Harim Peiris

Political and Reconciliation perspectives from Sri Lanka

  • August 2017
    M T W T F S S

When challenges get tougher

Posted by harimpeiris on August 29, 2017

By Harim Peiris

(Published in the Daily News of 28th August 2017)

August 2017 marks two years of the National Unity government formed after the general elections of August 2015, which followed the historic presidential elections earlier that year, which ended unceremoniously and two years ahead of schedule the rule and reign of the Rajapaksa clan. Ending Rajapaksa rule, was a remarkable rainbow coalition of practically everyone else but the Rajapaksa’s’ their UPFA, Mahinda Rajapaksa having the unique skill of uniting almost every other political shade of opinion in the country against himself, from the Sinhala nationalist JHU, to the JVP, the UNP, General Fonseka’s Democrats, every Muslim party and the TNA, in a broad rainbow coalition against Rajapaksa rule. The general election which followed essentially witnessed President Sirisena’s political allies win power and confirmed the decline of the Rajapaksa brand, the UPFA’s popular vote declining between January and August that year. Two years on, there seem little nostalgia for a Rajapaksa return, their political organs of the Joint Opposition and the SLPP, blowing hot air and some barely concealed racism but not making much traction either in Parliament or outside.

The Government of President Sirisena and Prime Minister Wickremesinghe was elected on a three-fold agenda of greater democratization, economic reform and reconciliation. It is perhaps in the area of democratization that the Government has the most impressive gains to date, with the passage of the 19th Amendment to the constitution and the Right to Information Act, the latter with the potential to significantly increase the transparency and accountability of Sri Lankan governance.

In terms of reconciliation the Government co-sponsored the UNHRC resolution on reconciliation in Sri Lanka demonstrating its own commitment to the same, cooperates with UN Special mandate holders and, opened up civil society space in post war rehabilitation, facilitated the smooth functioning of the provincial councils by replacing intransigent retired military governors with civilians in the North and East and released significant amounts of lands occupied by the military during the conflict, including the Mylatti fisheries harbour in the North and Sampoor in the East.

The Tamil Diaspora groups were engaged with, de-proscribing a large number of Diaspora organisations and persons and encouraging them to be partners in rehabilitation and post war reconstruction, while the Office of Missing Persons (OMP) Act, was also passed. There still remains much to be done in relation to reconciliation, especially making progress on devolution and constitutional reform. Tamil political opinion and actors have chaffed though at the complicated politics and inherent delays in effecting further progress on reconciliation measures.

Economic reforms

It is however in the area of economic reform and development that there has been some disquiet with the voting public expecting a quick “good governance dividend” which it has not seen forthcoming thus far. However, Rome was not built in a day and economic reforms take time to bear fruit. But most importantly Sri Lanka’s economy was set for a hard landing, a correction after the second Rajapaksa terms borrow and spend binge. Government investment on borrowed funds in white elephant projects of dubious utility value, like the Mattala airport and the Hambanthota port, meant that a slowdown from ceasing the borrow and spend binge was inevitable.

One of the best kept secrets in recent times has been the Mahinda Rajapaksa decision to call presidential elections two year before they were due. His astrologers, magicians and soothsays notwithstanding it is quite likely that Percy Mahinda Rajapaksa was well advised that he could not indefinitely borrow and spend on projects that gave no economic returns. The election of January 2015, might well have been his bet to avoid an election in the likely economic pain his policies were bringing and would bite by 2017.

Needless hot air over leasing state assets

A key strategy of the economic reforms of the government has been attracting foreign direct investment and as western commercial capital has been harder to access amidst fierce Asia’s wide competition for the same, the Unity Government has sought to change the policy of borrow at commercial rates adopted by the Rajapaksa regime to a lease and invest equity approach to regional economic giants, both India and China. Now the Rajapaksa Administration ignored India and courted only China, to the detriment of Sri Lanka’s national interest, while the National Unity Government once again rebalanced Sri Lanka’s foreign policy, a return to the status quo ante, of our previous policy of friendly relations and close economic ties with both India, our largest trading partner and China our largest foreign investor.

There has been needless hot air and distortions over the ETCA with India, leasing the oil tank farms to the Indian oil company, the Mattala airport to also to an Indian firm and of course the Hambanthota port deal to a Chinese state owned fame which incidentally cost the former Justice Minister his job for intemperate comments regarding the Government approved US Dollar one billion deal.

The political hot air over leasing public assets to foreign investors, is uncalled for, since leasing is merely a project financing option, which is definitely more beneficial than borrowing for that same public project or asset. In the case of the Hambanthota port or the Mattala airport, sovereign borrowings to build and operate the projects, incidentally at a loss as well, essentially mortgages the country’s future tax revenues to build and operate these projects. The option of leasing is merely a financing option, which is definitely preferable to massive loans at commercial rates of interest.

With regard to strategic assets such as ports and airports Sri Lanka should take into consideration and be mindful of the security interests and concerns of its giant neighbour, again in its own interest, regional cooperation on matters of security, trade and investment being the way forward for Sri Lanka. All the economic growth forecasts for the future predict an increasingly robust growth for the Indian economy which would see its economy outpace even the Chinese one. Sri Lanka must position herself early through smart diplomacy and an enlightened foreign policy to benefit from the regional economic boom, poised to be powered by India.


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