How to manage the crisis, and how not to

by DR. DAYAN JAYATILLEKA

The crisis is mounting and has to be managed before it explodes, triggering a chain reaction of a larger explosion. There are a few ideas already out there. My problem with them is that they may exacerbate the crisis, and cause it to escalate into sociopolitical conflict. That’s hardly the intention of crisis-management.

I also wish to suggest some alternative ideas for crisis management based on Realist principles and my own experience.

If I may put together a grab-bag of the ideas for crisis-management already out there, it would contain a National Government, a rush to the IMF, privatization of State-Owned Enterprises (SOEs), the scrapping of Air Lanka, reversion to the 19th amendment, abolition of the executive presidency and restoration of a parliamentary system etc.

Don’t those who make these proposals know that Sri Lanka has the most ‘woke’ mass protest movement that it has seen in a half-century, and that the mass movement is spearheaded by the trade-unions? What do the votaries of the privatization of the SOEs think the trade unions are going to do if there is the slightest sign of privatization? Will the resultant wave of strikes not dissuade foreign investors? Will the strike wave not cause the kind of social instability that will exacerbate and deepen the economic crisis, not attenuate it?

The same goes for the slogan of rushing to the IMF and sticking to the course of whatever stabilization program is agreed to, through to the bitter end. But what if the bitter end is an indefinite General Strike and a mass uprising as the austerity measures bite? How will sociopolitical destabilization help the cause of economic stabilization?

The radical reform proposals of those who suggest crisis management packages, just have not been logically thought-through. There is a reason that the Buddha urged a Middle Path and Aristotle, the Golden Mean. Surely the most prudent solution to the burden of Air Lanka is not to scrap the national airline (as a boy I was proud of Air Ceylon), but to restore something along the lines of the agreement with Emirates?

Haven’t those who urge a national government and a national consensus, not reflected on the failure of Yahapalanaya which culminated in one of the two constituent parties becoming electorally extinct and the other splitting, with the official party becoming a splinter?

Broadening the political participation in the national government cannot take place on the basis of the privatization program that is envisaged. Why should the JVP join such a government and subscribe to economic shock therapy which will only hurt its social base and cause its unions to defect to the rival, radical FSP?

The JVP isn’t going down the ruinous road of the LSSP-CPSL in the 1970-’77 coalition government and impose hardship on the people, so that a rival party can do to it, what it did to the LSSP-CPSL. Who can blame it for not being that dumb?

Those who propose measures of crisis management seem to have confused two agendas, unintentionally or cunningly. The two agendas are those of

(a) economic crisis management (cutting public expenditure etc.) and

(b) political transition (restore 19A etc.). It is possible that one agenda is being slipped surreptitiously into the envelope of the other.

It won’t work, and in fact such a wish-list would only harden regime opinion, strengthening the hawks who warn that going to the IMF would set the regime down the path of self-dissolution. The liberal and left-liberals who make such a mix of proposals are repeating their errors of 2015, namely, treating Sri Lanka as a one-party state or military junta, and regarding themselves as the eastern European or Russia reformers of the late 1980s and 1990s. The mix of proposals is straight from that dated playbook.

It is perfectly reasonable to state that the hyper-centralization of the system with the 20th amendment has become an impediment to crisis-management and perhaps one of the causes of the crisis. It is quite legitimate to seek a consensual recalibration and rebalancing of powers. Calling for the restoration of the 19th amendment which was soundly rejected by the electorate is another matter altogether. That demand is neither democratically legitimate nor is it enforceable.

Furthermore, the excessive bipolarity or multipolarity that the system witnessed during the 19th amendment is every bit as dysfunctional to the task of crisis-management as hyper-centralization and unipolarity via the 20th amendment. Once again the answer is a Middle Path solution: a version of the 17th amendment, perhaps.

History teaches us the following lessons about economic depressions:

(I) A strong-enough executive is necessary to introduce a viable economic solution. No President Roosevelt, no New Deal. No New Deal, and either anarcho-communism or fascism would have been strengthened.

(II) An excessively decentralized or multipolar system that doesn’t permit effective crisis-intervention, leads to the rise of ultranationalist-militarist strongmen (e.g, the Weimar republic yielding Hitler).

(II) Neoliberal economic shock therapy combined with liberal political reforms cause such state-weakening and social breakdown that the backlash culminates in a strong state, which stays durable because of the trauma that neoliberalism has inflicted (e.g., Russia’s programs under Gaidar and Shatalin in the 1990s which cemented a “never again’ consensus in that country, creating and embedding Putinism).

Is there no way out of the crisis? There is, but that would have to be a rational, reasonable and balanced way which the neoliberal ‘solutions’ for crisis management are not. I would suggest a three-component solution:

1. The principle of broad consultation of all stakeholders, leading to compromise and consensus, i.e., President Premadasa’s ‘Three-Cs’: Consultation-Compromise-Consensus.

2. The International Labour Organization (ILO) model, which is tripartite, bringing together governments, workers representatives and employers. Sri Lanka’s crisis-management should be based on this model, in which no measure that is not agreed upon by all three sectors, after comprehensive debate and negotiation, is adopted.

3. If crisis-management is not to be based upon measures urged by big corporates and neoliberal economists, which then cause social upheaval, the workers, peasants, student and all other stakeholders have to be consulted and trade-offs have to be made, which result in a broad social consensus undergirding the reforms.

The solution has to be negotiated, not unilaterally decided upon.

It has to be negotiated not firstly with the IMF but with the organizations of the working people.

The national consensus must be a social consensus, not a top-down elite consensus of the local establishment with the international establishment.

It is a comprehensive, socially all-inclusive People’s Plan that has to be put before the IMF or a consortium of creditors, or indeed implemented by any kind of national government.

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[Dr Dayan Jayatilleka was elected Chairperson of the ILO, 2007-2008]