by DR. DAYAN JAYATILLEKA
The crisis is mounting and has to be managed before it explodes, triggering a chain reaction of a larger explosion. There are a few ideas already out there. My problem with them is that they may exacerbate the crisis, and cause it to escalate into sociopolitical conflict. That’s hardly the intention of crisis-management.
I also wish to suggest some alternative ideas for crisis management based on Realist principles and my own experience.
If I may put together a grab-bag of the ideas for crisis-management already out there, it would contain a National Government, a rush to the IMF, privatization of State-Owned Enterprises (SOEs), the scrapping of Air Lanka, reversion to the 19th amendment, abolition of the executive presidency and restoration of a parliamentary system etc.
Don’t those who make these proposals know that Sri Lanka has the most ‘woke’ mass protest movement that it has seen in a half-century, and that the mass movement is spearheaded by the trade-unions? What do the votaries of the privatization of the SOEs think the trade unions are going to do if there is the slightest sign of privatization? Will the resultant wave of strikes not dissuade foreign investors? Will the strike wave not cause the kind of social instability that will exacerbate and deepen the economic crisis, not attenuate it?
The same goes for the slogan of rushing to the IMF and sticking to the course of whatever stabilization program is agreed to, through to the bitter end. But what if the bitter end is an indefinite General Strike and a mass uprising as the austerity measures bite? How will sociopolitical destabilization help the cause of economic stabilization?
The radical reform proposals of those who suggest crisis management packages, just have not been logically thought-through. There is a reason that the Buddha urged a Middle Path and Aristotle, the Golden Mean. Surely the most prudent solution to the burden of Air Lanka is not to scrap the national airline (as a boy I was proud of Air Ceylon), but to restore something along the lines of the agreement with Emirates?
Haven’t those who urge a national government and a national consensus, not reflected on the failure of Yahapalanaya which culminated in one of the two constituent parties becoming electorally extinct and the other splitting, with the official party becoming a splinter?
Broadening the political participation in the national government cannot take place on the basis of the privatization program that is envisaged. Why should the JVP join such a government and subscribe to economic shock therapy which will only hurt its social base and cause its unions to defect to the rival, radical FSP?
The JVP isn’t going down the ruinous road of the LSSP-CPSL in the 1970-’77 coalition government and impose hardship on the people, so that a rival party can do to it, what it did to the LSSP-CPSL. Who can blame it for not being that dumb?
Those who propose measures of crisis management seem to have confused two agendas, unintentionally or cunningly. The two agendas are those of
(a) economic crisis management (cutting public expenditure etc.) and
(b) political transition (restore 19A etc.). It is possible that one agenda is being slipped surreptitiously into the envelope of the other.
It won’t work, and in fact such a wish-list would only harden regime opinion, strengthening the hawks who warn that going to the IMF would set the regime down the path of self-dissolution. The liberal and left-liberals who make such a mix of proposals are repeating their errors of 2015, namely, treating Sri Lanka as a one-party state or military junta, and regarding themselves as the eastern European or Russia reformers of the late 1980s and 1990s. The mix of proposals is straight from that dated playbook.
It is perfectly reasonable to state that the hyper-centralization of the system with the 20th amendment has become an impediment to crisis-management and perhaps one of the causes of the crisis. It is quite legitimate to seek a consensual recalibration and rebalancing of powers. Calling for the restoration of the 19th amendment which was soundly rejected by the electorate is another matter altogether. That demand is neither democratically legitimate nor is it enforceable.
Furthermore, the excessive bipolarity or multipolarity that the system witnessed during the 19th amendment is every bit as dysfunctional to the task of crisis-management as hyper-centralization and unipolarity via the 20th amendment. Once again the answer is a Middle Path solution: a version of the 17th amendment, perhaps.
History teaches us the following lessons about economic depressions:
(I) A strong-enough executive is necessary to introduce a viable economic solution. No President Roosevelt, no New Deal. No New Deal, and either anarcho-communism or fascism would have been strengthened.
(II) An excessively decentralized or multipolar system that doesn’t permit effective crisis-intervention, leads to the rise of ultranationalist-militarist strongmen (e.g, the Weimar republic yielding Hitler).
(II) Neoliberal economic shock therapy combined with liberal political reforms cause such state-weakening and social breakdown that the backlash culminates in a strong state, which stays durable because of the trauma that neoliberalism has inflicted (e.g., Russia’s programs under Gaidar and Shatalin in the 1990s which cemented a “never again’ consensus in that country, creating and embedding Putinism).
Is there no way out of the crisis? There is, but that would have to be a rational, reasonable and balanced way which the neoliberal ‘solutions’ for crisis management are not. I would suggest a three-component solution:
1. The principle of broad consultation of all stakeholders, leading to compromise and consensus, i.e., President Premadasa’s ‘Three-Cs’: Consultation-Compromise-Consensus.
2. The International Labour Organization (ILO) model, which is tripartite, bringing together governments, workers representatives and employers. Sri Lanka’s crisis-management should be based on this model, in which no measure that is not agreed upon by all three sectors, after comprehensive debate and negotiation, is adopted.
3. If crisis-management is not to be based upon measures urged by big corporates and neoliberal economists, which then cause social upheaval, the workers, peasants, student and all other stakeholders have to be consulted and trade-offs have to be made, which result in a broad social consensus undergirding the reforms.
The solution has to be negotiated, not unilaterally decided upon.
It has to be negotiated not firstly with the IMF but with the organizations of the working people.
The national consensus must be a social consensus, not a top-down elite consensus of the local establishment with the international establishment.
It is a comprehensive, socially all-inclusive People’s Plan that has to be put before the IMF or a consortium of creditors, or indeed implemented by any kind of national government.
[Dr Dayan Jayatilleka was elected Chairperson of the ILO, 2007-2008]
President’s Dinner for his Old Comrades
The President and Commander in Chief HE Gotabaya Rajapakse invited 186 of his old military comrades and their ladies for dinner at President’s House on Dec. 22, 2021. For a media that lives on gossip, this was manna.
A Sunday paper (not the Island) on 26 Dec reported the invitees numbered 1,050.The figure was specific. Many readers were, as expected, duped to believe it. Added on was that ‘drinks’ too were served as though that was news. No detailed description of the menu was given as has happened before for reasons that will be a revelation. Was it to show profligacy which was news? The Sunday Island of Dec. 2, 2021 had a news item by Dayan Jayatilleka that went one better. He increased the figure to a smarter 1,090. Those made a lie look like the truth. It was meant to be so. No questions were asked as to sources.
The Dec. 26 Sunday paper also had a dig at the organizers. Apparently a few had turned down the invitation. That was curious as the invitations were sent only to those who confirmed verbal enquiries as to their attendance. It may have been that after accepting the invitation a few old sweats, officers and gentlemen it is said they had been, were churlish enough to avoid attendance at the C in C’s dinner. Were they the same fellows, who being absent from the scene, did the counting of heads too?
Jayatilleka went further. He thought there was something odd if not sinister in the exercise. He believed 1,090 ‘senior military men, serving and retired’ attended. He asked readers not to continue reading if they did not believe that the invitations had been sent with some ulterior motive. The suggestion was that the dinner was not a ‘sociable, benign gesture of a year-end party’. It obviously worried him that good and normal men in SL would have thought differently and questioned the assumption.
To begin with his facts were absolutely cock eyed. The cooked figures he had been served (1,090) by someone who was possibly not at the dinner, clearly supported his fertile imagination. He probably thought a mere 186 officers at dinner would not be enough to invent a rollicking fairy tale.
The only serving officers present were the tri services commanders. With their spouses a round figure of 400 invitees could have been closer to the truth. All the others were veterans aged 70 years and above, some disabled. A few were 90 years old and were in wheel chairs.
Now what did Jayatilleka a former minister in the EPRLF that was a IPKF stooge that made a Unilateral Declaration of Independence in the late1990s, think the doddering old and but still bold 186 could have been up to? It certainly helped to propel his latest onslaughts on the fanciful ‘militarization’ of the nation. Was it also to mark up points with the West, just in case?
So how did the ‘gala’ dinner go? First of all male guests in smart casual (tie), and their ladies in sarees, arrived well in time as is the norm among servicemen. They were given antigen tests by a team of medics before gathering in the manicured garden where the military bands played some lively music.
Old comrades reminisced with their friends, many after decades and two years of Covid. Everyone was refreshingly relaxed. Many recalled long forgotten incidents, hilarious mishaps mostly, and extraordinary characters they served with. Many heroes were present but stories of daring and battle were not recounted here. The missing was not forgotten.
As at any military social function, not a word of politics was heard. No one pulled rank. When the C in C came and graciously mixed with his guests, all older than him, no one in the best of service traditions and etiquette forgot who he, the C in C, was. He knew and called all of them by their first names. He seemed as happy as his guests were, to meet simply as old comrades, exchange greetings and enjoy themselves. There were no speeches.
A splendid buffet dinner followed.
Here was the first old soldier who had become the elected President and C in C of SL. He was now among old friends. They all thanked and wished him and his lady the very best in the challenging year to come.
People who will never know what military comradeship is should not waste their time trying to question the motives of a C in C in inviting his old comrades to dinner. It was the first ever in SL history. There was nothing ‘gala’ either, as anyone who was inveigled by his ‘informant’ may have believed. Such people should try not to judge others by their standards, be mean and gullible and should not to circulate worn out tales or have recurring nightmares about ‘militarization’.
Old soldiers never die; they only fade away, even from the President’s House. God only knows what happens to mercenaries and tale carriers.
DE-CODING THE AKD-JVP-NPP RELATIONSHIP
DR. DAYAN JAYATILLEKA
The JVP-NPP is prominent in the struggle against the presidential system–while permitting speculation that Anura Kumara Dissanayake will be the presidential candidate—and in the vanguard in the struggle against corruption.
Whether it realizes it or not, it is being hypocritical—not because of that duality–and so too are those who support them on those grounds.
The reason is simple and self-evident. Whether one is against the presidential system as such, or whether one is against the 20th amendment while being for the Presidential system, the reason is the same: the critique of over-centralization. To spell it out, the objection is too much power and too many functions in the hands of a single person and the remedy is seen as the separation of powers, which makes for check and balances.
In its practice, the JVP-NPP runs completely against that principle.
The next ‘signature issue’ is corruption. There too, the principle is the same: if one person holds more than one post and there is a possible conflict of interest, that is the potential source of corruption. Here too, the crux of the matter is that one person should not head several institutional or organization spaces. Interlocking directorates are the conduit of corruption. I am not accusing the JVP-NPP of corruption, but of violating the principle of safeguards or guardrails against overlapping and over-concentration.
The NPP was not founded by non-party activists or those of many political parties. Still less was it formed by academics. It was founded by Anura Kumara Dissanayake in 2015.
The NPP is not led by a non-party personality. It is led by Anura Kumara Dissanayake who founded it.
Anura Kumara Dissanayake is the leader of the JVP. He was the leader of the JVP when he established the NPP, and remains the leader of the JVP.
It is reasonable to assume that as the JVP’s leader, rather than merely a JVP member or second-level leader, Mr. Dissanayake would have founded the NPP as part of the JVP’s strategic vision.
Insofar as the NPP is the creation of the JVP’s leader, the NPP is the child of the JVP.
Latin American Left
The JVP has almost always had phases in which it had personalities and mass organization to which it gave a long leash. Indika Gunawardena and Sunila Abeysekara are two examples but not the only ones. Perhaps a more important one is HN Fernando the politically highly literate leader of the Ceylon Teachers Union which he had built up into a 30,000 strong organization. All of them were purged from the party when views that dissented from the changing party line, were voiced. (HN Fernando, who was Wijeweera’s brother-in-law was physically assaulted).
These seem to me the earlier prototypes of what is now manifested as the NPP. The NPP seems to me to be a new model of the same old template: a front organization of fellow-travelers.
If the NPP were to be an autonomous civic or mass organization or more ambitiously the formation which should be recognized as a contender to lead the country, the Latin American Left provides the architecture.
Uruguay’s Tupamaros and its Communist Party founded the Frente Amplio, the Broad Front, which lasted from the early 1970s through the decades of military dictatorship, to this day. The first leader of the Frente Amplio who remained so for many years, was General Liber Seregni, not the MLN-Tupamaro leader Raul Sendic nor the Uruguayan CP’s leader Rodney Arismendi.
In El Salvador, the revolutionary vanguard unified as the FMLN, with its politico-diplomatic partner being the Frente Democratico Revolutionario, the FDR. None of the FMLN’s leaders headed the FDR.
That is the model by which the autonomy of the civic front is ensured. In the case of the NPP, it is headed, not even by a JVP personality like Nalinda Jayatissa or Bimal Ratnayake, still less a respected progressive activist, intellectual or cultural-artistic figure but precisely by the top leader of the JVP.
As a disciplined leader who is committed to the strategy and decisions of the JVP, there is hardly a structural possibility of genuine autonomy for and on the part of the NPP.
Political Culture: Falsification & Opacity
A great many of us watched as Anura Kumara Dissanayake repeatedly emphasized on national TV that Kumara Gunaratnam was never a member of the JVP. Quiet apart from the insult to the memory of Ranjithan Gunaratnam, a real hero and martyr of the JVP leadership, it was a plain lie because it was widely known that Kumara Gunaratnam played the major role in rebuilding the JVP clandestinely after the repression was over.
The post 1994 JVP was built upon the foundation laid by Kumara Gunaratnam whom Anura Kumara Dissanayake told the nation was never a member of the party.
A few years ago, after Kumara Gunaratnam had been ‘disappeared’ and tortured in 2011, and was released only due to external lobbying and the intervention of Mahinda Rajapaksa, Gotabaya Rajapaksa made a throw-away public remark in response to Anura Kumara’s criticism of him on an entirely different matter, that the crackdown on Gunaratnam and his emerging new outfit (it wasn’t called Peratugamee at the time) was made on an alert from the same quarter that was now criticizing him. There was no answer from AKD.
If anything, a left alternative must occupy the moral high ground, and not only in its own eyes. The historical truth is the only path to the moral high ground.
None of this is meant as an indictment of or attack on Anura Kumara as a person. It speaks to the discourse, the political culture of the JVP and its opacity. The denial of Kumara Gunaratnam, his removal from the annals of the JVP, the sheer falsification of history, tells us what the JVP still is. This travesty is not something that has occurred, would occur or could occur in any other political party in Sri Lanka. The JVP was and is a party which is the most opaque in Sri Lanka.
It is the same Anura Kumara who leads the same JVP who also founded and leads the NPP.
Therefore, any influence that the NPP has on the JVP will be secondary, episodic and tactical, while the JVP’s influence over the NPP will be strategic and structural. The tail won’t be wagging the dog.
Foreign exchange, foreign policy, and economic roundtables
by Uditha Devapriya
Sri Lanka’s Central Bank will be settling a USD 500 million bond the day after tomorrow. Earlier this month, Ajith Nivard Cabraal tweeted that the Bank had set aside the required amount from its foreign reserves, reiterating the country’s commitment to honouring its debt obligations. Perhaps in response to this development, bondholders appear to have regained confidence about our prospects: latest figures show that bond market prices are converging with face value, though this may well be a temporary gain.
The January 18 settlement is the first of two that will have to be made to our International Sovereign Bond (ISB) holders this year. The second, amounting to USD one billion, is due on July 25. The Central Bank’s strategy is one of doubling down on these debt obligations while renegotiating loans from other governments. This strategy isn’t as muddled up as it is made to be by its critics: unlike governments, ISB holders don’t negotiate, and if they are asked to, it’s usually on the eve of a default or severe economic crisis.
In strategising a way out, then, the Central Bank has identified its priorities: it will pay up on its ISB commitments and devote foreign exchange to little else.
It’s difficult to predict how that will affect our foreign relations in the longer term. The country is presently governed by a party that promised never to sell or lease out its assets. Yet, today, officials are travelling everywhere, negotiating with this government and that, hoping for more lifelines. We have clearly exhausted other options: we can’t raise anything from bond auctions, and we are rejecting the IMF line. Since governments are easier to talk with, we are hence talking with as many of them as possible. It’s doubtful whether this is the only option available, but it’s probably the best shot we can give.
In giving that shot, however, are we exposing ourselves to the pressures of regional and extra-regional power pressures? Consider the countries we have gone to so far: Oman, China, and India. Negotiations with India have been successful, with Foreign Minister S. Jaishankar stating that Delhi is ready to stand with Sri Lanka. Though his government has remained quiet over requests for credit lines, these may well come our way.
On the other hand, Beijing has responded to Gotabaya Rajapaksa’s call to Foreign Minister Wang Yi to restructure its debts, with Cabraal declaring that a new loan is on the blocks. As for Oman, though negotiations have stalled over requests to explore the Mannar Oil Basin in return for interest-free credit, this too is a window that remains open.
These developments are, all things considered, intriguing. In the face of the worst global health crisis in over a century, our foreign policy has taken a massive beating. The fertiliser imbroglio with China and the withdrawal of Chinese projects from the North over alleged Indian pressure, as well as the visit of the Chinese Ambassador to the North, are cases in point here. All these point to an increasingly complicated foreign policy front. The question is, will the country’s foreign exchange problems complicate it even more?
Perhaps more so than the 1970s, when it faced a severe balance of payments crisis, Sri Lanka is gradually giving way to a foreign policy dictated by depleting foreign reserves. The administration’s dismissal of W. D. Lakshman and appointment of Cabraal, in that regard, accompanied a shift of focus, during the fourth quarter of last year, to the country’s foreign exchange situation. This has spilled over to our external relations.
Here the Central Bank has had to reckon with a contradiction: between its insistence on not going to the IMF and its assurances about meeting ISB obligations. Though it’s debatable whether the Bank has addressed, let alone resolved, that contradiction, it’s clearly making use of Sri Lanka’s foreign policy to pay bondholders their due.
For their part, economic experts have shifted in their response to what the government is doing. While earlier they warned about impending defaults, now many of them have turned to questioning the current policy of repaying bondholders no matter what.
Nishan de Mel of Verité Research, for instance, points out correctly that defaulting is not the same thing as declaring bankruptcy. Suggesting that the former is preferable, he contends that the government should do what it can to renegotiate its debts. On the other hand, as Dushni Weerakoon of the IPS rightly observes, restructuring debt may be easy for a country with a reputation for defaults, like Ecuador, but it is unviable, lengthy, and costly, at least in the short and medium term, for a country like Sri Lanka.
What of the IMF line? It’s obvious that Sri Lanka can no longer negotiate for more breathing space from the IMF without conditionalities being imposed on it. The only way it can obtain such space, in other words, is by succumbing to those conditionalities.
Now, defenders of the IMF line may argue, justifiably, that there’s no give without take, and that if we go to that body we will have to eat humble pie, gratefully. But the question to ask here is, who are we asking to take on these burdens? Who are we asking to endure more of the same? Have IMF advocates considered these problems?
The IMF is not a charity: it has provided financial assistance to almost 90 countries on condition that fiscal discipline be enforced in the long term. If we go down that road, we will need to give back something, like public sector retrenchment and fuel price formulas. These have generated enough backlashes elsewhere. Are we ready to risk them here?
So long as the government fears an uprising from the people, it will not choose the IMF line. To say this is not to defend the powers that be. They have contributed to the mess we are in. But to admit to that is not to deny that, whatever that mess may be, to opt for structural adjustment, when social pressures are peaking, would be politically inadvisable.
That is why Basil Rajapaksa’s billion rupee economic relief package, tabled earlier this month despite much criticism, is intriguing: among other things, it promises a LKR 5,000 allowance to 1.5 million government workers, pensioners, and disabled soldiers. Its underlying thrust is not less money, but more: not spending cuts, but spending hikes.
The urban and suburban middle-classes have responded to the package with characteristic ambivalence. While demanding for relief from the government, they are also questioning the efficacy of printing money. What they have failed to realise is that that printing money is the only resort the government has to grant the kind of relief being demanded. It’s a classic either/or scenario: you get the relief with printed money, or you don’t.
Though economists don’t spell it out exactly in these terms, they do observe that printing money can only lead to greater inflation, implying that the only alternative is to stop doing so. But what are the socio-political costs of such measures? What are the knock-on effects they will have on economic relief for the masses? To ask these questions is not to split hairs, but to raise valid concerns that have not been addressed by the other side.
That is not to say that the government’s measures have been farsighted. They have not. Though Modern Monetary Theory (MMT) policies, which the regime is advocating, may get us space in the short term, it is not the type of reform we should be enacting in the longer term. The policies we need require radical reform and radical action. However viable it may be, printing money should not be considered a substitute for such reform.
To suggest one option, one of Sri Lanka’s most brilliant economists, Howard Nicholas, has advised that we industrialise, noting that the historical record has been better for countries which opted to do so. The example of Vietnam shows how even a sector like textiles can be used to propel industrialisation. That is an example Sri Lanka under Ranasinghe Premadasa followed, at least according to Dr Nicholas, but it is one we have since abandoned, in favour of orthodox prescriptions of fiscal consolidation and untrammelled privatisation.
Sri Lanka needs to consider these options without caving into stopgap measures and orthodox alternatives. How do we do that? As Dayan Jayatilleka suggested some time ago, we should convene an economic roundtable. Such a roundtable will likely prevent economic discussions from becoming a monopoly of elites, thereby helping the government, and the opposition, to align the interests of the economy with the interests of the masses.
This has been a long time coming. Both the government and the opposition have tended to view economic priorities as distinct from other socio-political concerns. Yet the two remain very much interlinked. In that sense, caving into economic orthodoxy while ignoring social reality would be detrimental to the future of the country and the plight of its people. To this end, we need to think of alternatives, and fast. But have we, and are we?
The writer can be reached at firstname.lastname@example.org
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