Political authoritarianism and neoliberal tinkering

 

by Uditha Devapriya-2022/04/24

Last week was a powder keg waiting to go off. In Rambukkana, villagers stopped a fuel bowser, raging against not just shortages but price hikes. The night before, the government increased per litre petrol prices by more than LKR 80 and diesel prices by more than LKR 110. This was the biggest such increase in living memory. While Kanchana Wijesekara, the Minister in charge of fuel, has quoted the reduction of CEYPETCO’s daily loss from LKR 1.6 billion to LKR 300 million, people aren’t buying his line. Already angry at sweating under the sun in filling stations, they are fuming against seemingly never-ending hikes.

The residents of Rambukkana weren’t just asking for petrol and diesel, but petrol and diesel at prices that prevailed prior to those hikes. Yet mainstream economists, on Twitter and at seminars, are spewing a different narrative, claiming that government enforced shortages were what propelled them to violence and that the only way out is making the prices more cost reflective. Far removed from the harsh realities of the rural underclass, the Twitterati are urging further price hikes: one investor, tied to a prominent pro-free market thinktank, points out that petrol prices need to rise by another LKR 15 and diesel by another LKR 75 for CEYPETCO to “break even”, even further for it to record profits.

The mantra of welfare and subsidy cuts and removal of price controls has got louder and louder over the last few weeks. Emboldened by the government’s decision to go to the IMF, something they have been touting since at least 2020, neoliberal and orthodox economists are more or less urging the government to impose austerity. Supposedly with the benefit of hindsight, these economists, commentators, and policymakers warn of harsher times ahead, dishing out convenient shibboleths like “we’re all in this together” which class stratifications have, thanks to a pandemic and a declining economic situation, proved false.

In two perceptive articles, Shiran Illanperuma (“Sri Lanka: Tracing the historic roots of the island’s economic crisis”, in the radical magazine Jamhoor) and Rathindra Kuruwita (“Sri Lanka’s leaderless protests”, in The Diplomat) note the dangers of letting outside interests infiltrate and hijack the Galle Face protests. This is an important point, though only very few caught up in the fervour of #GotaGoHome have realised. Illanperuma, in particular, points out how mass scale demonstrations “articulating raw outrage without an alternative policy, plan, or program” can be co-opted by IMF-speak on austerity and welfare cuts.

This is largely correct, and events have borne it out well. When the protests began, not a few held up placards urging the government to toe the IMF line. Many of them noted Ajith Nivard Cabraal’s colossal mishandling of the economy, insinuating that he needed to attend economics classes. While Cabraal’s management of the country’s finances certainly merits investigation, as it hopefully will, what’s intriguing is how middle-class elements didn’t seem concerned about the alternative they were seeking: grinding austerity for all.

Since Cabraal and Basil Rajapaksa are out, and their replacements have, in record-time, turned the State’s attitude to the IMF around, orthodox-neoliberal economists and fellow travellers are sleekly changing their tune. Earlier they were pushing the regime to enact “reforms” like fuel price formulas and subsidy cuts, bemoaning what they saw as its apathy; today they are urging it to do more of what it’s doing. While drawing a line between their political opposition to the regime and their approval of its economic policies, they cave into that very convenient distinction between economic reform and State power.

Of course, they acknowledge the difficulties of enforcing the reforms they want. Some of them go as far as to describe IMF programmes as “politically costly.” But as Indi Samarajiva has recently pointed out, “politically costly” is just shorthand for “wildly unpopular and not democratically approved.” What the government does to enact such policies, policies that impose hardships on and compel resistance from the masses, is clear enough. The neoliberal right’s view that how a State operates is perfectly alright so long as it dismantles economic restrictions, in that sense, seems tragically wrong, if not horribly misplaced.

To be fair, not all their predictions and recommendations have been wrong. Their warnings about the government’s ban on chemical fertilisers have been vindicated. Yet even when critiquing such obvious policy blunders, the neoliberal right tends to couch their reforms in terms of liberalising markets and letting the market decide: prescriptions that look terribly unhelpful at a time when everyone is reeling in poverty and the world at large is suffering from COVID-19 induced shocks. A much better suggestion, as Indi has noted, is for the State to make full use of its power to alleviate unemployment and invest in public infrastructure, policies even supposedly free market economies are implementing today.

IMF loans will take around six months to trickle down to us. They will most probably come in tranches and will be preceded by restructuring negotiations. The IMF has made it very clear to the country’s delegation that whatever facility we get from it will depend on how those negotiations turn out. It has also noted that unless our debt situation becomes sustainable in the long term, creditors will not resume lending to us. This, of course, will depend on how far the government will go with painful measures that, according to the neoliberals at least, will impose a higher burden on the upper and middle classes, but will, in reality, shift such a burden to the already suffering lower and lower middle classes.

Not unlike middle-class anarchist liberals asking Anonymous to rescue Sri Lanka from the clutches of the Rajapaksas, Sri Lanka’s neoliberals continue to repose their trust on the holy trinity of international finance capital: Bretton Woods institutions, sovereign bondholders, and rating agencies. As the events in Rambukkana last week, which the neoliberal right is reframing to suit their narratives, show well, integrating our economy to that trinity will only lead to further hardships and further austerity, for the masses at large. It’s not a little tragic that those (rightly) railing against the government have failed to reconcile their opposition to political structures with opposition to these eventualities. This is a contradiction that will not survive this government; it will have to be resolved, sooner than later.

 

The writer can be reached at udakdev1@gmail.com