First published : Aug 9, 2015
On borrowed time
Sinhala leaders of the Srilankan state continue to mis diagnose what ails the island. Two speeches of some significance were made a while ago. One by former president Chandrika Kumaratunga and another by Foreign minister Mangala Samaraweera.
The former president who waged a “war for peace” made her speech curiously titled “ Winning the war is not establishing peace”. Unfortunately, she does not seem to have any such epiphany when it comes to the root cause of the conflict.
The foreign minister was much more forthcoming about the shortcomings. He had more specific things to say.
Yet both of them continue to dwell on the same outdated concepts. Thematically, both frame the conflict as “inequalities” through the dynamics of “majority” Vs “minority”.
If the “third republican constitution” is going to be reflective of this mindset, then the ethnic conflict is sure to continue. Tamils can be sure of that despite the hopeful writings and tweetings of the current Sinhala cosmopolitan liberals. As seen with the 19A, the final outcome will only be less than the initial attempts. The starting baseline for the new constitution is already set very low. Incrementalism is the way forward, we will be told.
According to Mr.Samaraweera, the new constitution “will celebrate Sri Lanka’s ethnic, religious and cultural diversity and pluralism and meet the aspirations of all the peoples of Sri Lanka.”
For the Tamils, mere celebration of diversity means nothing. Good intentions alone don't qualify for celebrations. What matters are meaningful results. Current administration is still unable to release the occupied lands, release Tamil political prisoners, or demilitarize.
Any political reform must first explicitly recognize the Tamil nation and seek its consent to be in a union with the other nations in the island.
Today Tamils are not told in specific terms what to expect from a political reform. It is very unlikely that any Sinhala political leader will ever go beyond a unitary state.
The U.S. and India no longer ( post regime change) have any incentives to support a political reform for the benefit of the Tamils.
Then, why are Sinhala leaders even attempting a reform ? or even talking about it ?
In the short term, the Sri Lankan economy is running, literally and figuratively, on borrowed time. Austerity measures need to be couched in a reform agenda.
In the long term, Sri Lankan state structure is far out of step with the global and regional trends. Srilanka needs to pretend that it is trying to catch up ( to be discussed later )
On borrowed Money
Sri Lanka is one of the most indebted country in South Asia in more ways than one. It is in so much debt that it needs to borrow money just to pay the interest on previously borrowed money. Most of the post war growth was/is financed by debt.
Between 2006 to 2012, The external debt grow twice as fast as the export revenue (1).
What is more critical was the type of liability Sri Lanka was incurring since 2005. It was increasingly non- concessional (1)
China played a convenient role in propping up the farce growth. It did it through non-concessional loans, given at higher than the market rate. (2)
The external debt servicing continued to increase since 2011 and now at about 25% level. (3)
Former President Chandrika Kumaratunga recently highlighted the dire economic situation, warning of bankruptcy. (4)
The west was working on toppling the Rajapakse regime. If the elections gambit hadn’t worked, it would have been through the OISL process and the sanctions that were to follow.
When Ranil came to the fore, post elections, he was desperate for aid. As evident in his Japan times op ed (5).
“Sadly, the help that we have received so far is too little to enable my government to be as effective as it can and should be in rebuilding our country and resetting our strategic position in the world.”
Why didn't the aid pour in after the regime change? A regime change that the West and India supported.
Because that is the new leverage West and India now hold over Sri Lanka.
The currency deal by India during PM Modi’s visit is an example of limited assistance. Both the US and India conferred legitimacy on the new government and helped ease the UN pressure but still withheld the monetary assistance. That economic assistance will come at a cost after the general election.
Srilankans need to prepare themselves for the austerity measures the Ranil administration is going to bring to get the debt crisis under control. That will likely to take precedence over any political reform. If JVP also wins as much as the TNA in the general election, their leverage on a UNP lead administration will be much higher. Unlike with the TNA, Ranil will have a real battle on his hands with the JVP on any economic reform agenda. JVP had sounded the alarm multiple times before and has kept all of its options open. All of TNA’s bravado is sure to disappear post election because it has spent its goodwill too early and too soon.
My write up, in 2013, about the China card is relevant here.
“As long as Sri Lanka remains a market friendly country and is willing to pretend it is serious about reconciliation, the structural issues blocking a genuine peace will continued to be ignored by the powers.”
“China helping Sri Lanka to develop infrastructure also indirectly serves the US and India. They do not have to spend money developing Sri Lanka and they can reap the benefits eventually. The more Sri Lanka develops, the more dependent it will become on the US and India.”
“While China continues to loan money for and help with infrastructure projects, America has integrated its purchasing power as an essential tool of its smart power. America and the UK also have leverage over the IMF and World Bank lending to Sri Lanka. If Sri Lanka continues as a market friendly country, these countries can continue to maintain their economic levers.”
As the west leans on Ranil for economic reform, he will need to please JVP and other Sinhala parties more than he will need to please TNA. He is not going to risk the real, economic reform wanted by the powers over a pretend, political reform. This is why getting an explicit promise from the West, India, and Ranil about specific political reform was/is a must for the Tamil side. It was no time for an unconditional support or for a heart to heart agreement.
In addition to the interest Tamils are paying for the debt incurred by the Sinhala governments ( ironically on money borrowed to kill them indiscriminately ), Tamils will now have pay for the folly of tolerating Tamil leaders who run with the hare and hunt with the hounds. Their promises are not something that the Tamils can take to the bank.
