Midweek Review

Micro Credit (Finance) – Facts and fallacies

Published

6 years ago

2020/09/2

By Chandrasena Maliyadde

Perhaps, microcredit to some and microfinance to others is the term used, misused and abused in many recent discourses on economic recovery, after the COVID 19 pandemic. Policymakers, practitioners, economists, researchers, analysts, think tanks, banks, financial institutions, journalists, chambers, and INGOs are among the discussants. They explain and argue the importance of micro credit in alleviating poverty, uplifting Micro, Small and Medium Enterprises (MSMEs), and empowering women (as if they were not already) for the purpose of enhancing the contribution, employment and social welfare status of the low-income category of the population. MSMEs, indeed play a major role in most economies, both developed and developing, in creating jobs and reducing unemployment. Thus, they contribute to national income, employment, productivity and entrepreneur development.

The agencies and individuals involved in promoting, facilitating and providing “microcredit”, turn around the term in many dimensions to see the vistas of it. Some say it is not microcredit but micro- finance; some are worried about its nature; others discuss types, composition, with or without collateral, which should or can best deliver, the role of the government, the Central Bank, banks and financial institutions, and NGOs, for what purpose, at which interest rate and so on. According to them, the MSMEs and lower-income categories are badly in need of financial assistance and to be more specific, extended credit facilities on concessionary terms.

Several discussants beat the number of potential beneficiaries! The banks and financial institutions have, on the other hand, come out with a series of concessionary credit schemes under names never heard. They claim to be the first, to be the highest, to be providing the best terms, to be the most convenient, to be the easiest access, and to be leading in assisting MSMEs and low-income category. The credit they claim for their contribution in providing financial assistance to this category is much higher than the volume of credit they provided. If one analyses the schemes and statistics provided by banks and financial institutions and the figures published by the Central Bank (CBSL), no more financial need of this category is left unmet. Banks, Financial institutions, CBSL, policymakers and the Government happily talks of their achievements and success in providing credit facilities to low-income categories. But, the intended beneficiaries are not happy. Why?

The answer lies in the following section of an advertisement published by one of the benevolent banks in a daily paper. This depicts how a Micro Finance recipient begins and ends his/her entrepreneurship.

“Whereas Mr./Ms.……………………has made default in payment due ………………………………on the development loan facility extended and the Board of Directors of……………….Bank ………., do hereby resolve that the property and the premises ……………………….mortgaged …………………..be sold by Public Auction ……………………for the recovery of the said sum………………………….”

As students of economics, we learned four factors of production, namely Land, Labour, Capital and Entrepreneurship. An entrepreneur is a person who takes a risk and combines the other three factors of production – land, labour, and capital – to earn a profit. The most successful entrepreneurs are innovators who find new ways to produce goods and services or who develop new types of goods and services to bring to market. Entrepreneurs are a vital engine of economic growth helping to build the largest firms in the world as well as the small businesses in our neighbourhood. The payment to entrepreneurship is profit. Most MSMEs and low-income category enterprises in Sri Lanka are not making profits. The explanation lies in the lack of entrepreneurship. Only a fraction of MSMEs and low-income category are entrepreneurs. To our policymakers, CBSL, banks, donors, project staff, NGOs and many others, each and every individual in the low-income category who starts up a business or a production is an entrepreneur. In their eyes, the only issue faced is the shortage of capital. This is a misconception. The issue is not lack of capital but the absence of entrepreneurship. When the government, a Bank, an NGO or any other financier extends credit facilities and financial packages, MSMEs are mushrooming. But rarely found an entrepreneur among them.

The majority of those in the low-income category have access to land. It is the land inherited, gifted, transferred, titled, leased or encroached. They have their family labour. Two vital factors of production, land and labour are available free. The opportunity cost of these factors is not reflective in their cost calculation. Earnings, minus payment of interest, are profit for them. So, they are in business but do not sustain their venture long. Then they seek concessionary financing. They pay the interest and capital installments during the initial period and then only the interest and then nothing. Then they resort to distress financing. This is the saga of many low-income category entrepreneurs. Banks and financial institutions have no mechanism to assess the project viability and the entrepreneurship of the borrower. They go by the cash flow statement and the collateral. They are worried about the repayment.

The eligibility criteria for microfinance are poverty, being in the low-income category or a small businessman and being a woman. It is true that a poor individual who used to carry a box of ointments on his head and wandering on his foot has built up an empire. It does not mean that every man who carries a box on his head would end up as a business tycoon. Women are indeed honest, do not take alcohol, do not smoke, do not gamble, do not misuse funds and repay the loan promptly. They are all good deeds but do not mean that every woman is a successful entrepreneur. Those in the categories mentioned above deserve a decent livelihood. But it does not mean that they all can become successful entrepreneurs and are eligible for microfinance. But those who promote facilitate and provide microfinance, believe these good deeds as eligible criteria. They have failed to identify potential eligible entrepreneurs and promising projects for microcredit. This is reflected in the frequent failure of many micro small-medium business ventures. They cannot resist and survive the vagaries of climate change; they are not capable of identifying a product, quantity, standards, design, market needs, market size, regularity, and timing; they lack knowledge, information, technology and more the entrepreneurship. This is good breeding grounds for our policymakers and all other microfinance lovers. The lucky guy who manages and has the patience to undergo all the harassment involved in microfinance will get the facility and copy the neighbour. This is why you see many retailers, poultry producers and pumpkin growers around; suppliers/producers surpass the buyers. Competition among producers will end up with crashing of some if not all and with disputes or as the latest trend with a death.

When we travel outstations, we identify some places with particular products such as pottery, lace, silverware, cane, handicrafts, cotton products and coir products. Most of these products are not chosen but inherited by tradition coming over generations. Access to information, technology, design, packaging, market is denied to the low-income categories. They, therefore, go by tradition, what is familiar to them for generations, what is produced by the neighbour, what is promoted by extension workers, etc. They are not competent in identifying the right product for his enterprise. They produce but do not find a market for their products. For them, famous Say’s Law “Supply creates its own demand” is valid. Say’s Law was promulgated by J B Say, the French Economist in the 18th Century but rejected long before. These types of producers are the so-called eligible borrowers for microfinance providers.

From time to time, government on the Central Bank, to a particular ministry’s donor-funded Project or an NGO comes out with a package of financial assistance for the benefit of MSMEs and low-income category. This category includes cultivators (peasants and farmers include), home gardeners, smallholders, self-employed, micro, small-medium entrepreneurs, and beneficiaries covered by poverty alleviation programmes. They all display similar characteristics and face similar issues. They all line up and come out with a project seeking financial assistance. Policymakers and others involved in microcredit provide consultancy, counselling, advice, instructions, guidelines to this category of beneficiaries on wiser use of financial assistance. Financial needs of this category take a multiple nature. It may be individual, family, social or business need or a mixture of several. They seek financial assistance for a project but use to meet any or all of these needs. Their project never existed or existed but not survived. They wait for another project or a scheme to appear to secure financial assistance and they succeed and settle the encumbrances remaining from the previous scheme. Being blessed by reaching middle-income level by statistics rather than by performance, the country has lost access to foreign-funded projects. But, the country is blessed by frequent elections which come with many packages of new schemes to assist MSMEs and low-income category and write off existing burdens.

We, benefactors, preach to this category of beneficiaries on wiser use of financial assistance they receive. We are the people who involve in preparation of national budget or the ministry budget leaving handling of the family budget in good hands of our wives. We are the people who wisely use some financial benefits entitled to us. For instance, we are entitled to obtain a distress loan. We take it to settle the medical bills of our “ailing grandfather” who has left us many years ago. We use the money and buy a good sound system. We are unable to make ends meet with the remainder of the salary after deduction of interest and the loan installment. We go for a second distress loan to meet the funeral expenses of the same grandfather. We don’t offer merits to our late grandfather. We are rolling before the sound system, while the grandfather would be rolling in his grave.

Low-income category entrepreneurs including MSMEs do not have the capacity, access and information to identify a viable product. The product in demand, quantity, quality, standards, volume, price, regularity, timing, access to market, new ideas and technology, knowledge, skills and skills development, designs, packing and packaging (presentation), market needs are essential ingredients to identify the right product. One would say why not? Google provides all such information. Of course, Google provides but our prospective clients do not receive. It is due to non-availability of power, internet facilities, computers, IT knowledge, and language barriers. The use of obsolete or inappropriate technology results in low productivity, low quality, and high rate of rejection, higher costs and a reduction in market competitiveness.

Successive governments since independence have introduced many schemes, institutions, programmes, projects and officers with the mandate to assist, advise, train, disseminate, share, demonstrate, and promote MSMEs and raise the economic status of low-income category. There are armies of advisors, extension officers, technical officers, development officers and field officers. Yes, the personnel are present but the service is absent. There are Departments, Agencies, Boards, projects to provide information and advice on plants, planting materials, planting techniques. But their presence on the ground is absent. We have Research institutions for almost every crop. They are in air-conditioned rooms with IT facilities and access to the latest knowledge. They can claim the credit for having the lowest productivity in respective crops. While the countries started plantation after Sri Lanka enjoy higher productivity in tea, rubber, coconut, field crops, spices we take the pride for our historical achievements. We have failed to improve the cost efficiency, standards, timing to suit the market. Most of the agencies walk with the producer up to the harvest and leave him high and dry. Because marketing is outside their perimeter.

Activists, policymakers, practitioners, academics, donors, NGOs, project managers, including Prof. YUNUS, think that lower-income categories have land and labour but not capital. But what they do not have is entrepreneurship. Every poor man or Each MSME is not an entrepreneur. This is why most of them fail. Professor Muhammad Yunus, who is widely known as “Banker to the Poor” established the Grameen Bank in Bangladesh in 1983, fuelled by the belief that credit is a fundamental human right. Grameen Bank is treated as the model for microcredit. He received the 2006 Nobel Peace Prize for founding Grameen. But critics say that this model has actually created a debt trap for some of the poor it tried to help. There were also isolated reports that lenders had repeatedly harassed borrowers, and that some of those who had defaulted had been forced to sell their organs to pay back the loans.

Low-income categories and MSMEs encounter many issues as described above. This is due to lethargy, and lack of coordination among supporting and facilitating agencies in the field. Each agency is working in isolation. They do not communicate, consult and deliver one single message. They confuse rather than facilitating. MSMEs and low-income category entrepreneurs do not have access to supporting agencies, such as ITI, IDB, and National Design Centre. These agencies have survived for decades; they have been conducting research; presented papers in Conferences; conducted fairs and exhibitions; awarded certificates and cups for the best entrepreneurs; they have built up modern facilities and new buildings for themselves; promoted their officers; have been exposed in a foreign land; Directors have become Directors General. They celebrate their mere existence with Anniversary events at public expenditure. But, the impact made on the ground is nil or little. Intended beneficiaries of their services are not even aware of the very existence of them.

Successive governments have provided employment to graduates as development officers. This move has elevated unemployed graduates to underemployed graduates. But, the livelihoods, earnings and the living standards of the low-income categories have not been elevated.

Officers, researchers, policymakers, bankers, lenders go by poverty line. Those who are below the poverty line are poor and in the low-income category and eligible for microfinance. Economists and policymakers look at the poverty line calculated by Statisticians and boast that poverty has come down to 4% of the population. But they fail to look at the waistline of the people living in the periphery. That will say ratio of the poor is 40%.

Chandrasena Maliyadde has served as a Secretary to three Ministries before his retirement. He is currently a Vice President of Sri Lanka Economic Association and a University Council Member. He can be reached via chandra.maliyadde@gmail.com

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Midweek Review

2019 Easter Sunday carnage in retrospect

Published

1 week ago

2026/04/8

Sahan Weerasooriya

November 21, 2019: President Gotabaya Rajapaksa meets Archbishop of Colombo, His Eminence Malcolm Cardinal Ranjith at the Bishop House where he requested the Church to nominate a representative for the Presidential Commission of Inquiry (PCoI) probing the Easter Sunday carnage.

Coordinated suicide attacks targeted three churches—St. Anthony’s in Colombo, St. Sebastian’s at Katuwapitiya and Zion Church in Batticaloa—along with popular tourist hotels Shangri-La, Kingsbury, and Cinnamon Grand. No less a person than His Eminence Archbishop of Colombo Rt. Rev. Malcolm Cardinal Ranjith is on record as having said that the carnage could have been averted if the Yahapalana government shared the available Indian intelligence warning with him. Yahapalana Minister Harin Fernando publicly admitted that his family was aware of the impending attack and the warning issued to senior police officers in charge of VVIP/VIP security is evidence that all those who represented Parliament at the time knew of the mass murder plot. Against the backdrop of Indian intelligence warning and our collective failure to act on it, it would be pertinent to ask the Indians whether they knew the Easter Sunday operation was to facilitate Gotabaya Rajapaksa’s victory at the 2019 presidential poll. Perhaps, a key to the Easter Sunday conspiracy is enigma Sara Jasmin (Tamil girl from Batticaloa converted to Islam) whose husband Atchchi Muhammadu Hasthun carried out the attack on St. Sebastian’s Church, Katuwapitiya

By Shamindra Ferdinando

Pivithuru Hela Urumaya (PHU) leader Udaya Gammanpila’s Pasku Praharaye Mahamolakaru Soya Yema (Searching for the mastermind behind the Easter Sunday attacks) inquired into the 2019 April 21 Easter Sunday carnage. The former Minister and Attorney-at-Law quite confidently argued that the mastermind of the only major post-war attack was Zahran Hashim, one of the two suicide bombers who targeted Shangri-la, Colombo.

Gammanpila launched his painstaking work recently at the Sambuddhathva Jayanthi Mandiraya at Thummulla, with the participation of former Presidents Gotabaya Rajapaksa, who had been accused of being the beneficiary of the Easter Sunday carnage at the November 2019 presidential election, and Maithripala Sirisena faulted by the Presidential Commission of Inquiry (PCoI) that probed the heinous crime. Rajapaksa and Sirisena sat next to each other, in the first row, and were among those who received copies of the controversial book.

PCoI, appointed by Sirisena in September, 2019, in the run-up to the presidential election, in its report submitted to President Gotabaya Rajapaksa, in February, 2020, declared that Sirisena’s failure as the President to act on ‘actionable intelligence’ exceeded mere civil negligence. Having declared criminal liability on the part of Sirisena, the PCoI recommended that the Attorney General consider criminal proceedings against former President Sirisena under any suitable provision in the Penal Code.

PCoI’s Chairman Supreme Court Judge Janak de Silva handed over the final report to President Rajapaksa on February 1, 2021 at the Presidential Secretariat. Gotabaya Rajapaksa received the first and second interim reports on 20 December and on 2 March, 2020, respectively.

The Commission consists of the following commissioners: Justice Janak De Silva (Judge of the Supreme Court and Chairman of the Commission), Justice Nissanka Bandula Karunarathna (Judge of the Court of Appeal), Justice Nihal Sunil Rajapakse (Retired Judge of the Court of Appeal), Bandula Kumara Atapattu (Retired Judge of the High Court) and Ms W.M.M.R. Adikari (Retired Ministry Secretary).

H.M.P. Buwaneka Herath functioned as the Secretary to the PCoI.

It would be pertinent to mention that the Archbishop of Colombo Malcolm Cardinal Ranjith, declined an opportunity offered by President Rajapaksa to nominate a person for the PCoI. The Church leader asserted such a move would be misconstrued by various interested parties. Both the former President and Archbishop of Colombo confirmed that development soon after the presidential election.

Having declared its faith in the PCoI and received assurance of the new government’s intention to implement its recommendations, the Church was taken aback when the government announced the appointment of a six-member committee, chaired by Minister Chamal Rajapaksa, to examine the PCoI and recommend how to proceed. That Committee included Ministers Johnston Fernando, Udaya Gammanpila, Ramesh Pathirana, Prasanna Ranatunga and Rohitha Abeygunawardena.

The Church cannot deny that their position in respect of the Yahapalana government’s pathetic failure to thwart the Easter Sunday carnage greatly influenced the electorate, and the SLPP presidential candidate Gotabaya Rajapaksa directly benefited. Alleging that the Archbishop of Colombo played politics with the Easter Sunday carnage, SJB parliamentarian Harin Fernando, in June 2020, didn’t mince his words when he accused the Church of influencing a decisive 5% of voters to back Gotabaya Rajapaksa. At the time that accusation was made about nine months before the PCoI handed over its report, President Rajapaksa and the Archbishop of Colombo enjoyed a close relationship.

The Church raised the failure on the part of the government to implement the PCoI’s recommendations six months after President Rajapaksa received the final report.

The National Catholic Committee for Justice to Eastern Sunday Attack Victims, in a lengthy letter dated 12 July 2021, demanded the government deal with the following persons for their failure to thwart the attacks. The Committee warned that unless the President addressed their concerns alternative measures would be taken. The government ignored the warning. Instead, the SLPP adopted delaying tactics much to their disappointment and the irate Church finally declared unconditional support for the US-India backed regime change project.

Sirisena and others

On the basis of the 19th Chapter, titled ‘Accountability’ of the final report, the Committee drew President Rajapaksa’s attention to the following persons as listed by the PCoI: (1) President Maithripala Sirisena (2) PM Ranil Wickremesinghe (3) Defence Secretary Hemasiri Fernando (4) Chief of National Intelligence Sisira Mendis (5) Director State Intelligence Service Nilantha Jayawardena.

The 20th Chapter, titled ‘Failures on the part of law enforcement authorities’ in the Final report (First Volume), identified the following culprits ,namely IGP Pujith Jayasundera, SDIG Nandana Munasinghe (WP), Deshabandu Tennakoon (DIG, Colombo, North), SP Sanjeewa Bandara (Colombo North), SSP Chandana Atukorale, B.E.I. Prasanna (SP, Director, Western province, Intelligence), ASP Sisira Kumara, Chief Inspector R.M. Sarath Kumarasinghe (Acting OIC, Fort), Chief Inspector Sagara Wilegoda Liyanage (OIC, Fort)., Chaminda Nawaratne (OIC, Katana), State Counsel Malik Azeez and Deputy Solicitor General Azad Navaavi.

The PCoI named former Minister and leader of All Ceylon Makkal Congress Rishad Bathiudeen, his brother Riyaj, Dr Muhamad Zulyan Muhamad Zafras and Ahamad Lukman Thalib as persons who facilitated the Easter Sunday conspiracy, while former Minister M.L.A.M. Hisbullah was faulted for spreading extremism in Kattankudy.

Major General (retd) Suresh Sallay, who is now in remand custody, under the CID, for a period of 90 days, in terms of the prevention of Terrorism Act (PTA) ,was not among those named by the PCoI. Sallay, who served as the head of the Directorate of Military Intelligence (DMI/from 2012 to 2016) was taken into custody on 25 February and named as the third suspect in the high profile investigation. (Interested parties propagated that Sallay was apprehended on the basis of UK’s Channel 4 claim that the officer got in touch with would-be Easter Sunday bombers, including Zahran Hashim, with the help of Sivanesathurai Chandrakanthan, alias Pilleyan. However, Pilleyan who had been arrested in early April 2025 under PTA was recently remanded by the Mount Lavinia Magistrate’s Court, pending the Attorney General’s recommendations in connection with investigations into the disappearance of a Vice Chancellor in the Eastern Province in 2006. There was absolutely no reference to the Easter Sunday case)

The Church also emphasised the need to investigate the then Attorney General Dappula de Livera’s declaration of a ‘grand conspiracy’ behind the Easter Sunday carnage. The Church sought answers from President Rajapaksa as to the nature of the grand conspiracy claimed by the then AG on the eve of his retirement.

Sallay was taken into custody six years after the PCoI handed over its recommendations to President Rajapaksa and the appointment of a six-member parliamentary committee that examined the recommendations. The author of Pasku Praharaye Mahamolakaru Soya Yema, Gammanpila, the only lawyer in the six-member PCoI, should be able to reveal the circumstances that committee came into being.

Against the backdrop of the PCoI making specific recommendations in respect of the disgraced politicians, civilian officials and law enforcement authorities over accountability and security failures, the SLPP owed an explanation regarding the appointment of a six-member committee of SLPPers. Actually, the SLPP owed an explanation to Sallay whose arrest under the PTA eight years after Easter Sunday carnage has to be discussed taking into consideration the failure to implement the recommendations.

Let me briefly mention PCoI’s recommendations pertaining to two senior police officers. PCoI recommended that the AG consider criminal proceedings against SDIG Nandana Munasinghe under any suitable provision in the Penal Code or Section 82 of the Police Ordinance (Final report, Vol 1, page 312). The PCoI recommended a disciplinary inquiry in respect of DIG Deshabandu Tennakoon. The SLPP simply sat on the PCoI recommendations.

Following the overthrow of President Rajapaksa by a well-organised Aragalaya mob in July 2022, the SLPP and President Ranil Wickremesinghe paved the way for Deshabandu Tennakoon to become the Acting IGP in November 2023. Wickremesinghe went out of his way to secure the Constitutional Council’s approval to confirm the controversial police officer Tennakoon’s status as the IGP.

Some have misconstrued the Supreme Court ruling, given in January 2023, as action taken by the State against those named in the PCoI report. It was not the case. The SC bench, comprising seven judges, ordered Sirisena to pay Rs 100 mn into a compensation fund in response to 12 fundamental rights cases filed by families of the Easter Sunday victims, Catholic clergy and the Bar Association of Sri Lanka. The SC also ordered ex-IGP Pujith Jayasundara and former SIS head Nilantha Jayawardene to pay Rs. 75m rupees each, former Defence Secretary Hemasiri Fernando Rs. 50 million and former CNI Sisira Mendis Rs. 10 million from their personal money. All of them have been named in the PCoI report. As previously mentioned, Maj. Gen. Sallay, who headed the SIS at the time of the SC ruling that created the largest ever single compensation fund, was not among those faulted by the sitting and former justices.

Initial assertion

The Archbishop of Colombo, in mid-May 2019, declared the Easter Sunday carnage was caused by local youth at the behest of a foreign group. The leader of the Catholic Church said so in response to a query raised by the writer regarding a controversial statement made by TNA MP M. A. Sumanthiran. The Archbishop was joined by Most Ven Ittapane Dhammalankara Nayaka Thera of Kotte Sri Kalyani Samagri Dharma Maha Sangha Sabha of Siyam Maha Nikaya. They responded to media queries at the Bishop’s House, Borella.

The Archbishop contradicted Sumanthiran’s claim that the failure on the part of successive governments to address the grievances of minorities over the past several decades led to the 2019 Easter Sunday massacre.

Sumanthiran made the unsubstantiated claim at an event organised to celebrate the first anniversary of the Sinhala political weekly ‘Annidda,’ edited by Attorney-at-Law K.W. Janaranjana at the BMICH.

The Archbishop alleged that a foreign group used misguided loyal youth to mount the Easter Sunday attacks (‘Cardinal rejects TNA’s interpretation’, with strap line ‘foreign group used misguided local youth’, The Island, May 15, 2019 edition).

Interested parties interpreted the Easter Sunday carnage in line with their thinking. The writer was present at a special media briefing called by President Sirisena on 30 April, 2019 at the President’s House where the then Northern Province Governor Dr. Suren Raghavan called for direct talks with those responsible for the Easter Sunday massacre. One-time Director of the President’s Media Division (PMD) Dr. Raghavan emphasised that direct dialogue was necessary in the absence of an acceptable mechanism to deal with such a situation. Don’t forget Sisisena had no qualms in leaving the country a few days before the attacks and was away in Singapore when extremists struck. Sirisena arrived in Singapore from India.

The NP Governor made the declaration though none of the journalists present sought his views on the post-Easter Sunday developments.

During that briefing, in response to another query raised by the writer, Army Commander Lt. Gen. Mahesh Senanayake disclosed that the CNI refrained from sharing intelligence alerts received by the CNI with the DMI. Brigadier Chula Kodituwakku, who served as Director, DMI, had been present at Sirisena’s briefing and was the first to brief the media with regard to the extremist build-up leading to the Easter Sunday attacks.

The collapse of the Yahapalana arrangement caused a security nightmare. Frequent feuds between Yahapalana partners, the UNP and the SLFP, facilitated the extremists’ project. The top UNP leadership feared to step in, even after Justice Minister Dr. Wijeyadasa Rajapaksha issued a warning in Parliament, in late 2016, regarding extremist activities and some Muslim families securing refuge in countries dominated by ISIS. Instead of taking tangible measures to address the growing threat, a section of the UNP parliamentary group pounced on the Minister.

The UNP felt that police/military action against extremists may undermine their voter base. The UNP remained passive even after extremists made an abortive bid to kill Thasleem, Coordinating Secretary to Minister Kabir Hashim, on 8 March 2019. Thasleem earned the wrath of the extremists as he accompanied the CID team that raided the extremists’ facility at Wanathawilluwa. The 16 January 2019 raid indicated the deadly intentions of the extremists but PM Wickremesinghe was unmoved, while President Sirisena appeared clueless as to what was going on.

Let me reproduce the PCoI assessment of PM Wickremesinghe in the run-up to the Easter Sunday massacre. “Upon consideration of evidence, it is the view of the PCoI that the lax approach of Mr. Wickremesinghe towards Islamic extremists as the Prime Minister was one of the primary reasons for the failure on the part of the then government to take proactive steps towards tackling growing extremism. This facilitated the build-up of Islam extremists to the point of the Easter Sunday attack.” (Final report, Vol 1, pages 276 and 277).

The National Catholic Committee for Justice to Easter Sunday Attack Victims, in its letter dated 12 July, 2021, addressed to President Rajapaksa, questioned the failure on the part of the PCoI to make any specific recommendations as regards Wickremesinghe. Accusing Wickremesinghe of a serious act of irresponsibility and neglect of duty, the Church emphasised that there should have been further investigations regarding the UNP leader’s conduct.

SLPP’s shocking failure

The SLPP never made a serious bid to examine all available information as part of an overall effort to counter accusations. If widely propagated lie that the Easter Sunday massacre had been engineered by Sallay to help Gotabaya Rajapaksa win the 2019 presidential poll is accepted, then not only Sirisena and Wickremesinghe but all law enforcement officers and others mentioned in the PCoI must have contributed to that despicable strategy. It would be interesting to see how the conspirators convinced a group of Muslims to sacrifice their lives to help Sinhala Buddhist hardliner Gotabaya Rajapaksa to become the President.

Amidst claims, counter claims and unsubstantiated propaganda all forgotten that a senior member of the JVP/NPP government, in February 2021, when he was in the Opposition directly claimed Indian involvement. The accusation seems unfair as all know that India alerted Sri Lanka on 4 April , 2019, regarding the conspiracy. However, Asanga Abeygoonasekera, in his latest work ‘Winds of Change’ questioned the conduct of the top Indian defence delegation that was in Colombo exactly two weeks before the Easter Sunday carnage. Abeygoonasekera, who had been a member of the Sri Lanka delegation, expressed suspicions over the visiting delegation’s failure to make reference to the warning given on 4 April 2019 regarding the plot.

The SLPP never had or developed a strategy to counter stepped up attacks. The party was overwhelmed by a spate of accusations meant to undermine them, both in and outside Parliament. The JVP/NPP, in spite of accommodating Mohamed Yusuf Ibrahim, father of two Easter Sunday suicide bombers Ilham Ahmed Ibrahim (Shangila-la) and Imsath Ahmed Ibrahim (Cinnamon Grand), in its 2015 National List was never really targeted by the SLPP. The SLPP never effectively raised the possibility of the wealthy spice trader funding the JVP to receive a National List slot.

The Catholic Church, too, was strangely silent on this particular issue. The issue is whether Mohamed Yusuf Ibrahim had been aware of the conspiracy that involved his sons. Another fact that cannot be ignored is Attorney-at-Law Hejaaz Hizbullah who had been arrested in April 2020 in connection with the Easter Sunday carnage but granted bail in February 2022 had been the Ibrahim family lawyer.

Hejaaz Hizbullah’s arrest received international attention and various interested parties raised the issue.

The father of the two brothers, who detonated suicide bombs, was granted bail in May 2022.

Eric Solheim, who had been involved in the Norwegian-led disastrous peace process here, commented on the Easter Sunday attacks. In spite of the international media naming the suicide bombers responsible for the worst such atrocity Solheim tweeted: “When we watch the horrific pictures from Sri Lanka, it is important to remember that Muslims and Christians are small minorities. Muslims historically were moderate and peaceful. They have been victims of violence in Sri Lanka, not orchestrating it.”

That ill-conceived tweet exposed the mindset of a man who unashamedly pursued a despicable agenda that threatened the country’s unitary status with the connivance of the UNP. Had they succeeded, the LTTE would have emerged as the dominant political-military power in the Northern and Eastern Provinces and a direct threat to the rest of the country.

Midweek Review

War with Iran and unravelling of the global order – I

Published

1 week ago

2026/04/8

Sahan Weerasooriya

At present, the world stands in the midst of a transitional and turbulent phase, characterised by heightened uncertainty and systemic flux, reflecting an ongoing transformation of the modern global order. The existing global order, rooted in the US hegemony, shows unmistakable signs of decay, while a new and uncertain global system struggles to be born. In such moments of profound transformation, as Antonio Gramsci observed, morbid symptoms proliferate across the body politic. From a geopolitical perspective, the intensifying coordinated aggression of the United States and Israel against Iran is not merely a regional crisis, but an acceleration of a deeper structural transformation in the international order. In this context, the conduct of Donald Trump appears less as an aberration and more as a morbid symptom of a declining US-led global order. As Amitav Acharya argues in The Once and Future World Order (2025), the emerging global order may well move beyond Western dominance. However, the pathway to that future is proving anything but orderly, shaped instead by disruption, unilateralism, and the unsettling symptoms of a system in transition.

Origins of the Conflict

To begin with, the origins and objectives of the parties to the present armed confrontation require unpacking. In a sense, the current Persian Gulf crisis reflects a convergence of long-standing geopolitical rivalries and evolving security dynamics in the Middle East. The roots of tension between the West and the Middle East can be traced back to earlier historical encounters, from the Persian Wars of classical antiquity to the Crusades of the medieval period. A new phase in the region’s political trajectory commenced in 1948 with the establishment of Israel—widely perceived as a Western enclave within the Arab world—and the concurrent displacement of approximately 700,000 Palestinians from their homeland. Since then, Israel has steadily consolidated and expanded its territory, a process that has remained a persistent source of regional instability. The Iranian Revolution introduced a further layer of complexity, fundamentally reshaping regional alignments and ideological contestations. In recent years, tensions between Israel and the United States on one side and Iran on the other have steadily intensified. The current phase of the conflict, however, was directly triggered by coordinated U.S.–Israeli airstrikes on both civilian and military targets on 28 February 2026, which, as noted in a 2 April 2026 statement by 100 international law experts from leading U.S. universities, constituted a clear violation of the UN Charter and International Humanitarian Law (IHL).

Objectives and Strategic Aims

Israel’s strategic objective appears to be directed toward the systematic and total destruction of Iran’s military, nuclear, and economic capabilities, driven by the perception that Iran remains the principal obstacle to its security and its pursuit of regional primacy. Israel was aware that Iran did not possess a nuclear weapon at the time; however, its nuclear programme remained a subject of international contention, with competing assessments regarding its ultimate intent and potential for weaponisation.

The United States, for its part, appears to be pursuing more targeted political and strategic objectives, including eventual transformation of Iran’s current political regime. Washington has long regarded the Iranian leadership as fundamentally antagonistic to U.S. interests in the Middle East. In this context, the United States may seek to enhance its strategic leverage over Iran, including in relation to its substantial oil and gas resources, a point underscored in recent statements by Donald Trump. It must be noted, however, successive U.S. administrations since 1979 have avoided direct large-scale military confrontation with Iran, preferring instead a combination of sanctions, diplomatic pressure, and indirect military engagement.

The positions of other Arab states in the Persian Gulf are shaped by a combination of security calculations, sectarian considerations, and broader geopolitical alignments. While several Gulf Cooperation Council (GCC) members, notably Saudi Arabia and United Arab Emirates, have expressed tacit support for measures that counter Iranian regional influence, their involvement remains calibrated to avoid direct military confrontation. Their position is informed by the belief that Iran provides backing to militant non-state actors, including Hezbollahs in the West Bank and the Houthis in Southern Yemen, which they view as destabilising forces in the region. These states are balancing competing priorities: the desire to curb Iran’s power projection, maintain strong security and economic ties with the United States, and preserve domestic stability. At the same time, countries such as Oman and Qatar have adopted more neutral or mediating stances, emphasizing diplomatic engagement and conflict de-escalation.

Militarily, Iran is not positioned to match the combined military capabilities of U.S.–Israeli forces. Nevertheless, it retains significant asymmetric leverage, particularly through its capacity to influence global energy flows. Control over critical maritime chokepoints, most notably the Strait of Hormuz, provides Tehran with a potent strategic instrument to disrupt global oil supply. Iranian leadership appears to view this leverage as a key pressure point, designed to compel global economic actors to push Washington and Tel Aviv toward a cessation of hostilities and a negotiated settlement. In this context, attacks on oil and gas infrastructure, shipping routes, and supply lines constitute central components of Iran’s survival strategy. As long as the conflict persists and energy flows through the Strait of Hormuz remain disrupted, the resulting instability is likely to generate severe repercussions across the global economy, increasing pressure on the United States to halt military operations against Iran.

Now entering its fifth week, the conflict continues to flare intensely, characterised by sustained and intensive aerial operations. Joint U.S.–Israeli strikes have reportedly destroyed substantial elements of Iran’s air and naval capabilities, as well as critical military and economic infrastructure. Nevertheless, Iran has retained the capacity to conduct guided missile strikes within Israel and against selected U.S. economic, diplomatic, and military assets across the Middle East, including reported long-range attacks on the U.S. facility at Diego Garcia in the Indian Ocean, approximately 4,000 kilometers from Iranian territory. Initial U.S. and Israeli strategic calculations—anticipating that a decisive initial strike and the targeted killing of Iranian Supreme Leader Ali Khamenei would precipitate regime collapse and popular uprising—have not materialized. On the contrary, the destruction of civilian facilities has strengthened anti-American sentiment and reinforced domestic support for the Iranian leadership. While Iran faced initial setbacks on the battlefield, it has achieved notable success in the international media front, effectively shaping global perceptions and advancing its propaganda objectives. By the fifth week, Tehran’s asymmetric strategy has yielded tangible results, including the downing of two U.S. military aircraft, F15E Strike Eagle fighter jet and A10 Thunderbolt II (“Warthog”) ground-attack aircraft , signaling the resilience and operational efficacy of Iran’s military power.

The Military Industrial Complexes and ProIsrael Lobby

Why did the United States initiate military action against Iran at this particular juncture? Joe Kent, who resigned in protest over the war, stated that available intelligence did not indicate an imminent Iranian capability to produce a nuclear weapon or pose an immediate threat to the United States. This assessment raises important questions about the stated objective of dismantling Iran’s nuclear programme, suggesting that it may have served to obscure broader strategic and economic considerations underpinning the intervention. To understand the timing and rationale of the U.S. intervention in the Persian Gulf, it is therefore necessary to examine the influence of two powerful domestic pressure groups: the military–industrial complex and the pro-Israel lobby.

The influence of the U.S. military–industrial complex on American foreign policy is most clearly manifested through the institutionalized “revolving door” between defense corporations and senior positions within the U.S. administration. Over the past two decades, key figures such as Lloyd Austin (Secretary of Defence, 2021–2025), a former board member of Raytheon Technologies, Mark Esper (Secretary of Defence 2019–2020), who previously served as a senior executive at the same firm, and Patrick Shanahan (2019) from Boeing exemplify the direct movement of personnel from industry into the highest levels of strategic decision-making. This circulation is complemented by influential policy actors such as Michèle Flournoy (Under Secretary of Defence Under President Obama) and Antony Blinken (Secretary of State 2021 to 2025, Deputy Secretary of State 2015 to 2017), whose engagement with consultancies like WestExec Advisors further blurs the boundary between public policy and private defense interests. This pattern appears to persist under the present Trump administration, where the interplay between defense industry interests and strategic policymaking continues to shape procurement priorities and threat perceptions. Consequently, the military–industrial complex operates not merely as an external pressure group but as an internalized component of the policy process, shaping U.S. foreign policy in ways that align strategic objectives with the structural and commercial interests of the defense sector. Armed conflicts may also generate substantial commercial opportunities, as increased military spending often translates into expanded profits for defense contractors.

The influence of the pro-Israel lobby on U.S. foreign policy is best understood as a dense network of advocacy organisations, donors, policy institutes, and political actors that shape both elite consensus and decision-making within successive administrations. At the center of this network is the American Israel Public Affairs Committee, widely regarded as one of the most effective lobbying organisations in Washington, which works alongside a broader constellation of groups and donors to sustain bipartisan support for Israel. This influence is reinforced through the presence of senior policymakers and advisors with strong ideological or institutional affinities toward Israel, including Donald Trump and Benjamin Netanyahu, whose close political alignment has translated into consistent diplomatic and strategic backing. Policy decisions—ranging from the recognition of Jerusalem as Israel’s capital to continued military assistance—reflect not only geopolitical calculations but also the domestic political salience of pro-Israel advocacy within the United States. Consequently, the pro-Israel lobby operates not merely as an external pressure group but as an embedded force within the policy ecosystem, shaping U.S. foreign policy in ways that sustain a strong and often unconditional commitment to Israeli security and strategic interests. A fuller explanation of U.S. policy toward Iran emerges when the influence of both the military–industrial complex and the pro-Israel lobby is considered together. These two forces, while distinct in composition and motivation, converge in reinforcing a strategic outlook that prioritises the identification of Iran as a central threat and legitimizes the use of coercive military instruments.

Global Economic Fallout

After five weeks of sustained conflict, the trajectory of the war suggests that Iran’s strategy of resilience and asymmetric resistance is yielding tangible effects. While the United States, alongside Israel, has inflicted significant damage on Iran’s economic and military infrastructure, it has not succeeded in eroding Tehran’s capacity—or resolve—to continue the conflict through unconventional means. At the same time, Washington appears to be encountering increasing difficulty in bringing the war to a decisive conclusion, even as signs of strain emerge in its relations with key European allies. Most importantly, the repercussions of the conflict are no longer confined to the battlefield: the unfolding crisis has generated a widening economic shock that is reverberating across global markets and supply chains. It is this broader international economic impact of the war that now warrants closer examination.

The Persian Gulf conflict is rapidly sending shockwaves through the global economy. At the forefront is the energy sector: even partial disruptions to oil and gas exports from the region are driving prices sharply higher, placing severe pressure on energy-importing economies in Europe and Asia and fueling inflation worldwide. Maritime trade is also under strain, as heightened risk prompts longer shipping routes, increased freight rates, and rising war-risk premiums. These disruptions ripple through global supply chains, pushing up the cost of goods far beyond the energy sector.

Insurance costs for shipping and aviation are soaring as large zones are designated high-risk or even excluded from coverage, further elevating transport costs and pricing out smaller operators. Together, these pressures constitute a systemic economic shock: industrial production costs rise, supply chains fragment, and trade volumes contract, stressing manufacturing, logistics, and consumption simultaneously.

The cumulative effect is already slowing global growth. Major economies such as the EU, China, and India face slower expansion, while import-dependent states risk recession. Trade-driven sectors are contracting, reinforcing a scenario of high inflation and stagnating growth. Air travel is also impacted, with restricted airspace, higher fuel prices, and elevated insurance premiums driving up ticket costs and lengthening travel routes. Rising energy prices, logistics bottlenecks, and increased production costs are pushing up food prices and cost-of-living pressures, potentially forcing central banks into tighter monetary policy and slowing growth further.

Finally, global manufacturing—from chemicals and plastics to agriculture—is experiencing ripple effects as supply chain disruptions intensify shortages and price increases. The conflict in the Persian Gulf is thus not only a regional security crisis but also a catalyst for broad, interconnected economic disruptions that are reverberating across markets, trade networks, and everyday life worldwide.

(To be continued)