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Midweek Review

The day Mangala issued a warning to P’karan



Mangala Samaraweera left an unforgettable mark in politics

By Shamindra Ferdinando

The late Minister Mangala Samaraweera, on Sept. 8, 2006, warned the Liberation Tigers of Tamil Eelam (LTTE) of dire consequences,unless the group returned to the negotiating table. The LTTE quit the negotiating table, in April 2003, during Ranil Wickremesinghe’s tenure as the Premier. The warning was issued in his capacity as the Foreign Minister, at a meeting with the Colombo-based diplomatic community.

Reiterating the then President Mahinda Rajapaksa’s readiness to consider proposals for a comprehensive and verifiable cession of hostilities, Samaraweera warned the LTTE that military aggression, on their part, would entail, what he called, military costs to them.

The Minister said so when he addressed a section of the diplomatic community in the wake of the successful Army assault on the LTTE first-line of defence across the Kilali-Muhamalai frontline a few days before the military recaptured Sampur in the East on August 4 (Forces seize Tigers’ Jaffna frontline with strapline …any military aggression on their part would entail military costs to them-Foreign Minister, The Island, Sept 11, 2006)

Matara district lawmaker, Mangala Pinsiri Samaraweera, who first entered parliament at the 1989 general election, received the vital foreign affairs portfolio in the wake of the then Premier Mahinda Rajapaksa’s triumph at the 2005 presidential election.

Samaraweera, 65, succumbed to Covid-19, at Lanka Hospital, last week.

Rajapaksa won narrowly against UNP leader Ranil Wickremesinghe, who lost by fewer than 200,000 votes. The polls boycott ordered by the LTTE caused Wickremesinghe’s defeat; he lost the Northern Province Tamil vote, which is traditionally cast in favour of the UNP. Interestingly, the announcement of the undemocratic act of telling the Tamil people not to vote was done by the Tamil National Alliance.

Following the presidential election, the LTTE resumed its offensive action in the Jaffna peninsula, in the first week of Dec. 2005. The LTTE launched a spate of claymore mine attacks in the North in spite of the Oslo-arranged Ceasefire Agreement (CFA) still in place with Peace Co-Chairs, namely the US, Japan, EU and Norway, engaged in the process, in a supervisory role. It looked as if the self-appointed co-chairs were there more to wink at the LTTE as it staged hundreds of CFA violations.

 Following the failed attempt to assassinate the then Army Chief Lt. Gen. Sarath Fonseka, in late April 2006, Mavil-aru battle, in June-July 2006, the LTTE launched large scale offensives, in both the northern and eastern theatres, simultaneously, in the second week of August 2006. The LTTE made some rapid territorial gains, though the armed forces gradually stabilised the situation, on both fronts. Having survived a suicide attack, in late April 2006, and flown to Singapore, where he received specialised treatment, Fonseka was obviously back, wanting to atone for what the LTTE did to him. Back at his heavily fortified headquarters in Colombo where he vowed to finish off the LTTE once and for all.

The LTTE strategy suffered another serious setback when then Defence Secretary Gotabaya Rajapaksa, too, survived an LTTE suicide attack in the first week of Dec 2006.

Foreign Minister Samaraweera issued the warning to the LTTE, ahead of the LTTE assassination attempt on Gotabaya Rajapaksa. Samaraweera received his first ministerial portfolio in 1994, thanks to President Kumaratunga, who accommodated him in her Cabinet as Posts and Telecommunications Minister. Kumaratunga also rewarded Samaraweera with Urban Development, Construction and Public Utilities.

 A cocky LTTE leadership felt confident that its formations could overwhelm the Army in the Jaffna peninsula, having disrupted the Trincomalee- Kankesanthurai Main Supply Route (MSR). Their plans eventually went awry. However, at the time Samaraweera issued the warning, in early Sept 2006, the LTTE was in a commanding position, with the West openly and repeatedly singing hosannas on its behalf claiming that the security forces were incapable of defeating it. A section of the diplomatic community, as well as various experts, believed the LTTE had the wherewithal to bring offensive actions, in the northern theatre, to a successful conclusion. But, by May 2009, just two years and 10 months after the LTTE resumed hostilities, its fighting cadre was left annihilated.

Mangala receives Foreign portfolio

President Rajapaksa rewarded Samaraweera with the Foreign Affairs portfolio, though the latter hadn’t been his first choice. Rajapaksa-Samaraweera duo emerged as a team during the second JVP-inspired insurgency (1987-1990) when they functioned as key spokespersons for the Mothers’ Front. The group represented the interests of those who had been at the receiving end of the military campaign, backed by UNP death squads. The late Anura Bandaranaike, too, expected the President to reappoint him as the Foreign Minister after his failure to secure the premiership with the JVP’s backing. Bandaranaike was sworn in as the Foreign Minister immediately after the assassination of Lakshman Kadirgamar on the night of August 12, 2005, at his private Bullers Lane residence.

It would be pertinent to mention that the JVP contested the 2004 parliamentary election on the UPFA ticket, following the short-lived so-called parivasa administration.

The JVP achieved the unthinkable by securing 39 seats, including three National List slots. In the immediate aftermath of the 2004 polls victory, the JVP, in a letter dated April 5, 2004, addressed to the then President Chandrika Bandaranaike Kumaratunga, demanded that Lakshman Kadirgamar be made the Premier.

JVP General Secretary Tilvin Silva emphasised that their second choice was Anura Bandaranaike and the third Maithripala Sirisena, the then General Secretary of the SLFP.

However, Maithripala Sirisena strongly advised Kumaratunga against the move, widely believed to have had the backing of staunch Kumaratunga loyalist Samaraweera. Son of the late Minister Mahanama Samaraweera and Khema Samaraweera, outspoken Mangala, a fashion designer by profession, was known for his controversial statements. Samaraweera daringly backed LGBT rights when such things were never even openly discussed here and was at the forefront of such campaigns.

If the JVP strategy succeeded, Mahinda Rajapaksa would have been deprived of the premiership in 2004 and the opportunity to contest the presidential poll in the following year. President Kumaratunga quite wrongly asserted that she could continue till 2006 as the presidential poll scheduled for 2000 under her watch was held in 1999. However, the Supreme Court torpedoed her move. With the collapse of Kumaratunga’s strategy, Samaraweera backed Rajapaksa’s candidature due to failure on her part to secure the backing of party seniors. Samaraweera played a significant role in the overall presidential polls campaign, though both Kumaratunga and Anura Bandaranaike skipped the campaign and more or less worked against Mahinda Rajapaksa, covertly.

Samaraweera had been among several SLFP seniors invited by President Rajapaksa on the evening of Nov 19, 2005 to inform them of the allocation of Cabinet portfolios. The late Jeyaraj Fernandopulle, Maithripala Sirisena, Nimal Siripala de Silva, Mangala Samaraweera, Rohitha Bogollagama, Basil Rajapaksa (not a member of Parliament at the time) and Lalith Weeratunga had been present. Dullas Alahapperuma, too, had been present, though he didn’t sit at that meeting.

“President Rajapaksa didn’t consult anyone as regards allocation of portfolios. He simply informed those who were seated around an oval shaped table what they were going to get. UNPer Rohitha Bogollagama, who switched his allegiance to the SLFP during Kumaratunga’s tenure was offered the Foreign Affairs portfolio. Bogollagama, who held the Foreign Investment portfolio at that time, inquired whether he could retain the same in addition to the foreign affairs. However, the allocation of portfolios quite clearly irritated some party seniors. Shortly, thereafter, only Rohitha Bogollagama sat with President Rajapaksa for dinner whereas others left,” a source familiar with the Temple Trees discussion told the writer.

“Subsequently, the Rajapaksas reached a consensus with Samaraweera by offering him the Foreign portfolio, originally offered to Bogollagama, who accepted the reality.

 Some believed Samaraweera expected the premiership and was quite disappointed when he was told he couldn’t retain the Urban Development portfolio. Samaraweera couldn’t maintain peace with the Rajapaksas and was unceremoniously stripped of the Foreign portfolio, in January 2007, in the wake of him pursuing an agenda opposed to that of the then Defence Secretary Gotabaya Rajapaksa.

President brought in Bogollagama as the Foreign Minister. One-time UNPer handled the Ministry during the most challenging period with the West exerting tremendous pressure to undermine the war effort.

Ousted from SLFP, Mangala joins UNP

In spite of losing the foreign portfolio, Samaraweera antagonised the Rajapaksas by pursuing an agenda which the latter considered was severely inimical to the overall war effort. President Rajapaksa also felt that Samaraweera’s strategy undermined the ruling party, particular at a time the military was engaged in a desperate battle with the LTTE. Finally, President Rajapaksa sacked Samaraweera, along with Anura Bandaranaike and Sripathy Sooriyaarachchi, in the second week of Feb 2007.

However, within days after declaring war on the Rajapaksas, Bandaranaike backtracked and quietly reached an agreement with the ruling clan. President removed the trio after they skipped the vote on the state of emergency. Bandaranaike re-joined what he called ‘Carnival of Clowns’ much to the dismay of Samaraweera, who didn’t receive the support pledged by his colleagues.

A dejected Samaraweera formed the Sri Lanka Freedom Party (Mahajana) Wing. Samaraweera couldn’t secure the much expected backing required to sustain his campaign and finally disbanded his unregistered party, in August 2010, to accept the UNP membership. However, by then Samaraweewa had re-entered Parliament, from the Matara district, on the UNP ticket. Samaraweera had no option but to accept Ranil Wickremesinghe’s leadership and worked diligently for the UNP’s victory, five years later.

Samaraweera played quite a significant role as an Opposition UNP member (2010-2015) and member of the yahapalana administration (2015-2019) before he switched his allegiance to Samagi Jana Balavegaya (SJB) leader Sajith Premadasa.

However, Samaraweera deserted Premadasa in next to no time ahead of the last parliamentary election in August 2020. In an obvious bid meant to undermine the SJB, Samaraweera declared he wouldn’t be in the fray though he handed over nominations as the leader of the Matara District SJB.

Role in 2010 prez poll

In his capacity as the Foreign Minister, Samaraweera clashed with Gotabaya Rajapaksa’s strategy. One of the major issues of disagreement between the two was Samaraweera’s push for the re-opening of the Kandy-Jaffna road, at Muhamalai, to pave the way for the resumption of overland traffic to and from the Jaffna peninsula. Gotabaya Rajapaksa dismissed the suggestion. Rajapaksa asserted that Muhamalai wouldn’t be re-opened through negotiations with the LTTE. Instead, the re-opening would be done by clearing the LTTE fortifications across the Kilali-Muhamalai-Nagarkovil line.

 The then Defence Secretary Rajapaksa told the writer of his decision not to re-open the Muhamalai entry/exit point in agreement with the LTTE, under no circumstances. They also disagreed on the deployment of SLAF choppers to move LTTE leaders around (this was done in terms of the Oslo understanding) and the handling of international NGOs. The Foreign Ministry asserted the military would antagonise Western powers whereas the Defence Secretary emphasised that nothing could be allowed to undermine the war effort.

As promised, the government re-opened the Kandy-Jaffna A9 road, only after the eradication of the LTTE in 2009.

Having ridiculed Fonseka as a person not even capable of commanding the Salvation Army, Samaraweera had no qualms in accepting the challenging task of being the Opposition candidate’s campaign strategist. In fact, Samaraweera, on behalf of Fonseka, assured the US of his good intentions. One such meeting took place on January 6, 2010, a few days before the then US Ambassador in Colombo, Patricia Butenis, in a leaked diplomatic memo, named the Rajapaksa brothers, Mahinda, Gotabaya and Basil and Sarath Fonseka, as war criminals. The massive defeat suffered by Fonseka, at the January 2010 presidential election, revealed serious shortcomings in the overall strategy. The Fonseka campaign suffered due to foolish attempts to placate the Tamil electorate by blaming the Army for battlefield executions during the last phase of the Vanni east offensive. Samaraweera played a significant role in forming the US backed alliance which included the Tamil National Alliance, onetime cat’s paw of Velupillai Prabhakaran. Samaraweera also facilitated the JVP’s participation in the high profile project, spearheaded by the UNP.

Having defeated Ranil Wickremesinghe, by 180,000 votes, at the 2005 presidential election, the President secured a second term by polling over 1.8mn more votes than the war- winning Army Commander. Obviously, Samaraweera’s strategy didn’t work, though many, including some sections of the diplomatic community, strongly believed the former Foreign Minister could turn tables on Mahinda Rajapaksa. At the end, the UNP-led camp made a ridiculous bid to blame the humiliating defeat Fonseka suffered on what bankrupt JVP called a computer jilmaart (fraud)

Mangala as yahapalana FM

 Samaraweera who enjoyed excellent relations with the JVP at politically crucial periods, played strategic roles in both the SLFP and UNP-led camps. At the 2005 presidential poll, Samaraweera threw his weight behind Mahinda Rajapaksa and five years later the electorate saw him spearheading Fonseka’s presidential campaign. Samaraweera proved again in politics there were no permanent friends or enemies.

 Perhaps, one of Samaraweera’s major successes was his ability to secure the support of the powerful Tamil Diaspora. Samaraweera was quite satisfied with the way he handled the Diaspora in the run-up to the 2015 presidential election. The writer, who accompanied the government delegation to London, led by President Sirisena, had an opportunity to discuss the matter with the then Foreign Minister Samaraweera during the visit a couple of months after the presidential election.

Samaraweera facilitated the TNA’s backing for Sirisena that made his triumph over Mahinda Rajapaksa a reality.

The writer sought GTF’s spokesperson Suren Surendiran’s comment on Samaraweera’s demise Surendiran said that his first ever interaction with the late lawmaker had been in 2007 in his personal capacity. However, as the GTF spokesperson, Surendiran had interacted with Samaraweera, in 2011, and again when he visited the UK, in 2012, over dinner at his place with fellow colleagues of GTF. Surendiran said: “In September 2013 we formally met along with other politicians and civil society activists from Sri Lanka, and overseas, in Singapore. We, as GTF, have met him several times in the UK, Germany, Washington, Switzerland, Australia and Singapore.”

Responding to another query, Surendiran said that Samaraweera had been instrumental in arranging the GTF’s first meeting with the then President Maithripala Sirisena, in 2015, in London. Yes, I met you (the writer) downstairs after that meeting). “Mangala was not just a fellow Sri Lankan and politician, he was a great friend. Mangala spoke to several of us from GTF, from various countries, at a virtual meeting, on 17 July 2021. My last personal interaction was on 06 August, 2021, via texts. Under normal circumstances he would have wished me on my birthday but that wasn’t to be as he was moved to ICU a couple of days before.”

Unlike many of his colleagues in the government and the Opposition, Samaraweera never hesitated to take a public stand on the post-war national reconciliation process. Samaraweera openly contradicted President Sirisena’s frequent claims that he hadn’t been aware of the finalisation of the Geneva Resolution on Oct 1, 2015.

Responding to the strong criticism of his role in the Geneva process, Samaraweera included the following section in a bigger statement he issued during the yahapalana administration: The final text of the resolution was largely negotiated over the phone, with the President and I at the same hotel in New York, and the Prime Minister in Colombo, accompanied by the Secretary to the Ministry of Foreign Affairs, at the time, and the Ambassador of the US and High Commissioner of the UK. Once consensus was reached , the Secretary to the Ministry of Foreign Affairs, at the time, who was in Colombo, had coordinated with Sri Lanka’s Permanent Representative to the UN in Geneva and conveyed the decision of the Government of Sri Lanka to the Human Rights Council.”

What Samaraweera didn’t say was that Sri Lanka’s Permanent Representative to the UN in Geneva, Ravinatha Aryasinghe, had rejected the draft just over a week before, during informal discussion with the Sri Lanka Core Group, headed by the US. Whatever the likes of Samaraweera said the UNP earned the wrath of the people for what was called Geneva betrayal. The treachery in Geneva proved to be as bad as the Treasury bond scams, in Feb 2015 and March 2016, leading to the humiliating defeat at the Feb 2018 Local Government polls. Although President Sirisena switched portfolios, held by Samaraweera and Finance Minister Ravi Karunanayake, in May 2017 in consultation with UNP leader Wickremesinghe, the rot continued unabated. The Wickremesinghe-Samaraweera led strategy that pushed the country towards the US-led Quad alliance with Sri Lanka entering into a Comprehensive Partnership with Japan in the first week of Oct 2015, in addition to talks on SOFA (Status of Forces Agreement) and MCC (Millennium Challenge Corporation) agreements also with the US against the backdrop of President Sirisena entering into ACSA (Access and Cross Servicing Agreement) didn’t help the then government at all.

Finally, Samaraweera abandoned the UNP and joined the newly formed SJB soon after the 2019 presidential poll only to quit the parliamentary election at the eleventh hour. Following the SLPP’s sweeping victory at the general election, Samaraweera launched a political campaign with the involvement of some civil society activists. His office, situated at T.B. Jayah Mawatha a little distance away from SLFP main office, was called ‘Freedom Hub’, where he addressed his last media briefing on July 25.

Samaraweera warned the current leadership of the dire financial crisis experienced by the country not only due to the raging Covid-19 epidemic but waste, corruption, irregularities and negligence as well. At the time Samaraweera served as the Finance Minister (May 2017 to Nov 2019) the government revenue surpassed Rs 1,900 bn. The shortsighted policy of the SLPP that did away with a range of taxes and duties, immediately after the presidential election resulted in the loss of over Rs 500 bn in government revenue, which too contributed to the current messy financial situation. Perhaps one of Samaraweera’s major achievements was the transformation of the telecommunications sector though he too couldn’t absolve himself of being part of an utterly corrupt and ruinous political party system.

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Midweek Review

Growing foreign dependency and India’s USD 4 bn lifeline



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.

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Midweek Review

A Miscellany of Thought



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.

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Midweek Review

Loneliness of the Bottom Half



By Lynn Ockersz

There you crouch by your hearth,

Seeing your fires sputtering out;

Your hopes of a bubbly pot of rice,

Ending in inflationary smoke spirals,

Leaving you with the painful thought,

That your dignity as mother and wife,

Is gravely harmed and beyond repair,

For, a turn of events not of your making,

Has reduced you and yours to penury,

So much for that Trickle-down Theory,

That Pundits say will end your misery,

But they tell you not to stop dreaming,

Because soon you will be bailed out,

Of your State of longsuffering;

Thanks to Princely tips from ancient Italy.

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