Sri Lanka: Strategizing Economic Recovery

By R Hariharan –

During the month, the government’s preliminary talks with the International Monetary Fund (IMF) on structuring its economic recovery continued. However, debt restructuring continues to be delayed with China due to its preoccupation with the 20th NPC meetings of the Chinese Communist Party (CCP). Even negotiations with India and Japan are moving at a slow pace. Perhaps, this is due to their lingering doubts about the Wickremesinghe government’s ability to see through the structural reforms. In this context, President Wickremesinghe must be heartened by the show of solidarity for his actions by the US and some of the EU members, despite the use of high-handed methods to suppress public protests.

Internally, the passing of the 22nd Constitutional Amendment (originally introduced as 21A) to improve executive president’s accountability, the use of the Prevention of Terrorism Act (PTA) to curb Aragalaya activism and the launching of the Rise Together (Ekwa Nagitimu) campaign at the grass roots to recoup the image of the Rajapaksas were key highlights of happenings in October 2022.

The events leading up to these important internal developments showed existing differences, not only within the ruling Sri Lanka Podujana Peramuna (SLPP) and its cohorts, but also within the opposition parties as well.

Of course, during the month political leaders continued to ride their time-tested political hobby horses – new constitution, electoral reforms, call for general election and the not be missed late entrant “investigation and follow up into the Easter Sunday terrorist attacks.”

The government used the familiar gambit of appointing parliamentary select committees and presidential commissions to tackle the opposition moves. So, everybody continued to be busy doing something.

Strategizing economic recovery

However, President Wickremesinghe appears to be leveraging lack of unity within political parties to adopt transactional strategies to push through actions to achieve targets set in the 2022 interim budget for increase in government revenue and debt reduction. The actions taken so far include reducing government spending, tackling public corruption, energy reforms to open retail distribution of fuel to private firms, privatise wasteful state-owned enterprises and promoting foreign investment avenues.

Normally, these issues are considered politically explosive. Despite paying lip service, political parties in power have seldom considered seriously implementing such measures. Given this dismal record of political parties, Wickremesinghe government’s actions do not seem to have animated the media. The Aragalaya movement has by and large eroded public credibility in political parties

In spite of the lack of credibility in the government, some progress seems to have been made in improving the business climate as indicated by the LMD-NielsenIQ Business Confidence Index (BCI) for October. Reporting on the state of business, Sri Lanka’s online business magazine LMD said the BCI provided “a semblance of relief; it has climbed a heartening 13 basis points to 89” during October from September’s 76. However, it quoted NielsenIQ Director-Consumer Insights Theirca Miyanadeniya’s assertion “concern over the socio-political status of the country is waning as business and people are in a race to survive against a backdrop of extreme hardships.”

With the major economies expecting a period of global recession in the coming months, it is essential that Wickremasinghe government survives to see the country through the period of economic privation in the coming months.

Under such circumstances, the passing of the 22nd Amendment to the constitution 174 votes in favour and one against, may be considered as an indication of grudging acceptance of President Wickremesinghe’s leadership by over two-thirds members of parliament.

The amendment was passed despite some pro-Basil Rajapaksa members of the ruling SLPP objecting to the clause on not allowing dual citizens to become members of parliament. This indicated two things: the decline of Basil Rajapaksa’s influence within SLPP and the Rajapaksas continued support to President Wickremesinghe.

The 22A is a compromise between the Yahapalana government’s 19A to curb the sweeping powers of executive presidency and Gotabaya’s 20A to restore the powers of the executive presidency.

The bill was much debated by parliament members and the public and its present form represents a compromise solution reflecting some of the key elements from both the earlier amendments on the subject. For instance, it has retained the 20A clause on the powers of the president to dissolve parliament after two and half years, as against four and a half years stipulated in the19A. On the other hand, 22A has reintroduced 19A’s clause prohibiting dual citizens from contesting elections which was allowed by the 20A.

The 22A reduces some of the powers of the president enjoyed earlier under 20A, regarding appointments to high officers of the state including the Chief Justice, judges of supreme court and appeals court, chairmen of the election commission, human rights commission and police commission and the IGP. The constitutional council created now has the power to make these appointments. The president and prime minister enjoy some influence in picking members of the constitutional council, which will have three members from civil society.

Conclusion

The writing on the wall is clear: Sri Lanka must achieve targets presented in the 2022 interim budget for increase in government revenue and debt reduction to overcome the worst ever financial crisis it is facing now. Otherwise, Sri Lanka’s debt will be unsustainable; international financial bodies like IMF and World Bank do not assist the economic recovery of such countries.

Obviously, lack of understanding among the political parties in tackling long pending critical issues, has stood in the way of evolving a coherent national political and economic narrative to restore Sri Lanka’s credibility both at home and abroad. It will not be pragmatic to expect the political parties to give up their pettifogging and bury their hatchets to see through the crises. They are accustomed to using the economic crunch and hardship faced by the people to improve their poll prospects.

As a seasoned politician, President Wickremesinghe is using his Machiavellian skills to use factionalism existing within almost all the parties, to push through legislation to restore the economy. So far, political parties by and large are grudgingly accepting his rule for want of a better alternative. How long he survives this perilous journey will determine the future course of events in Sri Lanka. One advantage he only seems to enjoy is the moral, political and even economic support of most of the major Indo-Pacific powers including India and China. But much would depend upon how President Xi Jinping will handle China’s economic downturn, that could have its fall out on Sri Lanka.

Tailpiece: Contact with BJP?

A columnist writing in the Colombo weekly Sunday Times said a group of former LTTE cadres identifying themselves after rehabilitation as the ‘Democratic Cadres Party’ were in New Delhi in India recently. They took part in “an event organised by a group that maintains close ties” with India’s ruling BJP. They are said to have had discussions with various influential political actors and policymakers in New Delhi. Their requests to Indian authorities included lifting of the ban on LTTE proscribed in India since 1991 and full implementation of 13th Amendment. The article said their allegations that Hindu shrines were being acquired by the Archaeological Dept and WildLife Dept under questionable circumstances seemed to have struck a chord with the audiences, “given the BJP’s aggressive campaigns based on Hindutva ideologies.”

*Col R Hariharan, a retired MI specialist on South Asia and terrorism, served as the head of intelligence of the Indian Peace Keeping Force in Sri Lanka 1987-90. He is associated with the Chennai Centre for China Studies. Email: haridirect@gmail.com Website: https://col.hariharan.info

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