by Jehan Perera

The discussions that President Ranil Wickremesinghe has commenced with the Tamil parties in the north and east are being seen as a possible precursor to elections in those two provinces.  The talks are scheduled over three days.  The president has an interest in holding some form of elections as the government’s moral legitimacy has been undermined by its refusal to conduct the local government elections on schedule.  The president would be conscious that the manner of his election, by parliament and not by the people, creates an issue of moral legitimacy that needs to be addressed. The grounds for the repeated postponement of local government elections, that the money is either unavailable or better spent elsewhere, is clearly unacceptable from a democratic or rule of law perspective.

 There is speculation that provincial elections will take place prior to presidential elections which are expected to take place by the end of the year and this is the reason for the president to engage in discussions with the Tamil parties.  One of the matters taken up for discussion has been the construction of several Buddhist temples in areas in which there are few if any Buddhists currently living which is causing much heartburn to Tamils and Muslims living there.  Ancient Buddhist ruins are being re-discovered in different parts of the north and east by the Archaeology Department.  At the same time there has been destruction of existing Hindu shrines, both ancient and more recent, by unidentified groups which has led to a suspicion that there is a government hand on account of the large presence of security forces in those areas.

 President Wickremesinghe has moved swiftly to address the problems by discussing these matters with officials from the Archaeology Department.  Upon inquiry, they have admitted that their archaeological work in the north and east is being funded by Buddhist monks and not by the government, as the government has no money at the present time. The Director General of Archaeological Department told the President that the priority has been given to the north and east, because it was neglected for 30 years and mostly they do not get government money, but from different funding agencies. The official said sometimes the Archaeological Department is given funds by monks.  The president had expressed the view that archaeological sites belonged to the country and it would be the state that looked after them.

INCLUSIVE APPROACH

The Buddhist heritage of Sri Lanka is a deeply held sentiment within the country’s ethnic and religious majority, and is often reflected in the state itself.  The constitution itself gives the foremost place to Buddhism, although it gives other religions the right to proselytize and to practice.  The official logo of the Archaeology Department is an image of the Stupa, which is the most visible component of the country’s Buddhist heritage.  The special place for Buddhism in Sri Lanka has been exploited for political purposes by politicians who claim that either the religion or race or both together are at risk, and that if they are voted into power they will protect them and the country.  Many of them seem to survive by articulating conspiracy theories to consolidate their nationalistic viewpoints. Only a handful of national level politicians have been willing to counter this parochial nationalism.  The current president is one of them.

 During the period of the Aragalaya, the venality of the political leaders in power at that time became exposed with the country’s economic collapse.  It led to youthful protestors, many from the universities, to voice out that they would not be tricked anymore by such claims and that regardless of race or religion everyone was an equal citizen.  It is ironic that after ascending to the pinnacle of the presidency as a result of the Aragalaya that drove out his predecessor, that the president should have moved to silence the youthful voice that called for equality, greater justice and accountability for economic crimes.  It would have been better if he had taken the challenge of harnessing their energy and idealism to the great task of building a Sri Lankan nation that is united to develop the country and its economy without robbing it at every possible turn.

 The straightforward manner in which the president addressed the officials of the Archaeology Department is indicative of a value system in which the state is the neutral arbiter of its ethnic and religious plurality.  His willingness to speak openly and clearly and to seek to guide the state institutions along an inclusive path would be much appreciated by the ethnic and religious minorities.  This rational quality of the president was also seen a few months ago when he advocated the implementation of the 13th Amendment to the constitution as mandated by the constitution. Unfortunately, these good intentions have remained in the realm of words only and not yet been translated into implementation on the ground.

BLEAK PROSPECTS 

The main feature of the 13th Amendment is the establishment of a system of devolved power to elected provincial councils that would empower the people of each province to elect their leaders who would govern them in specified subject areas.  However, provincial council elections have not been held for over four years and they are non-functional as institutions of devolved power.  Instead they are ruled by governors appointed by the president which has made a mockery of the devolution of power.  The provincial councils have become administrative bodies run by a presidentially appointed governor who can act, and do act arbitrarily, without consulting the people of the province. It is necessary to revise the provincial council law that gives more powers to the Governors beyond the elected representatives.

 Unfortunately, the origins of the provincial council system in the Indo-Lanka Peace Accord in 1987, has caused it to be viewed with a measure of skepticism by the Sinhalese majority as an Indian imposition that would weaken the Sri Lankan state.  The Indo-Lanka Peace Accord was controversial when it was signed and continues to be downplayed in the public life of the country.  According to it, India agreed to disarm the LTTE and Sri Lanka agreed to establish provincial councils on the Indian model.  Neither happened in full measure.  Today the non-implementation of the provincial council system has turned them into white elephants as the system has not been implemented as it should be.

 The problem with holding provincial council elections starting with the Northern and Eastern provinces is that it can fan Sinhalese apprehensions which will be exploited by parochial nationalist groups who are currently displaced from the centre of power.  They will have no qualms claiming that the president is favouring the Tamils, paving the way for the domination of the north and east by India, or some other scare mongering claim.  If provincial council elections are to be held, they need to be held in the entire country and for all the provinces at one time. In such a situation the government will face the same dilemma it faced in deciding to postpone the local government elections.  The prospects for elections in the near future continue to be bleak.

Economic policy and foreign policy:

By Neville Ladduwahetty

The general practice of governments of most nation states is to treat Economic policies and Foreign policy as two separate components of their national interest. Consequently, while the field of economics is littered with economic specialists, the field of foreign relations is confined to a relatively few. Perhaps, the tendency to do so is because of the popular understanding that economics is driven by market forces, while foreign policy is driven by a different paradigm, that being how nations conduct their relations with other nation states, even in matters that could include economics. This has resulted in the two subjects being handled by most governments as separate branches.

For instance, the financial crisis that Sri Lanka is currently facing is due to a combination of misguided economic policies, one of which was the lowering of taxes, causing the internal economy to be seriously impacted to a degree that caused budget deficits, and inflation to skyrocket, as a result of printing money, and the other being indulging in indiscriminately excessive dollar borrowings, from readily available sources, to develop infrastructure projects, where the returns were mostly in local Rupees. These lending sources took advantage of their bilateral relations to tempt Sri Lanka, because the significance of the island’s strategic location was critical to further their geopolitical interests. What Sri Lanka is experiencing currently is primarily due to these factors.

BLURRING of ECONOMIC and FOREIGN POLICIES

The nexus between Economic Policies and Foreign Policy is manifesting itself most prominently with neighbouring India. In April 2022, Sri Lanka’s debt to India was USD 1.041 billion. Today, it is nearly USD 5 Billion. While the need for India to engage in Sri Lanka’s internal and external affairs is motivated by self-interest, the fact that it would impact on Sri Lanka’s economic dependence is indisputable. Furthermore, it would also be a fetter to Sri Lanka’s sovereignty and independence to further relations with other countries with the view to furthering Sri Lanka’s own interests.

Sri Lanka is currently seriously campaigning for the importance of “economic integration between Sri Lanka and India”. Whether such a policy has been approved by the President and the Cabinet of Ministers, who, incidentally, are Constitutionally “charged with the direction and control of the Government”, is not known. As an extension of this policy, “India’s Prime Minister Narendra Modi’s administration, since July 2022, has been exploring the possibility of bringing countries that are short of dollars into the Rupee settlement mechanism. Designating the INR as a legal currency in Sri Lanka has provided Sri Lanka much needed liquidity support to tide over its economic crisis amid inadequate availability of US dollars …” (Sunday Observer, May 7, 2023).

While designating the INR as the legal currency in Sri Lanka would be favourable to India, it would amount to Sri Lanka piling up stacks of Indian currency, through trade and tourism, not knowing what to do with it all, because the Indian rupee is not only a non-convertible currency but also because the distortion between exports from India being five times the exports from Sri Lanka to India, as stated herein. would seriously disadvantage Sri Lanka. For instance, “During the last 26 years the exports of India to Sri Lanka have increased at an annualized rate of 10.1%, from $397M, in 1995, to $4.87B, in 2021. In 2021, India did not export any services to Sri Lanka. In 2021, Sri Lanka exported $1B to India (https://oec.world › bilateral-country › ind › partner › lka)

The experience between India and Russia, in respect of oil exports from Russia, was no different. Russia realizing that they would be stuck with Billions of Indian Rupees, for bilateral trade with India, suspended negotiations “after months of negotiations failed to convince Moscow to keep Indian Rupees in its coffers. This will be a major setback for Indian importers of cheap oil and coal from Russia who were awaiting a permanent rupee payment mechanism to help lower currency conversion costs …. Russia is not comfortable holding rupees and wants to be paid in Chinese yuan.” (The Island, May 5, 2023).

“Since Russia’s invasion of Ukraine, on February 21, last year, India’s imports from Russia have risen to $51.3 billion, until April 5, from $10.6 billion in the same period in the previous year, according to another Indian government official” (Ibid). The fact that Russia is prepared to accept such a large outstanding debt, to be settled in Chinese yuan ,reflects the strength of the bilateral relationship between Russia and China, at the expense of India. This underscores the power of bilateral relationships that could at times influence economic issues and vis-a-versa.

Drawing a lesson from this Russian/Indian experience, Sri Lanka should test the strength of its relationships and explore settling its outstanding debts to China, India and Japan, in their respective currencies, instead of settling them in US Dollars.

THE SRI LANKAN EXPERIENCE

Although Sri Lanka, then Ceylon, started out with Foreign affairs being linked with Defence, Foreign relations came under the jurisdiction of an independent Ministry, with the passage of time, thereby causing economic policies and foreign policy to function under two separate Cabinet ministers. However, during the early stages of this separation, bilateral relations had a significant influence on the determination of economic priorities.

For instance, the impetus to manufacturing was initiated with the introduction of the steel and tyre factories, from Russia. The flour mill from Russia contributed to meet the food needs. Another was the textile mill, at Athurugiriya, from The German Democratic Republic (GDR). It was the strength of bilateral relationships that contributed to further the economic development of Sri Lanka. Likewise, the urgent power needs of Sri Lanka, in the late 1970s and 1980s, compelled the then government to initiate the Accelerated Mahaweli Programme. The Implementation of the programme depended on harnessing the needed funds.

To secure the funds, the late Gamini Dissanayake invited all the Ambassadors ,and local heads of aid missions in Colombo, to a detailed discussion because “the raising of foreign funds for the construction of the Projects and the implementation of the downstream development programmes”, presented themselves as the most formidable task. It was the bilateral relations with countries such as “the USA, the UK, Canada, the Federal Republic of Germany, Sweden, the Netherlands, Belgium, Kuwait, Saudi Arabia, Japan, and from international funding agencies, like the World Bank, through outright grants, such as from the UK, and soft loans that became the key for Sri Lanka to find the needed financial resources to implement the Accelerated Mahaweli programme.

These infrastructure projects did not impose financial strains on the economy, not only because the cost of funding was low but also the return on the investment, which was in the form of Dollar savings for power generation, was almost immediate. However, the more recently implemented projects were funded with high cost short term loans, where the return on investment was over too long a period to justify their viability. For instance, there are several grounds on which the network of expressways constructed can be justified, but not the funding through Dollar loans at high interest rates. Instead, they should have been funded through a gasoline tax, as was done in the U.S.A. following WWII, because at the end of the day, it is the user that foots the bill, similar to any Value Added Tax.

What was the motivation for the strategy adopted? Was it corruption, or was Sri Lanka tempted by the creditors into taking advantage of bilateral relations with a view to seeking a foothold in order to exploit its strategic location to pursue their own geopolitical interests? Whatever the reason, or reasons, the fact remains that the current crisis is because Sri Lanka was not astute enough to be aware of “Greeks bearing gifts.”

CONCLUSION

It is evident from the foregoing that Economic Policies and Foreign Policy do not work in isolation of each other. Instead, the material cited above demonstrate that Foreign Relations and Foreign Policy have a significant influence over Economic Policies even to the point of outwitting Economic Policies that have negative consequences. For instance, the offer of three 100 MW Nuclear Reactors, by Russia, is motivated by bilateral relations and certainly not by economic considerations, because it would amount to importing uranium instead of oil. The Light Rail Project, at a reported cost of USD 2.0 Billion from Japan, that has soured Sri Lanka/Japan relations, is similar in vein, because the loan is in Dollars and the benefits are in Rupees.

The clear reason for this is because Sri Lanka does not have an Economic Plan. If it had, Sri Lanka would be in sounder position to politely say NO to bilateral unsolicited offers, without an impact on Foreign Relations.

One guiding principle of such an Economic Plan should be that if the funding for a project is in International convertible currency, the return on the investment should be in the same currency, or, the equivalent reduction in imports should be in a convertible currency.

Not only does Sri Lanka NOT have an Economic Plan, she does not have a clear Foreign Policy either. There is no more talk of being Non-Aligned. There is not much talk of being Neutral, either. This vacuum is tempting all the major powers to seek a foothold in Sri Lanka because of its relevance to Indo-Pacific confrontations; a trend that would make Sri Lanka’s sovereignty and territorial integrity vulnerable. The lack of a clear Foreign Policy gives the opportunity for the Government to respond to each situation and to every offer, individually. Such an individualized approach not only allocates too much power to the President, and a few others close to him, but also could change with a change of Government. This approach is not in the best interests of Sri Lanka, particularly because of global uncertainties in terms of currency related economic issues, as well as the other maneuverings going on around Sri Lanka, arising from Indo-Pacific tensions.

The President has repeatedly commented on these tensions. The most recent being at the BMICH when he stated that Sri Lanka “doesn’t want to get caught between escalating US-China tensions…. We are now being asked to choose sides”. However, he had stated that Sri Lanka would not succumb to the pressures (Daily Mirror, May 11, 2023). If Sri Lanka is not to take sides and/or succumb to pressures, the policy to pursue vigorously the policy of “integrating” with India would be a contradiction.

The President’s recommendation has been to rely on a strengthened ASEAN in the coming decades. Reliance on a future strengthened ASEAN misses the most critical point that the strategic location of Sri Lanka is unique in comparison to that of other ASEAN countries. Consequently, the pressures on them would be significantly less and different to that of Sri Lanka. This fact alone requires Sri Lanka to develop its own policy as to how it handles these escalating tensions.

Therefore, it is imperative that clear bipartisan policies be developed in respect of the link between economic and foreign policy issues. In addition, because of this inevitable interplay between economic policy and foreign policy, the separate institutional arrangements that currently exist should be reformed and reorganized to include an overarching arrangement in order to foster greater integration between economic and foreign policies, when making decisions that impact on both sectors, and eventually, the country.

Sri Lankans, in Toronto, Canada, are eagerly looking forward to Friday, May 26th, and that special date, in their calendar, isn’t far off.

Over the past years, they have enjoyed the setup at The Anchorman dance and this year is going to be no exception.

In fact, some say the 2023 event will be doubly exciting.

Working on making The Anchorman’s May Spring Ball Gala Dinner Dance extra special is the husband-and-wife team of Dirk Tissera and Michelle.

Dirk is the Founder, Publisher, and Editor-in-Chief of The Anchorman, a very popular Sri Lankan newspaper, in that part of the world, while Michelle is the Design Editor-cum-Deputy Editor.

In addition to all the other exciting activities, scheduled for May 26th, they will also be introducing veteran singer Fahmy Nazick to the crowd.

Fahmy is now based in Virginia, in the USA, and he will be performing for the first time in Toronto, Canada…at this prestigious dinner dance.

In Sri Lanka, Fahmy was seen in action with various bands, including Catseye, and was featured at all the top hotels, down south.

He performed in Jordan, and Muscat Intercontinental, in 1980, then on to Switzerland, in 1981, and later at the Taj Coromandal, Madras, the Taj Intercontinental, Bombay, in 1983, and at the Hong Kong Sheraton, in 2001.

Fahmy loves to sing ballads and, of course, the hits of Elvis Presley, Engelbert Humperdinck, Tom Jones, Frank Sinatra and the other great singers of that era.

Now, as a solo balladeer, he still enjoys rock ‘n’ roll, he says, and there’s going to be plenty of those Golden oldies at The Anchorman’s May Spring Ball Gala Dinner Dance.

Nimal Jayamanne,

a great singer himself, had this to say about Fahmy:

“I’m sure Fahmy Nazick will be a hit in Toronto amongst the audience, especially those who love Elvis, Engelbert, Tom Jones and the likes. Fahmy and I belong to the same era. He is like a brother to me and I’m a big fan of his.”

And music fan, Shirani Ibrahim, adds…

“Nimal Jayamanne…yes, I am a fan of Fahmy Nazick, too. He is a great singer and, at one time, looked very much like Engelbert. I remember going to some of his performances, in Sri Lanka. We belong to the same era.”