Lanka cannot but be Quixotic

Pres-PM stumble along in authentic Sri Lankan style 

Juan Domingo Peron was President of Argentina from 1946 to 1955

The Debt Burden in USA, Sri Lanka and everywhere

by Kumar David-September 3, 2016, 8:59 pm

 

"The best argument against democracy is a five-minute conversation with the average voter." Winston Churchill

To read ‘learned’ economists both able and unable (pun intended), political commentators and much of the English language press is to be exposed to a tirade of "they should do this, they should do that, why do they not do the third?" All splendid stuff IF only we lived on another planet. But then IF my aunty had those round things she would be my uncle! This is not an excuse for every bungle and blunder of the R&S regime; I will give you examples to show that even allowing for constraints, unforced errors are common. Rather my point is that that it is naïve to overlook the reality of populist democracy. Or to put it another way, Lankan democracy is defective in its political, social, economic and cultural spaces.

Examples of this blemish proliferate galore. It is dim-witted to award Buddhism (or any religion) constitutional primacy; or to call Lanka unitary when the need is devolution. But boldness on either count will see Ranil and Jayampathi lynched and burnt at the stake. Regarding the economy; first Ranil proposes then Ravi disposes, then Ravi proposes and the Cabinet disposes, policy is a yoyo, hence economists domiciled on Mars intone in sonorous tones "Ah there must be stability; screw reality". Is my dismissive take on platitudinous economists intended to cover up R&S mucking up? Most certainly not as you will see as you read on. But it does mean that I have scant regard for pompous speeches at Chamber Conventions, Business pages overflowing with naïveté, and NGO studies regurgitating platitudes with little to say about addressing constraints outside the control of Ranil, Sirisena or anyone else.

Democracy in Lanka is a particularly fateful case of populist democracy; but not all democracies are as short-sighted and populist. The electorate is all powerful and holds parliament and the government in thrall. The only concession that it makes to the elected is that it turns a blind-eye to corruption even on a mega scale. The Rajapaksa family and ministers, MPs and influential hangers on, despite being reviled as malefactors on a vast (or Vas) scale continue a command a mass following. Lankan populism’s political and cultural ethos translates into this dictum: Welfare expenditures must be sustained irrespective of how money is found; the government dare not cutback on popular measures irrespective of financial circumstances.

State revenues are only 12% of GDP and expenditure 18%, but impositions like the attempted VAT hike are resisted and defeated. Furthermore, Lanka is not only a populist but also a pirate capitalist democracy; that is to say not only the masses but also the propertied classes indulge in piracy. My colleague Professor Sivaguru Ganesan reckons that this country is one of the worst in tax avoidance. Add the bonanza of perks to the upper middleclass in the state and corporate sector (duty free car permits, allowances etc) and to get the scale of it you need to realise it that the beneficiaries exceed 10,000. The point of this essay is neither the size of benefits nor the extensiveness of its extensiveness; rather the point is that government is powerless to trim any of it. The GMOA has blocked ECTA, an essential international economic cooperation agreement, to protect its loot within a closed shop. The Organisation of Professional Associations has set out the nation’s foreign trade policy framework to suit its vested interests. Why do we need parliament?

The short and the long of it is that democracy in Lanka is of a certain type, an extreme case of populist democracy. Here is a list of things 12 things that this or any government cannot achieve.

a) Redefine the state in Lanka as a secular state

b) Provide substantial devolution to the minorities to run their own affairs

c) Rein in the military and free up land and property whose usufruct it has seized

d) Impose significant direct (mass) taxes in times of economic stress

e) Collect a goodly portion of fraudulent income tax and other taxes evaded

f) Restructure the state and corporate enterprise machinery to eke out higher efficiency

g) Systematically reduce graft in the public service and the police

h) Restrain the daily splurge of lies and half truths in the press including the English press

i) Build one more coal fired power plant which government will not be able to do due to the public outcry against coal even if done in an environmentally satisfactory way

j) Prosecute and punish mega-scale political or non-political financial criminals

k) End the "laws delays"; the backlog in our courts surely is one of the worst in the world

l) Improve road behaviour; stop ragging in universities; insist on better English; the list is endless

m) Develop public consciousness to where people place duty and not personal greed first

All this is not the responsibility of government alone. Religious bodies, public opinion and parents of young people can help, but some like the BBS are a part of the problem not the solution. Recently the Cardinal (some believe he’s an outright Mahinda man) strayed, with political objectives, into matters he does not know the foggiest about.

Unforced errors

Though I have pointed out the political and cultural blocks obstructing any government from progress in governance and economic gain, it must not be concluded that the government (in the context of this article I refer to the S&R regime only) has not made unforced errors. An unforced error is an unjustifiable act which was not forced on the government by the afore-discussed real-political pressures. I will for reasons of space confine myself to three issues, viz; the Central Bank Bond Scam and Malik Samarawickrema’s proposed US lobbying alleged scam, the perennial to-and-fro of decision in economic policy matters, and third haphazard decision making in the electric power sector culminating in a hush-hush decision to scuttle the Sampur coal power project at enormous financial cost to the country.

The alleged Bond Scam is morally the trickiest. What is being alleged is that the UNP needed money to face the Rajapaksa regimes treasure trove of billions and its flagrant abuse of state power and state machinery at two elections in 2015. Compared to the Rajapaksa billions the then-opposition was dead broke. Hence the then-opposition took a loan as it were, which is repaid by the profit stakeholder parties make via the Bond Scam. I have no proof or evidence that any of this is correct but this is what is being said in every tea shop and coffee parlour by both detractors and those who wish to explain that it was unavoidable. Let us put the question of veracity to one side and assume as a hypothesis that this version is true.

Immediately we are on the horns of a dilemma. Would you rather that the then-opposition stayed pristine clean eschewing dicey resources to match the Rajapaksa treasure and allowed Rajapaksa to come back for a third term; or would you rather that Rajapaksa was defeated by generating resources through available avenues? Now don’t give me all sorts of ifs and buts as is typical of petty bourgeois decision makers (like our economics scholars I referred to a while ago). Just tell me what your choice is? Assume there is no third option, no other practicable way of keeping out Rajapaksa. It’s a take it or leave it challenge.

As for me the overriding priority at the time was the ejection of Rajapaksa from the presidency – just imagine what Sri Lanka would be if he had pushed on to a third term! I don’t need to rub it in. Every thinking person sees the certainty of violations, robberies and highhanded destruction of democracy. If the regime had lasted the severe truncation of democratic and human rights and highway robbery would have been palpable enough. I guess Lenin felt like this when he turned a blind eye to Bolshevik comrades who occasionally robbed banks in desperate times. So my friends what then? If the hypothesised scenario had in fact come to fruition, will you bend morally to remove Rajapaksa or would you rather stay erect and perish like the boy on the burning deck? As for me, and I repeat, rescuing Lanka from potential dictatorship is priority number one.

Next let us hypothesise that Malik’s game plan in this US lobbying scandal was similar, that is kick backs for cronies or the party (not for himself since Malik is filthy rich in his own right). This time, if this hypothesis holds, I will not hesitate to damn and curse. (The possibility that this huge expenditure is justified does not cross my mind; this has to be some type of scam and if a scam someone is on the take). Why condemn this alleged case of graft and not another, the Bond Scam? That is precisely where morality is not rigid and absolute but relative to the circumstances in each case. Removing Rajapaksa is a very special imperative and the Sirisena crossover strategy a unique political opportunity. It is justified to raise funding by unconventional means to push/bring that strategy through to fruition. I see no such extenuating circumstances surrounding the US Lobbying scam. What is worse is that leaders are getting habituated to dicey behaviour.

Regarding instability in respect of fiscal policy announced, changed, changed again and so in only one case am I prepared to concede that Lanka’s populist democracy forced erratic decision making; that is the VAT issue. Broadly speaking President Sirisena represents the populist side (the shoulder to go and cry on) and PM Ranil is hard capitalistic policy realist. Actually this malleability enhances the ability of the government to ride through storms and functions as a stabiliser though sometimes vacillations are annoying. Well leaving aside the rocking of the stabilising mechanism on the VAT (announce-explore-react to protest-try again with changes) all other cases of policy inconsistency arose from mood swings among cabinet ministers, stupidities like the coal tender scam where everyone avoids responsibility, lobbies. The complaint that the government is inconsistent on economic policy measures over and above what unavoidable because of grassroots pressure is true.

The last matter is something I will dwell on next Sunday or the Sunday after. It is about the absurd amateurishness in planning our electricity system future. The Sampur coal power project in collaboration with India is the current case in point but this kind of thing has been the norm for 25 years. Whether there should never be another coal fired plant or whether a few with advanced environmental friendly technology is a separate and valid issue. What is at issue is the sheer amateurishness with which the project was cancelled, India’s polite refusal to endorse an erratic spur of the moment change of fuel and now Lanka’s desperate search for funding, collaborators, a site, starting electrical and harbour design to replace coal with a liquefied natural gas (LNG) alternative. Hard times lie ahead and on this sobering note I will sign off.