Free-fall of the nation Where is the alternative to ruinous Gotabaya regime?

28 June 2022

There is a great deal of ruin in a nation, Adam Smith once said - meaning that the modern states are innately strong enough to withstand a good deal of external and internal pressure. It takes serious and serial bungling by the policymakers to break a nation. Gotabaya Rajapaksa has shown how a country could be ruined on a fast track.  Consider these numbers. Sri Lanka’s nominal GDP per capita in 2020 was around US$ 3600, about US$ 200 down from the previous year. With the depreciation of the Rupee by 80% during the first half of this year, the GDP per capita at present should be around US$ 2000, in the range of India and Bangladesh. GDP per capita based on purchasing parity, which is a more accurate indicator of measuring the living standards might have taken an even worse hit, though actual numbers are elusive for the prices that double overnight. John Hopkins University Economist Steve Hanke gauges Sri Lanka’s real inflation in May as 128 %, only second to Zimbabwe. (The official inflation rate is 39.10%)

Along with the collapse of disposable income, comes the collapse of basic social indicators: child malnutrition is rising, general hunger is pervasive, hospitals are short of life-saving drugs and doctors and nurses are languishing in fuel queues instead at the hospitals. Schools are closed at a whim, and public transport is at a virtual standstill and functions only when there is fuel. Government offices are closed on Fridays to let the public servants farm, a sick joke in a country where the president has decimated the entire agricultural sector with a dim-witted ban on chemical agriculture.

In fact, Sri Lankans have not yet faced the full force of the wrath of the collapsing social wellbeing. Because, the country is still drawing from the innate strength of institutions, be it health care or education, that had been built over decades. Yet, as it happened elsewhere (such as in Venezuela, Latin America’s wealthiest country not so long ago, where Hugo Chavez invested the country’s oil windfall on at times unaffordable social welfare, albeit making rapid gains in social indicators) such innate strengths will be exhausted soon. Gotabaya Rajapaksa and his government are carrying Sri Lanka in that direction, steadily and fast. This freefall of the nation should be averted.
At present, Sri Lanka faces a twin crisis. One is political, caused by President Gotabaya’s desperate clinging to power, at the peril of the nation.  The second is the economic crisis, which is fast deteriorating to apocalyptic proportions.  After desperate patchwork solutions, it should now be starkly clear that the economic crisis cannot be addressed without solving the political crisis.  Yet, Gotabaya remains the greatest handicap for Sri Lanka to try to fix the broken state.

In the first place, Gotabaya Rajapaksa’s leadership does not invoke any confidence in the Sri Lankan public. He is the main protagonist who created the current economic misery.  Consider the soaring hunger - the UN warns of a humanitarian catastrophe. The acute food crisis is not necessarily a result of the foreign exchange crisis. Consumer goods account for less than 20% of Sri Lanka’s total imports. (Intermediate goods and capital goods account for 57% and 23% respectively).  Sri Lanka had a functioning domestic food industry, and the country was nearly self-sufficient in staple diet rice. Soaring hunger in the country is a result of Gotabaya’s decimation of the local farming sector through an overnight ban on chemical fertilizer. He pushed 1.8 million farming families into poverty and an entire nation into a looming threat of hunger. Now that he instructs officials to increase food production is not only a crude joke, but it also betrays the poverty in a different kind; of a principled and forward-looking political leadership in this country.

Second, he has burnt bridges with most of Sri Lanka’s traditional friends, ranging from Japan to the Gulf States. Even China which was once the banker of the Rajapaksa regime views him as a liability in its relations with Sri Lanka, which partly explains Beijing’s reluctance to make a substantial contribution. Americans and the EU are having the last laugh. 

 

Child malnutrition is rising, general hunger is pervasive, hospitals are short of life-saving drugs and doctors and nurses are languishing in fuel queues instead at the hospitals. Schools are closed at a whim, and public transport is at a virtual standstill and functions only when there is fuel

To make a sense of how isolated his regime was, note that the country would run out of all fuel within coming days, with no recourse to import new supplies. After the country spent the fuel quota from the Indian credit line, his government was singularly incapable of tapping into a willing foreign partner for short-term assistance. His regime antagonized the potential Gulf partners through its race-baiting campaign against Muslims. Tokyo had not responded to his request for a US$ 3 billion loan. Understandable because he gave them the middle finger and unceremoniously suspended the Japanese-funded light railway project.

 With a leader both isolated and loathed by the wealthiest of members of the international community, Sri Lanka is unlikely to receive the international goodwill it deserves. That distorts the country’s appeal for international assistance and talks for debt restructuring. 

The president says he does not want to leave as a failed leader. He has failed, verifiably and irrevocably. His continuation is failing the nation.

Where is the political opposition? 

Gotabaya is a liability. Unfortunately, though, a functioning alternative is still elusive. The main opposition, the Samagi Jana Balawegaya (SJB) spends its energy on media conferences and press releases to chide the government. Sajith Premadasa excels at eloquent speeches but shows little interest in assuming responsibility. The JVP is waiting till both main parties are discredited so that it can claim power.  The political opposition - SJB and JVP - offers no model or a programme for an alternative government. 

Both Gotabaya Rajapaksa and Ranil Wickremesinghe exploit this vacuum. It would have helped the SJB, the JVP and the other stakeholders if they presented a shadow government and an action plan to address the immediate economic hardships and medium and long-term economic restructuring. Such a posture would mitigate, to an extent, the current political vacuum, and invoke a degree of public confidence in them. That would also encourage the international community to more forcefully demand a political change as a condition for their assistance.
The vacuum of an alternative political leadership has also taken a toll on the ongoing people’s struggle. Demands for the departure of Gotabaya Rajapaksa have little meaning if there is no practical alternative to succeed him. 
In the coming months, the economic crisis would further deteriorate, before the economy rebound, only after a substantial inflow of assistance from IMF and donor nations. The joint opposition should come forward to assume responsibility; offer a functioning alternative to Gotabaya Rajapaksa’s ruinous regime.

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