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Will America be able to achieve its sinister objectives in Sri Lanka? Prof.Tissa Vitarana



One recollects that the UNP-led “Yahapalanaya” Government was on the verge of signing the MCC and SOFA agreements with the US Government after having signed the periodic ACSA agreement. The latter was signed at regular intervals to enable military exercises to be conducted in Sri Lanka and to receive military assistance from the USA. This was renewed at regular intervals and therefore it was a routine, but the MCC and SOFA agreements are new developments. These were a result of the only American military base in the Indian Ocean rim located at Diego Garcia being given back to the country that it belong to, the Mauritius, by virtue of a verdict given by the International Criminal Court (ICC). According to the MCC agreement the strip of land extending from Colombo and Katunayake to Trincomalee harbour was to be given to the USA to construct a means of rapid transport (rail and road) and the door would also be open for American companies to freely operate within our country. This would naturally lead to domination of our economy as well. The SOFA agreement would enable any American soldier in uniform with gun in hand to enter our country bringing any type of arms as luggage. Sri Lankan Customs would not be able to even examine them, leave alone charging any duty. The US Army personnel would have full use of all Ports and Airports and right to enter any of our Government premises at any time. In other words Sri Lanka would become a virtual colony of the USA and its military base. But these two agreements could not be signed because of the defeat of the “Yahapalanaya’’ Government at the Presidential and General Elections.

It was generally accepted that the present Government would not sign the two agreements and that the danger was passed. But a series of events should make us reconsider whether this danger may be forced upon us in the near future. The Sri Lankan economy has been run down to the lowest level in its history since independence. 60% of families are living below the poverty line and the level of malnutrition has grown to 18.3%(an MRI survey about 7 months ago). Many families have only one meal and that too without adequate nutrition. Children are suffering badly. I regret my proposal to give highest priority to feeding those who are hungry made to the higher authorities has been ignored.

A major cause for the above situation is the high cost of living. It has soared due to Covid 19 virus epidemic on top of the global economic crisis. But what is surprising is that the Government has allowed the traders to fix the price without any control or justification. To make matters worse the Government has not intervened to bring down the cost of living by measures that have succeeded in the past. For example during the Coalition Government of 1970-75 which strengthened the cooperative system thereby linking producer cooperatives with consumer cooperatives, so that essentials were available at a reasonable price without any profit. This was supported by the Food Control Department and the Marketing Department which also directly bought from the producer and delivered through sales outlets to the consumer, only adding on the actual cost. There was no profiteering. Automatically the traders too had to bring their prices down as well.

The people are suffering due to unwise decisions (e.g. the fertilizer problem which has badly affected the farmers). The major blunder has been the dollar crisis which has led to shortages of imported items that have affected all layers of society as well as the many industries that depend on imported inputs. The lack of fuel, gas, imported food and medicines has led to shortages resulting in long queues and to disruption of the whole transport system. Many people have lost their jobs as a result. This dollar crisis has led to our Foreign Reserves falling from US dollars 8 billion to less than 1 billion. The rating agencies such as Fitch and Moody have dropped Sri Lanka to the lowest level, a single C, as being on the verge of bankruptcy. Our importers are badly affected as the Letters of Credit (LC’s) are no longer accepted, so that orders are only acted on when dollars are directly paid to the suppliers. This means a delay of several months even if dollars are sent. But the reality is that the importers are unable to get dollars from local banks. Our foreign debt is said to have reached 52 billion US dollars and the annual payment for interest etc. (debt servicing) is in the region of US dollars 6 billion per year. The Government has not made use up to now of the various methods that are available to escape from this situation. For example re-structuring the economy by negotiating a moratorium on the debt payments. For instance it is possible to negotiate for a postponement of the annual debt servicing for a period of about 5 years. This would save us about 30 billion dollars starting from the next payment due in June this year. This money can be used to provide the people’s needs from abroad and also develop the economy. A very surprising feature is that no serious effort is being made to have such an arrangement with our main creditor, China.

Instead we are now signing an agreement with the IMF and a begging mission has gone to Washington, USA. This will only make matters worse as in addition to getting into deeper debt we are likely to be subject to their conditions which include the neoliberal policy of unlimited imports. The main cause of our dollar crisis is the fact that the Government when it began to be faced with the emerging dollar crisis failed to severely restrict the imports (which cost more than twice our export earnings) to narrow the adverse foreign trade gap. There should have been strict banning of the import of all non-essentials so that the outflow of the dollars would be minimized. There should have been more support to the organizations that I set up to promote the SMEs, like the 243 Vidatha Centers, to provide technology to support SMEs, one in each administrative division around the country. In the 5 years that I was Minister of Science and Technology the outcome had been the development of 231,000 SMEs. To support large scale industry as well as the SMEs, I set up a Nano Technology Centre in Homagama (which happens to be the 18th Nano Technology Centre in the world, which even India had not done). While the Government talks of cutting down imports and promoting local industries, there has been no serious attempt to promote this technology transfer mechanism.

The complaint of many Ministers that various decisions are taken without their knowledge suggest that there is a section of the bureaucracy, possibly supported by some politicians, who are controlling the Economy according to a plan determined by the USA to disrupt our economy to the point where we may be forced to accept any terms and even sign the MCC and SOFA agreements. The fact that both the Executive President and the former Finance Minister are American citizens further complicates the situation. Thus the proposal to set up an Interim Government for a period of 6-8 months to restore the economy and stabilize the social and economic situation in the country, if done effectively, as proposed by the group of 11 decedent political parties may provide a way out. But this will not be easy and certainly it would need a firm hand and the active support of the people.

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Lanka on the brink of economic collapse: Prez seeks international help to overcome crisis



President Gotabaya Rajapaksa, addressing the 27th International conference on ‘Future of Asia’, yesterday, called upon the international community to help Sri Lanka overcome its economic crisis.

Addressing the virtual summit, the President said that it was no secret that the last several months had been extremely difficult for Sri Lanka.

“We are currently undergoing a severe economic crisis, which has profoundly impacted the lives of all Sri Lankans, resulting in social unrest. The virtual shutting down of the tourism industry and the sharp decline in inward remittances from expatriate workers due to COVID19 in the past two years and increasing inflation due to other events combined with Sri Lanka’s high outstanding debt obligations to cause a severe financial crisis,” he said.

President Rajapaksa said that in April, Sri Lanka announced a ‘Debt Standstill’ with the intention of restructuring this external public debt through negotiations with our creditors, whilst simultaneously approaching the International Monetary Fund for a suitable programme.

“In parallel to these efforts, we have appointed a new Prime Minister and a Cabinet of Ministers with representation from multiple political parties, and we are fostering ongoing discussions in Parliament towards forming a national consensus on the way forward,” he said.

Given below are excerpts of his speech: “Sri Lanka is Asia’s oldest democracy. It is crucial that the solutions to our present national crisis are supported through our nation’s democratic framework.

“As we work through such solutions, however, we urgently require the assistance of our friends in the international community to ensure that our immediate needs in terms of the importation of essential medicines, food supplies, and fuel are met.

We are also in urgent need of bridging financing to restore confidence in our external sector and stabilise our economy until the debt restructuring process is completed and an IMF programme commences.

“Sri Lanka is grateful for the support provided by India, our close friend and neighbour, which responded with generosity in our time of need. The support extended by our other neighbours and development partners, as well as regional and global institutions, is also deeply appreciated.

“Japan remains one of Sri Lanka’s key development partners, and we hope that the negotiations now underway regarding bridging funds from Japan will conclude soon, and support Sri Lanka as we try to stabilise our economy and our nation.

“I appeal to the other friends of Sri Lanka present here today, to also explore the possibility of extending support and solidarity to my country at this very difficult time.

“A positive aspect of recent events in Sri Lanka has been the increased engagement of our youth in the nation’s politics.

“We have seen similar activism in other countries too, where the loss of confidence in prevailing systems has led to strong displays of opposition against governments.

“It is important to ensure that these systems undergo the reforms that are essential to their improvement so that future generations will benefit from better opportunities in education and employment, leading to an increase in their productivity.

“The grave difficulties facing Sri Lanka are an early indication of the long tail effects of the COVID19 pandemic, made worse by the ongoing conflict in Europe that may affect other vulnerable nations too.

“Supporting such vulnerable nations through these difficulties is essential for regional as well as global stability.

“It is therefore earnestly hoped that nations able to do so, lend a helping hand to these countries as they seek to overcome the very serious threats they face. An even more widespread problem that the world will face in future concerns food security.

“The shortages of food items and sharp increases in food prices likely to occur in the months ahead will place considerable strain on many countries.

“It is therefore essential that we pay attention to this crucial problem and prioritise agricultural production locally and improve our resilience in the face of this coming issue.

“Increased cooperation amongst nations will also be necessary to ensure that we overcome this issue.

“As we look to the future, it is no secret that even more widespread challenges caused by human induced climate changes lie ahead for the Asian region as well as the world.

“The adverse impacts of such climate change, including loss of biodiversity, water scarcity and pollution, degradation of air quality and ecosystems, will all contribute to significant challenges for many nations including in food security.

“Maritime security in Asia is another thorny issue that require serious policy attention. In addition to traditional security concerns involving the projection of naval power, many non-traditional issues including piracy, human trafficking, drug-smuggling, and illegal, unreported and unregulated fishing continue to pose challenges in this region.

“Sri Lanka has a great interest in the security of the Indian Ocean region, and the protection of the sea-lanes has established a strong relationship between Sri Lanka and dominant regional players including Japan.

“Sri Lanka has responsibility over protecting sea routes, maritime resources and combating maritime crime over a significant region of the Indian Ocean, and we look forward to partnering with the Asian community as we seek to expand our capacities in these areas in future.

“Another enduring regional concern has been civil unrest, conflicts, and communal violence. Sri Lanka too has been marred by sectarian tensions throughout its history. I am of the view that policymakers must come together to devise collaborative regional mechanisms on such issues.

“Exchanging expertise and experience to build capacity in the fields of peacebuilding and reconciliation is essential. So too is the empowerment of the underprivileged, because this is one of the root causes of unrest.

“In this context, I respectfully submit to this forum that the core objectives and functioning of some existing regional bodies are presently affected by conflicts of member countries on matters relating to economic, political, or strategic interests.

“It is my hope that member countries will be able to overcome such impasses and work together in the true spirit of Asia to fulfil the region’s priorities.

“In concluding, I once again thank Nikkei for having organised this conference, and the Government of Japan for hosting this event.

As Sri Lanka overcomes its present difficulties and starts rebuilding for tomorrow, we look forward to constructively participating in future such events too, for the betterment of Asia.”

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BASL, Opposition reject 21-A draft



The Bar Association has rejected the 21st Amendment to the Constitution that has been presented by Justice Minister Dr. Wijeyadasa Rajapakse, PC, to the Cabinet recently.

The main Opposition Samagi Jana Balavegaya (SJB), too, has rejected the 21 A in its present form.

Addressing the media at the Opposition Leader’s Office in Colombo, SJB spokesperson Eran Wickremaratne explained why the SJB wouldn’t support the proposed law as it would further enhance the executive.

A spokesperson for the BASL told The Island that they pointed out serious shortcomings in the draft and the need to rectify them. According to him, the BASL, in letters dated May 23 explained their position to President Gotabaya Rajapaksa, Prime Minister Ranil Wickemesinghe and Justice Minister Dr. Rajapakse.

The JVP and TNA too have rejected the 21 Amendment in its present form.

The following is the text of the BASL letter addressed to the President, PM and the Justice Minister: “On the 23rd of April 2022, the Bar Council approved the “PROPOSALS OF THE BAR ASSOCIATION OF SRI LANKA (BASL) TO RESTORE POLITICAL AND ECONOMIC STABLITY IN THE COUNTRY”. In the 13-point proposal the BASL proposed the introduction of the 21st Amendment to the Constitution by repealing the provisions of the 20th Amendment and restoring the 19th Amendment, and the re-establishment of the Constitutional Council and the Independent Commissions which existed under the 19th Amendment whilst enhancing their financial independence, transparency, and accountability.

The BASL is concerned that whilst the 21st Amendment will restore the provisions of the previous 19th Amendment to the Constitution as regards the Constitutional Council and the Independent Commissions, there are several vital provisions which were found in the 19th Amendment which are not incorporated into the draft 21st Amendment.

The provisions of the 19th Amendment precluded the President from assigning to himself any subjects or functions. However, the 21st Amendment does not incorporate such a provision and as such the President will be able to continue to retain Ministries and assign to himself any subjects and functions and take over subjects and functions of any Minister. The BASL is of the view that the 21st Amendment must include a provision amending Article 44(2) of the Constitution removing the power of the President to retain Ministries and assigning to himself any subjects or functions. Such provision must be made operative as soon as the 21st Amendment is passed.

In addition, the BASL observes that the President’s powers to prorogue and dissolve Parliament are left intact, in contrast to the 19th Amendment to the Constitution where the President could dissolve Parliament only after four and a half years following a Parliamentary election. The BASL is of the view that the provisions in the 19th Amendment relating to dissolution of Parliament should be restored. In addition, the BASL recommends that the following matters which were contained in the BASL proposals be included in the 21st Amendment:

1. A provision for the members of the Monetary Board to be appointed with the approval of the Constitutional Council (in addition to the Governor of the Central Bank);

2. A provision for the appointments of the Secretaries to the Ministries, Governors of the Provinces, Ambassadors and Heads of Missions be done on the advice of the Prime Minister in consultation with the Cabinet of Ministers;

3. A provision to require Presidential Pardons to be done according to the recommendation by a body established by law, appointed by the President on the recommendation of the Constitutional Council;

4. A provision to enhance the financial independence, transparency, and accountability of the Independent Commissions.

The BASL further recommends that the number of members of the Constitutional Council who are not Members of Parliament be increased from 3 to 5 and conversely the number of Members of Parliament on the Constitutional Council be reduced from 7 to 5 as was found in the 17th Amendment to the Constitution. This is consistent with the position taken by the BASL in 2015 when the 19th Amendment was enacted.

The BASL calls on the Government to ensure the early enactment of the 21st Amendment to the Constitution, as it is a necessary step towards achieving stability in Sri Lanka.”

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Plea for debt moratorium to rescue drowning SMEs and saving millions of jobs



Around 4.5 million Sri Lankans employed in the small and medium enterprises (SMEs) might lose their jobs in the coming months unless the government stepped in and assisted businesses, Chairman of Sri Lanka United National Businesses Alliance (SLUNBA), Tania Abeysundara told the media in Colombo on Wednesday.

She warned that a lot of SMEs might collapse in the next month unless the government arranged a debt moratorium.

“4.5 million people work in SMEs. When we asked the Central Bank Governor, he said that he can’t assure a debt moratorium. He was worried about the banking sector. I would like to ask the governor, wouldn’t the banking sector collapse if the SME’s can’t pay their loans,” Abeysundara said.

She said that Prime Minister Ranil Wickremesinghe had approved money printing to pay the salaries of government employees.

“When the government has no money to pay their employees, they can always print the money. What about us? Are we also to print money? Unless we receive a debt moratorium we will have to close our businesses,” she said.

Meanwhile, Treasurer of the SLUNBA, Lakmal Perera said that “once people lose their jobs, it is likely that they would come on to the roads and that will lead to a chaotic situation.

“We asked the government about this and they have no answer. There is no way that we can pay our loans with this contraction of the economy. We need an answer soon, when these people are on the roads the 225 MPs won’t be able to stop them,” he warned.

Vice chairman of the Association and President of the Vehicle Importers Association, Indika Sampath Merenchige also insisted that the government should talk to the business owners and give them a moratorium. If that did not happen, SMEs would be compelled to stop repaying loans.

“We give the government two weeks. We have employees that have been working with us for 10-15 years. They are a big part of how we have succeeded and survived. So, we can’t send them home. We have to somehow pay them. So, we have to stop paying loans,” Merenchige said.

Deputy Chairman of the SLUNBA, Susantha Liyanarachchi, who is also the Chairman of the National Construction Association of Sri Lanka (NCASL) said that there was a danger of a large number of garment factories leaving the country and as they couldn’t expect the cabinet that had been appointed to navigate the country out of the economic crisis.

“If garment factories leave, what will happen to foreign currency earnings?” he asked.

Governor of the Central Bank, Dr. Nandalal Weerasinghe said that the minimum economic activity would be experienced in the country in the next six to eight months.

“That means the economy will contract. We estimate that the economic contraction this year will be greater than any other time in post-independence Sri Lankan history. No one can bring down inflation below 30-40 percent in the next six months. People who are poor and vulnerable will be severely affected. Unless the government provides some support, the poor will find it hard to live,” he said.

Dr. Weerasinghe said that poverty levels would increase and when an economy contracted there would be a lot of unemployment, especially in the SME sector. (RK)

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