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Sri Lanka: Politics beyond 22

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“You are in the end – what you are.” ~ Goethe (Faust)

22 is not perfect. Far from it, perhaps light-years far. Yet, in a season of defeats and setbacks, it is a win for Lankan democracy, and for those Lankans who would be free citizens rather than obedient subjects or terrified children waiting for the next saviour.

The passing of the 22 (officially 21) came hard on the heels of another democratic victory. The Supreme Court effectively killed the deadly Rehabilitation Act. If President Wickremesinghe or the Rajapaksas dreamed of using the Act to punish past dissent and discourage future protests, that dream is now dead.  

The two wins demonstrate that however flawed or even dysfunctional the Lankan political system might be it’s not broken. It can be built on, improved. The better kind of ‘system change’, the sort that harms less, roots deep, lasts long.

By 2014, the Rajapaksas had disembowelled every single democratic institution in the country, from the highest court to the lowliest pradesheeya Sabha. Only periodic elections remained, a heads-we-win-tails-you-lose game the family believed it had mastered. Wrongly. Mahinda Rajapaksa lost the presidency and democracy made a comeback. The Sirisena-Wickremesinghe administration removed the executive’s mailed fist from the collective back of the judiciary and paved the way for more institution-building than any previous administration via the 19th Amendment and the Right to Information Act.

Electoral defeat also revealed the ordinary clay in the Rajapaksa makeup, diminishing the shock-and-awe effect created by the war-victory. High King Mahinda and Supreme General Gotabaya were downsized to normal size, for a while. The memory of that reduction had faded by 2018, but not dead. In 2022, as normal life collapsed under the cumulative weight of shortages and queues, that memory would return. Without its liberating effect, the peaceful revolt of the middle class which constituted the first inspiring phase of the Aragalaya couldn’t have happened.

Thus the importance in the death of the 20th and the safe birth of 22nd, especially if ‘system change’ is a real goal and not just a radical-sounding slogan or an excuse to scuttle reforms. The next step is its speedy implementation. What was done to the democratising 17th Amendment by the PA and the UNP mustn’t become the fate of 22: death by non-implementation. Having taken the sensible step of backing the amendment, the SJB and the JVP should focus on getting the constitutional council and the national procurement commission up and running. That is of far greater democratic consequence than holding local government elections, an exercise which will cost billions and change little.

The composition of COPE, COPA, and the Peoples’ Council has caused much handwringing and derisive laughter. Deservingly. But almost all the undesirables nominated to those bodies were elected by the people in 2020; more worryingly many would be re-elected thanks to the preferential vote system. A new electoral system is as much of a democratic (and anti-corruption) necessity as abolishing the executive presidency.

President Wickremesinghe’s decision to set up a committee to map a new electoral system may – or may not – be a ruse to postpone elections. Either way, it opens up a path to a desirable and popular goal. If the proposal is a Wickremesinghe-bluff, the Opposition can surely call it by coming up with reform blueprints which combine the best features of the PR and first-past-the-post system? Pertinently, what is the Opposition’s stand on the Election Commission mandated campaign finance legislation awaiting cabinet nod? Surely enacting that piece of legislation should be as much of an oppositional priority as calling for elections?

The Quotidian Rot

In the 19th century, there was an American political organisation called the Know Nothing Party which fared well electorally for a while. A nativist entity (not in the Native American but in the WASP-supremacist sense) it was anti-Black, anti-Catholic, and anti-Semitic. That party is now gone and mostly unremembered, but its spectre survives and thrives across the world. From the US to India, from Italy to Sri Lanka, know-nothing (and learn-nothing) voters and politicians are making choices that invite chaos.

US humorist Andy Borowitz asked, “What happens when you combine ignorance with performing talent?” and answered, “A president who tells the country to inject bleach” (Profiles in Ignorance: How America’s Politicians Got Dumb and Dumber). Or a president and a political family who take over a functioning economy and run it to the ground.

Mr. Borowitz divides ignorance into three stages, ridicule, acceptance, celebration. In Sri Lanka, we ridicule ignorance and accept it by voting the ignorant in. When hiring a driver, any sensible person would prioritise driving skills and experience over the width of a smile, the jauntiness of a moustache or the smoothness of a tongue. But the same person may act antithetically when deciding who should be at the national wheel for the next five years. After all, every Rajapaksa fault we decry now was fully or partly in evidence during their previous terms. Accountability is necessary not just for politicians, but also for the people who vote them in and out. If our people fail to understand their culpability for their own plight, how can they be persuaded not to remake the same old mistakes?  

As Liz Truss’ tenure as the UK’s prime minister entered its 6th chaotic week, Daily Star, a British Tabloid, launched the lettuce challenge. Would the premiership of Ms. Truss last longer than the lifespan of an ordinary iceberg lettuce? The lettuce won. And perhaps saved our former imperial masters from going the Lankan way. Had we stuck to the parliamentary system, we could have got rid of the Rajapaksas without the murder and the mayhem (no, it wasn’t all poetic and peaceful; the lynching of two men is murder and the burning of scores of houses, irrespective of the unsavoury nature of many of their owners, is mayhem). Institutional guardrails matter, especially where Know Nothings hold sway.

The rot is not limited to the government. Sajith Premadasa recently held a cosy powwow with that doyen of ideological racism, Dr. Gunadasa Amarasekara, and his majoritarian-supremacist National Organisations Collective. According to the media unit of the leader of opposition, “Opposition leader elucidated the importance of not making further amendments to the 13th Amendment,” and, said that “There are no ethnic minorities, there are different ethnic groups, all should get together and rebuild the country.” According to the Sinhala version, the opposition leader, “will not agree to any proposal that will lead to the fragmentation of the country by empowering the 13th amendment.” No ethnic problem, no need for a political solution: wasn’t that the Rajapaksa mantra too? The 13th Amendment equates division, wasn’t that the abiding cry of the most virulent of racists? Is this an attempt to shift to a Gotabaya-lite position and win with Sinhala votes only?

Mahsa Amini, Nika Shakarami, Sarina Esmailzadeh: three names amongst many unnamed victims of a struggle that began with a simple demand, the right to not wear a hijab.

Lankans probably look with a sense of complacent superiority at the events in Iran. But the rallying slogan of the Iranian schoolgirls, telling clerics to get lost, is valid here as well. After all, we too are plagued with clerics who try to impose their will on secular matters they know nothing about, from economics to sex education, often with distressing success.

            Iran’s ongoing uprising, with its stirring cry of Woman, Life, Freedom, began when a young Kurdish woman died in the custody of the Morality Police. We don’t have a morality police, but morality policing is not unknown here, including on matters sartorial. In the aftermath of the Easter Sunday massacre, a coat-and-tie clad top state official tried to make sari-wearing mandatory for female public officials. Banning first year female students from wearing trousers seems to be a fairly standard component of the orgy of cruel and unusual activities that passes off as ragging in Lankan universities.

The dean of arts faculty of the Peradeniya University is on record saying that students studying in the English medium are banned by the Students Union from using common facilities such as the canteen. Universities in Sri Lanka are not havens of democracy, open mindedness, and intellectual curiosity but deserts of intolerance, tyranny, and backwardness. Ragging is both a symbol of that mindset and its progeny. And all this by student unions and organisations under the control of the JVP and the FSP. The two parties can end this barbarism with one command (inner-party democracy is more alien to them than it is to their bourgeois counterparts). They haven’t, yet. In the universities where the two parties hold sway, even simple acts of dissent like opposing ragging is a punishable crime. The Rajapaksas are not the only problem we have.

On the need for deals

The petition filed by the Transparency International against the decision makers of the current disaster, starting with Gotabaya, Mahinda, and Basil Rajapaksa, has been granted leave to proceed by the Supreme Court. The case will hopefully cast some much needed light on who ordered, who enabled, and who consented to what in making this avoidable tragedy.

The 2019 November unfunded tax cut was the first outpost on that road to disaster, the error that made every other error necessary. Repairing that mistake is a necessary step in rescuing the economy without imposing even more burdens on the already overburdened poor. Will the Opposition, especially the economically more sensible SJB, propose constructive amendments to tax proposals instead of taking the easy way of damning the whole? One obvious need is to increase the tax-free threshold from the proposed 100,000rupees per month to at least 150,000rupees per month, to cushion the lower middle class and small businesses. Rates for upper brackets can be increased to make good the loss. (The GMOA is threatening strike action, true to form. Since most of that trade union’s members would not have become doctors without our free education system, their opposition to direct taxes is particularly despicable).

What is morally indefensible and politically dangerous is to increase taxes – any taxes – without touching the innumerable privileges enjoyed by the political class. The opposition can make a deal to combine tax increases with the drastic pruning of these giveaways – the pension system, duty free vehicle permit racket, giving official residences to all ministers and an official vehicle to all elected representatives, to mention but a few. Not likely, since the one subject on which the entire political class is agreed (from the UNP to the JVP, from the Rajapaksas to the TNA) is the sacrosanct nature of these unearned and unmerited privileges.

In her poem Working on the World, A Revised Improved Edition, Polish poet and 1996 Nobel Laureate Wislawa Szymborska, approaches her utopia of a good life and a good death in stages, starting with “fun for fools and tricks for old dogs.” Striving for incremental changes is more effective than dreaming of or chasing utopias. Given where we are, no improvement, however minute, should be scoffed at. Foreign remittances have gone up in August and September. Litro is making profit again and reducing prices. The Welisara Magistrate Court has ruled to provide legal protection to a young lesbian woman from the persecution of her parents (and the Welisara police). Women parliamentarians across the aisle have prepared an amendment defining anyone under 18 as a child. The Orwellian attempt to use the police to gather information on Colombo residents has been abandoned. To a drowning nations, straws can spell survival.

Our descent into economic disaster did not happen overnight. Our emergence from that abyss cannot happen overnight either. A parliamentary election might help that long climb or it might not. How an election impacts on the crisis would depend on the percentage of citizens willing to let facts rather than emotions decide their vote. If even 10% of voters cleave to the Rajapaksas (the real figure is likely to be double) despite their culpability for our common plight, an election is likely to worsen rather than alleviate the crisis.

 A fragmented parliament, and the resultant horse trading for power and influence while hunger soars and poverty deepens, can sunder hope in the democratic system. Once popular faith in electoral solutions breaks down, the Sinhala masses are more likely to seek salvation not from the JVP or the FSP, but from the military, and the monks, their brothers in blood and faith.

The saga of 22 shows that Ranil Wickremesinghe is not a Rajapaksa clone. Had the  opposition put personal rancour and political needs aside and worked with Mr.  Wickremesinghe once he became the president, a better 22 and other reforms could have been possible. Who can doubt that post-election every party currently in opposition will make whatever deals possible to gain a larger share of the power-pie? Better to make some deals now with the Wickremesinghe government, not for the sake of power, but to promote the sort of political and economic reforms that would help Lankan democracy and Lankan people survive the crisis, and perhaps even emerge a little stronger.

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Sea Cucumber: Allegory for Security Threat?

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Barrel-shaped Holothuroidea, commonly known as sea cucumbers are part of a larger animal group called echinoderms, which also contains starfish and sea urchins. All sea cucumbers are ocean dwellers, though some inhabit the shallows and others live in the deep ocean. There are more than 1,000 known species of sea cucumbers that inhabit the world’s ocean, but only about two dozen are commercially important. 

Sea cucumbers are amongst the highest value seafood available commercially. Sea cucumber has a long history of utilization as a cuisine in the Southeast Asian region, primarily due to their nutritional value and they are considered a delicacy. In some countries, medicines are produced, for example, “gamat oil” in Malaysia. The most important sea cucumber product is the dried body wall which is marketed as beche-de-mer (trepang or haisom).

Sri Lankan sea cucumbers are exported to countries like Singapore, China, Hong Kong, and Taiwan where they are highly prized and the delicacy sells for hundreds of dollars per kilo

Sea cucumber farming in Sri Lanka is quite old and was introduced by the Chinese. Sea cucumber was reported to be one of the major commodities taken to China for centuries when the trade existed via the ancient silk route. But the demand has arisen sharply with a high price tag, so farming surged in the 1980s in coastal areas.

Sri Lankan sea cucumbers are exported to countries like Singapore, China, Hong Kong, and Taiwan where they are highly prized and the delicacy sells for hundreds of dollars per kilo, bringing the much-needed foreign exchange to Sri Lanka. In 2020, Sri Lanka exported about 326 tonnes of sea worth Rs 1.5 billion and has become an important source of income for fishermen in the north, east, and north-western coastal region.

Since there is a growing demand for sea cucumber in the export market, the Sri Lankan government has taken steps to promote sea cucumber farming among the local fishing communities to support their livelihood and bring much-needed foreign exchange to the country.

Sri Lanka has got favourable environmental conditions to develop a large-scale sea cucumbers industry, however, given the limitations on sustainable production from wild sea cucumber capture, access to a regular supply of wild juvenile sea cucumbers for culture, and limited technical skills and knowledge among intended aquaculture practitioners hindered the long-term sustainable development of sea cucumbers industry in Sri Lanka.

At the time, when many northern fishermen were finding it harder to catch large fish which is blamed on many Indian trawlers entering Sri Lankan waters without a license and using illegal fishing methods like poaching and mechanised bottom trawling. It deprives the livelihoods of Sri Lanka fishermen, national fish production, the export income of fishing, and the rich ecosystem of the Sri Lankan waters and poses a threat to national security. The use of mechanised bottom trawling methods by the Indian fishermen is also a serious threat to the fishing gear of the fishing communities of the coastal areas.

Even sea cucumbers are illegally harvested by Indian bottom trawlers in Sri Lankan water. The secretary of Mannar District Fishermen Federation Union, N.M. Aalam told to a local newspaper that “The Indians are arbitrarily engaged in the harvest of sea cucumbers in our waters in addition to ongoing disastrous bottom trawling activities, then sell us back the same thing with some value addition.”

In 2001, India banned the harvest of all varieties of sea cucumber and declared it a protected species under the Indian Wildlife (Protection) Act of 1972, whereas in Sri Lanka it is legal and harvesting can be done under a licensing system.

Local community massively benefitted from the company, by its technological expertise which helped them to obtain bigger harvests and earn more income from exports at higher prices.

To address these needs, with the support of the Sri Lankan government, the Chinese joint venture company, GuiLan (Pvt) Ltd, established an artificial breeding production facility (hatchery) in Jaffna’s coastal village of Ariyalai in April 2016, to provide the necessary juvenile cucumbers stock to support a thriving and sustainable industry which can uphold local community’s livelihood hit hard by illegal Indian fishing. GuiLan (Pvt) Ltd’s operation involves the hatchery and the nursery to meet the locals’ demands and is not engaged in farming.

GuiLan (Pvt) Ltd was a pioneer of mass-producing juvenile sea cucumber in Sri Lanka using their own eco-friendly, artificial spawning technique. Since starting production, GuiLan (Pvt) Ltd nursed baby animals up to four months before they were sold to commercial farms run by locals throughout the entire year.

Earlier farmers used to have sea cucumbers only for six months of the year, now fishermen have them year-round. This has helped many northern farmers grow their businesses without harming the natural sea cucumber population. After a Chinese firm started a sea cucumber farm in the Northern Province, over 600 fishermen switched to sea cucumber farming.

Without a doubt, the local community massively benefitted from the company, by its technological expertise which helped them to obtain bigger harvests and earn more income from exports at higher prices. The Sri Lankan government also earned “a significant amount” of foreign exchange by exporting sea cucumbers to China and other Southeast Asian nations.

The National Aquaculture Development Authority (NAQDA) research shows that farming is the easiest, most lucrative, and more importantly, sustainable way of supporting an industry because wild sea cucumbers have been over-exploited. Hatchery-based artificial breeding is the most environmentally sustainable technique for raising sea cucumbers. Earlier, the Fisheries Ministry has taken steps to ban the overexploitation of wild sea cucumber cultivation from the sea directly to avoid depletion of wild populations in Sri Lankan waters.

In June this year, the Sri Lankan Government informed that they approved a proposal to allocate 5,000 acres of land in the districts of Jaffna, Kilinochchi, Mannar, and Batticaloa for large-scale commercial sea cucumber hatcheries. Further government approved to release of 100 acres to set up export villages as well.

Speaking to a local newspaper on 28th September 2022, Minister of Fisheries Douglas Devananda said that sea cucumber farms established by Chinese industries will not bring any harm to fishermen in the Northern Province and some of these industries have been operating in the North for the past four to five years. Further, he said that these investments are much needed for the country.

Minister told an Indian newspaper that “We need both investment and technology in the north to cultivate sea cucumbers. I have been asking India for five to six years but have not had any response. We must explore other options, right? We are only talking to a Chinese firm; no project has been finalised yet,” adding he will “never allow” any threat to India’s security concerns.

Earlier, Sri Lanka suspended a Hybrid Energy system to be built in three northern islands of Sri Lanka by a Chinese high-tech renewable energy company after India lodged a strong protest

So how a Chinese company’s investment in a Sea Cucumber farm in Northern Sri Lanka can become a threat to India? Why India can’t stop Indian trawlers from entering Sri Lankan waters without a license and using illegal fishing methods, crushing the Norther fishing community’s livelihood? Why then India can invest in the Sea Cucumber industry and provide technological expertise same as Chinese companies to support their livelihood and bring much-needed foreign exchange to the country?

Earlier, Sri Lanka suspended a Hybrid Energy system to be built in three northern islands of Sri Lanka by a Chinese high-tech renewable energy company after India lodged a strong protest with Sri Lanka on the award of a tender to a Chinese company owing to security concerns. Now it is embarrassing to see that Sri Lanka needs to buy fuel from the Lanka Indian Oil Corporation (LIOC) to run thermal electricity generators which also imports fuel by opening letters of credit (LCs) at Sri Lankan banks and using the dollars available in Sri Lanka, which is not helpful to Sri Lanka.

In September, the Sri Lankan government has invited the LIOC to set up Sri Lanka’s second oil refinery in Trincomalee, but until now no positive response given by LIOC. But India will come with another security concern when China agrees to invest and set up an oil refinery in Trincomalee which can provide guaranteed energy security and supply stability to Sri Lanka in the future and make Sri Lanka a petroleum hub in the Bay of Bengal.

India also raised concerns about the Chinese research and survey vessel Yuan Wang 5 docking at Hambantota International Port, however, Sri Lanka allowed entry for Yuan Wang 5 despite India’s concern. 

Views expressed are personal

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Sri Lanka: Consequences of Conscious Ignorance and Genealogical Absurdity

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Another global recession is imminent. The US, UK, EU are all expected to have lower growth rates and China’s growth has slowed down. India stands alone. There has been no discussion about its possible effect on Sri Lanka and what mitigating steps should be taken to cushion its ill effects on a country that is already bankrupt. Some 9.6 million people are reportedly in poverty according to a study by Peradeniya University. Its malnutrition levels have increased sharply. Public hospitals still have drug shortages. Inflation has risen very steeply with the highest increase seen with food items. Foreign exchange reserves are still precarious and there is yet, no agreed way forward economically and politically with opposition parties harping on elections without offering any alternatives to proposals put forward by the President. For many ordinary people, the absence of queues for petrol and gas appears to be the mirage that is hiding the quicksand below the surface.

The impending global recession is expected to hit the economies of all major powers to varying degrees, except India. As stated in the article ”The global recession and its impact on India”, a slowdown in the US economy was bad news for India during the last recession because Indian companies have major outsourcing deals from the US clients. India’s exports to the US have been developed over the years, but they  successfully weathered the great financial crisis of September 2008”

The article examines why India suffered so little during the previous global recession that impacted some of the biggest economies of the West, quoting, ”There are many factors that saved the Indian economy from the bad consequences of the global recession. India is a nation whose market is majorly dependent on agriculture; hence it supported India from getting laid off like other affected countries. In those times Indian banks and financial institutions had almost entirely avoided buying mortgage-backed securities and credit which turned out to be toxic and felled western financial institutions. While India’s merchandise exports were hit by the recession, service exports did not fall as IT and BPO exports held up good. Foreign direct investment went high despite the global financial crisis. Financiers reversed flows into India, but long-term investors in plants and factories kept moving on their ongoing projects”, unquote.

In the context of an impending global recession, the Sri Lankan government should begin discussions with India about what mitigating measures could be taken to prevent the current bad situation from getting worse. In all likelihood, it is not the IMF, but India which would be in a better position to assist Sri Lanka. However, in doing a bilateral deal, India too would lay down some conditions, both economic and political, and it is best to begin discussions and negotiations now rather than when the country has reached the next precipice.

Need for contingency planning

The ADB forecasts Sri Lanka’s GDP to be around 2.3% in 2023. This forecast however was prior to assessing the impact of the impending global recession on Sri Lanka. While economists will argue and predict varying degrees of impact, it is best to identify the worst-case scenario and undertake contingency planning to address such a scenario.

A study has revealed that 9.6 million (or 42% of the population) people of Sri Lanka are currently suffering from poverty. This is no doubt a direct result of the economic catastrophe faced by Sri Lanka now.

Prof. Wasantha Athukorala of the Department of Economics and Statistics at the University of Peradeniya said this in an article. What could possibly be worse than this situation? And could it be allowed to get worse?

What are the likely effects of a global recession on countries like Sri Lanka?

It could impact foreign direct investments. What is meagre today could get worse.  Sri Lanka’s exports, its lifeblood, could get affected due to lower demand. Whatever plans the BOI has and the Port City commission could be adversely affected.

Some countries that employ migrant workers, may reduce such employment opportunities if they are forced to scale back on their projects as a consequence of a global recession, and this will impact remittances from overseas migrants working in developed countries. Sri Lanka has experienced this with the COVID pandemic, and the slow rise of remittances is bound to decline, strangling and suffocating the country  

Tourism, a critical input to the economy which has just begun to show marginal increases will decline to cause much hardship to the industry and those directly and indirectly employed it, in addition to the impact on the country’s coffers.

If the country’s life-blood trifecta of exports, tourism and remittances are affected any further, it is difficult to imagine how the country would survive. 

Unemployment will rise and so will social unrest as a consequence. The country will not have enough funds to support the most affected as government revenue will not be there to provide such assistance. The depreciation of the rupee has already caused much misery to the people and a further depreciation which might be inevitable is bound to aggravate social unrest.

It is in this context that a politically consensual approach to the nature and extent of contingency planning, mitigation measures and broad strategic planning of the future direction of the economy becomes imperative. If not for today’s generation, but at least for the future generation. Such a task could have been achieved by the National Governance Council if only the country’s interest was placed above the personal interests of politicians.

Contrary to the belief that Ostriches bury their heads in the sand to save themselves from predators, which in fact is a myth, the BBC science focus explains why Ostriches engage in this practice, quote “As flightless birds, ostriches are unable to build nests in trees, so they lay their eggs in holes dug in the ground. To make sure that the eggs are evenly heated, they occasionally stick their heads into the nest to rotate the eggs, which makes it look like they’re trying to hide – hence the myth. An ostrich trying to hide from predators in this way wouldn’t last for long, and it wouldn’t be able to breathe, either!” end quote.

In referring to the situation in Sri Lanka where many people seem outwardly oblivious to the clear and present danger to the country and its people like Ostriches purportedly bury their heads in the sand, it is an insult to an Ostrich who is in fact sticking their heads into the sand for a purpose, as that is where their nests are and for the sake of their yet to be born chicks. One wishes human behaviour was more like that of Ostriches!

Collectively, the attitude of many people and the politicians who represent them, and even many religious leaders and civil society leaders, appear to live the myth surrounding Ostriches rather than the truth.

The attitudes displayed in the wake of current and potential hardships and disruptions, even greater poverty levels and malnutrition do not give an indication that the safety and well-being of future generations are being considered a priority.

While the President has proposed several governance initiatives including the national governance council, grama sevaka level people’s committees, changes to electoral laws, and many Parliamentary oversight committees as checks and balance mechanisms, no Opposition politician has presented an alternative governance model. The President’s proposals are matters for discussion and debate and improvement if they are regarded as inadequate, but the irresponsible Opposition has not done this.

It is no wonder that the current Parliamentary system and those in it are a ridiculed lot. It is no wonder that a genuine Aragalaya began with very ordinary people’s participation to discuss and debate the future, as the past and the present have been failures. The concept of the original Aragalaya is no doubt in the hearts and minds of many and it should not surprise anyone if the movement resumes and becomes active in all parts of the country.

In this context, it is well worth it for readers to watch and listen to a broadcast made by Venerable Galkande Dhammananda of the WalpolaRahula Trust on the birth of the Aragalaya before political vultures descended on it to feed on its message and regurgitate a politically motivated, violent message simply to change the deck chairs of a sinking Sri Lanka. Venerable Dhammananda’s broadcast should be watched by those whose hearts ache for Sri Lanka, and for the future generations of the country whose lives will be adversely affected if the political status quo continues.

A national economic summit

The Opposition political parties and those splinter groups withing the ruling party, should demonstrate their concern for the country, not by calling for elections at this juncture, but by joining together with the President and the governing party to agree on a broad program to address immediate and impending economic disasters. Such a program could be developed at a National Economic Summit with the participation of the business community, union leaders, academics, professional organisations, women’s organisations and other key participants, to develop a bi partisan economic plan for the next 10 years that includes a fiscal and monetary policy, an export development plan, a tourism plan, foreign direct investment plan, a plan for local revenue raising including taxation reform,and in addition, very importantly, a plan for food security.

If politicians do not change and take the lead to do this, and make a concerted, genuine effort to reverse the current economic catastrophe and undertake contingency planning to avoid even a worse debacle, people should exercise their right to change not just the politicians but the system that produces them.

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Sri Lanka: “Saving” the Economy

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The economy is shrinking

The economy can be likened to a train engine pulling carriages up a hill.

The engine represents the wealth-generating component of the economy, which is the private sector. This is because the existence of the private sector depends on profits, and since profits are an increase in value over costs, the private sector is always a surplus to the economy. The carriages, on the other hand, are in the government sector. Though this sector is important, it relies on private sector resources to maintain its size.

Despite the efforts of the engine to pull the carriages, the train has stopped moving forward and is now sliding back down the hill. This is the Sri Lankan economy in recession. Currently, there is a lack of foreign investment and the local private sector is the only means to stop the slide.

The government sector is doubly burdensome

The government obtains private sector resources through inflation (money printing), or seizes resources through taxation. What resources the government sector consumes becomes unavailable for the private sector to use. Thus the government sector is doubly burdensome to the economy, as on the one hand its weight must be pulled along by the private sector, and on the other hand, it is starving the private sector of valuable resources needed for growth.

In order to stop the slide and start to inch up again the first priority is to reduce government expenditure. Just as the current size of the government sector is doubly harming the economy, a reduction in size will provide double the relief. It will have the effect of both lightenings the carriages and increasing the size of the engine.

The importance of savings

The main resource of the private sector is savings. All economic growth takes place when entrepreneurs in the private sector make capital investments from savings. It is therefore vital to note that savings is the source and lifeblood of any economy, and the encouragement of savings translates to the encouragement of the economy.

What is savings

Savings come from underconsumption. By saving, the individual forgoes spending money today for some future date. In addition to improving discipline through thrift, savings also helps to prepare for unforeseen events such as medical emergencies, job losses, natural disasters and so on.

If the individual deposits money in a bank (as is often the case) the bank is able to lend that money to entrepreneurs for investment. Bank deposits make the savings of individuals available to the wider public, and in so doing more easily facilitates economic growth.

If the individual saves money outside of the banking system, such as by keeping it under a pillow, the economy is still improved. This is because prices of goods and services are a function of money in circulation. When money is removed from circulation, prices will correspondingly fall.

In the following sections, the negative impact of economic policies on savings will be discussed in brief.

Individual income taxes must also consider expenses

The income taxes for companies are on profits (i.e. income after expenses), but the income taxes for individuals have no relief from expenses (e.g. medical, food, rent etc.).

This creates a situation where an individual with high expenses may have to use savings to pay for income tax. This is unfair and particularly damaging to employees and fixed-income earners.

The income tax law should therefore be amended to take account of expenses and be consistent with corporate tax law. This will benefit savings in society.

Corporate taxes and income taxes are a double whammy

Private sector business is facilitated by profit margins, i.e. the percentage difference between the selling price and the costs. Corporate taxes are one such cost to businesses.

If the tax increases so must the selling price in order to maintain the profit margin, or the business will cease to exist.

Thus corporate taxes are simply an indirect tax to consumers. The government has now increased corporate taxes. This is counterproductive as that cost, when passed on to employees or fixed-income earners, diminish their ability to save.

Employees and fixed-income earners are in effect, doubly taxed as they must pay both the corporate tax and income tax.

The impact of marginal taxes on savings

If income increases so also does savings ability. The government must therefore incentivise earning higher income.

The current policy of higher marginal taxes can cause individuals to refuse higher salary in favour of other non monetary benefits. This is so that they can try staying within a lower tax bracket.

The policy also contributes to the brain-drain to foreign nations where an individual may be better able to hold on to their earnings.

Though marginal tax policy is common globally it is counterproductive to economic growth as it influences the wrong behavior in employees and discourages savings.

Income taxes are counterproductive

Due to the aforesaid reasons income taxes are counterproductive to the economy. They are a burden and cost to business and individuals, difficult to administer for the government and substantially hurtful towards employees and fixed income earners.

The government would therefore do well to abandon this means of income completely and focus on the consumption tax (e.g. GST) as a means to earning what it needs.

How interest influences savings

The incentive for individuals to deposit money in banks is the interest rate. If inflation is higher than interest, savings is discouraged and consumption is encouraged.

Interest rates are related to money availability. The more money banks hold, the lower the interest must go. A society that is unable to save will have high-interest rates reflecting the scarcity of saved money.

Central bank (CBSL) printing discourages savings

In Sri Lanka, the savings interest is relatively high when compared to what is global, but it not as high as inflation (measured at about 50% in June). Sri Lankans are therefore being encouraged to consume and not save.

The reason why interest is low (in relation to inflation) is because banks are indirect recipients of free money printed by the central bank (e.g. through public sector deposits).

In order to raise interest rates and encourage savings, the central bank must stop printing. This will create money scarcity in banks, which will cause interest rates to exceed inflation naturally.

Capital controls

The government has implemented capital controls which prevents individuals from holding significant amounts of foreign currency. Holding wealth in foreign currencies is particularly attractive now due to central bank-induced inflation.

These controls have the unintended consequence of discouraging Sri Lankans abroad from transferring their savings to local banks. Foreign remittances are therefore not taking place as they should.

The government should remove capital controls in order to encourage remittances.

Conclusions

The government is adopting common traditional methods to restore the economy. These methods are not universally applicable and in the context of Sri Lanka will fail. The government must revise its stance and think out of the box by focusing on savings as a priority.

Savings are the lifeblood of the economy. In order to improve savings the government must reduce expenditure first. In addition the policies of income tax, marginal tax, money printing and capital controls discourage savings and must be revised.

As a means to address budget deficits taxes have been increased. This will have the effect of diminishing the strength of the (already weak) engine thereby causing the slide down the hill to become uncontrolled.

As a consequence the LKR may lose all of its value and hyperinflate. The economy will lose a substantial portion of its remaining vigor. The brain-drain will reach unprecedented levels hitherto unseen, and food starvation of a broad segment of society can become reality. The government must therefore reverse this policy before it’s too late.

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Power Hunger and the Hypocrisy Bankrupted a Nation

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Over the last several months, intellectuals, politicians, and international development agencies have discussed the Sri Lankan economy and fiscal policy more than ever for its mismanagement. The words “foreign Reserves” and ‘’foreign Exchange” have become a common topic even among ordinary people who have never used those words. They talk more about the dollar than the rupee earnings and think the dollar is the panacea for all the economy’s ills. At the time of independence, the world community thought Sri Lanka would be a model economy for most developing countries. Sri Lanka was the second most prosperous country next to Japan in the Asian region. The country had fulfilled most preconditions to take off on the growth tract. However, it struggled to reach the status of a lower middle-income country for 50 years till 1997, while many other developing countries surpassed Sri Lanka. Eventually, in terms of World Bank classifications, Sri Lanka was elevated to a lower middle-income country in 1997. Since then, it has struggled in the lower middle-income trap and reached the status of an upper middle-income country in 2019, after 21 years. But, within a brief period, in 2020, under the World Bank classification, Sri Lanka was downgraded again to a lower middle-income country due to the sharpening economic crisis.

Since the transfer of ruling power from colonial masters to local elites, the fiscal policy adopted by Sri Lanka is short-sighted, irrational, arbitrary and not growth-oriented or sustainable. Those are aimed at winning the heart of constituents to win the next election and remain in power forever. The budgetary policy is nurtured as a bribe to the constituents to grab or stay in power.   Throughout history, with changes in government or leadership, policies have oscillated between growth and welfare orientation without policy consistency. Therefore, frequent ups and downs are observed in the path of economic growth. This policy inconsistency has caused catastrophic long-term and short-term economic ramifications. In the 1970s, in the journey to industrialisation, the country faced a scarcity of all imported consumer and intermediate goods due to strict import controls. Rations, coupons, and permits became part and parcel of daily life. Two prices, the control price and the black-market price, became the normal market situation for goods. People had to spend their time in queues to purchase goods for a controlled price. The policy priority was the protection and encouragement of the producer. This was done at the cost of consumer rights and preference.

 In 1978, the policy was reversed and removed all import restrictions. The market was flooded with inferior, superior, cheap, expensive, wanted, and unwanted imported goods, prioritising the consumer and consumption. The producer has been deserted without policy support. Following the open economic policy for 24 years till 2017, the year of the highest per capita GDP, the growth rate was maintained above 4%, except in 2001, when a 1.55 % negative growth was reported. In 2002, followed by a negative growth rate, the country faced near bankruptcy, with the government’s debt reaching 105.5% of the GDP. In 2002, the government made several changes in the overall economic policy, including the fiscal policy. The approach was more focused on growth than welfare. Though many opposed pruning welfare programs and privatising public enterprises, the government exerted considerable fiscal control. It trended the debt ratio downward to 90.6 % by 2005, controlled inflation and commenced the gradual economic recovery. From 2005 to 2012, the country maintained a GDP growth rate above 5%, and from 2010 to 2012, it was above 7% for three consecutive years, and the per capita GDP rose above US$ 4077 in 2017. The main contributor to this rapid GDP growth was the construction boom in the public sector infrastructure, funded under local and foreign commercial borrowings. However, there were no adequate investments in goods and service production to sustain the growth momentum generated by the construction boom. As such, the economy could not substantially reap the potential of new infrastructure. In other words, the volume of investment made in the infrastructure within a brief period was beyond the economy’s absorption capacity. The government was forced to service loans before bearing the fruits of costly investments.

As a combined effect of many inappropriate economic and fiscal management decisions and political crises, the growth rate became negligible or has fallen negative since 2018. The GDP per capita income fell from US$4077 in 2017 to US$ 3815 in 2021. An 8.4% negative growth rate has been recorded for the first half of 2022.  The government’s debt ratio exceeded 100% again in 2020 and 107% in 2021. The credit rating of Sri Lanka has been downgraded to very low by rating agencies, disabling any further borrowings. Foreign reserves depleted to near zero, compelling for rigorous import control. The government was forced to print money relentlessly to meet its essential domestic expenditure leading to hyperinflation. It eventually defaulted on the repayment of foreign loans and relegated the country to bankruptcy. Days and miles-long queues for essentials became familiar scenes everywhere in the country. Now, the destiny of the proud and conservative Island nation is in the hands of its friends and enemies.

Is it a Premediated Bankruptcy?

At the time of Sri Lanka’s independence, her macro economy was very healthy. Balance of payment, foreign reserves and balancing the national budget were not significant issues. However, after 1957, Sri Lanka’s trade balance was always negative. As a ratio to the GDP, the trade balance was above minus 6% from 1990 to 2021. Consequent to a continuous and extensive negative trade balance, balance of payment and budget deficit, the government has been highly dependent on foreign borrowing for more than six decades.  During the 1970s and 1980s government’s revenue ratio to the GDP was above 20%. But since 1991, it has declined rapidly, reaching 8.6 % of the GDP in 2021

During the 1970s, the government debt ratio to GDP was around 60 % and reached 84% in 1980. From 1990 to 2000, the debt ratio increased above 96% and went to 105.5% in 2002. After that, a declining trend was visible, dropping to 77.7% in 1915 and remaining below 79% for three years till 2017. Again, the increasing trend was accelerated, jumping the ratio from 84.2% in 2018 to 107.1% in 2021. In the early stages, the borrowing was from multi-lateral and bilateral agencies on concessionary terms. Sri Lanka denied concessionary credits for many sectors after it became a lower-middle-income country. Then the government opted for borrowing from bilateral agencies at relatively higher interest rates and medium-term repayment periods. Since 2007, Sri Lanka has issued several international sovereign bonds with maturity periods of 5 to 10 years. By the end of 2021, the total outstanding external debt of the government reached US$ 50.7 billion, of which 47% is market borrowings, which are short-term and high costs. These market borrowings were mainly used to repay previous loans. Later, the government was compelled to do market borrowing to settle previous market borrowings, entangling the country into a debt trap.

From the 1970s to the 1990s, government expenditure was around 30% of the GDP. During this period, the government revenue ratio to the GDP was also high, about 20% or above. Till 2015, the overall budget deficit was high, above 7%.  Due to the policy changes in 2015, the budget deficit decreased to 5.5% in 2017 and 5.3% in 2018.  However, with the policy reversal in the latter part of 2019, it increased again, reaching 12.2% in 2021. In addition to the policy changes, the corvid-19 pandemic also contributed to the budget deficit and demanded more government expenditure than expected. Since 2020, these deficits have been chiefly financed from local borrowings and money printings, an inflationary tool.

While struggling to find additional revenue to meet increasing public sector expenditure, the new government made a highly irrational ad-hoc decision to reduce taxes in December 2019. The maximum personal income tax rate was reduced from 24.5% to 18%, and the thresh hold of taxable income was increased from Rs.500,000 to Rs. 3,000,000. Consequently, the total number of income taxpayers decreased from 1,705,233 in 2019 to 133,445 in 2020, reflecting a 92% reduction.  The VAT rate was reduced from 15% to 08 %, and the thresh hold for VAT registration was increased from Rs.12,000 to 3,000,000, resulting in a reduction of VAT registries from 28,914 in 2019 to 8,152 in 2020, reflecting an 83 % decline.  Also, the standard corporate income tax rate was reduced from 28% to 24%.

The Economic Service Charge, Nation Building Tax, withholding tax and Debt Repayment Levy was also abolished. After replacing the PAYE system with the APIT scheme, the total number of contributors dropped to 664 828 in 2020 and lost the mechanism for regular inflow of income, which used to receive without much cost and effort.  All these changes were made effective from the beginning of 2020, pending formal parliamentary approval. According to the Central Banks Annual Report 2020, the government tax revenue in 2020 has declined by Rs 518.4 billion compared to the previous year. Considering the high price level of 2022, which is affected by hyperinflation, the revenue loss may exceed Rs. 1,100 billion. The income tax reduction increased the purchasing power of the upper middle class and the rich, which created an additional demand to import non-essential or luxury goods, exerting pressure on already sicked foreign reserves.

Even before the said tax alienation, the government had faced a heavy budget deficit, a negative balance of payment and depleting foreign reserves for many years. The government was pressured to do more local and foreign borrowings to service previous loans and continue with the welfare and development-oriented budget. This is a significant fiscal challenge faced by all governments after depleting the avenues for foreign grants and concessionary credits. The IMF and World Bank kept advising Sri Lanka to take appropriate action to improve government revenue, rationalise expenditure, and minimise corruption instead of costly commercial borrowings.

While all these ailments are in the backdrop, the government has decided to reduce taxes significantly for unknown reasons without any cost-benefit analysis. One obvious thing is that the decision is not based on economic, social, or broader political interests. According to the Central Bank Annual Report -2020, “the government implemented measures to lower the tax burden of business and individuals, thereby supporting the rebuilding of economic activities and enhancing incomes of the people”. The isolated ad-hoc policy instrument did not work, while all other harmful factors for investment remained unchanged. Instead, it negatively affected the overall economy and government budget, creating multiplier effects.

Is it a result of Ignorance or a Political Gimmick?

As explained above, a persistent budget deficit due to declining government revenue, increasing expenditure, and unfavourable trade balance became a chronic issue. After opening the economy, the fiscal policy was more weighted toward a consumption-oriented economy than a production-oriented economy.  The constituents also got accustomed to using voting power to bargain for more and more government handouts. Political parties are also accustomed to pledging more and more subsidies and free goodies in their election campaigns(bribes) instead of telling the truth to the people and facing reality.

Since 1965, Sri Lanka has sought the assistance of the International Monetary Fund on 16 occasions for bailout packages to heal economic wounds, especially the negative balance of payment. The IMF assistance is always conditional that Sri Lanka will undertake structural adjustments for the long-term sustainability of the economy. Among them, fiscal and economic reforms such as the devaluation of the rupee, controlling the government expenditure, strengthening the government revenue, reducing the budget deficit, correcting the price distortion in the market, privatising the loss-making state-own enterprises, minimising/alleviating corruption, targeting the subsidies only to the poor, supporting an export-oriented economy are the prominent recommendations/conditions.  On every occasion, the same conditions have been enforced with some modifications. However, a new requirement has been proposed for the 17th occasion in 2022, requiring negotiating with lenders for credit restructuring. On every occasion, the government has agreed to IMF conditions. But, once the bailout package is disbursed, agreed requirements are disregarded and back to loosen fiscal policy for political advantage. No political party have learned a lesson from past mistakes and keeps repeating the same. They expect camouflaging fundamental issues to mislead the donors, and the people can continue forever.  Suppose we had fully complied with the agreed requirements and continued with a growth-oriented fiscal policy and economic restructuring for several years. In that case, we could have cured the wound permanently without recurring it. But the government’s behaviour is like enabling the patient to move from the sick bed; the patient escapes from the hospital without facing the surgery.

On all previous occasions, the government approached the IMF before bankrupting the economy and benefited from bail-out packages. Since the beginning of 2020, the symptoms of the economic crisis have been visible. However, the government was reluctant to seek IMF assistance due to the possible challenging fiscal discipline that may enforce on the eve of the general election. Even after the general election, the government wanted to maintain a loose budgetary policy to accommodate popular election pledges. Towards the middle of 2021, it was clear that the economy would collapse without severe remedial actions and policy reversal. Even at this stage, the authorities did not realise the gravity of the situation and thought the same loosened policy could be continued with temporary homegrown solutions. An attempt was made to relieve the foreign exchange crisis by controlling the imports while keeping the value of the rupee artificially high. Also, the authorities believed the government could service all external borrowings without defaulting through the savings generated from import restrictions and printing money to finance the domestic expenditure, guided by the “new monetary theory”.  Available foreign reserves were used to service the external borrowings and maintain the rupee’s value artificially high. But they did not understand that this solution would deprive the people’s basic needs and collapse the domestic economy, which depends heavily on imported inputs.

At the beginning of 2022, it had proved that all homegrown solutions have miserably failed, and the country is running into a catastrophe. Towards the end of the first quarter of the year2022, the economy virtually collapsed, without foreign exchange to import petroleum, coal, gas, medicine, essential food items and many more. Eventually, the rupee was floated and allowed to depreciate. The immediate impact was the devaluation of the rupee by more than a hundred per cent pushing the cost-of-living sky high and days-long queues for all essentials, including fuel, food, and medicine. Meanwhile, the government was compelled to default on repayment of foreign loans to save the meagre foreign exchange for importing bear minimums. Due to the speculation of further devaluation of the rupee, foreign exchange earners stopped sending their earnings to the country through official channels. The country came to a standstill without inputs and mobility for industries, agriculture, and day-to-day operations for living. This resulted in multiplier effects such as constraints on industries resulting in low export income, high demand for imports, unemployment, low tax income to the government etc., creating a vicious cycle. It came to total anarchy, creating a political nightmare. Social unrest escalated to an unmanageable level, and eventually, the democratically elected president and prime minister were forced to resign.

Eventually, after failing all home-grown solutions, the government sought IMF assistance to bail out the crisis in April 2022. Then it was too late, and people and the economy suffered severely. Consequently, the recovery period will be much longer than the average IMF support program. Perhaps, it may take another five to six years to reach the per capita GDP to the 2017 level. If this decision had been taken at least in mid-2021, the recovery period could have been shorter, with less damage to the people and the economy. Relevant authorities could have bungled the episode from December 2019 to June 2002. But it isn’t easy to believe, as the president and finance minister were backed by many senior economists and experienced development administrators. Perhaps it may be the ego and deformed ideologies of the relevant authorities who are unwilling to listen to others’ views and productive criticisms. Another possibility is that some forces could have conspired by assigning bunglers to critical positions to mismanage the economy and thereby oust the non-political carrier president and capture power. This inference seems more pertinent, having observed entire political episodes from December 2019. Whatever the cause behind it, it has created long-lasting adverse socio-economic effects. Some of them are irreparable, such as child malnutrition and health hazards. Perhaps those who have abandoned farming may not be into agriculture again.

Conclusions

The limping economic legacy of over half a century has been further aggravated due to the nonsensical tax reduction in December 2019 and several other senseless decisions taken by the new government.  Accelerated unproductive government expenditure, such as recruiting 50,000 unemployed graduates and 100,000 unskilled less educated youths to the public sector, Weda Lakshayak (hundred thousand projects) and the 100,000 Km Road program, put more burden on the already unwieldy budget. Banning chemical fertilisers paralysed agricultural production. Alienating a considerable volume of government revenue, overnight switching to organic agriculture, and blindly trusting homegrown solutions for structural economic issues are the most preposterous decisions ever taken by a government. All these could have resulted from ill advice by bunglers guided by personnel agendas and deformed ideologies.

Since its independence, the power-greedy politicians competitively made Sri Lanka a nation lacking self-confidence and depending on subsidies and lives beyond its means. As a nation, Sri Lanka consumes more than it produces. To overcome this situation, we must learn to live within our means. There is no free lunch. Everything has a price. People must be ready to enter an era of new economic and political order. People must be prepared to produce more than they consume. Politicians in power should allow newcomers to take the reins and change the whole system to match the modern world instead of reinforcing the century-old corroded systems. The bureaucrats should be ready to switch on par with the contemporary world, proactive and able to drive the political masters on the right track instead of carrying forward the residua of feudal administration practices of their predecessors. All stakeholders in the governance system should be thoroughly determined to avoid financial and power corruption. We need a charismatic patriotic leader who can transform the whole society into a forward-looking, dynamic one.

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Sri Lanka Rejects West-led Resolution

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Sri Lanka categorically rejected resolution A/HRC/51/L.1 (Rev.1) titled “Promoting reconciliation, accountability and human rights in Sri Lanka” tabled by the United Kingdom, Canada, Germany, Malawi, Montenegro, North Macedonia, and the United States, which was adopted by a vote at the Human Rights Council (HRC) in Geneva, today (06 October 2022), a media statement issued by Minister of Foreign Affairs in Colombo has noted.

The statement reads further as follows;

Minister of Foreign Affairs Ali Sabry delivered the statement on behalf of Sri Lanka as the country concerned and called on the Members of the Council to reject the resolution by voting against it.

In support of Sri Lanka’s position opposing the resolution, the delegation of Pakistan called for a vote. Over half of the members of the Council did not support the resolution with 07 countries (Bolivia, China, Cuba, Eritrea, Pakistan, Uzbekistan and Venezuela) voting against the resolution and 20 countries abstaining on the vote. 20 countries voted in favour of the resolution.

Representatives of Pakistan, Brazil, China, Venezuela, Japan and Republic of Korea made statements in support of Sri Lanka prior to the vote. Pakistan said that they share the concerns of Sri Lanka and other Member States that the resolution is intrusive and this level of scrutiny would not be even acceptable to any sovereign state including the Core Group. They further observed that the resolution fails to recognize the horrendous acts of terrorism committed by the LTTE and its sponsors, lacks balance, proportionality and consistency.

At a critical time when the people of Sri Lanka expect demonstrations of global solidarity and support to face its economic challenges which are not entirely of Sri Lanka’s own making, the Core Group chose a path that has the potential to exacerbate the problem instead of improving the situation. Brazil noted the need to avoid politicization of the work of the Council and reiterated their position that cooperation of the country concerned is key to the success of this Council’s initiatives. Brazil highlighted the responsibility of the international community to support the country in its recovery including through international cooperation and assistance.

China appreciated the Government of Sri Lanka’s commitment to promoting and protecting human rights, advancing sustainable socio-economic development, improving living standards, protecting the rights of the vulnerable groups, facilitating national reconciliation and combatting terrorism. China regretted that the resolution is tabled without the consent of country concerned, is a product of politicization, and will by no means play any positive role in the promotion of human rights in Sri Lanka.

China highlighted that the work of Council should be guided by its founding principles and that all parties should promote genuine dialogue and cooperation and refrain from adopting double standards. China rejected the practice of using human rights as a pretext to interfere in the internal affairs and undermine the sovereignty of other countries to the detriment of international cooperation. Venezuela expressed their deep concern at initiatives that do not have the support of the country concerned and that the Core Group is insisting on imposing hostile initiative, monitoring and oversight mechanism without the consent of Sri Lanka, ignoring the progress made by the Government.

Venezuela highlighted that the mechanism financially bleed out over 6 million dollars that could have been better used to support the least developed countries and further that the practice of wasting money seems all too common in the Council. Japan recognized the progress made by Sri Lanka and said that the Government’s own initiatives, efforts and commitments are indispensable to achieving real change on the ground. Republic of Korea noted with appreciation the efforts of the Government of Sri Lanka to promote national reconciliation, reconstruction and prosperity.

Sri Lanka is grateful to the countries which withstood pressure by the sponsors and demonstrated their support to Sri Lanka by voting against or abstaining on the vote as well as by speaking in support of Sri Lanka. While delivering the Sri Lanka statement as the country concerned, the Foreign Minister regretted that a draft resolution on Sri Lanka is tabled once again despite the progress made domestically on reconciliation and human rights and Sri Lanka’s continued constructive engagement with the Council. He outlined Sri Lanka’s intention to move forward domestically with replacing the Prevention of Terrorism Act (PTA) with a comprehensive national security legislation, and the introduction of Constitutional amendments and a legal framework to strengthen democratic governance, participation and the rule of law as well as independent institutional oversight.

On reconciliation and human rights, Sri Lanka is awaiting the final report of the Presidential Commission and the establishment of a domestic truth-seeking mechanism is under advanced discussion. He also referred to Sri Lanka’s upcoming engagement with the UPR process. Minister Sabry highlighted that while the resolution may meet the objective of advancing the political considerations of the sponsors, it is manifestly unhelpful to Sri Lanka. The Minister strongly opposed the resolution, particularly the proposal in Operative Paragraph (OP) 8 that seeks to ‘extend and reinforce’ the so-called “external evidence gathering mechanism” created by the Office of the High Commissioner for Human Rights (OHCHR). The mechanism is outside the mandate envisaged for the Council. No sovereign state can accept the superimposition of an external mechanism that runs contrary to its Constitution and which pre-judges the commitment of its domestic legal processes.

The Minister also noted that many countries have already raised serious concerns on the budgetary implications of this resolution given its ever-expanding mandate. He further noted that this is an unhelpful and misdirected drain on the resources of all Member States, including the donors in the midst of ongoing global crises. In sharp contrast, he said that we are faced with the dire financial needs of developing countries to prevent hunger and child malnutrition.

Foreign Minister Sabry objected to the references in the resolution to matters which are outside the framework of the Council such as domestic economic and financial policy. He further observed 3 that solutions to economic and financial crises faced today by many countries will not be found in the mandate, the instruments or the expertise of the Council. The result of the vote demonstrates that the resolution is another example of the North-South polarization and politicization of the Council, contrary to its founding principles.

This vote also demonstrated solidarity among the countries of the South which continued to support the basic founding principles of the Human Rights Council of universality, impartiality, objectivity and nonselectivity leading to constructive international dialogue and cooperation. The Human Rights Council is comprised of 47 Members, including 13 African states, 13 AsiaPacific states, 8 Latin American & Caribbean States, 7 Western Europe and Other States, and 6 Eastern European States.

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Sri Lanka: Resolution Passes; So What?

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Editorial

The swank wedgy in Geneva on Sri Lanka is over for the time being. More to come. As many as 829 million people worldwide go to bed hungry each night while a bunch of groups titled themselves “human rights defenders” are lavishly enjoying time in the most expensive city in the world at public expense. Let’s go and see the bottom of this decaying flutter.

Not long ago, the dignity and reputation of the UN Human Rights Council evaporated. The global recognition it had gradually eroded over the years. The result was that it became an objectification institution to satisfy the malodorous desires of various regimes, regrettably. Countries that preach to the world about human rights forcibly abducted innocent people after naming them as prime suspects of terrorism, tortured and destroyed their lives in hideous torture chambers in places such as Guantanamo Bay and other classified black sites. They are still teaching us human rights. The torturers who urinate on the Holy Quran and force Muslims to eat pork are trying to teach the world about religious freedom.

The countries which spread their hegemony throughout the Middle East and destroy those countries in order to exploit their resources, pass resolutions against poor countries like Sri Lanka while talking about protecting human rights. Can anyone with a conscience agree to this dishonourable behaviour? Don’t you smell the stench in their words? Do you not see the blood of innocent people in their footsteps? Did you not see how they systematically destroyed many countries including Afghanistan, Iraq, Syria, Libya, etc.? Don’t you hear the voices of the Palestinians who breathe only at the thought of death, deprived of all basic rights? According to their track records, do you think that all this is done because of their overwhelming love for poor countries like Sri Lanka? In fact, such resolutions should be initiated by them – on them – for them as they have no moral right to speak about human rights in other countries. If you remember the series of human carnage they intentionally committed throughout history from Chile and Argentina to Cambodia and Vietnam, you cannot support them with a single word. They systematically destroyed Asia, Latin America, and Africa and did not hesitate to physically if not politically kill all the leaders who emerged from the voice of the voiceless and the power of the powerless. So tell us, against whom should such resolutions be passed?

It is said that this time they have included in their so-called resolution about the economic crimes that allegedly happened in Sri Lanka. Laughably, some self-proclaimed civil society activists have bragged about it in various ways. From the beginning, who gives visas to criminals and gives them sanctuary in their countries without forensic analysis of their wealth? Who gives permission to white-collar economic killers to maintain bank accounts in foreign currencies of their countries? Who gives shelter to crooks living in certain countries by denying visas to innocent people who have earned wages in a transparent and accountable manner? So, shouldn’t global organizations that tell fairy tales about equality, such as the United Nations, change? Isn’t it sad that such noble global forums are becoming a Hydepark-like place where any ugliness can be dramatized, falling prey to those who pursue their narrow political ambitions?

We see all the incidents related to this so-called resolution as a farce by a group of scoundrels who are abusing the highest virtues of human civilization by doing any abominable act for the sake of their supremacy. There is also a group of people standing around their peripheries, dancing to their tunes and licking some of the muskets they throw. They introduce themselves as “civil society activists”. But none of these activities will help the poor people living on the land.

Our respect goes to the real nations that have a backbone against the so-called resolution that was allegedly passed against Sri Lanka and to the nations that refused to go against their conscience and abstained from voting. Only these countries can carry out positivity for human civilization. These countries including Sri Lanka must break this multi-faceted dictatorial unipolar hegemony in order to build a real world where basic rights are respected equally. Although it is a very serious and complicated mission, it should be done immediately. Similarly, the power of true weapons of mass destruction such as the US dollar, which is being used as a quiet blade for genocide, must be neutralized. Then you will find the beauty of true humanity and harmony. Until then, it is inevitable that not only Sri Lanka but many small countries will become victims of these monopolistic hypocrites. Exploiting the prevailing excruciated economic crisis, these manipulators shall kill Sri Lanka softly. Consequently, the ordinary citizens struggling for daily wages will suffer at the end of this great game. When ordinary folks suffered more, they called it “justice”.

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Sri Lanka Politics of Protests

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During the month, Sri Lanka government made some progress in the measures it had initiated earlier for economic recovery. After holding the staff level meetings with the International Monetary Fund (IMF), the government is hopeful signs of $2.9 bn loan materialising. However, some other measures it has taken like the formation of a bloated cabinet for political reasons, declaring focus areas of Aragalaya protests as high security zones (HSZ) and the use of draconian Prevention of Terrorism Act (PTA) to arrest some of the protest leaders have drawn flak both at home and abroad. These negative aspects have provided a rallying point for opposition political parties to come together and articulate their stand against the Wickremesinghe government.

Actions of the government to suppress public protests found a place in the report on Sri Lanka by the outgoing High Commissioner of Human Rights Michelle Bachelet made at the 51st session of the UN Human Rights Commission (UNHRC) at Geneva. The session slated to end on October 7, is likely to extend the time given Sri Lanka to fulfil its commitments to the international body on the accountability for its human rights aberrations during the Eelam war. At the same time, it is likely to add negative riders in the resolution on the way the government has been handling public protests.

Former president Gotabaya Rajapaksa who fled the country for his safety on July 13, returned home to a warm official welcome on September 2. Though he had been keeping a low profile, his return has reinforced the belief that the Rajapaksas will continue to call the shots in the Wickremesinghe government.

Politics of protests

The Aragalaya public protests that had dethroned the Rajapaksas from power have shaken up the political parties of all shades as much as the government. Recovering from the shock effect of four-month long socio-political protests, political leaders seem to have realised the Aragalaya phenomenon as the expression of the unheard, unheralded and deprived citizens who are fed up with the existing political order.

Prof GL Peiris, Chairman of the Sri Lanka Podujana Peramuna (SLPP), in an interview in the Daily Mirror aptly described the Aragalaya as the alternative of ideas, of policies of freshness. “A new departure. The Aragalaya had a visionary aspect to it. Later it degenerated into violence. That is not to be condoned in any manner.” He found “a kind of renaissance about it.” The SLPP leader, who has chosen to sit separately in parliament from most of the SLPP members supporting the government, saw in the creations of protestors as “an expression of creativity and deep desire for a system change. To reorganise the system.” Prof Peiris, while acknowledging that some of the measures taken by the government to revamp the economy and ease the fuel and food shortages have yielded results, said a bloated cabinet cannot bring a systemic change. There were fewer public protests during the month. However, the ultraleft elements of the JVP and its student body seem to be using the Aragalaya to rekindle the embers of the protest movement to expand their political influence.

In June 2022, before Wickremesinghe was elected president, the Sri Lanka government had told the members at the UNHRC in Geneva that it was imposing a moratorium on the use of the PTA. Even a month later when protestors were forcibly evicted from “sensitive areas,” the newly elected president assured foreign diplomats in Colombo that the government will uphold both Article 21 of International Covenant on Civil and Political Rights and Article 14 (1) (b) of the Sri Lanka Constitution which govern the right to peaceful assembly. However, these promises seem to have been forgotten by President Wickremesinghe after his election. The President who had once called the Aragalaya protestors as fascists, seems to be trying to weed out their influence, using teleological methods. This was evident from the mass arrest of protestors under the PTA.

The detention of several activists of Aragalaya under the PTA including the convenor of the Inter University Students Federation (IUSF) Wasantha Mudalige was condemned by many political parties across the ethnic spectrum. This may be considered a positive outcome of the protests. This was seen in the participation of many leaders of the opposition parties, civil society and trade union activists and retired public servants, in the Ilankai Tamil Arasu Katchi (ITAK)’s mobile signature campaign against the PTA. When the protest launched in Jaffna reached Galle Facethe presence of former defence secretary Austin Fernando and trade union activist Joseph Stalin, apart from leaders from political parties like the ITAK, SJB and SLMC like Sumanthiran, Rasamanickam, Hirunika Premachandra and Rauf Hakeem, underscored its relevance in the present political environment.

Similarly, the government notification of several areas around key government buildings and their adjoining roads in Colombo as High Security Zone to prevent holding of public meetings and protest marches has also been condemned by large sections of society. SJB leader Sajith Premadasa called the setting up of HSZ as “acts of a dictatorship.” He said the cabinet had recently given the nod for setting up a committee to regulate and control media. Premadasa said it was a dictatorial move and warned the party “will take to the streets against all these moves in the future.”

President Wickremesinghe has sworn in a jumbo cabinet to satisfy the members from assorted parties, who support him. Apparently, he considers it only as a political exercise and not an effort to revamp the system in keeping with public sensitivities over the style of governance. Perhaps, conscious of this shortcoming, Prime Minister Dinesh Gunawardena successfully moved a unanimous resolution in parliament to constitute a ‘National Council’ (NC) after three rounds of talks with all parties. The NC will be chaired by the Speaker with the PM, leader of the opposition, Chief government whip and not more than 35 MPs representing all parties as members. According to a statement the NC will determine the priorities for the formulation of national policies, agree on short and medium term common minimum programs to stabilize the economy. It will also organize special meetings with cabinet ministers, the NC, the chairpersons of special committees and observers from youth organizations.

However, for the present the public is likely to view the formation of the NC as a political expediency. JVP leader Anura Kumara Dissanayake speaking in the parliament said the JVP will not support the NC project. He called the NC as “a facade. It is another attempt to dupe the people and the rest of the world.” He said the NC would not help solve problems. Few would dispute the JVP leader’s description of the prevailing political culture as “tainted by corruption, no respect for the rule of law and politicians enjoying perks and benefits and placing themselves above the law.” Unless the NC can address these issues, it is likely to end up as yet another glorified commission, whose findings are confined to the archives. Sri Lanka’s problems are not merely economic or political but much more organic, reflecting the disconnect between the polluted political system of governance and the ordinary people. Aragalaya is a manifestation of this disconnect. Unless the President and the political parties can rework their equation with the people, politics of protests is likely to continue as the norm.

Dr Subramanian Swamy with former President Gotabaya Rajapaksa [Photo: Special Arrangement]

Tailpiece: Visiting BJP leader Dr Subramanian Swamy called upon Gotabaya Rajapaksa, after the former president returned home. In fact, Swamy was the first foreign visitor to call upon him. Swamy, a close friend of the Rajapaksas, was in Colombo to attend a conference on national security at the Kotelewala Defence University. He also met with former president Mahinda Rajapaksa and attended the Navratri pooja at his residence. The Indian leader is well known for making shocking one-liners. In his twitter on July 11, he said the Sri Lanka crisis was engineered and India should ensure that later ‘this mob’ does not become refugees of India. What was he up to in Colombo? That is a question for twitterati and WhatsApp university to debate.

[Written on September 30, 2022.]

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ADB in Sri Lanka’s Debt Crisis

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The following article is based on the speech by the author as a Government of Asian Development Bank and President of Sri Lanka in their 55th Annual Meeting

It is my privilege to address you today, as the chair of the 55th Annual Meeting of the Asian Development Bank. Today, members of ADB have gathered in-person, after three years, here, in this dynamic city of Manila for the Second Stage of the ADB Annual Meeting. First of all, let me express my sincere appreciation to the Asian Development Bank (ADB) and the Government of Philippines for organizing this prestigious event. Amidst an unprecedented economic crisis that Sri Lanka is currently undergoing, we missed the opportunity to host the second stage of the Annual Meeting in Colombo. However, we are eagerly looking forward to welcoming you all in Colombo in the near future.

The ADB has made a very positive impact, which is being profoundly felt across the entire region. In 2021, the ADB committed $22.8 billion to members, and has mobilized an additional $12.9 billion in cofinancing through partnerships with other sources. The ADB’s Strategy 2030 seeks to respond to global challenges, including climate change and natural disasters, food and energy insecurity, whilst also embracing opportunities in the digital economy, sustainable energy, and leveraging technology for inclusive education and healthcare. Thus, the ADB has a crucial role in helping to shape and finance policies that improve people’s lives and livelihoods across Asia and the Pacific.

The supply chain shocks created by the COVID-19 pandemic is compounded with the prices of global commodities mainly food, fuel and fertilizer skyrocketing due to the Ukraine war. Higher food and energy prices are leading to stuttering the growth of middle class and has resulted in further insecurity amongst the vulnerable communities in the Indian Ocean region.

As a result of these shocks, there has been a spike in sovereign debt distress across emerging markets. The growth targets, both in East Asia and South Asia, have been revised downward. If this is not promptly addressed, it risks creating contagion of debt distress that threatens growth and financial stability across all economies. Countries with pre-existing economic vulnerabilities, including Sri Lanka, are the most affected. Therefore, creditors and debtor nations must work collectively in an equitable manner to ensure economic and financial stability across the region and indeed the world.

The developments on the global stage have further aggravated the self-inflicted economic crisis in Sri Lanka resulting in a political outburst that led to a change in Government. Today, we have stabilized the economy and many countries and stakeholders are keenly monitoring how we resolve this crisis. Many nations are keenly watching developments in Sri Lanka to see how we work with all stakeholders to resolve this crisis. We are well aware that the evolution of Sri Lanka’s economic crisis includes both domestic policy elements as well as external shocks. It follows that the resolution of the crisis also requires both domestic efforts and the support of external partners. It is incumbent upon Sri Lanka and our creditors and partners to set an example of how collaborative and good faith action can result in sustainable and equitable solutions to sovereign debt issues.

Towards this end, we have already undertaken major macroeconomic policy reform measures. I am pleased to inform you that we have now reached a Staff Level Agreement with the International Monetary Fund on a four-year program supported by the Extended Fund Facility. The programme is aligned with the commitment of the Government to implement an ambitious and comprehensive package of reforms that will help restore the sustainability of our public finances, addressing external imbalances, and restarting our growth engine through structural reforms and improvements in governance. Amidst major economic stress, Sri Lanka is undertaking an unprecedented fiscal effort as part of our commitment to restoring the country’s debt sustainability. It is our hope and expectation that Sri Lanka’s creditors, and all stakeholders, will support us in these efforts to restore our debt sustainability and help put the country back on the path of inclusive and sustainable economic growth.

Whilst Sri Lanka undertakes these deep and often painful reforms, we are experiencing rising unemployment and reduction in purchasing power of consumers. The Government is cognisant of the adverse impacts on the most vulnerable members of society. Accordingly, every effort has been taken to allocate greater financing and resources towards targeted support for social protection.

Asia has still to overcome the present global economic crisis. Unlike the financial crisis of 2008, in this instance, the economic levers alone are insufficient to stimulate global economic recovery. The factors underlining the main crisis is not only of economic origin but are also the consequences of evolving geopolitics. The result being the absence of cooperation amongst the G20 unlike the earlier crisis.

The Ukraine war on one side and the United States-People’s Republic of China rivalry, spurred on by military, trade and political differences, on the other side, are key contributors to this breakdown in cooperation. Added to this geopolitical rivalry are the droughts, floods and pandemic which are still present in Asia. All these challenges are compounded by the absence of global leadership – a time when the global economy is stuttering. As this global rivalry intensifies into a new cold war, which will determine a new global power balance by 2050, the inability of the major countries to give leadership to the mitigation of the global climate change crisis is becoming more apparent.

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Sri Lanka: Nephew’s Patrimony

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For every complex problem, there is an answer that is clear, simple and wrong’ — H.L. Mencken (American writer and humorist).

The validity of this contention in Sri Lanka can be gauged if we listen to ‘pundits’ on radio and television providing solutions to the most devastating problem this country has faced in its 73 years after Independence.

Sri Lankan governments have been attempting to resolve problems in the usual way that all ‘democratic’ governments do: Appoint commissions of inquiry and investigations and even presidential commissions to determine what went wrong.  Maximum publicity is provided to the progress of commissions on radio, TV and the print media but gradually the pressure is eased till time erases memories of the devastating problem.

The financial and political abyss that President Gotabaya Rajapaksa, his brothers and nephews confidently marched into with their military and civilian advisors was beyond the capabilities of presidential commissions to resolve and they remained in their bunkers until the GotaGoHome boys and girls rallied tens of thousands of protesters, stormed the bastions of power of the Rajapaksas, forcing them to resign and Gota to go home the way of ‘Parangiya Kotte Giya’ (The circumcircuitous way the Portuguese were taken from Colombo Fort to Kotte). Gota went home in a High Security Zone in Colombo by air via the Maldives, Singapore and Thailand.

But the problem remains: Sri Lanka has no money, little food or medicines, no fuel and has to keep borrowing.

Ranil Wickremesinghe was a free and defeated man with no problems to resolve but he seems to relish problems for power.

He volunteered to take on all the terrifying problems of the country left over by the Rajapaksas by volunteering to become the prime minister and then be elected president by politically destitute members of the Rajapaksa party, who are not his fans.

Wickremesinghe has done his job well in negotiating with the IMF and the Western bloc of nations but has kicked into his own goal by cracking down on the GotaGoHome boys and girls who had unwittingly paved the way for his political resurrection.

Wickremesinghe during the past week or so has gone through Westminster Castle and Abbey, Buckingham Palace, Windsor Castle, chatted with King Charles III and been able to present Sri Lanka’s case in a favourable light, reports said.

This week he was in Tokyo with powerful Japanese politicians and in the Japanese Imperial Palace with Emperor Akihito in the vicinity of the Chrysanthemum Throne.

Japan has been our all-weather friend since the San Francisco conference speech of his uncle J.R. Jayewardene who pleaded for Japan at that critical moment when the world was sitting in judgement over Japan’s conduct in the War.  The nephew of JR pleading for Lanka’s cause now may have revived poignant memories way back.

Japan has been showering assistance on this country without any strings attached.  The Kotte Parliament in a picturesque setting, the Jayawardenapura Hospital, the Administrative Capital of Kotte and the development of the entire region of Colombo East that has now become the best residential area of Colombo are all spin-offs of Japanese munificence.

Gotabaya Rajapaksa’s wooden-headed military mind destroyed that seven-decade-old friendship by boorishly halting the Japanese light rail project which would have eased the traffic congestion in the area. Ranil Wickremesinghe now has the opportunity to undo the damage although he is working for the ‘Pohottuwa’ government.

From Japan, Wickremesinghe went to Manila to chair a meeting of the Asian Development Bank where he called for the support of creditors and stakeholders for Sri Lanka’s economic recovery.

Is Wickremesinghe the solution for Sri Lanka’s economic and political debacle?

There is tremendous opposition to him continuing as the President and there are daily protests demanding his resignation. But indications are that he has no intention of giving up the presidency and intends to carry on for the next two years till the presidential term ends. He has had no qualms in crushing opposition forces rising against him although it is being pointed out that non-violent protests against legal governments are permissible under Sri Lankan law.

The parallels between Ranil Wickremesinghe’s and his uncle JRJ’s careers are striking. JRJ even when he was in his seventies did not have control of his party, the UNP, which he had stood by in all adversities and also put it back on its feet.

Even after the rout of the party in 1970 by the Sirima Bandaranaike-led United Front, Dudley Senanayake continued to be the leader with JRJ trying his utmost to oust him.

At one stage, JRJ declared that he wanted to join Sirima Bandaranaike’s coalition but the left leaders including Samasamjist N.M. Perera and Communist Pieter Keuneman were vehemently against it. N.M. Perera declared: ‘If he comes through the front door, I go out through the back door and if he comes through the backdoor, I go out from the window’.

JRJ tried many tactics to oust Dudley. He even tried to storm Siri Kotha (then located at Kollupitiya) with elephants!

And then Dudley Senanayake passed away plunging the entire nation into grief.  The astute JRJ then played his master stroke. His funeral oration at Independence Square was a masterpiece of oratory in democracy and hypocrisy: Goodbye Sweet Prince…May a thousand Devas…..

JRJ took control of the party and in 1977 swept the polls with a five-sixth majority for the party to hold power for 17 years.

Ranil Wickremesinghe still is the leader of the UNP but the vast majority of members ditched him in favour of Sajith Premadasa and Wickremesinghe could not even win a single seat — not even his own. Speculation is that he will try to wean away former UNPers now with Sajith Premadasa and contest the next election as leader of a rejuvenated UNP and win like his uncle did.

Sajith Premadasa had only one month’s time to organise his presidential election campaign against the formidable Gotabaya Rajapaksa. He contested under a new party name with ex-UNPers backing him.  He polled a creditable 41.99 percent of the poll against Rajapaksa’s 52.25 per cent.  Premadasa is today the sole opposition leader directly opposing both Wickremesinghe and the Rajapaksas and is no lame duck.

Can Wickremesinghe repeat his uncle’s feat. Time will tell.

Growth of Artificial Intelligence and decline in Human Intelligence

A voluminous newspaper supplement in a state-owned newspaper last week aimed at boosting artificial intelligence in Sri Lanka had us wondering about the possible science fiction scenario of the takeover of the former Pearl of the Orient by electronic robots.

A determined effort, it appears, is being made to have robots with artificial intelligence (AI) to help us Lankans in our domestic chores as well as work in factories. Glancing through some of the articles we were impressed at the enthusiasm and optimism expressed which made us conclude that robots functioning on artificial intelligence will grow at an exponential rate.

This accelerated growth of artificial intelligence in Lanka per se was not a matter of concern to us. What concerns us is its rapid growth alongside the rapid decline of human intelligence in this country.  It began decades ago and this year accelerated blindly with

open eyes into the chasm of financial bankruptcy and political wilderness.

The scenario we envisage is not the usual sci-fi battle between robots vs humans because the robots have to be fed with instructions by humans into the foreseeable future.  Increasingly intelligent robots coming up with solutions with dumb Lankans may not be able to comprehend, is a challenge to those now nurturing artificial intelligence.

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