Harim Peiris

By Harim Peiris

(Published in The Island & Groundviews (as “Elections Are the Only Way Forward”) on the 24th June 2022)

The young Sri Lankan cricket team has done the impossible and in the past couple of weeks, beaten the powerful Aussie cricket team several times, in the shorter formats of the game, giving Sri Lankans some much needed respite and cheer. The games have been played to packed crowds, notwithstanding lingering covid spread threats with TV viewership also reportedly high, demonstrating that people understandably seek some avenue of cheer from the misery which Rajapakse rule has plunged our nation to.

In contrast, the Gotabaya Rajapakse / Ranil Wickremasinghe administration has only managed to guide our ravaged economy to a near crash landing and an effective standstill. Government servants are asked to stay at home, school children are again online due to effectively non-existent fuel supplies in the country. During the five weeks of Ranil’s government, its seeming only role has been in coordinating the scare foreign aid, almost exclusively from India and not in effecting many of the significant and required reform measures, economic or political. It sought to argue that political reforms are not required and only emergency management of the economic crisis was needed. There was a basic game plan, backed by a politically naïve business elite, which was to get the white knight IMF in as soon as possible and until then use political contacts to get bridging finance to keep the economy moving. 

Well, this plan has not worked, for reasons which the young people of Sri Lanka correctly understand, but our political and business elites continue to want to ignore. It is that we have an economic crisis on our hands, precisely because of and due to our politics. After all the coming calamity was not sudden but forecast and warned about, most famously by former Finance Minister late Mangala Samaraweera. Even more recently as the proverbial writing was on the wall, using foreign reserves to defend the rupee at a ridiculous over valuation, printing money, not going to the IMF and not commencing early negotiations with our international creditors was the bombastic claim to fame of the lunatic leadership of our politicized Central Bank. It was relatively recently that we turned down a half billion-dollar grant (not loan) from the American Millennium Challenge Corporation (MCC) and opposed another half billion in Indian investment into the East Container Terminal (ECT). A billion dollars we can desperately use now. That is our politics, which drive our economics. The majoritarian ethno-religious nationalism which won big in 2019, drove our politics and drove us to our knees. We were advised by those who should know better to get a Hitler like administration (as opposed to a Mandela) and we voted for one, which has now resulted in our own defeat at Stalingrad, leading to the eventual destruction and fall of Berlin. 

The IMF white knight

There is great hope in the business community because of the naïve belief in the IMF as a white knight, will bail us out of trouble. That is because the business community does not fully appreciate the political constraints to the implementation of the required economic reforms. Reforms which are more painful now, because the economy has crashed, rather than when we were healthy. Any bailout / bridging finance by the IMF and / or bi-lateral lenders require our debt to be sustainable. In other words, that we can come out of bankruptcy and start honoring our obligations, including the bridging finance we are seeking now.

We not only need to raise revenue, but we also need to rationalize Government expenditure. We cannot as a nation afford to spend more on peace time defense, than we do on both education and health combined. But that is Rajapakse politics. We cannot afford badly targeted generally subsidies, though we can and must have a social safety net which takes care of those most vulnerable amongst us, which number is growing daily. We need to privatize our loss-making state-owned enterprises. Rajapakse politics was to re-nationalize Sri Lankan Airlines and kick out Emirates Airlines. Our politics have brought our economic collapse. We need to remove the anti-export bias in our economy and regulatory framework and the failed import substitution of the 1970’s towards which the Viyath maga & Eliya crowd at Shangri-La was dragging us. That would diminish the role of local oligarchs and replace rent seeking wheeler-dealing with internationally competitive businesses following best practices, as drivers of economic growth.

Elections the only solution

Ranil’s interim government has not been able to elect a woman deputy speaker, pass the 21^st Amendment or most likely not even pass a genuinely reforms oriented interim budget. It has on the contrary given a major reprieve to the Rajapakses’, taken the steam out of the “Aragalaya” and sought to solidify the status quo. We need the new, not the status quo ante. The reason is because Mr. Wickramasinghe is now Prime Minister of an essentially SLPP Government, of which he is nominally the vice-captain, but does not lead.  The Rajapakses still call the shots. An internal family reshuffle and image makeover, denying any course correction does not provide the reforms which make our debt sustainable, which is what the IMF and all our creditors require. We would not be able to go there and do that with the leadership which brought us to this ruin.

Self-realization of failure dawns slowly, if at all for some people. The Rajapakse Administration and the SLPP are in denial mode and a fractious opposition has not helped the nation by easing up the pressure for the Rajapakses’ to go. The Opposition should challenge the interim government to present to parliament a Cabinet approved minimum common program, which it has not unveiled and can garner bi-partisan support from the Opposition or move a motion to dissolve parliament and go for a general election, because Sri Lanka requires a government with political legitimacy and a mandate to deal with the mess created by those mandated in 2019, to create “vistas of prosperity” who instead bankrupted us. As a recent Verite Research report pointed out, we would spend less on an election than we are on a new defense ministry headquarters or barely more than just the loan, interest component only, for the Kotelawala Defense University’s teaching hospital.

Sri Lankans are inordinately proud of their state, and we have much we can be proud of. Regular elections have been a big social safety valve of releasing pent up political frustrations, empowering the people and they reinforce the legitimacy of governments. We can and must go for parliamentary elections, sooner rather than later.