Opinion

Why is there a winter of discontent in UK?

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3 mins read

The widespread industrial unrest in the run up to Christmas and into January 2023, is nothing new, as workers all over Britain demand better pay and working conditions. Their leverage is to cause the most amount of tolerance, inconvenience and resilience.

We’ve just come out of summer and autumn with rail and postal strikes, now we face strike action planned by Nurses, Teachers, Train drivers, Emergency services, Ambulance drivers, Civil Servants, all jumping on the bandwagon. After a decade of wage stagnation workers across the country are now calling for pay rises that match inflation. However, it is fair to say, that during the past decade inflation was below 2 %, but has now overshot expectation.  

The last time there was a winter of discontent that I can remember?

I reckon it was during the days of Labour Prime Minister James Callaghan.

I can remember the winter between November 1978 and February 1979 when rubbish on the streets piled up, not cleared for days, perhaps, weeks as “Bin men” Council workers went on strike. First, it was the private and later the public sector Trade Union workers, demanding Pay rises greater than offered by the Labour government. It was no joke, when lights used to flicker as power cuts made us to keep candles at the ready. Domestic services in hospitals were on poverty wages of £39.50 per week at that time.

We cannot of course, compare today’s scenario to either the days of the General Strike of 1926 or the strike in 1978/79. But, a picture is building of what this winter 2022/23 will look like.

Why the strikes in NHS, in particular?

How many of you know that 25,000 Nursing staff left their job in the past year, with staff shortages affecting patient safety?

How many know there are 47,000 unfilled NHS Registered Nursing posts in England alone?

Has this shortage anything to do with the minimum 5, sometimes 10 hour wait at A& E wards in hospitals up and down the country?

Nurses in UK are going on strike for the first time, the first official strike in their 106 year history, on 15 and 20th December 2022. The Royal College of Nursing (RCN) announced it has reluctantly called a national strike over pay and patient safety. It said their action will be as much for patients as it is for nurses.

Emergency care will still be provided, under a “life–preserving care model,” but routine services are expected to be affected by the strike. RCN stated the level of service during walk outs will be that dialysis and planned surgery cancelled.

Nurses are paid according to their level of seniority and how many years’ experience they have. The Nursing career is not a bed of roses, but a bed of patience?

For those who hope to apply to fill these empty nursing posts, almost all nursing staff are on contracts under a system introduced in 2004 to bring together different pay scales across the NHS.

A newly qualified Nurse under 2 years’ experience earns £27,055 in England, topped up by London Weighting Allowance rising to £32,934 after four (4) years. A Senior Nurse – Matron earns £48,526 to £54,619 after five (5) years.

RCN Nursing Union is asking for 19 % pay rise. This Union wants a rise of rise of 4.5% above the Retail Price Index (RPI); a pay hike of 19.2%, which the Government says is unaffordable and unacceptable. National inflation is currently at 12.6%,

The Government accepted the Independent Pay Service body recommendation for 1 million workers a pay rise of at least £1,400 this year equivalent around 4 to 5% for most nurses.

The Government also states that for every one (1) percent rise it costs £700 million taking the total demand to £10 billion or 6.5 % of the total NHS Budget.

When are some of the other Unions on strike?

Railways, 40 million RMT members –

Walk out on December 13-14; 16-17; January 3-4; 5-7, 2023.

Postal Workers, 120 million CMU members –

Walk out on November 30; December 1, 9, 11, 13-15; 17, 23-24.

Buses in London, Unite Members –

Almost 1000 bus drivers to stage a series of strikes for 10 intermittent days in December.

Teachers   750,000 NEU and NASUWT members –

Balloting for strike action voting closing on 9 and 13th January 2023.

Emergency Services – 15 million Ambulance Staff/ Para Medic members, also thinking of strike action, of some sort, perhaps, a work to rule.

Will strikes cripple Britain?

The Unions believe that the wave of strikes hitting “every sector of the economy” this winter, will help get a square deal for their members.

But neither the Government, nor the General Public believe, that other being greatly inconvenienced, they will not be “broken”?

The Government wants a fair deal to keep the economy afloat; while “what the people expect, is that they get at least a square meal in a round can,” this Christmas, at an affordable price.

Sri Lanka: Mahindagamanaya 3

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8 mins read

“We have not abandoned our people, neither will we do so.” ~ Mahinda Rajapaksa (Budget 2023, second reading debate)

The seminal event of the 2023 Budget cycle was not Budget 2023. The Budget was more good than bad, but too tepid overall to be an inflection point. The real stunner was the speech by Mahinda Rajapaksa during the second reading. To call it the first salvo of his Third Coming is no exaggeration.

The morning after he lost the 2015 presidential election, Mr. Rajapaksa returned to Medamulana, clung to a window in his ancestral pile, and blamed traitors and conspirators for his electoral loss. “We must remember they got their majority vote from Eelam,” he told his supporters. Sinhala-Buddhists, the true owners of the Motherland, have lost power which can be regained only by bringing the Rajapaksas back to power. That anti-democratic and racist interpretation of the 2015 presidential election would form the basis of Rajapaksa political platform for the next five years, starting with the Mahinda Sulanga rally in Nugegoda and ending in Gotabaya Rajapaksa’s historic victory.

Like that Count from Transylvania with nocturnal habits and strange appetites, the Rajapaksas won’t stay politically dead. And they can keep on returning so long as enough Sinhala-Buddhist voters wallow in minority phobia.

Traitors and Conspirators form a key thesis of Rajapaksa theory of politics. “It has been revealed who was behind the crisis,” Mahinda Rajapaksa said during the Budget debate. “The people will come to know more information in the near future. These elements are not letting this country rise. Instead they attempt to ensure the country’s downfall… It was their puppets who put on a show recently. The economic collapse was an organised act. They caused the destruction of the economy. As evidenced by past incidents, these groups have acted in the same manner every time the country was making progress.”

The corollary of the Traitors and Conspirators thesis is that the Rajapaksas never have to own their crimes, errors, and stupidities. It’s always someone else’s fault.

The debt crisis, and the resultant sovereign default, for instance, is the fault of the Sirisena-Wickremesinghe administration. That government took “the largest debt in the shortest period,” claimed Mr. Rajapaksa, prancing about on his moral high-horse.

The website factcheck.lk analysed the issue factually by comparing interest due to pre 2015 debt and  the increase in debt between 2015 to 2019. Accordingly, 117.6% of rupee debt and 59.3% of the dollar debt incurred under the Sirisena-Wickremesinghe administration was to service pre-2015 debt. So 89.8% of the total debt incurred by the ‘Good Governance’ administration was to pay the interest on the debt outstanding by 2015 (https://factcheck.lk/factcheck/deputy-unp-leader-ruwan-wijewardene-does-no-disservice-to-past-debt-servicing-costs/).

A few days before the 2019 presidential election, then finance minister Mangala Samaraweera asked candidate Gotabaya Rajapaksa how he was going to make good the revenues that’ll be lost from his tax cuts. Mr. Rajapaksa didn’t bother to answer because most of the electorate didn’t bother with facts. So the Family slashed and burned the country’s tax base. In one year, tax revenue fell from 11.6% of GDP in 2019 to 8.1% of the GDP in 2020. The money lost to the nation was pocketed by business and professional classes. The ordinary masses who bear the brunt of indirect taxes got nothing. Though VAT was slashed from 15% to 8%, inflation increased in January and February, proving that the benefit of VAT reduction accrued not to poor people but to business owners.

Having gutted national income, the Rajapaksas increased expenditure, burning the candle at both ends. President Gotabaya’s project of providing state employment to 50,000 unemployed graduates and 100,000 Samurdi recipients without OL was quintessential Rajapaksa economics. The military was involved in selecting candidates and training them. Today most of them waste their time and public money in various state institutions. In these already overstaffed entities, there’s no work for 150,000 new employees.

The SLPP’s Rise from the Ashes campaign had to be abandoned because enough Lankans still remember that the ashes are from the fires the Rajapaksas themselves lit and stoked. Meatier issues, more incendiary slogans are needed. Mr. Rajapaksa, in his budget debate speech, gave a hint about the way ahead. No selling of national assets, he proclaimed, not even loss-making ones. Selling national assets equals undermining national security equals betraying the nation. Rata, Jathiya, Agama, Ape Hamuduruwane, Rana Wiruwo, Janathava… Terrify the country into strangling itself with the Kurahan satakaya, again.

Factually-challenged Counts of Medamulana

In 2007 December, Mahinda Rajapaksa, with an entourage of 35, paid a private visit to the UK to watch the graduation of his second son from the Dartmouth Naval College. When the president demanded that not only he but his entourage be accommodated on the return Sri Lankan flight of his choice, the management said a polite no. It was the height of the holiday season. Acceding to the presidential request would have meant offloading 28 paid business class passengers. A furious president chartered a Mihin Lanka flight. Doubtless, like Basil Rajapaksa’s recent bill at the airport lounge, people paid the price. (Was Prof. GL Peiris, now reborn as anti-corruption crusader, a part of that entourage, one wonders).

Emirates-appointed Sri Lankan CEO, Peter Hill, would have thought he was making a sensible business decision. In fact, he was causing lèse majesté. When Mr. Hill’s work visa came up for renewal in January 2008, a petulant government said no, and demanded a greater say in the management of Sri Lankan. Emirates refused and opted not to renew its 10 year contract. (Incidentally Mr Hill returned in September 2022 to manage a local private airline).

Since the Chandrika Bandaranaike Kumaratunga government sold a 44% stake of Sri Lankan to Emirates for 70million dollars, the airline’s fortunes had revived. By 2007/8 its accumulated profit was 9.29billion rupees. In 2007 alone, it made a net profit of 5billion rupees. Then Sri Lankan fell back into the patriotic Sri Lankan hands of the Rajapaksas. In the first year itself, the airline made a loss of around 9billion rupees. By the end of 2021, the accumulated loss was 372billion rupees.

Is Sri Lankan national asset or national liability?

In the year 2020-21, Sri Lankan loss was a staggering 45billion rupees. If that money had been spent on social welfare, the 56,000 children facing severe acute malnutrition and the 2.43million people who are on the verge of malnutrition (according to the WFP) could have been fed not just adequately but sumptuously. That then is the real choice.

At a Himalayan 860billion rupees, the losses of SOEs in the first four months of 2022 is higher than their total loss in 2021. So, do we pump more money into a host of SOEs or do we help the wretched of Sri Lanka to survive? And when the Rajapaksas wage the patriotic battle to save the nation by saving Sri Lankan, where would the Opposition be?

In his budget debate speech Mahinda Rajapaksa said, “There is no benefit to the people by merely presenting the budget or by inciting them.” That was a double swipe, at Ranil Wickremesinghe for just presenting the budget without giving relief to the people and at the opposition for inciting the people.

Mr. Rajapaksa’s claim that Budget 2023 does not provide relief is as specious as his other claims. True, defence costs should have been pruned and were not. Yet, the money allocated to education and health exceeds money allocated to defence (including police), possibly for the first time in a long time. Total defence allocation is 539billion rupees while the total allocation for health and education is 554billion rupees. The allocation for social welfare is 852billion rupees amounting to 10.08% of the total budget. These are positive developments, despite the Budget’s pie-in-the-sky estimates and silly contradictions.

That the Rajapaksas should ignore these positives is understandable. In their eyes, only they can be praised since We did the best work (Api thamai hondatama kale). Unfortunately instead of adopting a nuanced approach, the Opposition too has opted to be blind to these positives. Ranil Wickremesinghe should be criticised for trying to clamp down on constitutionally guaranteed right to peaceful protest. But do his many political wrongs justify voting against the budget wholesale, relief measures and all?

            Has the Opposition decided to oppose anything Ranil Wickremesinghe does, simply because he does it? How else can they accuse him of being right wing/reactionary and then slam him for embracing progressive taxation? It is one thing to question how the tax money would be spent, as the Supreme Court did, when it gave its nod to the Inland Revenue Amendment Bill, stating that “corruption and wastage of public finance must be addressed and violators dealt according to law irrespective of standing.” But it is another thing to scream that people are being taxed. People were always taxed indirectly, with the lower income groups bearing the brunt. The new tax policies tries to right that wrong, a little.

            As world slips into recession, the issue of fair taxation has assumed a global importance. The General Assembly recently mandated the UN to play a global tax leadership role. The IMF has come out in favour of Latin American nations’ adoption of progressive taxation. As Nigel Chalk, a top IMF official said, in backing Chile’s ambitious tax reforms (including a capital income tax), “A tax reform that generates more revenue, and puts more money in social systems, in supporting lower income families, supporting middle class, that’s definitely a more progressive system…” (Reuter – 2.11.22). It’s one thing to savagely criticise increasing Cess on paper (thus school books), quite another thing to oppose re-imposition PAYE taxes. If Ranil Wickremesinghe actually brings in a wealth tax, will the Opposition oppose that too? Where will this irrationality end? In an alliance led by the Rajapaksas to save the Motherland by saving the SOEs?

When the bough breaks

There was no danger of Budget 2023 being defeated. Had that happened, the parliament would have stood dissolved. And the SLPP is not ready to face elections, not yet. It is for that, and no other reason, did the Rajapaksa-led SLPP support the budget.

The alliance between Ranil Wickremesinghe and the Rajapaksas is an opportune one, like most political deals. Both sides have something to gain from it. Each side is using the other. The Rajapaksas do not enjoy playing second fiddle to anyone and would cut the ground under Ranil Wickremesinghe as soon as they feel strong enough. Mr. Wickremesinghe would do the same to the Rajapaksas when he can.

So once the use value diminishes, the Wickremesinghe-Rajapaksa alliance will fall apart. That is a political inevitability. The only question is who cuts whose throat first.

The Rajapaksas are the greatest threat to Sri Lanka’s democratic health, economic sanity, and public well being. As was amply proven in the last two plus years, they are structurally blind when it comes to anything other than familial interests, in the narrowest possible sense. Just one example would suffice. Had the preferential vote contest between Nipuna Ranawaka and Dulles Alahapperuma (not to mention Kanchana Wijesekara) been better managed, the Rajapaksas could have ensured their nephew’s victory without antagonising two faithful acolytes who had served them well for decades. But such restraint is alien to them. Like Vellupillai Pirapaharan, extremist responses are in their political blood.

So the Rajapaksas in power or in a position of serious influence would retard the task of getting Sri Lanka out of this abyss of Rajapaksa creation. Currently, they have no control over economic policy even though they can win some concessions, like the appointment of state ministers. Even that influence will diminish when President Wickremesinghe becomes constitutionally able to dissolve the parliament at will.

Which is why the Rajapaksas will look for an issue that can set the country on fire. It could be the restructuring of the SOEs. It could be a wealth tax. Or a proposal to solve the ethnic problem, or even a prelude to such a solution, such as the full implementation of the 13th Amendment or returning military-occupied North Eastern lands their owners. If none of these happen, there will be the suffering of the masses which is not likely to abate for a while.

The Rajapaksas probably know that any attempt to dress as economic saviours will not carry conviction. But if the Motherland is in danger, if international conspiracies are afoot, if traitors are at work, then the patriotic banner can be unfurled. Mahindagamanaya 3 will not be different to Mahindagamanaya 1 or 2. The Family will divide everyone else, appeal to the worst in Sinhala-Buddhists, and encourage reactive extremism in minorities.

The Rajapaksas are focused on regaining power. Ranil Wickremesinghe, Sajith Premadasa, and Anura Kumara Dissanayake are preoccupied with hurts and resentment, pique and chagrin. By the time they see the common danger, the Kurahan satakaya might be close to throttling the nation, again.

Sri Lanka:  Correct The Price Distortion for A Sustainable Development – Part 3

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6 mins read

This is the third and final part of this series by the author, Click here and here to read previous parts -Editors

Excess Staff in the Public Service 

Compared to developed and developing countries, Sri Lanka has extensive public service, with about 1.5 million employees for a 22million population, which means one public servant for every 14 people and 19% of the country’s workforce. According to the Central Bank Statistical bulletin, 84.6% of the government tax revenue (Rs.1.1 trillion) of the year 20221 has been spent on public servants’ salaries and pensions, leaving little room for other recurrent expenditures and capital investments. This figure doesn’t reflect the salary bill of the semi-government institutions. Currently, there are 675,000 pensioners, and this number keeps increasing every year, and at a point, this will exceed the number of serving public servants. Most public sector workers have no sufficient work but enjoy the total salary and all other fringe benefits. If we estimate 40% is redundant, 40% of the Rs. 1.1 trillion (Rs.0.44 trillion) is a wasteful expenditure annually, which amounts to another massive subsidy for a privileged group who otherwise could have been unemployed.  If the government employs someone at the age of 18 years, serves for 42 years and lives for 81 years, the government will have to maintain him for 63 years. After his death, if the dependant lives for another 21 years, altogether government is committing to 84 years to obtain his services for 42 years. The above simple example is sufficient to understand the gravity of the problem created by the oversized public service.

 In 1990, recruitment to the public sector was frozen, and a voluntary retirement scheme (VRS) was introduced to reduce the size of the public service. Most of the excess cadre was unskilled, who couldn’t be employed anywhere else for that remuneration. Therefore, many did not agree to early retirement, which could have resulted in a low pension for the lifetime and dependents after their deaths. However, the opportunity availed under VRS was capitalised by essential categories such as nurses, engineers, accountants, science and mathematics teachers, and technicians of various fields, creating a vacuum of those skills in the public sector. The government was compelled to fill those vacancies again with qualified but inexperienced people while paying the pension for pre-mature retirees. In 1995, 2005, and 2015, the size of the government service jumped upward due to political reasons.

In 2022, in place of VRS, the government adopted a new approach. According to the circular issued by the Ministry of Finance, public sector employees can avail of no-pay leave to work abroad for a maximum of five years without affecting their seniority and annual increments. This has created great enthusiasm among the employees. However, unwanted cadres (unskilled) may face difficulties securing foreign jobs. Professionals in various fields have a good demand, and heads of departments may find it challenging to prevent them from obtaining five years’ leave. Like in 1990, a vacuum may create again in the essential cadres of public service, compelling the government to do new recruitments. As employees are not retiring under this scheme, vacant positions can’t be filled without creating additional cadres. If that happens, while the new cadre is in the service, employees on leave also shall accommodate after five years, doubling the burden. 

Instead of attempting to reduce the size of the government service in general, a scheme targeted towards unwanted cadres may produce better results. For instance, heads of institutions shall identify such people by name, and provisions of the circular shall apply only to them. Until they find foreign or private sector jobs during the five-year leave period, allow them to stay home with half the salary.  Half of the salary, overtime payments, electricity, telephone bills, and office space will be saved in that case. As a by-product, traffic congestion will be reduced, and the efficiency of the remaining workers will be improved.  Another solution is establishing a combined service for all SOEs, like in the public service. Then employees may be transferred to needy institutions from excess institutions without new recruitments. That would prevent unwarranted competition among institutions for salary and promotion schemes. Also, Politicians will not be able to overload the staff with unwanted cadres. Moreover, excess staff from SOEs may be transferred to public service vacancies instead of new recruitments. Further, in establishing new institutions and expanding the operation of existing institutions, excess staff may be transferred to those places without new recruitments.

Fraudulent Practices

According to various media reports, from time to time, governments write off unpaid taxes and duties from companies. In addition to the above-discussed futile expenditure, many public funds are being drained from public coffers due to the above tax alienation.  However, I don’t have data to highlight the seriousness of the issue.  But the importance of the problem can’t be underestimated. Even with the tax reduction in December 2019, the revenue loss was about Rs500 billion per annum, which continued until the tax revision in 2022. Unpaid accumulated indirect taxes, such as customs duties, excise duties, VAT, etc., are also being written off from time to time. Consumers pay indirect taxes, and companies are only tax collectors. Therefore, companies have no right to keep those; they should pay those to the government or return them to the consumers who paid. But governments have allowed companies to keep these silently, which amounts to fraud. Authorities are allowing tax evasion and accumulating unpaid taxes, compelling the government to costly borrowings to fill temporary gaps. Tax alienation, as well as allowing tax evasion, amounts to a significant subsidy in disguise to a few privileged/corrupt individuals and companies.

Poverty alleviation

The Samurdhi program was launched in 1995 and implemented over the last 28 years as the national poverty alleviation strategy. Conceptually, it has several components for sustainable poverty alleviation. (Income transfer, credit for self-employment, infrastructure rehabilitation, social welfare, awareness building, etc.). As of 2020, 35% of the households (1.8 million) were receiving Samurdi benefits, and another 800,000 were on the waiting list. Including them, it will come to 51% of the households in the country.  While the number of families below the official poverty line has come down to 4%, Sumurdhi relief recipients remained at a very high level of 35% of the total families. It has created a permanent dependency, and no one wants to get out of the program. There are many criticisms about the targeting of the benefits. While non-eligible families are receiving benefits, many eligible families have denied them. Also, there is no regular exit and entry mechanism for the benefits. The government spent 52.47 billion on samadhi relief payments in 2020, which accounts for 0.35 % of the GDP.

Under the Samurdhi banking system, assistance is extended for self-employment/micro-enterprises. But rarely someone comes out of poverty. While a large majority who can work receive the relief grant, the vulnerable without breadwinners in the family are receiving insufficient amounts to meet their basic needs. Self-employment is a mythical solution for most unskilled people. It will help only a few people with entrepreneurial skills and attitudes. Others must be employed for monthly or weekly wages to escape poverty.  

Most Samutdhi recipients can be easily diverted to an Employment Guarantee Program (public work /cash for works program) to maintain public properties, which are hitherto neglected due to a lack of funds. (Irrigation schemes, provincial and local authority roads, landscaping, schools, hospitals, etc., and various local government functions). The issue of targeting or selecting beneficiaries does not arise as only the unemployed, and the absolute poor will participate in such a program. Under such a scheme, the number seeking the Samurdhi relief grant will decrease drastically, and the public assets will be maintained.  Suppose a reasonable percentage of the above-discussed fruitless expenditure is saved through appropriate strategies. In that case, sufficient funds will be available to implement a National Employment Guarantee Scheme (cash for work) and adequate assistants to vulnerable families to alleviate absolute poverty.

 Conclusions

The above is a brief account of significant subsidies and wasteful expenditures, resulting in price distortion in the market and mal allocation of scarce resources. There may be many more such futile public expenditures contributing to the problem.  As people do not pay the actual economic costs for many things, they have gotten used to an artificial style of living, which is unaffordable to the overall economy. If we can correct a significant percentage of these distortions and unproductive spending, adequate resources can be generated to invest in a rapid growth phase and support the poor without many public debts. The government must allow SOEs to sell their products at a cost-reflective price with a reasonable profit margin, enabling them to sustain and invest further. The poor, who cannot afford market prices, should be supported sufficiently to satisfy their basic needs. Overall savings from economic reforms would be adequate for that purpose. However, cash grants will go to the wrong hands, like in the Samurdhi. Therefore, launching an employment guarantee scheme is more advisable and manageable. Then the cash grant should cover only vulnerable families. However, over the decades’ distortion of market prices and subsidies have been used as bait to lure voters, and now it is a structural issue, embracing the whole economy and the gamut of life, creating a cancerous effect. This needs far-reaching reforms, but such an attempt may backfire on the government. It shall be done with a cautious approach, step by step, with a holistic approach.

Concluded

Sri Lanka:  Correct The Price Distortion for A Sustainable Development – Part 2

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10 mins read

This is the second part of this series by the author, Click here to read the first part -Editors

Water Supply

Providing safe drinking water and improved sanitation services have been the government’s priority for many decades. In 1975 National Water Supply and Drainage Board (NWSDB) was established, and the responsibility was transferred to it. Before that, it was a local government function, and cost recovery was not considered an important issue. The local authorities provided Dug wells in rural areas, and the pipe-boned water supply was limited to urban areas. Their priority was to roadside public stand posts for free water, and the domestic connections were charged a nominal amount. Hence water was considered a free public good without a price.  Irrigation for agriculture is still a free public good with no price.

With the introduction of the Community Water Supply Projects, pipe-borne water supply was expanded to many rural areas, and today 58% of households have access to pipe-borne water. Gradually NWSDB expanded its operation to rural areas with high population density. The capital costs of projects are now shared 50:50 between the treasury and NWSDB. Still, domestic water is considered a government responsibility and only a part of the cost is recovered from the poor. Yet 25.8% of the total production falls under the non-revenue water category, which is put into the water supply system but not billed. This is mainly due to poor maintenance, leakages, and management issues such as water thefts, calculation errors, etc.

The average unit cost of producing potable water has increased from Rs.48.87 in 2020 to Rs. 60.63 in 2021 (Economynext 05.06.2022). According to the Water Tariff Revised in 2022, water is billed under 12 different categories for different purposes at different rates. Samurdhi beneficiaries are charged a nominal tariff of Rs.5.00 per unit for the first five units (5000Lt.), Rs. 10.00 per unit for the second 5 units, and Rs. 15.00 per unit for the following five units. Accordingly, 15,000 Lt. per month is highly subsidised for them, and the subsidy element (tariff below the cost of production) exists for up to 25 units (from 16to20 units Rs. 40 and 21 to 25 units Rs.58 per unit). In contrast, Domestic(other) Category consumers will have to pay four times higher than the Samurdhi recipients for the first five units (Rs. 20.00 per unit), and the subsidy element exists only for up to 15 units. Beyond that, an exceptionally high punitive tariff, which increases with the usage from Rs.86.00 up to Rs. 238 .00 per unit, is being changed.

There are four other categories where the tariff is much below the cost of production, namely, (a) Non-Samurdhi Tenement Gardens, (b)Public Stand Posts, (c)Schools, religious and charitable institutions, and (d) Local Authorities.  It means that out of 12 categories, 5 have a substantial subsidy. The tariff for the other seven categories (production-oriented) is much higher than the cost of production. In addition to the usage charge, a monthly service charge, increasing parallel to the consumption, is also levied from those categories. Therefore, the tariffs applicable to production-oriented and non-samurdhi household categories are punitive and discouraging. For instance, tariffs for the port and shipping, SOEs, BOI companies, and industries are Rs670, Rs.116, Rs.85, and Rs 82 per unit, respectively.

However, the NWSDB has demonstrated that it can recover a considerable portion of the subsidy cost through punitive tariffs from production-oriented and high-user domestic categories. According to the 2019 Annual Report, the losses for 2018 and 2019 were Rs. 1,176 and Rs. 580 million, respectively. According to the Economynext-05.06.2022, the NWSDB had posted a profit of 507 million rupees in 2020 but again lost 3,087 million in 2021, with salaries rising 19 per cent. If not for the salary increase, the NWSDB could have remained at least at the break-even point in 2021. With the tariff revision in 2022, it may reach the break-even point. Unlike other SOEs, NWSDB delivers essential public goods without a massive loss. This is mainly due to the capital costs subsidy granted by the treasury and the tariff structure to charge more from whom it is affordable to pay. But NWSDB is also overstaffed, and remunerations are relatively high.

Due to the scattered nature of housing and settlements, the capital cost of water distribution in rural settlements is very high. Many rural water supply schemes are found in hilly terrain in the wet zone, where water sources are abundantly available in good equality. Still, due to the hilly terrain, the capital cost of the distribution network is high. But in contrast, drinking water is a critical issue in the dry zone, covering about 70% of the country’s land area. This is the area chronic kidney disease is prevalent and suspected that the cause is poor-quality drinking water. Unlike in the wet zone, water sources are not found easily, and the quality is also unacceptable. Dry zone communities face many inconveniences and opportunity costs, such as risky long-distance travel and consuming many hours of the day to collect a pot of drinking water. If they purchase potable water from the market, they will have to pay more than Rs.50.00 a litter. Under this scenario, selling one unit (1000 litres) of water for Rs. 5.00 or Rs 20.00 in the wet zone and urban areas can’t be justified on humanitarian grounds. Therefore, financing potable water for the dry zone is justifiable, even at a higher cost, considering social justice and equal access to safe water. Further, the NWSDB must take serious action to reduce the 25.8% non-revenue water supply to a technically acceptable minimum level to increase its revenue. Currently, six tariff categories are below the cost of production, which seems highly irrational.

Instead of ad-hoc political decisions to revise the tariff for electricity and water from time to time, it is more logical to commission an in-depth study to restructure the tariffs to make water and electricity prices affordable to domestic users, discourage excessive unproductive use of subsidised products and remove punitive tariffs from the production-oriented categories.

Aviation

The national carrier rebranded as Sri Lankan in 1998 following its partial acquisition by Emirates. In 2008, the government re-acquired all the shares and management rights from Emirates. Then the accumulated profit of Sri Lankan was Rs. 9.288 billion (Wikipedia). In any case, Sri Lankan was not a burden to the treasury; instead, a share of the profit was paid to the treasury from time to time. It was revealed at the COPE meeting in July 2022 that the loss of the Sri Lankan as of 31 March 2021 from the day it was taken over from the Emirates was 372 billion, and the daily loss is about Rs 84 million.  Mihinlanka, which commenced its business in 2007, also amalgamated later with Sri Lankan with an accumulated loss of Rs 13 billion.  In 2020 Sri Lankan’s debt obligation exceeded Rs 372 billion. Also, its net worth was negative Rs.262 billion. Most of the above debts are to the Bank of Ceylon, the People’s Bank, and the CPC. Further, it had sovereign guaranteed internationally issued bonds worth UDS$ 175 million. If the government declares insolvent or shuts down the airline, the two banks and the CPC must write off all debts. This will severely affect the two banks’ liquidity, sustainability, and profit. The CPC is also heavily indebted to the above two banks. So eventually, that burden also will pass to two banks. The government owns two banks, and finally, all these responsibilities fall on the shoulders of the taxpayers. Moreover, the government could face multiple jurisdictions worldwide regarding the non-settlement of foreign liabilities.

Subsidising essential services is understandable. But subsidising foreign travel by affluent Sri Lankan citizens and foreigners has no meaning for the taxpayers. More than 99% of taxpayers do not benefit from this colossal subsidy. Many airlines provide services from and to Colombo to many destinations, even at a lower price than Sri Lankan. So, Sri Lankan does not fill any service gap too. If there is any justification for continuing the operation of Sri Lankan with subsidies, it would be to support tourism and strengthen linkages with foreign economies. In any case, earning from tourism cannot compensate for such a colossal loss/subsidy. It may be possible to justify the operation of a national carrier for national pride. If so, the airline must be restructured and scale down its operation to match that intention without a loss, at least on a cost-recovery basis.

 However, the establishment of Mihinlanka Airlines, re-acquiring Sri Lankan from the Emirates, and pumping public funds to Sri Lankan to expand its operation without a well-thought business plan are economic crimes for which the decision makers are responsible.

 Lose-Making SOEs

Subsidising the losses of state-owned enterprises (SOEs) and selling their products below the cost of production also amounts to direct subsidies to their employees and indirect subsidies to consumers while distorting the market prices. Sri Lanka has 527 SOEs. Of which 52 have been classified as “Strategically Important “enterprises by the general treasury. But some strategic enterprises, which are involved in purely commercial activities, such as CEB, CPC, CWE, CTB, Sri Lankan, Hotel Development Lanka Ltd, etc., have been running as loss-making enterprises for many years.

 Out of the non-strategic enterprises, 287 SOEs are also commercial ventures that can be run more efficiently by the private sector. According to the information available from the Department of Public Enterprise, out of 527 entities, only 57 are self-funding. In 2019, the total losses sustained by 52 SOEs amounted to Rs 151 billion. According to the above information, budgetary support amounting to Rs. 49 billion has been provided to loss-making institutions, of which Rs. 20 billion was for recurrent expenditure. Most SOEs’ pricing is not cost-reflective and sells their goods and services below the cost of production(subsidising). Perhaps, if the price becomes cost reflective, their products may be unaffordable to the people because the cost of production is very high due to inefficient management, wastage, and corruption.

 The private sector may produce those at a lesser cost resulting in lower selling prices and tax revenue for the government. According to the Advocata research team, the total accumulated loss of strategic SOEs from2006 from to 2020 amounted to Rs 1.2 trillion. As per the Public Finance Data, the top five losers, namely, CPC (Rs.628 bl.), Sri Lankan (Rs.248 bl.), CEB(Rs.47 bl.), Airport and Aviation Services (Rs.6 bl.), and SLTB (Rs.1 bl.) have recorded a total loss of 930 billion for the first four months of 2022. The government revenue for the same period is only Rs 543.6 billion. SLTB has a loss of Rs.1 billion in providing transport facilities for many middle- and low-income commuters. But Sri Lankan has a loss of 248bl., which provides aviation facilities to a minimal number of well-to-do Sri Lankans and foreigners.

When SOEs in short of funds or on the verge of bankruptcy, they do not follow the due process to borrow, liquidate or re-structure the business. They borrow inputs from other SOEs or borrow money from state-owned commercial banks. But it is done not on the strength of their balance sheets but at the request of the treasury, sometimes on verbal instructions, even without a treasury guarantee.  They continued to do so for many years. For instance, Sri Lankan, GCR, and CEB borrow their inputs from the CPC and keep accumulating debts.  The CPC borrows from the Peoples Bank and Bank of Ceylon to fill that gap. If CPC can’t borrow further due to cumulative outstanding debts, the treasury issues a long-term financial instrument to the CPC and passes the liability to the next generation. The CPC trade it and settle previous loans, and continues borrowing. This is a big cross-subsidy between SOEs. This amounts to a pyramid operation by the government. This can’t continue forever, and all resources will get exhausted and may collapse all institutions at once. It is advisable to allow major institutions to operate independently. Then who can sustain will sustain on its own strength. Others may get a boost to adopt sound management practices or restructure/privatise/liquidate.

But trade unions and politicians argue that those enterprises should come under state ownership to ensure the national interest and to prevent exploitation. As discussed above, the exploitation of consumers and taxpayers is very high under state ownership. However, policymakers may have a genuine interest also to keep essential services like energy, transport, health, education, etc., under government control to ensure the national interest/national security, respond to disasters, and assist the poor. But there are many low-cost and efficient solutions to achieve such objectives.  For instance, petroleum infrastructure and regulatory power may be kept with the CPC while allowing the private sector to import and sell fuel competitively. Railway Department can own the railway infrastructure and regulatory authority, while the private sector is running trains. Such arrangements ensure the government’s control over the service while the advantage of quality and price competitiveness passes to the consumers.

The impact of subsidising the loss of SOEs is not trickledown down to the large segment of the population, the consumers, and the taxpayers. But some groups with a vested interest have developed private sector phobia and hold the taxpayers and consumers to ransom for their economic, political, and power gain. Employees want to keep those under state ownership to secure higher income and fringe benefits with little or no work. Trade union leaders want to maintain SOEs at any cost to demonstrate/excise the power and authority and strengthen linkages with the upper echelons of political parties. Politicians wish to use the employees and other resources free for election campaigns and give jobs to their supporters. Further, they can support campaign funders by appointing them to management boards and promoting business linkages such as contracting, outsourcing, granting business permits, etc. Also, sometimes they can financially benefit by being involved in corrupt practices in procurement, service delivery, and recruitment.

But the public is happy if the quality of goods and services is satisfactory and reliable at a reasonable price, regardless of the ownership of the business. For instance, if a reasonably priced, reliable power supply is available, the customers don’t want to verify whether it is by the CEB or a private supplier. The customers don’t consider whether the fuel is from the CPC or Indian Oil Company if it is reliable, convenient and reasonably priced. But without knowing the facts, the taxpayers and the consumers also fight against the privatisation of loss-making entities.    

In the case of infrastructure or capital expenditure, passing the liability to the next generation is justifiable because they also become beneficiaries of those investments. But recurrent /consumption expenditure incurred by SOEs like SLTB, Sri Lankan, and Railways is only for the benefit and convenience of the present generation. Accumulating losses, defaulting and long-term borrowings for such expenses means passing the liability of luxurious consumption of the present generation (politicians, employees, trade unions) to the next generation, for which decision-makers have no rights. It is an unforgivable, very dangerous economic crime. If the private sector runs those commercial activities, the government can collect more revenue as taxes instead of subsidising the losses. Also, the government will have more time and resources to do its primary function, governing the country, which has been neglected hitherto by all governments.

To Be Continued

Biden nods to compromise in Ukraine

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5 mins read

The midterm elections in the US witnessed razor-thin races as Senate and House control hangs in the balance. But that didn’t discourage President Biden from holding a press conference on Wednesday to stake claim that the “giant red wave” didn’t happen. 

Biden said: “Democrats had a strong night.  And we lost fewer seats in the House of Representatives than any Democratic President’s first midterm election in the last 40 years.  And we had the best midterms for governors since 1986.” 

Biden, however, eschewed triumphalist rhetoric and committed “to continue to work across the aisle… (although) it’s not always easy.” 

For the world capitals, Biden’s remarks relating to Ukraine were the most keenly awaited segment. Succinctly put, Biden was far from emphatic that Republicans in control of the House now would be cooperative. 

He said: “I’m prepared to work with my Republican colleagues.  The American people have made clear, I think, that they expect Republicans to be prepared to work with me as well. In the area of foreign policy, I hope we’ll continue this bipartisan approach of confronting Russia’s aggression in Ukraine.” 

When asked whether US military aid to Ukraine will continue uninterrupted, Biden merely replied, “That is my expectation.” He contended that the US hasn’t given Ukraine “a black check” and only equipped Kiev to have “the rational ability to defend themselves.”

Biden had an impressive record as senator in coalition building in the Congress. But today, his bid for a second term as president comes in the way.  If he chooses to be a candidate in 2024, that would leave Republicans with no choice but oppose him viscerally — personally and politically.

Biden had some interesting comments on the announcement in Moscow earlier on Wednesday regarding Russian troop withdrawal in Kherson city. Biden said the Russian move was on expected lines and the interesting part is that Moscow waited till the midterms got over.

Biden avoided giving a direct answer when asked whether the Russian evacuation would give Kiev the leverage to begin peace negotiations with Moscow. But he didn’t refute such a line of thinking, either. Instead, Biden added that “at a minimum, it (evacuation) will lead to time for everyone to recalibrate their positions over the winter period. And it remainsto be seen whether or not there’ll be a judgment made as to whether or not Ukraine is prepared to compromise with Russia.” (Emphasis added.) 

Biden said that on the sidelines of the G20 summit at Bali (November 15-16), there there might be consultations with world leaders, although Putin himself was not going to be there. Indeed, some sort of diplomatic messaging is going on. In fact, the Kremlin spokesman Dmitry Peskov told Tass on Thursday that “It was decided that Russia will be represented by (foreign minister) Sergey Lavrov at the G20 summit.” 

Biden took a second question on Kherson developments to say furthermore that the Russian evacuation will not only help the sides to “lick their wounds” but “decide whether — what they’re going to do over the winter, and decide whether or not they’re going to compromise.” (Emphasis added.) 

Notably, Biden has spoken twice about “compromise” (read territorial concessions) by Kiev, which is a major shift from the US stance that the Russian forces should get out of Ukraine. Biden concluded: “That’s — that’s what’s going to happen, whether or not. I don’t know what they’re going to do.  And — but I do know one thing: We’re not going to tell them what they have to do.” 

Taken together, Biden’s remarks are consistent with the “scoop” by NBC News on Wednesday, citing informed sources, that during the National Security Advisor Jake Sullivan’s unannounced visit to Kiev last week, he studied Ukraine’s readiness for a diplomatic solution to the conflict. 

The NBC channel reported that Sullivan was exploring options for ending the conflict and the chance of starting negotiations and raised the need for a diplomatic settlement during meetings with Ukrainian authorities. It said some US and Western officials increasingly believe that neither Kiev nor Moscow can achieve all of their goals, and the winter slowdown in hostilities could provide a window of opportunity to start negotiations.

Interestingly, Kremlin-funded RT promptly picked up the NBC report and highlighted it. Russian Foreign Ministry spokesperson Maria Zakharova also chipped in commenting, “We are still open to negotiations, we have never refused them, we are ready to conduct them – taking, of course, into account the realities being established at the moment.”

The Russian authorities continue to maintain that the evacuation of their forces in Kherson stems purely out of security considerations. The onus has been put on the recommendation by Army General Sergey Surovikin, the commander of Russia’s military operation in Ukraine. The general claimed in a televised speech that the evacuation from Kherson  creates stronger defensive lines for the troops and will save the lives of soldiers and civilians. 

Suffice to say, Lavrov’s presence in Bali will be of pivotal importance. Presumably, he will have contacts with western counterparts. Indeed, Biden’s remarks about territorial compromise signal a sea change in the calculus. 

Also, Gen. Mark Milley, chairman of the Joint Chiefs of Staff, while opening a discussion with the Economic Club of New York on Wednesday about the possibility of peace between Ukraine and Russia, confirmed that there is indeed “a window of opportunity for negotiation” moving forward. 

The general urged, “When there’s an opportunity to negotiate, when peace can be achieved, seize it. Seize the moment.” To be sure, he spoke with an eye on the Russian military command. 

The backdrop is that the Democrats’ loss of control of the House of Representatives makes it difficult for them to freely promote the foreign policy line of the Biden administration, including assistance to Ukraine. Henceforth, Biden will have to negotiate decisions on Ukraine with the Republicans. This is one thing. 

Second, the cascading economic crisis in Europe holds explosive potential for political turmoil, especially if there is another refugee flow from Ukraine in the harsh winter conditions, which is a real possibility.

The blowback from sanctions against Russia has lethally wounded Europe, and bluster aside, there is really no replacement for the inexpensive, reliable, abundant Russian energy supplies via pipelines.

All this is becoming hugely consequential for western unity. The recent visit of German Chancellor Olaf Scholz to China shows that dissent is brewing.

Above all, the massive Russian mobilisation threatens to give a knockout blow to the Ukrainian military, but there is no appetite among Europeans for a confrontation with Russia.

The UK, Washington’s steadfast ally in Ukraine, also is under immense pressure to disengage and concentrate on the domestic crisis as the new government tackles a funding hole of the order of £50bn in the budget.

Going ahead, the notions of regime change in Moscow that Biden had once espoused publicly and the neocon project to “cancel” Russia has hit the wall and crumpled. That said, the US can draw comfort that the Russian pullout from the west of Dnieper implies that Moscow is not intending to make any move on Nikolaev, leave alone Odessa — at least, in the near term.

On the other hand, if the Ukrainian forces surge and occupy Kherson and threaten Crimea, it will pose a big challenge for the Biden Administration. From Biden’s remarks, the is confident that it has enough leverage in Kiev to ensure that there is no escalation.

For the present, it is premature to estimate that Moscow only took the bitter decision to abandon Kherson city, which was founded by a decree of Catherine the Great and is etched deeply in the Russian collective consciousness, with a reasonable certainty that Washington will restrain Kiev from “hot pursuit” of the retreating Russian army to the eastern banks of the Dnieper river.

Life and times in England today?

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3 mins read

There is so much going on in England that it is hardly necessary to describe the plight of the British.

One of Cornwall’s most beautiful beaches was unrecognisable at the weekend after a huge sewage and mud spill, according to The Times, tainted the environment.

“Last Sunday morning showed the usually pale blue water transforming into a murky shade of brown.Environmental groups have described the scenes as shocking and the government is being called on to review its sewage action plan.South West Water confirmed that the storm overflow at Agnes, in Cornwall, had triggered ‘briefly’ but claimed that mud dislodged by heavy rain had also contributed to the discolouration of the water”.

Inside the House of Commons, and on the front pages of most major papers and news websites this morning, embattled Home Secretary, SuelaBraverman, literally “came back from the dead on Halloween”. She has come under fire for her handling of the migrant boats of Albanian economic migrants crossing the English Channel from the French coast. She sparked outrage for calling the situation “an invasion”, deemed unwarranted by the Labour Opposition. Refugee charities and pressure groups have also accused her of overcrowding these economic migrants at Manston, in Kent, and allowing them to sleep on the floor, while awaiting processing.

It is well known that over 30,000 Albanian economic migrants have flooded into UK in the past year, after working on parts of the Continent including France as cheap farm labour, flooded with cash to find a home in England. 

To avoid the accusation of bias against the Home Secretary, past Prime Minister, Liz Truss, has been blamed for a security breach on her phone being tapped by outside agents. Blame is the name of the game.

Does anyone want to be Prime Minister of UK at this time?

An elderly woman patient at Kingston Hospital in Surrey confronted Prime Minister, Rishi Sunak, during hisplanned visit to her ward recently. She warned him to pay nurses more and when the Prime Minister said ‘the NHS is important to him and to the country’, she retorted, “yes, you are not trying, you need to try harder”.

People generally want to “shove the blame” for all the ills of England, on to the English born, first Asian Prime Minister. Is there a taint of prejudice, who knows? So why is the Prime Minister working all the given hours of the day to put things right? Why is he wanting to turn Britain around, what his motive to prove himself capable, while people name him as Rishi, and not call him by his official title as “Prime Minister”?

Whilst all this is happening, is there is a hidden agenda?

There is a“method in the madness”?  The Chancellor of the Exchequer, John Hunt is eying ways to cover  a multi-billion hole,(£60 billion on estimate fiscal black-hole) with plans that vital public services could be cut on the 17 November 2022 Mini Budget Statement. This is argued is close to the heart of the Prime Minister.

The English are thought to detest the French “froggies,” but want a French speaking Mauritian- Indian, Home Secretary, SuelaBraverman, to broker a deal with her French counterpart, to help curb the flood of migrants across the English Channel. She too is working round the clock to prove that she can deliver, and/or better the English “speaking French with the French”, by stopping criminal Albanian drug economic migrants flooding into UK.

People smugglers are being watched after the Home Secretary’s intervention, now more closely monitored by the French and British authorities. In fact, the Home Office may sooner than later, pay a sum to the French authorities, to curb the migrants coming across from France, rather than accommodating migrants at hotels at state expense.

The Battle of the Wits

While the Asians in high office are keen on showing off their talents, it is not strange that the English are being driven to work harder to survive. Most working people first want to go on strike to claim better wages. Understandably, they are worried that there could be cheap labour flooding in from abroad, such as Nursing Staff and other factory workers, plus boat loads of migrants, to accept low pay and conditions. Doctors and surgeons, in specialist hospitals in England, are thus performing more operations per day with the assistance of Anaesthetics, to clear the backlog due to COVID-19.

The Nurses at Hospitals are soon to ballot their members, as walk-outs are looming. They like the Train drivers want to hold the country to ransom, by demanding higher wages amidst soaring inflation and the oncoming winter.

Civil Service administrators are also worried that the new Chancellor may use his axe to chop top heavy government departments.

The one thing is for sure, there is a hue and cry for more wages as inflation soars. At the same time, market forces are demanding to cut to size of the economy, which is the vision of both the Prime Minister and his Chancellor of the Exchequer. Clawing back the excessive profits made in recent days and months by the Energy Companies in UK, is sooner than later envisaged by the Government and is welcome by both the Opposition and the general public.

Why Support for Ukraine Could Dwindle in the Final Months of 2022

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5 mins read

Since February 24, 2022, Ukraine’s armed forces have successfully defended much of their country. But without American assistance, the Ukrainian military campaign would have likely floundered months ago. Since the beginning of the Russian invasion of Ukraine, the U.S. has provided the lion’s share of military aid to Ukraine, alongside enormous financial and humanitarian assistance. With the U.S. midterm elections to be held on November 8, 2022, both President Joe Biden’s administration and Ukrainian President Volodymyr Zelenskyy fear that these channels of support for Ukraine will diminish significantly.

The economic effects of the Russian-Ukrainian conflict, such as higher energy prices, have taken their toll on American voters, and recent polling shows that U.S. support for the war is waning, especially among Republicans. According to Pew Research Center, the belief that the U.S. is providing too much support to Ukraine surged among Republicans and Republican-leaning independents from 9 percent in March to 32 percent in September.

While the U.S. economy is in a relatively good state compared to much of the rest of the world, Republicans have exploited domestic economic concerns to undermine Biden and the Democrats for months. And though many influential Republicans, such as Senator Lindsey Graham, continue to voice strong support for Ukraine, others aligned with the Tea Party and former U.S. President Donald Trump form the GOP’s increasingly vocal “isolationist wing.”

The influence of this populist group has been reflected in the growing split between Senate Minority Leader Mitch McConnell and House Minority Leader Kevin McCarthy, with both of them recently sparring over the issue of Ukraine aid. In May, 57 House Republicans voted against the $40 billion aid package to Ukraine, and during the middle of October, McCarthy warned that the U.S. is “not going to write a blank check to Ukraine.” With elections polls predicting a Republican House majority, future aid packages to Ukraine are likely to face greater GOP resistance.

Support for NATO and Ukraine among Trump-leaning Republicans has traditionally been low. Trump derided NATO throughout his 2016 presidential campaign and presidency, and his July 2019 phone call with Zelenskyy led to the first official efforts to impeach him. Florida Republican Governor and Trump ally Ron DeSantis was also comfortable enough to ignore calls to pull his state’s $300 million investments from Russia shortly after the war began.

Unfortunately for Kyiv, Democratic support for Ukraine has also fallen, according to the September Pew Research Center poll, as anxiety over the economy, access to abortion, and other issues have mounted. Another Pew Research Center poll from October found that the economy is the top issue for voters heading into the midterm elections. Biden’s explanation of rising inflation as “Putin’s price hike in gasoline” has only reinforced the notion in some voters’ minds that U.S.-led sanctions targeting Moscow and support for Ukraine have been partly responsible for their economic pain.

And on October 24, 30 members of the progressive caucus in the U.S. House of Representatives sent a letter to Joe Biden urging him to hold direct talks with Russia and end the war. While the letter was retracted the next day, it further demonstrated Ukraine’s falling support with the left in the U.S.

Any significant drop in American assistance to Ukraine—the U.S. has provided more than 52 billion euros in military, humanitarian, and financial aid to Ukraine from January 24 to October 3, 2022—will severely impact the latter’s ability to defend itself. According to Christoph Trebesch, head of the team compiling the Kiel Institute for the World Economy’s Ukraine Support Tracker, “The U.S. is now committing nearly twice as much as all EU countries and institutions combined.”

The UK has led major European efforts to defend Ukraine and is on track to train up to 10,000 Ukrainian soldiers on its own soil this year. But the UK is experiencing political destabilization following the death of Queen Elizabeth II in September and the resignation of two prime ministers in under two months. These events have inhibited the British government’s ability to form a coherent foreign policy and expand its support for Ukraine.

Furthermore, the UK has its own disputes with the EU regarding Brexit and is unlikely to rally many of the EU states to join its efforts to support Ukraine without strong U.S. coordination.

The EU has sent billions of euros of financial aid to Ukraine since the beginning of the conflict, but far less humanitarian and military aid. Bilateral military aid from Ukraine’s most important EU suppliers—France, Germany, Spain, Italy, and Poland—fell significantly since the end of April 2022, with no new military pledges being made in July. Large-scale European military assistance only resumed following the launch of the successful Ukrainian offensive that has reclaimed a large part of the territory since early September.

Yet around the same time (on September 5), EU foreign policy chief Josep Borrell warned that member states’ weapons stocks were “severely ‘depleted’” after months of providing Ukraine with arms, reinforcing perceptions of the EU’s inability to provide long-term military support to Kyiv.

On October 17, the EU formed its own military training program for Ukrainian soldiers. France declared it would train 2,000 on its soil, while other EU members will train another 13,000 Ukrainian soldiers. Though they are unlikely to match NATO-led initiatives, the latest round of EU sanctions against Russia, which were approved on October 5, demonstrate Europe’s commitment to keeping pressure on Russia.

A drastic increase in EU assistance to Ukraine and confrontation with Russia, however, remains unlikely. Poland, the leading member state advocating for these policies, was the largest recipient of EU funds between 2007 and 2020, and will not be able to coalesce the bloc for these purposes on its own. And with Europe’s energy costs mounting, the ability of the EU countries to maintain, let alone increase, their support for Ukraine may also soon come under much further strain.

As in the U.S., much of Europe’s political right wing (as well as left-wing political elements) is already far less enthusiastic about maintaining support for Ukraine than the political mainstream. Citing economic pain at home, fueled in part by rising energy costs, Hungarian Prime Minister Viktor Orbán, a close ally of Russian President Vladimir Putin, has led the continental criticism against Russian sanctions since the Ukrainian invasion. His enthusiastic reception at the August 4 Conservative Political Action Conference in Dallas, Texas, proves that these policies have not caused much concern in the GOP.

With the threat of reduced support from the U.S. and Europe, Ukraine’s ability to hold off Russia will weaken significantly in 2023. While most UN members voted to condemn Russia for its invasion, only Western allies like Japan, South Korea, Taiwan, Australia, Canada, and New Zealand have chosen to sanction Russia and aid Ukraine. This is unlikely to change, particularly if pressure from Washington and Brussels subsides.

Because the newly elected and reelected representatives in the 2022 U.S. midterm elections will not take office until January 2023, the Biden administration appears intent on using this window to build up its support for Kyiv. Lawmakers have begun discussing a $50 billion aid package for Ukraine that is expected to be finalized by January.

One problem with this strategy is that winter weather risks grinding Ukraine’s autumn offensive to a halt. Any potential Russian counteroffensive may wait until next spring, and Ukraine’s needs may have changed by then. Russia has shifted strategies throughout the war, including bolstering the use of artillery, Iranian drones, and other weapons. The first of the roughly 300,000 Russian reservists and volunteers are expected to arrive soon in Ukraine, allowing Russia to change strategies once more.

By then the war would be more than a year old, and U.S. public and political support would likely have fallen further. Having already provided more than 52 billion euros in military, humanitarian, and financial aid to Ukraine since January 24, 2022, Washington is unlikely to provide Ukraine with more large aid packages until the U.S. domestic economic situation improves.

It remains to be seen if Republicans win the House or the Senate. And if Ukrainian forces manage to regain a significant amount of territory from Russia over the next few months, then current levels of U.S. support could be mostly maintained even if Republicans gain control over either chamber of Congress. Nonetheless, Kyiv may be wise to prepare for one more extensive U.S. aid package and focus on maintaining support for current sanctions while appealing for greater help from Europe. While the Ukrainian armed forces may not mount any new major offensives for the foreseeable future, they may be able to prevent the Russian military from doing so.

This article was produced by Globetrotter.

US breaks ice, Russia thaws

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6 mins read

Fall ends and winter starts at the moment of the December solstice. But what if the Vernal Equinox arrives instead? In these times of climate change, anything is possible. There are subtle signs. Backyard birds are singing, butterflies and bumblebees are returning. How can one possibly miss it? 

It is abundantly clear by now that it was Ukraine war that drew the British Defence Secretary Ben Wallace post-haste to Washington on a secretive visit last Tuesday. Wallace met with US National Security Advisor Jake Sullivan followed up with meetings at the Pentagon, State Department and the spy agencies. 

Two press releases from the Biden Administration ensued — readout of Sullivan-Wallace meeting and a statement by President Biden, pinned on the exit of Liz Truss as UK Prime Minister, reaffirming the evergreen Anglo-American alliance. The striking thing was that neither statement spewed fire. Yet, the US and Britain are in the middle of a war that, according to Biden, is inching close to the Armageddon. 

Upon his return to London, Wallace lost no time to make a statement on Ukraine at the House of Commons, on Thursday. Although not directly relating to his visit to Washington, Wallace’s statement radiated from his consultations with top US officials.  

The statement largely adhered to the western triumphalist narrative of the war in Ukraine to the effect that “Russia’s ground campaign is being reversed. It is running out of modern long-range missiles and its military hierarchy is floundering. It is struggling to find junior officers to lead the rank and file.” 

However, towards the end, Wallace abruptly changed tack by expressing  appreciation of Russian Defence Minister Sergey Shoigu’s handling of the “potentially dangerous engagement” on September 29 between an RAF RC-135W Rivet Joint spy plane “on routine patrol” over the Black sea, which “interacted” with by two Russian armed Su-27 fighter aircraft when one of the Russian jets released a missile in the vicinity of the British plane “beyond visual range”. Wallace messaged the crucial importance of keeping communication lines open to Moscow. (The Hansard record is here.) 

Significantly, a day later, the US Defence Secretary Lloyd Austin made a phone call to Shoigu, the first such contact in over 5 months. Apparently, Austin and Wallace have a common opinion that it is about time to resume conversations with Moscow. 

The Pentagon readout merely said Austin “emphasised [to Shoigu] the importance of maintaining lines of communication amid the ongoing war against Ukraine.”

Indeed, Austin also took care to brief his Ukrainian counterpart Oleksii Reznikov about his initial call with Shoigu and “to reiterate the unwavering U.S. commitment to supporting Ukraine’s ability to counter Russia’s aggression.

“Secretary Austin also underscored the international community’s continued support in building Ukraine’s enduring strength and safeguarding Ukraine’s ability to defend itself in the future, as demonstrated by the security assistance commitments made by allies and partners at the most recent Ukraine Defense Contact Group meeting on October 12. The two leaders pledged to remain in close contact,” the Pentagon announced.

Curiously, two days later, on Sunday, it was Shoigu’s turn to make a follow up call to Austin. But this time around, the Pentagon readout clarified that “Secretary Austin rejected any pretext for Russian escalation and reaffirmed the value of continued communication amid Russia’s unlawful and unjustified war against Ukraine.” 

And within an hour of receiving Shoigu’s call on Sunday, Austin got in touch on phone with Wallace “to reaffirm the U.S.-UK defence relationship and the importance of transatlantic cooperation. Their conversation today was a continuation of their discussion at the Pentagon last week, which covered a wide range of shared defence and security priorities, including Ukraine.”  

Presumably, the fog of war is thickening. Or, possibly, Austin smelt a rat as Shoigu had in the meanwhile on Sunday also made calls to three other NATO capitals — Paris, Ankara and London — where they discussed the situation in Ukraine “which is rapidly deteriorating,” and Shoigu conveyed “concerns about possible provocations by Ukraine with the use of a ‘dirty bomb.’” (here)

Importantly, the British readout said Wallace reiterated to Shoigu the UK’s “desire to de-escalate this conflict… and the UK stands ready to assist.” 

It is entirely conceivable that all this could be the foreplay of a meeting between President Biden and President Putin on the sidelines of the G20 summit in Bali, Indonesia, on November 15-16, which seems increasingly likely. 

But there is also the backdrop of a massive Russian military build up in the Kherson Region in southern Ukraine in the direction of Nikolaev (and, possibly, Odessa.) Contrary to the western media reports, the real picture is that on the western side of the Dnieper, Russians may have established a big troop presence in their tens of thousands with logistical back-up that keep the frontline fully supplied and reserve forces backing up. The Russian defence line is reportedly hardening all across the Kherson front with the deployment of armoured weaponry and tanks. 

The Mayor of Nikolaev (also known as Mykolaiv) Oleksandr Syenkevych, an Ukrainian official, has ordered the evacuation of the civilian population in the city as heavy Russian bombardment continues. He told Christian Amanpour that Russian tanks are already in the vicinity of the city’s airport. (here

Evidently, things are moving toward a major escalation by mid-November. The capture of Nikolaev opens the road for Russian forces to advance toward Odessa 110 kms to the southwest. Control of Nikolaev and Odessa would mean control of Ukraine’s Black Sea coastline and denial of access to the NATO warships based in Romania and Bulgaria.

Evidently, despite the Western media’s triumphalist narrative, the big picture is turning against the US-UK axis. Wallace and Sullivan would have pondered over it, for sure. 

Again, cracks are widening in the transatlantic system, as it dawns on European countries that they have fallen victim to the US’ grand strategy of hegemony. There is growing bitterness that American oil companies are making windfall profits. 

The forthcoming visit by the German Chancellor Olaf Scholz to China is a massive statement in favour of globalisation in defiance of the Biden Administration’s strategy of “decoupling” from China. It signals a nuanced shift and return to pragmatism in Germany’s China policy. Official data shows that China-EU trade topped $800 billion for the first time in 2021 and two-way investment went beyond $270 billion in cumulative terms. In the first eight months of 2022, bilateral trade hit $575.22 billion, up by 8.8 percent and EU’s investment in China soared 121.5 percent year-on-year to $7.45 billion. 

War fatigue is also becoming a compelling reality. The EU has pledged 1.5 billion euros for Ukraine, but how long can it carry such an annual burden when its own economies are in recession? The UK economy is on the verge of collapse.  

Then, there is the “X” factor: sabotage of the Nord Stream pipelines. Putin wouldn’t have pointed finger at the US without corroborative evidence. The Kremlin said on Friday that the “truth” behind last month’s explosions on the Nord Stream gas pipelines “will surely surprise many in European countries if it was to be made public.” 

The bottom line is that Austin broke the ice on Thursday in consultation with Wallace and with Biden’s approval. In a conciliatory tone, the White House also issued an extraordinary statement by Sullivan on Friday expressing appreciation of the “rapid and unanimous vote in support of the Security Council resolution proposed by Mexico and the United States, to impose sanctions measures and hold accountable those actors who are undermining stability in Haiti.” 

Truly, isn’t it amazing that Russia voted for a US resolution imposing sanctions against yet another country in the Global South? 

With the midterms just ahead and the near certainty of Donald Trump’s bid for second term as president, Biden’s own  compass is going to be reset. Biden’s speech from the Roosevelt Room on Friday on deficit reduction projected the historicity of his “economic vision.” 

Suffice it to say that when Shoigu mentioned Ukraine’s “dirty bomb” to three NATO ministers in Europe, he was only echoing what some thoughtful Americans have been saying lately, namely, that the US’ vital interest in avoiding war with nuclear-armed Russia “may soon clash with the strategic war goals of Ukraine—i.e., full retrieval of Crimea and the Donbas,” as Patrick Buchanan, the influential ideologue of the Republican Party, wrote in the American Conservative magazine over the weekend. 

For sure, there is a waft of fresh, soft scents in the air. Does it presage an early spring? But to be a devil’s advocate, any suspension of the grand Russian offensive at this point may stir up a hornet’s nest in Moscow. Perhaps, that also forms part of the Anglo-American game plan.  

Click here to read the author’s personal blog

Sri Lanka: Politics beyond 22

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8 mins read

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

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

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

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

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

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

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

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

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

The Quotidian Rot

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

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

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

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

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

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

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

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

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

On the need for deals

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

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

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

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

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

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

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

Sri Lanka: Political Prescription to 22A

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460 views
3 mins read

Following article is based on the speech made by the author at the parliament during the second reading of Twenty-Second Amendment to the Constitution Bill

It was expected that this Bill would restore the essence of the more progressive 19th Amendment.  But unfortunately, centralisation of power around a single individual still exists. The checks and balances that were expected in a meaningful manner have not been included. The Independence of the public service, transfer of power to Parliament, checks and balances that could curtail the immense powers of the President, transfer of powers between President and Prime Minister are missing. Fundamentals of public finance and accountability too are missing.

Some of the offending areas are the President holding portfolios, appointing Ministers without the advice of the Prime Minister, President’s discretion to dissolve Parliament early, ability to control or influence 7 of the 10 members of the Constitutional Council thereby undermining the independence of the instittutions to which appointments are made through the Council.

But whatever the shortcomings and discrepancies are this Bill is a step in the right direction. To vote against it would be to perpetuate the present system. In arguing for perfection we should not turn out to be the enemy of the good.

No doubt advantages and disadvantages were envisaged at the time the Presidential System was introduced in 1978.The advantages trotted out at that time were

  1. Quick decision making
  2. Presidential discretion in Appointments. The appointees are directly responsible to the President.
  3. The whole Country elects the President and therefore entire Country is the Electorate.
  4. Fixed tenure of office which thereby ensures stability to the country.
  5. President above Party Politics and therefore insulated from Party Politics.

On the other hand the disadvantages are as follows-

  1. Prone to dictatorship or abuse of office being dangerous to the democratic process.
  2. Separation of powers can cause delays in the execution of government programs if executive-legislative relations are not properly managed. Therefore friction among government organs was contemplated. 
  3. Lack of flexibility in Tenure of office. A Parliamentary system could act according to circumstances and be flexible.
  4. Very expensive to operate. The Parliamentary system was considered to be more cost effective. The President’s power to spend directly creates opportunity for lack of fiscal discipline and even all forms of corruption.
  5. Due to the absence of Party discipline unlike in a Parliamentary system, the relationship between the Executive and the Legislature is prone to disagreements and less easy to manage. With the Government Party now being of one hue and the President of a different colour this possibility is even more plausible.
  6. Presidential lobbying can encourage corruption.  Suppose certain groups within the Governing Party decide to join the Party of the President there can be misuse of power by the President.

We have seen the contradictions that emanated due to lack of understanding between the President and the Legislature during the time of Madame Chandrika as well as during the Yahapalanaya government.

Therefore concentration of power in a single individual can have innumerable implications.

But it was thought that a strong Executive could bring benefits to minorities. The President if he wanted to, he could with his unfettered powers bring relief to the problems of the minorities. But how far that would be possible would depend upon the personality of the President. So far Ranil has not catered to the voice of the chauvinists and the champions of ethnocracy. 

The transitional provisions in the Bill allows the present incumbent to continue until the full term of office of the present Ninth Parliament. Therefore as a person somewhat acceptable to non-Sinhala Buddhists also he has an opportunity to take up matters of importance for the future of this Country.   As I understand them, they are –

  1. Repayment of National Debt through proper fiscal management. The way we diplomatically manage the International Community is intrinsically interwoven with this problem.
  2. Take cognisance of the recent UN Resolution with only seven Countries standing by Sri Lanka and commit the Country to conform to the expectations of the World Body. The Country’s supporters among the International community have steadily decreased every year and the next time I expect China too to abstain from voting for Sri Lanka. Our bravado statements have only exposed us as to who we are.
  3. Knowing the nature of the Tamil Ethnic problem and the long history of the Sri Lankan Tamils extending beyond 3000 years in this Island, it would be better for the Country if the President could solve our problem once and for all times by granting total devolution of powers to the North and East of Sri Lanka in order that all communities could travel hand in hand forward within a United Sri Lanka.

I would submit that the Transitional Provisions of the Bill has given the opportunity for the incumbent President and the members of the present 9th Parliament to work out solutions for our long-standing problems fully and effectively.

It is my studied opinion that a confederation would be the ideal system of Government for this Country. 

But before the present Constitution is changed the services of India would be paramount due to their responsibility in getting the Thirteenth Amendment into our Constitution. Any attempt at the arbitrary replacement of the present Constitution with a new Constitution could deprive the Tamils of even the limited powers granted under the Unitary Constitution by the Thirteenth Amendment. Therefore in the formulation of a new constitution for Sri Lanka, the services of India would be sine qua non as far as the future of the Sri Lankan Tamils in Sri Lanka is concerned.

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