President Wickremesinghe has his moment

By Uditha Devapriya

Sir Humphrey Appleby: There is no reason to change a system that has worked so well in the past!
Jim Hacker: But it hasn’t.
Sir Humphrey Appleby: But… we’ve got to give the present system a fair trial!
Jim Hacker: Ah yes, I thought you might say that. It may interest you to know, Humphrey, that the Most Noble Order of the Garter was founded in 1348 by King Edward the Third. I think perhaps it may be coming towards the end of its trial period now, don’t you?
— “Yes Minister”

For President Ranil Wickremesinghe, March has been an exceptionally good month. First China gave its assurance for his government’s debt restructuring plans. Then his school, Royal College, won its annual cricket encounter with S. Thomas’ College for the first time in six years, and by a wide margin. On account of that victory, and in keeping with tradition, he declared Monday, March 20, a holiday for his school. The following day, March 21, the IMF finally gave its approval for an Extended Fund Facility (EFF), amounting to USD 2.9 billion. Sri Lanka’s Facebook community were characteristically witty on that occasion, with some even suggesting that the President declare Tuesday a holiday for the country.

By all accounts, this is the President’s big moment, and he knows it. In his speech after the IMF’s announcement, he urged everyone to cooperate with the government, and by extension the IMF, and to extend support for his plans to restructure the economy and help it recover. Colombo’s business elites responded favourably to the news, with massive, nearly unprecedented gains in the Stock Exchange and the rupee. Bondholders responded favourably as well, while bodies such as the Chamber of Commerce issued communiques welcoming the bailout and unequivocally urging trade unions, workers’ collectives, and civil society in general to help the government get on with its business.

Over the last six months, President Wickremesinghe has been busy consolidating his power. He has so far not wavered in his quest to establish himself at the centre, and has taken it upon himself to promote stability at whatever price, resorting to every trick in the political book to enforce his rule and silence his critics. In this, he has been helped by a fragmented Opposition. The country’s main Opposition, the SJB, remains as divided as ever on the economic reforms his government has proposed and is implementing. Immediately after the IMF gave its approval, for instance, a prominent MP welcomed the bailout, underscored the need to set aside political differences to “get the job done”, and regretted that the previous regime, led by Gotabaya Rajapaksa, did not go the IMF sooner.

Mr Wickremesinghe has always been the bête noire of Sri Lanka’s formidable, relentless, activist trade unions. There has never been any love lost between the two. Yet even here, there is something of a silence over what the unions intend on doing. On March 15, the day the President’s school organised a massive cycle parade and an even more extravagant vehicle parade – an event revived, so I am told, after a long time – several unions took to the street and threatened a continuous strike. Underlying these protests was a palpable sense of anger and discontent at a government that seems content in making the public sector, in particular its professionals, pay for the sins of the past. While the economic establishment criticised the protests and questioned the unions’ stance on taxes, unions themselves were divided over the trajectory of the strike: some wanted it to continue, while others, including the JVP-NPP’s Lal Kantha, preferred a “wait and see” approach.

The unions may have been divided, but their critics, particularly from Colombo’s right-wing establishment circles, are as united as ever. A few leading faces of this establishment have, again and again, tweeted or posted their support for anti-protest legislation, invoking the typical upper-class diatribe against strikes that “inconvenience” the public. To be sure, these protests have inconvenienced the general public, and a not inconsiderable section of the latter are tired and weary about protests and strikes. But this is not 2017, when the country witnessed an outpouring of strikes against private education and the then regime’s decision to sign a concession agreement over the Hambantota Port. There is no disjuncture now between what the unions want and what the public wants. Both are opposed to the tax hikes, and both want a better deal from political elites. Every other talking point – including whether the critique of the tax hikes is fair – seems at best peripheral.

Dovetailing with all these developments have been important debates, and discussions, over the IMF’s intervention in the country. Several months ago, this writer noted, in this column, that Colombo’s civil society had pinned its hopes on the IMF to promote its visions and narratives of human rights, good governance, and democratic accountability. But the IMF is not in the business of promoting these values: its mandate is manifestly economic. Against that backdrop, political reforms remain a secondary concern. On the other hand, however, the people are demanding political reforms, and they have been angered by the government’s postponement of elections. The IMF’s approval of the recent tax hikes – the locus, then as now, of popular anger and hatred at the government – has not improved matters. Perhaps responding to these developments, the IMF, in its most recent despatch, has denied rumours of intervening in the country’s electoral process, suggesting there is no fundamental disconnect between political and economic reforms.

Proponents of the President’s current policy of stability at any price – those I’d like to call the Stability Brigade – are not entirely wrong in their assertion that IMF reforms take time and thus need to be given a fair trial. But how long should this trial be? Sri Lanka has been to the IMF some 16 times before: it has completed only about half of them. While critics of the Fund and the government’s austerity overdrive are complaining, rightly, that it’s the poor and vulnerable – communities whom the IMF has urged governments to look after – who feel the brunt of neoliberal reforms, advocates of IMF intervention have pointed out that the IMF has been a little too soft on the government’s commitment to those reforms. There is a fundamental contradiction here, an almost impassable ideological gap.

Against that backdrop, certain commentators have advocated a middle way, a compromise between critics and advocates of untrammelled IMF intervention. Professor Mick Moore, in a recent piece to Groundviews, for example, argues that an IMF deal that places emphasis on wealth taxes, greater social equity and cohesion, and more political accountability, can and will make the organisation “work for Sri Lankans.” While I am generally sceptical of the IMF’s capacity for change and reform – as Yanis Varoufakis and Jayati Ghosh pointed out in a recent LSE forum, there is a regrettable disconnect between its rhetoric on equity and its actual stance on equity vis-à-vis the “bitter medicine” it prescribes for debt-ridden countries. I concede Moore’s point that it is counterproductive to stop engaging with the Fund once you have gone to it, and that even within the limits imposed by it, the government can and should be doing much more to ensure less pain for its people.

Yet my scepticism remains. The IMF’s trysts with neoliberal shock therapy – popularly called the Washington Consensus – in the 1980s pushed countries in Africa and Asia towards rather than away from crisis. This later converted some of the organisation’s most fervent advocates, including Joseph Stiglitz, Dan Rodrik, Robert Reich, and Robert Wade, towards other, alternative economic development theories. It is significant that Stiglitz cautioned the yahapalana administration, under Ranil Wickremesinghe’s premiership, to fundamentally transform and restructure the economy, and to make it more production- and innovation-oriented: in other words, to take it away from the Washington Consensus. This advice was of course never heeded. Meanwhile, as Sanja de Silva Jayatilleka has pointed out in a recent essay in the DailyFT (“IMF and accountability”), the IMF has itself limited its mandate to the domain of economic reform, rather than political-electoral reform.

The horses, in any case, have bolted from the stables. In that context, what are we to do? The IMF has given Sri Lanka a bailout on which the establishment has staked so much, to the extent of inflicting the severest punishment on its own citizens. What is distressing about this is that the economic establishment appears to be content with what the government is doing. Some within the establishment are, to be sure, grumbling about the government’s stifling of dissent, its crackdowns on protesters. But by and large, they seem alright with the economic reforms the government is enforcing. On the other hand, the President’s recent remarks on the media’s responsibility to report correctly on the IMF bailout make it clear that his administration is aware of the voices of dissent in the press. What critics of the IMF bailout and the regime’s austerity overdrive should be doing, in that respect, is to amplify their voices, and ensure that the economic elite, who were enthusiastic about this regime’s endorsement of IMF reforms, do not have, and do not get, the last say.

The writer is an international relations analyst, researcher, and columnist who can be reached at udakdev1@gmail.com.