Features
An unstable and unusual new world survival strategies for lanka
by Kumar David
The only crime that is committed in broad daylight is politics, all others are done in secret. This is true whether it be Trump’s America or the ruling cohorts of Sri Lanka. No need to elaborate, it is universally known. Trump brags about his tax evasions and encourages his compatriots to do likewise.
This country is trapped in a strange syndrome. It argued that Ranil Wickremesinghe (RW) may be able to win over the IMF and thereby stabilise the currency, deleverage debt (make it easier to borrow from commercial markets again), improve the import-export trade (on a capitalist basis) and negotiate a compromise between the Treasury and the Central Bank (limit money printing and enforce a degree of fiscal discipline). But at the same time economic pain will be inflicted on the poor and the lower middle-class. His budget proposals include raising income tax, increasing VAT and broadening the company tax but the costs will all filter down. RW hopes to reach a primary surplus (that is excluding interest payment on state debt) of 2.3% of GDP by 2024. This involves raising fuel and electricity prices. At present a part of these are sold far below production cost since they include large subsidies to low income households. The CEB and the Petroleum Corporation show huge losses on their books – it’s all politics.
Social spending and a safety-net m1itigating the impact of the current crisis on the poor and vulnerable by raising social spending is envisaged. However, inflation and high interest rates (spurred by the US Federal Reserve Bank) is beyond control in most countries, therefore achieving price stability is a pipedream. The IMF which has promised technical help and the government say they are both committed to a new Central Bank Act, reducing corruption and achieving good financial management. On the whole these plans can be called a conventional capitalist economic programme and like a curate’s egg is good in parts.
However, here’s the rub. Ranil has from time to time shown himself to be a ruthless opponent of democratic and human rights. In the last three months he has encouraged his goons, several times, to attack peaceful anti-government protesters, human rights campaigners and women’s groups. The Police Minister who urged the force to break up peaceful democratic protests against government policies (some democracy!) continues to ply his ugly trade. You ask me which is the real Ranil? I say both; that is the fact of the matter; that is why there is no set-piece response to Sri Lanka’s paradox. Furthermore, this needs to be placed in the context of a deeply contradictory and fractured global scene. The world is upside down and since the financial crisis of the early 2000s is mostly standing on its head.
A daunting economic scenario faces global capitalism in the wake of the financial crisis of the early 2000s. The theology of the success of uncontrolled free-market capitalism has been shattered. Capitalism is kept alive by the STATE, yes that’s right, the state has diverted trillions of dollars, Euros and Yen into keeping capitalism alive. The principal role of the state in metropolitan nations is not subsidising bankrupt state enterprises, it is bankrolling insolvent capitalism. All this is no longer disputed. In 2008 the US Congress approved a $700 billion bailout known as the Troubled Asset Relief Program and in February 2009 Obama delivered a $787 billion economic stimulus to avert a global depression. This $1.5 trillion has been supplemented by a further $5 trillion post-Covid, post supply-chain-disruption stimulus monies in the US alone. Add the other capitalist nations and the increase is substantial, but I agree that not all of it can be attributed to propping up failed capitalist market economics.
The Great Recession began with a subprime mortgage crisis in 2006 when banks drove American households into rotten Mortgages and fake instruments known as Derivatives. The housing bubble burst and subprime borrowers defaulted. The capitalist state declared banks (Lehman Brothers, Merrill Lynch) and giant corporations (GM and insurance giant (AIG) “Too big to fail” when they turned worthless. The stock market crash of 2008 was accompanied by one of the largest points drop in the history of the Dow. Global capitalism needed to avert a second Great Depression; this is not disputed. The myth of stable free-market capitalism has been shattered; the state has been exposed as a committee to oversee the activities of the capitalist class to a degree that even Marx did not foresee.
Free-market capitalism not only went belly-up as an economic system but we have now entered an era of extremism and social instability the likes of which we last saw in the 1930s in Europe in the period of the rise of fascism in Italy, Germany, Eastern Europe and Spain. The return of a Trump presidency, near civil war over women’s rights to an abortion in consultation with their doctors, the possible overthrow of Putin (good riddance you are entitled to say) and dangerous instability on the “eastern front” are the setting to a very unstable global situation. Sri Lanka needs to play its cards both wisely and craftily to navigate these waters.
The one issue that I would like to address today instead of ploughing on with generalities is the economic role of the state. Therefore, I will focus of the most important global example of state involvement in economic development at this time, China. China’s economy whether measured by a PPP (Paycheck Protection Program) yardstick or in nominal dollar is likely to surpass that of the United States within a decade. The benefits of competent state direction in the initial decades of post-colonial modernisation are bearing fruit. Decades of high single-digit and some years of two-digit GDP growth pulled 800 million people pulled out of poverty, created a middle-class whose numbers exceed the population of the USA and saw infrastructure improvement that is hard to believe. State-direction built railways, airports, highways, industries and encouraged massive soulless public housing projects by private developers. This is all known; some people call it the greatest economic explosion in history. Nevertheless . . . be patient!
Whether under the leadership of the Communist Party, or in Singapore, Taiwan or South Korea for different reasons, the directive-modernising role of the state has been paramount. Size is not the only attractor; technology, investment, military focus and other crucial aspects. The bread-and- butter technology picture is mixed. China is pulling ahead in Artificial Intelligence and hard technology for industrial expansion. Though the West is hell bent on denying it access to the best in computer-chip and military know-how there were ways round this such as joint-ventures and theft of intellectual property. Russian science-technology is no pushover; China-Russia cooperation can one day yield huge results.
A friend and former professor at the Open University, Nawala known as Eich, sent this pessimistic note to me a few days ago: “There is a major fallacy in your (KD’s) assumptions; given the insatiable desires and greed of people (ordinary people, capitalists and political leaders) this is never going to pass. The present state of technology is sufficiently advanced to allow people to lead decent lives and engage in enjoyable occupations. If you wish to you may speculate how much longer the Chinese capitalists will tolerate the dictatorship of the CPC without taking over decision-making themselves”.
But protests are erupting in Shanghai and other Chinese cities over heavy handed Covid controls. For the first time in decades, thousands of people have defied the authorities at universities and on the streets of major cities, demanding to be freed not only from incessant Covid tests and lockdowns, censorship the Communist Party’s tightening grip over all aspects of life.
Across the country, “We want freedom” has become a rallying cry of a groundswell of protests led by a younger generation too young to have taken part in previous anti-government dissent. As numbers swelled in multiple major cities over the weekend, so too have the range of grievances. Among protesters hundreds have called for the removal of Chinese leader Xi Jinping, who has overseen a strategy of mass-testing, lockdowns, enforced quarantine and digital tracking. Crowds chanted “Give me liberty or give me death!” according to videos circulating online in vigils to mark the death of 10 people in a fire in Xinjiang. By Sunday (27) evening, protests had spread to Beijing, Chengdu, Guangzhou and Wuhan, where thousands called not only an end to Covid restrictions, but remarkably, for political freedoms. Residents in some locked-down neighbourhoods tore down barriers. Protests on campuses included prestigious Peking U, Tsinghua U and the Communication University, Nanjing.
Nevertheless, there remains a nagging question. What after the dirigisme phase has served its purpose and is past its use-by date? How is post-dirigisme society, technology and innovation to organise itself? Productivity in China is falling, innovation is stifled and raises questions about the freedoms essential for the future. Society has to be set free to flourish. What was the great failure of the USSR? The state, far from withering away, became an ever more determining force. But socialism is unimaginable if men are dominated by the state. Somewhere along the road the state must wither away if as envisaged by socialists a society of plenty and freedom is to be realised. Society has to be free to flourish. The lamp illustrates the leap into the sphere of human freedom and innovation that is a precondition for socialism.
This brings me to my closing remarks pertaining to the role of the state in Sri Lanka. At the present time it
Has to play a directive role in economic development but it can do so only if it is not a predator in the hands of corrupt political classes. Marx speculated that “in place of the old bourgeois society, with its class antagonisms, we shall have an association, in which the free development of each is the condition for the free development of all”. Leave aside the flowery language, in the final analysis the state is only a temporary instrument, human liberation demands that eventually we must be rid of it.
A few days ago, I polled my liberal and intellectual friends about who will they would vote for in a presidential election in 2023/24. I gave them a wide choice; Sajith, Ranil, any Sajith-Ranil combo, various Rajapaksa options such as Dullas and Namal, the JVP/NPP and Peratugami (Front Line Socialists). Believe me I am not saying this because I am an NPP member, but over half choose the NPP/JVP while the other half distributed themselves all over. The challenge then is to take forward the debate within the JVP (the NPP is fine) on the longer-term economic role of the state and my “The nagging question, what after the dirigisme phase as served its purpose and is past its use-by date?” Looks like we have a busy work schedule cut out for years to come.
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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