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Sri Lanka: Is Ranil solving the Economic Crisis?

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It is widely acknowledged that the current economic problems in Sri Lanka are complex and multi-faceted, and will likely require a range of solutions and approaches to address effectively.

Whether or not President Ranil Wickremesinghe, as an individual politician, can solve these problems without a mandate from the people is a matter of debate. Some might argue that political leadership is an important factor in driving economic reform and progress and that a leader with experience and a track record of success could bring valuable insights and solutions to the table. Others might argue that, without a mandate from the people, a leader may struggle to secure the support and resources needed to implement their ideas and drive meaningful change.

Ultimately, the effectiveness of any political leader in addressing the economic problems of Sri Lanka will depend on a range of factors, including their ability to work with other key stakeholders, secure the support of the public, and effectively implement their policies and initiatives.

In order to address the current economic problems in Sri Lanka, political leaders might consider the following steps:

Forming a united front: One of the key challenges in addressing economic problems is political polarization and division. Leaders from different political parties need to work together in a united front to develop a common vision and approach to tackling economic issues.

Addressing corruption: Corruption has been identified as a major contributor to economic problems in Sri Lanka. Political leaders need to take a strong stand against corruption and put in place measures to tackle this issue effectively.

Implementing structural reforms: The economy of Sri Lanka needs structural reforms to become more competitive and attractive to investors. Political leaders need to work with stakeholders to identify the reforms required and implement them effectively.

Encouraging private investment: Encouraging private investment is key to driving economic growth and creating jobs. Political leaders need to create a favorable business environment that encourages investment and fosters innovation.

Promoting financial stability: Political leaders need to work with the central bank and other financial institutions to promote financial stability and restore confidence in the financial system.

Fostering inclusive growth: Political leaders need to ensure that economic growth is inclusive and benefits all segments of society, particularly those who are marginalized and disadvantaged.

It is important to note that these are complex and challenging issues, and there are no easy solutions. However, with the right leadership and a collaborative approach, it is possible to make progress and address the economic problems facing Sri Lanka.

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Sri Lanka: Governor disregards trade mis-invoicing

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Central Bank of Sri Lanka (CBSL) Governor Dr. Nandalal Weerasinghe has disregarded and trivialised the extent of illicit financial flows through trade mis-invoicing in instigating Sri Lanka’s ongoing foreign exchange and fiscal crisis. This was fully apparent at the Parliamentary Committee on Public Finance meeting on January 23rd in response to revelations made by us as a collective of Sri Lanka’s prominent trade unions, mass organisations, professionals and economists.

In response to questions raised by Parliamentarians on our statement at the Committee meeting, the CBSL Governor responded,

“Obviously people who do under-invoicing or over-invoicing happens basically to evade taxes. If you have taxation, you declare low value and pay low taxes and then they keep money. probably they keep it out or bring it here. That’s their business. We don’t know.”

The Governor of the country’s Central Bank continued to rationalise or mis-rationalise his admitted ignorance by speaking in a language which is alien to economists, saying, 

“Other thing is, I don’t believe this number. Reason is if exporters are doing business here, they can’t keep that amount of money abroad.”

After hearing this, we as citizens are concerned whether the operations of the CBSL are in fact moving forward on the erroneous personal beliefs of the CBSL Governorat this time of deep economic crisis. Since the CBSL Governor ‘does not know’, we as trade unions, civil society organisations, economists and concerned professionals find the need to enlighten him, CBSL Officials and all concerned citizens the extent and dynamics of trade mis-invoicing in accelerating Sri Lanka’s economic collapse. In the following account we will critically address the misleading remarks of CBSL Governor on capital outflows through trade mis-invoicing.

International Recognition that Trade Mis-invoicingis Not a Myth

The CBSL Governor dismissed the findings of Global Financial Integrity (GFI) report published in December 2021 which pointed out that an estimated US$ 40 billion was transferred out of the economy between 2009-2018 through fraudulent invoicing by corporates operating in the import-export sector. This figure significantly exceeds Sri Lanka’s foreign debt of US$ 36 billion in default since April 2022. The impact of capital outflow of this magnitude on the ongoing economic collapse is self-explanatory. Nevertheless, the CBSL Governor is of the view that corporates would not have sufficient funds to operate within the economy if such a large sum of capital is held outside the country. Consequently, he falsely concludes that the GFI estimates are extreme exaggerations. This amounts to a complete misunderstanding of illicit outflows globally. If not, it indicates that the CBSL’s Governor and officials are colluding with business interests and the political establishment to trivialise and dismiss what appears to be the largest financial crime in Sri Lankan history.

These outflows are surpluses from both legal and illegal operations and therefore are not reutilised in domestic operations and in the interest of expanding industries locally. Economists such as Professor Arun Kumar at Jawaharlal Nehru University, New Delhi, have pointed out that the illegal outflow of capital is used to acquire property abroad or in conspicuous luxury consumption. In other words, illicit financial outflows enable the extravagant enrichment of individuals at the expense of entire countries in the third world.

However illicit financial flows are a common occurrence in countries which have poor financial controls. For instance, theUN referring to the GFI report published in 2014 recognised that illicit financial flows from the African continent through trade mis-invoicing from 1970 to 2009 is a staggering four times the aggregate foreign debt of the region.Furthermore, the UN Conference on Trade and Development (UNCTAD) in September 2020 revealed that an estimated US$ 88.6 billion leaves the African continent as illicit capital flight yearly and the aggregate outflows between 2000-2015 (US$ 836 billion) is far greater than total foreign borrowings of the continent (US$ 770 billion).

The ground-breaking findings of GFI and their collective work with the UN, the World Bank and the IMF advocated including illicit financial flows in the UN’s Sustainable Development Goals in 2015 under goal 16.4 to which Sri Lanka is also a signatory. As early as September 2018, Mr. Juan Pablo Bohoslavsky, the UN’s Independent Expert on Foreign Debt and Human Rights for 2014-2020 stated following his visit to Sri Lanka that “no study or official estimation of illicit outflows or inflows has been conducted to date in Sri Lanka”. In his report, he urged the Government “to conduct these studies in order to further curb illicit financial flows in line with the Sustainable Development Goals.”

Further, the Asian Development Bank (ADB) in 2003 emphasized that “inaccurate pricing (“misinvoicing”) of imports or exports [is used] to hide the transfer of funds. When such transactions are extensive, the impact on a country’s entire external sector can be substantial” (ADB,Manual on Countering Money Laundering, 2003). In 2017, the ADB further estimated that trade mis-invoicing accounts for a staggering 83% of all illicit capital outflows from developing countries. The recent statement endorsed by 182 globally renowned economists, academics and activists demanding cancellation of Sri Lanka’s foreign debt also highlighted that capital outflows during the past 15 years is estimated to be greater than Sri Lanka’s total outstanding foreign debt.

There is thus a vast body of research conducted by institutions such as the ADB, IMF, World Bank, OHCHR, UNCTAD and international economists on what happens to national economic development when rampant corruption is allowed through illicit financial flows. It is therefore hugely concerning that our CBSL Governor ‘does not believe’ and does not seem to be aware of the impact illicit financial flows through trade mis-invoicing have hadon the Sri Lankan debt crisis. Ultimately, it is a tragedy that Sri Lanka’s foremost authority on economic affairs is completely oblivious to chronic issues engulfing the developing world and the root causes of the fiscal crises we face. Alternatively, if this is not ignorance or misunderstanding, then it points to deliberate collusion by the CBSL’s Governor and his officials with business interests and the political establishment to trivialise and dismiss what are massive financial crimes.

Government Enabling of Illicit Capital Flows

We are well aware that the Sri Lankan Government ‘legally’ permitted companies to park income outside the country for years and that this economic hara-kiri was only addressed in October 2021 through a regulation under the Monetary Law Act. It is our interest as citizens to know the full impact of this disastrous blunder. We demand that the CBSL publicise the amount of residual income that the export sector failed to repatriate between the period October 2021 to date, thereby aggravating the economic crisis. We further request institutions such as the CBSL to be responsible and reflect on the implications of the ‘legality’ of enabling local companies to take capital on a developing economy like ours’ in the long run. We are glad to note that the CBSL Governor is aware of other developing countries such as India and Malaysia which have placed restrictions on financial flows as part of a policy framework to accelerate their development with the capital produced in their own countries.

CBSL Governor passing the buck to Customs

In a separate press conference on January 26th,Dr. Nandalal Weerasinghestated it is the responsibility of the public to inform the Financial Investigative Unit (FIU) of CBSL and Customs Department if they have conclusive evidence of firms involved in fraudulent trade invoicing.It is only then he claimed that the FIU of CBSL and Customs Department can take appropriate legal measures against the perpetrators. He further stated it is the responsibility of Customs Department to address mis-invoicing and not of the CBSL. These assertions indicate the reluctance of CBSL to recognise and investigate illicit outflows. It is shocking to hear from the Governor that it is the general public who should provide information or advise CBSL on highly technical matters like illicit capital transfers when the CBSL employs the greatest number of Ph.D.holders under one institution in Sri Lanka. Furthermore, it is clearly stated throughout the Monetary Law Act, No. 58 of 1949 that the CBSL bears the responsibility and authority to address issues threatening the economic stability and economic wellbeing of the general public. Hence,the CBSL cannot simply abdicate responsibility by passing the mantle to Customs Department and the general public.

Export profits are only a fraction of capital transfers through trade mis-invoicing

During the Parliamentary Committee on Public Finance meeting,the CBSL Governor further claimed that capital flight through trade mis-invoicing is tantamount to shifting profits to an overseas destination for tax avoidance. However, this is a gross understatement of the gravity of the issue. We have shown in our earlier statements that the over-invoicing of imports transfers out foreign exchange received as foreign borrowing and even workers’ remittances. This compounds the foreign debt crisis, leads to chronic shortages of foreign exchange to finance essential imports and a collapse of living conditions. A study based on 39 African countries illustrates that between 1970 and 2010 approximately 63% to 73% of foreign borrowing exited Africa within a five-year window as a result of capital flight through trade mis-invoicing. Further, the IMF in its publications over the years shows that the loss of foreign reserves of Central Banks is accelerated by capital flight through trade mis-invoicing while decreasing tax revenue.It diminishes governments’ debt-servicing capacity and worsens the incidence of balance of payments crises. Capital outflows are a diversion of domestic savings out of the economy and deplete domestic resources, compelling governments to absorb more and more foreign debt to finance domestic investments, and exacerbating debt unsustainability. Needless to say that these observations are clearly applicable to the course of Sri Lankan economy over the past three decades as we have emphasised repeatedly in earlier statements.

“IMF Budget” for the People, Non-IMF Concessions for Corrupt Businessmen

The government is imposing an ‘IMF budget’ on Sri Lanka, making life unbearable to ordinary Sri Lankans, particularly working and poor people. We hope that the CBSL Governor is able to see the ground from the tall towers he occupies and observe how people are not eating any longer because they can’t afford food; have restricted even essential travel for medical and educational purposes; live in the dark because electricity has become a luxury; and have children not going to school because of hunger and costs. His ‘belief’ is costing the lives of millions in Sri Lanka. Hence, we as trade unions, civil society organisations, economists and concerned professionals ask the obvious question – Why has the Government failed to move an inch on the observations and recommendations of institutions such as the IMF on illicit financial outflows? Why is the Government burying its head in sand while their friends, the business elite, loot money out of this country and deny our country of much-needed foreign exchange?

The CBSL should therefore immediately implement a coordinated mechanism integrating itself with commercial banks and the Customs Department to investigate the issue and repatriate illicitly transferred, funds starting from most recent transactions. Instead of speculating on the credibility of GFI and the extent of trade mis-invoicing which are already recognised by international organisations like the UN, World Bank, IMF and ADB, the CBSL should collaborate with GFI and UNCTAD to further clarify the findings on Sri Lanka that emerged from 2021GFI report. In the absence of no such an initiative being even proposed by the CBSL Governor, we can only conclude thatthe CBSL is complying with the criminal corporate-political corruption that has driven the economy to the ground and ordinary Sri Lankans into destitution.

Swasthika Arulingam, President, Commercial and Industrial Workers’ Union, United Federation of Labour

Signed on behalf of: Centre for Community Empowerment,Ceylon Bank Employees’ Union,Ceylon Federation of Labour,Ceylon Teachers’ Union,Dabindu Union,Engineers’ Services Professional Association,Federation of Media Workers’ Trade Union, Institute for People Engagement and Networking, Mass Movement for Social Justice, Movement for the Defence of Democratic Rights,Movement for Land and Agricultural Reform,Movement for Plantation Peoples’ Land Rights, National Collaboration Development Foundation,National Trade Protection Council, North South Solidarity Group, Professionals’ Centre for People,Protect Union, Satahan Media,Rural Development Foundation, Social Institute for Development of Plantation Sector,Sri Lanka All Telecommunication Employees’ Union,Stand Up Workers’ Union,Suriya Shakthi FoundationNuwaraEliya,Textiles Garments and Clothing Workers’ Union,United Fishermen’s and Fish Workers’ Congress,Upcountry Civil Society Collective, UvaShakthi Foundation,Young Lawyers’ Association

SugathKulathunga–Former Senior Advisor at International Trade Centre (WTO/UNCTAD), Former Director General of Sri Lanka Export Development Board and Former Additional Secretary to Ministry of Trade, Prof. (Dr.) M. P.S. Magamage – Former Chairman of National Livestock Development Board,Dr. KalpaRajapaksha – Senior Lecturer in Economics,AmaliWedagedara – Political Economist and PhD Student, DhanushaPathirana– Economist

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Politicization of trade unions in Sri Lanka

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The politicization of trade unions in Sri Lanka has been a prominent issue in the country’s labour movement for many years. While trade unions are typically established to represent the interests of workers and negotiate for better working conditions and wages, the politicization of these organizations has often led to the use of union power for political gain rather than for the benefit of workers.

In Sri Lanka, political parties have historically used trade unions as a tool to advance their own agendas. Union leaders have been appointed based on their political affiliations, rather than their ability to effectively represent the interests of workers. This has resulted in a lack of accountability and transparency within the trade union movement, as union leaders prioritize political goals over the needs of their constituents.

The politicization of trade unions has also led to a fragmentation of the labour movement, as unions become divided along political lines. This fragmentation weakens the bargaining power of workers and undermines the effectiveness of the trade union movement as a whole. Additionally, the politicization of unions has created a hostile work environment, with workers who belong to opposing political parties often facing discrimination and marginalization.

Moreover, the politicization of trade unions has also contributed to a decline in the quality of representation provided to workers. Union leaders who are appointed based on political connections often lack the expertise and experience necessary to effectively negotiate for better working conditions and wages. This has resulted in a lack of progress in improving the lives of workers and has contributed to a decline in the overall status of the labour movement in Sri Lanka.

In conclusion, the politicization of trade unions in Sri Lanka has had a negative impact on the labour movement and has hindered the ability of workers to negotiate for better working conditions and wages. It is important for trade unions to remain independent and neutral in order to effectively represent the interests of workers and to negotiate for their rights. By breaking the connection between politics and trade unions, the labour movement in Sri Lanka can be reinvigorated and become a more effective advocate for workers.

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New Book: Mannakulam Battle – A Testament of Valour and Dedication

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by Our Defence Correspondent

‘We few, we happy few, we band of brothers. For he, today that sheds his blood with me shall be my brother.’ – William Shakespeare

The process of putting thoughts and ideas onto paper, and transforming them into a coherent story is both challenging and exhilarating. Unlike regular writers, we believe that writing a book can be a therapeutic and cathartic experience for military veterans. It is a tangible expression of their creativity, resilience, and determination, and a lasting legacy that honours their service and contributions to our beloved motherland.

Yesterday was a day of pride and celebration not only for this veteran but for the wider military community. The launch of his first book was a moment to honour his service, recognize his sacrifices, and share his story with the world. The veteran’s bravery and determination serve as an inspiration to us all, and his book will be a valuable resource for generations to come. The author is Selvin Sallay, a military veteran, who published his first book, “Battle of Mannakulam through the eyes of a commando” ( Mannakulam Satana Commando Esin).

The event yesterday was truly a colourful and memorable occasion, with wonderful speeches by former commandos and military veterans. Lt. Col. Nilantha Jayaweera and Major General P Chandrawansa, who were the commanding officers of the same battle, added an extra layer of excitement to the proceedings. They mentioned the importance of military literature.

Battleground in Mannakulam [ Graphic courtesy: Battle of Mannakulam through the eyes of a commando]

True, military literature has long played an important role in documenting the experiences of soldiers, sailors, and airmen in the wars and conflicts that have shaped the course of human history. Sri Lanka is not an exception.  Whether through memoirs, novels, poems, or other forms of creative expression, military literature serves as a powerful tool for capturing the emotions, thoughts, and experiences of those who have fought in these wars, and for preserving these memories for future generations.

In recent years, there has been a growing recognition of the importance of military literature for veterans themselves. By putting their experiences down on paper, veterans can gain a greater understanding of the events they went through, and the impact they have had on their lives. Military literature provides a valuable perspective on the nature of war and conflict.

Writing is a powerful tool for preserving the memories and experiences of veterans, educating the public about the realities of war, and promoting a greater appreciation and understanding of the sacrifices made by those who serve in the military. It is therefore essential that veterans be encouraged and supported in their efforts to write about their experiences, and that the value of military literature is recognized and appreciated.

In this context, the publication of “Battle of Mannakulam through the eyes of a commando” by Major Selvin Sallay provides a unique and valuable perspective on one of the pivotal moments in the fight against the Liberation Tigers of Tamil Eelam (LTTE), widely considered one of the most brutal terrorist organizations in the world. Through the lens of Major Selvin’s experiences as a commando in the battle of Mannakulam, the book offers readers a powerful and intimate look at the realities of modern warfare, and the courage and sacrifice of those who fight to protect their country and their fellow citizens.

As a participant in the battle, Major Selvin provides a first-hand account of the challenges faced by the commandos in the field, the decisions they had to make, and the emotions they experienced during this intense and highly dangerous conflict. His narrative is at once gripping, thought-provoking, and deeply inspiring, offering an unvarnished look at the realities of the ground they fought.

Major (Rtd.) Selvin Sallay with his mother during the event [ Photo: Sri Lanka Guardian]

Yesterday’s event was glamoured by many of his colleagues and relatives. Among them, a special guest was there. That was his mother. The heroic lady whose life is bigger than herself. The emotions of a mother who sends her sons to the battlefield are complex and intense, encompassing a mixture of fear, worry, pride, and heartbreak. Major Selvin’s mother is no exception. But she is different from many other mothers. She was bold enough to send three of four sons to defend the nation during the most difficult time in the country. His second elder brother, Major General Suresh Sallay and his younger brother Brigadier Ramesh Sallay, both of them continue to work in the military. Suresh is currently heading the country’s premier spy agency, the State Intelligence Service.

The idea of sending a son off to fight in a war fills many mothers with dread, as they worry about their safety and well-being, and wonder if they will ever return home. In the case of Major Selvin’s mother, the news of his injury in the Mannakulam Battle must have been especially devastating. Upon initially hearing the news of his injury, the family likely believed that Major Selvin had been killed, and his brother, now the head of the State Intelligence Service, would have been in a state of panic and dilemma over how to break the news to their mother. The moment of learning that Major Selvin was injured but safe, would have been a time of intense emotion and relief for his mother, who would have been torn between her worry for her son’s well-being and her pride in his service.

Book Cover of Battle of Mannakulam through the eyes of a commando [ Photo: Sri Lanka Guardian]

Major Selvin is a true patriot and a tall man in a band of brothers on a battlefield. He has proved by actions a deep love and devotion to the country, a willingness to defend its values and principles, and a desire to serve and support the greater good. This book is not a piece of rhetoric but a true pulse of a man who fought the most decisive battle in the country.

In addition to its value as a historical document, “Battle of Mannakulam through the eyes of a commando” also serves as a tribute to the bravery and courage of the soldiers who fought in this critical conflict.  The publication of this book also highlights the importance of preserving the memories and experiences of those who served in the military, and of making these experiences accessible to the public. By documenting the events of the Mannakulam battle through the eyes of Major Selvin Sallay, the book provides a valuable resource for future generations, who will be able to learn from and be inspired by the experiences of those who came before them.

This book tells the reader why they fought the battle. As G.K. Chesterton says, “a true soldier fights not because he hates what is in front of him, but because he loves what is behind him.” This book is a timely and essential testimony to the bravery and dedication of true patriots who never abandon their country when surrounded by enemies.

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Sri Lanka: An open letter to the NPP/JVP

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Two stalwarts of the JVP-led National People’s Power (NPP) alliance, Dr Harini Amarasuriya MP and Mr Tilvin Silva, JVP General Secretary, as reported in the media early February 2023, have made more or less clear the alliance’s stand on the full implementation of the 13th Amendment to the Constitution (suggested by the president): the NPP is broadly for it. But both Amarasuriya and Silva are not convinced of president Ranil Wickremasinghe’s actual commitment to his decision to fully implement the controversial amendment. They both express misgivings about president Wickremasinghe’s real intentions in bringing up the issue at this critical juncture.

Amarasuriya says he didn’t do it when he had ‘opportunities’ to do it in the past. Well, actually, to be fair by Wickremasinghe, he didn’t have any opportunity to make the decisive move. He neither became executive president nor got sufficient parliamentary power to do so  before he ultimately got kicked out of parliament altogether for pursuing policies that tended towards the full implementation of 13A. But for the Rajapaksas’ perfidious betrayal of the nearly seven million patriotic Sri Lankans who voted in Gotabaya Rajapaksa as president and 140+ MPs on the SLPP ticket to defeat the yahapalanaya that he had controlled under Sirisena’s lame executive presidency, he won’t have entered parliament even as an ordinary MP, let alone be executive president. (The Rajapaksas’ treachery is a different matter.)

Tilvin Silva sees the main parties (presumably, the UNP and SLFP rumps and their utterly disoriented new manifestations) as arousing communal passions through the debate on 13A. Those that he calls ‘diehard racists…’ (who, according to him, had been hiding these few months) are coming out of the woodwork. Who are these so-called ‘racists’? They are, of course, those who are opposed to 13A, the patriots who are opposed to the division of the country into nine virtually independent units, resulting in the disintegration of the unitary state.   

Tilvin Silva said that what people in the North and the South are asking for are food, fuel and medicine and so on; but the Northerners have problems. “We do not think that any other party except a government of the JVP-led NPP can give real solutions to the problems of people in the North. We would form an NPP government and bring in a new constitution with a mechanism to solve the problems of Tamil people. We get it passed with people’s approval and provide solutions for the problems of the Northerner. Until such times, provincial councils will have their existence,” Silva said, as reported in one national English daily.

It is not clear how the NPP is going to deal with the 13A issue. But if it is hoping to wangle the support of the Sinhala Buddhist masses, who are always at the receiving end, while horse-trading with the federalists, Anura’s chances of becoming president will evaporate soon. As he has already apparently indicated that his prime minister will be Sumanthiran (I am not sure of the authenticity of this piece of information, though) in case he becomes president, the voters in the South will be even more sceptical about voting for him. Sumanthiran is the exact opposite of Lakshman Kadirgamar, whom the Sinhalese universally loved and honoured above all other politicians, but whom the LTTE assassinated as a traitor to the separatist cause.

The truth is that the majority of ordinary Tamils in Jaffna do not want to live in a separate state. They want to live in peace with the other communities of the country. According to Arun Siddharthan, the convener of the Jaffna Civil Society Centre, the proposed full implementation of 13A is a conspiracy of the casteist TNA. People in the North actually suffer from casteism, not from any political discrimination or human rights violations by the Sinhalese majority. Tamils deemed to belong to low castes like himself (but he doesn’t accept casteism; he is a much more honourable man than his racist, casteist opponents) have no human rights.  He says he is not allowed to have a press conference in Jaffna. Hence he holds his news briefings in Colombo. At this briefing, Arun Siddharthan refers to the non-implementation in Jaffna of the Prevention of Social Disabilities Act No. 21 of 1957 adopted by the S.W.R.D. Bandaranaike government of the day amidst opposition from casteist Tamil MPs. Arun Siddharthan warns that if the government tries to implement 13A, there will be a communal uprising against it in Jaffna, which, though, in my opinion will be counterproductive. It might provide an opportunity for India to intervene militarily, and make matters worse.

Leaders of the NPP, please stop being misled by your ‘friends’, certain Colombo-based crafty Tamil lawyers and moribund political counsellors who, unlike you, are out and out  misanthropic,  racists. Trust young Tamil leaders like Arun to befriend the Tamil polity in the North as well as in the South. To increase your appeal among the Sinhalese, please enlist the support of JVP founder Rohana Wijeweera’s son Uvindu wherever he is and young grassroots level nationalist activists like Amith Weerasinghe, who is already doing much to relieve the suffering of the poor of all communities around Kandy in central Sri Lanka (hence disliked by traditional politicians as a threat to their political existence). 

What is the point of your insisting on the holding of local government elections? There is no meaning in having elections at this time. Even if they are held, you will not stand to win. You hardly won any seats at the last local government election in 2018, don’t you remember? You will not do better this time if you stick to your purblind policy of cozying up to the casteist elite of the Tamil society in the North, while ignoring the populace suffering at their hands, and while taking the support of the Sinhalese majority for granted. As it is clear to the intelligent voters that you have swallowed the TNA cajolery hook, line, and sinker, people will not trust you enough to vote for you. What you can do instead is to use the next two years to educate the young people of today about the JVP’s heroic past, with a genuine analysis of its costly errors (Uvindu has an idea about that) and organise the multiethnic electorate (dominated by the lower middle and working classes) across the country for a resounding victory at the next presidential and parliamentary elections. Until then, try to help prevent Ranil Wickremasinghe from doing anything really detrimental to the country that is irreversible.

As I wrote in my previous writeup “Is 13A PANACEA? Cynical irony of……….” (Sri Lanka Guardian/February 2, 2023) “We need statesmen/women, not mere politicians. People are fed up with the latter. Anura is not likely to turn out to be a real statesman, even if he gets the chance to do so one day, if he pursues his proven hypocrisy. However, compared to the leading buffoons of the two traditional parties (the UNP and the SLFP/or their ghostly modern reincarnations), Anura Dissanayake would be someone that the people can look towards as an alternative leader, provided he does not forfeit the trust of the majority Sinhala Buddhists in his attempt to win the loyalty of the traditional minority leaders, who will never ever change their spots, though they may change their hunting grounds”.

Let me end this piece with the last paragraph of an essay I wrote four years ago (‘JVP at a crossroads’/The Island/March 5, 2018): 

“The JVP must take a good hard look at its wasteful past and subject itself to serious reform as a party. It must get rid of its outdated ideologies and outmoded leaders. It must not condemn the voters as idiots for not voting for them. Most important, the JVP’ers must find political allies with whom they can coexist and serve the nation.”

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Sri Lanka: Victim of Hegemony

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Sri Lanka is a country that has often been viewed as a victim of hegemony, or the dominance of one country or group of countries over others. This has been a result of a long history of foreign influence and intervention, dating back to the colonial period and continuing through to the present day.

During the colonial period, Sri Lanka was ruled by the Portuguese, Dutch, and British, each of whom imposed their own cultural, political, and economic systems on the island nation. The colonial powers exploited Sri Lanka’s resources and labor, and imposed a social and economic structure that was designed to benefit the colonizers and marginalize the native population. This legacy of colonialism has had a lasting impact on Sri Lanka, and has contributed to the country’s status as a victim of hegemony.

In more recent years, Sri Lanka has continued to face the challenges of foreign intervention and domination. The country has been the target of geopolitical struggles between major global powers, and has often found itself caught in the crosshairs of competing interests. For example, during the Cold War, Sri Lanka was viewed as a strategically important country due to its location at the crossroads of the Indian Ocean, and was a target of influence by both the United States and the Soviet Union.

Additionally, Sri Lanka has faced the challenges of economic hegemony, as multinational corporations and international financial institutions have sought to exploit the country’s resources and labor. This has often led to the exploitation of workers and the depletion of the country’s natural resources, and has contributed to a growing inequality between the wealthy and the poor.

In conclusion, Sri Lanka is a country that has long been a victim of hegemony, both during the colonial period and in more recent years. The country has faced challenges from foreign powers seeking to impose their will, as well as from multinational corporations and international financial institutions seeking to exploit its resources and labor. To overcome these challenges, Sri Lanka must work to assert its independence and sovereignty, and to protect its people and resources from exploitation by foreign interests.

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Sri Lanka: Reflections on state formation

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This short article explains a framework for analysing Sri Lankan state formation and understanding the current challenges that the country is facing. My interest in state formation began when trying to make sense of the data on political violence and state repression that I had collected from 1977. I realised that I could easily expand this database to cover the entire post-colonial period. It was also clear that this violence was not an abberation or exception, but a systemic characteristic of Sri Lankan society. The data collected largely consisted of numbers and reports of individual events. It just touched the surface of the problem. To understand the impact of political violence and state repression in Sri Lankan society you need to go deeper, preferably using a case study method. This is a task for future researchers.

The dominant essentialist categorisation of the Sri Lankan state -that it is a democracy or a welfare state – was not compatible with the level of political violence and state repression that I was witnessing. In the meantime, I had also begun to analyse political answers to the Tamil demand for a separate state, with a focus on state reform. But this notion of state reform fitted with the conventional approach to studying a state. This approach treats the state as a concrete, self-contained entity that has attained a final status. The legal notion of sovereignty strengthens this idea. Those who control the state, and their ideologues, always try to convey this notion. A whole paraphernalia of rituals, histories and symbols have developed – not only to promote this idea, but also to convey the eternal character of the state.Much of the effort to promote goals such as economic growth, social development and democracy are based on a notion that states have been formed, and now the task is to focus on promoting these objectives.

In contrast to this, the moment you begin to look at states as a product of historical processes, new ways of looking at the state and new avenues of research emerge. This is the way we look at other social phenomena – so why not states? States are formed under certain historical conditions. They continuously undergo changes, and under certain circumstances can even totally disappear. A cursory glance at the history of the world will show this.

At this point it is important to emphasise that, although states are a product of history, once formed they have a degree of autonomy from other societal processes. This means that states cannot be understood by reducing them to any other feature in society. The earliest efforts within Marxist tradition explained the state as a product of capitalist development. This economic reductionism was replaced by a notion of the relative autonomy of the state. Now there are studies focusing more on the autonomous power of the state.

State formation involves developing mechanisms to control territory and to manage state-society relations in a specific historical context. The identity of the state, institutions and public policies are key dimensions in this process. State-society relations are maintained through coercion and consent. When consent overrides coercion, we have states that have legitimacy in society. In such situations the hegemony that sustains the state is strong. When coercion predominates, state security is given priority – but it undermines the security of individuals and groups in society. There is an inherent weakness in the hegemony that sustains this type of state. These processes don’t develop in the same way in all states. They have to be analysed taking specific historical context into account.

A state needs resources to sustain itself, and to manage relations with politically important social groups. These two dimensions constitute the economic security of the state.These resources have to be secured within the process of capitalist transition. When the state has enough economic resources and is able to manage relations with the politically important social groups through specific policies, there is an element of consent in certain dimensions of state-society relations. When this fails the state resorts to coercive measures, and this affects the pattern of state expenditure.

State formation always takes place in an international context – the study of state formation is a study of an individual state in a global context. The international context consists of a system of states, organisations formed by these states and global capitalism. The relationship between the states and global capitalism cannot be seen as a zero-sum game. Changes in global capitalism transform states and the relationship between them. Developments in global capitalism can make some states strong, and some weak.

The international system changes over time. This, in turn, has an impact on the state formation process of individual states. Changes in the global system are determined by the actions of the more powerful players in the international system. The capacity of smaller states to influence changes at the global level is limited. But global-level changes have an impact on the state formation process of smaller states like Sri Lanka.

In the post-colonial history of state formation in Sri Lanka, three types of state-society relations have been important:

– First, relations between the centralised state, inherited from the British colonial period, and minorities. State formation involves bringing together diverse ethnic and religious groups under a single policy.This has not been an easy process in many parts of world. When identity groups have a special link with a part of the territory of the state, it creates special problems. This dimension has been a major source of violence in the history of state formation of Sri Lanka. Trying to construct a centralised state defined by the identity of the Sinhala majority led to Tamils demanding a separate state covering the Northern and Eastern Provinces. What happened in 2009 was consolidating the territory of the centralised Sinhala nationalist state through military means. There has been little progress towards a state that has legitimacy in a multi-ethnic society. The social costs of the last stages of the war have created new problems. In addition, discussions on state-minority relations today cannot be confined to the problems of Tamil people alone. The concerns of other two numerically large minorities – Muslims and Hill country Tamils must be considered.

– Second, electoral politics and state formation. On one hand, electoral politics is a mechanism through which the political elite that controls the state is chosen. On the other side, it is also a mechanism to manage relations between rulers and the ruled. The history of state formation in areas where electoral politics has existed for a long time shows that the characteristics of the political system that emerges is an important factor in constructing a national political space. Constructing a national political space is an important factor in creating a unified state. This means that breaking down territorial cleavages is not simply a result of social changes, but also a product of the actions of parties and characteristics of political systems.

In the case of the post-colonial state formation of Sri Lanka, the dominance of ethnicity right from the beginning gave rise to a political system that could not contribute to the construction of a national political space.Instead, electoral politics and the political system produced regional political spaces with ethnic characteristics. This means that the electoral politics of the post-colonial Sri Lankan state has to be discussed taking account of ethnic political spaces, rather than treating Sri Lanka as a unified political space. The vote in Sinhala majority districts was critical in deciding who came to power.

While electoral politics undermined the formation of a unified state in a multi-ethnic society, its institutionalisation resulted in a competitive system of politics within the Sinhala majority. However, today this aspect of the political system which depends on the support of the Sinhala majority, is highly fractured. Two trends dominate – the struggle to control the presidency and enjoy the power that comes with it and deal -making politics for the sake of power. How this political system can tackle the multiple problems that the country is facing is an open question. Certainly, legal reforms alone will not go very far.

– The third important variable in post-colonial state formation of Sri Lanka is relations between the state and the Sinhala majority in the context of the politics of capitalist transition.Capitalist transition within a state is a process that involves changing institutions or the ‘rules of the game’, so that markets become the primary mechanism for resource allocation. These changes must be legitimised at an ideological level. When institutions to establish markets are successful, they become ideas that seem to be natural and common sense, thereby creating a hegemony. The establishment of the hegemony of markets is not a technocratic process, but a political process. Conflicts and struggles are always a part of this. The process of capitalist transition takes place in a particular society within its own history. This means that capitalism is not some sort of model. It is shaped by political struggles and historical processes in a particular context.

Since the socio-economic impact of capitalism is always unequal, in Sri Lanka various sections of the Sinhala majority benefitted more than others from capitalist transition. In other words, although the Sinhalese were unified in ethnic terms, they were divided in class terms. The inequality generated by capitalist transition within the Sinhala majority could always combine with the Sinhala nationalism that legitimised the state to oppose the regime in power. The opposition to regimes could also turn into an opposition to capitalism, and a general opposition to the state itself. In order to meet this challenge, the post-colonial state developed a number of policies. These are what is usually called ‘welfare’ policies. The use of the term welfare ignores their strategic role as a technique of state formation. This makes it easier to argues that these policies are luxuries we cannot afford.

The ability of the state to continue with these policies depends on the performance of the Sri Lankan economy within global capitalism. In post-colonial historythere were several instances when this strategy of state formation broke down, resulting in protest, sometimes violent challenges to the state and state repression. At present we are witnessing another such instance because the Sri Lankan state was unable to satisfy the demands of global financial capital. This is happening in a society with the socio-economic impact of three decades of armed conflict, and four decades of more liberal economic policies. The latter has resulted in an increase in socio-economic inequality. Instead of trying to make use of this opportunity to rethink social policy while restoring economic growth, what prevails are the same old ideas of safety nets and, of course, state repression.

To end this short piece, I would like to emphasise that there is no one big answer to Sri Lanka’s problems. The outcome of answers to one issue can contradict answers to other questions. In addition, the analysis of the present must be done with a historical sense. Many are preaching single-factor answers for various reasons. Some are simply a reflection of self-interest, and nothing more. It is time to shift this debate, so that we can take into account of the complexity of the situation.

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Sri Lanka: 13A and Role of India – ChatGPT Column

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AI is revolutionizing every aspect of life. Here we decided to let ChatGPT, the latest AI assistant, to express its findings on issues selected by our editorial board. ChatGPT is a conversational AI language model developed by OpenAI. It was trained on a diverse range of internet text to generate human-like responses to a wide range of questions. The data used to train it consists of text from websites, books, and other publicly available sources, totalling over 8 million web pages. This training data provides it with the knowledge to answer questions and generate text on a wide range of topics. However, please keep in mind that its training data has a knowledge cutoff of 2021, so any new events or developments after that time are not reflected in my knowledge – Editors

The 13th Amendment to the Sri Lanka Constitution, which was passed in 1987, is a highly controversial issue that has generated much debate and discussion over the years. This amendment aimed to provide devolved power to Sri Lanka’s Tamil-majority northern and eastern provinces and to resolve the country’s long-standing ethnic conflict. However, its full implementation has faced numerous challenges, leading to widespread controversy.

One of the major challenges has been the role of India in the 13th Amendment. India has been seen as instrumental in bringing about the amendment, but some Sri Lankans have criticized the Indian government for imposing its will on their country. Furthermore, many believe that India has not been fully supportive of Sri Lanka in implementing the amendment, and has instead used it as a tool to further its own interests in the region.

Another major challenge has been the opposition to the amendment by some Sri Lankan political and nationalist groups, who argue that it threatens the unity and territorial integrity of the country. Some have also criticized the amendment for being too lenient on the Tamil separatist movement and for allowing the creation of a semi-autonomous Tamil-majority state in the north and east of the country.

Despite these challenges, the 13th Amendment remains an important and contentious issue in Sri Lanka’s history. In order to fully implement the amendment, it is crucial for the Sri Lankan government and the international community to address the concerns of both the Tamil and Sinhalese communities and to work towards finding a mutually acceptable solution. This will require a commitment to dialogue, compromise, and the respect for each other’s rights and interests.

India’s Role in the 13th Amendment

It’s possible that India’s influence on the 13th Amendment could cause social turmoil in Sri Lanka. The amendment is a highly sensitive issue that affects the country’s political and cultural landscape, and any outside interference is likely to be met with resistance from some quarters. Additionally, the perception that India is imposing its will on Sri Lanka could further inflame tensions and lead to mistrust between the two countries.

However, it is also possible that India’s involvement could help to promote peace and stability in the region. India has a strong interest in maintaining good relations with its neighbours, and it is possible that its involvement in the 13th Amendment could help to bring the different ethnic and political groups in Sri Lanka together and resolve the long-standing conflict in a peaceful and equitable manner.

The impact of India’s influence on the 13th Amendment is difficult to predict. While it is possible that it could cause social turmoil, it is also possible that it could help to bring about peace and stability. Ultimately, the outcome will depend on the actions of the Sri Lankan government, India, and other stakeholders, and their ability to work together in the interest of the country and its people.

Why India cannot simply “keep aside”?

It’s not as simple as India “keeping aside” its influence to ensure peace in Sri Lanka. India has a long history of close ties with Sri Lanka, and it is natural for it to have a strong interest in the island nation’s political and economic stability.

That being said, it is important for any foreign influence, including India’s, to be exercised in a responsible and transparent manner that takes into account the needs and interests of the people of Sri Lanka. The 13th Amendment to the Sri Lanka Constitution is a complex issue, and it is important for all parties involved to engage in constructive dialogue and find a solution that promotes peace and stability for the people of Sri Lanka.

In this context, India can play a positive role by offering its support and expertise to help resolve the conflict and promote development and prosperity in the region. However, this support should be offered in a way that is respectful of Sri Lanka’s sovereignty and its right to make its own decisions.

While India’s influence is important, it is important for it to be exercised in a responsible and sensitive manner that takes into account the needs and interests of the people of Sri Lanka. The ultimate goal should be to promote peace and stability in the region, and to help the people of Sri Lanka build a better future for themselves and their families.

In conclusion, the 13th Amendment to the Sri Lanka Constitution is a complex and challenging issue that has been the subject of much debate and controversy. Its full implementation will require a concerted effort by the Sri Lankan government, India, and the international community to address the concerns of both the Tamil and Sinhalese communities and to work towards finding a mutually acceptable solution.

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Your feedbacks are welcome at editor@slguardian.org

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The Chinese Spy Balloon Hoax

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After the Russiagate Hoax, the Covid hoax, and the Insurrection hoax, We now Have the Chinese Spy Balloon Hoax

According to Washington and the whore media, China sent a balloon that the Pentagon said “could” be loaded with explosives to spy on America.  A top general said that similar balloons have entered US airspace undetected before.  The balloon is huge–200 feet tall weighing in excess of a couple thousand pounds.  So if such a large object can enter our airspace undetected, does this mean far smaller ICBMs can also?   

Do understand that what is going on here is the purposeful creation of an incident for propaganda purposes to stoke up more animosity against China, and to spend more money on defense in Asia.  We don’t have a Malaysian airliner to blame on China, but we do have a weather balloon.

After receiving a brainwashing by a Pentagon briefing, Rep. Jim Himes (D,Conn.) says that US officials will “learn a lot” from the pieces of the “Chinese spy craft” that was shot down. Two other dumbshit House members, one a Republican, one a Democrat declare the blown-off-course weather balloon “a violation of American sovereignty.” The Chinese explanation is the only one that makes any sense: 

“It is a civilian airship used for research, mainly meteorological, purposes. Affected by the Westerlies and with limited self-steering capability, the airship deviated far from its planned course.  The Chinese side regrets the unintended entry of the airship into US airspace due to an unforeseen and unintended outcome. The Chinese side will continue communicating with the US side and properly handle this unexpected situation caused by wind and limited steering capability.” (A translation uses the term “force majeure,” an unforeseen event.)

But the spy story continues.  It is needed in order to worsen relations with China, the second nuclear power that Washington is doing everything it possibly can to antagonize.  Keep in mind that in these days spying is done by satellites, not by weather balloons.  If China is using balloons to spy on the US, why did China send a balloon over Columbia.  Why is China spying on South America? 

The Columbian military determined that the balloon posed no threat to national security, defense, or air safety.  Washington lacks the capability of the Columbian military, because Washington is in the business of creating a hoax issue.

Try to think of something the government has told the truth about.  Tonkin Gulf?  Ruby Ridge?  Waco? Oklahoma City Bombing? 9/11? Saddam Hussein’s weapons of mass destruction?  Assad’s use of chemical weapons? Gaddafi?  Russiagate?  January 6 insurrection?  Covid?  Covid vaccine?  Ukraine?  Malaysian airliner?   Find one thing that was true.

All the government’s lies, parroted by the presstitutes, are designed to advance secret agendas.  The people are brainwashed with lies so that they go along with the agendas.  That is the way the US government functions.  There is no longer an American media.  Just an indoctrination ministry.  Only official narratives please.  All else is misinformation.

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Sri Lanka: A reflection on the similarities between 1971 and the current crisis

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As the 75th anniversary of independence gathers steam, it will be important to reflect on the gradual erosion of checks and balances and the rule of law. No crisis, be it in 1953, 1971, 1983, the long civil war, or the current crisis, has seen a desire for accountability, good governance, commitment to social justice and economic competence from the three families that have ruled the country since independence. Instead, they have demanded more centralised and unaccountable power. Currently the Rajapaksa clan and several notable personalities from the UNP have combined to crush the demand for meaningful political change, using the draconian power enshrined in the Executive Presidential constitution, with such repressive legislation as the Prevention of Terrorism Act, whereby a person can be held without charge for up to two years.

This essay will look at the economic and structural reasons that lay behind to the 1971 JVP insurrection and led to the current economic crisis.

1971

Like the current crisis, the economy in the seventies was characterised by sinking export income, growing foreign debt and escalating unemployment. Throughout the 1960s the size of the industrial sector remained static and hovered between 12 and 13 per cent, with the majority of income derived from the service sector and agriculture. In the export sector there was a fundamental dependence on agricultural products. The country was caught in a classic economic pincer movement and still is – declining export prices and rising export costs.

The country’s debt rose from Rs 95 million in 1957 to Rs 349 million in 1966, and again to Rs 744 million in 1969. Then as now, the money to pay for the foreign debt came from foreign loans and the running down of the country’s foreign exchange reserves.

Like today, foodstuffs made up a large part of county’s imports around 53 per cent.

Unemployment continued to rise in 1971. Out of a labour force of 4.4 million, 585,000 were officially unemployed. The economic authority of the time, Dr N.M. Perera, estimated the figure to be around 700,000.

Out of the 585,000 who were unemployed, 460,000 were in the rural areas and 250,000 were aged between 19 to 24. 167,000 of these had received a secondary education or went on to tertiary level.

The children of the era which began in 1956, the “beneficiaries” of the Official Languages Act, were not given the economic fruits promised to them. As a result of government repression in 1971, though never acknowledged by the country’s rulers, around 10,000 to 15,000 young Sinhalese were killed and tens of thousands more were imprisoned and tortured without due process. In contrast, according to the government, 61 civilians and 63 members of the armed forces lost their lives. The security forces’ extra-judicial killings and torture escaped scrutiny and impunity became the norm.

To prosecute the leaders, of whom I was one, the rule of law was trampled on, habeas corpus was waived and confessions gained by torture were admissible. The murder of countless thousands of Sinhalese youth by the security forces has never been examined.

The repressive playbook was set: an unwillingness to examine and fix structural issues, be they economic, political and judicial, accompanied by ever more restrictive and unaccountable measures and a marked reluctance to investigate crimes committed by the state.

An economic snapshot before the second coming of the Rajapaksas.

By the 1980s the economic direction changed, neo-liberalism became the mantra, and welfare provisions were gradually dismantled. Lanka now relied on tourism, garments, remittances and tea. National debt continued to rise

Billions of dollars were spent on vanity projects by the ruling clan: airports, stadiums, freeways, convention centres and a seaport, with no thought of who would need or use them.

Debt by the 2000s had risen to 79 per cent of Gross Domestic Product (GDP). It continued to rise and rise, reaching 100 per cent just before Covid struck. The economic instability is exacerbated by the fact that the top 20 per cent of the population have 42 per cent of the Island’s income, whilst the lowest 40 per cent make do with 17.8 per cent.

Accession of Gotabaya and the latest Resurrection of Ranil

The economy contracted after the fall in tourism as a result of the 2019 Easter bombings, putting a strain on the country’s foreign currency reserves. Gotabaya Rajapaksa exacerbated the crisis by cutting taxes collected from a very small base, costing the country hundreds of billions of rupees. Next, he banned the import of fertilisers, partially due to the lack of foreign exchange to pay for them. Agricultural production declined at an alarming rate, in particular vital export earners like tea and rubber. The economy went into freefall, with a shortage of food, fuel, medicine, cooking gas and other essentials. Whilst the top 20 percent had the economic means to cope, for the vast majority the burden was catastrophic.

A spontaneous protest movement erupted which forced the resignation of the then president Gotabaya Rajapaksa and the installation of the veteran serial aspirant, Ranil Wickramasinghe. Instead of opening dialogue with the protestors and dealing with their legitimate demands, we got state repression and the scapegoating of the protestors. The same people who looted the public purse and were ineffectual economic managers are in charge of the recovery!  Solutions on offer do not deal with the heart of the problem: the mismanagement, corruption and wastage prevalent in the economic and political system. Those least able to pay will be forced to shoulder the burden, and the structural issues, if not addressed, will lead to another economic and political crisis.

Conclusion

It is vital that celebrations to mark the anniversary of independence be tempered by reflection on how the country got to the current crisis and how it should be fixed. Otherwise, we will be forced to relive past disasters. As 1971 and 2020 remind us, the failure to change the system comes with enormous costs, both at a personal and economic level. It is the least we can do for those thousands of young people being detained on spurious grounds and those nameless 15,000 young people who lost their lives at the hands of the state in 1971.

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