RW, IMF & The Economy
By Ameer Ali –
Dr. Ameer Ali
President Ranil Wickremesinghe in addressing the International Customs Day Celebrations had once again thrown the gauntlet at all political parties and challenged them to put forward a better and alternative agenda to the current IMF designed economic revival program. In that address, he obviously omitted to utter even one word about the extent of economic hardship endured by a vast majority of people as a result of implementing IMF recommendations. Because, like IMF, RW also believes that the hardship is short term pain worth enduring to achieve long term gain. But who gains at the cost of whose pain is left unsaid. This address, like several of his in recent months, was obviously driven by RW’s political desire to discredit the opposition before declaring the date for presidential poll to which he would be a contestant.
All opposition parties without exception have accepted the fact that to reject the IMF totally would be financially suicidal, because it would jeopardize firstly, the desperately needed flow of foreign capital for investment, and secondly the scheduled foreign debt restructuring negotiations with state and private creditors. However, with an eye on the vote bank all major parties and their coalition partners are promising to renegotiate with IMF a few of the items in the agenda without naming them, so that their implementation becomes less onerous to Sri Lanka’s consumer public. All political parties including the left-oriented National Peoples Power (NPP) would also agree with RW that economic recovery would have to be achieved through a competitive market, production of an exportable surplus, and increasing the country’s foreign reserves. But how to achieve these objectives with or without the prevailing socio-political paradigm is the challenge facing all of them and it is on that issue NPP is standing apart from the rest of the pack and offering a clear choice to voters.
NPP is the only party that advocates a paradigm shift through social revolution and believes that unless the prevailing corruption ridden and ethno-religiously circumscribed political and economic infrastructure that has kept the nation disunited, sapped the vitality of its economy for decades before bankrupting it finally to leave it at the mercy of IMF and foreign powers is removed there is no long-term solution to Sri Lanka’s poly-crisis. While every party leader including RW believes in preserving the old paradigm with changes in its operational model only Anura Kumara Dissanayake (AKD) of NPP is calling for its total rejection and preference for an alternative paradigm, which would be politically democratic but secular, economically equitable and corruption free, market friendly without artificial rigidities and culturally inclusive. In fact, AKD is providing a theoretical frame work and practical direction to realize the aspirations of a new generation of voters who rose in revolt with an aragalaya demanding “system change” and “No 225”. RW, who stood to benefit from that revolt, betrayed that generation by ending the aragalaya with brute force, and now taking all precautions to protect himself and the old order he represents through repressive legislations like PTA and OSB. Ironically, these contentious legislations are passed by a House of Representatives in which a significant portion of its members, according to RW himself, ‘could not understand the difference between a sovereign or commercial bond and James Bond’. But the fact of the matter is these semi-literate members are the very product of the prevailing political culture and its ethnonational framework. This is why when RW and his rivals talk about their measures to revive the economy and generate growth without eliminating the basic paradigm one has to accept their words with not a pinch but bags of salt.
NPP like all the other parties is also accommodative of IMF but with a big difference. That difference arises partly from the contrasting view between NPP and others regarding IMF’s primary objective in assisting bankrupt economies like Sri Lanka, and partly from IMF’s demand for “reforms in governance”. Regarding IMF’s primary objective, its funding assistance is system biased and not driven by any altruistic motive. The main objective of creating IMF in the first place was to protect the capitalist system and promote the interests of the capitalist class. Therefore, the resulting economic growth from IMF assistance and advice is a byproduct of saving the capitalist system with its class structure. Brevity prevents the need to explain at length the systemic bias of IMF policies. However, in an economy like Sri Lanka where the wealth gap between the upper and lower classes is huge IMF’s pressure on the government to increase public revenue through broadening the tax structure via higher and more inclusive indirect taxes tantamount to a punishment for the middle and low-income groups who were not a party to the bankruptcy in the first place. Therefore, unlike the other parties that are ready to accept IMF’s ideological premises NPP’s negotiation would entail its preference to restructure the tax scheme to make it more equitable while cleaning tax administration of its systemic and systematic corruption. IMF has to accommodate NPP’s approach, because it is one aspect of fulfilling that organization’s demand for reforms in governance.
For instance, RW and other party leaders talk of ending corruption merely through passing legislations in the parliament; but in terms of executing those legislations there is total inaction and the status quo continues. How could they end corruption when the corrupt are financing their political campaigns? Has RW initiated any legal action on any of the members in his present cabinet against whom there is clear evidence of receiving financial kickbacks for issuing contracts? Why does the former Health Minister still in the cabinet? A recent announcement by another minister and spokesperson to the cabinet to start development projects to boost economic growth via construction of roads and highways smell a rat. Because, such projects had earned the notoriety of financially benefitting government politicians through contracts and kickbacks. NPP is promising to bring the corrupt before the law and cleanse political management from making shady deals in the name of development. IMF should welcome this determination. Thus, IMF’s economic agenda would have better success under NPP rule than under other parties.
NPP also believes that without producing an exportable surplus the country cannot accumulate foreign reserves. But unlike RW and other parties NPP wants that surplus to be produced by a revitalized domestic sector dominated by small and medium scale enterprises rather than by foreign controlled mega enterprises. The Korean Chaebol and Japanese Keiretsu were originally small and medium enterprises which grew into conglomerates today through open competition, innovation and scale economies. Vietnam is also following their footsteps. NPP should be thinking of an industrial model along those lines. Shouldn’t international financiers be interested in investing in such initiatives provided the market is free of artificial rigidities and political interference? This is why NPP deserves a chance to govern and voters should get rid of their fear of the unknown.
RW’s 2048 economic paradise, his half-hearted pronouncements about ethnic reconciliation and his tears for Palestine at NAM are all a calculated deception to attract votes from the three communities at the next presidential election. Enough has been said about the first two and let this piece end with a few remarks about the third. While pretending to champion the cause of Palestine at Kamapala, RW has dispatched a Sri Lankan Navy vessel to protect ships carrying cargo and weapons to Israel through the Red Sea. How does one reconcile this contradiction? One should not forget that the Israeli consulate in Colombo, which remained closed under the Sirimavo Bandaranaike coalition government, was opened by RW’s uncle JR and when Muslims protested, he asked his Muslim ministers to quit the cabinet if they don’t support his decision. When RW’s foreign minister Ali Sabry participated in Israel’s 75th year celebrations in Colombo last year that minister didn’t have the guts to speak truth in front of power by at least reminding his hosts about the 75th anniversary of Palestinian Nakba. Why then is RW’s sudden love towards Palestine? Obviously, to attract Muslim votes at the forthcoming Presidential election. The poor foreign minister of Palestine Riyad al-Maliki who thanked RW for that speech didn’t know that RW is an old fox in politics and that his speech was all razzamatazz with a different agenda.
*Dr. Ameer Ali, Murdoch Business School, Murdoch University, W. Australia
The post RW, IMF & The Economy appeared first on Colombo Telegraph.
