"The materialist world outlook not only opens a wide window on the whole universe, but it also strengthens the will. It is also the only thing that makes contemporary man a man"- Leon Trotsky [Attention to Theory].
Tamil Nationalism, a dead end to the Tamil working class in Sri Lanka
Three and half decades after the bloody anti-Tamil pogrom in Sri Lanka, in July 1983, and ensuring war in the North and East that caused colossal losses of lives and wealth to the working people, both in the North and South of the country, and close to a decade since the end of civil war in 2009, the Tamil bourgeoisie is yet more emphatically fixing the Tamil working class in the most damaging Tamil Nationalist defensive strategy against the Sinhalese working class.
Cankili Thoppu Archway
While the Tamil bourgeoisie has been all throughout endeavouring to strike a deal with the Sinhalese liberal bourgeoisie in the South, it was always confronted with even harsher offensive by Sinhalese bourgeois Nationalists. In an attempt to carve up an autonomous pro-imperialist capitalist state in the North and East, it was always necessary for the Tamil bourgeoise to rationalize and assert a Tamil Homeland in the North and East, which task was assigned to Tamil nationalist historians, in a cold war with Sinhala chauvinist historiography and archaeology. This debate remains unresolved, as it should, propounding competing historical narratives, while the Sinhalese nationalists denying to recognize the North and East as the lands where Tamil civilization prevailed for centuries.
Against each anti-Tamil offensive by the capitalist ruling class in the South, using parliamentary, military and police state measures, the bourgeoise Tamil nationalists place the blame on the Sinhalese working class and the poor, as if they were responsible for the discriminatory and oppressive treatment by the Sinhalese Majority government of the South. In the backdrop of the government of the South retaining the lands of the Tamils and fortifying its military presence in the North and East, even nine years after the end of war, some Tamil nationalist academics and politicians even revived blaming Sinhalese of being an internal colonizer, portraying the Sinhalese working masses as an oppressive colonizer of Tamil masses. The picture painted is false to the core.
This blame-game flows from the very interests of the Tamil elite, which is devoted to formulate narratives in order to dilute the class question of the entire national question. When class differences are sidelined and diluted, the nationalist issue is retained in the interests of the Tamil elite, at the expense of the Tamil working class.
The politics of Tamil nationalists is so bankrupt that it fails to unravel the truth of the real enemy of the Tamil working class and the poor, which is none other than the Tamil and Sinhalese ruling class, borth in the North and the South. In this background, the more the identity politics of Tamil Nationalism is strengthened, the more the Sinhalese Nationalism is strengthened in the South by the Sinhalese ruling elite, in order to further entrench the nationalist dividing lines that separate Tamil and Sinhalese working classes and the poor on communal lines.
This is a vicious cycle. It affects the whole working class in the island, as it disarm them of a political programme of a united independant fight against the capitalist ruling elite of both the communities, that serve the demands of neoliberal market economy.
Naloor Manthiri manai in Jaffna
Without a complete breakaway from this bankrupt politics of Tamil Nationalism, the Tamil working class and the poor will have no imancipation, no lasting solution to any of the day-to-day problems of their lives. History has taught the most important lesson that the only programme that saves the Tamil working class against the oppression by the Southern government is only a fight against these ruling classes in union with the Sinhalese working class of the South, in order to establish a Socialist Republic of Sri Lanka and Eelam on the internationalist perspective of a Socialist Federation of South Asia. This is a fight that was ever resisted and hated by the Tamil elite and the Liberation Tigers of Tamil Eelam(LTTE), who never ever appealed to the Sinhalese masses.
Nationalist politics serves the ruling elite, not the working class and the oppressed peoples. Images by SWJ.
Neoliberal Constitutionalism and the Danger of Authoritarianism in the Third World
By Sanjaya Wilson Jayasekera, LL.B, Attorney-at-Law.
Following is the speech delivered at the Third World Approaches to International Law (TWAIL) Conference held at National University of Singapore on July 21,2018. The panel was moderated by Vasuki Nesiah, Associate Professor, New York University, Gallatin School (USA).
Good Morning! Professor Vasuki, all my colleagues,
While thanking the National University of Singapore for organizing this event, in my presentation today, I will place the center of my arguments, in the topic I am discussing, on the impact of the financial and economic crisis in 2008. Let me also mention that my topic here flows as a specific area of study of my Masters thesis. The short video, which will accompany my speech, though muted, would remind you of the events that I would be enumerating during the presentation. I have prepared a brief note of my paper and, for fear of losing to mention the significant points, I will be reading-out from my note.
It is almost a decade since the collapse of subprime mortgage market and the big enterprises of financial capital, the Fannie Mae, Freddie Mac and American International Group, and investment Bankers like Lehman Brothers and Goldman Sachs in the United States, which initiated the most damaging financial and economic crisis since the Great Depression of 1931. This crisis, termed as the Great Recession, subsequently led to irrevocable economic calamities all around the world.
The States resorted to unpopular austerity measures in order to bail out the economies and the financial capital. This turn of the governments to respond to economic crisis caused major reformations in the constitutional setup and all the organs of the States were seemingly compliant to facilitate the reforms.
Indebted to the core, the States of the Third World heavily depend on the bailout loans from the international financiers, prominently the International Monetary Fund(IMF) and the World Bank, dispersed on drastic conditionalities of reduction of budget deficits and repayment of debts and for implementing policy reforms of the World Trade Organization(WTO). Intending to reduce budget deficit and government debt, States around the world implemented austerity measures, which included a range of public welfare and subsidy cuts, cuts of wages, unemployment benefits and pensions and, increase of taxes on consumer products and services, often referred to as fiscal austerity. Austerity also includes deregulation, commercialization and privatization of State-owned enterprises and extensive labour market liberalization.
Last year, for example, the Sri Lankan government made overhaul amendments to its tax law and passed the Inland Revenue Act No. 24 of 2017, targeting a greater spectrum of the working class, in strict compliance with the recommendations of the IMF, which felicitated and encouraged the government in releasing the fifth tranche of the bail out loan under the Extended Fund Facility negotiated in 2016.
Many research and reports available on this phenomenon have shown that such austerity measures have largely undermined economic and social rights[1], civil liberties and freedoms of the people of the third world, as well as in major capitalist market States. The United Nations Independent Expert on the effects of foreign debt and other related international financial obligations of States on the full enjoyment of all human rights, particularly economic, social and cultural rights, in his January 2016 report reveals that “Austerity measures adopted in response to financial crises have pushed many individuals below minimum income levels."[2]
These drastic measures have been met with militant struggles of the working class, youth and the poor, which the States have been suppressing by way of police and military apparatus and the judicial systems, all at the expense of the international human rights standards, democratic values and rule of law. At the same time, the States of the Third World are victim of inter imperialist rivalries, while the United States is openly preparing for the next world war with China and Russia, in order to resolve its own economic crisis by destruction of competitive markets.
The age of austerity is also the grounds for protectionism and for the rise of all forms of reactionary tendencies such as populism and racism, which the States are prone to deal with by force. Outside the democratic discourse, geo-strategic decisions are made and laws are passed through national legislatures to suit the imperialist demands and the dictates of the International lending institutions. The third world States increasingly seem to lose their democratic credentials. The danger of authoritarianism[3] haunts the Third World.
The right to peaceful assembly and association, the freedom of speech , media freedom, freedom of information , right to individual liberty, right to non-discrimination are significant rights badly affected by the counter measures implemented by the States under austerity conditions. The minority and vulnerable groups are discriminated against forcing them to face the risk of social marginalization and exclusion[4]. Access to justice is severely affected due to non-affordability and lack of State legal aid.
In India, last year, 31 workers of the Maruti-Suzuki company were victimized by the terror sponsored by the State-Company partnership, for the simple reason that they demanded job security, higher wages and trade union rights, in the backdrop of severe austerity measures and IMF sanctioned free-market policies implemented by the Indian government. Found guilty on framed-up charges of culpable homicide, 13 workers were sentenced to life imprisonment. Last May, Indian police shot and killed a dozen demonstrators protesting against a copper smelter in Tuticorin, in Tamil Nadu, that was emitting hazardous polluters for years.
Including instances from Sri Lanka, Myanmar, Philippines, Chile, Argentina and Venezuela, hundreds more examples can be drawn from many countries of the third world, most considered belonging to modern democracies by 2008, to show their backsliding to police-state regimes. Many reports abound in this regard[5]. Parallel to many other States, Indian government, closely working with social media giants to restrict alternative thinking and expression, amended its Information Technology Act in 2011, which requires that Internet café owners photograph their customers, keep copies of client IDs and browsing histories for one year, and forward this data each month to the government. In Sri Lanka, where hardly a day passes by without even a single mass agitation against government's measures of budget-deficit reduction, the government is now planing to implement death penalty.
These anti-democratic measures are legalized and legitimized by the States on the basis of national security and economic stability. This is the very logic of the theory of neoliberal market economy propounded by Friedrich Von Hayek, who wrote that a State's legal system should guarantee "a constitutional framework that is capable of holding the power of the State in check, whilst respecting the general rules that underpin the market order." In other words, rule of law is to ensure that power of the State is held in check, so that the State does not interfere with the rules of the market, but, on the contrary, upholds them.
According to D.M.Kotz, Neoliberalism, as the new phase of capitalist economy after late 1970s, is often described by reference to a trilogy of policies known as liberalization, privatization, and stabilization[6]. This necessitated that the post-World War II welfare-State whither away. Austerity, therefore, inevitably becomes an enhanced demand of neoliberalism at times of financial and economic crises. Where budgets are constrained, the immediate casualty is social welfare and the living standards of the people. The new Social Structure of Accumulation(SSA) of neoliberal capitalism is constitutionalized internationally through global trade, investment and corporation agreements and nationally through domestic legislations. This new constitutionalism, which is the overarching economic and politico-legal ideology of the basic structure of the governance of the Third World in the age of austerity, I propose, could be best termed as neoliberal constitutionalism.
What can be observed therefore is that Capitalist crisis, austerity, poverty, inequality, social polarization and authoritarianism go hand-in-hand. A reversal of this phenomenon affecting millions in the third world, as well as in the centres of global capitalist economy, requires an internationalist response, a reversal of the class-biased[7] international legal system and the very Social Structure of Accumulation itself.
1. S.Kidd, Pro-poor or anti-poor? The World Bank and IMF’s approach to social protection, April 2018, http://www.brettonwoodsproject.org/2018/03/pro-poor-anti-poor-world-bank-imfs-approach-social-protection/ (accessed 16.07.2018)
2. Report to the 31st Session of the United Nations Human Rights Council(UNHRC).
3. Lynne Henderson describes authoritarianism as political structures and practices that directly threaten human freedom and dignity that lies in opposition to the liberal values of tolerance of ambiguity and difference, insists on obedience to rules, insists on conformity and uses coercion and punishment to ensure that obedience. L.Henderson,"Authoritarianism and the Rule of Law”,Indiana Law Journal,Vol.66,Issue.2,1991,pp379,456,p382
4. L.Ginsborg,"The impact of the economic crisis on human rights in Europe and the accountability of international institutions", Global Campus Human Rights Journal,Vol.1,2017,97-117, P104. A detailed analysis on the austerity's impact on human rights and about anti-Austerity protests in the Eurozone countries is provided in the following Report: "The impact of the crisis on fundamental rights across Member States of the EU- Comparative analysis", European Parliament, Brussels(February 2015), http://www.europarl.europa.eu/studies (accessed 12.10.2017), especially Chapters 9 & 10.
5. A lost decade for human rights? Assessing austerity and its alternatives 10 years on from the financial crisis, http://www.brettonwoodsproject.org/2018/04/lost-decade-human-rights-assessing-austerity-alternatives-10-years-financial-crisis/ (accessed on 16.07.2018); M.J.Abramowitz, Democracy in Crisis: Freedom in the World- 2018, https://freedomhouse.org/report/freedom-world/freedom-world-2018 ( accessed on 16.07.2018)
6. D.M.Kotz,The Rise and Fall of Neoliberal Capitalism (Harvard University Press,Cambridge, 2015)
International Monetary Fund(IMF) early this month reviewed Sri Lanka government's austerity programme and approved the disbursement of US $ 252 million as the fifth tranche of its three year bail-out loan,
demanding the government further squeeze the living conditions of the working class and the poor.
The IMF staff review report was released on June 20. The total amount released with this instalment would be US$ 1,014 million.
The three year Extended Fund Facility(EFF) was approved by IMF in June 2016 to enable Sri Lanka to resolve the island nation's balance of payment crises on the strict conditions that the US backed government of Prime Minister Ranil Wickremasinghe and President Maithripla Sirisena implements economic reforms aimed at fiscal tightening, commercialization and restructuring state owned enterprises(SOEs) and privatization, and reforming its revenue laws. These measures are aimed at furthering cuts in social welfare for workers and the poor and increase of taxes.
IMF press release on June 1, cites its Acting Chair and Deputy Managing Director, Mitsuhiro Furusawa appreciating the Sri Lanka government's robust implementation of fiscal and monetary consolidation: "Sri Lanka has made important progress under its Fund-supported program. The authorities’ efforts to improve the policy mix through fiscal consolidation and prudent monetary policy, and landmark structural reforms are supporting the economic recovery."
The government has been heeding to the IMF demands of austerity by raising prices of essential items of food and gas and fuel price. Petrol and diesel prices have been increased by 17 percent and 15 percent, to 137 rupees per litre ($US0.87) and 109 rupees per litre respectively. The price of a 12-litre tank of cooking gas was hiked by 17 percent to 1,676 rupees per litre. These have led to repelling effects.
Sri Lanka estate worker family
The price of kerosene was lifted by 130 percent to Rs.101 per litre. Later, in view of the island-wide agitation by the fishermen, the government was forced to reduce kerosene price just by Rs.30. However, fishermen demand the previous price, which is Rs.26 lower than the adjusted price.
On April 20, in terms of its demands under the third review report published in January, IMF mission chief for Sri Lanka Manuela Goretti stated that the IMF loan instalment was conditional upon the government implementing an automatic fuel pricing mechanism. This will adjust fuel prices every two months, according to the world crude oil prices and the rupee exchange rate.
Furusawa complimented the recent approval of an automatic fuel pricing formula as "a major achievement towards reducing fiscal risks from state-owned enterprises (SOEs)". He has also insisted that the government implement an automatic pricing formula for electricity and a "restructuring plan for Sri Lankan Airlines, as well as further strengthening SOE governance."
The government is forced to implement an automatic pricing mechanism also for electricity by September this year. The staff report provides that this pricing mechanism "ensures retail prices above cost-recovery levels and a financial position of Ceylon Electricity Board capable of covering debt service." Consequently, sharp increase in electricity bills will affect millions poor.
Furusawa stated, "Further progress with revenue-based fiscal consolidation, supported by the new Inland Revenue Act, is needed", calling the government for "fostering gradual trade liberalization, and the investment climate".
The IMF staff report demands that the government and the Central Bank push ahead with the austerity agenda for the coming years detailed in “Vision 2025” launched by the government last September, by "further advancing fiscal consolidation through stronger fiscal rules and SOE governance; modernizing monetary and exchange rate frameworks " and trade liberalization.
The government last year passed the new revenue law targeting a broad base of low income earners to its web of taxes. Under this law every person whose monthly income is Rs.50,000 or above is liable to pay tax. A greater number of private sector workers and state employees therefore fall into this category.
The Inland Revenue Department (IRD) has opened 49,000 new tax files in April, Finance and Mass Media Minister Mangala Samaraweera boasted in May. The government has set a target of 250,000 new tax files during the year. “The government’s tax revenue has increased to 12.6 percent of GDP from 10.3 percent; the government’s revenue has increased to 13.8 percent of GDP from 12.6 percent while the government managed to retain expenditure at 19.4 percent of GDP and 5 percent of government investments, ” Samaraweera declared.
The IMF-dictated austerity measures are aimed at slashing the fiscal deficit to 3.5 percent of gross domestic product(GDP) by 2020. The tax revenue is largely spent for debt and interest payments. As Samaraweera mentioned, debt to GDP ratio has fallen to 77.6 percent in 2017 from 78.8 in 2016, while the government will have to pay off Rs 11.4 trillion worth of loans.
According to the Central Bank, the debt service payment for this year is $US2.9 billion, rising to $4.2 billion in 2019 and continuing at $3.6 billion for each year from 2020 to 2022. Finance Ministry last month revealed that the heavily cash-strapped government of Sri Lanka accepted an eight-year syndicated loan of $ 1 billion from China Development Bank(CDB) to repay loans maturing this year.
Under IMF's third review, Sri Lanka is committed to fiscal consolidation in 2019 through further revenue mobilization, requiring to acquire primary surplus of 2 percent of GDP in the coming year.
The ensuing austerity measures are attacking jobs, wages, welfare programmes and living conditions of the masses, while slowing down the economy.
Last year Sri Lanka’s economic growth rate fell to 3.1 percent, the worst in 16 years, and down from 4.4 percent in 2016.
The rupee depreciated to its lowest of 161 rupees per US dollar in the third week of June, marking a 4.2% decline during the year up to June 22. This places upward pressure on the price of imports, further driving down the living conditions of the working people.
IMF has been demanding that the currency be subject to market forces and that the Central Bank’s foreign currency reserves not be used to prop it up.
Last week, Goretti commended Central Bank's "Road Map(monetary and financial sector policies for 2018 and beyond)" for flexible inflation targeting and stressed its recommendation that "exchange rate flexibility needs to remain as the first line of defence in case of volatile capital outflows."
According to the Central Bank, in the week ending on June 6, investors sold government securities worth a net Rs.2.8 billion, bringing the outflow of foreign reserves so far this year to 19.9 billion rupees, further pressing the rupee down.
Amid serious political crisis within the Sirisena-Wickremasinghe unity government, it is also faced with a wave of strike actions by workers including in university, health, railways, airports, postal, petroleum, telecommunication and power and plantations with wage demands and against commercialization and privatization of SOEs. Students have come to the streets against education commercialization, privatization and militarization, while farmers fight for subsidies.
Other than for some limited wage increase and cosmetic changes to subsidies to deflect the anger among workers and poor, since 2015, real wages have been freezing, World Socialist Web Site(wsws) reported early this year. According to a Central Bank report in last November, public sector real wages eroded 6.9 percent, while in private sector the decline was 5.6 percent during the first seven months of 2017.
Anti-austerity protest in Dublin in 2012
Furusawa's claimed that "the impact of the reforms on the vulnerable can be mitigated by ongoing efforts to strengthen social safety nets." This is a lie to the core. Sri Lanka government like its counterparts in Europe -Greece, Spain, Italy and Ireland - is unleashing its counter-revolutionary measures to rewind all "social safety nets" to place the burden of economic recovery on the working class and the poor.
The Sirisena-Wickremasinghe government of Sri Lanka is rushing to push through a law that will establish a special criminal courts system to function outside the regular court system in order to target political opponents. The government whip minister Gayantha Karunathilaka presented the bill, as an amendment to the Judicature Act, to the Parliament on March 05.
The system of Courts called Permanent High Courts at Bar, branded by the ruling United National Party chiefs as Anti-Corruption High Courts will have powers to hear the cases selectively filed in the form of direct indictment by the Attorney General and the Director General for the Prevention of Bribary and Corruption(DGPBC). The judges are nominated by the Judicial Service Commission and the Minister can decide the number and place of the Courts. Under the normal procedure it is the Chief Justice who can appoint a trial-at-bar to hear gruesome cases of murder and rape, while the proposed law will institute permanent trial-at-bar courts and vest the power of initiating cases on the executive and administrative authorities.
The scheduled offences triable by these Courts include almost all financial and public property related offences including bribary and corruption and money laundering. The courts must hear the cases on day-to-day basis and conclude expeditiously.
The bill as a whole is unconstitutional and anti-democratic. The sole discretion of instituting action in these Courts against arbitrarily selected suspects is placed on the Attorney General and the DGPBC without any oversight either by way of a magisterial inquiry or by the Commission to Investigate Bribery or Corruption respectively, contrary to the regular procedure. It usurps the right of an accused for a fair trial and impinges upon independence of the judiciary.
The bill is exemplary of the practice of successive governments of Sri Lanka notoriously exploiting its courts and the legal system to suppress working class struggles and intimidate political opponents.
Backed by United States to change the regime of former president Mahinda Rajapakshe in order to distance the island from the influence of China to suit US geo-strategic demands within the region, the Sirisena-Wickremasinghe government was installed in January 2015, claiming to fight against corruption and establish good governance. Since then, the government has been targeting Rajapakshes and members of his Joint Opposition for various allegations of corruption, though this campaign subsided in the backdrop of the revelations of of the bond scam directly implicating chiefs of the ruling United National Party(UNP).
In August last year, in response to several ministers blaming government during Parliament sessions for failing to take actions against the frauds and corruption of the Rajapakshe government, Ministers Rajitha Senarathna, Patali Champika Ranawaka, Mangala Samaraweera and Sarath Fonseka called to setup a separate court to hear the cases of corruption and frauds during the last government. The ministers were aware of the rapid growth of public discontent about the government which could keep to none of the election promises, while Rajapakshe faction was to benefit from the aggravating circumstances. The revival of the anti-corruption campaign was to divert the public dissatisfaction against the government.
President Sirisena hypocritically blamed, also in August last year, that his government has "failed to put an end to corruption and waste". In January, after the report on the Central Bank bond scam was released and addressing a local government election rally, he declared he would ensure that the corrupt politicians from whatever party would be sent to prison and then to hell before he quit office. He tweeted "my term ends the day corrupt politicians, murderers and thieves are brought to justice.”
Malik Smarawickrama, UNP Chairman and Development Strategies and International Trade Minister told media in January, " the UNP is putting an end to the days of rampant corruption under the previous regime that robbed people of their future" and that it is " strengthening [our] courts and forcing through reforms that will enable us to properly prosecute those under the previous government that stand guilty of corruption".
The bill was brought under severe circumstances of economic instability, growing class tensions and massive financial scandals. Between 2019 and 2022 the government has to pay US $ 3.6 billion annually as debt-repayments. The cash-strapped government has been compelled to implement more austerity measures dictated by the International Monetary Fund (IMF) in order to receive financial assistance and face militant struggles against budget cuts, tax-hikes and for pay increases by the working class, youth and the rural poor.
The coalition went to further political crisis in the aftermath of the local government elections in early February, which exposed widespread opposition to the ruling parties. The newly-formed Sri Lanka Podujana Peramuna (SLPP), led by Rajapakse, could win control of the majority of local councils, on the basis of widespread public dissatisfaction over government's austerity measures and pro-imperialist policies. Amidst the crisis of the coalition after the election results, the US and Indian government stepped into "advise" that the ruling parties continued the coalition, which led to a sham cabinet reshuffle.
Seven years after the lifting of emergency rule in Sri Lanka, in early March, Sirisena declared State of Emergency on the backdrop of the anti-Muslim violence carried out by a Sinhala-Buddhist racist mob in the central Kandy district, fomented by the Sri Lankan ruling class to divert the growing working-class opposition to its austerity program. The government capitalized the racist provocations to ban social media for a week. Last week, Wickremasinghe unveiled the government's plan to introduce laws to regulate freedom of speech over the internet.
Since January, the Joint Opposition led by Rajapakshe was gathering support for a no-confidence motion against Wickremasinghe, on the basis of his alleged involvement in the bond scam, which was handed over to the speaker of the parliament last week(21st).
Countering the fragility of the ruling government requires that its political opponents are suppressed at any cost. While Rajapakshe and his associates will be prime target in view of the general election to come, these new laws will be employed against any political faction to compel continued support for the coalition.
Several members of the Joint Opposition proceeded to the Supreme Courts challenging the bill. The Rajapakshe and his faction has no concern whatsoever of the democratic rights and living standards of the broad masses. Instead, they are worried about the growing threats against their survival and deprivation of their privileges. Once coming into power, they will also use these laws to suppress any political opposition in turn.
The anti-corruption crusade is the slogan of many oppressive regimes all over the world, including those of Cyril Ramaphosa of South Africa, Xi Jingping of China to Rodrigo Duterte of Phillipine. They exploit rampant corruption, which is endemic in the capitalist nation state system, to sideline political opposition and to divert working class fighting against social counter- revolution, leading to anti-democratic and authoritarian rule.
IMF reviews Sri Lanka's austerity measures amidst government's claim of economic stability
Student protest against education privatization. Jan 2018
Early January, the International Monetary Fund(IMF) published its third review (staff report) of the three year Extended Arrangement under the Extended Fund Facility(EFF), which sets out its austerity demands upon which it released US$ 251.4, the fourth tranche of the bailout money to Sri Lanka in last December.
The EFF was approved by IMF in June 2016 to enable Sri Lanka to resolve the island nation's balance of payment crises on the strict conditions that the US backed government of Prime Minister Ranil Wickremasinghe and President Sirisena implements economic reforms aimed at fiscal tightening, restructuring state owned enterprises(SOEs), privatization and reforming its revenue laws.
"A return to fiscal consolidation, targeting a reduction in the overall fiscal deficit to 3.5 percent of Gross Domestic Product(GDP) by 2020, is the linchpin of the reform programme", and "Rebuilding tax revenues through a comprehensive reform of both tax policy and administration will be key in this regard, supplemented by steps toward more effective control over expenditures and putting state enterprise operations on a more commercial footing", the IMF June 2016 press release said.
The conditionalities imposed on Sri Lanka largely resembled those imposed on Greece and Spain by the Troika, which include IMF, Europen Commission and European Central Bank, under the European Stability Mechanism(ESM).
The third review reveals that the government's economic reforms have placed fiscal consolidation, revenue mobilization, monetary policy management and reserves accumulation broadly on track. The government's 2016 VAT law amendments increased VAT rates and narrowed exemptions. The lender insists on implementation of the program’s landmark reform, the new Inland Revenue Act, which was legislated in October 2017, by April 2018. "Consistent with the objectives of the EFF-supported program, the authorities announced a new far reaching economic plan titled Vision 2025 in September 2017," the review says.
Government passed the Budget 2018 in last December strictly in line with these demands of
IMF, which the report stated targeted a primary surplus of 1 percent of GDP and fiscal consolidation towards the objective of reducing the overall fiscal deficit to 3.5 percent of GDP by 2020. "Vision 2025: A Country Enriched" is the government's austerity programme aimed at achieving these demands during the next eight years.
Early this month, presenting the Road Map for 2018, the monetary and financial sector policies for 2018 and beyond, Central Bank Governor, Indrajit Coomarsawamy, exposed government's devout adherence to IMF demands. He stated, "the government is also committed to a revenue based fiscal consolidation programme, which intends to bring down budget deficits and debt levels progressively."
The island is deep-trodden in an escalating debt crisis. The total debt repayment for the next three years would be 7,000 billion rupees ($45 billion). Fiscal consolidation requires government to reduce the budget deficit to 4.5 percent in 2018, which stood at 5.4 percent last year. The government is bound to honour IMF's neoliberal policies in order to meet these debt repayment goals and reduce budget deficit.
The review was released while the government and the Central Bank desperately claimed of reaching economic stability by the end of 2017, in view of the Local Government elections in next month. In his new year message to the people at the dawn of the year, Wickremasinghe said "amidst great challenges, we were able to steer forward in restoring economic stability and a process of sustainable development."
In his speech presenting the Road Map, Coomarsawamy echoed Wickremasinghe and stated, "macroeconomic stability is being restored and our economy is trending in the right direction," which he had said, in end of December, has won the investor confidence.
Yet, even the official indicators do not hide the gloomy picture. Country's GDP growth stood just at 3.3 percent in the third quarter of 2017. In spite of country's exports expanding by 8.2 percent in the first nine months of year 2017, imports increased by 9.7 percent expanding the trade deficit to US$ 6.8 billion, an increase of US$ 0.7 billion from year 2016. Foreign reserves of a meagre US$ 7.3 billion comprises mainly of borrowed monies and bond sales. The government will incur large amortization payments in 2018, and will be burdened with repayments on its international sovereign bonds starting in 2019. Gross financing needs (amortization payments plus overall deficit) are projected to reach 20 percent of GDP in 2018, IMF staff report details.
In spite of government's claims of stability, the review states, "Sri Lanka remains vulnerable to shocks given its high level of public debt, large financing needs, and weak external position." Therefore, the lender recommends that, "fiscal consolidation should continue, supported by effective tax administration and spending controls." In respect of monetary policy, it advocates the central bank maintain "a tightening bias to contain inflation and credit growth pressures, while continuing to accumulate reserves accompanied by greater exchange rate flexibility." Reforms in SOEs, "especially in the areas of energy pricing and airline restructuring, should proceed without further delay".
In fact, the claims of so called "stability" is nothing about any gains for the working people and the poor, but an indication of the ruling establishment's sighs of relief in implementing austerity measures at the expense of the working class and the poor, and satisfying the demands of foreign investment and of IMF to receive balance bailout funds.
The Institute of Policy Studies, a think-tank based in Colombo, consoled the ruling elite and top businesses in its September last year report stating, "with the gains made in fiscal consolidation so far under the IMF's watchful eye, achieving and retaining macroeconomic stability appears more probable."
What the working class and the poor in turn have got is welfare cuts, increased taxes and consumer price hikes, unemployment, reduction of wages, privatization, state repression of militant strikes against these measures and subjection to police state apparatus.
Inflation in the country stood at 7.1 percent in December while food inflation rose to 14.4 percent. Youth unemployment stands at 18.30 percent.
In October last year, the government deployed police and brutally attacked workers who protested against the long term lease of down South, Hambantota Port to a Chinese company. 435 workers lost jobs subsequent to the deal. President Sirisena declared fuel distribution an essential service in July last year and declared same on railways in December to counter and force break worker strikes. Last week, the government used police anti-riot squad and attacked protesting Electricity Board workers. This is how the Wickremasinghe-Sirisena government met the "great challenges".
Sri Lanka Government implements Vision 2025, the austerity programme for the next eight years.
Sri Lanka government is devoutly implementing "Vision 2025: A Country Enriched", the government's economic and austerity programme for the next eight years, lunched by President Maithripala Sirisena and Prime Minister Ranil Wickremasinghe, in early last September.
Presenting the monetary and financial sector policies for 2018 and beyond, Sri Lanka Central Bank Governor, Indrajith Coomaraswamy on Wednesday declared the Bank's proposed moves to keep up with government's "Vision 2025", which he said "unveils the future policy direction of the country".
End of December last year, while disclosing the last monetary policy review for the year 2017 he also endeavoured to show that the country's economic stability is reached and would remain so, given the current fiscal consolidation is continued. Early December, Coomaraswamy told the Financial Sector Investment Conference that the Bank is confident in being able to handle the sovereign debt repayments in next two years, "provided the fiscal consolidation measures stays on track".
The Government passed its Budget for 2018 in early December, which is primarily grounded on the policies of Vision 2025. This so called economic vision to "make Sri Lanka a rich country by 2025" is the programme recommended by the World Bank aimed at fiscal consolidation, opening Sri Lanka's resources and labour for international capital and streamlining privatization.
The whole claim of a vision for a "country enriched" is falsehood. In the backdrop of staggering social polarization, poverty and unemployment which have exacerbated after 2008 economic and financial crisis that hit the United States and has had spiralling effects all over the world almost over a decade, this implies the building of a country for the super rich. The budget for 2018 ensures this, in that the indirect taxes paid chiefly by the working people will constitute a 74 percent of the government’s total tax income, while direct taxes paid by the rich will fall to just 17 percent.
Aimed at furthering fiscal consolidation in order to reduce debt-to-GDP ratio by 70%, which currently stands at 79.30% of GDP, the agenda is also a consolidation of the neoliberal policy demands of International Monetary Fund(IMF). Wickremasinghe declared at the launch that, in order to do so, the Unity government has "formulated a forward-looking liability management strategy for domestic and foreign debt under the medium term debt management strategy", and that "the country hopes to repay all its outstanding loans by 2025". So, the whole programme is primarily a debt repayment mechanism.
Wickremasinghe also declared government's moves to further liberalize Sri Lankan market to attract foreign direct investment(FDI), by stating that it has formulated a new trade policy, along with an original "National Export Strategy", aimed at creating a "more liberal, simple, transparent and predictable trade regime". Some of the significant economic policy goals in the Vision 2025 include the following:
• Strengthening the macroeconomic framework, which has three prongs: fiscal consolidation, ensuring price stability, and maintaining a market-based competitive exchange rate and "prudent" monetary policy. The policy statement plainly exposes that "external debt repayments from 2018 requires strong fiscal consolidation measures for debt sustainability and growth".
• Transforming Sri Lanka into the economic hub of the Indian Ocean, with a export-oriented, highly competitive, social-market economy: It promises citizens "higher incomes" and "better standards of living".
• Enhancing global competitiveness of the economy. This implies further trade liberalization.
• Introducing business-friendly legal reforms. Finance Minister Mangala Samaraweera said archaic laws such as the Agricultural Lands Act and Shop and Office Employees Act would be amended to provide more market flexibility.
• Rationalizing public expenditure and restructuring State Owned Enterproses (SOEs) as commercially viable enterprises.
• Encouraging Public-Private Partnerships (PPPs): the potential areas would include health care, leisure, tourism, education, ports and aviation. This mechanism is intended to release the government of welfare burden and increasingly privatizing essential services.
Sri Lanka is mired in a acute debt crisis, the budget deficit standing at 5.4% of GDP. The GDP for 2017 and for this year is estimated at 1999 billion rupees ($ 13 billion) and 2,326 billion rupees ($US15 billion), respectively, the increase pointing to the tax hikes following the recent drastic tax reforms and 2018 budget, while the total debt repayment for the next three years would be 7,000 billion rupees ($45 billion), as stated by Samaraweera.
Early December last year, granting $ 251.4 million as the fourth tranche of the agreed bailout loan of $1.5 billion, the IMF forced its conditionalities onto the government: continuous fiscal consolidation, building up foreign reserves, maintaining a liberal exchange rate regime, tightening monetary policy and restructuring SOEs. Fiscal consolidation requires government to reduce the budget deficit to 4.5% by 2018 and to 3.5 % by 2020.
It is in this background that the government is forced to cut social welfare, increase taxes and liberalize trade and labour, like many European Union countries including Greece, Ireland, Italy, Portugal and Spain, to reduce budget deficits and sovereign debt. The promises of prosperity and development for the masses is therefore a blatant lie.
During last eight months up to end of November, the government cut funding for the limited social welfare programmes of Samurdhi by 700 million rupees ($ 4.5 million) and the fertilizer subsidy by 3.8 billion rupees ($ 24.8 million), compared to the same period last year.
In a good gesture for foreign direct investment (FDI), government approved early in December a 32 year period of income tax holiday for the China Merchants Port Holdings company, to which the government leased Southern port of Hambabtota for 99 years, amidst much concern by US, India and Japan. Wickremasinghe stated that the money out of this deal would be used for debt repayment. The government is also aiming at privatising Sri Lankan Airlines, the national carrier, on claims of being loss-incurring SOE under a PPP, as also demanded by IMF.
The budget for 2018 was passed with more than two third majority in Parliament in favour, showing the readiness of the whole bourgeoisie establishment to impose severe austerity measures on larger public. Samaraweera declared at a post-budget forum that "the main theme of the budget, 'enterprise Sri Lanka' and liberalizations are non-negotiable. "Non-negotiable" means that the policies are not subject to any compromise with the opposition of the working people.
The Wickremasinghe-led United National Party (UNP) and Sirisena-led Sri Lanka Freedom Party(SLFP) entered into a unity government in 2015 to drive through its pro-market policies and suppress the already-emerging opposition of the working class against social counter-revolution.
Wickremasinghe has a long history of implementing pro-market reforms. In November 2015, he presented an economic policy statement outlining sweeping pro-market reforms that would drastically affect jobs, wages and living conditions of workers and the poor, while offering benefits and concessions for foreign and local businesses. Even before, in 2002, his previous government got approval from the World Bank and IMF for a parallel agenda of economic policies laid down in the Poverty Reduction Strategy Paper(PRSP), which was consolidated in the programme of "Regaining Sri Lanka". Succeeding governments of Chandrika Kumaratunga and Mahinda Rajapakshe continued the same.
The working class should reject these agendas. Under a workers’ and peasants’ government founded on socialist policies sovereign debt would be repudiated. The mass opposition to the implementation of these policies should be guided by a political perspective for socialist restructuring of the economy nationally and globally against international capital.
The Marxist approach to the Jathika Chinthana "Lie"
Is it necessary for Marxists to debate with nationalists, for instance neo-Nazis and others, including followers of Nalin de Silva? In so far as their propositions challenge Marxist materialist theory, Marxists have to deal with them. But once it is covered within the basic dichotomy between idealism and materialism, Marxists do not need to proceed further in attacking such idealist popositions. However, we can deal with their subjective ideologies that deny objective truths even in the political and social life of a society. Quantum mechanics is about physical micro world and not about social life of a national and international society which is a macro-level social organization. One may also call it the relative frame of reality upon which Marxists work.
Sinhala nationalists deny objective truth and at the same time assert a whole history, knowledge of a Sinhalese race and a united Sinhala Country from the so called King Dutugemunu, whose existence in the past they assert as an objective truth. This is a serious contradiction of the so called Jathika Chinthana, and there are many. Simply, once they deny objective truth, they have no right even to utter a word, because then words have only relative meaning and therefore there is no word, no language, no communication, everything is private and depends on the Observer, the I; So no cultural heritage and no social organization is possible. Then they would argue that there is a relative truth agreeable for common purpose and social organization. But that yet again is relative to observer. The history of a nation underlies the histories of classes. For example the history of the Sinhalese is the history of the elites and not of the oppressed claases in feudal and monarchical systems. The history of different casts under so called Sinhala kings would have been different to the meta-narrative of Ruling elites. There would have been casts who did not want to identify themselves with so called Sinhalese of the elites. They would have asserted their culture was the true Sinhala culture. So what is Sinhala too is problematic and depends on evidence and relative to different clases in feudal systems, arguing in line with denial of objective truths. They also say the knowledge we have been educated with is western.
The Jathika Chinthana flows from idealist formulations of Nalin de Silva, whose so called Constructive Relativism(CR) is an anti-marxist metanarrative, asserting primacy of mind above matter, that no objective world can be perceived without mind. But it fails to assert that the mind can exist without matter, or to answer whether the mind which is also a creation of mind itself exists in a vacum, free from laws of time and space. There cannot be mind without relationship to external matter, even to create most primary concepts, images from which to create othet concepts and images without additional external information. Mind thus itself exists in relationship to matter. Mind is history, images, past, conditioning, thoughts, which all arise in association with matter (matter is not necessarily mass, but includes magnetic fields, all forms of physical energy etc and our sensory images). There is no mind without thoughts, consciousness which are all obtained through senses. Mind is impotent to create itself without matter, images. Mind simply cannot perceive the change,movement or change in itself being unrelated to external movement, changes in matter. The primacy of Mind and matter is not a question of egg before hen. It's through mind that objective material world is perceived, but the assertion of the existence of Mind independant of matter cannot deny the existence of Matter independent of Mind.
Constructive Relativism has one unique way of disassociating with the western philosophy's argument against idealism: to assert that the idea of mind in CR is not the same as that which is identified in western philosopy's idealism: that so called Sinhala Theravada Chinthana formulation of mind is different from the concept of mind in what is referred to as Weastern Greek Judaic Christian Chinthanaya as against Catholic Thinking. Marxists do not have to bother with such disasscosition, because it in no way affects its political programme.
The objective truth for Marxists is that there is a market, a capitalist system, there is imperialism, Sinhala nationalism, Tamil nationalism, an international working class, and so on. Marxists do not bother whether such truths are relative to the Observer. History is read by Marxists with dialectical method. Historical materialism is the method of interpreting the written history .
Why do the West impose their hegamony of knowledge? The purpose is political and economic. Imperialism is one such expression. Their economic hegamony is founded on global capitalism.
There is hardly any merit in having a debate with Jathika Chinthana. There is no purpose in debating with religious fanatics too. The simple question Marxists must put to the working class, the workers and youth who belong to different identities is, how to resolve the crisis of global inequality, poverty and social misery, which are objective realities, also perceived by mind through the senses. The programme to defeat identity politics needs to assert the fight against Capitalism.
Marxists examine the objective economic, political and historical foundations of a phenomenon, an incident, a development. Instead of analysing the histories of a nationality, Marxists analyse the history of nationalism being used as a bourgeoisie weapon of class division.
Nalin de Silva's theory on mind and knowlede being fundamentally idealist, Marxists should plainly deny any impact on Marxist programme for Socialism and against Capitalism. The basic line of division between Marxism and Constructive Relativism is the line dividing materialism and idealism.
