There is an alternative: Economic perspectives of Ranil Wickremesinghe vs. Sajith Premadasa

President Ranil Wickremesinghe (left) and SJB Leader Sajith Premadasa

Ranil Wickremesinghe as debt-junkie PM in 2015-2019, the Rajapaksas who were serially responsible for the economic crisis, are now together, imposing economic pain upon the vast majority of the people who didn’t create the crisis. We, the people, are paying the price for the blunders that they, the ruling elite, made and the economic elite benefitted from (tax cuts). Until this moral asymmetry is addressed, no economic solution will have public consent and lacking that consent, will prove implementable without social and political consequence

UK Labour leader Keir Starmer promises to abolish the House of Lords which consists of unelected, appointed members. He pledges to replace it with a popularly elected chamber if he wins the British general election. This, he says, would “restore trust in politics”. What if the UK were led by a PM who had not been elected to Parliament? That, after all, is the surreal situation we Sri Lankans are in. 

Good news, bad news

The good news is that despite the pronouncement by Minister Ali Sabry in the Budget debate that “there is no alternative” (the good old Thatcherite ‘TINA’), the mainline democratic Opposition articulated during that very debate, a more balanced and therefore considerably superior economic alternative to President Ranil Wickremesinghe’s systemically risky policy intervention in the crisis. 

The bad news is that the democratic Opposition has no political plan to extract an election from President Wickremesinghe which is the only way its economic plan can be implemented, because only a legitimate administration armed with a pragmatic and fair economic plan can resolve the crisis. 

The really bad news is that President Wickremesinghe who has a high-risk economic plan and zero legitimacy to impose it on the people, looks like he is not going to opt for parliamentary elections or even permit the local authorities election that is long overdue. 

The Left, that is to say the two competing Left formations, may know how to secure an opening through relentless resistance but doesn’t know what macroeconomic policy to put in place if in power. Anura Kumara Dissanayake’s blistering speech in the Budget debate was a sharp, credible critique and contained some excellent ideas and recommendations but presented no conceptual, coherent, macroeconomic alternative. The JVP-JJB leader would make a great Opposition Leader if/when the current one, the SJB leader moves up to the PM-ship or Presidency.

What’s he smoking?

Whatever else President Ranil Wickremesinghe becomes famous for before he vacates the presidency, he will certainly be known for two things: his remark that he will sell profit-making state enterprises and not limit himself to the divestiture of loss-making ones, because it will bring in a few billion US dollars. Secondly he will be known for his adoption of Diana Gamage’s policy on marijuana cultivation. 

Let’s take the second point first. In the mid-1980s, the Lanka Guardian magazine under my father Mervyn de Silva’s editorship ran a cover story advocating the legalisation of the use of pot for medicinal and recreational use. It was written by Manik Sandrasagara. I agreed with it then and I do so now. But when it is presented by President Ranil Wickremesinghe in his Budget, the scale and scope of the matter is drastically different. 

This pertains to the cultivation of marijuana as a cash crop, for export. There are two major problems with this. At a time of a food crisis and when the world has shifted to the understanding of the absolute need for national food security, every incentive has to be given for the cultivation of food crops. When, instead, the President signals that the cultivation of ganja will be a dollar-earner, he is creating an irresistible impulse on the part of farmers who have been impoverished by Gotabaya’s lunatic ‘great leap forward’ into organic fertiliser, to shift to the far more profitable cultivation of ganja. That will inevitably be at the expense of the cultivation of food crops. If the counter-argument that the ganja farms will be strictly regulated by the state and patrolled by the military, the obvious hole in that bucket is that there will be clandestine farming which cannot be controlled. 

Worse still as the example of Latin America shows, large scale marijuana cultivation can be shifted clandestinely adapted/shifted to the cultivation of more dangerous crops from which hard drugs are processed. 

So, when President Wickremesinghe adopted the Diana developmental doctrine, what was he smoking?   

For a few dollars more

Now to the sale of profitable state enterprises for a few billion dollars more. That’s a legitimate, if wrong-headed idea, if presented as a point of view at a seminar. It is not legitimate when it comes as state policy from a president who was not elected to office by popular vote, and was not even elected to parliament. 

President Wickremesinghe is revealing that his economic policy is not based on economic rationality—in which case, profitable state enterprises would not be sold off – but on ideological dogma. That dogma, which he has also articulated is that the state should not be engaged in enterprise; any enterprise, even profitable ones. He would be hard put to show us a real-world example, from the USA to China, of the practice of that particular extremist doctrine.  

Yet another dictum of Ranil’s economics is no less illegitimate. He holds that what went wrong with all economic policy hitherto was a “relief and concession” i.e., welfare mentality. That is a skewed notion which, as I said before, is legitimate if he were speaking in his personal capacity at a seminar. It would also be legitimate as policy if he had presented that policy to the electorate and obtained a mandate for it, which is manifestly not the case. 

What makes President Wickremesinghe think that the citizens of Sri Lanka who threw out a President they had elected, because his economic policies betrayed his mandate, would submit to a harsh economic doctrine of belt-tightening sought to be implemented by a leader who has absolutely no mandate and has merely stepped into the shoes of the one who was thrown out? 

In his remarks to the exporters, Ranil Wickremesinghe rejected tax concessions until competitiveness was achieved in the global marketplace. He said that the state should not play a protectionist role for however short an interim period and that the local exporters should show international competitiveness and profitability from the get-go. His notion of utterly unassisted growth of export industries has no basis in economic history however far back you go. It certainly has no basis in the Asian Tigers’ economic miracle in which a smart state and smart economic policies played a key role. Deleting the state from the economy and leaving everything to the ‘free market’ bears no resemblance to the East Asian miracle.  

Battle of economic alternatives

The political battle is tripartite: Ranil-Rajapaksa regime on the Right, SJB, FPC and SLFP in the Center, and, JVP on the Left. However, the Budget debate showed that there aren’t three macroeconomic perspectives on offer, only two. The JVP has a very valid critique and valuable individual policy proposals but no holistic macroeconomic alternative.  

The two competing policy paradigms are that presented by President Wickremesinghe and the other whose outstanding but not sole protagonist is Opposition Leader and SJB leader Sajith Premadasa. Premadasa presented a blistering critique of Ranil’s Budget which was simultaneously a 6-point alternative economic program (see: https://youtu.be/K2aYG7I3tgc).

This follows Sajith’s 20-point critique of President Wickremesinghe’s economic policy rollout in October (https://youtu.be/mFRS13gewIA).

Sajith Premadasa’s measured, carefully calibrated yet spontaneous replies delivered with easy fluency when facing a multi-barrelled question posed by Murtaza Jafferjee, the head of Advocata, shows an intellectual grasp of political and economic reform that neither of the other front-runners for the presidency, Ranil Wickremesinghe and Anura Kumara Dissanayake or indeed anyone on either side of the aisle in Parliament has. (https://fb.watch/gIr4-Y5lP7/).

This is buttressed by his recent Q/A session at the Rotary Club Colombo West. (https://youtu.be/z-fYz2PVMpQ).

Clearly Sajith Premadasa is the leader-in-waiting and has the coherent macro-policy framework to take on the leadership of the country and the management of the crisis. Just as the victories of S.W.R.D. Bandaranaike in 1956, Ranasinghe Premadasa in 1988 and Mahinda Rajapaksa in 2005 shocked both the Establishment elite and the cosmopolitan Left so too will that of Sajith Premadasa at the next national election.    

Sajith was the only one to present a macroeconomic alternative in parliament in the context of the Budget debate but he wasn’t the only one in or out of parliament to occupy the same space. The two policy frameworks presented at the BCIS by the Freedom People’s Congress and articulated during the Budget debate by Charitha Herath and Nalaka Godahewa are quite compatible with Sajith’s.  

In conceptual terms the discourse of Ranil Wickremesinghe is a rightwing neoliberal ‘free-market fundamentalist’ economic philosophy, while that of Sajith and the FPC is ‘social democratic’ (both Sajith’s speech and the FPC framework documents use the term). To put it more simply, in the arena of economic policy-sets, the contestation is not between Right, Left and Center, but between Right and Centre, or neoliberal right and progressive centre. It is the UK Conservatives vs. the US Democrats and European-Australian-NZ social democrats. If I may be flippant, in intellectual terms it is Advocata vs. Verite.  

Sajith Premadasa stands taller than Ranil Wickremesinghe and all others in parliament in the arena of the political economy of development not only because of education, diligent reading and experience in outstanding budgetary critiques for over a decade, also because of his background and formation: he sits on the shoulders of his father’s development principles and their enormous success. 

The Premadasa paradigm of growth with equity has been tested and proved successful by all accounts in 1989-’93. That is at the empirical level. Ranil Wickremesinghe and his younger ideological fellow-travellers such as those in Advocata, are focused on ‘the economy’, while President Premadasa belonged to the international tendency which privileged ‘development’. 

Even if one were to charitably concede that Wickremesinghe and his co-thinkers also have some notion of ‘development’, that notion was and is totally antipodal to President Premadasa’s outlook on development which proved itself by registering spectacular economic success.     President Premadasa was unambiguous in his radical redefinition of the goals which animate macroeconomic policy and the criteria by which macroeconomic policies and practice should be judged: 

“Whatever development we may bring about should be to the benefit of the poor. Development in any sense should help people live! Our party is aware that there is no meaning in any development that keeps the people in hunger and in malnutrition, leading to death...!”

– President Premadasa, ‘Providing Assets to the Assetless’, Feb 13th 1989.

The date must be noted. This is not Premadasa in the midst of a hotly contested presidential election campaign, playing a populist card against his formidable national rival Madam Sirimavo Bandaranaike. 

This is Premadasa a month after he had won that race. This is what animated his development philosophy which guided his economic policy—not the other way around. The very title of the speech ‘providing assets to the assetless’ signals an economic philosophy very different from Ranil’s vision of selling state assets to ‘the haves’, be they national or international. 

This key definitional paragraph (which the SJB’s Economic Policy Unit should memorize) above serves as the most striking indictment of the entire Ranil Wickremesinghe economic model and strategy, and indicates why it will not merely fail, but could result in revolution.

Moral-ethical deficit 

Contrary to the conventional wisdom that at the heart of the crisis lies an economic problem, in realty at the heart of the current crisis is a moral and ethical problem, which is in a state of dynamic interaction with a political legitimacy problem and in turn, obscures and obstructs any economic solution to the crisis. Unless the moral-ethical and political legitimacy deficit is removed, any economic solution will only worsen the economic problem by generating polarisation and instability.  

The moral-ethical problem is best illustrated by the reality that parents cannot buy children’s schoolbooks including exercise books because the prices have skyrocketed as a result of governmental policy. In other words, children, parents and the prospect of the country’s future which lies in the education of the young, are all being made to suffer due to an economic crisis which the citizens didn’t create as well as part of an alleged solution imposed by a ruler the citizens didn’t choose at an election. 

Ranil Wickremesinghe as debt-junkie PM in 2015-2019, the Rajapaksas who were serially responsible for the economic crisis, are now together, imposing economic pain upon the vast majority of the people who didn’t create the crisis. We, the people, are paying the price for the blunders that they, the ruling elite, made and the economic elite benefitted from (tax cuts). Until this moral asymmetry is addressed, no economic solution will have public consent and lacking that consent, will prove implementable without social and political consequence.  

Sajith Premadasa stands taller than Ranil Wickremesinghe and all others in parliament in the arena of the political economy of development not only because of education, diligent reading and experience in outstanding budgetary critiques for over a decade, also because of his background and formation: he sits on the shoulders of his father’s development principles and their enormous success

Loss of legitimacy

The argument that Wickremesinghe’s policies are legitimate though he is himself unelected by the people but he is supported by a Cabinet and ruling party, the SLPP, which was popularly elected, is specious. Legitimacy derives from a popular mandate for a specific political and policy posture. For two decades, the Sri Lanka Freedom Party (SLFP) and its successor party the SLPP, i.e., leaders from Chandrika Bandaranaike Kumaratunga to Mahinda Rajapaksa and Gotabaya Rajapaksa, won elections by running against Ranil Wickremesinghe and his policies; everything he represented and stood for—which were deemed anti-people and anti-national. 

The only exception was Maithripala Sirisena who initially ran against the Rajapaksas but after the SLPP’s sweeping win at the local authorities election of 2018, read the electoral tea-leaves and switch to an anti-Ranil policy and a rapprochement with Mahinda Rajapaksa. 

Today, the SLFP and SLPP mandates obtained by targeting and rejecting Ranil Wickremesinghe and his policies, have been openly betrayed by resorting to the exact opposite policy, namely the election by parliamentary majority, of Ranil Wickremesinghe as President, with his neoliberal economic policies very much intact, turning away from the option of the SLPP’s own Dullas Alahapperuma who ran against Ranil. 

Thus, having done the exact opposite of what it sought and obtained a mandate for, the SLPP has abandoned its mandate. It no longer has it. Therefore, it no longer has legitimacy.        

What happens when a leader imposes an outdated, dogmatic economic policy which can show no success, only recession and blowback? 

What happens when the leader who does that is unelected and has no popular mandate?

What happens when that leader is selected, supported and in a bloc with a ruling party that has renounced its policy platform, enthroned its enemy and thereby lost its mandate and legitimacy?  

What happens when the leader concerned, gives every sign of seeking to block the safety-valves of elections even at the sub-national level?   

What happens when that politico-electoral shutdown takes place in a country in which a mass movement threw out a powerful, ex-military president? 

What happens when all this takes place in a country which has a Left movement – consisting of two competing left parties—at its most powerful since the 1940s-1960s?     

The regime is far too narrowly based to implement drastic economic reforms. The only way that could be done is to legitimise and broad-base the reform process by one or more rounds of snap elections. If not, the system will start to crack from below.