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Sri Lanka: Wickremesinghe’s “Accidental” Presidency — From Agile to Fragile Democracy

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Editorial

“The challenge of modernity is to live without illusions and without becoming disillusioned.” – Antonio Gramsci

President Wickemesinghe’s accidental presidency was seen by many as a solution to the deadliest crises in the country and a way to bring about normalization. However, several of the key initiatives he had promised are still in limbo, and rhetoric has surpassed reality. As a result, people are being forced to compromise in order to survive daily, while those responsible for the economic turmoil remain at large. It’s no exaggeration to say that Sri Lanka’s sovereignty is at risk, as various actors disguised as protectors are plotting to interfere with the country’s internal affairs.

Sri Lanka has a long history of democratic governance, with its citizens enjoying the right to vote and elect their representatives. However, in recent years, the country’s democracy has been in decline, with the government under President Wickremesinghe accused of manipulating state institutions for political gain, postponing elections, and failing to build consensus with other political parties. As Plato says, “the price of apathy towards public affairs is to be ruled by evil men.”

One of the key indicators of a functioning democracy is the holding of free and fair elections, which allow citizens to choose their leaders without any interference or manipulation. However, Sri Lanka’s government has been accused of postponing local and provincial elections, which has led to a democratic deficit in the country. This has also contributed to a lack of accountability and transparency, as government officials are not being held accountable for their actions. In addition to using every possible trick to postpone elections, President Wickremesinghe has been accused of manipulating government institutions to promote his own political agenda. This is constantly eroding public trust in these institutions and undermined the rule of law. The lack of checks and balances has led to a concentration of power in the hands of a few individuals, which is a dangerous trend for any democracy.

Another critical issue is the failure of the government to initiate a national consensus among political parties. Without a shared vision and common goals, it becomes difficult to make progress on important issues, such as economic growth and social welfare. The lack of consensus has led to a situation where the government is unable to build consensus with other parties, which has further contributed to a democratic deficit. Moreover, the current government lacks a people’s mandate as it has been accused of obtaining the consent of a few politicians who were themselves accused of plundering the country. This has further weakened the democratic institutions in the country.

The current situation in Sri Lanka, where the government is facing accusations of undermining democracy, could have serious consequences for the country’s stability. Sri Lanka has a history of social unrest and armed struggle, which was triggered by similar issues that are being faced today. In 1971, an armed uprising led by the Janatha Vimukthi Peramuna (JVP) was launched against the government of Sri Lanka. The insurgency was fueled by economic and social grievances, as well as a lack of political representation for marginalized groups. The government’s response was brutal, with thousands of people being killed or imprisoned. The insurgency was eventually suppressed, but at a high cost to Sri Lanka’s social and political fabric. Similarly, in the late 1980s, Sri Lanka witnessed another period of armed struggle. The government’s failure to address the grievances of the Tamil minority led to the rise of the Liberation Tigers of Tamil Eelam (LTTE). The insurgency lasted for over two decades and resulted in the deaths of tens of thousands of people, as well as the displacement of many more. The LTTE was eventually defeated in 2009, but at a cost to Sri Lanka’s social and economic development.

These examples show how the failure of democratic institutions and the erosion of public trust can lead to social unrest and even armed conflict. If the current situation in Sri Lanka is not addressed, there is a risk of history repeating itself. The government must take urgent steps to restore trust in democratic institutions and engage with other political parties to build consensus on key issues. It is important to note that Sri Lanka’s history of social unrest and armed struggle has had a devastating impact on the country’s development. The conflict has left deep scars on Sri Lanka’s social fabric and economy, and it will take years to heal those wounds. Therefore, it is in the interest of all Sri Lankans to work towards a stable, peaceful, and democratic future, which can ensure that the country does not have to suffer through similar events in the future.

Sri Lanka’s democracy has been on a downward trajectory for some time now. The government’s failure to uphold democratic values and institutions has led to a decline in public trust and a democratic deficit. President Wickremesinghe’s days are numbered, and it is time for him to step down, if he is expecting an honourable existence, and allow for a democratic transition of power. Only then can Sri Lanka restore its democratic institutions and ensure that its citizens enjoy the rights and freedoms that are their birthright.

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Sri Lanka: Failure to open a Diaspora office

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by Our Political Affairs Editor

What became of President Wickremesinghe’s proposal to unveil a Diaspora office during the independence celebration that was meant to open to the public at the same time? Despite its significance, why did this initiative fail in Sri Lanka, a country that is unlike any other?

The diaspora experience can involve a complex negotiation of identities, as individuals seek to adapt to their new surroundings while preserving their cultural traditions and ties to their homeland. As such, the diaspora can be seen as a space of both dislocation and continuity, where individuals and communities are constantly negotiating their sense of belonging and identity.

The presence of an office for expatriates in the host country is an essential element for the successful integration of expatriates into their new home country. It provides a platform for expatriates to access necessary services, connect with their community, and participate in the country’s economic and social development. Unfortunately, Sri Lanka has been unable to open its Diaspora office due to political disunity and personal agenda, despite the rallying together for the national interest. This failure highlights the need for political leaders to put aside their differences and prioritize the well-being of their citizens, both at home and abroad.

The Sri Lankan Diaspora is estimated to be around three million people, with a significant presence in countries such as the United Kingdom, Canada, and Australia. These individuals have left their homeland for a variety of reasons, including education, employment, and to escape conflict. Despite being away from their home country, many Sri Lankan expatriates remain deeply connected to their culture and heritage, and continue to play an active role in Sri Lanka’s economic and social development.

Furthermore, the absence of a Diaspora office not only hinders the Sri Lankan government’s ability to engage with its citizens abroad, but it also perpetuates the sense of distance and disconnection felt by the expatriate community. The Sri Lankan diaspora remains an important part of the country’s social and cultural fabric, and they have a deep attachment to their homeland. Despite being physically away from Sri Lanka, many expatriates maintain close ties to their family, friends, and community in the country, and they often feel a strong desire to contribute to the development of their country of origin.

A Diaspora office would provide a platform for the Sri Lankan expatriate community to connect with their homeland, participate in social and economic development initiatives, and contribute their skills, knowledge, and resources to the country’s growth. It would create a sense of belonging and inclusion for expatriates, who often struggle with feelings of isolation and detachment from their roots. Additionally, it would allow the Sri Lankan government to gain a better understanding of the needs and priorities of the diaspora community and address any concerns they may have.

It is crucial for Sri Lanka to recognize the significance of its expatriate community and the important role they play in the country’s growth and development. A Diaspora office would be a concrete demonstration of this recognition, and it would help to foster a stronger sense of national identity and unity. While there may be disagreements among political leaders, the need to establish a Diaspora office should transcend political affiliations and personal interests. It is time for the government to take action and prioritize the establishment of a Diaspora office for the well-being of its citizens and the country’s future.

However, the lack of an official office for expatriates in Sri Lanka has made it difficult for the Sri Lankan government to engage with its diaspora effectively. This has resulted in missed opportunities for trade, investment, and knowledge transfer. Moreover, expatriates have faced difficulties in accessing government services, such as consular support, visa applications, and property ownership, which has left many feeling disconnected and frustrated.

The reasons for the inability to open a Diaspora office in Sri Lanka are multifaceted. Political disunity and personal agendas have been cited as significant factors. The lack of political will to address the issue, combined with bureaucratic red tape, has further compounded the problem. While various political parties have recognized the importance of opening a Diaspora office, they have been unable to find a consensus on how to proceed.

This failure is especially concerning because the opening of a Diaspora office would not only benefit Sri Lankan expatriates but also the country as a whole. It would enable the government to leverage the knowledge, expertise, and resources of the diaspora for the country’s economic and social development. It would also allow the Sri Lankan government to connect with its citizens abroad, fostering a sense of national unity and pride.

The failure to open a Diaspora office in Sri Lanka highlights the need for political leaders to prioritize the well-being of their citizens, both at home and abroad. The Sri Lankan diaspora has the potential to make a significant contribution to the country’s economic and social development. Political disunity and personal agendas must not be allowed to hinder progress towards achieving this important goal. Instead, the government must come together to address the issue and open an official office for expatriates, recognizing the significant benefits it would bring to the country as a whole.

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Sri Lanka: Is Mahinda Rajapaksa still bluffing?

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The Most Venerable Mahanayake theras of the Three Nikayas (Siyam, Amarapura and Ramanna) wrote to president Ranil Wickremasinghe admonishing him not to fully implement the 13th Amendment to the Constitution two weeks ago, on February 2, as reported in The Island (‘Mahanayakes tell President not to implement 13A’/February 3, 2023). The Buddhist prelates reminded the president that his predecessors did not implement 13A fully because of the devastating consequences this would have on the country, and that the executive presidency was established to safeguard the people’s sovereignty. The Mahanayake theras warned him of public anger rising against him if he carried out activities that tend to weaken the central government. It is evident that the senior monks are aware of the current economic crisis that the country is going through. They understand that Sri Lanka needs the assistance of global powers to overcome these difficulties. However, they correctly point out that proposals that undermine the sovereignty and territorial integrity of the country must be rejected. According to The Island report, the Mahanayakes also told the president that the country as a whole.. ….”faced many difficulties during the war. The government must do more to develop the North and East and uplift the livelihood of people who faced the most damage. Politicians who come from those parts hold Cabinet posts and can do a lot to develop these areas. At such a time, fully implementing the 13th amendment will create confusion….”

Is this dabbling in politics on the part of the Mahanayakes? Absolutely not. They are just attending to the hallowed duty assigned to the bhikkhus of our country by a tradition that began 2260 years ago with the official introduction of Buddhism: to come forward/usually to offer advice to the ruler when the country, the people and the Buddha Sasana are in jeopardy. Sri Lanka is a Buddhist majority country. Countries that possess such a long unbroken history of the same spiritual culture are extremely rare. Doesn’t that imply something about the dominant cultural background of the country and the people’s beliefs and ideas about the living of life, worldly happiness, social obligations, spiritual fulfillment, and so on?  As the spiritual guides of at least 70% of the Sri Lankan population, they have a historic responsibility to advise the ruler when they realize that the interests of the people of the country (including non-Buddhists) are threatened as understood at present by a large majority of the population. 

The Maha Sangha are arguably the most democratic community of clerical men and women on earth. They are averse to totalitarian control of any kind (something hinted at by the president in the Buddha’s admonition to his followers “Be a lamp unto yourself” with which pithy quote he ended his policy statement, though its appositeness in that context may be in question). 

In their missive, the Buddhist hierarchs express their sincere concern about the need to address the current economic issues with special attention to the livelihood problems of the people of the North and the East who faced the brunt of the civil conflict. At the same, they urge the president not to carry out the full implementation of the 13th Amendment. (Though the Venerables didn’t mention it, the 13th Amendment was forcibly imposed on Sri Lanka grossly violating her sovereignty in 1987 in less than ideal, less than democratic circumstances as the older generation of Sri Lankans knew at first hand.)

While presidents, prime ministers, and governments come and go from time to time, changing their powers and policies as appropriate or otherwise, the Mahanayakes who are symbols of wisdom and compassion remain more permanent, like the sovereign state itself. However, hardly ever do they usurp a ruler’s role. The intrinsic secular nature of Article 9 (relating to Buddhism) of Sri Lanka’s existent republican constitution is something that Western observers, and even our own politicians including the nationalists among them do not or do not want to understand; the latter seem to be abysmally ignorant of the term ‘secularism’, and play havoc with it.  

Contrary to what people expected, in his ceremonial policy statement from the Speaker’s chair in parliament on February 8,  president Wickremasinghe did not seem to respond to the Mahanayakes’ earnest advice conveyed to him nearly a week previously, but he did so by implication, towards the end of his speech. Some of his utterances, probably, increased their apprehensions. He talked about having to take unpopular decisions. “I am not here to be popular!”, he said. Ranil Wickremasinghe can well say that since it was not because he was popular that he became executive president. He, as a would-be technocrat, can take unpopular decisions, as he thinks fit, in dealing with purely economic issues. But if his economic policies are based on wrong political decisions, it’s a different issue, where his personal moral values get tested (in spite of his indispensability at this juncture).

The president devoted the first half of his speech to dealing with strictly economic matters: Rebuilding the nation, foreign reserves, IMF negotiations, revival of tourism, economic reforms, etc. To properly handle these it will be helpful for him to keep in mind the concerns raised by the monks. For example, one of the worries of these leading monks, though not mentioned in the letter, relates to the preservation of the Buddhist archaeological heritage of the northern and eastern areas. The archaeological treasures connected with the history of Sinhalese habitation in the northern, north central and eastern parts of the island have been under threat for decades; some of them have been  deliberately destroyed, reburied, built over or falsely claimed by non-Buddhists.  There is history written on rock in the form of rock inscriptions right across the country from north to south and from east to west that bear witness to the presence of the Sinhalese throughout the island. Archaeological remains and sites are great tourist attractions, which means their preservation is economically very important, too.

Most of the other half is about establishing communal harmony.  President Wickremasinghe takes great pains to convince the Tamil and Muslim minorities about his determination to solve their problems. He had discussed with R. Sampandan MP in 1977 (i.e., 45 years ago) about how to resolve the Tamil ethnic issue. The time has come at long last for them to achieve their goal. Ranil had been made aware of problems of the Muslims by minister A.C.S. Hameed, presumably in the latter 1980s, i.e., 35 years ago. All sensible Sri Lankans appreciate Ranil Wickremasinghe’s desire to resolve minority problems, but he should remember that no politician has a moral right to disregard the human rights interests of the majority community.

While listening to the policy statement streamed live on February 8th, I felt that the president displayed less enthusiasm in talking about the problems that the majority community suffer from. It looked as though he thought those problems were less substantive than the ones that the minorities faced. His single apathetic utterance in this regard was: “The Sinhalese community is also facing issues of their own which require open discussion. We expect to recognize the communities that are marginalized in society especially due to caste discrimination”. This is tantamount to associating the caste issue with the Sinhalese instead of the Tamils, particularly those in the North, who are persecuted by religion sanctioned casteism. The caste problem among the Sinhalese – historically borrowed from Tamil Hindu culture – is very mild, confined perhaps to party politics and matrimonial occasions, and is fast disappearing. Tamil civil society activist Arun Siddharthan often mentions this problem among Tamils. Rear Admiral (Retd) Sarath Weerasekera MP said in Parliament recently stated that blood needed for blood transfusion in Jaffna hospitals was in short supply due to (Hindu religion based) caste discrimination and had to be donated by Sinhalese soldiers. Of course, how seriously the particular form of social injustice affects the Tamil society can’t have escaped the president’s attention.

Paradoxically, though, in stark contradiction with basic Buddhist teachings, caste distinctions are still observed by Sri Lankan Buddhist monks, who have divided themselves into caste-based nikayas, something initiated by the Siyam nikaya in unalterable historical circumstances in the 18th century. It’s an evil that the Mahanayakes could have corrected, at least decades before, had they been less worldly, and more devoted to the Dhamma, and more dedicated to the welfare of the Buddhist laity, and the society in general. At least now, they must bury these undue divisions among themselves, and unite as a single body and realize and demonstrate to the world what the power of the Maha Sangha is. This is urgent for the survival of the Buddha Sasana.

President Wickremasinghe expressed his determination for bringing in maximum devolution of power within a unitary Sri Lanka (not united Sri Lanka as he used to say in the past). How he can secure this is yet to be disclosed. The people must be wary, for the devil is in the details. He says quite correctly that reconciliation alone will not bring about economic development: people’s attitudes must change. (Of course, this should apply not only to the majority, but also to the minorities.) This is perhaps a reference to his decision to get Tamil diaspora entrepreneurs involved in the development of the war-damaged North, for which he will create a separate department. We remember that, even months before, diaspora representatives indicated their readiness to bring in foreign funds to ease Sri Lanka’s dollar crunch, but that was with the proviso that those funds will be utilized exclusively for the economic development of the North.  

During his closing words, president Wickremasinghe said: 

“,,,,,,,We are all bound to protect the State of Sri Lanka. Any citizen has the opportunity to democratically change Governments through the elections. However, no one has the right to create anarchy in Sri Lanka. Not any political party. Not any group.

“We cannot allow our motherland to become an economic or social colony. Anarchy cannot be allowed. No one who truly loves the nation will allow such a situation. We all should stand on the side that supports the nation and not that which is bent to destroy the country..”.

That is a kind of assurance given that the sovereign Sri Lankan state will remain whole; there will be no division of the country. Governments will be changed democratically through elections. This means that the sort of annihilationist anarchy that the chaotic medley of leaderless directionless political and religious desperados of the foreign funded, anti national, conspiratorial ‘Aragalaya’ will not be allowed. The president promised that his proposals will be implemented through the National Assembly of the Parliament. What better guarantee can be given than this that the kind of undemocratic coercion that forced the 13th Amendment on a hapless Sri Lanka in 1987 under a dictatorial president who had succumbed to undue Indian pressure will not be applied in the present situation?

If the 13th Amendment must be implemented in full, let it be implemented in that democratic way. But we know that the present parliament doesn’t have a legitimate mandate to achieve that end. The SLPP was returned to power with a near two thirds majority, having fought elections on the platform of ‘One country, One law’. It is still an SLPP government. So they do not have the moral right to pass legislation that is entirely opposed to the original rallying cry that brought it to power. To cut a long story short, it is only Mahinda Rajapaksa MP who can persuade the unelected, president by default, Ranil Wickremasinghe from using the sitting parliament to enact 13A in its entirety without consulting the public regarding it through a referendum or a general election. Of course, in the past, Mahinda Rajapaksa used to repeat that he’d offer a 13A+. But I thought he was just bluffing then. Now Ranil seems to have called his bluff. Almost all members of parliament including Mahinda Rajapaksa, except a small splinter group who have left the SLPP alliance, have expressed agreement to the president’s decision to execute the full implementation of 13A. So, legally, there is no obstacle to his plan. But it is undemocratic and immoral.

It is the conscientious assertion of a nation’s dominant moral values by the three branches of government in a democracy – the executive, the legislature and the judiciary – in their activities that saves that nation from collapse and disaster. In the final analysis, Mahinda Rajapaksa, former president and prime minister, despite his, perhaps, unmatchable past achievements, is responsible for the present unprecedented crisis, especially, the ruinous political chaos. Only he can put an end to it by putting the country before himself, if possible. He used to say that his  Priority Number One, Number Two, and Number Three was the same: the Motherland/the Nation. Let him redeem his lost honour and popularity, and also win back the love of the people he tried to serve. 

Most Venerable Mahanayake Theros, I would like to beseech you Reverend Sirs, in all humility and with the deepest respect, to please write to Mahinda Rajapaksa MP or summon him before you Reverends, to demand that he explain to the nation why he now supports a measure that is likely to prolong the suffering and insecurity of the people and to endanger the survival of the Buddha Sasana, and, if it is something unavoidable at this stage, how he is going to make the proposed change harmless. Please remind him that he was a former prime minister, president, and a minister for Buddha Sasana.

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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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