Harim Peiris

Political and Reconciliation perspectives from Sri Lanka

  • August 2022
    M T W T F S S

Vistas of prosperity – Not quite! 

Posted by harimpeiris on January 6, 2022

By Harim Peiris

(Published in the Island on 5th January 2022)

The New Year 2022 is upon us and with it also, late last year, the completion of two years of the first SLPP administration. As a nation, as we look to the year ahead, the prospects for the vistas of prosperity, we were promised, are not bright and a look back may allow the current administration to charter a new course or an eventual successor to carve out an alternate path. For a country promised vistas of prosperity and splendour, the contrary could hardly be starker; people standing in line for daily essentials, shortages of everything from cooking gas to foreign exchange, with rising inflation and declining real incomes and living standards. The hardest hit is the rural farmer and plantation worker as agricultural and plantation output and yields drop precipitously due to the fiasco that is our fertiliser policy. National life and governance are no better. We seem unable to manage anything from an oil spill to sub-standard fertiliser, and despite various election pledges of both national security and justice we are no closer to knowing who the masterminds of the 2019 Easter bombings were and bringing the conspirators to justice. Our international standing is at an all time low, facing opprobrium in Geneva and very unwisely having moved Sri Lanka away from our traditional ‘friends with all policy’ to an unnecessary alignment with one power at the cost of our relations with others.

Finance Minister Basil Rajapaksa has sought to defray rising criticism and significant erosion of public support to the government by announcing overnight and not through his November Budget, a relief package costing the government over two hundred billion rupees, the highlight of which is a 5000 rupee monthly allowance for all public servants and disabled ex-servicemen. This will indeed be a welcome relief to public servants, but those really hurting even more right now are the rural farmers, the informal sector and daily wage earners, who are seeing living standards and real incomes plummet.

The government’s answer to all this of course, is that the only culprit is COVID-19 and if not for the pandemic, the vistas of prosperity and splendour would be upon us. But even a cursory examination of this thesis proves otherwise. It was unwise and bad policy, pure and simple, which caused the mire in which we find ourselves in today. Many economies in the world, including those in our region, such as even Bangladesh, to whom we now go hat in hand for foreign exchange swaps, saw their economies take a hit during the initial COVID-19 waves in 2020, but rebound in 2021 and are well poised for growth in 2022. That is not the case for Sri Lanka. Our wounds are self-inflicted and exacerbated by the defining weaknesses of this administration, their unwillingness to consult experts, their inability to listen to the community and their complete, if misguided, faith in the righteousness of their cause.

Organic fertiliser fiasco

The first self-inflicted wound, the pain of which is yet to be felt, because the Maha crop season is yet not fully harvested, was the amazingly short-sighted decision, since rescinded, to administer shock therapy to the agricultural sector by banning non-organic fertiliser. Around the world, organic farming is an upmarket niche and not a mass market practice. The SLPP manifesto did promise to work the transition to organic farming but in a phased-out manner, over a decade. The implementation was different. It was sudden, overnight and instantaneous. The task of green agriculture has now been, even more bizarrely, handed over to the Army. It was not only agriculture that was affected, but also the plantations, especially tea, that also relies on fertiliser. Both these sectors combined employ the majority of Sri Lanka’s labour force. The drop in yields and output would push many rural families and plantation worker communities deeper into despair, debt and relative poverty. Food shortages are causing cost-push inflation or prices of daily essentials to soar. The reversal of the non-organic fertiliser policy has come too late and with the significant collateral damage of having to remove any subsidies on fertiliser and not paying the fertiliser importers their dues, running into billions of rupees, for prior period subsidies, thereby effectively restricting their ability to supply fresh stocks. This was not COVID-19 induced.

Fiscal slippage

The previous Sirisena-Wickremesinghe administration had expended political capital and taken the political hits to adjusted direct taxation upwards through the 2018 Budget and the resultant Inland Revenue Amendment Act. Sri Lanka is a country which has the twin anomalies of a very low tax revenue to GDP ratio compounded by a very high indirect to direct tax ratio, which disproportionately falls on the lower income sections of the population; this in a social context of extremely skewed income distribution, where the top ten percent of the population earns just below forty percentile of the national income. In that context, there was absolutely no need for a massive tax cut, in the first flush of election victory, for that top percent of the population. It was both unwise and unnecessary and resulted in a massive fiscal slippage which consequently led to an even more foolish loose money policy by the Central Bank. Today, consequently, the government is without adequate revenue. This was also not COVID-19 induced.

Loose monetary policy and foreign exchange crisis

The Central Bank, in 2020 and 2021, led by economic theories that predated the fall of the Berlin wall and was inspired most closely perhaps by the Sirimavo Bandaranaike government of 1970-1977 and its protectionist, even isolationist ethos, followed a loose money policy during the years of the pandemic. Saner counsel, including those of the opposition SJB was ignored. Former State Finance Minister Eran Wickramaratne was to point out in 2020, that the problem in economic activity and production was supply side constraints consequent to the lockdowns and loose money would not help or address the situation. It would merely cause massive inflation down the road. The rather obvious forecast has now been fulfilled. The foreign exchange crisis is because the Central Bank by executive fiat, that far exceeds the moral persuasion of markets, insists on maintaining the exchange rate artificially high, essentially seeking to have the export sector subsidise the government’s money printing binge. A solution that cannot really be made to work. While interest rates should only be allowed to rise moderately, the exchange rate would need to be at a more market driven equilibrium, which would result in both greater foreign exchange inflows through formal banking channels, while facilitating foreign direct investment (FDI) as well, which is also at an all time low. None of this is COVID-19 induced.

The cracks in the Government ranks are showing. The minor left party allies are openly voicing their dissent. The SLFP, whose leading lights have been deprived of meaningful ministerial office, has been distancing itself from the Administration and there is fresh speculation in the mainstream press about yet another Cabinet reshuffle including a replacement of the Prime Minister, a rumour squashed by the PM’s media office earlier yesterday. But the disunity can hardly help either policy cohesion or a course correction, both of which are needed for Sri Lanka to recover from the hole we have dug for ourselves.

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Face the Nation TV1 : Managing global relations in the contemporary age 25.10.2021

Posted by harimpeiris on November 5, 2021

On 25th October 2021, Harim Peiris appeared as a guest speaker on Face the Nation program on TV1 to discuss on Managing global relations in the contemporary age.

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A Cabinet Reshuffle for a Much Needed Course Correction

Posted by harimpeiris on August 19, 2021

By Harim Peiris

(Published in Groundviews on 18th August 2021)

President Gotabaya Rajapaksa, approximately a third of the way into his term of office, carried out the most significant mid term cabinet reshuffle in recent Sri Lankan political history. The closest in scale and scope was about 18 years ago when President Chandrika Kumaratunga arrogated to herself the ministries of Defence and Internal Security and inducted Lakshman Kadirgamar as Media Minister into the rather difficult co-habitation government with Prime Minister Ranil Wickremesinghe, a precursor to the latter’s even more tortuous relationship with another SLFP president, Maithripala Sirisena.

However the SLFP’s effective political successor, the SLPP, has carried out an even more significant political reshuffle. Considering the preceding induction of Basil Rajapakse as Minister of Finance, with the same portfolio being divested from the Prime Minister and the current reshuffle, signifies some changes in government tactics at least, a change in the batting order, if not in the team, and some possible changes in the game plan.

When Covid-19 first made its appearance in Sri Lanka, in March 2020, the new administration elected in November 2019 and facing an unsympathetic lame duck parliament was intent on conducting the general elections and a lockdown was declared only after nominations were received. Similarly, as the latest and most virulent Covid-19 wave surges in the country with record number of daily deaths and infections, the focus of the Administration seems to be on more political rather than public health concerns. However, in the current context, good public pandemic management would be good politics. However, social media seemingly indicates that there is quite a bit of skepticism regarding the Government’s pronouncements and actions especially with regard the real Covid situation in the country.

Taking over the mantle of the Health Ministry is Minister Keheliya Rambukwella, whose claim to fame was as Media Minister during the war years under President Mahinda Rajapaksa where he worked well with the military. Clearly the new Health Minister will continue to be a good spokesman and speak his lines clearly in the military dominated, public health exercise. He could perhaps use the trust he has built up with the military hierarchy to reassert the primacy of the health sector professionals in the fight against the pandemic. After all fighting against viruses requires an altogether different skill set to fighting against terrorists. Hopefully the maiden November budget of Finance Minister Basil Rajapaksa would see a shift to public health care and indeed education instead of increasing peace time defense expenditure.

The most significant of the political changes wrought by the cabinet reshuffle, is the inducting of young Namal Rajapaksa as Minister in Charge of Development Coordination and Supervision. If, as the Duke of Wellington famously claimed, the battle of Waterloo was won on the playing fields of Eaton, it may well be that at a future date the new Development Coordination Minister would claim that the development battle for Sri Lanka was shaped on the rugby grounds of that school by the sea in Mt. Lavinia. The development challenges facing the young minister are considerable. Poor fiscal policy keeps Sri Lanka at the lowest rung of tax revenue as a percentage of GDP while a loose money policy is fueling inflation and putting enormous pressure on the exchange rate, which cannot be contained by banning imports. A political ideology, which declines American financial grants not loans (MCC) and denies foreign direct investment from India (East Container Terminal/ECT) while we are starved for foreign exchange, does not leave the new minister or indeed his uncle the new finance minister, much scope for action. The shock therapy of the overnight organic fertilizer only policy, six decades after its better-known language equivalent, may well have similar profound effects, this time on Sri Lanka’s still agrarian economy, as yields and production begins to decline.

Foreign policy is another area that shifts to yet another distinguished old Thomian, Professor G.L. Peiris, the devolution package advocate for President Kumaratunga, the former peace negotiator with the LTTE for Ranil Wickremesinghe and of course in his most recent avatar, the chairperson and an ideologue of sorts for the majoritarian ethno nationalist Sri Lanka Podujana Perumana (SLPP), the political vehicle of Sri Lanka’s first family. Foreign policy has been, one suspects, largely shaped for the SLPP by the generals, or rather, the admiral running the show at the Republic building; it will be interesting to see if the new minister will seek to remake Sri Lanka’s foreign policy by rebuilding our relations with India, strengthening our traditional non-alignment and improving relations with our largest export markets nations of the West. The as yet unresolved issues of post war reconciliation also find their locus now in the Foreign Ministry, as human rights and reform of the PTA drive the GSP+ process and Sri Lanka continues to be on the UNHRC agenda through our country specific resolution. Engagement, or the absence thereof, with Sri Lanka’s diaspora community is also in the purview of foreign affairs.

The good professor’s predecessor at the Foreign Ministry, Minister Dinesh Gunawardena, takes over education at the time when the school teachers are on strike, demanding the rectification of all their long running salary and service anomalies. It remains to be seen if the scion of the Boralugoda lion can use his vast public service experience and political acumen to resolve the issues faced by teachers, the largest category of public servants by far. Sending the president of the teacher’s union for enforced quarantine is best not repeated. We are still a multi-party democracy governed by the rule of law and not an absolute monarchy nor a military dictatorship. As the courts recently observed, quarantine regulations do not override the constitutional liberties and rights granted under the constitution.

The first SLPP Administration at the end of about a third of its term of office signals some desire for a tactical if not a strategic rethink and an operational regrouping and redeployment. It remains to be seen if the significant personnel changes it has made will translate into policy changes. All Sri Lankans, for our collective well-being, should wish our new ministers every success in their future endeavours.

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Open Letter to Basil Rajapaksa: Some Ideas for a Course Correction

Posted by harimpeiris on July 21, 2021

By Harim Peiris

(Published in the Island on 21st July 2021)

Dear Sir,

At the outset, may I rather belatedly congratulate you on your assumption of high ministerial office as the new Minister of Finance of Sri Lanka.

Skimming through the rather lengthy gazette notification of the duties and functions, assigned to you, I find that you are tasked with a very wide ambit of duties, and responsibilities, impacting the present and future well being of our nation and her people.

As you take over the Finance portfolio and many of the duties previously entrusted to the Prime Minister, there is a widespread public expectation that this change will result in a mid-term course correction by the government. I venture to highlight and flag a few such issues for your kind consideration, in the interest of the public.

Fighting the Pandemic

As public health is always a crucial factor in the economy and the Covid-19 pandemic dominates the public life of the citizenry, the management of the same is vital for both economic activity and societal well-being.

Accordingly, you may want to consider giving a slightly greater weightage to the medical professionals in the anti-pandemic effort, with the military playing a more supporting role, rather than vice versa. One and a half years into the pandemic, we are no longer in an initial emergency phase but facing a long-term public health issue, best handled by public health professionals.

They require reliable data and depoliticised management. The periodic protests by doctors, nurses and PHIs, regarding the pandemic management, are concerning. Their advice should be heeded and the course corrected.

Rather unfortunately at the early stages of the pandemic, we stigmatised our victims and had a forced cremation policy, since rescinded, but further measures to win public support and cooperation, such as the international practice of home quarantine for Covid patients, not requiring hospital care, and allowing the private healthcare sector to be involved in administering vaccines, may be further desirable changes to the current practices.

The slate of resignations in protest by medical professionals of the National Medicinal Regulatory Authority (NMRA), should not be repeated. Heed their professional views. It increases public confidence, in the overall management of the pandemic.

Fiscal policy, the national debt and foreign reserves

‘Voodoo economics’ is a term first used, about 40 years ago in American presidential politics to describe the economic policies and supply side theories of then US President Ronald Reagan, whose economic policies of deep tax cuts for large corporations, and the very wealthy, resulted in a ballooning national debt.

While the US with a fiercely and institutionally independent central bank can manage such a situation, not least because the US dollar is the reserve currency of the world, we can less afford to go the same route.

So, some kind of course correction in this regard maybe appropriate.

An obvious course of action would be to go for an IMF budgetary support facility. While its size may be small, compared to our need, the investor confidence, such an agreement provides, would not only facilitate foreign direct investment (FDI), but also once again make the global capital markets accessible to us, allowing us to roll over our maturing debt, even as we wisely seek to avoid increasing the same. In hindsight, turning down a near half a billion-dollar grant, not a loan, from the Millennium Challenge Corporation (MCC) and an equal sized equity investment by India’s Adani Group into the Colombo Port’s East Container Terminal (ECT) are unwise missed opportunities.

We could very much have used a billion dollars of non-debt foreign exchange inflows into our economy at this time. Plus developed our port (ECT) and road network (MCC) rather than just the very expensive reclaimed land of the Port City. Policy consistency would be very advisable.

Foreign policy and investments

You may also want to examine our ease of doing business criteria for local, not just foreign investors. As you woo foreign investors, into the largely autonomous Port City Zone, do consider local entrepreneurs, who are finding, among other things, the import ban on intermediate and capital goods, to be a significant drag on their operations.

The closed economy did not work from 1970 to ’77 and resulted in the SLFP, being banished to the opposition for 17 years. I am sure you wish to avoid a similar fate.

A sound foreign policy is a must for an island nation’s economy, such as ours, so acting as if we live in a unipolar world, with China as the world’s sole superpower, has been an unwise approach.

Sri Lanka has been well served in the past by our non-aligned foreign policy and robust relations with India. Also remember that the West is the largest market for our exports, the EU, the US and the UK leading the way and that the Muslim majority Middle East, the host nations for our expatriate workers, whose remittances make up the bulk of our net foreign exchange earnings. So, a rebalancing of our foreign policy is very much needed.

Non-organic fertiliser

Sri Lanka is at its core still very much an agricultural society and the sudden shock therapy of banning all non-organic fertiliser may end up being more shock than therapy.

As we are all aware, decades of agricultural policies have led farmers to switch over to higher yielding varieties of crops, dependent on chemical fertiliser and a sudden halt to the same can have drastic consequences for yields and total national agricultural output, including for our tea production.

Accordingly, you may want to revisit this policy and at least consider a phased process, of using both organic and non-organic fertiliser.

The subsidy to switch over to organic fertiliser is a good start, and therefore continue with such incentives, rather than sudden and unexpected policy changes, that reverse almost four decades of agricultural practices.

Democracy, human rights and reconciliation

Sri Lanka’s human rights and broader governance practices, has come under increasing global scrutiny. Denying reality or being pugnaciously aggressive does not make friends nor influence people in international relations.

A serious rethink of the current practices of expanding the use of the PTA, cracking down on trade unions, peaceful protests and social media users, as well as other human rights issues that threaten our GSP+ trade status with the EU, should be reconsidered. Good politics is good for the economy and vice versa.

As you are aware, in the recent past, during your time in the US, the President invited the TNA for talks and then abruptly cancelled the same, reportedly until you returned.

For over a decade now, since the end of the war, neither the causes of the conflict nor the effects of the same, have been adequately addressed.

So, you may want to commence a process of dialogue with the TNA and the report of the Lessons Learnt and Reconciliation Commission (LLRC) appointed by the Prime Minister, during his time as President, maybe a good starting point. The LLRCs excellent key recommendations are all regrettably ignored and largely implemented in the breech.

You have a lot on your plate now as the Finance Minister and a key leader in the government.

For all our sakes, I wish you every success, to make the course corrections and bring about the prosperity and peace, that our nation so desperately needs and our people so deeply desire.

With best wishes,

Harim Peiris

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Only Option Available to UNP: An open letter to UNP Deputy Leader

Posted by harimpeiris on June 30, 2021

By Harim Peiris

(Published in the Island on 30th June 2021)

Dear Mr. Ruwan Wijewardena,

I thought I must write to you because the UNP finally managed to fill its solitary National List seat in Parliament, unsurprisingly with your cousin and leader for life, former Prime Minister Ranil Wickremesinghe. Unsurprising, because the moment I heard, after the general election wiped out the UNP, that Mr. Wickremesinghe intended to resign as the leader at some future date, I knew that day will never come. When you were appointed as UNP Deputy Leader, I hoped that Mr. Wickremesinghe may at least make way for you, his close kinsman, even if he would never do so for anyone else and, thereby, finally see a welcome, though now largely irrelevant switch of the UNP leadership, from an old Royalist to a fellow old Prepite.

However, I thought I would address a few issues of relevance in the opposition political space, which may be food for thought, for you. Though I am uncertain how much clout you carry with your cousin.

Firstly, though the UNP, post the formation of the SJB, garnered 2% of the national vote, this really is your highwater mark, since voters, in August 2020, were never really sure how the UNP’s voter base would divide up between the SJB and the UNP. The contrived media hype was all entirely on your side. Now it is very clear, that it was hardly a contest. Nine out of every 10 UNP voters, voted for the SJB and only one remained with the rump UNP. There is something known as electoral credibility. That is the ability of a political party to actually secure representation and the corresponding desire of an active voter, to not waste his or her vote. Given that the UNP failed to elect a single Member of Parliament from any district, including from Mr. Wickremasinghe’s supposed pocket borough of the Colombo city, or even your own electorate of Gamapha, expect the UNP’s vote at future elections, be that local or provincial polls, to garner even fewer votes, if you persist in the foolishness of contesting future elections under the UNP’s own banner.

Secondly, there is serious confusion as to whether the UNP occupies the non-Rajapaksa anti-government political space or whether it is actually a pro-government political ploy, masquerading as an opposition political party. It is never really quite clear, exactly what kind of political creature the UNP is; you seem to be neither flesh, fish nor fowl. In fact, the general observation, both earlier and even now, is that the UNP seemingly sees the political opposition, led by Opposition Leader Sajith Premadasa and the SJB, as the real political competitors to be opposed, rather than the government and the ruling party. This is extremely detrimental to the Opposition’s political cause as they seek to ensure that the current Rajapaksa administration is a one term exercise and ends without an encore. The obsession of your rump UNP, in snipping at the Opposition Leader, Sajith Premadasa and the SJB, creates a dissonance in the Opposition political space that is only beneficial to the government. Frankly it is not even beneficial to you. You only come across as sour grapes and poor losers, who cannot accept the verdict of the electorate. You were not just beaten fair and square but comprehensively and completely. In simple mathematical terms 54 :1. You weren’t just routed; you were wiped out and the verdict of the electorate must be respected. Take the JVP as an example. They chart an independent political course, without sniping at the other opposition parties. They train their guns on the government. An Opposition party is called to be a check and balance on government. Not be a cannibal on your own side of the isle.

Let me explain to you, why I believe that if Ranil insists on Parliament being his retirement home, he should at least occupy his solitary seat in golden silence. History will probably judge Mr. Wickremesinghe kindlier than the electorate does right now, because we all make mistakes over the course of a long career and as Alexander Pope famously wrote in his subliminal Essay on Criticism, “to err is human and to forgive is divine”. No political party or personality has a monopoly on either virtue or vice, but, right now, Mr. Ranil Wickremesinghe and the UNP has been ruled out by the voter/umpire and should retire back to the pavilion. The nature of the innings he played and how he fared out in the middle, during his various tenures, is a different story. But the fact is that the curtain has come down and the lights have gone out and the actor needs to leave the stage or at a minimum not disturb the next show.

Frankly, take a page out of former President Jayewardene, who in term limit induced retirement, referred to his successor President Ranasinghe Premadasa as his greatest political friend. This was at the height of the impeachment drama and the Athulathmudali/Dissanayake breakaway saga. Some grace and wisdom, along those lines, may be in order at this time. Sajith Premadasa should be your greatest political friend of all time. You may also advise your leader that there are other more gainful ways of spending an elder statesman retirement rather than hogging a parliamentary seat and constantly sniping at your own side of the political divide. Seek some guidance from former President Kumaratunga, who, upon retirement, became involved in the Clinton Global Initiative and the Club de Madrid among other international organisations and roles, though she did play an active behind the scenes role in ending the former Rajapaksa Administration in 2015, when it became clear that they were not interested in a course correction.

Anyway, for you and the UNP, there is but a single course of action. Retire the leader to an international role and join the SJB unconditionally, as a minor ally, mindful that you bring little to the table, except ceasing the “friendly fire” constantly being rained down on the SJB, by your party and its allied media houses.

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