The JRJ Cabinet and Finance Minister Ronnie de Mel

It would be fair to say that JRJ had the most competent Cabinet of Ministers of modern times. As usual the new Prime Minster (he was elected PM in 1977 before he became president via a constitutional amendment a year later: ed) had been very thorough in his decision making. He first accommodated all the seniors who were Cabinet ministers in previous UNP governments. Premadasa, M.D.H. Jayawardene, Montague Jayawickreme, E.L. Senanayake, Mohamed and Hurulle were all thus accommodated.

He also brought in party seniors who had helped him like Mathew, Hameed, Festus Perera, Jayasuriya and Wijetunga. Having secured that flank he chose two technocrats Ronnie de Mel and Nissanka Wijeratne, both ex-CCS, to man key ministries – Finance for de Mel and Education for Wijeyaratne. Last, he inducted two young stars of the party, Gamini Dissanayake and Lalith Athulathmudali. They too were given plum portfolios. Everybody could see the logic of the leader’s decisions and there was little of the heartburn that usually follows the selection of cabinet ministers.

Another key factor was that JRJ was clearly ‘Primus inter pares’. While he acknowledged that the victory was a combined effort, ministers knew that he was supreme, having brought the UNP to a historic and unprecedented win which would have been unthinkable under the Senanayakes. He also made it known that he would not brook any underhand maneuvering which had been a regular feature of Sri Lankan party politics.

Later on, we will see that there was some dissatisfaction among his senior colleagues – M.D.H. Jayawardana, Gamini Jayasuriya and E.L. Senanayake. JRJ showed no mercy to them in asking for their resignation from their ministerial positions when disagreements came to the surface. But both sides stuck to the rules and the transitions took place in a civilized manner with JRJ writing to them to thank them for services rendered.

While the cabinet ministers were able and willing, several of them were highly ambitious and had no doubts about their fitness to succeed the Old Man who in his own words had “climbed to the top of the greasy pole” at the ripe age of 72. He was fighting fit and unfailingly followed every morning, a rigorous exercise regime tailored for the Canadian Air Force, but that did not prevent several of his Ministers nursing ambitions of succeeding him one day.

Their hopes were raised even before the 1977 election when JRJ, with no warning, held a straw poll to form a 10-man committee to manage the election campaign. Premadasa came first by a small margin. The surprise was Gamini Dissanayake’s performance coming a strong second, thus fueling his already vaulting ambition. Ronnie de Mel and Lalith Athulathmudali also made it to the group. It sent a clear signal to Premadasa and the party seniors that they would not have a cakewalk to the top. It also created a sense of competition among the front runners which simmered right through JRJ’s two terms and blew the party apart after Premadasa donned the mantle.

While this competition helped in running an efficient administration it must be recognized that it exacerbated tensions among the front runners. JRJ gave ear to them all and while not discouraging them did not overtly back any one of them either. He was a master at giving each of them hope, while not showing his hand in any way. To complicate matters there were two others outside this ring who believed that they had JRJ’s blessings to go to the top.

One was Anandatissa de Alwis, a party grandee who managed both the political and personal entanglements of Sir John Kotelawala. He was the kingpin of the UNP youth league in the early days and had been recruited by JRJ as his Permanent Secretary in the 1965 Dudley-led administration. They were close friends and the leader’s unilateral decision to make him Speaker of the House did not please Ananda who wanted to be a Minister, preferably in charge of the old ministry of JRJ’s (State) he was Permanent Secretary. The other was Upali Wijewardene, JRJ’s cousin who had emerged as a clever and ambitious business magnate.

He wrapped himself in the mantle of a hero of the south because his mother and the source of his wealth came from a prominent family in the southern heartland. ‘This was a direct affront to Ronnie de Mel, who also was burnishing his southern credentials as the representative for Devinuwara, the abode of Vishnu – the guardian god of the South. Vishnu is believed to be the only god who did not run away when the Buddha was threatened by Mara.

Ronnie de Mel

The JRJ administration of 1977 was chiefly marked by its radical change of the country’s economic policies. By 1977 the previous administration led by Mrs. B was hated by the general public.It was an era of shortages and stagnation. The inward looking policies of the PM and her Finance Minister N.M. Perera, had failed and had created immense difficulties for the public in its wake.

So much so that a wing of the SLFP led by Felix and Anura Bandaranaike, began to publicly criticize NMs socialist policies. They drew attention to the epochal changes that were shaking up western economies and driving hard bitten communist regimes in the USSR and Eastern Europe to extinction. The new free market economy which spelt doom for socialist economies was led by President Reagan in the US and Prime Minister Thatcher in the UK. Their USSR counterpart Gorbachev was also taking the first steps ‘along the capitalist road’ as the Chinese leaders described it.The world was entering a new economic cycle of free markets and globalisation. Who would be best to help JRJ to transform the moribund economy? The President unhesitatingly chose Ronnie de Mel. “Cometh the hour; cometh the man”.

Though the JRJ Cabinet had many clever Ministers, the crucial post of Minister of Finance was given to the best qualified person- Ronnie de Mel. In a sense this appointment was waiting for him since he entered politics late in life. The SLFP which was his first party of choice had many envious seniors who prevailed on Mrs. B not to offer him a portfolio. The SLFP was a one man or one woman show and it placed greater store on loyalty than on talent.

Ronnie was a brilliant scholar who had refused the offer of a research assignment in Cambridge or Oxford as a historian based on his examination performance. He chose the CCS and was ear-marked from the start as an outstanding public servant. He had socialist leanings and was a favourite official of Philip Gunawardena when he was Minister of Agriculture in 1956. As with many CCS colleagues of his time he married into a wealthy family. Like JRJ he was without money worries but did not show off like the new rich who were now coming into politics under the SLFP. His wife Mallika was a dynamic and capable lady who undertook the responsibility of nursing her husband’s electorate as he was not a “hail fellow well met” type of politician.

In that he shared many personality traits with JRJ who looked upon him as a very valuable colleague. Both had an abiding interest in looking after the poor and underprivileged though they did not resort to popular gimmicks. Both JRJ and Ronnie came from a strong Anglican background and had an intellectual approach to Buddhism which did not view popular Buddhism and ritual with favour. Even when Ronnie was a fierce critic of the UNP, JRJ decided to woo Ronnie and playing on Mrs. B’s inability to accommodate him, slowly won him over to his side.

Ronnie was so important to the President that when he lost the Devinuwara seat in 1983 when JR sought re-election and the Referendum that followed, he was brought in on the national list of the UNP. Ronnie was so well accommodated in the UNP that he also brought along his friend and CCS colleague Nissanka Wijeryaatne, who was smarting under Mrs. B’s rejection of him for daring to contest her uncle Paranagama for the post of Diyawadana Nilame and beating him. Nissanka contested the Dedigama seat and became the Minister of Education. The luring of this duo of talented SLFPers was a feather in JRJ’s cap and presaged the trouble that was in store for Mrs. B in the 1977 election.

The opening of the economy in 1977, under the directions of JRJ, was implemented by Ronnie. It was a ‘tour de force’ which showed great skill and intelligence. De Silva and Wriggins in their biography of JRJ summarize the reforms envisaged in Ronnie’s first budget of 1977. “He asserted that the principal objective of the Budget was the establishment of a free economy after more than 20 years of controls and restrictions which had hampered economic growth….The budget marked a fundamental shift in Sri Lanka’s monetary and fiscal perspectives, through liberalized economic policies which emphasized great reliance on the market mechanism, liberalization of trade and payments and a large increase in external finance.

Most direct controls on prices, imports and external payments were dismantled, government operations in processing and distribution of basic commodities were reduced if not removed, and attractive incentives were provided to producers. There was also the unification of the exchange rate at a depreciated level and the introduction of a flexible exchange rate policy.” [P335] The rupee exchange rate was brought to its market value. All governments before that had artificially kept the rupee below its real value thereby distorting the country’s economy. It led to a black economy and the energies of the Government was diverted to catching currency racketeers as in Felix’s time. The next step was to deal with subsidies, particularly the rice subsidy – a major factor in electoral politics. Under the JRJ regime the subsidy for rice was restricted to those who earned under 300 rupees a month.

In order to cushion this poor segment from rising food prices it was decided to give a cash allowance in lieu of the rice ration. We in the Ministry of Information under Anandatissa put our heads together to fashion an Information strategy to popularize the cash grant. Together with Irvin Weerakkody of Phoenix Advertising we created a ‘Salli Potha’ or cash book as an alternative to the ‘Ration book’. The poor citizen could use the cash coupon to buy commodities of his choice subject to the ceiling imposed on the grant. This became so popular that the opposition which was still licking its wounds could not respond. Later they printed fake rice ration books to show that they too provided relief in their time. This was clearly illegal and the “fake ration book” trial dragged on in the courts for a long time.

By that time Ossie Abeygunasekere, the main accused in the case, had crossed over to the Premadasa camp and the matter was hushed up. Another prong of the Government strategy was to create a welcoming approach to foreign investment. The Board of Investment (originally called the ‘Greater Colombo Economic Commission’) was set up under Upali Wijewardene and a special investment zone was established in Katunayake.

At the same time the modernization of the Colombo Port with Japanese aid and the Mahaweli scheme with multiple foreign assistance was launched. With so many of the projects off the ground it was Ronnie who kept a tight leash on the funding with JRJ’s support. This financial control was not to the liking particularly of the PM Premadasa and Lalith Athulathmudali but they had no option but to accept the overseeing functions of the Finance Ministry.

There were also turf wars regarding funding for the accelerated Mahaweli project. But JRJ backed Gamin Dissanayake’s efforts to seek funding and he and Ronnie worked together fairly cordially. Ronnie established the “Aid Sri Lanka Club” of donors under the umbrella of the World Bank. This donors’ meeting was held annually in the World Bank and OECD Office in Paris. A well prepared ‘laundry list’ of projects approved by the Finance Ministry were discussed with high level representatives of the donor countries as well as representatives of multilateral institutions.

Once agreement was reached on funding it was included in the national budget for the following year which was presented to Parliament. This meeting also reviewed progress of the foreign funded projects then underway. All in all, these arrangements which were coordinated by Ronnie smoothed the way for a rapid take off and was later copied by many developing countries at the urging of the World Bank.

Ronnie depended very much on his civil service colleagues like Chandi Chanmugam, J.V. Fonseka, Chandra Fonseka, Gaya Kumaratunga and Akiel Mohammed who formed the bedrock of the divisions of the Finance Ministry. He also reached out to the Central Bank and co-opted officials from there – which had become the practice by that time. Illangaratne as acting Finance Minister of the 1970 cabinet had earlier inducted the `Kandyan twins’ – Kelegama and Karandawela, from the Central Bank and the practice has persisted with all subsequent Finance Ministers.

In addition the President used the services of Raju Coomaraswamy who had retired from the UN and returned to Sri Lanka, as his special envoy. When relations with the World Bank deteriorated to such an extent that JRJ wanted to close down its Colombo Office it was Raju who urged caution and got the Bank to support the Mahaweli project. JR had a special affection for Raju as he was part of his team when he was Minister of Finance in the DS Cabinet. He was thinking of fielding Raju as a candidate for a seat in the North and a Cabinet assignment, when the latter died of a sudden heart attack.

Raju’s son – the popular and capable Indrajit was seconded from the Central Bank to be Ronnie’s assistant and dogsbody. It must be mentioned here that subsequent Ministers of Finance, particularly CBK did not handle the ‘Aid Club’ very well. Her trips to Paris were not so productive. In fact she took a number of her ministers along with her. They were clueless about the purpose of the meeting and concentrated on the social events including a farewell party at the Crillon.I can reveal that it was a misunderstanding between CBK and S.B. Dissanayake whom she had taken along to Paris, that began the rupture that led to SB’s defection and the fall of her Cabinet in 2001.

Right along Ronnie had a special concern for the underprivileged. He served for a long time as a senior official in Philip Gunawardena’s ministry and was held in high regard by Philip. Ronnie, then in the prime of his life, naturally harbored ambitions of advancement. Premadasa, Athulathmudali and Upali were suspicious of his motives as the latter two hankered to be Minister of Finance. This led to much tension in the Cabinet which sometimes flared out as criticisms of the Finance Ministry.

But JRJ, who had been a Finance Minister himself, backed Ronnie. Much later at the tail end of his career JRJ was disappointed when Ronnie offered him only lukewarm support for the Indo-Lanka agreement and remained in his Geekiyanakanda estate, not even returning the President’s telephone calls. I had a close relationship with Ronnie and facilitated his rapprochement with President Wijetunga in 1993.Later I played ‘broker’ in getting him into CBK’s Cabinet in 2000. CBK always had a good rapport with him and Ronnie returned as a senior Cabinet Minister for a short duration which I shall describe in volume three of my autobiography.