer to potential tourists. Its ancient and more modern cultural history, geographical beauty, its rich flora and fauna habitats, unparalleled beaches and its trekking adventures are all part of a package of diverse interests that are offered to tourists. It needs to be noted that tourism is not limited and should not be limited to non-Sri Lankan overseas domiciled foreign nationals, but also to the ever-growing Sri Lankan Diaspora, many of whom still call Sri Lanka their “home” and who would wish to enjoy the beauty of the country. One hopes that the potential arising from Sri Lankan origin foreign nationals are not overlooked when it comes to promoting tourism.

A news report appearing in the Daily FT notes that India, Russia, China, the UK, France, Germany, the Middle East, Nordic countries and Australia as focus markets for tourists according to Sri Lanka Tourism (https://www.ft.lk/top-story/Sri-Lanka-to-focus-on-9-key-markets-to-woo-tourists-in-2023/26-745624. Tourist arrivals in the first two months of 2023 have reportedly exceeded 100,000 each month.

However, tourism also brings in unwanted negatives such as crime, drugs and cultural degradation While genuine tourists need to be protected, equally importantly, the Sri Lankan people and its culture also needs to be protected.

Madison Mussio, Hospitality writer and professional author writing in Quora, (https://www.quora.com/What-is-the-negative-effect-of-tourism) encapsulates some of the negatives of tourism “The biggest drawback of tourism is the authentic culture of many cities are lost to mass tourism and tourists. Every city has its own culture and culture is always changing. But some of the greatest and most beautiful cities in the world have changed from being wonderful cities to mega-tourist attractions and nothing more”. Another comment states “Spreading of various diseases, Rise in environmental pollution, Rise in criminal activities, Seasonal unèmployment may rise, and the Extension of endangered species of plants and animals.

Madison Mussio goes on to say “Citizens of cities like Barcelona and Venice are now heavily protesting the development of tourism in their cities. They have seen prices for their homes increase due to the loss of housing to hotels. They have seen entire neighbourhoods bought up by real-estate investors, only to never use them. The thing is, the government of these cities want tourism, they provide many jobs to the local people and tax revenue for them. Barcelona alone has 1.6 million residencies (2016) but had close to 8 million tourists in 2014. Twenty years ago, they had less than 2 million, in 2000 a little over 3 million. At what point does a government look at the number of tourist to residence in a city and say they need their biggest industry to slow down? Barcelona has recently voted in an anti-tourism mayor. Her biggest claims were that the rising pricing of housing and loss of culture is due to the mass tourism that is unnecessary and that the city should focus on its citizens, not the tourists. Currently, the building permits for hotels have stopped for at least one year and she has now required all Airbnb properties to have tourist licences to operate. She was also the first person to fine Airbnb in history (30k). They are now increasing the fine to 600k for every illegal listing.

Venice on the other hand, is trying to separate from Italy. In 1866 it because part of Italy, before then it was an independent kingdom. It has seen massive tourism since it became part of Italy. Fishing and agriculture jobs have been replaced with tourism jobs. The culture of a great and powerful nation surrounded by water and farmland has been destroyed. In 2014 in an unofficial vote, 89% of citizens voted to leave Italy. One of the biggest reasons was because they claim the city has been lost to them in favour of tourists. To be fair, I am part of the tourism industry, and my job is provided by tourists. However, even I agree sometimes it can be too much and that governments need to plan for tourism and local sustainability, rather than just developing the tourism industry blindly”.

Long term strategic planning however is a must to maximise on the opportunities that are there now and may be there in the future. Such opportunities may be lost if planning is not done.

The Borgen Project, a nonprofit organization that is addressing poverty and hunger and working towards ending them, states that “unless well planned, the disadvantages of tourism may greatly outweigh the advantages in a country (https://borgenproject.org/advantages-disadvantages-of-tourism/). It says that “A major factor to take into consideration is environmental damage. Many countries with ancient ruins or natural attractions are also in danger of destruction or erosion with significant foot traffic and human interaction. Additionally, flora and fauna can decrease in areas or change their growth and migration patterns when there is an overflow of humans interact. Foot traffic and continuous touching can also slowly degrade the stability of ancient structures. As previously stated, the profit gained from tourism is often reinvested into the industry. However, with unequal infrastructure development, the tourism industry can inadvertently sustain itself without aiding a country’s other vital sectors. As such, many countries end up developing tourism hot spots while the rest of the country suffers. In these countries, there are visible socioeconomic gaps between the wealthy and the poor. Focusing mainly on the tourism industry and places of mass attraction could leave disadvantaged communities at risk of financial instability”.

Econsult solutions Inc (ESI), a US based consulting company, emphasises the importance of strategic tourism planning efforts that achieve comprehensive and successful results. They mention four critical ingredients for such planning (https://econsultsolutions.com/tourism-strategic-planning-the-tried-and-true/)

Attractions: Creating a compelling experience for visitors to enjoy
1. Determine gaps in the tourism products.
2. Enhancement and new product / event opportunities
3. Support for and partnerships with attractions
Tourism Infrastructure: Helping visitors successfully navigate their experience.
1. Availability, variety, quality, and competitiveness of accommodations, restaurants, transportation, signage, visitor centers, retail, and visitor domains
Marketing: Getting the right message to the right audience
1. Addressing the appropriate target audiences and ensuring that the destination’s marketing helps:
2. Attract new and repeat visitation; extends stays; increases tourist spending;
3. Reflects the destination so that the visitors’ expectations are met.
4. The right mix of paid, earned, owned and shared media for promoting the destination.
Organizational Structure: Effectively and efficiently improving local tourism
1. The most appropriate organizational structure to meet various responsibilities and achieve a strong return on investment.
2. Ensure that the tourism organization figures prominently in political, policy, and planning discussions.
3. The role to be played in determining and collecting public and private funding.
4. The value and opportunities of partnerships

ESI states that “this framework is the starting point rather than the end point for the crucial discussion of the prioritization of opportunities, resources, and efforts to address gaps. Through collaborative discussions with key stakeholders, the most effective planning processes arrive not at a laundry list of recommendations, but at an identification of the most important priorities, and the initial implementation steps needed to address them”.

Sri Lanka Tourism is said to have developed a tourism policy. Presumably this will be in the public domain soon. Hopefully this policy is of strategic nature and is a long-term policy that addresses the positives of tourism and how to ensure tourism potential is matched to global trends in tourism, as well as its negatives and what measures can and will be taken to address such negatives.

If not already included, such a policy should include a promotional strategy based broadly on interest priorities of potential tourists. Is the emphasis of this policy about providing a composite package of everything the country has to offer say within a period of two weeks? Or are there interest-based packages such a sea and beach packages, cultural packages, wildlife experience packages, sports packages (for example, why not Golf tours that include Colombo, Digana, Nuwara Eliya, Trincomalee, and Hambantota?). If such interest-based packages are included, there will be a potential to improve the infrastructure associated with such interests through investments in these areas, and an overall benefit to tourism in general within the country.

While individual travel companies may undertake such interest assessments, it would benefit the country in the longer term if the national tourism policy, developed in consultation with all relevant stakeholders, includes this approach as a composite of such a policy.

It is also worth considering a zone based tourism approach from an interest and an infrastructure aspect. For example, a Southern zone with Hambantota as the centre of it, a Northern zone with perhaps Vavuniya as the centre of it, an Eastern zone with Trincomalee as the centre of it, and a Central zone including the cultural triangle with Kandy as the centre of it, could become the epicentres of an investment policy on tourism.

These zones are mentioned considering the proximity they have to various, current, and potential tourist interests. Hambantota has the advantage of having an international airport, a bustling port that could have the potential for cruise ships to call over, a network of roads that connects it to beach hotels in popular sea spots, wild life and bird sanctuaries, and the potential to link Hambantota to the East and places like Passekudah and Potuvil by extending the highway beyond Hambantota.

Unchecked, unplanned tourism could spell disaster for Sri Lanka from several aspects. The quality of tourists is as important or more important that the economic benefits they accrue to the country. Tourists will come and go, but the culture of the country, its environment, its fauna and flora and its natural beauty has to remain for the benefit of many generations to come.

Sri Lanka: Why not tax the informal rich rather than the formal poor?

Published on February 21, 2023

Sri Lanka Guardian Essays

While levying an income tax on individual earnings to supplement government revenue is a necessity to meet government expenditure, the issue in question is the perception and/or the reality of its unfairness and the lack of confidence and trust that people have about the way the tax they pay is spent by the government. There is no evidence that just and equitable approaches have been taken by politicians to address revenue raising and the curtailment of unaffordable expenditure in a systematic manner.

On the question of unfairness, many are of the opinion that there are a significant number of individuals who operate in a cash economy, with black and/or white cash, who either do not pay any tax or pay a minuscule amount by declaring an income far less than their real income. Big guns in this group are said to include some specialist doctors, architects, engineers, lawyers, customs officials, tuition teachers, and officials of the department of motor traffic among others. A report of a specialist doctor who charges a huge amount of money in cash per patient for a procedure that takes less than 15 minutes underscores the massive earnings of some and the underreporting of income by professionals and government officials, the latter category obviously making their money via bribes, depriving the government of much-needed revenue. There is anecdotal evidence of properties and luxury motor vehicles purchased for large sums of money, and extravagant expenditures incurred for weddings and other functions by individuals who apparently pay for these with cash.

On the same side of the coin of lost revenue, but on the corporate side, the Morning newspaper reported on the 13th of February that the government lost Rs. 560 mn in revenue due to tax concessions for listed companies in 2021/22.

Imesh Ranasinghe writing in the Morning stated that “the Government of Sri Lanka missed out on Rs. 560 million in corporate income tax in the financial year 2021/22 from 13 companies that enjoyed a 50% tax concession for being listed on the Colombo Stock Exchange (CSE) in 2021, financial statements of the listed companies revealed. As per the financial statements of the said 13 companies to which the concessions were granted for being listed on the CSE between May-December 2021, First Capital Treasuries PLC and Capital Alliance PLC recorded losses for the financial year 2021/22, while Lanka Credit and Business Finance PLC LOLC General Insurance paid deferred taxation charges. Some of the major companies that enjoyed higher taxation benefits include LOLC General Insurance PLC, which had earned a profit before tax (PBT) of Rs. 1.2 billion and had only paid Rs. 170.6 million under the concessionary tax rate after paying Rs. 413.5 million as taxes in 2022. Prime Land Residencies PLC had made a PBT of Rs. 1.8 billion and had paid Rs. 162 million as taxes from Rs. 289 million in 2020 and Cooperative Insurance PLC paid Rs. 97 million as corporate income tax from a PBT of Rs. 933 million after paying Rs. 260 million as taxes in 2020”.

This example of loss of tax revenue from 13 companies may be the tip of the iceberg as there could be other companies, smaller and bigger, who have paid less tax although their revenue was higher and their profit before tax was higher, and companies which are unlisted who may have not paid or paid fewer taxes although their revenues and profit before tax were higher than previous years.

In the context of the individual and corporate situations noted, increasing income tax from those at the bottom end of the income/revenue scale cannot be regarded as a fair proposition. As per the International Monetary Fund, Government Finance Statistics Yearbook and data files, and World Bank and OECD GDP estimates, the tax revenue in Sri Lanka had dropped to 7.7% of GDP in 2020 from 19% in the 1990as illustrated in the graph below. The revenue in 2022 was reported at 7.6 % of GDP in Sep 2022. As the graph depicts revenue has been steadily declining since 1990

Economynext in an article state that quote “Sri Lanka has aimed at increasing tax revenue by 69 percent to fund government spending in the crisis-hit economy, but analysts say the 2023 budget failed to address core issues on excess spending and articulate strong policies on restructuring loss-making state-owned enterprises (SOEs). The budget has aimed at increasing tax revenue by 69 percent to 3,130 billion rupees next year from this year’s 1,852 billion rupees while bringing down the budget deficit to 7.9 percent in 2023 from this year’s revised 9.8 percent. The high tax revenue target comes as millions of Sri Lankans face the impacts of the ongoing economic crisis – 66 percent inflation, job losses, and shrinking disposable income, unquote.

These factors portend even more of a difficult period in the coming years as no one appears willing and/or able to take the difficult decisions that must be taken to yield an effective course correction that will take the country out of the economic mess it is in. However, the pain of such decisions cannot fall unjustly on ordinary people who are already in great pain, while some segments of society enjoy a largesse that is both embarrassing and unkind to those who are struggling to find their next meal.

The following table on tax revenue estimate and collection by tax type (2019) published in lankastatistics gives an insight into the contribution to tax revenue from different categories. As can be seen, value-added tax and income tax comprise nearly 90% of the tax estimated and collected.

The value-added tax also contributes to the unfairness of tax because of its regressive nature. The Tax Policy Centre, is a joint venture of the Urban Institute and Brookings Institution made up of nationally recognized experts in tax, budget, and social policy who have served at the highest levels of government.

A briefing book, states, “because lower-income households spend a greater share of their income on consumption than higher-income households do, the burden of a VAT is regressive when measured as a share of current income: the tax burden as a share of income is highest for low-income households and falls sharply as household income rises. Because income saved today is generally spent in the future, the burden of a VAT is more proportional to income when measured as a share of income over a lifetime. Even by a lifetime income measure, however, the burden of the VAT as a share of income is lower for high-income households than for other households. A VAT (like any consumption tax) does not tax the returns (such as dividends and capital gains) from new capital investment, and income from capital makes up a larger portion of the total income of high-income households”.

If Sri Lanka is serious about an equitable and fair tax system, it needs a complete overhaul of the system and not patchwork changes at the behest of external agencies. The morally and politically bankrupt politicians and special interest groups may not wish for such an overhaul and the country would continue its debilitating slide into further trouble despite the best efforts of a few.

Firstly, if as suspected, a significant number of high earners are either not paying their fair share of income tax or not paying any income tax, that loophole needs to be fixed. There are measures that could be considered. The idea of levying a tax at the source could be considered for professionals who deal in cash payments. For example, unless a law exists, a new law could be brought in to make it compulsory that doctors see patients only in hospitals or certified medical or home practices, and that ALL cash or credit card transactions are recorded as auditable, legal documents. If patients are seen or treated at a hospital or a similar medical institution, the attending doctor SHOULD be paid by the institution and no direct patient transactions should be permitted. The hospital in these instances could be compelled by law to deduct a percentage of the doctor’s fee as a tax, with the doctor permitted to disclose this payment in their annual tax returns. A similar methodology could be adopted with some variations to other high earners by way of a registration process where and all such registered individuals are required to submit periodic returns to the Inland Revenue department.

Government officials who become high earners through bribe taking will be harder to rope in although in their case as well as in the case of professionals, strict asset tests conducted by the tax office, and also bank disclosures on ALL cash deposits over a given amount, plus a tax levy imposed when deposits are made, for deposits over a given value, could be some of the plugs that can be used to close loopholes.

In all cases it is vital that penalties for violating existing and new tax laws are very stringent and they include jail terms and confiscation of assets including any unlawfully held cash assets in the name of the individuals. As suspected, if such assets are written in the name of relatives or friends of the individuals concerned, such persons should be called upon to explain and justify how they managed to acquire such assets.

Secondly, value added taxes needs to be revised and redress given to individuals when they purchase essentials. Instead, a tax overhaul could investigate increasing value added taxes for functions held in hotels and function halls. It is no secret that vast sums of money are spent on these functions. Many such spending is unconscionable and an affront to the hundreds and thousands of ordinary people who do not have money for their basic, routine meals. However, rather than focusing on the morals and ethics of such high spenders, as that would be more or less water off duck’s backs, charging a high value added tax would at least allow the government to support the most vulnerable with such funds. To the best of the writer’s knowledge, no surveys have been carried out to ascertain the revenue to hotels and function centres from such functions.

The tax office could undertake such a survey to ascertain the current and potential value added tax collection from such venues.A tax overhaul should naturally include corporate taxation and a re look at concessions provided and how a situation reported in the Morning newspaper described earlier could be addressed. CEIC Unlimited states the following

Sri Lanka Tax Revenue was reported at 6.562 USD bn in Dec 2021.
This is a decrease from the previous figure of 6.566 USD bn for Dec 2020.

The decline in tax revenue is shown in the illustration below. The corporate tax component and individual income tax component is not mentioned here, and this is something that needs to be examined to ascertain the contribution from the corporate sector and if the Morning article is to be taken as perhaps the tip of the iceberg, the potential loss of income tax from the corporate sector.

Clearly, it appears that there are some individuals who earn vast amounts of money but hardly pay reasonable income taxes, corporate earnings and profits are not consistent with taxes paid, there is no assessment of the income of some individuals who purchase high-value properties and other assets and whether they have fulfilled their tax commitments. On the other hand, successive governments seem to have and still are taking the easy way out by taxing wage earners.

If the country is serious about increasing its revenue base from taxes, it should engage in a complete overhaul of the tax system, strengthen the hand of the tax department by way of suitable legislation and introduce serious punitive measures to punish individuals and corporate entities who firstly do not declare their real income, and secondly who do not pay their fair share of taxes. The VAT system too should be revised in such a way that the most vulnerable are safeguarded from the regressive nature of the VAT system.

Sri Lanka LG Polls: Would USD 27.2 million(Rs 10 Billion) address fundamental questions relating to democracy?

Published on January 15, 2023

Columns/Politics

The following passage from Britannica is a good commencement point to discuss the much debated Local Government poll in Sri Lanka. Conducting the election is said to cost around 10 Billion Rupees of State funds, assuming such funds are available to spend in the bankrupt Sri Lanka. Besides State money, individual candidate spending would be substantial. Two serious questions need to be asked. Firstly, whether the country could afford such an extravagance at this point. Secondly, the current political system being what it is, what benefit such an election would provide to a bankrupt country and an increasing number of people already in poverty and others who are on the verge of poverty.

Democracy as defined in the Britannica, “is literally, rule by the people. The term is derived from the Greek dēmokratia, which was coined from dēmos (“people”) and kratos (“rule”) in the middle of the 5th century BCE to denote the political systems then existing in some Greek city-states, notably Athens.

The Britannica goes onto say “etymological origins of the term democracy hint at a number of urgent problems that go far beyond semantic issues. If a government of or by the people—a “popular” government—is to be established, at least five fundamental questions must be confronted at the outset, and two more are almost certain to be posed if the democracy continues to exist for long.

(1) What is the appropriate unit or association within which a democratic government should be established? A town or city? A country? A business corporation? A university? An international organization? All of these?

(2) Given an appropriate association—a city, for example—who among its members should enjoy full citizenship? Which persons, in other words, should constitute the dēmos? Is every member of the association entitled to participate in governing it? Assuming that children should not be allowed to participate (as most adults would agree), should the dēmos include all adults? If it includes only a subset of the adult population, how small can the subset be before the association ceases to be a democracy and becomes something else, such as an aristocracy (government by the best, aristos) or an oligarchy (government by the few, oligos)?

(3) Assuming a proper association and a proper dēmos, how are citizens to govern? What political organizations or institutions will they need? Will these institutions differ between different kinds of associations—for example, a small town and a large country?

(4) When citizens are divided on an issue, as they often will be, whose views should prevail, and in what circumstances? Should a majority always prevail, or should minorities sometimes be empowered to block or overcome majority rule?

(5) If a majority is ordinarily to prevail, what is to constitute a proper majority? A majority of all citizens? A majority of voters? Should a proper majority comprise not individual citizens but certain groups or associations of citizens, such as hereditary groups or territorial associations?

(6) The preceding questions presuppose an adequate answer to a sixth and even more important question: Why should “the people” rule? Is democracy really better than aristocracy or monarchy? Perhaps, as Plato argues in the Republic, the best government would be led by a minority of the most highly qualified persons—an aristocracy of “philosopher-kings.” What reasons could be given to show that Plato’s view is wrong?

(7) No association could maintain a democratic government for very long if a majority of the dēmos—or a majority of the government—believed that some other form of government were better. Thus, a minimum condition for the continued existence of a democracy is that a substantial proportion of both the dēmos and the leadership believes that popular government is better than any feasible alternative. What conditions, in addition to this one, favour the continued existence of democracy? What conditions are harmful to it? Why have some democracies managed to endure, even though periods of severe crisis, while so many others have collapsed

These questions, and answers to them by the readers themselves will be quite relevant to the LG poll which is to be conducted at this enormous cost. Perhaps the poll could be considered from two key aspects

Firstly, is it the appropriate time to spend Rs 10 billion on the election, when

The country is bankrupt with the forecast for 2023 even worse than the situation in 2022
Would not the 10 billion rupees meet many other critical needs for people who are in poverty and on the verge of it?
Will the local government poll result in a change to the National Parliament, and the effectiveness or otherwise of the national parliament? What power or authority do LG institutions have from a national perspective?
How much would LG politicians be able to do for their constituencies at this stage if the entire country is bankrupt?
Is it not best for the country for a national government to govern the country at this stage rather than spend Rs 10 Billion for a LG poll which will not address the issues that bankruptcy has befallen on the country?

Secondly, in relation to the questions posed in the Britannica

(1) What is the appropriate unit or association within which a democratic government should be established? A town or city? A country? A business corporation? A university? An international organization? All of these?

This has not been addressed and the structure/s of democratic government that establishes and makes good the adage of “a government by the people, for the people” has not materialised. A question must be posed whether the country should have more of the same or whether it should have a discussion on what type of a democratic structure is needed in order to make the masters, the people, dictating to the elected representatives and not the other way around. One has to question whether the best brains of the country are part of the policy making process or whether they are bi standers in a process managed by politicians who think they have brains.

**Democracy** “is literally, rule by the people.

(2) Given an appropriate association—a city, for example—who among its members should enjoy full citizenship? Which persons, in other words, should constitute the dēmos?

Is every member of the association entitled to participate in governing it? Assuming that children should not be allowed to participate (as most adults would agree), should the dēmos include all adults? If it includes only a subset of the adult population, how small can the subset be before the association ceases to be a democracy and becomes something else, such as an aristocracy (government by the best, aristos) or an oligarchy (government by the few, oligos)?

There is a strong case to be made for universal franchise and for all citizens above a given age to be entitled to vote, rather than an aristocracy or an oligarchy. The question of what is “best” of course is very subjective while in fact, the “few” in fact is a reality in Sri Lanka considering that family politics has been the main stay of political power and governance in the country. The challenge is to have a system that is neither an aristocracy or an oligarchy, even by any other name, but a system that provides a wider collection of professional, academic, civil society organisations, unions, women’s organisations to participate in policy making, while policy administration should be entrusted to efficient and effective administrators and not politicians.

(3) Assuming a proper association and a proper dēmos, how are citizens to govern? What political organizations or institutions will they need? Will these institutions differ between different kinds of associations—for example, a small town and a large country?

As touched on earlier, this question is an extremely critical one relating to what democracy is and should be. How do people govern? Is it only by exercising their franchise once in so many years? What mechanisms should be there for people to have a say in governance, and chart their destiny and that of the country? If family power, influence and money results in personalities being voted in rather than their policies or the policies of the political party’s they belong to, in effect, people will not have any input or a say in governance.

(4) When citizens are divided on an issue, as they often will be, whose views should prevail, and in what circumstances? Should a majority always prevail, or should minorities sometimes be empowered to block or overcome majority rule?

This is probably one of the most contentious issues from a Sri Lankan context and the long standing and ongoing ethnic issue, and which has a direct relevance to this question. The question of all citizens agreeing on all issues is an impossibility and is a highly impractical proposition and majority decision making, with whatever its shortcomings, is a realistic option. However, in Sri Lanka, the majority/minority composition has ethno-religious dimensions, with the minorities, primarily Tamils, but Muslims as well, feeling subjugated by a Sinhala Buddhist majority. It is this numerical strength rather than what is right and fair for all people, from within the majority or the minority, that has dictated how the country is governed. In this context, majority rule has not delivered fairness, justice, and equality for all people, and therefore needs minority empowerment to block and even overcome majority rule when situations demand it. Majority/minority rule issues would become less important if there is better communication between people, and they understand each other better and they trust each other more.

(5) If a majority is ordinarily to prevail, what is to constitute a proper majority? A majority of all citizens? A majority of voters? Should a proper majority comprise not individual citizens but certain groups or associations of citizens, such as hereditary groups or territorial associations?

Another very valid question. In some countries, the USA being one, the average voter turnout at Presidential elections is less than 60%. If an individual gets 50 % of that 60%, plus one more vote, that person could potentially become the President of the country. One could argue that the other 50% who voted have opposed that candidate. In effect, a candidate becomes the President of the US with 30% of the eligible vote

In Sri Lanka, whether it is at Presidential elections or Parliamentary elections, the voter turn out is greater, perhaps averaging between 55- 70%. However, prior to the introduction of the district based proportional representation system, in 1970, a government was elected with a 2/3 majority with only 49% of the votes cast, and in 1977, with a 5/6^th majority with just over 51% of the vote.

These lopsided election outcomes makes a strong case for a change to the system, and a greater involvement of groups or associations of citizens, such a business associations, academics, unions, women’s groups, other groups such as environmentalist groups, etc to play a more active part in political governance, especially policy development.

It is interesting to note the voter turn out in countries where voting is compulsory. For example in Australia, it is in excess of 95%

(6) The preceding questions presuppose an adequate answer to a sixth and even more important question: Why should “the people” rule? Is democracy really better than aristocracy or monarchy? Perhaps, as Plato argues in the Republic, the best government would be led by a minority of the most highly qualified persons—an aristocracy of “philosopher-kings.” What reasons could be given to show that Plato’s view is wrong?

This is a debate on fundamentals and probably suited for another occasion!. Two issues in response to what Plato postulated is (a) who will decide who is most “qualified” and what and who would comprise the aristocracy of philosopher- kings (2) would his theory be relevant and/or appropriate in an age of technology and communication access where information could be just a nano second away from each other, as compared to Plato’s time?

(7) No association could maintain a democratic government for very long if a majority of the dēmos—or a majority of the government—believed that some other forms of government were better. Thus, a minimum condition for the continued existence of a democracy is that a substantial proportion of both the dēmos and the leadership believes that popular government is better than any feasible alternative. What conditions, in addition to this one, favour the continued existence of democracy? What conditions are harmful to it? Why have some democracies managed to endure, even though periods of severe crisis, while so many others have collapsed

The maturity of a democratic governance system, traditions, how such a system fits within an overall framework of governance perhaps matters a lot for the sustainability of a democratic system. It could be argued that diffusion of power as against the concentration of power, particularly in the hands of a few, could encourage the few wielding that power to change the system if they feel their power is ebbing or there is potential for that to happen if pressure builds up to diffuse power. An independent Judiciary, other stakeholders such strong business entities, academic institutions, unions, women’s organisations, civic entities, and as many peoples organisations could act as deterrents to changing a democratic system to more autocratic systems. The democratic governance system in Sri Lanka has been minimally democratic as the demos or peoples component of it has limited themselves to voting in or voting out governments every five years or so. The money, power and acquiring more money symbiotic link has thrived, and it has been used basically to buy votes in one way or another. Policy debates have been confined to a few living rooms.

So, what is or should be the practical alternative to the LG polls? Assuming politicians love the country more than themselves, and considering the deep pit the country is in, a national government with no more than 15 ministers could govern the country under a national economic plan approved by all political parties in Parliament at least for a period of 2 years. During this period, a national political commission could be constituted with wide, nonpartisan political representation to seek the views of the people, political parties and others, to design a new political system for the country. If the existing system is retained, it will produce the same output of substandard politicians, and an ongoing policy vacuum that will lead the country further down the precipice. As Einstein would have said if he was around, Sri Lankans would be mad to expect different outcomes doing the same thing with the same system in place.

How living as a true Buddhist could avoid an environmental catastrophe

Published on January 10, 2023

Culture/Opinion

“In my mind I see a group of chickens in a cage disputing over a few seeds of grain, unaware that in a few hours they will all be killed,” -Venerable Thích Nhất Hạnh

Zen Master late Thich Nhat Hanh was a global spiritual leader, poet, and peace activist, renowned for his powerful teachings and bestselling writings on mindfulness and peace. A gentle, humble monk, Dr. Martin Luther King, Jr. called him “an Apostle of peace and nonviolence” when nominating him for the Nobel Peace Prize. Exiled from his native Vietnam for almost four decades, Thich Nhat Hanh has been a pioneer in bringing Buddhism and mindfulness to the West and establishing an engaged Buddhist community for the 21st Century -https://plumvillage.org/thich-nhat-hanh/biography/

Jo Confino writing in the Guardian many years ago said quote “Venerable Thích Nhất Hạnh teaches that the world cannot be changed outside of ourselves. The answer is for each one of us to transform the fear, anger, and despair which we cover-up with over-consumption. If we are filling our bodies and minds with toxins, it is no surprise that the world around us also becomes poisoned. He also argues that those who put their faith in technology alone to save the planet are bowing to a false god”

Confino goes on to say “Like many other spiritual leaders, he sees the genesis of our pain as coming from our dualistic mindset that sees our connection to God, or Buddha, or spirit as outside ourselves and accessible only after our death. As a result, we have developed a strong ego that sees itself as separate and threatened and needs to amass things like wealth to feel strong and protected. But none of these can fill the chasm created by our deep sense of separation”

Venerable Thích Nhất Hạnh believed that within every person are the seeds of love, compassion and understanding as well as the seeds of anger, hatred, and discrimination. Using a gardening metaphor, he said our experience of life depends on which seeds we choose to water. His words are very profound and yet, they are simple and very logical. They remind one of the words of a Buddhist Monk of repute in Sri Lanka, Venerable Galkande Dhammananda, the only Monk pupil of late Ven Walpola Rahula, who constantly refers to the mental wounds that all human beings carry and the chain of events that follow whenever such a wounded person thinks, talks and acts in a particular way. Practicing the tenants of Metta, Karuna, Muditha, and Upekka (loving-kindness, compassion, sympathetic joy or empathy and equanimity) at all times, towards all living beings, is what Ven Dhammananda espouses at all times. This would be the seed of love, compassion and understanding that Ven Thich Nhat Hanh referred to above.

Venerable Thích Nhất Hạnh’s words “The energy we need is not fear or anger, but the energy of understanding and compassion. There is no need to blame or condemn. Those who are destroying themselves, societies and the planet aren’t doing it intentionally. Their pain and loneliness are overwhelming and they want to escape. They need to be helped, not punished. Only understanding and compassion on a collective level can liberate us” are identical to what Ven Dhammananda has been saying about the need to understand and do one’s utmost to heal the mental wounds of oneself and in others by extending Metta, Karuna, Muditha and Upekka to all others.

Buddhist Monks like Ven Thích Nhất Hạnh and Ven Dhammananda have expounded what Buddha taught about the oneness and interdependence of all living beings. The National Library of Medicine in an article titled Cosmic design from a Buddhist perspective says “one of the basic tenets of Buddhism is the concept of interdependence which says that all things exist only in relationship to others, and that nothing can have an independent and autonomous existence. The world is a vast flow of events that are linked together and participate in one another. Thus, there can be no First Cause, and no creation ex nihilo of the universe, as in the Big Bang theory. Since the universe has neither beginning nor end, the only universe compatible with Buddhism is a cyclic one. According to Buddhism, the exquisitely precise fine-tuning of the universe for the emergence of life and consciousness as expressed in the “anthropic principle” is not due to a Creative Principle, but to the interdependence of matter with flows of consciousness, the two having co-existed for all times”

Margaret Blaine, author, Buddhist teacher and a former mental health counselor, who lives in Eugene, Oregon, United States in a concise but an in-depth observation says “Buddhism teaches the principle of the oneness of life and its environment. That means as though our subjective self and our objective surroundings might appear to be two independent realities, they are in fact two dimensions of a single reality, each arising in relationship with the other. As Nichiren Daishonin, the founder of this form of Buddhism says, “Environment is like the shadow, and life, the body. Without the body, no shadow can exist, and without life, no environment. In the same way life is shaped by its environment.”

The Buddhist concept of interdependence which says that all things exist only in relationship to others, and that nothing can have an independent and autonomous existence is the key to the survival of everything one sees before their eyes and feels in their inner selves. This and Buddha’s words that “We don’t inherit the earth from our ancestors, we borrow it from our children” is the context in which the those who are causing untold harm to the environment should consider why the broader view of what comprises the environment is important and why it should be saved and preserved.

Efficient and effective land and water resource management, the criticality of forest cover, development of renewable energy sources to replace fossil fuel generated energy to lower carbon dioxide and other harmful emissions, realization and acceptance of the universality of the value of all living beings, not just human beings, to sustain and maintain a safe and healthy environment are all vital elements that should be integral to thinking of people of Sri Lanka and of course the entire world.

The destruction of forests, the indifference to any value to life, both fauna and flora, the wanton destruction of wild life habitats are clear examples of people not realizing and recognizing what Margaret Blaine said about our subjective self and our objective surroundings in fact being two dimensions of a single reality, each arising in relationship with the other.

It is sad and unfortunate to note the reported decline in Sri Lanka’s forest cover down to 16% now, whereas Bhutan’s forest cover is in excess of 70%,(As reported in News 1st, Rain Forest Protectors of Sri Lanka movement has said that Sri Lanka’s forest cover that stood at 82 percent in 1881 has dropped drastically to 16 percent. The Conservator General of Sri Lanka has denied this reported decline in forest cover). However, whether it is 29% as reported in 2015, or 16%, it is best for the country if an assessment could be carried out by an independent body as the general belief amongst many is that there is degradation and exploitation of forest cover and opening up of land for “cultivation” and “development” purposes at the behest of politicians. What matters for the future generations is the truth. Hiding the truth is a sure way to bring forth the destruction of all living beings.

The Buddhist concepts outlined here are logical, common-sense concepts. They need not be Buddhist concepts, but simply common sense concepts. The Buddhist doctrine relating to greed and anger as clearly explained by Dalai Lama, “True happiness comes from having a sense of inner peace and contentment, which in turn must be achieved by cultivating altruism, love and compassion, and by eliminating anger, selfishness and greed” are clear pointers that accumulation of wealth, engaging in armed conflict and war, and lack of empathy and sympathy with and towards the less fortunate are, among other things, the drivers of ignorance, the root cause of unhappiness and suffering. Buddha’s fundamental message that he teaches only two things, suffering and end of suffering clearly applies to life in general but to the environment as well as it is the ignorance about the reality of interdependence of all living beings and that all things exist only because of others that causes human beings to destroy what in fact sustains them.

Whether Buddhism provides a way to save the environment or whether common sense provides the way, what influences negatively on it is political shortsightedness and ignorance.

In saying this, politicians are not solely identified as the cause as they are a product of a political system which only people create and which they only can continue with or change. Such a change can only come from the younger generation through a more informed, questioning, and challenging education system. If this generation is not exposed to rational thinking and objectivity, they will behave in the same manner as their forebearers and before they realize it, the environment would have become irreparable. What has been borrowed from them would be of no use to them when it is passed onto them. They will have nothing to pass onto their succeeding generations.

Sri Lanka in 2023: Challenges and beyond?

Published on December 24, 2022

Columns/Politics

“A dog is not considered a good dog because he is a good barker. A man is not considered a good man because he is a good talker – It’s not what you say but what you do that defines you – Buddha

“Nothing ever exists entirely alone; everything is in relation to everything else.” – Buddha

The year 2022 will end as the year that turned Sri Lanka on its belly. It demonstrated that while some political leaders were well-meaning and did what they thought was good for the country, the collective effort of 75 years of independent governance had ended in the economic bankruptcy of the country and owing more than what it is economically worth. It has demonstrated that the country is good at living on borrowed money, and it had demonstrated that the country has functioned without a clear vision and a clear strategy as to how to achieve that vision.

It is not the time to dwell on the past unless one is doing so to learn lessons from the past. What is more important is the present, and what one could do to avoid mistakes of the past, create a new vision for the future and move to a better future.

Not blaming politicians alone for such mistakes is one lesson one should learn as they are a product of the political system in place. Creators of the system and its participants includes the people who elect the politicians. So, collectively, the people, their representatives and the system in place have all failed the country. In saying this, the vast strides made in different sectors of the country are recognized, and so are some leaders who spearheaded such improvements. The achievements of the country are however looked at from the prism of where it is now, an economically bankrupt nation.

One may argue that after 75 years of independence, this bankruptcy extends beyond economic bankruptcy and to social, moral, and ethical standards despite the teachings of three major religions of the world, Buddhism, Christianity, and Islam which are well entrenched in the country. Some would take the view that the strengthening of cultural, ritualistic aspects of these religions rather than practices based on the original teachings of these religions have contributed to the social, moral, and ethical bankruptcy that is being experienced. In this regard, it is the religious institutions that should look inwards and question themselves of the part they have played by just mouthing, but not living the teachings of the founders of the major religions.

Politics and religion, or rather the religious institutions and the political establishment has a symbiotic relationship of inter dependance. This is markedly so when it comes to the Sinhala Buddhist institution and the political establishment. Early in independent Sri Lanka, the leader who is hated and loved in equal measure, one who is recognized as the one who gave the Sinhala Buddhist community their due place, and at the same time who is recognized as the person who was the cause of the Sinhala Tamil rift, SWRD Bandaranaike, born a Christian, converted to Buddhism. Whatever the reasons for this conversion, there cannot be any doubt that this helped his political objectives considering that in post independent history, being the first citizen of the country has not been possible unless one were a Sinhala Buddhist.

In terms of the future, a question must be asked where this symbiotic relationship would take the country? More of the same? If the status quo continues, how could leaders of the two institutions, the religious and the political, work together to advance the country rather than themselves? This is one of the most important challenges for the future. While the Buddhist institutions argue that their role is to ensure the protection of Buddhism, their activities have gone well beyond this. Divisions within Buddhist Monks, the institutions they belong to, and their partisan preferences and actions as to who and which party should govern the country, have clearly indicated the real motive of some individual Monks and more broadly the institutions. This motive being the desire to be a key stakeholder in political governance. In this context, as influential stakeholders, they have contributed in equal measure to the sorry state of the country today.

The Buddhist clergy is supposed to abide by the Vinaya Pitakaya, the code of conduct applicable to them as Buddhist Monks. Today, this is a joke if one looks at the behavior of some Monks. The Buddhist institution is replete with various internal judiciary positions, all of which are no more than figurehead positions that do not seem to be performing their tasks as outlined in the Vinaya Pitakaya.

While it may be controversial to some, the role and power of the religious institutions and Buddhist Monks, their conformity with the Vinaya Pitakaya and their influence on political governance arising from their political partisanship is a challenge that the country will have to confront with. If their political partisanship, power and influence should remain, and their role as stakeholders in political governance continues, a truly bi partisan economic framework will not be possible to take the country forward. This political bipartisanship has not happened partly due to the actions of some influential members of religious institutions who have exerted a significant degree of influence with the voters who elect politicians and political parties to govern. In this context, such an influence factor contributes either to the success or otherwise of the country’s economic development. If the present status of bankruptcy is to be a yardstick, it can be taken that this influence factor has failed the country.

Ideally, no religious institution nor its members should engage in politics, and if they wish to do so, they should leave their religious institutions and do so as lay persons. The ability to make this happen is in the hands of the people, and they should clearly and unequivocally send this message to all religious institutions.

Another key challenge for the country and its public is the need for a long-term development framework, at least the contours of such a framework. The very nature of the political system of 75 years has resulted in short term planning of not more than 5 years. There has never been a bi partisan development framework, even within a span of 5 years, let alone any period longer than that. The country needs such a framework of not less than 10 years, and it is heartening to note that the current President is said to be working on a 25-year framework.

It is vital however for such a framework to have bi partisan (or multi partisan) agreement, and for such an agreed framework to be periodically reviewed and updated to keep it in line with global developments including technological developments.

Such a framework should include major economic drivers such as an export development plan, an import substitution plan, a tourism plan, an agriculture plan to assure food security, a plan to maximize land and water utilization, an industrial development plan that includes Port development, sustainable energy development etc., and an education plan that prepares the future generations to meet the challenges posed by such an economic framework. Besides these, the health of the nation is paramount, and the framework should include plans for long term primary and curative healthcare in the country.

It is questionable whether the people nor their representatives, and other institutions that influence governance planning and decision making will have the foresight nor the guts to make far reaching decisions for the benefit of future generations. Ad hoc planning has been the order of the day for 75 years, and sadly, it is quite likely that this situation will continue for another 75 years if not more.

Sri Lanka has faced its gravest economic and social crisis since independence, and this has not been sufficient for the political leaders and their parties, in particular the Opposition parties, to work with the governing party and agree on an economic framework to lift the country out of its morass. Calling for fresh elections is the only plan they have offered to the country.

Even if elections were held, history has shown that generally, the vote between the governing party and Opposition parties have been split in the ratio of 55 % to 45%.

If this were to be the case at an election the Opposition is clamoring to have, what will suffer most will be the way forward for the economy as political partisanship, split in the manner described above will stand in the way of a commonly agreed economic development framework.

The country is bankrupt, and yet, the singing and dancing goes on. It has been reported that the appointment of more cabinet ministers is imminent. The Titanic is sinking, but more deckhands are said to join the captain. This may defy logic, but it does fit in with the reality that the morals and ethics of most politicians have already sunk far below the level of economic bankruptcy.

Drug shortages and impact on health outcomes; Is it only the tip of the iceberg?

Published on December 13, 2022

Health/Human Rights

On the night of April 14, 1912, though, only a few days into the Titanic’s maiden voyage, its Achilles’ heel was exposed. The ship wasn’t nimble enough to avoid an iceberg that lookouts spotted (the only way to detect icebergs at the time) at the last minute in the darkness. As the ice bumped along its starboard side, it punched holes in the ship’s steel plates, flooding six compartments. In a little over two hours, the Titanic filled with water and sank- The Secret of How the Titanic Sank ~ Justin Ewers

Although the mystery surrounding the sinking of the Titanic is yet to be fully unraveled, logically, the fact that the extent of the iceberg below the water and which was not visible, compared to what was above the surface, and the underestimation of or not knowing the extent below the surface was the primary cause for the sinking cannot be denied or disputed.

This article attempts to present a point of view that the current drug shortages arising from possible shortfalls in funding maybe likened to the tip of an iceberg, where in fact, underlying medical supply chain issues, the part of the iceberg below the surface, could be a very significant contributor to the shortages.

Health outcomes will get affected whenever critical drugs are out of stock or in short supply. However, even prior to the COVID invasion and the global economic and health destabilization it caused, medicine and medical supply shortages have been a common occurrence in most developing countries. Sri Lanka was no exception and no doubt experienced this although such situations did not attract headlines in the media and politicians did not raise this as a critical issue that affects health outcomes, except when it suited them do so for political gain.

International agencies including the WHO, ADB, Global Fund, World Bank, and development entities like USAID, UK AID, Australian AID, spend considerable amounts of funds to address this issue in developing countries. The emphasis of such donor funded programs is to strengthen health systems while in some instances, material assistance is provided for some commodities to overcome acute situations that would otherwise exacerbate health outcomes.

For example, the Global Fund is a leading international entity that supports health systems strengthening while providing financial assistance for procuring drugs needed for Malaria, TB and HIV AIDS patients. Other agencies also provide similar support to a lesser or greater degree and based on country needs and their willingness to address common reasons that result in drug and medical supply shortages. Such reasons are manyfold. Systemic, structural, shortfalls in funding and capacity issues are commonplace in many countries, and the lack of a strategic approach arising from SWOT analysis (strengths, weaknesses, opportunities and threats) is often not considered as a necessity as it is not understood or misunderstood or ignored in favour of short term stop gap measures.

A common thread also weaves around the system and its shortcomings, that being the corruption element prevalent in these countries. Perversely, the “opportunities” component in a SWOT analysis becomes the opportunity that a systemic failure provides for corrupt activity. In this context, one does not have to be an Einstein to understand that corruption feeds on systemic shortcomings and therefore addressing such shortcomings would be counterproductive and detrimental to those engaged in corruption.This is one of the reasons why some influential figures within many dysfunctional country systems do not want shortcomings addressed as they benefit personally within such dysfunctional systems through corrupt activity.

Fundamentally, shortages are often the creation of those who stand to benefit from them, such as emergency procurement at exorbitant prices by doing away with standard procurement procedures on account of the “emergency”. Contrary to the belief that these activities are in the domain of relative small timers in the system, the long arm of corruption extends very far, and to senior officials and ministers or even more highly placed politicians.

Development partners naturally would not go into these areas and to act as spies or policemen and policewomen to expose corruption. Their task would be to carry out SWOT analysis of existing systems, structures, capacity issues, resource issues, and to submit their assessments and findings and submit recommendations as to how gaps identified may be addressed.

No doubt such assessments may have been carried out in Sri Lanka, and efforts taken to address gaps that may have been identified. However, some doubts exist whether adequate attention has been given to the overall systemic, structural, and capacity issues considering the misconception that the current headline grabbing publicity about drugs and medical supply shortages have all been entirely consequential to the current economic crisis and the resulting lack of funds to procure these items.

Sri Lanka has a mixed system of public and private sector stakeholder participation in the drugs and medical supplies importation and local manufacture to serve the needs of the public.

Going back in history, in 1972, the government of Sirimavo Bandaranaike entrusted the task of reforming the pharmaceutical policy of Sri Lanka to Pharmacologist Professor Senaka Bibile and Parliamentarian Dr S A Wickremasinghe, and consequently, far reaching reforms were introduced including the rationalization of the drug formulary from some 3000 plus items (many brands of the same item) to less than 700, introduction of the ABC classification to identify essential items (lifesaving and mostly without alternatives), important items (with availability of at least a few alternatives) and less important drugs(with several alternative formulations), the formation of the State Pharmaceuticals Corporation (SPC) and assigning the task of undertaking all imports of pharmaceuticals, both for the State and private sector, to the SPC and a quality assurance process under an institution for all imports of drugs. A State sponsored local manufacturing program was commenced by the SPC, and this was the precursor to the State Pharmaceuticals Manufacturing Corporation in (SPMC) in later years.

Professor Bibile died under mysterious circumstances in 1977 while on a mission to introduce his policies in the Caribbean through UNCTAD. Despite this setback, his policies however internationalized and over the years, and institutions like the WHO have adopted many of his policies.

In Sri Lanka much of Professor Bibile’s policies have been reversed since the advent of the open economy policies of the government elected in 1977, and once again, the private sector has become a large scale of importer of drugs today with questionable drug quality assurance processes, and a proliferation of brands of the same generic drug. Although the State sector is supplied primarily by the SPC and the SPMC, it is no secret that it has had funding issues to procure its requirements, and it has, time and again, resorted to directing patients who patronize public hospitals to obtain their drug requirements from the private sector.

Clearly, besides policy dilution over the years, structural issues, logistics issues, capacity issues, forecasting & quantification issues and of course corrupt activities have impacted on the overall system. While the economic factor has contributed significantly to the shortages being experienced now, underlying factors that were there prior to the economic downturn and which are still there, contributes to shortages of drugs and medical supplies. This is particularly so in the public sector.

While urgent funding is required to source drugs, particularly the A and B types of items, pouring more money into a system that is dysfunctional to lesser or greater extents in different State institutions, will not address a recurrence of shortages, and an avoidance of shortages, in a consistent manner.

Globally, the pharmaceutical industry (or as some refer to it, the “pharmaceutical mafia”), is a very powerful industry and a very powerful lobby group. Internationally, the pharmaceutical industry is rated as the second biggest one in the world next to the arms industry, and it wields considerable power and influence over governance issues. (Note; as per the link noted here, the world pharmaceutical market was worth an estimated $1.2 trillion at ex-factory prices in 2020)

Sri Lanka is not immune to the power of this industry considering the reversal of far-reaching policy and process reforms introduced during the time of Professor Senaka Bibile.

Essential drug shortages will have an impact on health outcomes, and it is therefore important to address such shortages with an adequate supply of such items. However, this could be just a short-termband aid solution unless a thorough assessment is done of the medical supply chain in Sri Lanka to identify gaps in it, and then find effective and efficient mechanisms to address any such gaps.

Firstly, as a structural issue, pharmaceutical policy settings related to rational use, importation and manufacture will have to be reviewed. While health outcomes of the public should be key objective in determining policy settings, the efficacy and efficiency of the existing policy in the context of Sri Lanka’s economy also needs to be a priority consideration in any assessment of the medical supply chain.

One of the factors that drove Professor Bibile’s policy perspective on drug rationalization would have been the questionable need for a plethora of brands of the same drug, and the need for several pharmacologically similar drugsto be in the drug formulary in relation to the objective of health outcomes.

Perhaps a relook at drug rationalization and the drug formulary maybe timely to assess the efficacy of the current policy in a general sense, and specifically on account of the economic challenges faced by the country. Considering that some 9 million people are reportedly in poverty now, with more likely on the edge of poverty, coupled with an increasing malnutrition rate, it is very likely that health outcomes will get adversely affected if those in poverty or at the edge of it are unable to obtain their drug requirements from public hospitals, and they are forced go to private pharmacies where they may either forego buying the drugs prescribed or buy half or one third of a prescription due to the very high prices of drugs and medical supplies.

Secondly, a study will have to assess the accuracy of the quantification and forecasting of demand for drugs as this one single factor that perhaps maybe identified as the commencement point of a medical supply chain although such a point does not exist in a chain. Quantification requires reliable usage data that should be supported by morbidity data. Accurate quantification is a major factor for a medical supply chain to function without interruption.

Thirdly, the methodology used to assess the quality of drugs imported, and the credentials of the suppliers will have to be assessed as substandard drugs could have adverse effects on health outcomes. It is not certain how the private sector as well as the public sector assesses the quality of drugs imported and what quality assurance processes are in place.

Fourthly, the prices paid for drugs imported, and raw materials imported for the local manufacture of drugs, are also key factors that effect the budgets allocated for imports. Whether procurement procedures are adequately competitive in the State sector, and whether large scale emergency procurement has been done at high prices are factors that will have to be investigated. It is unclear whether private sector imports are subject to a pricing mechanism such as a pricing formula or whether they are free to determine their market prices. The high retail prices of many drugs are perhaps indicative of the latter.

Last but not least, the environmental impact on drugs during transportation and storage is a key area that needs to be looked at as adverse environmental conditions could affect the efficacy of drugs and therefore health outcomes.

In some countries, waste that occurs due to some of the above-mentioned factors has amounted to anything between 20-30 % of the annual expenditure on drugs. Hopefully, this has been minimal in Sri Lanka. However, this and all above mentioned areas should be investigated as the immediate drug shortage issue and possible impact on health outcomes could be just the tip of an iceberg and underlying factors mentioned above could be the hidden part of the iceberg that has been creating shortages and an impact on health outcomes for a long time.

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