By Chandu Epitawala
A fundamental principle in finance and economics of risk-return trade-off dictates that Government Issued Debt Instruments should yield the lowest interest rate for the (lender/investor) and the government should be able to borrow at the lowest cost since the government paper is supposed to have no default risk (Giltedged).
However, in Sri Lanka, this principle does not seem to hold. This has been the case for as long as I can remember (even in the 1990s) and needs to be corrected. Discussions of the current hot topic in the country on Domestic Debt Restructuring (DDR) glaringly highlighted this. Most commercial banks in Sri Lanka hold massive amounts (up to 39% according to one research report) of Government Paper in their Asset or Loan Portfolio, going well beyond the inclusion of T Bills/Bonds under Tier 2 Capital requirements.
Term Structure of Interest Rates
How are the interest rates constructed or formed? The largest portion (perhaps up to 80%) of a given Interest Rate is the expected inflation (not past reported inflation) for the period/tenure (3 Months to 30 Years) of the debt instrument or the deposit. Then the next most important factor (perhaps 15%) is the default risk premium attached to the institution which issues the debt instrument (the institution that borrows). Then comes all the other risk premia, which are supposed to cover such risks as reinvestment rate risk, liquidity risk, risk associated with tenure etc. As a result, any country’s Government Issued Debt Instruments carry the lowest (close to zero or zero) premia for Default Risk and Liquidity Risk, as Government Paper is the most liquid. Default Risk is zero since the government has extraordinary/unique authority/powers to Impose Taxes and to Print Money.
The function of Commercial banks
The primary function of commercial banks in an economy (Capitalist economy) is to function as an intermediary between the ultimate saver and borrower (usually a business, government or individual). It’s called intermediation. The commercial banks (which are specifically authorised/licensed by the Central Bank to collect/accept deposits from the savers) will gather dispersed savings from individuals (small or retail savings) by offering an attractive or appropriate (market-driven) interest rate and lend or loan them to businesses/corporates (usually large amounts) to do their productive activities (capital investments, operational activities etc.) in all sectors of the economy keeping a reasonable margin (spread) for their expertise in risk assessment/intermediation. This is the critical function/process of capital formation in a Capitalist economic system. By and Large traditional commercial banks do not directly get involved in the equity sphere of financing/raising capital or in the disintermediation process. However, these conventional boundaries have now largely disappeared.
Therefore is it correct for commercial banks to hold such large amounts of T Bills/Bonds without channeling them to productive economic activities of Corporates/Businesses through their traditional lending activities? This is only possible because there is an anomaly in the interest rates in Sri Lanka.
The Function of Primary Dealers
The Central Bank appoints Primary Dealers who must be well-capitalized and of good repute. They perform a critical function in financial markets and the economy. They are expected to bid at the weekly Primary auctions for Government Securities and create a secondary marketplace (liquidity providers) for T-Bills/Bonds. The term Dealer means an entity that quotes both ways (buy and sell) which requires them to maintain some inventory of T-Bills/Bonds (to sell) as well as cash (to buy). They are expected to create an active secondary market for T-Bills and Bonds. This process should produce a market-driven interest rate/yield for Government Securities, which reflects expected inflation and other risks. These rates (one year, five years and 10 years) should be the benchmark (lowest) rates for a particular tenure upon which all other rates are formulated.
Disintermediation using Capital Markets
Capital Markets (Primary) are used by seekers of Capital (Borrowers and Recipients of Equity Capital) to bypass the commercial banks (Deposit-taking Institutions) and directly go to the saver and raise funds/capital. This bypassing the Banks (via Capital Markets) is called disintermediation. The Stock Market is the best example of this process and is mainly used for raising equity capital. Treasury Bill/Bond Markets can be considered the largest and most liquid market where the government goes directly to the market/savers to borrow debt capital. Then there are other markets (centrally organized, exchange-traded, or over-the-counter-OTC) for Corporate Bonds/Commercial Paper, etc. Commercial banks are not prohibited from participating in any of these markets, but it is not their primary economic function.
The primary market is where the borrower/seeker of equity or debt capital initially sells/markets their Security (share, promissory note, commercial paper, T-Bill/Bond etc.). Initial Price Offering (IPO) of shares (Equity) and T-Bill/Bond (Debt) auctions are the best examples of Primary Markets. Only authorized Primary Dealers can participate in weekly T-Bill/Bond auctions. Most Commercial banks are also Primary Dealers. And the Primary Dealers have a responsibility and obligation to create a secondary market in T-Bills/Bonds so that retail investors have an opportunity to participate/invest/lend directly to the government and create liquidity for the T-Bills/Bonds, thereby creating an efficient market-driven price/yield discovery mechanism. Since this market is less transparent and inactive in Sri Lanka than it ought to be, it would be correct to say the interest rate/yield is not 100% market-driven and reflect the correct risk premia for expected inflation and other risks.
Another fundamental principle of Finance/Economics states; the higher the risk, the higher the return. The lender/investor of equity will expect a higher return (usually annualized returns for ease of comparison with other investment options) for their funds as the borrower/recipient of equity capital riskiness is higher and vice versa.
Interest Rate Anomaly
As explained earlier, once the risk premia are added up, in any developed and efficient capital market, the government-issued debt instruments should yield or return the lowest for a lender/investor as the government has the lowest default risk and liquidity (trading in the secondary market) of government-issued debt instruments ought to be the highest. Therefore (correspondingly), the Yield/Return of T-Bills/Bonds should be the lowest for a given tenure (three Months to 30 years). However, this fundamental principle in Sri Lanka does not hold as T-Bill/Bond rates often exceed (higher) than the Commercial Bank deposit Rates for similar tenures. This is the anomaly.
This anomaly allows Commercial banks to mobilize deposits from mainly unsophisticated (uninformed or uninitiated) retail and corporate savers and turn around and park those funds in higher yielding T-Bills/Bonds and make an easy/effortless profit (including tax-free capital gains). This doesn’t seem right or inappropriate on two levels;
This (lending to the government) is not commercial banks’ core function or responsibility.
As Primary Dealers of T-Bills/Bonds, commercial banks appear not to be meeting their obligation to actively create a secondary market for T-Bills/Bonds, as this directly goes against their deposit mobilization objectives.
What is the reason for this persistent and abnormal disparity in interest rates?
I believe this anomaly exists in Sri Lanka due to two main reasons;
The lack of financial literacy or understanding of retail lenders/depositors/savers of the above explained principles and obvious/myriad of advantages of investing in a tradable debt (in the Secondary Market) instrument like T-Bills/Bonds. It even allows the investor/lender/saver an opportunity to make a Capital Gain which is tax-free (Ex. Those who invested in T-Bills/Bonds at high rates seen in the past six months to a year can now exit with up to 100% capital gains!!!).
Most primary dealers (ones with deep pockets) are commercial banks and lack interest in creating a secondary market, which requires them to actively market the T-Bills/Bonds to the retail investors/lenders/savers. I believe this is why commercial banks carry significant T-Bill/Bond investments in their Asset/Loan Portfolios, as pointed out in the research report mentioned at the beginning.
Why should commercial banks lend their funds to riskier customers when they can lend to the government if the depositor is ignorant or ill-informed enough to deposit their savings in commercial banks at lower rates (sometimes this gap can go up to 4-5%), than what T-Bills/Bonds (safest investment/debt instrument) pay/yield them?
Some suggestions to correct the persistent interest rate anomaly It is in the interest of the Government/CBSL to ensure that the government can borrow at the lowest cost in any market. My suggestions to correct the anomaly are;
Mandate all Primary Dealers (including commercial banks) to actively create a secondary market and market and trade a minimum amount obtained at the Primary Auction to retailers and corporate or institutional investors. Ideally, they should be required to advertise the T-Bill/Bond rates and deposit rates at all their Branches. A dealer should be obligated to carry inventory, quote both ways (buy and sell) and have a good track record of active trading and market making.
The government/CBSL should educate the public/ retail savers through ongoing marketing campaigns. Ideally, this should be in the school curriculum along with other elements of financial literacy) about all the advantages of investing in T-Bills/Bonds – the risk-return principle, and how easy to access (online etc.) T-Bills/Bonds, the high liquidity in the secondary market (just like cash), and, very importantly, the potential for capital gains (which is tax-free).
These two measures, in my humble opinion, should correct the interest rate anomaly and bring the T-Bill rates down (and conversely deposit rates up), allowing the government to borrow at the lowest cost like in any other country in addition to giving the general public access to a low risk, liquid Security (Debt Instrument) that can be easily accessed, traded, mortgaged and liquidated (turned into cash).
Understanding policy of neutrality
by Neville Ladduwahetty
In order to assuage the apprehensions of India regarding the intended arrival of the Chinese research vessel Shi Yang 6 to Sri Lanka, an informed source of the National Aquatic Resources Research Agency (NARA) is reported to have said “a team of officials from the NARA would board Shi Yang 6 to observe research activities”. This act is “widely seen by Sri Lankan interlocutors as an attempt by the Government to signal to the countries which are at loggerheads with China that Sri Lanka is privy to what is transpiring in the whole process and to make sure that it will pose no security threat to any third country” (Daily Mirror, September 19, 2023).
Continuing the above DM report states: “Sri Lanka advocates a neutral foreign policy. However, India, Japan and the United States are skeptical about Chinese maritime activities in the Sri Lankan territorial waters since they fear that it is part of a major effort by China to systematically map the seabed across the vast swath of the Indian Ocean. They fear hydrographic data, collected in the process, can be used for security related purposes later …. Nevertheless, Sri Lanka insists that it is a neutral venue to all countries, and won’t allow its territory, be it sea, air space or land to be used against the security interests of another country, particularly India” (Ibid).
EXERCISING SOVEREIGN RIGHTS
Sri Lanka is indeed encouraged and heartened by the stand the country has taken to exercise its rights in keeping with its stated policy of Neutrality backed up by provisions of Internationally accepted Customary Law relating to entitlements, such as exploring within Exclusive Economic Zones of Coastal states. However, this stand could be strengthened by incorporating provisions of International Law as stated in Part V of the United Nations Convention on the Law of the Sea presented below.
By incorporating these provisions into the Corpus of Domestic Law, Sri Lanka would be in a much stronger position to exercise its sovereign rights in the Exclusive Economic Zone by way of imposing penalties on those who violate its provisions and in particular those who engage in illegal fishing and destroying natural resources by the fishing crafts of India and other countries.
ARTICLE 56: EXCLUSIVE ECONOMIC ZONE
Rights, jurisdiction and duties of the coastal State in the exclusive economic zone
1. In the exclusive economic zone, the coastal State has:
(a) sovereign rights for the purpose of exploring and exploiting conserving and managing the natural resources» whether living or non-living» of the waters superjacent to the sea-bed and of the sea-bed and its subsoil» and with regard to other activities for the economic exploitation and exploration of the zone such as the production of energy from the water currents and winds
(b) jurisdiction as provided for in the relevant provisions of this Convention with regard to:
(i) the establishment and use of artificial islands, installations and structures:
(ii) marine scientific research:
(iii) the protection and preservation of the marine environment:
(c) other rights and duties provided for in this Convention.
2. In exercising its rights and performing its duties under this Convention in the exclusive economic zone the coastal State shall have due regard to the rights and duties of other States and shall act in a manner compatible with the provisions of this Convention.
3. The rights set out in this article with respect to the sea-bed and subsoil shall be exercised in accordance with Part VI.
CAPACITY to EXERCISE SOVEREIGN RIGHTS
A top source that is considered to be familiar with Indian affairs is reported to have stated: “Sri Lanka’s neutral position is acceptable but it is doubtful for India whether Sri Lanka being economically weak, has the strength to maintain such an approach” (Ibid), and cited the example of India purchasing fuel from Russia despite objections by the United States. That top source has forgotten that India despite its power, once “invaded” Sri Lanka hoping to resolve the conflict in Sri Lanka and was compelled to return in shame having failed to fulfill its mission.
According to him “India can act in this way because it is powerful enough to resist any pressure…”. For India to buy oil from Russia despite objections from the U.S. means that these objections are relatively benign because the U.S. needs India as part of QUAD to counter China. However, this being a commercial arrangement, it cannot be compared with the legacy of despicable acts repeatedly committed against humanity of weaker States by so called “powerful states” in the pursuit of their interests.
It is evident that the “top source” is unaware that the International Order does not make a difference between “powerful states” and the rest, because one of the principal pillars on which the United Nations Charter rests states in Article 2 (1) that “The Organization is based on the principle of the sovereign equality of all its Members”.
Furthermore, Principles and Duties of a Neutral State are based on International Customary Law, which in its Introduction states: “The sources of the international law of neutrality are customary international law and, for certain questions, international treaties, in particular the Paris Declaration of 1856, the 1907 Hague Convention No. V respecting the Rights and Duties of Neutral Powers and Persons in Case of War on Land, the 1907 Hague Convention No. XIII concerning the Rights and Duties of Neutral Powers in Naval War, the four 1949 Geneva Conventions and Additional Protocol I of 1977 (ICRC Publication June 2022).
Despite the existence of such International provisions “powerful states” have not hesitated to brazenly flout its provisions in the pursuit of their interests most of which are warped imaginations.
For instance, it was India that imposed its will on Sri Lanka when it forced Sri Lanka to accept the 13th Amendment; an act that denied Sri Lanka the fundamental right of self-determination enshrined in Article 1 (2) of the Charter of the United Nations that state:
“To develop friendly relations among nations based on respect for the principle of equal rights and self-determination of peoples…”. This Amendment crafted by India compels Sri Lanka to adopt devolution to Provinces as a form of internal government to satisfy the imaginations of the Tamil community in Sri Lanka and Tamil Nadu. This was violently rejected by the People when it was first introduced and ironically even after more than three decades continues to be rejected not only by the majority but also by the Tamil community in Sri Lanka. Despite such rejections, India keeps insisting the Sri Lanka should live by its provisions; the latest being at the ongoing General Assembly Secessions in New York.
Under the circumstances, Sri Lanka has to come up with an innovative strategy within the provisions of the Constitution to get free of 13A because its entrenched contradictions hinder peripheral development. What is most objectionable about devolution as a concept is that it fosters the operation of Central Government and Provincial Government functions simultaneously that often are at variance thus perpetuating disparities within and among Provinces amounting to entrenching discrimination among the Peoples; a fact that is starkly evident among the States in India and other countries that have divested Central power.
Another practice adopted by “powerful” India is to overlook the violations committed by the Fishing community in Tamil Nadu at the expense of the Fishing community in Sri Lanka, by robbing the maritime resources and vandalizing the marine environment by resorting to bottom trawling within Sri Lanka’s Exclusive Economic Zone notwithstanding the fact that it is a violation of Article 56 of the U.N. Convention on the Law of the Sea. Instead of raising such issues at bilateral meetings, despite the presence of the Minister of Fisheries, Sri Lanka has been trapped into commitment to issues of connectivity that bolster India’s influence over Sri Lanka.
While Sri Lanka appreciates and is proud of the position taken by NARA and the Government in respect of the intended arrival of the Chinese research vessel, Sri Lanka has to exploit all International safeguards to overcome potential threats from the so called “powerful states”. In a background where “powerful states” would not miss an opportunity to exploit the circumstances in other States, countries such as Sri Lanka have to depend on the shield or weapon of international law to protect their interests.
Therefore, for them, it is the codified rule of the Rights and Duties of a Neutral State and the incorporation of the relevant provisions of the U.N. Convention on the Law of the Sea into Domestic Law or the fact that its provisions are part of Customary Law to protect its sovereign rights and enforce its interests in the Exclusive Economic Zone.
Such material should form the framework of a Standard Operating Procedure as suggested in a previous article (Neutral Foreign Policy in Practice, August 22, 2023). A strengthened Sri Lanka would then be in a position to avail itself of the resources of the International Court of justice, as other countries have done to seek redress. Furthermore, since they are numerically greater, their strength lies in a Rules based World Order and not on “power”, irrespective of its source.
Some buildings with their attributes gone forever
Rest houses were places we grew up with and most had existed during the later years of British rule in Ceylon. Counterpart in India was called a dakh bungalow, or so Cass remembers from staying overnight long ago in one in Sanchi. Rest houses were really what their name implied: places to rest in; mostly for government administrators when they travelled on government business termed circuits. There were the circuit bungalows too but they were in remote areas and with much less amenities.
The best-known rest houses were Nuwara Wewa and Tisa Wewa in Anuradhapura, the one jutting into the Parakrama Samudra in Polonnaruwa, in Belihuloya, Ella, Hambantota Tissamaharama, Kankesanturai and Elephant Pass, and in Peradeniya, opposite the Botanical Gardens. They were well known for their gentlemanly keepers, most dressed in cloth and shirt, and the food served: excellent lunches with the invariable fried karola or hal messo; the wonderful coconut sambol and the fried red chillies which was not a usual homemade appetizer.
Now, most of these wonderful places of staying in comparatively cheap, are called resorts and expanded, losing the old-world charm, the warm welcoming ambience, and the spacious one storey roominess. They were tossed aside by hotels being constructed and so they too changed ‘shape’. One or two deteriorated – the Hambantota RH accompanied by the deterioration in standard of clientele too becoming more a water hole than temporary stay-in place. Some surpassed their previous selves like the Ella RH which was transformed to a high-end inn.
We often lunched and stayed in several times and remembered was the Peradeniya RH with its wide veranda with tables to lunch or dine at, looking across at the trees in the Gardens, particularly that variety which had red drooping down flowers bordered by bright red spathes which we called kukul kakul and even ate, delighting in its sour flavour. No more. None of the view of glorious nature; none of the almost al fresco lunching; none of the old-world charm and particular ambience of the old rest house. It has been rebuilt and ‘developed’ to a horrible state.
Change – for better, for worse
On a recent visit to Kandy after many years the Peradeniya Botanical Gardens was walked through, with plenty others, both local and foreign. One small niggle of doubt was the fee charged from foreigners Rs 3,500, Cass believes. Too excessive is her opinion particularly in comparison to what locals pay. We should not fleece foreigners though they are with dollars, pounds sterling, euros or whatever.
The gardens are excellently maintained; the orchid house glorious in its blooms and the banning of vehicular traffic very wise. Unlike many of our Buddhist places; visitors who found it difficult to walk much and toddlers were amply catered for by frequently running motorised open vehicles. The layout of the Gardens is almost the same as it was for many decades previous, but improved and maintained sprucely clean.
In sharp contrast was the Peradeniya Rest house. Cass forgot to note its name. The old building was so stately yet with a comforting, welcoming air about it. You usually parked yourself in the wide quarter-walled verandah at a table or in a comfy, un-upholstered chair. Now you are led to the first floor to a fully curtained room. Tall windows were all closed and the drawn curtains obliterated even a glimpse of the outside. Cass ordered rice and curry since she did not want a buffet lunch. Not possible to serve rice and curry a la carte was the waiter’s reply. Only Chinese dishes could be ordered. Cass was aghast.
Imagine not being able to order our basic meal in a restaurant that was a rest house previously with the reputation of serving the best rice ’n curry. You had to have the buffet if you wanted rice and curry; if you ordered your lunch it would be Chinese – fried rice, chopsuey, etc. Isn’t that a travesty? You are enclosed claustrophobically in a heavily curtained room with fans; cut off from fresh air and all the greenery around, and dictated to on what you eat. That is development for you!! Cass calls it mudalali aberration. The buffet was simple enough with a couple of additions like soup to a rice and curry meal costing 1800. Chinese was 1200.
I am sure all adults of Sri Lanka object to President RW’s promise to set up a Parliamentary Committee to look into and report on the Easter Sunday suicide bombs in April 2019. A comment people make is that RW’s solution to any problem/matter is to appoint a committee; never mind the report and taking action.
You can bet your last thousand rupees that if a Parliamentary Committee is set up to report on the C4 documentary and its repercussions etc., all politicians will be exonerated and the ones who are pointed at as the accused, would be pronounced lily white. Zahran did it all by himself with ISIS control. We millions of Ordinaries too cry out against a fully local panel of investigators, and never a group of MPS.
A boxed news item on page 1 of The Island of Tuesday September 19 had this heading: CID takes over probe into gun attack on MP. The car with Anuradhapura District MP Uddika Premarathne was shot at. No one was injured. But quick as lightning, the Police handed over the hunt for perpetrators to the CID. They too will work overtime and catch the miscreants.
Good! But what happens over the several motorbike shootings and those guilty of distributing dangerous drugs and making this lovely island rotten with drug importers, peddlers and takers? Oh, those can be taken time over and never nail the guilty and punish them. Rather assist those caught and jailed to get out or at least attempt escape.
An Indian friend sent me this story which so gladdened my maternal heart. It is shared here so more mothers could feel appreciated.
Ninth Grader Ajunath Sindhu Vinayala of Trissur (Kerala), often heard his father brush his mother aside as “just a housewife. She does not work.” Ajunath was surprised because he never saw his mother not busy so he painted this picture (published with this article) depicting all the chores she did. His teacher sent it to the State govt office where it got selected as the cover for the 2021 gender budget document. The appreciative son with more of his pictures can be accessed on the Internet.
Almost all Sri Lankan mothers will agree with Cass that our sons and daughters are wonderfully grateful and caring people, with many living overseas but still visiting, transferring money and sending parcels of goodies and necessities. Bless them, we mothers/grandmothers chorus.
Amunugama on Anagarika: A partial review
By Uditha Devapriya
In the course of his study of myths and legends, Bruce Kapferer observes that those who attempt to rationalise myths are as much in error as those who believe in their literal meaning. There are several points in his book with which I beg to differ, but I agree with this specific point. Myths have a logic and a life of their own, and any external compulsion to alter or rationalise them will be met with hostility. Kapferer’s other contention, that myths are continually being renewed and reborn, is also tenable. The narrative around which these myths revolve may stay the same, but the implications of such stories change from era to era. Millenarian platitudes about glorious pasts and histories, of utopic Edens before the Fall, whether in Buddhist or Christian societies, fall into that category.
I reflected on Kapferer when I reread Sarath Amunugama’s impressive book on Anagarika Dharmapala, The Lion’s Roar, the other day. Dharmapala has gone down as perhaps the most misunderstood national figure or figurehead in our history. For close to two centuries if not more, Sri Vikrama Rajasinghe got a bad press as well, but thanks to recent forays by Gananath Obeyesekere, we have come to understand and, as a nation, identify with the tragic figure that he was. Dharmapala, however, is more complex, because his writings and speeches lend themselves to a multiplicity of interpretations: out of necessity, he made it a point to speak differently to different people. Ultimately, I believe all national figures end up being misunderstood. Dharmapala was no different.
What Amunugama tries to do in The Lion’s Roar is to present Dharmapala in a new light. As one reads through his book, one realises how predictably he has been presented until now. Most contemporary assessments of Anagarika Dharmapala place him at the forefront of the Buddhist Revival of the late 19th century. Though, in later years, he broke ranks with the organisation which gave the revival its impetus, the Theosophical Society, he nevertheless maintained contacts with it. Sociologists and anthropologists have presented the Revival as having been led by an emergent, nascent Buddhist bourgeoisie and petty bourgeoisie. The latter were constantly frustrated in their efforts to join the ranks of the former, a point which more or less pitted them against foreign traders and minority groups.
Until now, social scientists have been content in casting Dharmapala as a messiah, of sorts, of this petty bourgeoisie. Dharmapala’s actions certainly did not endear him to the up-and-coming Sinhala bourgeoisie. Unlike his brothers Edmund and Charles, he was alienated from the many elite and bourgeois groups which formed the basis of later political associations, of which the most prominent would have to be the Ceylon National Congress. That may have been because of Dharmapala’s own background, which stood a tier or two below that of the Senanayakes and the Attygalles. Sarath Amunugama goes as far as to contend that the death of F. R. Senanayake in India closed the possibility of an open conflict between Dharmapala and these families. Yet even Senanayake’s death did not wholly foreclose these possibilities, as the many press campaigns against Dharmapala shows.
Is it accurate, then, to locate Dharmapala at that crucial juncture between the formation of the Theosophical Society, the beginning of the Buddhist Revival in the late 19th century, and the emergence of a weak but aspirant Buddhist petty bourgeoisie in the early 20th? This is how social scientists have generally viewed him, so far.
Dharmapala himself may not have been conscious of his role here. Yet as Regi Siriwardena eloquently put it once, “[t]o say that any thinker or leader served the interests of a particular class is not necessarily to say that he was conscious of doing so, still less that he was hired or commanded by that class.” The ultimatum of social scientists and anthropologists, hence, seems to be that he became the ideological vehicle of these groups, that as the latter’s attitudes to foreigners and minorities hardened, they saw in him a definitive “ancestor from antiquity.”
Amunugama attempts to shed new light on Dharmapala’s followers and acolytes by bringing to the foreground groups which have been excluded from most contemporary assessments of Dharmapala’s life. Prime among them are what Amunugama sees as “subaltern” groups, among whom he includes the Sinhala working class. This working class, he contends rather convincingly, were swept away from their roots into the cities, where they confronted a new and different social order.
As they became more aware of the conditions of their existence and sought to transform them, they began to encounter foreign traders and minority groups, hired by the colonial government to counter the growing tide of trade unionism and Sinhala proletarian discontent. It is against this backdrop that they saw Dharmapala as a saviour, and not just a saviour, but someone they could call their own.
This is, to be sure, an intriguing point. Yet how “subaltern” were these classes Amunugama associates with Dharmapala? Without splitting hairs too much, I think we must bear two points in mind. The first is that, until the formation of a Left movement in the 1930s, no political association, however radical, envisioned a Ceylon falling outside of the orbit of the British Empire. This was as true of bourgeois reformist associations as it was of nationalist ideologues. Whatever “subaltern group” in Sri Lanka at this juncture saw things differently, in contrast to their mobilisation by the Left after 1935. In that sense Dharmapala fulfilled a role, however limited, for these groups. The Marxists could not have been more different to his ideology, as their struggles on behalf of Indian Tamil plantation workers showed. But then Dharmapala was no Marxist, even if a scion of his family – Anil Moonesinghe – made a seminal contribution to the Left movement of the country.
The second point recalls an observation Gananath Obeyesekere once made in relation to Dharmapala and his disciples: namely, that their attitudes to the Other – which Amunugama dwells on at considerable length in his remarkable study – were paradoxically activated by their alienation from their social and kinship groups. In their quest for “identity affirmation”, the Dharmapalists sought a negative identity for themselves, in relation to the Other.
I think that more or less explains the Sinhala working class’s affinity for Dharmapala, at a time of rising anger against foreign traders and minority groups, including the Malayalis. Such anger cannot be condoned, especially when it transforms into racialist feelings. But it helps explain why, in the absence of an anti-imperialist Left movement in the country, these groups could gravitate to nationalist figures – and why even as key a representative of the Sinhala working class movement as A. E. Gunasinha could invoke him in his struggles.
Does this necessarily mean Dharmapala’s politics were not anti-imperialist, or in the least radical? I think the jury is still out there, though I believe that Dharmapala’s emphasis on industrialisation has been missed out by those who see only his ranting against other social groups and ethnicities. Dharmapala once counted among his defenders a highly unlikely figure: Yohan Devananda.
Writing in the Lanka Guardian, in response to Regi Siriwardena, Devananda contended that Dharmapala “did perform an essential historical function in rousing the national consciousness against the foreigner.” I do not know what to make of this assertion, given that for Dharmapala’s followers, “the foreigner” has come to include all groups deemed “alien” in the country. But there is no doubt that he did, at the end of the day, serve a function. The question that countless scholars have raised, which Amunugama tries to answer, is exactly in whose interests he served that function.
The writer is an international relations analyst, independent researcher, and freelance columnist who can be reached at firstname.lastname@example.org.
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