Midweek Review

India’s Vietnam moment, US pullout and Afghan dilemma

Published

2 years ago

2021/08/25

UNP’s call to terminate diplomatic relations with Taliban questionable

By Shamindra Ferdinando

Can the recent US pullout, from Afghanistan, be compared with the Indian withdrawal, from Sri Lanka ,in late March 1990? Some sections of the Western media, at that time ,called the disastrous Indian military intervention here (July 1987-March 1990) India’s Vietnam. Reference was also made to what some called India’s Vietnam moment. The Washington Post report, that dealt with the situation in Sri Lanka, in the wake of ‘Operation Pawan,’ was aptly headlined, India’s Vietnam? The US media giant declared: “One reason that Sri Lanka had been unable to tame the ‘Tamil Tigers’ was the support that an indulgent New Delhi had let flow to them from India’s 50 million Tamils.”

What the Washington Post report, dated Oct 27, 1987, left unsaid, was that New Delhi armed over a half a dozen terrorist groups, in Sri Lanka, on the specific instructions of the then Indian Premier, Indira Gandhi, though Tamil Nadu was routinely blamed for the aggression. No less a person than the late Indian National Security Advisor and veteran diplomat J.N. Dixit, who had been Indian High Commissioner in Colombo (1985-1989) in his memoirs ‘Makers of India’s Foreign Policy’ acknowledged the executive prime ministerial decision to arm terrorists here.

Dixit’s declaration should be examined against the backdrop of Indira Gandhi‘s assassination by her Sikh bodyguards, on Oct 31, 1984. When did Indira Gandhi actually authorise arming of terrorist groups in Sri Lanka?

May be we shouldn’t be so unkind to Mrs. Gandhi, for obviously she was also a victim of circumstances, clearly sowed by the West. Mind you this was a time when the West was clearly lighting separatist fires right across India, be it in Punjab, Assam or Tripura. And the separatist fire that was lit here had, as its final aim, the breakup of India. The July ’83 riots, in the country, were clearly due to manipulation of the police here not to nip it in the bud by powerful interests. We even saw at firsthand how police, in different areas, went round egging the poor, among the Sinhalese and Muslims, to attack Tamils, who were considered the haves. So, in the resultant picture of mob violence, against hapless Tamils, that was created, can we blame Mrs. Gandhi for the counter steps that she took? She wanted to show the huge long restless Tamil population, in Tamil Nadu, that it was not the West that would give succor and protection to Tamils, in Sri Lanka, but mother India. The West even would have had plenty of infiltrators among her intelligence to feed her fears. From the word go, mind you, it was not in India that many of these separatists had their rear bases but in the capitals of the powerful West. For example, the LTTE International Secretariat was based in London, even after the assassination of Rajiv Gandhi by it. Of course, their lame excuse was that the LTTE had not violated British laws!

She may have even assented to the ambush of a Sri Lankan military patrol, by Tamil terrorists, at Thinnavely, Jaffna, that was used by vested forces to trigger the anti-Tamil violence, in the south, with police not lifting a finger to stop it, let alone even firing a warning shot.

There had been an interesting incident, around 1977, at a cocktail party, in Manila, where a big talking American, who was obviously after one too many, had boasted to our Ambassador there, the late Oliver Perera, that soon there would be an armed rebellion, by Tamils, in Sri Lanka!

Obviously, Indira Gandhi’s assassination didn’t halt the despicable Indian project which culminated with the deployment of the Indian Army here. She was succeeded by son Rajiv, 40, the sixth and the youngest Indian Premier who intensified assistance to terrorist groups here. PM Gandhi also intervened, on behalf of the LTTE ,when the latter faced certain defeat in the hands of the Sri Lankan military.

If Rajiv Gandhi returned at the 1989 general election, the then Sri Lankan President Ranasinghe Premadasa, elected in the previous year, wouldn’t have succeeded in getting rid of the Indian Army. Those who propagated, and justified, New Delhi’s direct intervention, here, following the July 1983 violence, directed at the Tamil community, conveniently ignored the truth that India triggered the riots by causing the deaths of 13 soldiers at Thinnaveli, in Jaffna. There had never been such a devastating attack on the Army, until Indian trained terrorists wiped out the lightly armed mobile patrol.

Can the US invasion of Afghanistan, in the wake of the 9/11 carnage, and the Indian military misadventure, in Sri Lanka, be compared? In the case of Afghanistan, the US invaded that country, on the pretext of going after those responsible for 9/11, receiving refuge there, whereas New Delhi forced Army deployment here to impose a ‘political’ solution. Over 30 years later, the Indian solution is on the Geneva agenda!

On both occasions, powerful foreign forces had pathetically failed to achieve their primary objectives, though the circumstances were totally different. For the US, both Afghanistan and the fall of Saigon, way back, in late April 1975, meant the humiliating failure of Washington’s strategic policy. In other words, the US abandoned South Vietnam and Afghanistan administrations, and here, in Sri Lanka, India gave up a Tamil administration, installed by its Army. India went to the extent of forming, what was dubbed, Tamil National Army (TNA) to protect the NE provincial administration.

The US-led NATO forces, invaded Afghanistan to destroy the Taliban administration, accused of providing safe haven to those responsible for the 9/11 attacks, though, at the end, the US negotiated with them whereas the Indian military mission was meant to disarm Tamil groups, once sponsored by New Delhi. It would be pertinent to mention that the US invaded Afghanistan, though the majority of those involved in the 9/11 attacks, were Saudis. Of the 19 attackers, 15 were Saudi citizens, two were from the United Arab Emirates (UAE), one was from Lebanon, and one from Egypt.

India destabilised Sri Lanka in a bid to create a situation, conducive for deployment of its Army, followed by Provincial Council elections, rigged in favour of the Eelam People’s Revolutionary Liberation Front (EPRLF). With the Indian Army deployed in Sri Lanka, New Delhi forced the then JRJ administration to introduce the 13th Amendment to the Constitution. As the writer pointed out before, the 13th Amendment has ended up in the Geneva agenda.

Perhaps, those who had referred to New Delhi’s military misadventure here as India’s Vietnam may consider calling the US withdrawal, from Afghanistan, America’s Sri Lanka moment. The US pullout caused the immediate collapse of 72-year-old Mohammad Ashraf Ghani’s Afghan administration. Twice President Ghani, with the knowledge of the US, secured political asylum in the UAE. Ghani couldn’t have done so without the blessings of the Biden administration. International media coverage of the pathetic scenes at the Kabul airport must have deeply embarrassed the US. Those who believed the Afghan National Defence and Security Forces — including an 180,000 strong Afghan National Army, and a police force with 150,000 personnel, besides an Air Force, and other security wings — trained by the US military, NATO and India – could face up to the Taliban. They simply folded up like a house of cards, proving utterly unequal to the task of holding on to territory, and containing the Taliban. The Afghan imbroglio cannot be discussed without taking into consideration the US-Taliban agreement, finalised in Doha, in Qatar, in February, last year. In other words, Biden implemented the agreement between his predecessor Trump and the Taliban. Most probably, the US must have sealed the fate of its costly mission by its blind drone strikes there, which would have killed many hundreds, if not thousands, of innocents, thereby turning many more Afghans against the whole false façade of the West, fighting for human rights and fair play for their much-exploited women. Surely, how many times did they strike funeral processions, or weddings, while targeting the Taliban, using their smart missiles? Now, they and their allies have turned tail and run, leaving behind for the Taliban to use billions of dollars’ worth of state-of-the-art weapons!

India also stepped up engagement with Taliban, in the wake of US moves to bring the 20-year-old disastrous Afghan chapter to an end. One shouldn’t be surprised by the Indian strategy, as India cannot lose its relationship with Afghanistan, in the wake of the US pullout. That would be a major blunder on India’s part. Perhaps, the Afghan military received instructions, from those who sponsored them, to quickly give up the fight. That possibility cannot be ruled out. Perhaps, Ghani knew of that likelihood. In spite of being trained and equipped by US and its NATO allies, the Afghan Army didn’t have the guts to face the Taliban, who advanced to Kabul without facing any organised resistance. Quad member India, too, provided training to thousands of Afghan officers, and men, both in Afghanistan as well as at various training facilities, in India, over a period of time. India also provided a range of weapons, including helicopter gunships to Afghanistan. Of several Mi-24 helicopter gunships provided by India, the Taliban seized one as the Afghan Army quickly gave up the fight for Kabul. The swift collapse of the Afghan Army must have definitely embarrassed those who trained them.

India deployed Mi-24s against the LTTE here whereas the Sri Lanka Air Force acquired the same, in 1995, after the LTTE introduced surface-to-air heat seeking missiles.

In 1990, Sri Lanka faced a situation similar to that faced by the Afghan military. The Sri Lankan military struggled to cope up with an unprecedented crisis. The vacuum created by the Indian withdrawal had to be filled quickly but the Army lacked the strength. However, the country’s intrepid armed forces faced the challenge. The military saved the country from a catastrophe, in the wake of the Indian pullout.

The writer was among a group of journalists, invited to board INS Magar,on the morning of March 24, 1990, at the Trincomalee harbour, soon after the last contingent of Indian troops boarded the troop-carrier. The vessel left the port to the farewell strains of Auld lang syne, played by the Sri Lankan military. Before their departure, the Indian Commander, here, Lt. General A.S. Kalkat, declared, on board INS Magar: “We came as a proud force and are leaving as a proud force.” India lost 1,155 IPKF officers, and men, on top of 2,984 personnel wounded. India never bothered to build a monument for those who perished during the conflict here.

The Afghan Army didn’t have the stomach to fight the Taliban though there were some confrontations between them, as the US stepped up withdrawal. India re-trained Tamil terrorists, belonging to several groups, as well as new cadres, including underage children, as a last minute effort to establish, what was then known as the Tamil National Army. The TNA was meant to protect the then North-East administration of EPRLF strongman Varatharaja Perumal. However, the TNA collapsed, even before India completed its withdrawal, under controversial circumstances. India evacuated Perumal, along with those near and dear to him. The LTTE assassinated Rajiv Gandhi over a year later. Gandhi’s crime was sending the Indian Army here. Prabhakaran conveniently forgot how Gandhi saved him, in 1987, when the Sri Lanka Army was advancing on his hideout in the Vadamaratchchy region.

Resumption of hostilities

March 24, 1990, Trincomalee harbour: The last batch of Indian Army to leave Sri Lanka at the end of the disastrous mission

Less than three months, after India quit Sri Lanka, the LTTE resumed hostilities. Having gained valuable experience in fighting South Asia’s largest Army, the LTTE obviously believed the relatively smaller Sri Lanka Army could be overwhelmed in a meticulously planned offensive. By the end of June 1990, the LTTE had taken control of the Northern and Eastern Provinces, with the military confined to major bases. The police remained within their stations. When the writer, accompanied a group of journalists, assigned to cover the Indian departure ,from Trincomalee, the eastern port city was under threat. Both police and the military therein had no qualms in acknowledging the growing threat posed by LTTE units, operating just outside the town. Had the LTTE plan succeeded, Sri Lanka would have suffered an irrevocable setback in the Northern theatre of operations. As a result of miscalculations, on the part of the then political leadership, the LTTE had an opportunity to build up the required strength for a major offensive. The LTTE had the wherewithal to neutralise the Army, north of Vavuniya. Destruction, and the vacation of Army detachments, along the Kandy-Jaffna A9 road, isolated the Jaffna peninsula.

The LTTE couldn’t achieve its primary objective as the Army, in spite of being surrounded, managed to hold onto its strategic Elephant Pass base. The public would be surprised to know, at the time the LTTE resumed hostilities, the Army didn’t even have two battalions deployed in the entire Northern and Vanni regions. The then political and military leaderships never bothered to make contingency plans, as the Indians gradually withdrew from the Northern and Eastern regions. The last Indian contingent left by air, and sea, from Trincomalee, leaving the LTTE to isolate and destroy the police and the military. The LTTE realised the difficulties experienced by the military, primarily due to them not being at least engaged in proper patrolling. The armed forces, and the police, had been successful in neutralising the JVP threat (1987-1990) though the conventional LTTE challenge was not anticipated. The military hadn’t been prepared in the immediate aftermath of the Indian pullout.

Once the LTTE resumed hostilities, in the East, where the group massacred several hundred policemen, after they surrendered, on a government directive, the fighting quickly spread to the Northern theatre. The LTTE overran the Kokavil detachment, north of Vavuniya, in June 1990, and swiftly established control over the Vanni region. Successive governments had to move supplies, required by the military, and police, deployed in the Jaffna peninsula, by sea and air. The overland Main Supply Route (MSR) was restored in January 2009, during the final phase of the Vanni offensive.

The military and the police thwarted two JVP insurrections in 1971 and 1987-1990 and defeated conventional military challenges posed by the LTTE.

When the LTTE resumed hostilities, within months after the Indian withdrawal, in March 1990, the total strength of the Army had been 60,596 officers, and men, in both the Regular and Volunteer Forces. They had been deployed in isolated bases, with the majority outside the Northern and Eastern regions and, if not for the bravery of ordinary men and resolute leadership, given by some officers, they would have been overwhelmed in the Northern Province. Of the total strength at that time, the Regular Army comprised 2,221 officers and 36,304 other ranks. The Sri Lanka Army must have found the ground situation extremely difficult to handle as, at the height of the Indian Army deployment here, the IPKF comprised approximately 100,000 officers and men.

TNA’s view on Taliban

Jaffna District Illankai Tamil Arasu Kadchi (ITAK) MP Sivagnanam Sridharan recently compared the spectacularly successful Taliban advance, on Kabul, and the Tamil community’s struggle. Sridharan declared that struggles, undertaken by minority communities, could erupt at any moment. Justifying their struggle, MP Sridharan warned of dire consequences if the community was suppressed. Obviously, the Jaffna District lawmaker believed the Taliban’s return to Kabul boosted the Tamil community. Sridharan should be reminded that his political party served the LTTE’s terror project, from 2001 until the crushing military defeat of the organisation, in May 2009. The TNA believed in the LTTE’s capability to bring its terror project to a successful conclusion. MP Sridharan, expecting Taliban to provide a boost, shouldn’t come as a surprise, as another TNA lawmaker. M.A. Sumanthiran, PC, attempted to exploit the 2019 Easter Sunday attacks. The TNA heavyweight had no doubts in issuing a warning, a week after the Easter Sunday carnage (at the BMICH), when he declared that such attacks should be expected if grievances of minorities weren’t addressed.

Norwegian Anders Behring Breivik, 32, shocked the world, in late July 2011, by massacring 90 and wounding over 300 in two separate incidents. Breivik made references to the LTTE as a role model in his ‘manifesto’ that was released to the web, hours before the devastating bomb attack, in central Oslo, and the subsequent shooting rampage in an island resort. So no one should be surprised over MP Sridharan talking in glowing terms about Taliban’s triumph, or MP Sumanthiran seeing the Easter Sunday massacre as a way to pressure the government over minority rights.

UNP Chairman Vajira Abeywardena’s recent call to terminate diplomatic ties with Afghanistan, in the wake of the Taliban triumph, reminded the writer of UNP leader Ranil Wickremesinghe assuring Japan (now a Quad member) that the LTTE hadn’t been involved with Al Qaeda. The assurance was given at a meeting organised by the Japan Center for Conflict Prevention (JCCP) at the Imperial Hotel. The writer accompanied the GoSL delegation, led by the then Premier Ranil Wickremesinghe whose task was to appreciate the Japanese role in the Oslo-led peace process (LTTE not linked to al-Qaeda, PM tells Japan-The Sunday Island, Dec 8, 2002). The Taliban provided a safe haven for those who had fought the Soviet Union, in the wake of its invasion of Afghanistan, in Dec 1979. Osama bin Laden had been among those who secured the protection of Taliban, having served US interests during the Soviet occupation of Afghanistan. The Western media, and top US officials, have routinely referred to Afghanistan being the Soviet Union’s Vietnam. Decades later, the same fate has befallen the US military.

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Midweek Review

Growing foreign dependency and India’s USD 4 bn lifeline

Published

5 days ago

2023/03/22

Sahan Weerasooriya

Baglay on an inspection tour of the State Printing Corporation

By Shamindra Ferdinando

The Japanese embassy and UNICEF (United Nations Children’s Fund, previously known as United Nations International Children’s Emergency Fund), on 16 March, 2023, issued a joint statement that dealt with the impact the developing political-economic-social crisis is having on the poor in Sri Lanka.

The statement focused on the suffering of the children and measures taken by UNICEF, in consultation with the Governments of Japan and Sri Lanka, to provide relief to the needy.

However, what really captured public attention was the declaration made by the Japanese Ambassador, in Colombo, Mizukoshi Hideak, that with the latest contribution, amounting to USD 1.8 mn, the total Japanese financial assistance, provided through UNICEF alone, exceeded USD 3.8 mn, since the beginning of last year. That is definitely a significant package provided through a single UN agency, particularly against the backdrop of the unceremonious cancellation of the Japan- funded Light Rail Transit (LRT) project, in late Sept., 2020, by the Gotabaya Rajapaksa Government.

The directive, in this regard, was issued on 21 Sept., 2020, by Dr. P. B. Jayasundera, in his capacity as Secretary to the President, to the then Transport Secretary, Monti Ranatunga. That move ruined Sri Lanka’s relations with Japan.

Whoever advised the then President Gotabaya Rajapaksa to terminate the project, without consulting Japan, as head of the Cabinet-of-Ministers, he couldn’t absolve himself of the responsibility for the ruination of vital relationship with Tokyo. Had it not been the case, Japan, most probably, would have delivered a substantial assistance to Sri Lanka, at the onset of the ongoing unprecedented crisis.

Sri Lanka made a failed bid to secure as much as USD 3.5 bn loan from Japan, during the tenure of Sanjiv Gunasekara as Sri Lanka’s Ambassador in Tokyo. Gunasekara, a close associate of President Gotabaya Rajapaksa, resigned in the wake of the 09 May, 2022, violence, that gave a turbo boost to the campaign against his government.

Unlike Japan, India provided direct aid in various forms to Sri Lanka, struggling to cope up with what became an insurmountable crisis to overcome on our own. India has repeatedly declared that the continuing assistance is in line with Premier Narendra Modi’s much touted ‘Neighbourhood First’ policy. Sri Lanka received concessional credit facility, amounting to USD 1 bn, in March last year. In addition to that, by the second week of March this year, Sri Lanka received other lines of credit, worth over USD 3 bn. Therefore, the total Indian assistance is worth over USD 4 bn, a staggering amount as Sri Lanka’s debt before the Japanese and Indian interventions stood at over USD 53 bn. Indian intervention cannot be compared, under any circumstances, with assistance provided by any other country.

The Indian assistance is of immense importance as the International Monetary Fund (IMF), after much deliberation, promised USD 2.9 bn over a period of four years. The delay on the part of China to provide an assurance as regards debt-restructuring support, hindered the finalization of the tripartite agreement involving Sri Lanka, creditors and IMF. Finally, China gave that assurance, in writing, early this month.

Indrajit Coomaraswamy

The situation was so precarious, Sri Lanka couldn’t have even provided the free text books that have been given, annually, to the student population ,from the time of the JRJ regime. Those who had been at the helm of political power, over the past three decades, to varying degrees, ruined the economy, and, by 2021/2022, Sri Lanka was unable to provide even the basic requirements, like cooking gas, kerosene, petrol, etc., as even remittances from our expatriate workers, which in the past amounted to about seven billion dollars per year, dropped drastically due to the illegal underground banking system, hawala/undiyal, hijacking much of it from the normal banks. The government didn’t have the means to provide school text books for the 2023 academic year. In consultation with India, of the USD 1 bn concessional credit facility, over USD 10 mn was utilized by the State Printing Corporation, and private importers, to procure printing paper and other material from India. India met 45% (four mn students) of the total requirement. Indian High Commissioner Gopal Baglay visited the SPC, on 09 March, 2023, to dispatch a consignment of textbooks to schools. Education Minister Dr. Susil Premjayantha joined Baglay. The Indian High Commission statement, issued two days later,, was aptly titled ‘India’s support for text books investment in Sri Lanka’s future.’

The government and the Opposition should be ashamed of their failure to provide for the children’s need.

Perhaps, a Parliamentary Select Committee (PSC) should be appointed to examine the circumstances leading to Sri Lanka’s bankruptcy status. Decades of utterly irresponsible management of the economy, coupled with an explosive mixture of causes – waste, corruption and irregularities – caused the current crisis.

Political parties, represented in Parliament, are responsible for the continuing crisis, to varying degrees.

Controversy over ISBs

The Island discussed some of the issues at hand in last week’s midweek piece, headlined ‘All praise for Lanka’s saviours!

What Dr. Coomaraswamy didn’t say was that as the CB Governor, he was also directly responsible for the Yahapalana government borrowing a record USD 12.5 bn from the international bond market, at high interest rates, from private lenders, primarily in the West. So what did that government achieve with such huge borrowings? All that the Yahapalana regime achieved, with all that money, we cannot see, except to lay the foundation for the current debt crisis?

Our comment on the basis of recent claims that the Governor of the Central Bank, Dr. Coomaraswamy (2016-2019), only told one side of the truth, attracted responses from several parties, including the Central Bank.

Consequently, the writer discussed the borrowing of USD 12.5 bn, and related matters, and was told the following: First, it is important to point out that the Governor, Central Bank, has no authority to approve or undertake any borrowing on behalf of the government. The borrowing limit, in any given year, is set by Parliament. Therefore, the government cannot borrow beyond the limit set by Parliament. In addition, all external borrowing has to be approved by the Finance Minister, and the Cabinet of Ministers. The Governor and the CBSL only have an advisory role. On ISBs, they have marketing and issuance as additional responsibilities once the Cabinet approved the transaction.

It is also important to recognize that ISBs are only one channel for external commercial borrowings. Others include short-term SWAPs, foreign term loans/syndicated loans and external flows into government rupee securities. The article dealt with only one instrument, having ignored the switching that was undertaken during 2015-19 to increase the maturity and reduce the cost of foreign borrowing.

As regards the USD 10 bn increase in ISBs outstanding during 2015-19, USD 5 bn of this increase can be attributed to switching away from shorter term (one year or less) and more expensive SWAPs and highly volatile foreign portfolio investment (hot money) in Government rupee securities to longer term (5 and 10 years) and less costly ISBs. SWAPs were reduced from approximately USD 2.5 bn to USD 500 mn.

Volatile and foreign investment in government rupee securities was reduced from USD 3.5 bn to USD 600 mn. In addition, during the course of 2019, a second ISB of USD 2 bn was issued to create a stronger buffer of external reserves to address the inevitable increase in uncertainty going into elections due shortly thereafter. (The money required for 2019 had been raised through an ISB, issued in March 2019.)

So about USD 7 bn of the USD 10 bn increase in the stock of ISBs outstanding, during 2015-19 may be attributed to increasing the stability and reducing the cost of the ISBs outstanding by switching instruments and raising the buffer provided by external reserves prior to a period of uncertainty, associated with elections.

The remaining increase of USD 3 bn may be partly attributed to the fact that borrowing incurred earlier had not resulted in a sufficient increase and/or saving of foreign exchange. Hence money had to be borrowed to repay debt incurred earlier. In fact, Verite Research found that 89 percent of external debt, repaid during 2015-19, could be accounted for by liabilities incurred prior to 2015.

The adverse debt dynamics were recognized and the Medium Term Debt Management Strategy was published in April 2019 to chart the way to sustainability. In addition, the Active Liability Management Act (2018) was introduced to expand the tools available to the CBSL for managing external debt sustainably. The CBSL, as the economic adviser to the Government, also advocated that there should be a primary surplus in the budget and that non-debt creating inflows (such as exports, remittances, tourism proceeds, FDI, inflows into the CSE and government securities) should be increased to enhance the capacity to service debt while supporting the level of imports necessary to achieve the growth potential of the economy.

They also pointed out that only one of the ISBs, issued during 2015-19, has been settled to date. This amounted to USD 500mn. They expressed the view that it is not possible to sustain the argument that servicing ISBs, incurred during 2015-19 ,led to the standstill in debt repayments in April 2023.

Treasury bond scams and tax cuts

The US embassy released this picture of
Ambassador Chung at an event in
Colombo where the second shipment of
36,000 metric tons of Triple Super
Phosphate (TSP) was handed over to Sri
Lanka. It brings the total of USAID-supported
TSP and urea fertiliser to more than
45,000MT, over the last year.

Sweeping tax concessions to the rich and reduction of VAT, that had been introduced by President Gotabaya Rajapaksa’s government to encourage business in 2019/2020, escalated the financial crisis, leading to the declaration of the state of bankruptcy, two years later. No one in the Gotabaya Rajapaksa’s cabinet dared to challenge such far reaching tax concessions and VAT reduction.

How the loss of as much as Rs 600 bn in revenue, as alleged by the Opposition ,due to tax concessions and reduction of VAT, contributed to the current crisis, should be examined, also taking into consideration (1) Treasury bond scams perpetrated in Feb, 2015 and March 2016 at a time the CBSL has been under the then Prime Minister Ranil Wickremesinghe, in his capacity as Minister of Policy Planning and Economic Affairs (2) Enactment of new Foreign Exchange Act in 2017 in the wake of Treasury bond scams. Critics say the repealing of time-tested exchange control law that has been in place for decades paved the way for exporters to ‘park’ export proceeds overseas. Of the 225 MPs, 94 voted for the new law whereas 18 voted against. In spite of Justice Minister, Dr. Wijeyadasa Rajapakse, PC, taking up this issue, both in and outside Parliament, remedial measures hasn’t been taken, to date. The Finance Ministry owed an explanation as to how it intended to compel the exporters to bring back export proceeds (3) Continuing public-private sector partnership in corrupt practices, particularly mis-invoicing (under invoicing and over invoicing of imports/exports) (4) Pivithuru Hela Urumaya leader Udaya Gammanpila, MP, has moved the Supreme Court against the Central Bank Bill. The Attorney-at-Law alleged that the new law violated Article 3 and 4 of the Constitution hence needing the approval of the people at a referendum. In addition to Gammanpila, Dr. Gunadasa Amarasekera and Jathika Nidahas Peramuna leader Wimal Weerawansa, too, moved the Supreme Court in terms of the Article 121 against the Bill titled ‘Central Bank of Sri Lanka.’ Former JVP MP Wasantha Samarasinghe, on behalf of the Jathika Jana Balavegaya (JJB), too, moved the Supreme Court in this regard.

A warning from Hanke

The country is in a bind. In spite of the execution of the agreement with the IMF later this month, the situation remains dicey. The absence of economic recovery plan continues to cause further instability.

Therefore, the government and the Opposition should seek a consensus on a national action plan, even if Local Government polls cannot be conducted in late April, regardless of the Supreme Court intervention.

Steve Hanke, Professor of Applied Economics, at Johns Hopkins University, in the USA, recently issued a dire warning to Sri Lanka. Appearing on CNBC’s ‘Squawk Box Asia,’ Prof. Hanke declared Sri Lanka needs institutional reforms in order to achieve long-term debt sustainability.

Referring to Sri Lanka and what was described as emerging markets (Argentina and Montenegro), where he played a key role in establishing new currency regime, former economic advisor to US President Ronald Reagan warned “Unless you change the institutions and the rules of the game, governing these countries, they’re always going to remain in the same … situation that they’ve been in for a long time.”

Prof. Hanke added: “In fact, most of the personalities, involved in Sri Lanka ,at the high level, are exactly the same as they’ve been for years. So nothing has changed.”

In other words, those who have ruined Sri Lanka are spearheading the economic recovery process. The American is spot on. Sri Lanka is in a pathetic situation. Those who had systematically brought Sri Lanka to its knees, by pursuing ill-fated policies, emerged as its saviours. That is the bitter truth. The role of the executive, legislature, and judiciary, needs to be examined. Those who have moved the Supreme Court against the Bill, titled ‘Central Bank of Sri Lanka,’ have quite conveniently forgotten how the Yahapalana government, and Central Bank, twice perpetrated Treasury bond scams. What would have Prof. Hanke said if CNBC raised Treasury bonds scams during ‘Squawk Box Asia.’

If not for Deepa Seneviratne, the then head of Public Debt Department, Governor Arjuna Mahendran’s role couldn’t have been proved. Former Auditor General Gamini Wijesinghe said so at an event organized by the Colombo Municipal Council years ago.

Sri Lanka cannot forget Prof. Hanke’s remark in the CNBC programme. “You have to remember that we have a country that since 1965 has had 16 IMF programmes and they’ve all failed. You get temporary relief in anticipation of a bailout. But in the long run … none of these IMF programmes work.”

It would be pertinent to briefly examine how interested parties brazenly protected perpetrators of the Treasury bond scams.

Having named Mahendran as the Governor, regardless of the opposition from President Maithripala Sirisena, those planning to commit the first daylight robbery of the Central Bank moved Deepa Seneviratne to the Public Debt Department as its head, in spite of her not having had any previous experience in the particular division. It seems they had obviously felt comfortable in having a lady officer there they thought they could manipulate her to suit their need. But Seneviratne turned tables on the bond thieves by putting up a note to register her strong opposition to Mahendran’s move. She should have been rewarded for her fearless stand with at least a national honour if not an international one, even from bodies like the UN, the Transparency International, Amnesty International, etc. But it seems that even these international busy bodies have their own political angles.

It would be of pivotal importance to keep in mind that President Sirisena appointed a Commission of Inquiry (CoI) in January 2017, about 10 months after the second robbery, and two years after the first.

The Commission comprised Justice K.T. Chitrasiri, the late Justice P S Jayawardena and retired Deputy Auditor General V. Kandasamy. Sumathipala Udugamsuriya functioned as its Secretary. CoI issued a devastating report that implicated Perpetual Treasuries Limited (PTL) in the Treasury bond scams.

President Sirisena went to the extent of dissolving Parliament, in June 2015, to prevent the Committee on Public Enterprises (COPE) tabling its report on the first bond scam. SLFP leader Sirisena owes an explanation. Justice Chitrasiri’s CoI didn’t inquire into that aspect. Sri Lanka’s response to waste, corruption, irregularities and mismanagement is baffling. Let me end this piece reminding how the Bar Association of Sri Lanka (BASL) secured a substantial sponsorship from Perpetual Treasuries Limited (PTL) deeply mired in a bond scam, in 2016, for the Law Asia Conference during the tenure of its then President Geoffrey Alagaratnam, PC. The BASL never explained why it obtained PTL sponsorship even after the exposure of Treasury bond scams. That partnership also escaped the CoI. The rest is history.

Knowing what is now happening to the US economy with a string of bank failures and unprecedented bailouts, especially due to hoodoo economics it introduced in recent decades, like repeated quantitative easing (blindly printing trillions of dollars leading many to say the dollar is now only good as toilet paper) that has been practiced to ensure its world hegemony, the whole world might be hit with bank failures and even by a depression worse than the one that befell with the stock market crash of 1929. Already the contagion has spread to Europe with some leading banks there also requiring help.

Washington’s debt now stands at USD 31 trillion and climbing, but our own debt burden is still under USD 55 billion. So if we can get our exporters, who have stashed export earnings abroad, to bring them back, the picture here will not be as scary as it is made out to be. Even Minister Wijeyadasa Rajapakse has said that our export proceeds that have been parked overseas is in the region of USD 55 billion.

Soonwe will start receiving the IMF bailout, but our economic whiz kids have not done anything to plug the massive foreign exchange leak that has been freely draining foreign currency from the country, since the nineties, by way of private foreign exchange dealers who have been allowed to sell foreign exchange to any Tom, Dick and Harry, including drug dealers, to take their sales proceeds out of the country!

We would also like to ask the relevant authorities what they have done to recover monies stashed abroad by Lankans illegally that were exposed in great detail by the likes of Panama Papers and Pandora Papers.

Midweek Review

A Miscellany of Thought

Published

5 days ago

2023/03/22

Sahan Weerasooriya

N. A. de S. Amaratunga (2022)

A Review by G. H. Peiris

I cannot claim to have the scholarly competence to place under critical scrutiny all items in this collection of writings authored by Professor N. A. de S. Amaratunga, and published in The Island from time to time since the early years of the present century. Accordingly, this ‘review’ is no more than an attempt to convey to a wide readership my gratitude for what I have learnt from Professor Amaratunga’s insights on a series of metaphysical and secular issues that have figured prominently during the recent past in the arena of debate and discussion among our intellectual elite, my appreciation of his rational perceptions and his subtle banter in responding to bizarre elements in our public affairs.

As a brief introduction to the author I should state that Professor Amaratunga’s career record is featured by several decades of distinguished and dedicated service to the University of Peradeniya in teaching, research and clinical work. Acquiring advanced skills in the field of ‘Maxillofacial Surgery’, he has provided physical and psychological relief of life-long impact to thousands of patients. He is also credited to have trained several of his junior colleagues in the Faculty of Dental Science, had has served as its Dean. The offer he received from the Peradeniya University of the Prestigious Award of the ‘Degree of Doctor of Science’ is testimony to his eminence in Sri Lanka’s community of scholars and professionals.

What probably enhances Professor Amaratunga’s status among the intellectual elite of Sri Lanka is the fact that his talents, interests, and concerns have not been confined to professional expertise. He has authored several creative writings in Sinhala which the cognoscenti place at par with the best works of that genre. More relevant than all else to the present ‘commentary’ is his capacity for elucidating the essence of certain complex metaphysical issues – especially those of Buddhist philosophy ‒ with the same clarity of thought seen in his contributions to media forums on current affairs.

In his ‘Introduction’ to the volume Professor Amaratunga makes a categorical statement regarding the paradigmatic guidelines of his ‘thoughts’. They are rendered below in abridged form as follows:

(a) The distinctive elements of our island civilisation are derived from Theravada Buddhism and the Sinhala language.

(b) The leadership of Sri Lanka’s mainstream politics since the termination of British rule in the mid-20th century has continued to be impaired by a cultural duality – on one side of the divide, the ‘alienated’ whose behavioural values and norms bear the imprint of subservience to values prescribed by the ‘West’, and, on the other side, those who treasure our civilisational heritage and understand the needs and aspirations of the majority of our people.

(c) His standpoint is that of an ardent ‘nationalist’, in the sense that he is unequivocally committed to safeguarding and promoting Sri Lanka’s national interests.

On literature, Professor Amaratunga adds that he is inclined towards the need for ‘social relevance’ of the fine arts, and believes that the paradigm of ars gratia artis (‘art for art’s sake’) is inappropriate for Sri Lanka, especially in creative writing.

The ‘miscellany’ of this volume is structured to constitute four ‘Sections’ – titled as: 1. ‘Literature and Culture’; 2. ‘Religion’; 3. ‘Economy’; and 4. ‘Health’. The first two of these ‘Sections’, consist respectively of 25 and 19 essays of unequal length. In these ‘Sections’ the reader could pick out from different points of the temporal sequence in which they are arranged items that constitute a mutually cohesive group from the viewpoint of content. For example, in the first ‘Section’, there are six such items, each serving as a contribution to an ongoing media debate, but when considered as a group would be seen as an invaluable enrichment of understanding on a significant feature of the educational system of the country – such as, say, the impact of the nation-wide ‘Fifth-standard Scholarship Examination’ or ‘The general decline of standards in higher education’. Likewise, in the total of 18 articles in ‘Section’ 2, thirteen items could be considered as a mutually cohesive group of thoughts that illuminates certain vitally significant aspect of Buddha Dhamma and Buddhism as practiced in Sri Lanka.

The forgoing observations do not detract from the intrinsic value of the short contributions referred to. Indeed, in my amateur assessment, in Section 1, the items titled ‘Quality of University Education’, ‘Purpose of the Novel and its Appraisal’, and the twin items titled ‘Darwinian Evolution vs. Intelligent Design’; and in Section 2, ‘Truth in Buddhism and Realism in Literature’, and ‘Mind, Matter and Nirvana in Mahayana and Theravada Buddhism’, are examples of the author’s extraordinary depth of understanding and his skill of disseminating that knowledge in a lucid form.

It is in the 3rd Section of the volume titled ‘Politics’ that the real ‘miscellany’ of Thought is found, consisting of 78 items, and accounting for well over half the total page-length of the volume. Since they have been presented in a chronological order ‒ with the first item published in 2001, and the last in 2021‒ the list of items, at first glance, looks like a total mess which, indeed, is how our politics look. But a closer scrutiny show that all items in this list could be placed in one or another of 6 ‘Sub-Sections’ titled as ‘Ethnic Relations’, ‘Foreign Affairs’, ‘Electoral Politics’, ‘Development Plans and Projects’, and ‘Constitutional Issues’, with the chronology of the list providing the vicissitudinous background of each contribution which Professor Amaratunga has made, and each discussion or debate in which he has participated.

Once again I should emphasise that foregoing observation does not imply that the ‘Thoughts’ in this section, read individually, are either uninteresting or irrelevant to our present concerns. On the contrary they offer ideal readings both as reminders of the volatile scenarios we have passed though during the past two decades as well as the unshakable faith our politicians appear to have on the widespread dementia among the voter-population and on their own ability to hoodwink the electorate. Professor Amaratunga’s thoughts could re-kindle fading memories, especially on repeated failures to fulfil campaign pledges, the large-scale losses due to financial malpractices, the allegations of ‘war-crimes’ and of ‘violation of human rights’ in the counter-attack by the major powers of the North Atlantic alliance in retaliation to Sri Lanka’s close relations with the People’s Republic of China, the ingredients of success in the US-sponsored ‘regime change’ effort culminating in the establishment in 2015 of a puppet government in Colombo, the betrayal of our national interests by our own self-seeking representatives at the protracted Geneva inquisitions, the constitutional fiasco of August 2018, the euphoric Gotabhaya victory about a year thereafter, and then, the stunning exposure by the pandemic of the fundamental weakness of our dependent economy.

In the 4th Section of the volume titled ‘Health’, most of the items are devoted to diverse experiences witnessed globally and in Sri Lanka during the Covid-19 pandemic, but in an unconventional manner in the sense that they emphasise significant aspects that have not received adequate attention in the analytical writings on the pandemic. In my view the most significant issue highlighted in this section is the need for Sri Lanka to adopt development strategies towards self-reliance, especially in the availability of medicinal drugs and on food-security. Implicit in several items of this section is a forewarning of the risks entailed in the pursuit of development policies that enhance Sri Lanka’s macroeconomic dependence on the major global and regional powers.

Many items in this miscellany of thoughts contain a prominent element of dissent and disagreement with other participants in the media debates and discussion for which The Island has served as a major forum. But that dissent has all along been featured by a laudable sense of “civilised intelligence”. As a professional whose skills have an intense demand, his interests and concerns have not remained confined to his professional expertise – a feature often seen among other ‘specialists’ including those of the university community.

This volume is, first of all, a demonstration of intense and well-informed concern on a wide range of issues of vital importance to Sri Lanka. Had that quality been more widespread it is unlikely that those earning six-figure incomes would threaten collective action to bring the economy to a standstill to express their dissatisfaction on a relatively marginal erosion of monthly emoluments at a time of unprecedented national crisis, attempting to conceal their avarice with a façade of safeguarding democracy, or eliminating public corruption, or on grounds of their capacity to earn higher incomes outside Sri Lanka.

Yet another exemplary feature I discern in this ‘Miscellany of Thoughts’ is that its contents are not angry knee-jerk reactions when provoked by thoughts different to his own. Professor Amaratunga’s dissent is entirely free of the crude clashes often seen in the so-called social media. Nor are his thoughts based on a hurried consumption of internet ‘short-eats’. In his thoughts that extend beyond brief corrective interjections of ‘common sense’, what we see is an extraordinary depth of knowledge acquired through serious reading and a thorough understanding of the issues on which he had focused.