No magic portal out of badlands

Facts are seditious things – Joseph Mather (God save great Thomas Paine)

By Tisaranee Gunasekara

Khettarama R. Premadasa stadium is still Sri Lanka’s largest international cricketing arena. What makes it truly special is its genesis. It was built in 1985-86, with no foreign funding or expertise. The idea came from then PM Ranasinghe Premadasa; implementation was by Mayor Sirisena Cooray and the Colombo Municipal Council. 

As Sirisena Cooray recalled in his memoirs, President Premadasa and I: Our Story, “At that time all that area was marshland. The CMC planned to reclaim a small section of it for a municipal playground... One day I asked Mr. Premadasa why we have not built something for cricket. Initially we did not think of building an international stadium. That came later.” The funds (except for flashlights and the scoreboard) came from municipal coffers. There were no extra labour costs as construction was done by municipal workers under the direction of municipal engineers. “The enthusiasm of all the participants of this great endeavour from the engineers to the humblest workers was so tremendous that we were able to complete the work in just six months,” (ibid).

Fast forward to 2022; Sri Lanka, suffering from the biggest forex crisis in history, is intent on outsourcing to a Chinese firm a pipe-laying project the relevant state agency has offered to do at half-cost. Ceylon Petroleum Storage Terminal Ltd. officials insist that they can build the pipeline from the Kolonnawa terminal to the Dolphin Tanker Berth in Colombo. “They have experience in pipeline laying work and are confident they could handle the new project at less than half the cost the Chinese firm has quoted,” (The Sunday Times – 2.1.2022). Yet the Ministry of Energy wants to gift the project to China Petroleum Engineering Pipeline Company Ltd. at $ 35 million (including interest on the loan, all in scarce dollars). The locals lack the expertise, the Ministry argues. CPSTL officials point out that during the Sirisena-Wickremesinghe administration, they laid a 12-inch diameter pipeline from Kolonnawa to Colombo Port using their own funds and expertise at a fourth of the estimated cost. They argue that their engineers and workers can handle the new project for $ 14 million, using better quality European products.

If this is bad, worse is on the cards. During the Chinese foreign minister’s recent visit to Colombo, four bilateral agreements were signed. One was a Letter of exchange on the Project of Subsidised Housing for Low Income Category in Colombo. In plain language, the Rajapaksas want to outsource low-income house building to Chinese companies. This in a country which was once a world-leader in building affordable houses for the poor. 

When kleptocracy dons the garb of development and talks the language of policy, cost-benefit analyses become redefined as costs to the nation and benefits to the rulers. Even as Sri Lanka scrambles to find dollars for essential imports, there’s talk of building another port city in Galle and negotiations with Hungary for loans to build four overhead bridges. 

While most of the world experienced pandemic-related economic slumps in 2020, many of those countries recovered lost ground in 2021. Sri Lanka, on the other hand, spiralled into an unprecedented crisis traceable, not so much to the pandemic as to the Rajapaksas’ tax-cutting measures and the subsequent money-printing extravaganza. After all, Sri Lanka spent less on pandemic alleviation than most South Asian nations, including Afghanistan. We spent a measly 0.8% of our GDP on pandemic alleviation (0.1% on the health sector and 0.7% on the non-health sector). Bangladesh, for instance, spent lots more, and still has enough forex reserves to lend to us when we go a-begging (https://publicfinance.lk/en/topics/sri-lanka-s-expenditure-on-covid-19-response-is-much-lower-than-its-regional-peers-1630477922). 

The Rajapaksa attempt to blame the debt crisis on the Sirisena-Wickremesinghe administration is another canard. Though the country’s debt burden increased by Rs. 4,257 billion between 2015 and 2019, 89.8% of this (Rs. 3,823 billion) was to pay interest on outstanding accumulated debt as at 2014.

Had Sri Lanka remained a parliamentary democracy, the Rajapaksas could have been dislodged from power early. Getting rid of executive presidents before time is another matter. This Gotabaya-Mahinda-Basil-Namal fiesta of incompetence is likely to bumble and bungle its full term. The state the country would be in by then is both imaginable and unimaginable. 

No time for bedtime stories

Every day the Rajapaksas stay in power, Sri Lanka will slink deeper and deeper into the badlands. Yet, even if some unforeseeable miracle sweeps the Rajapaksas into the ash heap of history tomorrow, resuscitating the country would be a daunting task. The opposition’s many assurances and promises of relief to the people are laudatory. The question though is whether these generous pledges are grounded in reality. 

Take a simple example. Farmers, who became unwitting guinea pigs in Gotabaya Rajapaksa’s Great Leap into organic agriculture experiment, deserve compensation. But would a new Government be able to fund it, without resorting to the ruinous Rajapaksa practice of massive money printing?

The unpalatable truth is that the road out of the Rajapaksa-created badlands would be a hard and painful slog, which would rapidly deteriorate into a violent disaster if the requisite understanding, imagination or political will is in abeyance. The lesson of the Khettarama Stadium is not to hark back to this or that past, but to be imaginative in using available resources to resolve problems at hand. 

Gotabaya Rajapaksa’s economic vision seems to be wreathed in fogs of mis-knowledge. Still, even he realises that some sort of debt restructuring is unavoidable. When the Chinese Foreign Minister came calling – after Beijing taught Colombo a lesson in obedience over the fertiliser drama – the president asked for a bilateral debt restructuring. The Chinese response was to promote the old idea of a free trade pact. (China is suffering from over-exposure due to its Belt-and-Road lending spree; if Beijing agrees to Colombo’s request, most of the 138 or so indebted countries would be clamouring for similar relief). 

Given Sri Lanka’s disastrous economic state, bilateral restructuring is a pipe dream. A post-Rajapaksa Government, if it operates on a rational plane, will have to seek IMF assistance for a multilateral arrangement. Any restructuring will involve hard choices, as Prof. Lee C. Buchheit, a top international expert in sovereign debt management, pointed out at the Sri Lanka Economic Outlook 2022 forum. “Any fiscal adjustment programme initiated at this stage will be ‘distasteful’ and will involve a degree of pain... Every sovereign bond restructuring boils down to one decision — How much of the country’s pain should be borne by its citizens, and how much should be borne by the creditors,” (Newswire – 17.1.2022).

Within this general question resides a specific question that is of immense political salience. How should the country’s pain be distributed among its citizens? 

This month, while the economy continued on its downward spiral and people queued for hours to buy gas or milk powder, Colombo Stock Exchange broke new ground, vaulting over the Rs. 6 trillion mark in capitalisation. This is the starkest expression of countries with a country. The critical question any post-Rajapaksa Government must answer is how the pain of structural adjustment (tax increases and cost cutting) will be spread among the winners and losers of the Rajapaksa era. This is not merely an academic matter to be discussed behind closed doors. This is a matter that has a direct and immediate bearing on all Lankans and thus requires an informed public discussion. 

The IMF has long since shifted away from its earlier adherence to neo-liberal dogmas. In a 2017 tax policy statement, the IMF, for instance, named progressive taxation, a universal basic income, and spending on education and health as the three key methods for tackling inequality in the developing world. So, the Rajapaksa argument that an IMF deal would ineluctably cause deadly belt-tightening for the poor and the middle classes is not true. 

As researchers have pointed out, there is a gap between the IMF’s public backing for progressive taxation and social spending and the contours of structural adjustment programmes it presides over. But this gap may be the outcome of not just this Bretten-Woods Twin’s lingering fondness for neoliberal shibboleths but also unwillingness on the part of national political elites to implement policies unpalatable to themselves and their allies. 

As the IMF points out its 2017 publication on tax policy, “Although raising high tax revenues...ideally calls for the rich to be taxed more heavily than the poor, the economic and political power of the rich taxpayers often allows them to prevent fiscal reforms that would increase their tax burden. This explains in part why many developing countries have not fully exploited personal income and property taxes and why their tax systems rarely achieve satisfactory progressivity.” If national political elites baulk at taxing the rich, the only other option is the kind of tax that is punitive on the poor and the middle classes.

Does the Lankan Opposition possess the political will to withstand ‘the economic and political power of the rich taxpayers’? Will it be able to ignore the clamour of Sinhala-Buddhist extremists and reduce the bloated defence budget? Perhaps a litmus test would be would-be presidential candidates’ attitude to the egregious practice of duty-free vehicle permits. Which leading light in the opposition is willing to pledge himself publicly to the immediate abolition of this racket and other obscene privileges parliamentarians have accorded themselves? Which parliamentarian is willing to introduce a private member’s motion to such effect? If the opposition lacks the political will for such minor reforms, how will it implement the major structural changes necessary to chart a path out of the badlands?

The scapegoat solution

Poet and teacher Ahnaf Jazeem was given bail after more than 18 months of hell as a PTA detainee. In a media interview, he claimed that the police insisted he was a terrorist because he owns only Islamic, Hindu, and Christian books but no Buddhist books. 

Whether in Rajapaksa Sri Lanka, the non-possession of Buddhist books is proof of terrorism is a question the police minister and the justice minister need to answer (not to mention the AG’s Department). But take this deadly absurdity with the plethora of contradictory statements about the All Saints Church bomb and the bloody sheen on the coming colours become clear. 

Initially, the Borella bomb was attributed to a ‘Muslim mastermind.’ Now it seems to be the work of a ‘Catholic mastermind’ who is also allegedly responsible for the Apollo bomb and the Bellanwila temple bomb. 

If this is reminiscent of the 2019/2020 hysteria about Dr. Shafi Shahafdeen’s ‘war of wombs’ against Sinhala-Buddhists, it is because they stood against the politics of the ‘Other’ that had been the bane of modern Lanka. We should be ready to greet with a wink and a nod any future revelation that blames the Easter Sunday massacre on a Catholic mastermind (with the help of Muslim foot-soldiers; after all, Catholics and Muslims have always conspired against Sinhala-Buddhists, haven’t they?) 

As Nobel Laureate Jose Saramago pointed out in his semi-autobiographical novel, Raised from the Ground, “There can be no justice when some have everything and others nothing...” No stability either; such imbalances are breeding grounds for discontent and conflict. One way of responding to such discontent is repressive laws. The Justice Minister’s idea of banning strikes will not get off the ground because even an attempt to draft such a draconian legislation would lose Sri Lanka losing the GSP plus facility. 

When large scale repression becomes impractical, just look for scapegoats. 

During Black July then president J.R. Jayewardene told Britain’s Daily Telegraph, “I am not worried about the opinion of the Jaffna people... now we cannot think of them, not about their lives or their opinion... the more you put pressure in the north, the happier the Sinhala people will be here... Really if I starve the Tamils out, the Sinhala people will be happy.” Sadly, in that moment, he wasn’t way off the mark. But that mood of irrational hatred did not happen automatically. It was created drop by poisonous drop. The Cyril Mathew-led hysteria about Tamil-cheating at university entrance exams was one such toxin. 

Last month, some TV stations attempted to ignite a similar outbreak by alleging Muslim cheating at the Grade 5 scholarship exam. Fortunately, that lie didn’t fly. But others may, in different conditions. There are no magic portals to socio-economic heavens. But to violent political hells, such instant transportation is freely available. All we need is enough susceptible minds to believe the next lie, or the next, or the next.