Features
Lanka Adrift in Tempestuous Seas
by Kumar David
There are three dangerous global trends. The first is not new, it is the growth of right-wing extremism in the US; the second is more recent and commenced in 2022 with the Russian invasion of Ukraine. The third is the prospect of Sino-US military hostilities. All three will affect this country. Right-wing extremism turned perilous in the US with the election of Donald Trump whose Administration has lived alongside hate groups and an extreme legislative agenda (anti-environmental, anti-feminist, anti-LGBT). In the state of Idaho extremist Ammon Bundy has a chance of being elected State Governor.
America
With disarray in the Democratic Party which fears defeat in mid-term Congressional elections in November and a likely return of Trump to the presidency in 2024, the stage is set for a further drift of the US to right-extremism. Trump seems near certain to be re-elected in 2024 unless convicted of illegalities and barred from contesting. But this may lead to unrest led by the large white working-class base of the Republican Party. It is reasonable to speculate that the United States is on its way, if it happens then for some years only I am sure, to turning right-extremist. What difference will a temporary death of democracy in America mean for midgets like Sri Lanka?
The truthful answer to this is curious; it belongs in the domain of “known unknowns” meaning that we know that the effect could swing in two entirely different ways. The US is the world’s premier military and diplomatic, and one of two leading economic powers. Its influence is large and if it chooses to hound Lanka’s war-criminals and leaders who savaged human-rights it can make life hard for such vermin. On the other hand a right-extremist influenced USA may swing the other way, it could for reasons of its own cut a deal, as it has often done, with the military, leaders who are the scourge of democracy and mass murderers – think Pinochet and dozens of brutal Latin American regimes in the last 50 years.
Russian military losses in Ukraine are huge; some estimate as high as 60,000. (Ukrainian military losses seem to be less than a quarter of this). Both sides are digging in for a cold winter of attrition and trench warfare extending well into 2023; the invasion truly is a gigantic Putin blunder. The Ukraine-Russia policy of zero-integrity Trump’s mongrel hypothetical second Administration, supported by fascist trends in the US can be bizarre. His empathy for Putin, antipathy to NATO and the resemblances of US right-extremism to its European counterparts make outcomes unpredictable. Meanwhile Ukraine’s Zaporizhzhia nuclear plant is under attack by Russian artillery; bombing nuclear power plant is not banned by international law. It’s a dangerous world. Big countries have deep enough financial pockets and sufficient economic resources to mollify their populations, a small country is a hapless skiff adrift on a tempestuous ocean.
Europe
Outcomes seem more predictable in post Ukraine-invasion Europe. Western Europe’s choices are stark. The continent is desperate to minimise dependence on Russian gas, coal and strategic materials – the poor spend an astounding 50% of their income on energy. Germany’s long-term energy plans have come unstuck, the drive to a green future has been reversed. Mothballed coal power stations are to be brought into service and three nuclear power plants that were to be decommissioned have been given a lease of life. This is bad news all round, instability in energy markets is not good for anyone, especially small fry.
Apart from energy dependence, Germany, Europe’s largest economy, is also dependent on Russian metals and minerals as are other European industries to varying degrees. Russia has rich reserves of manganese, chromium, nickel, platinum, titanium and the conventional materials iron ore, copper, tin, lead, tungsten, diamonds, phosphates, and gold. Siberia nurtures one-fifth of the world’s timber. Although Lanka is of miniscule significance, Europe’s desire to keep open international supply chains on which its industries depend will be helpful in our quest to preserve GSP+ benefits.
On other counts too, the post invasion environment is troublesome. Russia is the largest urea exporter; one reason for surging fertilizer prices is prices of natural gas and energy needed in urea production. (As of mid-2022 there were indications that urea prices would decline later this year due to a slow start to seeding in the US). Russia is one of the world’s largest exporters of nitrogenous fertiliser, phosphates and potash. Ukraine and Russia are big food exporters and the imbroglio will lead to higher global food prices. All these concerns affect Sri Lanka agriculture directly and via their effect on world food prices.
Sino-US conflict
The danger of spreading Sino-American conflict is chilling for everybody, especially the countries of East Asia, the Far East and the littoral states of the Indian Ocean. Nancy Pelosi’s high-profile visit to Taiwan at this time was foolish and provocative. Pelosi visited the island in defiance of threats from Beijing which views Taiwan as a breakaway province and warned it would consider the visit a major provocation. It was undertaken entirely in the hope of gaining votes for the Democrats in the November 2022 Congressional elections, which expectation will come to nought. It so incensed China that for the first time it conducted military drills that butted into Taiwan’s territorial waters. Outright Sino-US conflict confined even to this theatre is unlikely because neither side has the appetite to escalate, but the visit has destabilised the region and increased the cost of shipping in East Asia and through the Malacca Straits.
A lot is at stake for Chinese leader Xi Jinping who is making an unprecedented since Mao bid for a third term. Xi who came to power in 2012 placed reunification-with-Taiwan high on his agenda; perhaps he will live to regret it as he will be unable to deliver within any foreseeable time-frame. He may wish to turn to domestic issues but it is hard to see how he can link these to the Pelosi visit. China is plagued by a property crisis, and an economic slowdown due to its strict zero-Covid lockdown. According to Hong Kong’s South China Morning Post there are fifty million empty flats in China which threaten to plunge the property market into chaos. These two factors have provoked protests but Xi will not be able to link them to the Pelosi visit and distract attention away from domestic failures. It is most unlikely that Xi’s grip on power will be challenged at the 2022 Congress in November but his inability to deliver on reunification will make him look weak in the ensuing period – Party Congresses are held every five years. This his third-term is likely to be his last.
China is unable to make a critical building block of the global economy: top of the line silicon chips. It buys 60% of the world’s supply of semiconductors to drive its vast industrial product output; 90% are made outside the country or by foreign companies in China. It spends more buying computer chips than importing oil. But it is struggling to keep up in the technological arms race. Why? Its champion in the foundry industry (makers of integrated circuits) Semiconductor Manufacturing International Corp last year announced plans to build a 28-nanometre chip but this technology is a decade behind TSMC’s 3-nanometer chip. Taiwan Semiconductor Manufacturing Corp is the world’s top chip maker.
TSMC’s dominance ensures Taiwan’s grip on 60% of the global chip business. Furthermore, nine out of the ten outfits which design rather than make chips (“fabless” or non-fabricating outfits), and also drive innovation are US based; the tenth, MediaTek, is Taiwanese. In various ways the US controls half the global chip market and China only 10% and these are technically less sophisticated, more useful for industrial than military uses. China is pouring billions into a chip-building but faces strategic impediments. It is shackled by geopolitical tensions, a hawkish Washington and economic damage caused by its own zero-Covid policy. The sun does not seem to be shining brightly on President Xi. Increases is cost of Chinese merchandise, disruptions to supply chains and big increases in shipping prices are more bad news. For foreign countries the negative effect is the rising costs of Chinese products.
I do not want to sign off on a depressing note, surely there are things we can do. I have been boringly insistent that we as a country have no option but to tighten our belts. Provision has to be made for the poorest but everybody else will feel the pinch. A graded system of price differentiation for all classes, except income tax gradation, is not feasible. Income tax on the rich will certainly have to be raised and a wealth tax and an inheritance tax introduced. True everybody, not only the rich benefited from 70 years of eating more than we produced and from extravagant imports paid for by profligacy in foreign and local debt. However, it is also true that expensive luxuries (fancy cars, foreign travel, fashionable merchandise) were almost entirely for the benefit of the affluent. An incomes and taxation policy that targets better off incomes is justified.
Contradictions in policy space are unavoidable. Exchange controls have to be relaxed to attract foreign investment and the inflow of capital in general. Then the rupee-dollar relationship will decline at the cost of the former – will 2023/24 witness the horror of LKR 1000 to the $ and therefore near galloping inflation? [Galloping inflation grows at dual or triple-digit annual rates, usually for a brief period. Hyperinflation runs at hundreds or thousands of percent per annum and is a precursor of anarchy, revolution or fascism]. High interest rates to curb inflation will shackle growth, hobble small and medium enterprises and crush the informal sector.
There is a reasonable chance that the country will navigate these torrents without shipwreck. Though there is all-round acceptance that some degree of belt-tightening is unavoidable, everyone, even aragalaya grants that revolution is not around the corner and agrees that the risk of anarchy is real. Trade unions, liberals and urban and rural folk agree that Ranil must, and can, be kept on a tight leash re democracy. Hence, I am moderately confident that bourgeois-democracy, albeit doused with economic hardship will come off the life-support system in say a year and that the IMF, India, Western capitalism, and China will wink and give us a hand to climb out of the mire. Reports say that preliminary agreement on a loan has been reached and will be announced a day or two after these lines are written.
Or like Toselli’s serenade is it only a ‘golden dream’, an improbable ‘vision fair’ that a Colour Revolution may deliver rewards? Perhaps I was optimistic when I gushed in this column on April 24 “The people’s uprising is a colour-revolution, a vision fair, a celebration of happier days to come. The light beaming from the radiant eyes of the young is the first time in our two-thousand-year story, to quote a comment, that we have seen anything like it”. I hope my lyricism is not lopsided. Never has a people’s uprising in Lanka driven out an unjust ruler. Regime change so far has always been by armies brought from India ( Moggallana) or conspiracy between Court and foreign colonisers (Kotte and Kandyan Kingdoms).
by Dr Gotabhya Ranasinghe
Senior Consultant Cardiologist
National Hospital Sri Lanka
When we sought a meeting with Hon Dr. Ramesh Pathirana, Minister of Health, he graciously cleared his busy schedule to accommodate us. Renowned for his attentive listening and deep understanding, Minister Pathirana is dedicated to advancing the health sector. His openness and transparency exemplify the qualities of an exemplary politician and minister.
Dr. Palitha Mahipala, the current Health Secretary, demonstrates both commendable enthusiasm and unwavering support. This combination of attributes makes him a highly compatible colleague for the esteemed Minister of Health.
Our discussion centered on a project that has been in the works for the past 30 years, one that no other minister had managed to advance.
Minister Pathirana, however, recognized the project’s significance and its potential to revolutionize care for heart patients.
The project involves the construction of a state-of-the-art facility at the premises of the National Hospital Colombo. The project’s location within the premises of the National Hospital underscores its importance and relevance to the healthcare infrastructure of the nation.
This facility will include a cardiology building and a tertiary care center, equipped with the latest technology to handle and treat all types of heart-related conditions and surgeries.
Securing funding was a major milestone for this initiative. Minister Pathirana successfully obtained approval for a $40 billion loan from the Asian Development Bank. With the funding in place, the foundation stone is scheduled to be laid in September this year, and construction will begin in January 2025.
This project guarantees a consistent and uninterrupted supply of stents and related medications for heart patients. As a result, patients will have timely access to essential medical supplies during their treatment and recovery. By securing these critical resources, the project aims to enhance patient outcomes, minimize treatment delays, and maintain the highest standards of cardiac care.
Upon its fruition, this monumental building will serve as a beacon of hope and healing, symbolizing the unwavering dedication to improving patient outcomes and fostering a healthier society.We anticipate a future marked by significant progress and positive outcomes in Sri Lanka’s cardiovascular treatment landscape within the foreseeable timeframe.
by Fr. Emmanuel Fernando, OMI
Jesuit Fr. Aloysius Pieris (affectionately called Fr. Aloy) celebrated his 90th birthday on April 9, 2024 and I, as the editor of our Oblate Journal, THE MISSIONARY OBLATE had gone to press by that time. Immediately I decided to publish an article, appreciating the untiring selfless services he continues to offer for inter-Faith dialogue, the renewal of the Catholic Church, his concern for the poor and the suffering Sri Lankan masses and to me, the present writer.
It was in 1988, when I was appointed Director of the Oblate Scholastics at Ampitiya by the then Oblate Provincial Fr. Anselm Silva, that I came to know Fr. Aloy more closely. Knowing well his expertise in matters spiritual, theological, Indological and pastoral, and with the collaborative spirit of my companion-formators, our Oblate Scholastics were sent to Tulana, the Research and Encounter Centre, Kelaniya, of which he is the Founder-Director, for ‘exposure-programmes’ on matters spiritual, biblical, theological and pastoral. Some of these dimensions according to my view and that of my companion-formators, were not available at the National Seminary, Ampitiya.
Ever since that time, our Oblate formators/ accompaniers at the Oblate Scholasticate, Ampitiya , have continued to send our Oblate Scholastics to Tulana Centre for deepening their insights and convictions regarding matters needed to serve the people in today’s context. Fr. Aloy also had tried very enthusiastically with the Oblate team headed by Frs. Oswald Firth and Clement Waidyasekara to begin a Theologate, directed by the Religious Congregations in Sri Lanka, for the contextual formation/ accompaniment of their members. It should very well be a desired goal of the Leaders / Provincials of the Religious Congregations.
Besides being a formator/accompanier at the Oblate Scholasticate, I was entrusted also with the task of editing and publishing our Oblate journal, ‘The Missionary Oblate’. To maintain the quality of the journal I continue to depend on Fr. Aloy for his thought-provoking and stimulating articles on Biblical Spirituality, Biblical Theology and Ecclesiology. I am very grateful to him for his generous assistance. Of late, his writings on renewal of the Church, initiated by Pope St. John XX111 and continued by Pope Francis through the Synodal path, published in our Oblate journal, enable our readers to focus their attention also on the needed renewal in the Catholic Church in Sri Lanka. Fr. Aloy appreciated very much the Synodal path adopted by the Jesuit Pope Francis for the renewal of the Church, rooted very much on prayerful discernment. In my Religious and presbyteral life, Fr.Aloy continues to be my spiritual animator / guide and ongoing formator / acccompanier.
Fr. Aloysius Pieris, BA Hons (Lond), LPh (SHC, India), STL (PFT, Naples), PhD (SLU/VC), ThD (Tilburg), D.Ltt (KU), has been one of the eminent Asian theologians well recognized internationally and one who has lectured and held visiting chairs in many universities both in the West and in the East. Many members of Religious Congregations from Asian countries have benefited from his lectures and guidance in the East Asian Pastoral Institute (EAPI) in Manila, Philippines. He had been a Theologian consulted by the Federation of Asian Bishops’ Conferences for many years. During his professorship at the Gregorian University in Rome, he was called to be a member of a special group of advisers on other religions consulted by Pope Paul VI.
Fr. Aloy is the author of more than 30 books and well over 500 Research Papers. Some of his books and articles have been translated and published in several countries. Among those books, one can find the following: 1) The Genesis of an Asian Theology of Liberation (An Autobiographical Excursus on the Art of Theologising in Asia, 2) An Asian Theology of Liberation, 3) Providential Timeliness of Vatican 11 (a long-overdue halt to a scandalous millennium, 4) Give Vatican 11 a chance, 5) Leadership in the Church, 6) Relishing our faith in working for justice (Themes for study and discussion), 7) A Message meant mainly, not exclusively for Jesuits (Background information necessary for helping Francis renew the Church), 8) Lent in Lanka (Reflections and Resolutions, 9) Love meets wisdom (A Christian Experience of Buddhism, 10) Fire and Water 11) God’s Reign for God’s poor, 12) Our Unhiddden Agenda (How we Jesuits work, pray and form our men). He is also the Editor of two journals, Vagdevi, Journal of Religious Reflection and Dialogue, New Series.
Fr. Aloy has a BA in Pali and Sanskrit from the University of London and a Ph.D in Buddhist Philosophy from the University of Sri Lankan, Vidyodaya Campus. On Nov. 23, 2019, he was awarded the prestigious honorary Doctorate of Literature (D.Litt) by the Chancellor of the University of Kelaniya, the Most Venerable Welamitiyawe Dharmakirthi Sri Kusala Dhamma Thera.
Fr. Aloy continues to be a promoter of Gospel values and virtues. Justice as a constitutive dimension of love and social concern for the downtrodden masses are very much noted in his life and work. He had very much appreciated the commitment of the late Fr. Joseph (Joe) Fernando, the National Director of the Social and Economic Centre (SEDEC) for the poor.
In Sri Lanka, a few religious Congregations – the Good Shepherd Sisters, the Christian Brothers, the Marist Brothers and the Oblates – have invited him to animate their members especially during their Provincial Congresses, Chapters and International Conferences. The mainline Christian Churches also have sought his advice and followed his seminars. I, for one, regret very much, that the Sri Lankan authorities of the Catholic Church –today’s Hierarchy—- have not sought Fr.
Aloy’s expertise for the renewal of the Catholic Church in Sri Lanka and thus have not benefited from the immense store of wisdom and insight that he can offer to our local Church while the Sri Lankan bishops who governed the Catholic church in the immediate aftermath of the Second Vatican Council (Edmund Fernando OMI, Anthony de Saram, Leo Nanayakkara OSB, Frank Marcus Fernando, Paul Perera,) visited him and consulted him on many matters. Among the Tamil Bishops, Bishop Rayappu Joseph was keeping close contact with him and Bishop J. Deogupillai hosted him and his team visiting him after the horrible Black July massacre of Tamils.
Sri Lanka-Singapore Free Trade Agreement
By Gomi Senadhira
senadhiragomi@gmail.com
“You might tell fairy tales, but the progress of a country cannot be achieved through such narratives. A country cannot be developed by making false promises. The country moved backward because of the electoral promises made by political parties throughout time. We have witnessed that the ultimate result of this is the country becoming bankrupt. Unfortunately, many segments of the population have not come to realize this yet.” – President Ranil Wickremesinghe, 2024 Budget speech
Any Sri Lankan would agree with the above words of President Wickremesinghe on the false promises our politicians and officials make and the fairy tales they narrate which bankrupted this country. So, to understand this, let’s look at one such fairy tale with lots of false promises; Ranil Wickremesinghe’s greatest achievement in the area of international trade and investment promotion during the Yahapalana period, Sri Lanka-Singapore Free Trade Agreement (SLSFTA).
It is appropriate and timely to do it now as Finance Minister Wickremesinghe has just presented to parliament a bill on the National Policy on Economic Transformation which includes the establishment of an Office for International Trade and the Sri Lanka Institute of Economics and International Trade.
Was SLSFTA a “Cleverly negotiated Free Trade Agreement” as stated by the (former) Minister of Development Strategies and International Trade Malik Samarawickrama during the Parliamentary Debate on the SLSFTA in July 2018, or a colossal blunder covered up with lies, false promises, and fairy tales? After SLSFTA was signed there were a number of fairy tales published on this agreement by the Ministry of Development Strategies and International, Institute of Policy Studies, and others.
However, for this article, I would like to limit my comments to the speech by Minister Samarawickrama during the Parliamentary Debate, and the two most important areas in the agreement which were covered up with lies, fairy tales, and false promises, namely: revenue loss for Sri Lanka and Investment from Singapore. On the other important area, “Waste products dumping” I do not want to comment here as I have written extensively on the issue.
1. The revenue loss
During the Parliamentary Debate in July 2018, Minister Samarawickrama stated “…. let me reiterate that this FTA with Singapore has been very cleverly negotiated by us…. The liberalisation programme under this FTA has been carefully designed to have the least impact on domestic industry and revenue collection. We have included all revenue sensitive items in the negative list of items which will not be subject to removal of tariff. Therefore, 97.8% revenue from Customs duty is protected. Our tariff liberalisation will take place over a period of 12-15 years! In fact, the revenue earned through tariffs on goods imported from Singapore last year was Rs. 35 billion.
The revenue loss for over the next 15 years due to the FTA is only Rs. 733 million– which when annualised, on average, is just Rs. 51 million. That is just 0.14% per year! So anyone who claims the Singapore FTA causes revenue loss to the Government cannot do basic arithmetic! Mr. Speaker, in conclusion, I call on my fellow members of this House – don’t mislead the public with baseless criticism that is not grounded in facts. Don’t look at petty politics and use these issues for your own political survival.”
I was surprised to read the minister’s speech because an article published in January 2018 in “The Straits Times“, based on information released by the Singaporean Negotiators stated, “…. With the FTA, tariff savings for Singapore exports are estimated to hit $10 million annually“.
As the annual tariff savings (that is the revenue loss for Sri Lanka) calculated by the Singaporean Negotiators, Singaporean $ 10 million (Sri Lankan rupees 1,200 million in 2018) was way above the rupees’ 733 million revenue loss for 15 years estimated by the Sri Lankan negotiators, it was clear to any observer that one of the parties to the agreement had not done the basic arithmetic!
Six years later, according to a report published by “The Morning” newspaper, speaking at the Committee on Public Finance (COPF) on 7th May 2024, Mr Samarawickrama’s chief trade negotiator K.J. Weerasinghehad had admitted “…. that forecasted revenue loss for the Government of Sri Lanka through the Singapore FTA is Rs. 450 million in 2023 and Rs. 1.3 billion in 2024.”
If these numbers are correct, as tariff liberalisation under the SLSFTA has just started, we will pass Rs 2 billion very soon. Then, the question is how Sri Lanka’s trade negotiators made such a colossal blunder. Didn’t they do their basic arithmetic? If they didn’t know how to do basic arithmetic they should have at least done their basic readings. For example, the headline of the article published in The Straits Times in January 2018 was “Singapore, Sri Lanka sign FTA, annual savings of $10m expected”.
Anyway, as Sri Lanka’s chief negotiator reiterated at the COPF meeting that “…. since 99% of the tariffs in Singapore have zero rates of duty, Sri Lanka has agreed on 80% tariff liberalisation over a period of 15 years while expecting Singapore investments to address the imbalance in trade,” let’s turn towards investment.
Investment from Singapore
In July 2018, speaking during the Parliamentary Debate on the FTA this is what Minister Malik Samarawickrama stated on investment from Singapore, “Already, thanks to this FTA, in just the past two-and-a-half months since the agreement came into effect we have received a proposal from Singapore for investment amounting to $ 14.8 billion in an oil refinery for export of petroleum products. In addition, we have proposals for a steel manufacturing plant for exports ($ 1 billion investment), flour milling plant ($ 50 million), sugar refinery ($ 200 million). This adds up to more than $ 16.05 billion in the pipeline on these projects alone.
And all of these projects will create thousands of more jobs for our people. In principle approval has already been granted by the BOI and the investors are awaiting the release of land the environmental approvals to commence the project.
I request the Opposition and those with vested interests to change their narrow-minded thinking and join us to develop our country. We must always look at what is best for the whole community, not just the few who may oppose. We owe it to our people to courageously take decisions that will change their lives for the better.”
According to the media report I quoted earlier, speaking at the Committee on Public Finance (COPF) Chief Negotiator Weerasinghe has admitted that Sri Lanka was not happy with overall Singapore investments that have come in the past few years in return for the trade liberalisation under the Singapore-Sri Lanka Free Trade Agreement. He has added that between 2021 and 2023 the total investment from Singapore had been around $162 million!
What happened to those projects worth $16 billion negotiated, thanks to the SLSFTA, in just the two-and-a-half months after the agreement came into effect and approved by the BOI? I do not know about the steel manufacturing plant for exports ($ 1 billion investment), flour milling plant ($ 50 million) and sugar refinery ($ 200 million).
However, story of the multibillion-dollar investment in the Petroleum Refinery unfolded in a manner that would qualify it as the best fairy tale with false promises presented by our politicians and the officials, prior to 2019 elections.
Though many Sri Lankans got to know, through the media which repeatedly highlighted a plethora of issues surrounding the project and the questionable credentials of the Singaporean investor, the construction work on the Mirrijiwela Oil Refinery along with the cement factory began on the24th of March 2019 with a bang and Minister Ranil Wickremesinghe and his ministers along with the foreign and local dignitaries laid the foundation stones.
That was few months before the 2019 Presidential elections. Inaugurating the construction work Prime Minister Ranil Wickremesinghe said the projects will create thousands of job opportunities in the area and surrounding districts.
The oil refinery, which was to be built over 200 acres of land, with the capacity to refine 200,000 barrels of crude oil per day, was to generate US$7 billion of exports and create 1,500 direct and 3,000 indirect jobs. The construction of the refinery was to be completed in 44 months. Four years later, in August 2023 the Cabinet of Ministers approved the proposal presented by President Ranil Wickremesinghe to cancel the agreement with the investors of the refinery as the project has not been implemented! Can they explain to the country how much money was wasted to produce that fairy tale?
It is obvious that the President, ministers, and officials had made huge blunders and had deliberately misled the public and the parliament on the revenue loss and potential investment from SLSFTA with fairy tales and false promises.
As the president himself said, a country cannot be developed by making false promises or with fairy tales and these false promises and fairy tales had bankrupted the country. “Unfortunately, many segments of the population have not come to realize this yet”.
(The writer, a specialist and an activist on trade and development issues . )
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