Will the SLFP remain or leave the government?

Nobody will make the decision for the Sri Lanka Freedom Party (SLFP) to leave the Government, and it will be a decision taken after discussions between the SLFP and the President himself, says the Deputy Chairman of the SLFP, Mahinda Amaraweera.

Speaking to media on Monday (10), SLPP and SLFP members expressed opinions on whether or not the Government would lose its 2/3rd majority as a result of its own factions criticizing the Government.

Citing the reports of the former President himself criticizing the Government, the State Minister of Transport, Dilum Amunugama stated that it is not an issue for the Government, and the assistance of the SLFP is not necessary for a party that was able to elect the President and the Prime Minister.

Speaking further, the State Minister reminded that the SLPP is a party that rules with an additional one seat at the Parliament and that they do not need a 2/3rds majority to govern.

“Mark my word, just because they are part of the 2/3rds majority we cannot be patient every time, they will finally leave us,” he added, speaking to media.

Meanwhile, the Deputy Chairman of the Sri Lanka Freedom Party (SLFP), Mahinda Amaraweera stated that the SLFP is not owned by anyone, and is a party that assisted in forming the Government,

“It was the President who we supported and formed a Government which obtained 2/3rds majority with our assistance,”

Furthermore, the SLFP Deputy Chairman stated that the party came and joined with the Government based on the request by President Gotabaya Rajapaksa.

“We don’t let anyone make a decision about us on joining or leaving the Government, it will be a decision that we will make,” he added.

Chinese Ambassador asks SL Govt why talks halted on FTA

As Sri Lanka is facing an economic crisis mainly due to the Covid-19 pandemic, China has expressed its desire to resume the stalled Free Trade Agreement with Sri Lanka in order to boost exports, China’s Ambassador to Sri Lanka Qi Zhenhong said yesterday.

He said that visiting State Councillor and Foreign Minister Wang Yi held positive discussions with the Sri Lankan government leaders on the FTA.

“During the State Councillor’s visit this time, he himself and leaders of Sri Lanka’s government had a very good discussion on the Free Trade Agreement (FTA) as well as Comprehensive Economic and Technical Framework Corporation,” the ambassador told a group of newspaper editors last evening.

He also questioned why the Sri Lankan government halted talks with the Chinese government on the FTA. “Already we had six rounds. I would like to ask the Sri Lankan government why the talks were halted. I don’t know why,”the ambassador said.

Since 2017, during the last regime, ministerial level discussions were held on the possible FTA between two nations but halted reportedly due to some conditions in the proposed FTA. Ambassador Qi Zhenhong also said if Sri Lanka is able to have this FTA, it can export products to a market of 1.4 billion population in China.

The ambassador also said that when State Counsellor Wang Yi had discussions with the Sri Lankan leaders, he explained that “we should encourage exports and professionals to study the FTA discussions very soon.” “Wang said any questions or concerns on the FTA from the Sri Lanka side can be raised.we are open for that,”adding to that the ambassador said that “if one particular item is not good enough for Sri Lanka, you can ask more and we will do the study, as we have a flexible policy.”

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SL and China ink RMB800 Mn agreement on economic & technical cooperation

The Governments of Sri Lanka and China signed several agreements today (09), including an Agreement on Economic and Technical Cooperation, which is an 800 million Yuan project financing facility.

Treasury Secretary SR. Attygalle signed from the Sri Lankan side and China International Development Cooperation Vice Chairman Zhang Maoyu represented China.

In addition, several more agreements were signed as well:

Letter of Exchange on the Project of Subsidized Housing for Low Income Category in Colombo
Handover Certificate of the Technical Cooperation Project for BMICH
Handover Certificate of the Technical Cooperation Project for the Kidney Disease Mobile Screening Ambulance Vehicles.
These developments come in the backdrop China’s State Councillor and Foreign Minister Wang Yi being present in the country on a two day official visit.

Lanka has no room for manoeuver says Pathfinder Foundation

The Colombo-based Pathfinder Foundations issued a statement on Sunday saying that Sri Lanka’s economic crisis is so severe that it has no room for maneuver and that it should go for debt restructuring and begin talks with the IMF.

Here is the statement in full:

The Government has spoken of both Rupee and Dollar shortages. The severity of these problems is reflected in the following startling data points.

On the lack of Rupees (or fiscal space) for the government, interest payments alone account for over 70% of revenue. This is possibly the highest in the world. In addition, salaries and pensions account for over 90% of revenue. So, interest and salaries/pensions together amount to over 160% of revenue. It is hardly surprising, therefore that the Central Bank’s net credit to government (money printing) amounts to Rs. 1.1 trillion as at November 2021. This vast amount of money printing inevitably fuels inflation; exerts pressure on the balance of payments by boosting imports; and undermines exchange rate stability.

As for the Dollar illiquidity, net foreign assets of the Central Bank recorded a deficit of $1.6 billion as at the end of November 2021. The net foreign assets of the total banking system amounted to a deficit of US$ 4.1 billion. This explains vividly the cause of the large scale scarring of the economy that is arising from the massive shortage of dollars. Turning this around will require radical action, including a debt restructuring and decisive measures to attract foreign inflows.

The consequences of these twin problems have already been severe. Inflation, particularly food inflation, has been rising sharply. There have been shortages in food items, including milk food; fuel; gas; and medicines. There is also a rampant black market in foreign exchange. Businesses have collapsed and livelihoods have been lost.

The Pathfinder Foundation in its previous articles has urged that immediate priority be given to: (1) restructuring external debt; (2) negotiating an arrangement with the IMF; and (3) mobilizing bridging finance to meet the external financing gap in the next six months.

A debt re-structuring will provide breathing space to stabilize the economy. An IMF arrangement can catalyze much needed foreign exchange both directly from multilateral institutions and some bilateral donors; and indirectly by increasing confidence among investors and creditors. The bridging finance is necessary to fund essential imports and meet immediate obligations until the negotiations on the debt re-structuring and the IMF programme are completed.

The package of relief from India that is now expected is an encouraging beginning in terms of a bridging arrangement. However, it will only buy a couple of months’ time. This positive initiative needs to be supplemented by negotiating support from other friendly countries, including Japan, to obtain bridging finance that would be required during the time it takes to negotiate a debt restructuring and an IMF programme (about six months).

Action on all three fronts identified above needs to be initiated immediately to stem the ever deepening crisis and support sustainable recovery.

This is A Pathfinder Perspective issued by the Pathfinder Foundation can view on https://pathfinderfoundation.org/ Readers’ comments via email to pm@pathfinderfoundation.org are welcome.

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Sri Lanka President seeks debt relief, import credit from China

Sri Lanka’s President Gotabaya Rajapaksa has sought debt relief and import credit from China, following a meeting with visiting Chinese foreign minister Wang Yi, his office said.

“The President pointed out that it would be a great relief to the country if the attention could be paid on restructuring the debt repayments as a solution to the economic crisis that has arisen in the face of the Covid-19 pandemic,” a statement from the President’s media office said.

“The President also said that if a concessional trade credit scheme could be initiated for imports from China, it would enable the industries to operate smoothly.”

Sri Lanka is facing forex shortages and lost reserves due to money printed to keep interest rates down after cutting taxes in a fiscal and monetary ‘stimulus’ amid a Coronavirus pandemic.

Sri Lanka had also signed several grant agreements for housing, medical and refurbishing a conference hall in Colombo gifted by China.

Sri Lanka had about 3.5 billion US dollars in central government debt from China by the end of 2020, not counting loans to state enterprises.

China’s Foreign Minister arrived in Sri Lanka after an escalating dispute over a contaminated organic fertilizer was settled.

An International Monetary Fund report in 2019 said about 9.1 percent of external central government debt was owed to China and when counting SOEs it was about 15 percent by the end of 2018.

Sri Lanka’s central bank also drew down on a 1.5 billion US dollar equivalent Renminbi swap in December 2021 to boost year end reserves to 3.1 billion US dollars or about 2 months of imports.

India is also expected to give around 400 million US dollars through a swap, and a 500 million US dollar credit line for fuel. Another billion dollars of credits are expected from India.

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China and Sri Lanka sign four agreements, discuss wide range of cooperation

Following a special request by Prime Minister Mahinda Rajapaksa on behalf of Sri Lankan medical students awaiting to return to China to complete their studies, State Councillor and Foreign Minister Wang Yi immediately instructed the Ambassador of China in Sri Lanka to work closely with the Foreign Ministry to facilitate the return of Sri Lankan medical students.

The matter was discussed during the bilateral meeting between Prime Minister Rajapaksa and the visiting Foreign Minister at Temple Trees this morning (09), the PM’s Office said.

Currently, approximately 1,200 medical students, including 400 final-year students, who were studying at Chinese medical institutions, are waiting to return to China to complete their studies.

They have been unable to return due to restrictions imposed as a result of the pandemic. In response to the Prime Minister’s special request, Foreign Minister Yi assured that Sri Lankan students will be given highest priority.

During the bilateral discussions between the two delegations, a host of other matters were also discussed, including further support for the vaccine program, attracting investments to the Port City and the Hambantota Industrial Zone, increasing tourism from China to Sri Lanka, increasing Sri Lankan exports to China and enhancing cultural cooperation, especially in the area of Buddhist ties.

Following the discussions, the delegations signed the following agreements:

Agreement on Economic and Technical Cooperation
Letter of Exchange on the Project of Subsidized Housing for Low Income Category in Colombo
Handover Certificate of the Technical Cooperation Project for BMICH
Handover Certificate of the Technical Cooperation Project for the Kidney Disease Mobile Screening Ambulance Vehicles
Foreign Minister Yi is on a one-day visit to Sri Lanka to launch the celebrations marking the 65th anniversary of Sri Lanka—China bilateral relations.

Last year the Central Bank of Sri Lanka issued a commemorative coin to mark the 65th anniversary as well as the 100th anniversary of the founding of the Communist Party of China. A set of the coins were gifted to the visiting Foreign Minister by the Prime Minister.

Conveying best wishes from the President and Premier of China to Prime Minister Rajapaksa, Foreign Minister Yi said, “China will continue to do its best to provide all the necessary help and support [to Sri Lanka].”

Prime Minister Mahinda Rajapaksa’s Opening Remarks:

“Good morning, Your Excellency and welcome once again to Sri Lanka. Your last visit to Sri Lanka was exactly two years ago, and I’m happy to see you return. I believe these regular high-level visits help reaffirm our strong and friendly relations.

This year is an important year for our two countries. It marks the 65th anniversary of establishing diplomatic relations and 70 years of signing the Rubber-Rice Pact. Allow me to also congratulate the Communist Party of China on its 100th anniversary. As you know, the Central Bank of Sri Lanka issued a commemorative coin to mark these important milestones.

Excellency, I want to thank the Government and the friendly people of China for the generous support towards fighting the COVID-19 pandemic. The consistent supply of the Sinopharm vaccines made a significant contribution to our successful vaccine program.

As you know, similar to many other countries, Sri Lanka’s economy was also greatly impacted by the pandemic. We appreciate China’s assistance towards our economic revival and financial stability. There is still a long way to go in establishing normalcy, but we’re confident that with support from friendly countries like China, we will be able to overcome these challenges soon. I look forward to continue working closely with you and the Government of China in addressing common challenges.”

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Military deployed for organic farming

The Army has been sent in to implement government policy on organic farming by monitoring and educating farmers on the job they have to do. The Maha season is likely to see a 30 per cent drop in yields but the authorities are convinced the people will not starve.

Army deployment towards this project was mooted by President Gotabaya Rajapaksa since he believed the agriculture state sector officials were not supportive of the green agriculture concept for organic farming, Agriculture Minister Mahindananda Aluthgamage told the Business Times on Thursday.

He noted that the officials were part of a “chemical mafia”, on the contrary the Army is said to be disciplined enough to carry out any task given to them and implement government policy.

The minister also noted that there would be a yield drop of about 30 per cent as predicted by the agriculture officials, even so the government will not cause a shortage of food in the country.

Compost once produced by the Army will be bought by the state fertiliser companies and distributed to farmers alongside the other organic bio fertilisers produced by the local manufacturers.

Compost contains one of the lowest amounts of the nitrogen source but the application of this will help to condition the soil, Crop and Weed Scientist Peradeniya University Senior Prof. Buddhi Marambe explained.

He pointed out that one of the best ways to carry out waste management is to convert it to compost that could be used for agriculture.

Monitoring of the farming methods is the agriculture instructor’s job, Prof. Marambe explained adding that monitoring alone will not help but feedback is also important.

Farmers this season were concerned whether they would be able to produce sufficient crop for their own consumption. Usually at the end of the season, farmers would retain 25-30 per cent of the harvest for their own consumption and as seed paddy and then sell the rest.

The lower yields will mean there will be a drop in the product sent to the market as well.

Prof. Marambe explained that according to published data following a 11-year research in Sri Lanka by the Agriculture Department it has been found that applying organic fertiliser alone was able to generate a yield 21-31.5 per cent lower compared to plots that received only chemical fertiliser. But the paddy cultivation carried out using both chemical and organic fertilisers were able to generate the highest yield.

The Army is being deployed to assist the Ministries of Agriculture and Fertiliser in purchasing and distributing the required organic fertiliser for the next season, Agriculture Department Director General Dr. Ajantha De Silva explained.

Commenting on a possible yield drop, he noted that farmers will be duly compensated to ensure their incomes are stable. Yield estimations will be released by the middle of this month, he said.

He also noted that the local organic fertilisers have not gone through two seasons of trials but these will be tested at Batalagoda, Samanthurai and Paranthan; and in addition to this another international tender will be called to procure organic fertiliser.

Chemical fertiliser imports recommence

Fertiliser companies have been issued with another part payment of Rs.300 million to pay off the government subsidy bill of Rs.27 billon as a result of which another batch of fertiliser will be imported.
All fertiliser companies will bring in a total of another 30,000 MT of Sulphate of Ammonia (SOA) for which Letters of Credit have been opened with the banks. This is the second consignment of the total fertiliser requirement of 98,000 MT for the tea sector.

However, companies are concerned about bringing down large stocks and as a result will only bring this 30,000 MT as there is uncertainty regarding the demand for these purchases.

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Forex crisis: Severe pharmaceuticals shortage in the offing

An acute shortage of essential medicinal drugs has been reported around the country as pharmaceutical companies are struggling to secure necessary imports due to the ongoing dollar crisis.

The Sunday Morning learns that both Government and private sectors have been affected and are expecting a severe shortage of essential medicines in a month’s time unless the Government prioritises the pharmaceutical sector and releases funds to pay for Letters of Credit (LCs) already opened by importers.

Accordingly, it is learnt that a request has been made to the Treasury as well as the Central Bank of Sri Lanka (CBSL) and Foreign Ministry to make funds available immediately.

State Pharmaceutical Corporation (SPC) General Manager Dinusha Dassanayake said the dollar crisis had affected pharmaceutical imports as it had affected all other sectors and SPC was also experiencing a shortage.

Therefore, it had already informed the Health Ministry’s Medical Supplies Division (MSD) and necessary arrangements would be made by them, Dassanayake noted.

Prior to the shortage reported recently, prices of all pharmaceuticals were increased to reflect the falling rupee.

Health Minister Keheliya Rambukwella issuing an extraordinary gazette notification last August amended the Medicines (Ceiling on Prices) Regulations of 2019 published in the Gazette Extraordinary No.2123/35 of 15 May 2019 by increasing the Maximum Retail Prices (MRP) of 60 essential medicines, 38 intraocular lenses/lenses with delivery system (preloaded provided with cartridge) by amending the Medical Devices Pricing Regulations No. 1 of 2017 published in the Gazette Extraordinary No.2006/45 of 17 February 2017 as amended by regulations published in the Gazette Extraordinary No.2114/54 of 15 March 2019.

Further, the MRP of two selected medical devices including blood glucose monitoring system and test strips for blood glucose monitoring system have also been revised by amending the Medical Devices (Pricing) Regulations of 2018 published in the Gazette Extraordinary No. 2086/37 of 31 August 2018 as amended by regulations published in the Gazette Extraordinary No. 2114/54 of 15 March 2020. The last price revision was made in May 2019 when the exchange rate was at Rs. 178 per United States Dollar (USD).

But, as claimed by pharmacists, consumers are facing difficulties as they cannot find some common medicines in the market.

“Several medicines are in short supply. Some of the most essential medicines are out of stock. We were not given an exact date on when they will be restocked,” All Ceylon Private Pharmacy Owners’ Association (ACPPOA) President Chandika Gankanda told The Sunday Morning. “If this continues, most items will be in short supply.”

According to available data, in 2017, pharmaceutical expenditure in Sri Lanka (hospital and pharmacy medicine sales at consumer prices) reached a value of $ 642 million and by 2022, the market is expected to reach a value of $ 787 million. Sri Lanka imports medicines worth Rs. 130 billion annually, comprising some 85% of its annual requirement. Local State and private sectors produce only 15% of the requirement.

The State Pharmaceuticals Manufacturing Corporation (SPMC) owns a plant in Ratmalana and along with several private pharmaceutical manufacturing factories produces medicines required for the country.

Sri Lanka Chamber of Pharmaceutical Industry (SLCPI) President Sanjeewa Wijesekera said: “There is a dollar crisis and we are also in difficulty when establishing LCs. There could be a delay in shipments as we are unable to establish LCs.”

“Previously, priority was given to oil and pharmaceuticals and our industry has facilities with the two State banks. Unfortunately I feel like they have been assigned to establish LCs for petroleum importation. We were asked wherever possible to channel public banks to establish LCs,” he noted.

“In the private sector there isn’t much of a shortage. If this continues there could be a shortage,” Wijesekera added.

Generally, about 14 days to one month’s stocks are available with retailers, so importers carry about one- or two-and-a-half months’ worth of stocks. There should be an ongoing process of establishing LCs and getting stocks and any lag would become an issue later, he explained.

State Ministry of Production, Supply, and Regulation of Pharmaceuticals Secretary Dr. R.M.S.K. Ratnayake said a discussion had been held with stakeholders on Thursday (6) and they had decided to send a list of essentials with shortage timings to the Finance Ministry to prioritise accordingly.

“We have prepared a list with the dates from which the respective stocks of the medicines will be in short supply and the Government will release funds accordingly.”

Meanwhile, Rambukwella said the Government was looking at all possible methods to secure stocks and maintain uninterrupted supplies. “We have held discussions with stakeholders and informed the CBSL too; necessary arrangements will be made to release funds to import essential medicines.”

When asked how long it would take to recover from the ongoing crisis, Minister Ramkuwella said at present dollars had started to come in through tourism and foreign employment.

“We hope the ongoing crisis will end in six months to a year. The Government is focusing on diversifying methods of bringing down dollars, including by expanding the foreign employment sector.”

Wang’s visit and Jaishankar’s phone call could lift Lanka’s spirits By P.K.Balachandran

The visit of the Chinese Foreign Minister Wang Yi to Sri Lanka from January 8 to 9, and the Indian Foreign Minister S.Jaishankar’s recent phone call to his Lankan counterpart G.L.Peiris, have given the impression that both Asian giants are keen on helping Sri Lanka come out of the economic woods it has been in in the past year.

Due to a variety of factors, including COVID-19 and gross mismanagement, Sri Lanka is now frightfully short of dollars even to import essentials. The disastrous decision to shift wholesale to organic farming immediately, has led to predictions of a food shortage in April 2022. Government’s callousness has led to an unprecedented rise in prices of essentials.

The EconomyNext website quoted the Central Bank Governor, Ajith Nivard Cabraal, to say that the bank had sold about 3.6 tonnes of gold out of a 6.69 tonne stockpile it had at the beginning of 2021, leaving it with around 3.0 to 3.1 tonnes of gold. The gold sale was to boost liquid reserves, Governor Cabraal said.

Sri Lanka’s gross foreign reserves had dropped to US$ 1.5 billion in November 2021 but recovered in December to touch US$ 3.1 billion. And yet the demand on the dollar remains high in an import dependent economy.

Wang’s Visit

While it is still not known precisely what the visiting Chinese Foreign Minister will bring to the table, Colombo is expecting big ticket investments. Both China and Sri Lanka had brushed the nasty organic fertilizer import row under the carpet. The row over the allegedly contaminated fertilizer consignment had led to the Chinese company’s threating to go for international arbitration and Sri Lanka’s going to court. Eventually, Sri Lanka coughed up US$ 6.9 billion to settle the matter out of court.

According to the Sri Lankan Ambassador to China, Dr. Palitha Kohona, two big Chinese companies have sent their representatives to Sri Lanka. He told Daily Mirror: “Power China is one. KY Electric is another. Power China is interested in building residential units in Colombo and outside. KY Electric is interested in renewable energy. We held talks with China Harbor, China Great Wall, Power Steel, etc. These are only a few of them. All of them have shown keen interest in investing in Sri Lanka catering not only to the domestic market but also to the wider regional markets. We have been encouraging them.”

Kohona further said: “One of the reasons for nothing tangible to be eventuated so far is the inability to send their specialists to Sri Lanka to assess the situation at ground levels. Once travel is restored to some extent, we can expect many of these companies to show greater interest in Sri Lanka. We have also encouraged travel companies to invest in Sri Lanka. One company with a client base of over 40 million is interested in developing resorts in Sri Lanka, like the resorts in southern Europe or Hainan Island. We can expect it once things return to some sort of normalcy. Many other companies will make a beeline to Sri Lanka.”

These investments may work as catalysts for investors from elsewhere, whether they are from the United States, Europe, Russia, Australia, Japan and Korea, Kohona added. As regards investment in the China-built Colombo Port City, the envoy said: “ A very serious offer has been made by Power China and China Harbor. It is quite likely that over the next few months, they will invest substantial amounts in the Port City. Again, this will be a flagship investment which will hopefully be an attraction to others to follow-suit. We are hopeful that companies from India, Europe and the United States will follow these big investments in the financial center, the Marina and in the Convention Center.”

Indian Interest

India’s interest in giving a helping hand to Sri Lanka was evident when its Foreign Minister, S.Jaishankar, called his Lankan counterpart, G.L.Peiris, on the phone to say that “India will support Sri Lanka in these difficult times.” This has heightened hopes that India will, at the earliest, deliver a US$ 1.9 billion financial aid package to Sri Lanka.

In the first week of December 2021, the Lankan Finance Minister Basil Rajapaksa had had two sessions spread over two days with the Indian Finance Minister Nirmala Sitaraman and Foreign Minister Jaishankar in New Delhi. Though the expected meeting with Prime Minister Narendra Modi did not come through, the Lankan Finance Minister came back to Colombo with a four-point economic cooperation plan.

India indicated that, apart from the existing US$ 400 million swap, there will be a US$ 500 million line of credit for the purchase of oil, and a US$ 1 billion credit line for purchases of medicines and food. It was agreed that the issue of the refurbishing and running of the 99 giant oil tanks in Trincomalee would be settled to mutual satisfaction. The two sides further agreed that modalities to realize the four-point package would be “finalized early, within a mutually agreed timeline.”

Trinco Tanks Deal

As planned, India and Sri Lanka reached an agreement on the oil tanks and signed an agreement after securing cabinet approval. Giving the basic contours of the agreement, the Lankan Minister of Energy, Udaya Gmmanpila said that out of the 99 tanks, each with a capacity of 12,000 mt, the State-owned Ceylon Petroleum Corporation (CPC) will get 24 tanks to develop and use independently of the Lanka Indian Oil Corporation (LIOC); 14 of the tanks, currently used by the LIOC, will be leased to the LIOC for 50 years; and the balance of 61 tanks will be managed by the Trinco Petroleum Terminal Ltd.,(TPTL), a joint venture of the CPC and LIOC to be launched soon. In the TPTL, the CPC will own 51% of the shares and the LIOC will hold 49%. The TPTL will be a subsidiary of the CPC.

In effect, 85 out of the 99 tanks will be under the control of the CPC directly or indirectly. And the LIOC will manage only 14 tanks, Gammanpila said.

A leading Buddhist monk has challenged the agreement in the Supreme Court, and the opposition has called it a sell because it wants the government to nationalize the tanks given to India in 2003. But the government is confident of seeing the deal through parliament later this month.

The Lankan Energy minister considers it a “historic” agreement since no government before had been able to get the tanks that were given wholesale to India in 2003. The Indian government has described the deal as a “milestone”. India did not consider the new agreement as a loss because it was committed to run the tanks as a joint venture way back in July 1987 as part of the Indo-Lanka Accord. This commitment found fruition 35 years later.

A regards the other elements in the four-point package agreed to during Basil Rajapaksa’s New Delhi visit, including the credit lines, both countries are working on the technicalities and modalities. Officials are not certain when each of them will see fruition, but work is in progress.

Therefore, while China has ambitious plans to boost the Lankan economy through investments and credit lines, so is India. The international competition to woo Sri Lanka, given its strategic location in the Indian Ocean, should help it come out economic distress in 2022.

Coming crack-up, President’s plans and Tamil timing – DR Dayan Jayatilleka

Susil Premjayanth is one of the good ones; educated, intelligent, experienced, a fine speaker and debater be it in parliament or on TV. He is not one of those the protesting peasants refer to rudely as “the buffaloes in Parliament”. An SLPP member, he represents what is best in the SLFP tradition: he is a moderate, progressive centrist. Someone who should have wielded a top portfolio, he has been deprived of his State Ministry by President Gotabaya. By so doing, President GR has fired a stalwart of the political culture and tradition of which his late father was a co-founder.

It won’t help. Not only will Premjayanth get more publicity than before; he will be more openly critical than before. President Gotabaya may have thought he was removing a pebble from his shoe, but he may well have set rolling the pebble which will precede the coming landslide of the SLFP and part of the SLPP—one notes Vidura Wickramanayake’s critical voice—as the economic crisis worsens, the harvest fails, and the SLPP-SLFP’s vote base, the peasantry, hits the streets demanding economic justice and reparation.

Beat the Regime in 2022

The best political satire I’ve seen in recent months doesn’t contain even one clever punchline. It is a new genre, a cross between a silent movie (no dialogue), a news documentary and reality TV. It is shot from within a four-wheel drive, which moves at a moderate pace on a single continuous but short trip, with the camera focusing on the sidewalks with unending lines of grim-faced and often vociferous citizens, waiting for gas, kerosene, milk, etc. From inside the vehicle, the speakers blare Gotabaya Rajapaksa’s campaign song. When the chorus comes along, young voices inside the vehicle join in, and yell out in unison “Goh-taa-bhaya!”. A passenger in the front seat, who isn’t yelling, laughs and places his palm on his forehead after gazing at the queues. It is black humour at its best.

You’ve heard of the classification and category ‘backsliding democracy’. Democracy isn’t the only thing that’s backsliding in Sri Lanka. So too are farming, cooking and nutrition. When Andre Gunder Frank wrote of the “development of underdevelopment”, he didn’t know the half of it.

In his chat with the newspaper editors, President Gotabaya spoke critically of the media coverage of the explosions of gas-cookers, without once acknowledging the report of his own panel of experts who traced the cause to the change in ratio of the gases. Who is accountable?

Sri Lankan analysts of the economic crisis are roughly divisible into two: those who place the greatest emphasis on the debt and foreign exchange crisis, and those, like me, who place the greatest emphasis on the crisis of agrarian production and the likelihood of a food shortage, due entirely to the President’s blindly insensitive, arrogant and unscientific fertiliser-weedicide-pesticide policy.

Though I did work with Immanuel Wallerstein, the iconic thinker on world systems and world economy, I’m no economist. However, I am a student of conflict, revolution and wars, and I know of far fewer internal conflicts triggered by debt and forex crises and far more detonated by the collapse of harvests and resultant famines or extreme food shortages. This is more so when those crashes of harvests, the resultant shortages and mass misery are seen as avoidable and ruler/ruling elite-created.

There are countries which have experienced crisis due to debt repayment, a hard-cash crunch or sanctions, but almost all of them have peasant agriculture to fall back on. Russia faced Western sanctions by boosting agricultural productivity, and it was certainly not through conversion to organic fertiliser but through redoubled efforts in scientific agriculture. If it was the cash crunch that triggered the cutback in fertiliser imports, contracts should have been given to local and foreign industrialists to produce chemical fertiliser, pesticides and weedicide in Sri Lanka well before embarking on this program of ‘agricide’ (or ‘peasanticide’) through a ‘shock-and awe’ ban.

There is a possibility of defeating the regime in 2022, which doesn’t necessitate the interesting proposal of lawyer Sunil Watagala of the JVP, of the early dissolution of Parliament, nor does it depend entirely on ceaseless street demonstrations over economic grievances.

That possibility will be provided by the President’s project of a new Constitution. It will be perfectly possible to call for and win a massive ‘No’ vote at a referendum in this year of the avoidable economic torture of the citizenry. Not even Augusto Pinochet was able to survive defeat at a Referendum.

No more Mr. Nice Guy?

The Spanish term “querencia” refers to the patch of ground that the besieged bull stakes out in the bull-ring during a bull fight. It is the place where the bull makes his stand and from which he charges. More generally, “querencia” has come to mean a spot from which a personality chooses to make his/her stand. Besieged President Gotabaya Rajapaksa has just demarcated his querencia, and there are no surprises as to the space he has demarcated and has chosen to place himself. It is his home-ground.

He also gives a valuable clue as to his future intentions.

The evidence is in the text of his speech of 2 January 2022 at the ceremony to confer honorary title of “Sri Lankadheeshwara Padma Vibhushana” on President GR by the Kotte Sri Kalyani Samagri Dharma Maha Sangha Sabha.

“…I would like to specially mention the fact that I was born into a Buddhist family, the disciplines I received when I was studying at Ananda College, Colombo, one of the leading Buddhist schools in the country, the inspiration I received from following the advices (sic) of the Maha Sangha and the discipline I received from serving in the Army were the factors that made my life better.

“Today the Maha Sangha bestowed on me an honorary title in recognition of my service towards the country as a military officer and Secretary of Defence. During my twenty years of military service, I had been involved in military operations carried out in the initial stages of the Eelam War and Second Eelam War as well as operations carried out in the north and east areas. Before the arrival of the Indian Peace Keeping Force, I commanded one of the four brigades in the Vadamarachchi operation, the largest operation of the time. At the outbreak of the Second Eelam War, I commanded one of the two main brigades to liberate Jaffna Fort. I carried out several operations in areas like Welioya, Vavuniya and Trincomalee. In recognition of those services, I received the Ranashura and Ranawickrama medals and President’s Award. The Maha Sangha is fully aware of the service rendered by me directly as the Defence Secretary to the end of the thirty years of war.

“…On the day I was sworn-in as the country’s President at the Ruwanweli Seya, I declared that I was a President elected by the majority of Sinhalese. I firmly believe that the protection of Sinhala Buddhists, who have made so many sacrifices to elect me as the first citizen of this country and that heritage is my foremost responsibility…” (Ada Derana/PMD)

Here comes his crucially significant signal as to the strategic direction he has decided to move in:

“I am ready to embark on a new journey by overcoming the obstacles we have encountered so far, and to fulfil the aspirations of the people who elected me as President of this country. I responsibly declare before this Most Venerable Sangha community that I am ready to take any tough or bold decisions that need to be taken in this regard…” (Ibid)

What the speech tells us is that the President is sticking to his hard-core Sinhala Buddhist discourse and base. The obvious problem with playing this card is that most of the angry rice farmers are Sinhala Buddhists, as are most in the queues for milk-food, cooking gas and kerosene. They are mad at him and the ruling elite (starting with the ruling family), and they are angry not as Sinhala Buddhists but as human beings. The President must understand at least now, why the Buddha advised against preaching the Dhamma to those with an empty stomach.

Going by his declaration of intent, the President initially hopes to move forward with those Sinhala Buddhists who are not suffering the same economic hardships as the rest of the citizenry. That would range from the uber-rich ultra-right, to the military brass. Furthermore, he hopes to rekindle the Sinhala Buddhist identity consciousness among those Sinhala Buddhists who are embittered towards him over socioeconomic pain generated by his policies.

How does he hope to do this? There are some clues in his words: “…a new journey…to fulfil the aspirations of the people who elected me as President …I am ready to take any tough or bold decisions that need to be taken in this regard…”

What kind of “new journey” and “tough and bold decisions” might he have in mind? Given the President’s known agenda, it is reasonable to assume that in the first instance he means the new Constitution, in which the primacy of Sinhala Buddhist identity and heritage will be given unprecedentedly hegemonic status, thereby either flipping the Sinhala Buddhists from economic grievances back to an ethno-religious majoritarian consciousness, or at the least, causing a split among the Sinhala Buddhists on the lines of economics versus ethno-religiosity.

Or could it be an enhanced role, perhaps even the ultimate enhanced role, for the sword and shield, if not the martial custodian, of that “heritage” and those “aspirations”, i.e., the military?

I do not know whether Minister Basil Rajapaksa is to be made Prime Minister as is rumoured in the media. Given that Mahinda Rajapaksa is the sole sentimental adhesive keeping the coalition and even the ruling SLPP going, that may not be on the cards. What I do know is that Basil Rajapaksa’s territory of economic development is already being invaded. In his address of 30 December 2021 to the tri-forces based in Mullaitivu, Army chief, Gen. Shavendra Silva announced that the economic development of the area has been entrusted to the Army by President Gotabaya Rajapaksa. This was aired on the TV newscasts. (Watch from minute 19, https://m.youtube.com/watch?v=qgE7mO0y_Ls) Where does that leave Minister Basil Rajapaksa and the Sri Lankan Cabinet Ministers?

Meanwhile the Army chief who seized power in Sudan has had to step down due to unremitting street protests by the Sudanese people. There’s a lesson in there somewhere.

Tamil talks: Last train

The process of negotiation among the Tamil and Muslim parties over a consensus document to be addressed to India with regard to the Accord and the 13th amendment in light of the coming Constitution, has not been brought to a closure at the time of writing this column, though it was to be finalised around New Year.

The delay deprives the Tamil side of the chance of insinuating its issues into the subtext of, or the trade-offs in, what might well be the Indo-Sri Lanka Economic Accord. The economic package could also be considered Indo-Sri Lanka Accord 2 or the completion of the original Indo-Sri Lanka Accord, with reference to the economic footprint in Trincomalee. The closure on that issue may by-pass or supersede the original reason for the 1987 Accord, the Tamil Question, because the dominant Tamil party seems not to know or care that the Tamil autonomy project is in the Last Chance Saloon.

If signing-off on a basic Tamil consensus is quite so fraught even when time is of the essence and the stakes and the odds are at their historical highest, then it is no surprise that the Tamils find themselves in the dead-end they do, and it will be no surprise if they lose everything that India obtained for them and are left with no semi-autonomous sub-state political space – even on paper – in their “historical habitation” which is now pretty much controlled by the military.

The delay on the Tamil political side may cause forfeiture of the residual return that may accrue to it with India’s economic backstop – though that Indian input may be matched or offset by whatever generosity China’s Foreign Minister Wang Yi brings in his wallet.

In geometry, especially political geometry, the higher your apex, the narrower your base. The broader you wish the buy-in to be, the more stakeholders you hope to attract, the lower must be your apex. The higher you pitch your political stand and thicken your discourse, the more difficult to get the SLMC on board. Since the SLMC has been part of the ongoing discussion process from its earliest days, some Tamil parties are loathe to let it go and be content with a Tamil consensus. This means that a Tamil consensus itself may have to be limited to the north and part of the east (the 1977 electoral map), losing those Tamil organisations representing the Tamils of recent Indian origin, based outside the north and east.

If the ITAK had been reasonable enough to accommodate the SLMC, it could have stood at the head of a bloc of Tamil-speaking people(s), also incorporating the Tamil parties outside the north and east. Now, with the window of opportunity about to shut, it is imperative to clinch a northern and eastern Tamil ‘heartland’ consensus.

In the currently ongoing process, the more pragmatic position around the full implementation of the 13th amendment was arrived at by the Tamil parties which had done the hard yards from the 1970s as militant organisations; the ones who belonged to the “Iyekkam” (The Movement). They have (belatedly) displayed a Sinn Fein-type pragmatism.

The ITAK behaves like the Palestinian Authority (PA) but without the Authority.

The demagogic counterview to the effect that “the Tamil people did not shed so much blood to seek and accept the full implementation of the 13th amendment; if so, we could have settled everything back in 1987; we should await a new US initiative” came, ironically enough, from the purely parliamentarian Tamil nationalist wing, which had not taken the risks and made the sacrifices of militant engagement and experience.

Had the Yahapalanaya Government of 2015 embarked on the full implementation of the 13th amendment, who would have opposed it? Not President Sirisena, PM Wickremesinghe or de facto Opposition leader Mahinda Rajapaksa. Instead, the TNA/ITAK’s push for a brand-new Constitution with a non-unitary character helped fissure the hybrid government, split the SLFP, provoke the emergence of the SLPP, catalyse the hawkish candidacy of Gotabaya and electorally extinguish the UNP. The ITAK/TNA also helped jam-up the holding of Provincial Council elections.

Had the Yahapalanaya Government of 2015 embarked on the full implementation of the 13th amendment, who would have opposed it? Not President Sirisena, PM Wickremesinghe or de facto Opposition leader Mahinda Rajapaksa. Instead, the TNA/ITAK’s push for a brand-new Constitution with a non-unitary character helped fissure the hybrid government, split the SLFP, provoke the emergence of the SLPP, catalyse the hawkish candidacy of Gotabaya and electorally extinguish the UNP. The ITAK/TNA also helped jam-up the holding of Provincial Council elections

With traditional inter-state interactions (India-China-Sri Lanka) and economic diplomacy about to decisively eclipse sub-state political nationalism, the Tamil leaders must decide whether the only tangible political gain of 70+ years of the Tamil struggle i.e., the Accord/13A/PCs, will be buried by their own grand-standing and dithering. Now that’s an exercise in self-determination. Perhaps the last there will be time and space for.

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