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Constitutional reforms, economic democratisation and sovereignty


Comments / 1208 Views / Thursday, 7 April 2016 00:00


New-appointments-of-the-eighth-parliament-SLTodayBy Vijay K. Nagaraj

There is now a significant tradition of constitutions articulating principles and mechanisms enabling the exercise of people’s sovereignty over and democratisation of economic affairs. Such foundational norms do not merely serve to temper executive privilege but to also catalyse popular mobilisation and participation in economic affairs.

Ongoing debates in Sri Lanka concerning unrestrained, non-productive and even ‘hidden’ international borrowing to inequitable bilateral economic relations to unfavourable international procurement further underline the need for such norms. 

Latin American and Andean constitutionalism offers a rich source of inspiration in this context. Drawing on these and other constitutional traditions this submission makes a plea for enshrining a set of primary norms designed to further economic democratisation within the new Sri Lankan constitution.

I. Envisioning the national economy and development

The Bolivian constitution envisages an economic order built on the idea of a ‘plural economy’ “composed of forms of community, state, private and public cooperative economic organisation.” It also articulates principles underlying their inter-relationships: complementariness, reciprocity, solidarity, redistribution, equality, legal security, sustainability, equilibrium, justice and transparency.

Ecuador’s constitution calls for a central place for the ‘grassroots solidarity economy’, a formulation that recognises and values the social basis of economic production and services. This is integrated into a ‘Good Way Of Living System’ that will form the basis for a ‘National Development Plan’ covering a wide array of social, economic, cultural and environmental concerns as well as science and risk management.

A key feature of Latin American and Andean constitutions is the emphasis on solidarity—as “an instrument of economic and social growth” (Costa Rica)—and by natural extension on cooperatives. This is a recognition of the significance of building the economy bottom-up as opposed to only a top-down investment model.

Taken together, Latin American and Andean jurisdictions offer other elements relevant to defining the constitutional pillars of national economic policy and development. Some of these are goals, such as eliminating poverty, progressively ending regional disparities in access to basic services and entitlements, ensuring full employment, valuing domestic and local production, sustainable consumption, and minimising foreign debt. 

Equally important are key entitlements, such as the right to social security, universal access to social protection, respect for labour rights, access to land and natural resources, and a safe and healthy environment.

It is important also to note that Latin American and Andean constitutions do not create constitutional hierarchies between principles, rights and obligations that are enforceable and noble intentions that are limited to the status of directive principles. 

II. Exercising people’s sovereignty over economic affairs

Apart from goals and entitlements, mechanisms for the direct exercise of people’s control and sovereignty is another feature that Sri Lanka can draw from Latin America. In addition to participation and monitoring, constitutionalism in the region vests power in the people to directly regulate national economic relations and integration. 

The constitution of Ecuador provides for a Council for Public Participation and Social Control aimed at ensuring participation and social accountability.  Title IV of the constitution is dedicated to ‘Participation and Organisation of Power’ and lays down elaborate mechanisms for direct democracy including referendums as well as the right to recall.

An entire Title (VI) of the Bolivian Constitution deals with ‘participation and social control’.  Article 241 enables public monitoring of a) “public management at all levels of the State, and of businesses, public enterprises, and private ventures that administer public fiscal resources” and b) “the quality of public services.” Participation and public monitoring are detailed further to include participation in policy formulation, “social oversight at all levels of the government”, right to information, filing complaints, public scrutiny of appointments, etc. 

The Bolivian constitution also stipulates that international treaties involving “questions of borders, monetary integration, structural economic integration, and grant of institutional authority to international or supra-national organisms, in the context of processes of integration” require “prior approval by binding popular referendum.”

Moreover, any international treaty goes to a popular referendum when 5% of the citizens registered on the voting rolls or 35% of the representatives of the Bolivian national assembly request it. Indeed, these initiatives can be also used also to compel the Executive to sign a treaty. Similarly, the Ecuadorian and Costa Rican constitutions also allow for a referendum or citizen initiative to govern ratification or denunciation of laws or international treaties. 

There are two further provisions that are especially relevant in terms of securing economic sovereignty in the new Sri Lankan constitution. Firstly, the new constitution must include provisions that prohibit the executive from entering into any international trade or economic cooperation arrangement that can undermine, either directly or indirectly, food security, the right to health and access to medicines, protection of biodiversity and the environment, or access to results from scientific and technological research that are in the public interest. 

Secondly, the new constitution must address the increasing reliance on international arbitration entities to resolve disputes over agreements between states and other entities such as corporations. It must also explicitly prohibit Sri Lanka from entering into treaties or international instruments where it yields its sovereign jurisdiction to international arbitration entities, excepting of course to jurisdictional organisations designated by signatory countries.

III. Fiscal management and the constitution 

Drawing on the Latin American and Andean as well as other constitutions, a number of other provisions or matters pertaining to fiscal management must also be considered in framing the new Sri Lankan constitution.   

The Annual Budget: While the Ministry of Finance does issue a public call for proposals in relation to the Annual Budget, there is no structured system of consultation and participation. Constitutional provisions that ensure participatory budgeting through district and provincial level-mechanisms and formal national level consultative forums are therefore critical. 

Moreover, constitutional reform is an opportunity mandating gender budgeting. Inspiration can be drawn, for example, from Article 13 (3) of the Austrian Constitution, according to which all level of governments “must aim at achieving the actual equality of women and men in budget processes.” 

Parliamentary oversight of appropriations: The new constitution must further strengthen provisions that grant Parliament maximum control over public finances and explicitly prohibit backdoors allowing the Executive too much leeway. Clauses such as the now standard 7b of the Appropriations Bill open such backdoors by vesting in the Minister powers that really belong to Parliament. 

Contracting foreign debt: It is vital that the constitution includes provisions that explicitly prohibit the Executive from amending the annual debt ceiling proposed in the Budget without Parliamentary approval. A Parliamentary Committee on Public Debt must be established whose duty would include “financial, social and environmental auditing at all stages of domestic and foreign public borrowing” (Article 291, Ecuador). 

The Committee must also be empowered to undertake or commission an annual audit of all foreign debt contracted and also periodically propose measures and steps to be approved by Parliament with regard to the contracting and management of foreign and domestic debt. 

Public Procurement: The constitution must contain provisions that ensure that when necessary, international procurement is transparent and rigorous. Moreover, it must be incumbent on the concerned public authority to demonstrate that such procurement a) ensures transfer of technology and expertise and b) maximises national value addition and does not undermine the local economy. 

The new constitution must ensure clearer and streamlined but stronger regulatory powers for National Procurement Commission (NPC). The NPC must approve, monitor and review all exceptions or exemptions from standard contracting procedures and also be mandated to receive complaints from the public regarding procurement. 

The NPC should be empowered to prefer complaints to the Procurement Appeals Board (PAB) for adjudication. The PAB itself must be brought within the purview of the Constitution, with its members appointed by the Constitutional Council. 

The present system, whereby the PAB only issues ‘opinions’ that maybe over-ruled by Cabinet, must be done away with in favour of PAB rulings having binding status with the possibility of judicial review. All rulings of the PAB and the NPC must be made public and the latter must submit an annual report to Parliament on domestic and foreign procurement including recommending new standards.

Conclusion

Sri Lanka cannot afford to fail to mobilise constitutive power in favour of an economic system that is self-determined, autonomous and furthers equality and distributive justice. 

Far from constraining the Executive, constitutionally enshrined norms in matters of economic affairs ensure consistency and further policy coherence. They also promote accountability, and perhaps most importantly, provide a locus for citizen engagement in political dialogue and mobilisation over the country’s economic affairs. 

[The author (vijay@cepa.lk) works at the Centre for Poverty Analysis (CEPA) and is a member of the Collective for Economic Democratisation.]


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