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Can we have good economics and bad politics?

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Edited by Amaya Vershuur

On Sunday, July 3, a week prior to President Gotabaya Rajapaksa’s resignation, I wrote an article called ‘’ in which I reflected on the proposed economic reform programme, the role of the International Monetary Fund (IMF) and argued for a broad coalition of activists, political leaders and professionals to come together to provide a more just and decent economic reform plan for all Sri Lankans.

I received a response the very next day from Shanta Devarajan, former Chief Economist of the World Bank, familiar with Sri Lanka and knowledgeable about the workings of the IMF. While much has changed since President Gotabaya Rajapaksa’s resignation, much remains the same – in particular Sri Lanka’s need for an IMF bailout. Below is our frank discussion of the impact of an IMF bailout on Sri Lanka’s economic situation.

Shanta D:Thanks for sharing the article. Since you asked for reactions, I will share mine with you. While your proposed “Next Steps” are perfectly sensible, I think your characterization of the economic reform program and the role of the IMF and other IFIs is incorrect (and perpetuates some myths from the 1970s). Furthermore, a closer look at the current situation in Sri Lanka provides an opportunity for the economic and political agendas to come together.

Is the government strong enough to implement the necessary reforms?

Shanta D: In your article you state that, “Even if this government (the previous government headed by Gotabaya Rajapaksas with Ranil Wickremesinghe as Prime Minister) lasts it would be too weak to carry out the stringent economic reforms that the IMF is likely to impose on Sri Lanka.” However, the government has already undertaken most of the reforms proposed in the programme. So it’s hard to see how the government is too weak to carry out the reforms. Furthermore you mention “Caught between the economic pressure of IFIs and lenders…” The only pressure is coming from the Sri Lankan government, which took the decision to call for a debt standstill and embark on a debt restructuring program and an IMF program. In order to achieve a debt restructuring (i.e. get the creditors to agree to take a haircut on their bonds and debts), the Sri Lankan government has to show that it has a credible fiscal policy that will ensure that it can pay back the (reduced) level of debt. So all of the economic reforms in the IMF program are reforms needed to restore stability to Sri Lanka’s fiscal policy so that it can reduce its debt. The pressure is self-imposed because without a debt restructuring, the economy would simply collapse and be unable to recover for a long time (just look at Lebanon).

Ram M:In terms of government weakness/strength, I do think the government may be strong enough to carry out some of the reforms – such as flexible exchange rates and some tax increases. Getting rid of subsidies though maybe trickier. And I am not convinced they can reduce expenditure on State Owned Enterprises (SOEs) in the face of strong public sector unions. Even a vanity project like Sri Lankan Airlines is still to be privatized, leave alone the Petroleum Corporation and the Ceylon Electricity Board. For this to happen, you need a strong government with the support of the people willing to take on entrenched interests.

Shanta D:Currently, the government is working on schemes to provide alternative employment options for the laid-off workers in the privatized SOEs. One of them is to use the government-owned land to give these workers shares in the land, which they could then farm themselves or lease to other farmers. In any event, there is a lot of experience around the world in managing worker resistance to privatization. Programs such as voluntary retirement schemes and even cash transfers (as in Brazil’s Bolsa Familia) have overcome the much-feared resistance from workers. I don’t think having a strong government is either necessary or sufficient. It takes a creative plan and excellent public communication. The current situation in Sri Lanka helps because of the widespread antipathy to the status quo.

Ram M:I take your general point that worker resistance can be reduced by creative schemes. But I just do not see how a government that lacks support can be effective at coming up with creative ideas or good public communication. At a minimum there should be a plan and the government should communicate it. And preferably, the plan should be viewed as fair and that the money saved as not wasted – for example on SUVs for ministers. I do not see the current conditions reflecting that. Very few people – other than SLPP politicians – will see whatever the government does as legitimate.

My point is that a politically weak government is more likely to agree to external measures and lender/IMF pressure that leads to an agreement that is not as good, as one that could be achieved with a government that is strong. I do not really buy your point that this restructuring is self-imposed by the government. Yes we chose an orderly default instead of a disorderly default, as is the case in Lebanon. But we still have to agree on a debt restructuring programme. And I do not think there is only one type of debt restructuring programme that is given simply by our level of debt and ability to pay it off. In theory, yes. In practice, the programme will depend a lot on how effective the government is at coming up with options, negotiating its position and winning over friends and convincing detractors.

Shanta D:What is this “better agreement” that a strong government would agree to? The economic policies that are being agreed to in the Sri Lanka program are not that different from those agreed to by Korea during the Asian financial crisis of 1997, Argentina during its many crises, and Chad and Republic of Congo in the recent oil price decline of 2014. So extremely weak and extremely strong governments negotiate more or less the same policy package. This tells me that the policy package has to do with the economics of the situation rather than the politics (as it should be).

Ram M:On your comparison between the current Sri Lankan program and those implemented in other contexts, I am sceptical about the argument that short term pain is necessary for medium to long term gain. Most IMF programmes are associated with austerity – at least in the short term. Greece, Spain, not to mention many parts of Latin America. These measures end up punishing the people for the blunders or worse corruption of their leaders. And bilateral and multilateral lenders end up imposing these restrictions, not just because of good economics (balance the budget and reduce wasteful expenditure), but because of politics – a kind of morality play where rich countries (and their public) feel that someone should pay for this. That someone ends up being the poor, or at least the lower middle class and salaried folk – who had nothing to do with the bad decisions of their governments. They gained nothing from it. And indeed suffered from those decisions to begin with.

Shanta D:Let’s separate appearances from reality. Of course, these IMF programs are associated with austerity and when there is austerity, everybody suffers and in some cases, the poor suffer more (incidentally, the recent evidence is that the poor don’t suffer more than the non-poor). And in many cases, the middle class takes a hit. But you have to always compare this outcome to the counterfactual. What would have happened in the absence of the IMF program? In almost all cases, the economy would have collapsed and the poor would have suffered immeasurably. Since (by definition) we don’t observe the counterfactual, most people observe the hardship associated with the IMF program and blame the Fund. But the reality is that the Fund is trying to avoid an even bigger disaster from happening.

Furthermore, for a given austerity program, whether the poor are hurt more than the non-poor depends on the existing policies and institutions in the country. Typically, in these countries, the policies and institutions are captured by the elites. In Egypt, the energy-intensive industries are owned by government cronies who therefore keep energy prices low. Since these are powerful people, they make sure that the burden of an austerity program doesn’t fall on them, which is why they get off Scot free. World Bank programs try to dislodge these entrenched elites (subsidy reform, targeted cash transfers, SOE reforms, etc.) but, as you observed, there are limits given the existing political situation. And a program is needed to avert the bigger collapse. So the Fund and Bank compromise and allow some of the anti-poor distortions in the economy to continue, in order to get the program delivered. But the underlying problem is the policy and institutional framework in the country rather than the IMF program.

Who is to blame?

Ram M:The problem we are in is certainly self-inflicted, in that our corrupt governments borrowed more than we could pay off for non-productive projects. Those who pushed debt on the SL government, or for that matter any other badly run third world government, and lent money for corrupt projects do not pay a price. Sure some of them take a haircut, but many others have already recouped their investments.

Shanta D: Every loan has a risk associated with it. That is why lenders do a cost-benefit analysis of the project before financing. If they made a mistake with their cost-benefit analysis, then they do pay for it in the case of default. Of course, if the borrower doesn’t want to default and continues paying back the loan when it’s gone bad (just like Sri Lanka did paying off the bondholders when the country lost access to capital markets), that’s the borrower’s fault, not the lender’s.

Ram M:But there is “self dealing” or at least backroom dealing going on that leads to a country like Sri Lanka taking on more debt than it can pay back. Consider the Central Bank under Cabraal paying bond holders even after we lost access to capital markets. There is a private complaint in courts alleging that either through corruption or gross negligence he is responsible for the economic crisis in the country. But it is exactly this leap from Cabraal to Sri Lanka that I am pushing back against. Let us – only for the sake of argument – say that senior officials had a deal with bond holders. And promised to pay them back no matter what the consequences for Sri Lanka’s people. That is exactly the kind of “debt pushing” and back room deals by lenders and key officials in debtor countries that I am concerned about here. Why should the Lankan people pay the price for this? OK we elected President Gotabaya, and he appointed these officials. So it is our fault in the end. But isn’t that a bit of a stretch when it comes to accountability. Since we did not really elect President Gotabaya to undermine the economy in this way. Moreover, this lets bond holders off the hook – when they knowingly invest in shaky bonds on the basis of assurances given by “dodgy” officials. So my concern here is about “odious” debt where debt pushers not only fail to pay a price, but actually make a profit.

Shanta D:I’m still not convinced that the creditors did anything wrong. Anyone who buys an ISB is taking a risk. The bond can be paid back at face value or, if the economy gets worse, it could be worth a lot less on the secondary market. In Sri Lanka’s case, the ISBs were trading at a discount in 2021 because everyone saw that the economy was declining and Sri Lanka would probably not be able to pay back. However, the Sri Lankan government took the decision in January 2022 to pay back $500 million ISBs in full (starving the people of much needed imports). The bondholders who bought these ISBs at a discount in 2021 made a killing but that was because of the Sri Lankan government’s decision. Now, you could say that the people who bought Sri Lankan ISBs in the secondary market in 2021 may have had some inside information that Sri Lanka was going to pay in full, but I would think that even this information was not reliable and they were taking a risk. So I would put the blame for the current crisis squarely on the government.

What will be the impact of the economic reform measures for normal Sri Lankans?

Shanta D:In your article you state that, “Even if this government (then headed by Gotabaya Rajapaksa) lasts, it would be too weak to carry out the stringent economic reforms that the IFIs are likely to impose on Sri Lanka.” How do you know that the economic reforms are “stringent”? The program that is currently being negotiated between the government and the Fund includes tax increases, subsidy cuts, targeted cash transfers, interest rate increases, and exchange rate flexibility. They are not what any of us would call stringent.

Tax increases and subsidy cuts

Ram M:Tax increases and subsidy cuts can work in a “normal” situation. But in the context of an economic contraction they have the potential to move us in a downward economic spiral. In terms of tax increases, my concern is not about income tax, property tax or taxes on business profits. But particularly regressive taxes – such as VAT – that have a significant impact on the poor.

Shanta D:First, the international evidence on whether the VAT is regressive or progressive is ambiguous, leaning towards neutral or mildly progressive. Second, in the Sri Lankan case, note that the Rajapaksa administration reduced VAT rates by seven percentage points in November 2019. Did the poor benefit from this? I think the reduction was to benefit some powerful business interests. So the increase in VAT will also likely hurt those interests. Third, in the current situation in Sri Lanka, an increase in taxes, including VAT (which by the way is one of the most efficient ways of increasing revenues), is likely to reduce inflation, which helps the poor and, by making the fiscal balance more sustainable, will bring in foreign exchange, both through the IMF program and the debt restructuring.

Ram M:I want to just focus on whether or not VAT is regressive – not the repercussions of reducing the fiscal deficit on the poor. That is a bigger and separate debate – where the answer I think is that it depends on what the money is used for. Of course VAT is an effective way to increase revenues. And yes – the rich spend more – so VAT will lead to a larger share of taxes on the rich. But it leaves untaxed – income, wealth, property and savings. So isn’t the answer a combination of VAT and other taxes. And shouldn’t we be shoring up our capacity to tax, not just look at VAT?

Shanta D:Yes, of course we should be looking at other tax instruments as well but in the short run, the VAT is the most effective instrument we have to raise revenues. The other tax that we should be considering is rescinding all the tax incentives given to investors. This to me is the biggest scandal. A number of rich investors, foreign and domestic, pay no taxes because they received tax holidays when they invested in the country. First, the international evidence is these tax incentives don’t result in higher investment. Secondly, at this time of acute revenue shortage, when ordinary Sri Lankans are having to tighten their belts, it is unacceptable that this group of rich people get away Scot free. To be sure, taxing them would mean abrogating the agreement that they pay no taxes. But we have already abrogated a series of debt contracts (ISBs, etc.), so I don’t see why we shouldn’t do the same for these investment contracts.

That said, we should keep in mind two things. First, the VAT has proven to be a really effective instrument around the world, and especially in developing countries, as a minimally distorting form of taxation. Second, we should be trying to achieve our equity objectives through the fiscal system as a whole rather than separate the revenue and expenditure sides. Most developing countries try to achieve a neutral tax system and achieve their redistribution objectives through the expenditure system (it’s the reverse in developed countries). So I think you should focus on the impact of the fiscal system on the poor rather than looking at each tax instrument. The latter is in fact dangerous. I’ve seen many countries that introduce a highly progressive income tax system but one that doesn’t generate much revenue (Sri Lanka is a bit like that). They then don’t cut expenditures so they run huge fiscal deficits that lead to inflation, debt crises and the like which end up hurting the poor very badly.

Interest Rates

Ram M:On the increase in interest rates, while you need to fight (hyper) inflation, what about a situation where the poor are indebted and spend significant parts of their income servicing debt. How is this affected by inflation – positively or negatively. If I am poor and heavily indebted, would inflation be a good thing?

Shanta D:In general, inflation helps debtors and hurts creditors (because the real value of what they have to pay back is eroding). If there are genuinely poor people who have high debts, there are ways of forgiving their debts. But you need to be careful here. Many of the people who claim to be poor and indebted are not poor (that’s why they were able to take on the loans in the first place). For instance, many tuk-tuk drivers borrowed to buy their tuk-tuks. But these are mainly urban dwellers in Colombo who come from the 80th percentile of the income distribution. In general, we should avoid giving relief to specific types of workers or sectors. The cash transfers should be given to poor people regardless of which sector they work in.

Now to the opportunities from the current crisis

.Shanta D:The two main differences with the current crisis are: (i) the people are already suffering from a government-imposed austerity program (because of the shortage of foreign exchange) before the IMF program has been concluded. To the extent that the IMF program will bring in $4-5 billion in foreign exchange, it will relieve the shortages rather than exacerbate them. So the effect of the IMF program is to put Sri Lankan fiscal policy on a path that can, over time, enable the country to bring in foreign exchange (and pay less to creditors). So I don’t see the IMF program as necessarily “aggravating the crisis”. On the contrary, it is likely to relieve it. (ii) the people in the Aragalaya movement clearly see the link between the government’s failed economic policies and their dire economic situation today. They don’t blame Covid or the Ukraine war–they know it was the misguided policies of the administration (including the delays in going to the Fund and undertaking a debt restructuring) that got us into this mess.

Some of them seem to understand that subsidies are not helpful when you run out of money to pay for them. This is a huge improvement in thinking from, frankly, what I hear from Sri Lankan politicians from the left and the right. The logical extension of this argument is that, if the government’s policies led to the current situation, then to get out of the situation, we must reverse those policies. That is exactly what the economic reform program is doing–reversing the tax cuts of November 2019, reducing regressive subsidies, expanding targeted cash transfers, cutting government borrowing from the central bank, raising interest rates, making the exchange rate flexible, and approaching the IMF and embarking on a debt restructuring. So the demands of the Aragalaya movement are consistent with the IMF program. We should seize this unique opportunity to galvanize the support of the Aragalaya movement in order to counter the usual objections from senior politicians to the economic reforms on grounds that they will not be politically acceptable. Most of these objections stem from an effort to protect the rents accruing to their particular political base. This is a chance to call their bluff.

Ram M:I agree that just because the IMF helps bailout Sri Lanka, need not mean then President Gotabaya (and now President Wickremesinghe) will continue in power. Whether or not a President or government continues, depends on the opposition and the protesters and their ability to out manoeuvre those in power, politically. And making people suffer in order to get a government out is not only unconscionable, but also not likely to succeed (again look at Lebanon). In this regard, I do think that we should separate these two issues, even as we use, to the extent possible, the economic pressure to press for political reforms.

(Ram Manikkalingam is the Director of the Dialogue Advisory Group and a Visiting Professor at the University of Amsterdam.

Shanta Devarajan is a former Chief Economist of the World Bank and a Professor at Georgetown University.)



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Vinland: A Question of Timing

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By Gwynne Dyer

“If the 20th century AD were dated at the same resolution as the 20th century BC, the two World Wars would be indistinguishable in time; and the Montgomery Bus Strike might post-date the release of Mandela.” So wrote the ECHOES team of palaeohistorians at Groningen University in the northern Netherlands – and then they fixed the problem.

Their new method for dating events in the distant past immediately got my attention, because the first problem they solved was the exact date of the first European settlement in the New World. It was the Viking settlement at L’Anse aux Meadows at the very northernmost tip of Newfoundland, and the year was 1021 AD.

I was always interested in the Norse, because I grew up in Newfoundland and that was already seen as the likeliest location of the region they called ‘Vinland’. I read the sagas (‘Erik the Red’ and ‘The Greenlanders’), which were rip-roaring tales of triumph and treachery but distinctly short on geographical and chronological detail.

Then in the 1960s, Norwegian archaeologists discovered the remains of eight Norse longhouses on the L’Anse aux Meadows site. So, the location was known, but still not the date. The explorers came from the new Norse settlements in Greenland, which had been founded in 985 AD, but nobody knew how much later they arrived in Newfoundland.

So, what the hell! Let’s say it was the year 1000 AD. The Newfoundland Museum declared that the year 2000 was the millennium of the Viking settlement, the local tourist authorities went into high gear – and somebody at the Museum contacted me to write the script for the exhibition, because…well, because I was a journalist and a Newfoundlander.

I swallowed my doubts, named my price, and did the job. Not a bad job, actually, because I could play with the fact that the Norse in Newfoundland had both peaceful and violent contacts with the local indigenous people.Those people, probably related to the extinct Beothuk of Newfoundland or the modern Innu of Labrador, were very distant descendants of the modern human beings who left Africa around 100,000 years ago, turned right, crossed all of Asia, and finally arrived in North America when the glaciers receded about 14,000 years ago.

The Norse, on the other hand, were the distant descendants of those who turned left when they left Africa, settled in Europe – and eventually island-hopped across the Atlantic. After all those millennia the two streams of migration finally met up again in Newfoundland. So, I called the exhibition ‘Full Circle’, and slid past the question of exactly when it happened.

But now we know. The ECHOES team (it stands for ‘Exact Chronology of Early Societies’) figured it out by examining bits of wood found on the L’Anse aux Meadows site that had clearly been cut with iron (European) axes. A huge solar flare in 993 AD left a spike in that year’s tree rings, so just count rings out from there to the bark. The trees died in 1021.

The specific date of L’Anse aux Meadows doesn’t really matter, of course, but the technique does. Cosmic-ray-induced surges in atmospheric radiocarbon concentrations are another new tool for figuring out the past, and that is now important work.

Two centuries ago, our knowledge of the past barely reached back past classical Greece and Rome: say, 3,000 years. Now scientists are working hard to puzzle out past climate states ranging from hundreds to billions of years ago, because understanding the patterns of the past may help us through whatever happens next. Every scrap of information may be valuable.

All very well, but why didn’t the Norse settlement last?

They abandoned their exploration of north-eastern North America because the ‘cash crop’ they were looking for in Vinland turned out to be much closer to home: ivory from the abundant walrus population that they could hunt in Disko Bay, only a thousand kilometres up Greenland’s west coast.They could feed themselves by farming and fishing, but it was the ivory that paid for all the things they needed to import from Europe (timber, iron and bronze, stained glass, etc.). Up to 5,000 people lived in the Greenland settlements for more than four centuries, apparently quite happy to ignore ‘Vinland’ – and then they disappeared.

Where they went or how they died has been promoted as a great mystery, but the real reason is probably that the bottom dropped out of the European market for ivory in the early 15th century as abundant new supplies became available from Africa and Russia’s new Arctic settlements.

The climate had also turned against the Greenland Norse (the ‘Little Ice Age’), so they most likely just upped stakes and moved back to Iceland, or even to Norway. No massacre, no famine, just a change in the trade routes. It’s not always dramatic.

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Anwar: Not Malaysia’s Mandela, but something more

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By Krishantha Prasad Cooray

Something extraordinary happened in Malaysia this week. After a bitterly fought general election with no clear winner, the King had the wisdom and the courage to appoint Datuk Seri Anwar Ibrahim as Malaysia’s 10thPrime Minister. To those observing from the outside, it was a remarkable sight. So, one can only imagine the gravity of the moment from the point of view of Malaysia’s new Prime Minister.

Anwar Ibrahim travelled to Istana Negara for the ceremony on Thursday from Sungai Long with his wife, the accomplished and independently remarkable Datuk Seri Dr Wan Azizah Wan Ismail, who for 24 years, has taken her husband’s crusade against corruption and bigotry in Malaysia and made it her own. When Anwar was imprisoned, she stood in for him and embodied his cause with an authenticity and ferocity that saw her become Malaysia’s first ever female opposition leader.

When they arrived at the ceremony, one of the many dignitaries assembled for Anwar’s swearing in was Malaysia’s Chief Justice, Tun Tengku Maimun Tuan Mat, the first woman to hold that office, who herself has long stood out as a judge with little patience for corruption or abuse of power. Whether in the MDB appeals or in holding firm against other powerful special interests, she has embodied the kind of judicial independence for which Anwar has fought.

As Anwar, the Prime Minister in waiting, took the instrument of his appointment into his hand and began reciting his oaths, he must have felt the weight of every word he swore of the pledge he has long dreamt of taking. Perhaps no Malaysian politician has distinguished himself on the world stage as Anwar did as Malaysia’s finance minister between 1991 and 1998.

His outstanding performance in transforming the Malaysian economy and navigating the perils of the 1997 financial crisis, while lauded across the globe, threatened entrenched interests, leading not just to his sacking and repeated imprisonment, but to a systematic 24-year long campaign to tear him down, destroy his name, and vanquish the causes of good governance and egalitarianism that he stood for. It was a campaign that was almost comical in its corruption.

Beginning in September 1998, every time it ever looked like Anwar was raising his head and might score a major political victory, either an arrest, a court ruling, gerrymandering or some other element of state machinery interceded to intercept him and keep him from power.

His multiple imprisonments on what the world agrees are trumped up charges are well known, as is the black eye bestowed on him by the fists of Malaysia’s chief of police. However, it is often forgotten that his Pakatan Rakyat won a 51.4% majority of the popular vote at GE13 in 2013, “losing” the election in practice only because of the first past the post electoral system by which the votes were apportioned. Whatever else Malaysia’s elite entrenched special interests disagreed about, they all seemed to agree on one thing: stopping Anwar at all costs.

Most of those who sacrificed their conscience and integrity over the years to keep Anwar down are now out of the spotlight, shunned by the electorate, recognised for their crimes by the judiciary, or cast aside by their political handlers once their utility expired. None were present in the corridors of power at the royal ceremony last Thursday to witness the totality of their failure.

It was heartening to see the local markets react to Anwar’s appointment with the biggest rally they have shown in two years, and to see the world market respond through the Ringit seeing its best day in the currency market since 2016. As Anwar prioritises tackling the skyrocketing cost of living for ordinary Malaysians in the backdrop of a looming global recession, these signals of confidence are a promising sign.

As he begins to combat poverty while forming his cabinet and steering a fragile coalition, the new Prime Minister will have to grapple with bringing about good governance, combatting corruption and ensuring judicial independence. With corruption as deep-rooted as Anwar himself has charged, he should expect and be prepared to combat the fiercest opposition and subterfuge. To those who live on graft, this is not just a matter of policy. They stand to lose everything, their livelihood and their liberty, if he succeeds.

It is difficult to argue against anti-corruption initiatives or transparency in government, so his opponents will try, as they did throughout his time in the opposition, to paint Anwar as an outsider, unpatriotic, anti-Malay, anti-Islam. It will be up to Anwar and those around him to ensure that from the bully pulpit of the Prime Minister’s office, he can show a larger swath of Malaysians who he is and unite them.

Anwar has the most essential quality of a unifying politician, in that he is a “we” politician and not a “me” politician. Notwithstanding the formidable cult of personality that has been built around him, he is quick to redirect any personal praise or flattery by sharing credit with others and putting them in the spotlight and doing so with a humility and sincerity that endears him to other leaders.

While Anwar Ibrahim is fond of calling himself a ‘village boy’ due to his affection for the simplest pleasures of life, there is nothing simple about his pedigree. He was born with UMNO in his blood, with an UMNO parliamentarian for a father and political organiser for a mother. He is accused of being anti-Malay for his egalitarian politics, even though his entire undergraduate education was devoted to the study of Malay culture, history and literature. The idea that he would oppose the legitimate interests of Malays is unthinkable.

So it is important that he succeed as Prime Minister where he failed as a candidate, in persuading more Malay people that they have nothing to fear from him. In fact, their interests are better served by a level playing field that would enable them to thrive and compete not just in the shelter of the cosy, subsidised affirmative action bubbles that other parties have tried to woo them with, but in the world at large.

Anwar’s in-depth study of the Bible does not make him any less devout a Muslim, but a stronger, more confident one. An unapologetic ally of the Palestinian people, Anwar’s opposition to the suffering imposed by Israelis on Palestinians is only sharpened, not blunted, by his assertion of Israel’s right to exist. He is confident in who he is. Even torture, and years spent in the darkest depths of solitary confinement in a gruesome prison cell were not able to make him waver in his values or political principles.

It is already evident that Anwar’s appointment has raised Malaysia’s standing in the world. Several governments who either vocally or privately protested the way he was treated over the last quarter century have responded to his appointment with a new vigor and eagerness to engage with Malaysia and deepen political and economic ties with the country. Anwar demonstrated in opposition that he has a gift for advocating for Malaysia on the world stage. As Prime Minister, this is a gift that will serve him in good stead.

Wherever they sit on the political spectrum, no Malaysian could deny the sincerity that Anwar brought to his first press conference on Thursday following his appointment. He means to do the job, and do it well, responding thoughtfully and obediently to the King’s direction to form a unity government. He has clearly taken to heart the words of the monarch that “those who won did not win everything, and those who lost did not lose everything.”

The lesson in that message for every politician is that Malaysians are sick and tired of political knife fighting, of “moves”, from Kajang moves to Sheraton moves. No doubt some confederacy of politicians are already plotting the next creative ‘move’ to bring Anwar down, but they may find themselves outmatched by history.

Pundits have quipped that Anwar’s journey this week was one of “prison to palace”, forgetting that he earned that particular honour on 16 May 2018, when he was released from prison and had to deal with the dizzying experience of being driven directly to the palace for an audience with then Yang di-Pertuan Agong Muhammad V. He has been dubbed Malaysia’s “Nelson Mandela” as both men were imprisoned for their politics and came to power soon after. But such reductions do little service to Anwar, whose time in prison, as horrific as it was, is not what defines him or best qualifies him to govern Malaysia in such perilous times.

Prime Minister Anwar was born Malay and has always been a devout Muslim. Unlike the African Mandela in white apartheid South Africa, Anwar was born to power. And he was not directly elected to his office by a clear majority as Mandela was, but instead, Anwar was appointed Prime Minister after no one won a majority. He is not Malaysia’s Mandela, or Malaysia’s Barack Obama. But history has examples more fitting of Anwar’s pedigree, principles and intellect.

There was another politician once, who, like Anwar, had the privilege of sailing into politics through an established political party. That politician too, like Anwar, was from the majority community, but over time grew to vocally oppose discriminatory policies and helped form a new political party. That politician too, like Anwar, was an accomplished orator and compelling communicator. And he did not directly win nomination for the American presidency in May 1860. Instead, he was selected following much debate after no candidate secured a clear majority. And just like Anwar will have to do in the coming days, President Abraham Lincoln had to assemble a broad coalition, a team of rivals, to get his country through the most perilous of times.

Prime Minister Anwar shares other qualities with America’s most revered President. Lincoln too was known for having little patience for pettiness, and to extend a hand of friendship to sworn rivals. The American President’s devotion to his children was also legendary. Anwar rarely responds to questions about his ordeal in prison without sharing his anguish that his five daughters and only son had to endure in watching their father suffer and be persecuted.

Having either taught or studied at schools of the calibre of Oxford, Georgetown and Johns Hopkins, an astute student of history such as Prime Minister Anwar has no doubt already drawn some of these parallels and knows how to take the right pages out of Lincoln’s book to thread the political needle and form a stable government. As a battle-tested politician, there is little doubt that if any Malaysian can rise to the challenge and hold together a team of rivals, it is Anwar Ibrahim.

For Anwar to truly succeed, he will have to transform Malaysian politics and bring about the paradigm shift in Malaysia’s political culture that his supporters have rallied behind for so long. Anwar may be the first Malaysian Prime Minister since independence who does not plan to leave behind a legacy for his children of titles, property, monuments or fortunes.

Anwar’s own oldest daughter, Nurul Izzah Anwar, in her congratulatory message to her father, said that the legacy she expects to be left for the next generation is not a material one, but one of “ideals, principles and values that cannot be bought or sold.” Over the last 24-years, Anwar, his family, his party, and their supporters have braved unimaginable odds to take this simple message to Malaysians.

Whatever policy compromises Anwar may have to make to assemble a stable coalition government, he, like Lincoln, will be defined by whether he is able to remain true to his core principles while governing effectively. After so many years of struggle, so many years of trying to awaken Malaysians to the future that could await them if they unleashed the potential of all Malaysians and empowered grassroots industries and businesses to thrive, Anwar will finally get a chance to show them through deeds instead of words.

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From Jungle To International Five-Star

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CONFESSIONS OF A GLOBAL GYPSY

Dr. Chandana (Chandi) Jayawardena DPhil
President – Chandi J. Associates Inc. Consulting, Canada
Founder & Administrator – Global Hospitality Forum
chandij@sympatico.ca

Prime Minister’s Village Re-awakening

I first met Ranasinghe Premadasa, the ninth prime minister of Sri Lanka, in 1981. He was a unique man loved by many supporters and hated by many critics. At that time, I was at the John Keells head office as the Manager – Operations of their hotel management and marketing services company. We also managed Temple Trees, the official residence of the Prime Minister and his family. Managing Temple Trees was a demanding contract.

I visited Temple Trees occasionally to support Fazal Izzadeen, a manager whom I transferred from Hotel Swanee to be in charge of the Temple Trees operation. Given the personal friendship my boss, Bobby Adams had with the Prime Minister, the Director – Operation had to be personally involved in managing this prestigious property. A perfectionist, Mr. Premadasa did not tolerate any sub-standard quality in maintenance, upkeep and cleanliness. Fazal did a great job in keeping the second family of Sri Lanka content with the services we provided, and more importantly, off our backs.

Unlike any of his predecessors, Ranasinghe Premadasa came from a family of modest means. Politically a self-made man, he was the first ‘commoner’ to become Prime Minister of Sri Lanka, breaking a 30-year tradition of the top leadership of the country being controlled by the high caste aristocracy coming from affluent families. Educated in a Christian missionary college in Colombo, Mr. Premadasa initially opted for a career as a journalist. He was a prolific writer and an electrifying orator in Sinhala. He had been keenly interested in neighbourhood welfare affairs since his youth. He became increasingly involved in municipal politics, initially as a member of the leftist, Ceylon Labour Party which led to his election to the Colombo Municipal Council at a young age of 26.

One day in early 1986, Bobby Adams entrusted a special duty to me. He called to say, “the Honourable Prime Minister will be staying at the Village, Habarana for five days, while he is busy with the 1986 Gam Udawa (Village Re-awakening) project in nearby Hingurakgoda. As I cannot be there this time, please look after him and his team of 50, including the security detail.”

Between 1979 and until his gruesome assassination by a suicide bomber while organizing a May Day demonstration in 1993, when he was the President of Sri Lanka, Mr. Premadasa led 15 annual Gam Udawa projects in different districts in rural Sri Lanka. The festivals were part of a massive, public housing and development program envisioned by him. The festivals were implemented with great efficiency, for the benefit of poor villagers, and predominantly in Sinhala Buddhist areas. Gam Udawa helped consolidate state ideologies at a time when its political and moral authority was being challenged by insurrectionary and separatist groups.

As the General Manager of the Lodge and the Village, hosting the Prime Minister for five-days was an interesting assignment. It enabled me to see the different facets of a unique personality of our times. Our team did the outdoor catering whenever the Prime Minister went to Hingurakgoda to see the progress of the project. At times, he was ruthless in dealing with the government engineers, project managers and private contractors.

He had no patience for project delays and inefficiencies. Nor did he hesitate to take senior bureaucrats to task, in public, in the presence of their subordinates. Quoting one of his idols, Jawaharlal Nehru (the first Prime Minister of India, whose autobiography was translated into Sinhala by Premadasa), he emphasised that, “I am only interested in work done and not in excuses!”

During the evening at the Village, the Prime Minister was in a more relaxed mood, and I saw a different side of his personality. At times he played football with the resort staff. He was athletic and fit. He had his dinner around 6:00 pm and then walked with our management team on the bund of the Habarana tank. His loyal and influential valet, Mohideen walked behind him with a radio playing Buddhist pirith chanting.

One early evening, during our walk, the Prime Minister looked at my wife who was pregnant, and asked her, “Did you have your dinner?” When she replied that we eat around 9:00 pm, the Prime Minister was unhappy. “In your condition, you should ideally be eating five hours before bed time.” he lectured her.Mr. Premadasa was a hard-working man who commenced his day around 4:00 am. After his early breakfast (usually string hoppers made with healthy, kurakkan (millet) and red rice flour, he would call the cabinet ministers and senior officials. They all knew his early routine and had gotten used to getting up very early to respond to the boss’s calls.

Mr. Premadasa was a big fan of the Singaporean Prime Minister, Lee Kuan Yew and his tough leadership style. He often spoke fondly about how effectively Lee Kuan Yew had developed Singapore to an unprecedented advanced level from a previously poor country which only obtained independence 14 years after Ceylon.On the last day of his visit, we were all waiting by the helipad of the Village Habarana to bid farewell to the Prime Minister. At 8:00 am sharp, he left his suite and said his goodbyes to managers and staff waiting in a long greeting line, before getting into an Air Force helicopter piloted by a squadron leader.

Mr. Premadasa was very observant. He paused for a moment and looking unhappy, picked a small, dry leaf from the floor of the helicopter. He then placed that leaf in the palm of the pilot without uttering a word. There was pin drop silence until the helicopter took off. “That’s something Lee Kuan Yew would have done too!” one of our managers told me.

My New Best Friend

From February 1, 1986, with the birth of our son, Marlon, my life changed. Our apartment in Habarana was Marlon’s first home. After my daily, lunch management meeting at the Village, I dropped in at our apartment to spend time with him. After playing a little, we both usually fell asleep for a short nap. When he started talking, Marlon commenced calling me his best friend.

In the later years, Marlon travelled to many countries with us and lived and studied in Iraq, United Kingdom, Sri Lanka, Guyana, Jamaica and Canada. He also lived in Vietnam for five years as a corporate executive of a large company. When he was in his mid-teens, I prompted him to pursue a career in hospitality, but he declined, saying that, “Thaththi, I never want to work as hard as you do in hotels!” Marlon was correct – hoteliering is certainly a demanding career, which often requires long hours of work, while sacrificing family life.

Leadership Change

I was saddened to hear that the Chairman of the John Keells Group, Mark Bostock had decided to retire. He had led the company for over 17 years, since 1969. Under his remarkable leadership, the John Keells Group evolved from a traditional company focusing on commodity and share broking to become the largest and most diverse group of companies in Sri Lanka. Today, John Keells Holdings, PLC (JKH) is Sri Lanka’s largest, listed conglomerate on the Colombo Stock Exchange. It is also the undisputed leader of the tourism and hospitality industries in the country.

Having been associated with the group’s chairman since 1972, initially through rugby football and then as a hotel manager, I was an admirer of Mark Bostock. I was extremely grateful to him for fully sponsoring my first overseas trip and training in London in 1979. In 1980 when I got married, Mark Bostock was an attesting witness. My personal friendship with him continued in 1984 when my family was invited to visit his family in their home in Royal Tunbridge Wells, Kent, for an overnight stay. Later in 1985, he supported re-hiring me to John Keells to manage their two largest hotels (The Lodge and The Village) as the General Manager.

An emotional farewell to a visionary leader

During his last visit to Habarana as the Chairman, he kindly accepted my invitation for Mrs. Bostock and him to plant a tree and address the employees. He shared his vision for the future, and said that, “My Deputy Chairman, David Blackler will certainly continue our good work, as the new Chairman. We have developed a strong team of Sri Lankan directors, who will take the company to a new level,” he assured.

Unfortunately, my first meeting with the new Chairman did not go well. David Blackler, who was also a Britisher like Mark Bostock, wanted some changes done immediately. He also told me that spending time as the President of two trade associations was a waste of time in my busy schedule. I was unhappy, but did not comment as I realized that with leadership change, emphasis may change. Managers need to go with the flow.

Being the General Manager of the Habarana Resort Complex was a rewarding job, but it was not overly challenging. I enjoyed the opportunity to do new things, develop an amazing team and the free rein that I had been given, up to that point. Yet, it was not fully aligned with my mid-term career plan, which was to gain five-star international management experience. I decided to keep my options as well as, my eyes open. The last memo/letter Mark Bostock sent me was motivating and I was very touched with his kind words.

Last memo/letter to me from Mark Bostock

Five-Star Offer

Mr. Steffan Pfeiffer, the General Manager of the 500-room five-star hotel, Galadari Meridien called me with another offer. It was the third time he was offering me a job in this hotel managed by the hotel company owned by Air France. “Chandana, after working here for three years, Meridien is transferring me as the General Manager of their hotel in Hong Kong. All other senior managers will continue, except four managers from one division – Food and Beverage, are leaving. I have identified you as the new lead for this division.” Steffan was trying to motivate me to make a career move.

Due to the popularity of nine food and beverage outlets and large banqueting facilities, the Food and Beverage Division of Galadari Meridian was generating over half the total revenue of the hotel. The offer was for me to be accountable for 230 employees including three expatriate managers, working in 13 departments, including kitchens.

The Food and Beverage Division of a large five-star hotel usually has four senior managers – Food & Beverage Manager, Executive Chef, Assistant Food & Beverage Manager, and the Banquet Manager. Two Frenchmen, who were the Food & Beverage Manager/Executive Assistant Manager and Executive Chef in the hotel opening team had left as well as the other two, who were senior Lankan hoteliers were about to leave Sri Lanka.

Steffan Pfeiffer offered me the opportunity to take over, and to re-organize the Food and Beverage Division. “I have recruited an excellent French Executive Chef to report to you. That is Chef Emile Castillo, who worked with me at Hotel Lanka Oberoi. You have a full control to fill the other two senior vacancies,” he explained. “I need you to meet the new Acting General Manager coming from the Meridien head office in Paris – Mr. Jean-Michel Varichon.”

“We will take you as the Acting Food & Beverage Manager and be confirmed in the position after six months, or once you have impressed the new General Manager, which I am sure that you will.” I agreed to join the Galadari Meridian on the day when Jean-Michel Varichon and Chef Emile Castillo were arriving – June 16, 1986. Steffan Pfeiffer said that he would work with me for two weeks prior to leaving for Hong Kong. I decided to leave John Keells to pursue a career with an international five-star hotel business.

Grading Time

On my last day at the Lodge and the Village, I decided to do something different. I had initiated many new things, but was not sure how the 18 managers in my teams viewed those. I developed a one-page questionnaire listing 12 general aspects of leadership and 18 other aspects we had initiated in 1985 and 1986. I requested the managers not to write their names on the questionnaires.

When I tabulated the results, I was happy to note that my team gave full marks for five elements – Planning, Delegation, Sales Promotion, Leadership Training and Statistical Analysis. The other side of the coin was that I was given poor marks for initiatives such as: Job Descriptions, Best Worker Awards, and surprisingly, the Management Trainee Program. Since 1986, every time I changed my job, I requested written feedback from the teams I managed.

Good Bye from the Lodge Team

David Blackler was surprised that I would leave the position of the General Manager of two of the best local hotels in the country to join a five-star hotel as an Acting Divisional Manager. Some of my friends were also surprised that I would leave the largest group of companies in the country, which was considered a great employer. At times, one has to follow the heart for career progress.

Over the next three years, until his retirement from John Keells in 1989, as a regular lunch customer of Colombo Club (one of the nine food and beverage outlets of Galadari Meridien), Mr David Blackler became very friendly with me. He often discussed my innovative initiatives at Galadari Meridien, especially when I mastered the art of show biz productions to increase hotel profits.

Progress with Le Meridien

Exciting new challenges awaiting me in Colombo…

Within six months of joining, I was confirmed as the Food & Beverage Manager of Galadari Meridien (from 1987, Le Meridien), and another six months later I was promoted Director of Food & Beverage, a job title unique at that time for any Lankan hotelier.

Le Meridien was very generous in developing my international hotel management career. During my two stints with them in 1980s and in 1990s, Le Meridien invested time and funds to send me as a Management Observer to their five-star hotels in Singapore, Changi Airport, Paris, Tours, London, Guadalupe, New Orleans, Toronto, and Dubai (the last two, on quality assurance mystery shopper assignments). They also sponsored my business management education with Institut International Meridien in France, where they developed promising divisional heads to become expatriate General Managers of five-star Le Meridien hotels.

In 1997, after gaining years of experience in managing seven hotels for different companies, I was chosen to convert the largest and the best hotel in the capital city of Jamaica, as Le Meridien Jamaica Pegasus Hotel. My team worked hard with the union to make this hotel become the first hotel in Americas to earn the ISO 9002 certification. In that rewarding assignment, on my request, the company sent two of Le Meridien experts to assist me with the opening – Jean-Michel Varichon from Paris and Chef Emile Castillo from New York. Small world!

In 1997, at the soft opening of Le Meridien Jamaica Pegasus Hotel. (L to R) Paddy Mitchell – MD of Le Meridien North America, John Issa – Chairman of Jamaica Pegasus Limited & SuperClubs, and P. J. Patterson – Prime Minister of Jamaica, listening to my welcome remarks.I will briefly narrate some related ‘fun’ stories in the future episodes of this column.

Dr. Chandana (Chandi) Jayawardena

has been an Executive Chef, Food & Beverage Director, Hotel GM, MD, VP, President, Chairman, Professor, Dean, Leadership Coach and Consultant. He has published 22 text books. This weekly column narrates ‘fun’ stories from his 50-year career in South Asia, the Middle East, Europe, South America, the Caribbean and North America, and his travels to 98 countries and assignments in 44 countries.

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