Defusing Foreign Interferences and Influences - Part XIII | Daily News

Defusing Foreign Interferences and Influences - Part XIII

IMF Headquarters in Washington, D.C.
IMF Headquarters in Washington, D.C.

Sri Lanka was declared to be bankrupt on April 12, 2022 in the midst of great political turmoil. Less than a month later most unprecedentedly the Prime Minister and the Government and finally two months thereafter the President himself were ousted by anti-Government agitators.

Within days of assuming Office to complete the remainder of President Gotabaya Rajapaksa’s tenure, President Ranil Wickremesinghe brought the country under a semblance of normalcy. Whilst the long queues for essentials have disappeared, our economic woes that led to political mayhem still lurks. Thankfully remittances from exports are increasing and footing the bills for essentials. Yet, the possibility of returning to queues continues to be real.

Uneasy Political Truce Trembles

Since President Wickremesinghe assumed Office, up until now, there had been an unusual truce in the political arena, though economically the turmoil continues. The Opposition Leader Sajith Premadasa is happy with his current position. During President Gotabaya’s last days in Office, he appealed to Premadasa repeatedly to take over the mantle from him. Premadasa however steadfastly refused.

This was the same situation during the Yahapalana Government’s days. After the relations between the then President Maithripala Sirisena and his Premier Ranil Wickremesinghe soured, President Sirisena too wanted to replace Wickremesinghe with Premadasa.

According to Premadasa, he was offered the position more than 70 times. It is with great pride that Premadasa reveals that he refused each and every time. He claims that he cannot work with rogues. This is nonsense as his own party members are politicians where some with a past that is far from peachy.

The SLPP, that rose as beautifully as a soufflé, is now a sore sight in politics. There are now at least 11 breakaway factions. The manner in which the voting for the 22nd Amendment to the constitution (22A) took place highlighted the SLPP’s pathetic position. Only Rear Admiral Sarath Weerasekera had the courage to take a principled stand, while everyone else - including the Rajapaksas themselves - played politics with it.

The JVP, who takes ownership of the anti-Government agitations that literally drove President Gotabaya from Office, were quiet until now. The JVP and the UNP share an interesting history. In the late 1980s, during the terror era of JVP’s second insurgency, challenging the UNP Government, Wickremesinghe as a minister of the Ranasinghe Premadasa Government played a pivotal role to bring down the JVP.

Shortage of foreign currencies.

During the Yahapalana Government it was widely rumoured that the JVP top hierarchy was in the UNP’s pocket. The Yahapalana Government was formed with the backing of powerful entities as the West and India, with all of Rajapaksa’s political foes united to oust President Mahinda Rajapaksa and keep the Rajapaksa clan out of politics. It was a strange era where anything was possible. However, whatever goodwill that may have existed between the JVP and the UNP evaporated with the Yahapalana Government’s disintegration.

Since events engineered by the JVP to oust the Gotabaya Administration unwittingly propelled Wickremesinghe into presidency, they have been quiet. President Wickremesinghe made it clear that he was not in the mood to tolerate any nonsense.

For one thing the anti-Government agitators burned down Wickremesinghe’s home, along with his collection of valuable and rare transcripts and an equally valuable collection of Buddhist artifacts. His pet dog too died in the incident. Taking a political fight to such a personal level with a politically astute mind reputed with an elephant’s memory was not the agitators’ finest moments.

Two months prior to this incident, they burnt and destroyed over 100 properties of Parliamentarians. Few arrests have been made and it is likely that those at the grassroots of the agitations would have to face the wrath of the law.

Had they left President Wickremesinghe’s residence alone, the leadership would have remained unscathed. Now however, they may find themselves in the same sticky situation as the woodpecker, who pecked every tree in the woods without incident and got into a spot with the banana tree trunk.

The other reason that ensures President Wickremesinghe from playing politics with the anarchists is his own reputation. Since the 1990s Wickremesinghe took too many wrong turns politically. Thus over the decades he lost credibility among his supporters and virtually all his voters by 2020. This is thus his last chance to prove himself.

The JVP who reads the political pulse better than most veteran politicians would know that messing with President Wickremesinghe would not be the same as that with President Gotabaya. Hence, until now they had been quiet. However, on October 27, 2022, the JVP again organised a massive rally at Hyde Park. The two main themes were in protest of the tax hikes and the laws, which they claim are to suppress people.

IMF Delay Catalyzes Anarchists

The catalyst that is breaking the uneasy political truce is the delay in getting the IMF bailout programme moving. When Sri Lanka was declared to be bankrupt all hopes were placed with the IMF. Yet, even after seven and half months since approaching the IMF, not a single US dollar bill has floated our way. The staff level agreement reached in early September 2022 for a USD 2.9 billion bailout package over a period of 48 months has so far just been a carrot (real or imagined).

According to Rear Admiral Weerasekera, a number of MPs did not want to vote for the 22A. They were however misled into believing that the IMF bailout package hinges on the passing of the 22A.

This is an inexcusable excuse. As lawmakers holding the trust of their electorate, Parliamentarians cannot allow themselves to be misled. It is shameful that instead of studying a crucial agreement as this bailout package and making an independent effort to understand its contents, they chose hearsay.

This also highlights the present administration’s vulnerability. Despite President Wickremesinghe’s dedicated efforts to restructure debt with our key lenders, an IMF prerequisite, we have not made any headway. This is because our lenders have their own concerns.

Japan, to whom we owe USD 3 billion, is our second largest creditor. Apart from recovering their funds Japan has a diplomatic interest against China's increasing influence in the region. Hence, in August 2022, Japan was thinking of organising a creditors’ conference. Tokyo believes that such a “platform” is a must to ensure that all creditor nations would “shoulder a fair share in waiving debt”.

China who owns 10 percent of our USD 32 billion foreign debt is also the lender to a number of other economies. Therefore granting a “haircut” to Sri Lanka alone is not possible. However, if China would not accept a reduced payment, then neither would our other creditors.

Simultaneously, the Sri Lankan Government must prove to both the IMF and her creditors that they are serious about the fiscal reforms. As such, the Government is forced to cap spending whilst increasing taxes. At the same time, the Government must alleviate IMF’s concerns over the economically challenged.

To cut down on Government spending whilst cushioning the poor is a tough act to follow. This challenge is made tougher as the economically affected will continue to rise in the coming months and perhaps years.

As taxes rise, so will the Cost of Living. The Central Bank has increased interest rates repeatedly in an effort to control inflation, which is at an all time high.

This is however forcing the country into a recession. This means more people, especially blue collar workers, will have less employment opportunities. In an economy where two thirds of the eight million workforce are daily wage earners, this is an extremely worrisome situation indeed.

Political Opportunists Born in a Poor Economic Climate

The greater the burden on the people, the weaker the Government gets. It does not help the situation when international bodies as the UNHRC are closely watching the unfolding crisis in Sri Lanka. The intention is not to be a safety net to Sri Lanka and support the gaps of the Government.

They observe with the sole intention of catching the Government toeing outside the line. Without making an effort to understand the unique challenges before the Government, these organisations demand accountability for what they deem as fundamental rights violations and insist on Governments to adhere to international standards.

Speaking to this writer former Central Bank Governor Ajith Cabraal points out, “it is easy for someone to appreciate the systems in developed countries as the US. However, it is important to understand the systems they had when their economies were as small as ours.”

Unfortunately, for the JVP this deteriorating situation amounts to political mileage. Speaking at the recent rally, JVP stalwart Lalkantha listed the number of times trade unions ground the economy to a halt to bring leaders down to their knees.

Apart from boasting on the trade unions’ might to humble political leaders, he failed to note as to how such actions helped the ordinary citizens. In truth, it is these actions that pushed an already ailing economy down the precipice.

His seven-minute speech highlighted the unenviable position of our successive Governments. Hiding behind lofty ideologies such as freedom of expression and right to protest, political opportunists provoke politically like-minded trade unions to push the country into an ungovernable situation. How these acts came to be recognized as components of democracy is extremely puzzling.

Any attempt by the Government to overcome these artificially created obstacles by political opportunists will get entities as the UNHRC breathing down that Government’s neck. Callously Governments are blacklisted as autocratic, oppressor, suppressor and violator. Tightening the screws further, these entities as well as foreign Governments with powerful economies can and do influence funders as the IMF to exert pressure from their ends as well to our Governments.

“Today,” Cabraal commenting on this phenomenon noted, “democracy and countries being ruled by elected leaders has become an illusion. It is the unelected entities such as the IMF that dictate terms that our Governments must follow.”

“No Option” is Not an Option for a Government

“The only way for our countries to be independent,” observed Cabraal, “is a strong economy.”

Cabraal believes that as such we must preserve our integrity at all times. Drawing from his experience as the Central Bank Governor during the height of the war against terrorism and then again in the peak of the COVID-19 pandemic, he categorically maintains that as a Government we cannot chose “no option”.

“We are elected to find options,” he stated. “In 2005, we were told that we had no option but to give what the LTTE demanded. Had we accepted ‘no option’ as our only option, then today our territory would have been divided.”

Likewise, he recalled the challenges overcome to meet our debt obligations when all revenues stopped because of the pandemic. “I made sure that the Government didn’t have to default by even one cent. We negotiated with India and found Rs 3.8 billion to service our debt. JVP Leader Anura Kumara Dissanayaka noted this in Parliament. It was not an easy task, but in the six months I functioned as the Governor, I made sure that the Government had the funds to repay the loans.”

Even at the time, he remembers, that there was an enormous pressure to declare the country as bankrupt and default debt.

“If you lose your job would even the corner shop let you buy on credit? On March 28, 2022 at an interview with Sanka on Derana 360, Ranil Wickremesinghe explained clearly that if we declared bankruptcy, no one will lend us even a cent, banks would not be even able to open an LC,” Cabraal said as he explained the danger of declaring bankruptcy.

Thoroughly disappointed with the officials who advised the previous Government to declare bankruptcy, he wondered, “did they not understand the gravity of such an act? Had we disclosed our true financial status during the war, the LTTE would have struck us immediately knowing we will not be able to buy even a bullet to retaliate. Today, we are expected to pay upfront or a prepayment is demanded as we procure our essentials.”

The issue of declaring bankruptcy is a deeply divided issue. While some believe that Cabraal is responsible for driving the economy to bankruptcy, others share Cabraal’s sentiments.

In the meantime, riding on this confusion, the likes of JVP are gaining political mileage. Out of naïveté or ulterior motive, entities as the UNHRC further complicate the issues by trying to cuff the Government from taking appropriate action. IMF’s advice based on the figures in a spreadsheet are not helping the situation either.

The only thing that is clear is that we are truly in a pickle. If we are to move forward, then we must overcome our penchant for wanting to be rescued by someone else. We must also make a serious effort to remove “can’t” from our vocabulary.

A UNHRC session.

[email protected]

To be continued

Add new comment