Features
An economic programme for the colour-revolution
by Kumar David
We know of a proletarian revolution which toppled Tsarism and transformed the state; we know of China where the state was deposed more by peasants than proletarians but swore fealty to Marx and in the last three decades, we have had Colour Revolutions, Velvet ones and Arab Springs. The aims of the Popular Movement now sweeping Lanka are more modest: “Go Gota Go”, drive out the Rajapaksa Clan and stop its robbery, dissolve parliament and hold elections.
If the first transpires the rest will follow in some disorderly order. Can it be called a revolution if these goodies all come to pass? You may demurr; the state has not been sent packing, there is no economic and class reordering, nothing is fundamental, only a change of costume. “What all this fuss is about?” as my eloquent Indian friend Lawrence would quip.
You may also whine that there is not much difference between the programs of the political entities now competing for a place in the sun. True. And though the Central Bank now seems to be in competent hands, as lender of last resort it has long been an accomplice in fiscal bungling and ineptitude of governments both blue and green. What can it achieve by soiling its hands associating with forlorn pleas to the IMF by a despairing and expiring Administration?
First, ‘Revolution Without a Revolution’ – sorry Debray. If the now snowballing movement succeeds in driving Gotabaya out, how significant would it be? If only that, well it’s great but earns some title less than revolutionary transformation of society. If it sets in motion a process which within a reasonable number of months abolishes the executive presidency and transforms the balances of power in parliament, that’s very significant. Wasn’t 1956 a revolution of sorts?
There’s a statement in circulation regarding a proposal by the Prime Minister, approved by the Cabinet on 26 April, for a new agency to ‘Evaluate, Expedite and Approve Foreign Funded Projects’. I do not have permission to publish the statement but its gist is that the PM’s proposal: “Risks unprofessional decision making, corruption and illicit financial flows in by-passing Board of Investments, and Tender Evaluation Processes including acceptable procurement procedures, procedures governing unsolicited proposals, Treasury Circulars and corporate governance codes.” Placed against the background of the anger pouring out on the streets this is pretty damning; demonstrators will substitute ‘certainty’ for the polite term “Risks”. My point in the previous paragraph was that breaking such a destiny is a big deal.
I am aware that the trend of this essay will alarm my redder-than-red comrades that it is drifting into liberal contamination. Let me reassure them; on the darkest of nights the monkey does not lose its grip! It is pragmatic, appropriately empirical and free of adultery with liberal dross. (The somewhat empirically inclined Ch.10 on The Working Day and Ch.15 on Machinery & Modern Industry are the longest in Kapital my dear comrades will recall). Right now, we need to advance not utopian images but programs to address acute current needs, but of course which also point towards the shinning castle on the hill. There is a term for this among cognoscenti, Transitional Programme, but theory need not detain us here.
This is not a technical paper, but statistics give a measure of the alarming multi-sided crises. The groan on everyone’s lips is: Production is way short of consumption, fiscal deficit is out of control, foreign debt an abyss, repayments are in default; there is no work-ethic in the populace; parliamentarians seek to benefit only themselves; the ruling clan’s theft of public money is legendary. This one sentence is enough summary and introduction, if it is necessary at all. But instead of only letting off steam, which like other people I find exhilarating, let’s look at numbers.
The data in the table freely available on the web is up to 2021 and makes forecasts for 2022 and 2023. Row 1 says real GDP will shrink by 2% to 3% in 2022 and growth will recover to 2.2% next year. Row 2 says inflation will be 18-20% but fall to say 7% next year (fat hopes). Row 3 expects LKR 380 to the $ next year, and I say it will fall to LKR 800 per $ within 5 years. Row 8 is important and interesting; Bond Yield, to less educated folk like us, signals the effective interest rate Lanka will pay for commercial foreign borrowing (18-25%), from capital markets unless the loan is backstopped by the IMF. Rows 10, 11 and 12 forecast budget-deficit, trade-deficit and current account-deficit; all depressing numbers. The last two rows say that total government debt (domestic plus foreign) will remain in the region 110% of GDP while foreign debt alone will float above $40 billion. There could be adjustments expert economists and quacks (are they not the same?) may wish to make to these numbers, but overall, they are not likely to be vigorously contested.
DATA AND FORECASTS
So far, I think, everybody is on the same page; all repeat ad nauseum the same depressing numbers. In their reply to the ‘What is to be Done?’ question everybody again is on much the same page and repeat the same mantras, but not quite ad nauseum since they inject changes of nuance. The invariable ingredients are: Balance the budget, reduce expenditure, export more, get FDI, improve technology, services and manufacturing, give inducements to capitalists to invest, encourage SMEs, restructure/close-down state-enterprises, let professionals and technocrats run the Administration, hang if legally permissible or otherwise dispose of the Rajapaksa Clan, and cull parliament. This truly is Sri Lanka’s new National Anthem.
Let’s take the bull by the horns and cut this ever repetitive unprioritized Gordian Knot. I want the pro-left government that I dream of to propose a sharp two-pronged strategy; a double-sided sword.
(a) A short-term bunker-busting onslaught to get the country out of this ‘Great-Grimpen Mire’ into which it is sinking helplessly.
(b) Then a medium-term five-year programme. [In the long-term we all have to join JMK in purgatory].
Bunker-busting
Two years of bunker-busting will be painful but people will OK it if they glimpse light at the end of the blitz and if satisfied that the new midwives are not crooked blackguards. I am fed up with liberal euphemisms (speakeasy reform talk and palliative b-s). Like Alexander we have to cut the Gordian Knot. Consumption has to be cut, pruned, cropped, lopped, choose your least-offensive verb. The propensity to consume has to be curbed till production catches up. The begging bowl will ease pain – rent knee-guards for foreign ministers. Keynes’ concern throughout The General Theory was reluctance of interwar wealthy societies to spend and invest (weak effective demand). Our Lankan malady, many other hard-up countries included, is the opposite; a disproportionate-to-production propensity to consume leading to large national debt. Democratic governments that defy this will last only till the next election, authoritarians ones face riots. Screwball incompetents like the Rajapaksas encounter both destinies at once.
Discouraging consumption may be justified in theory but the mood of the people is that they would rather shoot this specific government than trust it with their sweat, tears and tightened belts. The proposed sales taxes will be resisted, increase of medicine prices will be met with fury, Cabinet reshuffles will be ridiculed, offers of an All-Party administration scoffed at. Petitions tell the IMF not to waste its money and warn overseas lenders that loans to corrupt regimes will not be honoured. The regime must GO first! That is unconditional and categorical; nothing can be done or get done till then. Seals and penguins undergo a catastrophic moult where skin and fur peels off completely and make an entirely new start. Got it?
Many countries starved themselves in times of war to produce bombs and tanks and god-forbids, and in the 1930s the Soviet Union endured hardship to build an industrial powerhouse. The Meiji transition in Japan, China generally, Mao’s closing lunacy notwithstanding, Stalinist Eastern Europe and Vietnam right now, are societies where current consumption was or is limited for future gain. In contrast to these valiant examples what is being demanded of us is less painful. Videos of families without food on Tik-Tok are heartrending; bunker-busting will have to be accompanied by emergency relief only for the most needy.
Medium-term programme
Busting the bunker must dovetail into a medium-term strategy. The invariable ingredients everyone talks of in summary are again: Export, FDI, technology, services and manufacture, get domestic capitalists to invest, encourage SMEs, reform state-enterprises, let professionals and technocrats run the Administration etc. Everything is in this mishmash without order or prioritisation. I don’t want to jump the gun and say too much so early, prior even to the bunker-busting first innings. My intention is to think aloud and dare a different angle from the glut of all-liberal agendas showcased in smart TV interviews.
The state (not only political dolts but professionals and peoples’ rep societies) in some formal consultative assembly convened every so-many-years must lay down a direction. I can hear half my readers tear their hair screaming “Central Planner! Stalinist! Market-Hater!” Sorry, somebody has to defy the pack and say it; it’s this way or you have no option but to trust the invisible hand of laissez fair. I know that with best intentions Sajith’s team (Eran, Harsha and Kabir) as well as self-interested businesses people, think that the wild and feral licence of the free-market is the way to go. Ok, buddy, see you on Galle Face Green.
Yes, I am saying that a state/peoples’ agency must within limits choose winners and losers in the sense of trade-offs between types of say agricultural priorities, types of investment projects and the implications of trade agreements which by their nature are very complicated. For example, how much emphasis to put on electronic device assembly, chips, laser-device assembly as opposed to say heavier manufacturing (neither can be done without overseas investment, technical support and product marketing partners) is a trade-off of national concern.
The broader the category the more important the role of public policy. Banking policy pushed through the Central Bank can for example gently coax direction without the need for direct hands-on state involvement. Also, I agree that domestic capitalists need better inducements to invest; but careful we are getting close to shades of grey; laissez fair cannot be permitted carte blanche. Conversely the more specific and ground level a management issue, the more imperative that Ministers and such morons keep their grubby fingers out.
I have said a great deal more than I intended to in this last subsection of the essay. I would like to retreat a bit and declare that it is not specific steps that I am pushing but a way of thinking. It would be nice to have concrete proposals from others too to discuss apart from the anodyne offerings of liberal intellectuals.
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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