Showing That Lessons Are Learnt From The Past

By Jehan Perera-Sunday, February 01, 2015

The interim budget of the National Democratic Front government presented by its Finance Minister Ravi Karunanayake was easily the most people-friendly budget of any government in recent times. It was described as a mini-budget, unlike the main budget that makes its appearance in November.  But it will have a significant impact on the lives of the majority of people who are still far from being the middle income earners that Central Bank figures used to make out.  The new government has claimed that the economic situation is far from being the rosy one painted by the former government.  Nevertheless it has sacrificed government revenue by reducing several taxes and prices of essential commodities.  As in the case of the reduction of the prices of petrol and diesel fuel a fortnight ago, the government acted boldly in giving big price concessions rather than niggardly ones.

One of the main charges leveled against the former United People’s Freedom Alliance government is that it led the country into massive debt due to its white elephant projects, waste and corruption.  However, the new government appears to have decided that it will address repaying the debts to a later time.  It is not repeating the politically damaging policies of the short-lived United National Front government of 2001-04 which was also headed by today’s Prime Minister, Ranil Wickremesinghe.  That government too inherited an economy in very bad shape.  The expenditures on the war against the LTTE that was taking place in full force at that time had drained the economy.  One prong of the government’s remedy to this problem was to slash government expenditures and to try to stimulate private sector investments.

The UNF government was successful in reviving the economy.  Its policies were rational in terms of economics.  But its policies created hardships to the masses of people and were resented by them.  In addition, the government sought to deal rationally with the issue of the war against the LTTE by entering into a ceasefire agreement with it with the support and praise of the international community.  However, both of these rational policy shifts by the UNF government proved to be deeply unpopular with the masses of people.  The economic recovery programme of the government doomed the poorer sections of the population to further belt-tightening and suffering.  The people did not get the immediate relief they had hoped for when they voted for a change of government in 2001.

Lesson learnt

At the same time as it sought to rationalise the economy through cost-cutting measures, the UNF government sought to stabilise the country through a peace process with the LTTE.  The international community was prepared to support the government in this.  What followed was a textbook case of mediation and conflict resolution.  However, the UNF government’s efforts to make the LTTE a partner in the peace process caused unease amongst the majority of people who did not trust the LTTE. This enabled the government’s political rivals to accuse it of betraying the country to the LTTE and to the international community. As a result the government could not keep its hold on power and was soon defeated at elections.

The mini budget presented on Thursday is an indicator that the new NDF government headed by Prime Minister Wickremesinghe has learnt from its previous experience in regard to the economy.   Although the country is deep in debt due to the shortcomings in the economic policies of its predecessor government, the new government has decided not to pass the burden onto the masses of people immediately.  Instead it has heeded their desire for a measure of relief from economic hardship that the former government was getting increasingly oblivious to.  The former UPFA government was content with putting up big shows, including both exhibitions of Sri Lanka’s triumphs and large infrastructure projects that showed people the fruits of development that could be theirs, but in the future.

The former UPFA government believed it had an unbeatable formula to obtain the support of the majority of people due to its constant mobilisation of Sinhalese ethnic nationalism.  It constantly reminded the ethnic majority of the military victory it had obtained over the LTTE and the militancy of the Tamil ethnic minority.  It warned about future threats to the unity of the country and to the primary place of the Sinhalese as the ethnic majority.

It also claimed that the international community was seeking to revive the LTTE and used that justification to bolster the strength of the military and rule the ethnic minorities with a heavy hand.  It added the Muslim community as a second threat to the country and sought to add to the fears of the ethnic majority to obtain their political support.

Caution needed

In catering to the needs of the majority of people through its mini budget, the new government has shown it is being pragmatic about retaining the support of the majority of people in anticipation of general elections in June. But if it is to prevail at the forthcoming elections, it will be important for the new government to specifically woo the ethnic majority, of whom a significant majority voted for the former president.  In the period 2001-04, the UNF government lost its popularity due to its harsh economic policies in relation to the majority of people, but also due to the erosion of confidence that accompanied its efforts to compromise with the LTTE for the sake of peace.

There is a similar issue this time. This time around, the LTTE is no longer the threat, but it has been replaced by the international community that is pressing for accountability on the part of the former government leaders for war crimes.  Unlike the former government that refused to engage with the international community on the issue of war crimes, and has the sympathy of the ethnic majority on this issue, the new government has shown its willingness to engage with the international community on the issue of war crimes.  It has sent one of the country’s top diplomats Jayantha Dhanapala to the meet with the UN High Commissioner for Human Rights to ask for time and space to cope with this issue.   Unless properly handled, the issue of war crimes and accountability can undermine the popularity of the new government regardless of the economic benefits it provides the people.

The former leaders of the government, especially former president Mahinda Rajapaksa have repeatedly told the people that they fought against and destroyed the LTTE for the sake of the country and its people. The former president has said he is prepared to go to the electric chair if he can save the country from being divided and the soldiers who fought the war from being punished.  This type of speech is very emotive and can evoke the political support of the Sinhalese ethnic majority who has been given a high dose of nationalistic propaganda over the past decade by the former government leaders and propagandists.

It is in this context that the promise of the new government leaders not to permit any Sri Lankan to be taken away to an international court for war crimes and instead to hold a domestic inquiry into accountability issues needs to be viewed.