Features
Biden Presidency Initiates Significant Policy Shifts
Sri Lanka and the Gotabaya Executive may be in for a rough ride
by Kumar David
The changes in both domestic and foreign policy initiated by the Biden Administration are quite significant. On the domestic side changes include a sharp turn in economic strategy, an energetic intervention in dealing with the pandemic, a more plural approach to race relations, positive environmentalism and rethinking border controls. I can touch only on the first today. The effect of American economic policy on Sri Lanka will be felt through the appreciation of the dollar against LKR and the possible upward movement of global interest rates both of which are bad news for a country mired in foreign debt. The determination of the US administration to chart a sharply different economic strategy from that of the last four years, and given the importance of the dollar and the size of the US economy, this will have sizeable effect on the rest of the world. I will spend a few paragraphs on this before turning to human-rights issues which are more likely to impact us directly.
It is likely that there will be an upturn in the US, Chinese and global economies in the next two quarters as the worst of the pandemic passes – fingers crossed since the devastation that covid-variants may inflict on the world is still a known unknown. The $1.9 trillion covid relief, unemployment support and handout package that Biden forced through Congress last week comes atop $2.7 trillion injected into the economy for covid relief since the start of the pandemic and Obama’s stimulus package of 2009 which finally grew to $830 billion by 2019. American Federal debt has risen to about $25 trillion; this is separate from Quantitative Easing whereby the Federal Reserve (FED) bought corporate and government bonds to stimulate the economy after the 2008-9 Great Recession. It is difficult to estimate how much of this still remains on the FED’s balance sheet but I estimate that at its peak the FED had doled out about $5 trillion.
Indications at the moment are that most economies have weathered the pandemic-induced dip with varying degrees of damage and that the next 12 to 18 months will be a period of modest recovery. The US, China and India – I am not too confident of the EU and Russia – will experience a return to pre-pandemic growth, at least for a while; others like Sri Lanka may be less fortunate for reasons I will discuss anon. The relevance of this to today’s column is how this could impact on the Sri Lankan Double-Paksa (two Rajapaksas) led state? Usually a universal upturn will benefit all players in the global market and Sri Lanka should see some increase in demand for its products but there are also three downside factors. The consequences of a very likely rise in world interest rates and appreciation of the dollar, the American led onslaught on human-rights violators and the anti-BJP backlash in Tamil Nadu. The consequences of the first of these is of course directly economic, the second and third will have political consequences with economic spill over.
Although a school known as Modern Monetary theory (MMT) thinks otherwise, it is impossible to avoid inflation if there is endless money creation. The response of central banks to inflation is to raise interest rates. True enough the FED has for a long time aimed at an average inflation rate of 2% but it has doggedly remained much lower – in fact US inflation has remained below 4% for the last 30 years despite the US Federal debt increasing from $3 trillion to $25 trillion. Now in the context of the current bout of planned expenditure the FED hopes inflation will climb from very low values to 2.4%, enabling it to raise interest rates to above 3% sometime in 2022.
This would help stabilise US monetary policy but spells bad news for heavily indebted countries like Sri Lanka. Inflation has a knock on effect on interest rates and bond yields. Without getting technical about it we can expect our debt servicing costs – Lanka will need to keep borrowing to meet its current account deficits and take new loans to service repayment and interest on existing debt – to become more onerous in the coming years as a consequence of America, China and other rich countries pouring funds into new domestic programmes. There is now talk of a new $3 trillion infrastructure programme being steered through Congress by Team Biden before the 2022 Congress elections at which the Republicans are expected to recapture some ground. Team Double-Paksa will have no option but to offer its rear to China in exchange for further loans if it is not to default on debt servicing; a new 10 billion yuan ($1.5 billion) swap-deal was signed a few days ago. The rupee briefly crossed the 200 to a US$ mark on March 17 and is at 199 at this time of writing. It will drift beyond 200 as the bludgeoning in Geneva seeps into the calculations of market players.
The post-Geneva wasteland
There has been a profound shift of foreign policy from Trump’s idiosyncratic and droll circus. The obvious change is a much greater emphasis on human rights as the Double-Paksas are learning to their cost. The UNHRC resolution calls for enhanced monitoring of Sri Lanka’s progress in reconciliation and accountability. Since the government will do damn-all, the oral update to the Council at its 48th session and written update at its 49th session will be negative (unless you believe that leopards can change their spots and tigers their stripes). A comprehensive report is to be presented at the 51st including recommendations for action. There are three Regular Sessions per year in March, June and September. Funding of $3 million for the Commissioner’s Office for this part of the work has been promised by Australia and others and monitoring will commence immediately. The Resolution had over 40 co-sponsors and there may be long term impact on trade and restrictions may be imposed on alleged miscreants.
The Biden Administration is going out on a limb to show that it is different from Trumps insane interlude. This is partly for domestic consumption and partly to correct damage that Trump did to American interests around the world. His love affair with North Korea’s Kim reduced the mighty US into a caricature; America wants NATO as much as NATO needs America and Biden now has a salvage operation on his plate both on NATO and environmentalism. These should be doable but what may be more difficult to salvage is the Iran Nuclear Deal. Iran has made further progress towards a bomb since Trump scuttled the agreement which it obviously will not be willing to reverse. The US for its part is demanding new concessions before it lifts sanctions. Most likely over time individual countries will overlook the American stand and do business with Iran as suits their own interests.
A tougher human rights regimen will be prominent. Sri Lanka will not have an easy ride with Asian countries including those who abstained in Geneva (India, Japan, Indonesia and Nepal) or for that matter those who voted in its favour such as Pakistan and the Philippines. No one will overtly assist the Sri Lankan state to defy or undercut the stipulations of the Resolution. The country seems to be sailing into uncharted waters and the horizon looks gloomy. Worst of all the Captain is an inexperienced novice and the older and shrewder First Officer is keeping out of sight except for a short holiday in Bangladesh – a successful one!
Secretary of State Antony Blinken said in Alaska: “There are a number of areas where we are fundamentally at odds, including China’s actions in Xinjiang, Hong Kong, Tibet and Taiwan . . .” America may take limited action against China over its “genocidal campaign” against Uighur Muslims. China’s top diplomat Yang Jiechi reacted strongly, warning the US against meddling in its “internal affairs” and challenging its own rights record using the Black Lives Matter as an example. The Chinese unfortunately picked a very bad example because the massive BLM movement drawing in whites, blacks and Hispanics is a demonstration of the strength not the weakness of a more open society. The attack on Putin too is focussed on issues of democratic rights and attempts to murder opposition leaders. Therefore to return to my starting point, given the turn of the Biden administration to rights issues as its foreign policy plank, Gotabaya would be wise to learn three Singaporean principles enunciated by two Prime Ministers, Lee Kuan Yew and Lee Hsien Loong.
= Always put Singapore’s interests first and make it clear to the big powers that Singapore has no intention of meddling or taking sides in geopolitical manoeuvres.
= Ensure that the Government of Singapore functions within the remit of Singaporean law and give no room for outsiders to allege that it curtails or violates the rule of law or its binding responsibilities.
= Maintain fairness between ethnic communities (Chinese, Malay and Tamil) so that rifts that open the door to outside interference are precluded.
The Sri Lankan government is not free to do any of this because the economy is in near collapse and the possibility of default on foreign debt makes it dependent on China. This undermines its ability to act as a free and independent agent. At home the regime is beholden to extremist nationalists and monks. The military is treated by the Executive as though it embodies the state. A military that has been brutalised in a civil war is unsafe. Last week I pleaded with international actors to assist the people to protect their freedoms. The mechanisms that the UNHRC has put in place to monitor the regime are admirable and will very helpful. I am confident that not even this neophyte Executive will spurn world opinion brazenly.
Features
‘Lord Edgware Dies’
It has been some time since I read an Agatha Christie, the plot of which I cannot remember. So, I was delighted to find on the shelves of a friend Lord Edgware Dies, which I had a vague memory of, but no certainty about who had done it.
When I read it, I found that my memory of who was probably the killer was correct, but I could not be certain and the red herrings Christie threw in were so diverting that until almost the very end I wondered if I had been wrong.
The plot is very simple. Jane Wilkinson, who is married to Lord Edgware, tells him that she is desperate for a divorce since she is in love with a very proper Anglo-Catholic peer, Lord Melton, but Edgware refuses to divorce her. She asks Poirot to talk to him, which he does, and is surprised to find that Edgware has told Jane he is prepared to give her a divorce. This was, after he had categorically refused, through a letter, which Jane said she had not received.
That night Edgware is murdered, after Jane had been to see him, or so the butler said, and also Edgware’s secretary. But Jane had been that evening at a grand dinner many miles away, where a dozen fellow guests could swear to her presence.
There was a solution however to the mystery of two Jane Wilkinsons, namely a skilful impersonator called Carlotta Adams who, in the opening chapter had impersonated Jane Wilkinson, who had also been at the performance. But when Poirot goes to see her, he finds that she had been found dead on the morning after Edgware had been killed, of an overdose. And in her bag was a gold case, with a strange inscription, that contained the drug, along with a pair of pince-nez.
Her maid said she had written a letter to her sister in America and posted it the previous night. Poirot asks Inspector Japp to get the letter, and a transcript is received from America, and in it the name of Edgware’s nephew Ronald Marsh is mentioned; he had taken Carlotta to dinner after her performance, with which the book opens, and had then set her a challenge. Japp arrests Marsh, but Poirot is not happy and asks for the original of the letter, which the sister sends him. That shows that a page is missing, and the tear is obvious, though that raises the question as to why it had not simply been cut.
Matters are further complicated by the fact that Marsh had gone in a taxi to the Edgware house, along with Edgware’s daughter Geraldine, in the interval of an opera which had previously seemed to provide them with cast iron alibis. Geraldine had gone in to fetch her pearls so that Marsh could raise money he needed, and thus had an opportunity to kill Edgware, as did Marsh, for the driver said he had got out of the taxi while waiting and gone into the house.
Marsh explained why he had gone to the house on the night of the murder as having followed Bryan Martin, an American actor, who had been in love with Jane, whom he saw go into the house with a key. But there was no one visible when he entered, and Geraldine almost immediately came down and they left together. And Martin too has become an object of suspicion to Poirot, for he had been to see him before the murders were discovered with a story of being followed by a man with a gold tooth – a story Poirot immediately realized was false when he was asked how old the man was, and was told he was young, for young people did not have gold teeth.
A heap of French money Edgware had got for a trip to Paris was missing, but since Marsh had no need for it after his cousin’s offer of help, Poirot deduces that it must have been taken by the butler, who has disappeared. Christie has stressed that he is astonishingly handsome, unusual in a butler, and Poirot notes a resemblance to Martin, so he thinks the mysterious man going into the house must have been him.
Incidentally, later Poirot assumes that Edgware’s change of mind was because he was involved in some scandal, and I believe Christie intends us to see the cause of this in his handsome butler, though this is not specified.
Meanwhile, Poirot has asked Japp to find out the provenance of the case found in Carlotta’s handbag, and it turns out to have been made in Paris, specially commissioned, and collected by a woman with pince-nez.
But then another murder occurs—that of another guest at the grand dinner, which provided Jane with her alibi. The victim is an actor who had been bemused when Jane, at a lunch, thought the Judgment of Paris referred to the city. He told Hastings he wanted to see Poirot, but was killed before he could get to the appointment. Poirot had rushed there when told about his request, but it was too late.
Meanwhile, Poirot has tried out the pince-nez on Edgware’s secretary, but she could not see through these. It was only a chance remark heard outside the theatre that led him to try them out on Wilkinson’s maid Ellis, a spare pair that had been appropriated for the night of the murders.
Poirot then lays things out, having summoned Martin and told him that he probably suppressed Edgware’s letter, as he had been dropped by then and he did not want Jane to marry another. But after teasing Martin, Poirot says that Jane was in fact the murderer, and she got Carlotta to impersonate her at the dinner while she went to the house and killed her husband. After meeting Carlotta later and checking with her through a call that she had
not been rumbled, Jane had gone ahead with the murder – she put veronal into her drink and the case with veronal into the handbag. She forgot to take out the pince-nez she had used earlier to imitate an American. Carlotta had registered as the American in a hotel and Jane had gone to see her, and there they exchanged identities. After seen the letter, she made use of it by tearing off the page that referred to her, and the S of She, so that the person who had challenged Carlotta to impersonate her seemed to be a man.
There is a coda in which Jane, condemned to death, writes to Hastings, still full of pride at her ingenuity hoping she will be remembered.
Features
Desilt reservoirs, learn from our ancient irrigation systems
by Prof. O. A. Ileperuma
Silting of reservoirs is a major problem today affecting our hydropower production and irrigation systems. The main Mahaweli reservoirs are silted to a considerable extent reducing the water holding capacity of them. Due to poor soil management practices, floodwaters deposit large amounts of silt in these reservoirs. When the Polgolla reservoir was fully drained about two years back, one could see mountains of silt in the lower reaches of the reservoir. A rough estimate is that 50% of the total capacity of these reservoirs has been lost to siltation. This is a serious issue which affects not only power and agriculture but also flood control.
Our ancient irrigation systems ensured that desilting of reservoirs took place under royal decree where all users of the reservoirs were ordered to carry out desilting of reservoirs during the dry season. The clay thus collected was used in making bricks for the construction of great stupas which dot the landscape of our ancient kingdoms. This ensured that the reservoirs had their full capacity filled with water for the next cultivating season. Our ancient kings were clever enough not to construct reservoirs by blocking main rivers such as the Mahaweli. A classic example is the Minipe left canal where they tapped only the surface water of Mahaweli. Even the bigger tanks such as Nuwara Wewa and Parakrama Samudraya were fed with minor rivulets. There were also other ingenious features in the cascade irrigation systems built by the ancient kings, such as mud sluice canals and forest reservations between the reservoirs in the cascade system. These reservations helped trap silt and remove excess nutrients, which could otherwise contribute to increasing salinity as water flowed from one reservoir to another.
- Parakrama Samudraya
- Kalawewa
- Kotmale
A classic engineering marvel is the former Yoda Ela, which carries water from Kalawewa to Nuwara Wewa and Tissa Wewa. It is 87 km long although the straight distance between these points is only about 40 km. The gradient of this canal is about 10 cm per km or 6 inches per mile. Yodha Ela functions as a moving reservoir and feeds about 4,600 hectares of paddy lands. It is a winding canal with about 120 smaller reservoirs on its way. It was constructed during the reign of King Dhatusena around 459 AD and later expanded by King Parakramabahu by connecting more reservoirs to the network. Unfortunately, during the Mahaweli project our modern-day engineers constructed a concrete canal replacing the winding path of this Yoda Ela also called Jaya Ganga. This effectively removed the ability of the old Yoda Ela to remove silt and nutrients. The bank of this Ela has wet zone trees such as jak and areca nut growing well. They take up the nutrients from the flowing stream making the water suitable for irrigation later.
Ancient Mesopotamian civilisations depended on dams constructed along the two main rivers, Euphrates and Tigris. After continuous irrigation of their fields over several thousand years, salinity of the irrigated lands increased making them unsuitable for agriculture. People died due to famine and this clearly illustrates the danger of blocking main rivers for agriculture. There is scientific evidence that the salinity of paddy soils in the Mahaweli C area is increasing.
We saw the devastation caused by Cyclone Ditwah. The sluice gates of the Kotmale Reservoir were opened, and Kandy and Peradeniya were flooded. If the reservoir had had greater storage capacity, couldn’t the opening of the gates have been delayed? This may not be an argument that modern-day engineers would readily accept, and I am not an irrigation expert. These ideas may well be naïve. But most of us tend to think of reservoirs mainly in terms of hydropower generation and irrigation, while their role in flood control receives much less attention. The question therefore deserves serious consideration. Could restoring lost reservoir capacity through desilting help improve our ability to manage extreme rainfall and reduce flood risks?
Desilting our reservoirs should be considered a national priority.
Features
Losing out to Ethiopia
Export diversification – Missing the wood for the trees – Part III
by Gomi Senadhira
In Sri Lanka, the word “Ethiopia” is often used as disparaging slang to describe individuals or areas experiencing extreme poverty, starvation, or severe economic hardship. This linguistic habit originated in the 1980s with the Western media coverage of the devastating Ethiopian famine of 1983-85. That media coverage shocked the world but also left an outdated and offensive global stereotype that the country is permanently starving. Much has changed since then. By now, with an annual growth rate of around 9%, it is the fastest-growing economy in sub-Saharan Africa. Ethiopia has also emerged as a highly competitive exporter and is challenging not only its competitors in the region but also countries like Sri Lanka. This article is on how Sri Lanka has lost ground to Ethiopia (and a few other countries) in the GCC markets for agricultural and floricultural products.
Sri Lanka – A Pioneer in the Agriculture and Floricultural Market in the GCC
As discussed in Part II of this article, by the mid-1980s Sri Lanka had established a strong foothold in the GCC’s fruit, vegetable, and floricultural market. Geographical proximity and well-established shipping and air links gave Sri Lanka a strong comparative advantage over Southeast Asian and African nations. Thailand, Vietnam, and Kenya were not even in the market. At that time, Ethiopia was experiencing (as BBC news reports described) “a biblical famine”.
The market was not very large, but it was lucrative and growing. Trade Minister Lalith Athulathmudali as well as the Chairman of the Export Development Board, Victor Santiapillai, who visited Kuwait (and the GCC countries), recognised the market potential for these products and encouraged us to continue with our work. The minister was particularly keen to further develop links between the market for these products, exporters, and his Export Production Villages (EPVs). So, it was becoming a successful case not only for export diversification but also for transferring gains from exports directly to rural households.
From Trailblazer to Tailender
As a result, even by the beginning of this century Sri Lanka had a larger market share than most of its competitors from Asia or Africa. But since then, our competitiveness has weakened significantly. The tables below provide a comparative snapshot of Sri Lanka’s performance vis-à-vis Thailand, Vietnam, Kenya and Ethiopia in the GCC market for vegetables, fruits and floricultural products. As illustrated therein, in 2001 Sri Lanka was ahead of Thailand, Kenya and Ethiopia in this small but rapidly growing market. Since then, we have fallen behind Thailand, Kenya and many other countries in that lucrative market. If this trend continues, Sri Lanka will fall behind Ethiopia within the next few years. (See Table 1)
In the GCC market for vegetables (covered in HS chapter 07), Sri Lanka was ahead of most other competitors in 2001. As illustrated in Table 1 , Sri Lanka had failed to develop this market, while Thailand, Kenya, and even Ethiopia had very efficiently increased their market shares. The GCC is a market to which Sri Lanka can supply some vegetables, like cabbages, by sea. It appears Sri Lanka had also failed to exploit this mode of supply.
We can see a similar trend in the market for fruits. Vietnam, Kenya, and Thailand have emerged as major players, while exports from Sri Lanka have staggered on slowly. In this segment, Vietnam has emerged as a leading player during the last twenty years and the GCC imports from Viet Nam have shot up from US$44 thousand in 2001 to US$346 million by 2024. In part one of these articles, I discussed the remarkable increase of jackfruit exports from Vietnam “…just $3 million in 2015 to an impressive $236.8 million in 2023” while most of our jackfruit production rots under the trees. This explains how countries develop their markets, geographically and product-wise. (See Table 2)
Sri Lanka’s performance has been weakest in the market for floricultural products (HS Chapter 06), which groups live trees, cut flowers, and ornamental foliage. When we first entered the market in the 1980s, the market was dominated by the Netherlands, and Kenya and Ethiopia were not even in the market. At that time, we identified the Gulf states as a market where Sri Lanka could have a dominant presence due to geographical proximity. Even in 2001, Sri Lanka was ahead of Kenya, Ethiopia, and Thailand. But by now, Kenya has emerged as the dominant supplier. Ethiopia is also expanding its market share and is the third-largest exporter. (See Table 3)
Missing the Wood for the Trees
In the mid-1980s, Sri Lanka first established its foothold in the GCC market. Since then, Thailand, Vietnam, Kenya, and even Ethiopia have moved well ahead of us and have become leading players. Why did we lag behind in our export diversification efforts in general and, more particularly, in the GCC market?
The reasons are very clear. After the initial attempts in the 1980s and early 1990s, Sri Lanka has not been proactively involved in identifying, developing, and promoting new products and markets, or protecting and further developing new markets already established. The focus has simply been on traditional exports: tea, coconut, cinnamon, and garments, while other products were almost ignored. In essence, we have been and continue to focus intensely on a narrow group of products and markets, and we have lost sight of the bigger picture.
(The writer can be reached at senadhiragomi@gmail.com)
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