FUTA's Proposals for Economic and Political Stability in Sri Lanka

Proposals for Economic and Political Stability in Sri Lanka submitted by the Federation of University Teachers’ Associations (FUTA)

06/12/2022

Summary

The political and economic crisis that the country has been facing for the past few months has intensified. The state’s attempt to suppress dissent has brought much violence and exacerbated the prevailing crisis. Following the events of May 9, when violence was unleashed on peaceful protestors leading to widespread protests across the country, Mr. Mahinda Rajapaksa resigned and President Gotabaya Rajapaksa called on Mr. Wickremesinghe to become the Prime Minister. This flies in the face of all the democratic demands of the multitude of people protesting. The appointment of Mr. Wickremasinghe, an arbitrary, unilaterial and undemocratic action of the President is a grave contravention of the principles undergirding the people’s protests. At this stage, it does little to promote confidence or stability. The economic crisis continues to deepen with lengthening queues for fuel and gas, shortages in medicine and skyrocketing food prices. The people’s struggle for greater accountability in governance and economic management will continue. In this context, FUTA recommends a set of principles and actions that need to be followed as priorities in the task of alleviating misery and rebuilding the country in the long term. 

The Economy 

1. Negotiations with the IMF, including any conditions agreed to must be transparent. Such conditions should not further burden the poor, and should not undermine people’s sovereignty and their access to resources. The process should not create a greater debt trap for the future. 

2. Ensure food security and continued government spending on health and education at least at current levels. 

3. Eliminate corruption patronage and cronyism. Establish independent anti-corruption mechanisms and streamline and professionalize the public sector. 

4. Introduce a robust tax policy for the country, which increases government revenue while unburdening low-income categories from additional indirect taxes; introduce a progressive wealth tax, curtail wastage and reduce expenditure on national defence.

5. Secure worker rights and protect the natural environment. 

6. Ensure the protection of essential services like education and health, two key areas that provide the people with some measure of social cohesion, social mobility and security of life. 

7. Upgrade the Agricultural sector, empower livelihoods, import substitution where possible and enhance the industrial sector for exports.

Politics and Governance

1. The government must acknowledge its loss of legitimacy. A credible interim government should be established. The president should immediately resign. Prime Minister Ranil Wickremasinghe’s working with the support of the discredited SLPP alone is not viable. 

2. Abolish the Executive Presidency and revert to a parliamentary system of government through a 21st Constitutional Amendment.

3. Given that the government has lost legitimacy, formulate a mechanism to enable a people’s council with which the elected officials will be able to consult in policy formulation and implementation.

4. Ensure that majoritarianism and special privileges are replaced by equal citizenship and equal participation of all communities. Ensure that mechanisms are in place to prevent marginalization of communities and individuals at all level on the basis of ethnicity, religion, caste, gender, gender identity, disability and sexual orientation.

5. Do away with the excessive power held by line ministries by strengthening power sharing mechanisms and devolution of power that enable greater participation of people in governance.

6. Ensure freedom of expression and association, including the free functioning of social media.  

FUTA will set up its own mechanisms to monitor and ensure greater accountability on the part of those in authority and support all calls for change and greater democracy in the name of the people and in the name of people’s sovereignty. 

The Proposals

The GOTA GO HOME campaign and the widespread citizen-led protests all over the country against the economic failures of the government have opened up discussion on the vital issues of economy and governance, pressing for socio-political change within the Sri Lankan polity. We too, as members of FUTA, are moved by the intensity of the anger and the uncompromising demand for change in the political order expressed by the long-suffering Sri Lankan public. As part of the protesting community in the country, we join the rest of the people in standing against the arbitrary and undemocratic actions of those in power today, in suppressing protest and dissent and for the role they played in bringing the country to the current economic and political impasse.  

The economic crisis precipitated by the dollar shortage and its knock-on effects will result in difficulties for the people over an extended period.  The crisis therefore requires policy interventions but also community mobilization for collective action and support in the immediate, medium, and long term. As a trade union representing the country’s academic community, FUTA sees the need for a holistic economic and political analysis as well as related interventions that will help put the country back on its feet short term, and on the path toward healing, stability and development in the long term. In this regard, we hope to engage with the political class as well as civil society, including trade unions, community bodies and the people at large, in an urgent and long-term productive collaboration.  

The Economic and Political Impasse

We are extremely concerned by the hardships faced by the people. The numbers of those severely affected are increasing daily and it is likely that the future of a generation may be impacted by the growing crisis and the coming deprivation. A student population affected by two years of Covid are now impacted by a shortages of essential goods. Women, engaged in care work within households are shouldering the greater burden of these shortages. There are reports of pregnant and lactating mothers’ nutritional needs not being met and it is likely that this would have a dire impact on the well-being of children in large numbers. The social impact of such suffering could be divisive, particularly the inciting of ethno-religious tensions, despite the fledgling demands for respecting pluralism emerging from the protests. 

The current economic crisis is the combined outcome of the failure of long-term economic policies and economic mismanagement of successive governments. The current regime’s alleged corruption, their preoccupations with familial and dynastic rule, and their disregard for democratic and participatory governance coupled with their colossal failures in policy and implementation are also to be blamed. Any attempt to pull ourselves out of the crisis therefore, requires that we treat the spheres of politics and economics as connected. Politically, we should hasten to transform a system where the centralization of power enabled corruption at all levels of governance. We should analyse the nature of our governance culture – the non-transparent connections between those in positions of power and those in production and distribution – as well as the fundamentals of our economic policies to arrive at a comprehensive picture of what went wrong. We must thereby bring about a socio-political order based on social justice and equality that is democratic and accountable to the people. Such an order should reject discrimination and marginalization on the bases of ethnicity, religion, gender/sexual identity, social status, disability and similar grounds, and be founded on the principle of socio-economic egalitarianism.  

In this policy document we build on the principles already articulated in the FUTA statement of 19th April 2022 in relation to the upcoming IMF agreement, the 17th IMF agreement contracted by this country in its postcolonial history. These are principles that the political class should adopt towards democratic governance and economic action. Here we detail the ways in which these principles could be activated by initiating a dialogue on these matters with all concerned. 

Economic Concerns

FUTA recognizes that the current foreign exchange crisis is causing severe difficulties for the population and has placed considerable stress on banking sector.  Crippling shortages of petrol, diesel, electricity, and cooking gas are causing suffering to working people and disrupting businesses and industries. Additionally essential goods such as food and medicines are running out, and it is likely that we will soon face severe food shortages. Therefore, addressing the problem of financing, including bridge financing, is the urgent responsibility of the government. However, we urge the government to ensure that any conditions that it accepts from lenders including but not limited to the IMF, be people centric. The difficulties that people are facing should not be further exacerbated through ill-considered austerity measures. 

We recommend the following economic priorities:

The IMF Agreement:

As we enter into a new IMF agreement, with little bargaining power on our side, it is important to have a clear understanding of how it would impact on the wellbeing of the people. Some of the conditions laid out below are fundamental. 

1. IMF loan conditions must be transparent, and the people must be made aware of them. These conditions should not further deepen the economic burden and suffering of economically and socially deprived communities, which may currently include sections of the middle class.  Furthermore, the process should not accumulate more debt creating severe debt traps in the future. 

2. The IMF policies should not in any way undermine people’s sovereignty and their right to their land, occupations, health, education and access to resources in the real sense of the term, and force the government to sell off state assets and natural resources including land. In the case of IMF loans and borrowing from other sources, a transparent performance-auditing system should be made public.

Social Safety Net:

3. In view of the fiscal discipline that is expected along with IMF conditionality, a strong and secure safety net that protects vulnerable groups, including the poor, the near-poor, children and the elderly is essential. Where possible universal social welfare measures, a legacy of our progressive history of human development, should be enhanced and/or created.

4. The existing Samurdhi Programme should be restructured to rectify problems of leakage and under-coverage, especially the latter. Identifying the poor and near poor should be based on the most recent data that provides information on their geographical and sectoral distribution. The updated Samurdhi Programme should not be used as an instrument of patronage.

5. Ensure food security for all. No decision or policy should adversely affect this principle. Agricultural policies that are consistent with this principle should be followed.

6. Protect government spending on the health and education sectors, at least at current levels, in real terms. 

Elimination of Corruption, Patronage and Cronyism:

7. Establish independent anti-corruption mechanisms which should begin by revealing to the public the extent to which corruption has contributed to the economic crisis, and to ensure that wrong doers are prosecuted.

8. Establish a zero-tolerance policy on corruption in any of its forms, at all levels, and ensure that it is implemented.

9. Abolish any form of special government licenses, as they promote patronage and corruption.

10. Streamline and professionalize the public sector, including by increasing accountability and productivity, and by ensuring a culture of personal and institutional integrity.

Taxation and Expenditure:

11. Indirect taxes should not be increased, while the tax base and the rates of direct taxes should be augmented, making transparency and accountability in spending tax income a key requirement. What is required, therefore, is a tax commission that would create a robust tax policy for the country, which increases revenue to the government while unburdening low-income categories from additional indirect taxes.

12. Implementation of a viable PAYE taxation system.

13. Implementation of a progressive wealth tax.

14. Reduction of government expenditure on national defence, and increase expenditure on food security, health, education and other basic needs. General reduction of wasteful and ad hoc expenditure through open and accountable processes.

Securing Worker Rights and Protecting the Natural Environment:

15. Secure and implement labour rights for all categories of workers, both in the formal and informal sectors.

16. Ensure that all workers are entitled to and receive a living wage.

17. Envision and provide pensions and/or universal retirement benefits for all workers.

18. Develop a more holistic understanding of sustainable development, since neoliberal policies, dispossession and extraction in Sri Lanka have accelerated the destruction of the environment, recognizing that while global warming and environmental pollution affects everyone, the poor and vulnerable are at greatest risk.

Upgrade the Agricultural sector towards food and nutrition security, empower livelihoods, import substitution and enhance the industrial sector for exports:

19. Mobilise the agricultural sector to increase production, support home gardening within households, address the food security needs of the country and enhance rural livelihoods.

20. Stop the import of locally available agricultural products, address the fertilizer crisis and enhance support to farmers and fishers. 

21. Promote locally-oriented farming and fisheries, deploy new technology and create access to global markets where possible. Interventions should be based on short and long-term planning and strong mobilising programs.

22. Remove barriers to the industrial sector and establish new export industries particularly in value-added industries using available raw materials, while introducing an appropriate import substitution policy and relevant administrative mechanisms. 

23. Support sectors that can bring in foreign earnings.

Political context and the basic requirements for governance and social cohesion

The success of the GOTA GO HOME protests and the Strike and Hartal actions indicate that people from all walks of life, are united in clamouring for change in governance. The fact that students and youth are spearheading the protests speak to the vibrancy of the movement. As stated above the economic crisis was precipitated by the incompetence and authoritarianism that pervades governance. A Governing class and system disconnected from the people, unresponsive to their needs and distanced from global and local developments are now unable to pay loans and attract sufficient foreign currency to ensure supply of essential goods for the people. In response to the protests, the President enforced a state of emergency and there was violence unleashed on peaceful protestors by the regime on May 9th.  The regime can no longer claim any legitimacy to govern. Therefore, it is of the utmost urgency that an interim governance arrangement is formulated that includes representation from those protesting. The appointment of Mr. Ranil Wickremesinghe as Prime Minister by the President is yet another instance of political sleight of hand against which the people are protesting. It remains undemocratic and may undermine the democratising trajectory of the country, leading to repeated and deeper political crises in the future. 

We recommend the following political steps:

1. The government must acknowledge its loss of legitimacy. A credible interim government should be established. The President should immediately resign. Prime Minister Ranil Wickremasinghe working on the basis of support from the SLPP is not a viable option. 

2. Abolish the Executive Presidency and revert to a parliamentary system of government.

3. Given that the government has lost legitimacy, it is important that a mechanism is formulated to enable a people’s council with which the elected officials will be able to consult in planning, policy formulation and implementation. It must act as a permanent or semi-permanent body that critically interrogates policies and aids and provides feedback to political bodies on economic and political policies and implementation of those policies. Such a process is essential in the immediate term but it must also be considered for the longer term.

4. Introduce economic, social and cultural rights (in particular, the right to food security, equal access to the highest attainable healthcare, holistic education for all, and the right to an adequate standard of living) through the 21st Constitutional Amendment.

5. Ensure freedom of expression and association, including the free functioning of social media.  

6. In formulating the 21st Amendment, bring back strengthened formulations of the positive features of the 19th Constitutional Amendment. The Constitutional Council must be re-established with a majority of citizens over MPs. All independent commissions should be immediately reconstituted.

7. Re-establish the rule of law and an independent judiciary, ensuring redress for past human rights violations and other proven grievances, after due process is followed. The 21st Amendment must also facilitate the independent functioning of the Attorney-General’s Department and the Police.

8. Address core ideological issues, ensuring that majoritarianism and special privileges are replaced by equal citizenship and equal participation of all communities. Ensure that mechanisms are in place to prevent marginalization of communities and individuals at all level on the basis of ethnicity, religion, caste, gender, gender identity, disability and sexual orientation. An open public dialogue which engages with all communities should form the basis of a new national consensus. 

9. Do away with the excessive power held by line ministries by strengthening power sharing mechanisms that enable greater participation of people in governance. This should include devolving powers to the regions, provinces and local government bodies so that minorities, communities on the peripheries and historically marginalized people have a greater say over social, economic and political issues that affect them. 

Conclusion

In taking forward the above plan, we as FUTA will form our own expert committees, and will engage with trade unions, the legal fraternity, the administrative service unions, local government and other bodies working closely with the people to ensure that the academic expertise of the FUTA membership is mobilized through an inclusive, consultative and community friendly process. FUTA will mobilise its network of sister unions across the country to enable close engagement with communities at the regional level.