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Prime Minister Ranil Wickremesinghe discussing the 21st Amendment with political party leaders

As he gets a grip of the causes for the unprecedented economic catastrophe, he has been forced to delay the proposed presentation of a fresh budget by six weeks. Its four-pronged objective was to revise taxation, remove subsidies, privatise loss-making state-owned enterprises, and provide relief to poorer sections. Sadly, there are no reliable official statistics on several key economic indicators. For example, there are no reliable data on the availability or the lack of medicinal drugs. Officials are now busy researching to arrive at figures that could be either near accurate or reliable. Similarly, there are no data on unpaid bills and the exact quantity of fertilizer requirements.

Little wonder, Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF), lamented that it breaks her heart to watch the pictures of what is happening in Sri Lanka, once quite a prosperous country. It is the result of mismanagement, she declared speaking to New Delhi Television (NDTV). She was attending the World Economic Forum annual meeting in the Swiss mountain resort of Davos in eastern Alps.

Initial reaction from the IMF to Premier Wickremesinghe’s widely televised statement two weeks ago was that it was forthright, honest, and transparent. It was important for every citizen to know, and he had done very well. Also welcome were the declarations that loss-making state enterprises like SriLankan Airlines would be privatized, highlighting the energy subsidies and the resultant loss the government bears were also welcome. However, the positive impressions are now being clouded by questions on the challenges Premier Wickremesinghe faces over future stability. Attention is being raised over how the post-Ranil Wickremesinghe stability would be navigated, and this is being keenly watched. This subject has also been discussed by the Colombo-based diplomatic community. In one instance, a highly enthusiastic Colombo-based envoy tweeted within seven minutes of Wickremesinghe’s becoming Premier welcoming his appointment. This week the same diplomat was talking to different groups of politicians and others to shyly explain why public support had to be expressed.

Sri Lanka has hired heavyweight financial and legal advisers, the French company Lazard Freres and Clifford Chance, an English Law firm based in London as it prepares for the challenging task of renegotiating debts. The Government looks to restructure over $12 billion of overseas debt (total external debt of $51 billion), a mix of loans from China, India, and Japan, as well as all the bonds held by private investment funds that had been building up for years but become unsustainable.

Financial Advisors Lazard Freres are considered market leaders in negotiating with the Chinese, as they were a key factor in Zambia achieving staff-level agreement with the IMF over a bailout that was to pave the way for negotiations with creditors to restructure about $16 billion in external debt in December 2021. After over 13 months of hard negotiations, China finally agreed to join a creditor committee to discuss the restructuring of Zambia’s debt, in April 2022. Lazard’s bill to Zambia for that service was expected to be just over $5 million. China has already signalled to Sri Lanka back in April 2022 similar sentiments and suggested debt refinancing rather than debt restructuring. This is the kind of complications that the Lazard will have to negotiate and find a path to a universal agreement between creditors. It took over 13 months for the company to be successful in the case of Zambia.

Added to this, the majority bond holders have appointed a notoriously tough negotiators Rothschild who are going to be unwilling to accept a haircut.  Overall, going by recent history, it will take months for Sri Lanka to obtain IMF assistance. That in turn means sources for bridge finance have to be found beyond India which has been a great neighbour helping at a time of desperation. Premier Wickremesinghe said he wanted to have the process with IMF fast tracked. Until the external debt becomes sustainable, lending facilities such as the proposed Paris Club, multilateral agencies such as the World Bank, the Asian Development Bank, and other countries will be reluctant to come forward to help in a material way. Debt sustainability can only be achieved once an acceptable universal restructure plan is agreed between the creditors and that seems months away!

Inflation in March was 18.7 percent and in April 29.8 percent. This is an increase of 11.1 percent month on month. With funding assistance still away, inflation increasing by ten percent every month, Sri Lankans must belt up tight as even a tough bumpy ride await them in the next few weeks and months. Even when help finally arrives from the IMF, the UK-based Oxfam recently found that 13 of the 15 of its loan programmes negotiated in 2021 required new austerity measures.

The head of the IMF, to which the Government has pinned its hope mainly for relief, has summed up in just one word that mismanagement led to the country’s economy being ruined. Who is responsible? Firstly, the blame should go fairly and squarely to President Gotabaya Rajapaksa. He first denied responsibility but later admitted his mistakes. It is he who assigned jobs to the other principal shareholders to the worst post-independence debacle. That included then Finance Minister, Mahinda Rajapaksa, and later Finance Minister Basil Rajapaksa, who had little or no knowledge of banking or economics. So much so, one of Basil Rajapaksa’s bizarre proposals after taking office was to print more money, fight an election, come to power, and carry out “their policies.” It was fortuitous both for Sri Lanka and its people that his warped strategy did not work.

There was Ajith Nivard Cabraal, the then Central Bank Governor who spewed out words with the rapidity of a vending machine to expound bombastic financial theories. He took on the international rating agencies and it was too late when his bluff was called. There were also then Presidential Secretary P.B. Jayasundera and then Treasury Secretary, S.R. Attygalle. The irony is that President Rajapaksa allowed these premier stakeholders in the crisis to function until the situation exploded. Cabraal was even able to, through just a telephone call, persuade President Rajapaksa to issue an official statement that he continued to have “confidence” in the then Governor of the Central Bank. He opened his eyes only when the economy crumbled.

Does this not show that President Rajapaksa’s judgements of people for high positions were badly flawed? What stands as a glaring example is how he loaded the state sector with retired military officers. How the country suffered serious damage is better illustrated by the case of the Foreign Ministry where a retired Navy officer was asked to step down. Amateurism in the conduct of foreign policy led to one faux pas after another. Sri Lanka ended up making more enemies than friends as the unwritten tenets of diplomacy were ignored mostly out of ignorance and the Ministry itself becoming a laughingstock.

President Rajapaksa has engineered the exit of Prime Minister Mahinda Rajapaksa, Ministers Chamal and Namal Rajapaksa in the belief that it would mitigate the blame on him. This week, he was in a buoyant mood working from his makeshift office on the first floor of Janadipathi Mandiraya, perhaps happy that Premier Wickremesinghe was drawing more attention. That was deflecting criticism against him.  Only his personal staff worked there. Presidential Secretary Gamini Senarath continued to use his Presidential Secretariat office and went there through a rear entrance. Protestors were occupying the main one. Both appear content with the arrangement.

What did Premier Wickremesinghe mean when he declared he did not expect the economic catastrophe to be much worse than he expected?  One must start with the existing issues. Queues outside fuel stations continue to remain. There is still a shortage of LPG (cooking gas). Essential drugs are in short supply though health authorities are yet to determine the exact volume. In this backdrop, food prices have continued to spiral. Garden produce from economic centres cannot be transported to Colombo due to fuel shortages. What arrives has turned out to be costly and often beyond the reach of lower middle-class families. There is starvation. The real fear over these issues will exacerbate by late July or early August if not earlier.

The Government has sought a credit facility of $500 million from the Exim Bank of India and that amount would be sufficient for five weeks of fuel supplies. In addition, $ 27 million is said to be available as remainder from a credit line of $ 500 million and a further $ 21 million from a credit line of $ 200 million. Government officials said India had indicated that these could be topped up for one shipment of petrol and another shipment of diesel.  In any case, Indian assistance, the official said, was also reaching saturation point with some of her own states facing financial issues.  Other than at least two fuel ships due, no fresh orders have been placed due to lack of resources. The question is whether the Government will be able to raise funds to ensure supplies when the anticipated stocks arrive and are exhausted. A failure would bring a disastrous situation.

Aggravating it, it is feared, would be an acute shortage of rice. It has come to light that even if fertiliser, obtained on credit, is issued to farmers, a yield could be expected only after February, next year. Hence, from October this year to February next year, no paddy crop is expected. As a result, rice will have to be imported and for that there is no foreign exchange. This has come as the biggest challenge. Therefore, the Government has approached the Food and Agriculture Organisation (FAO) for assistance besides seeking the help of friendly countries. This matter is receiving priority consideration.

There is a sizeable segment of Sri Lankans who consume rice for their three meals a day – breakfast, lunch, and dinner. Even for those who consume once or twice, like for lunch and dinner, the non-availability of rice, their staple diet, could come as a serious blow. Such a shortage, it is no secret, also has serious internal security implications. It could trigger public protests on a bigger scale and the maintenance of law and order could come as a burden for the Police and security forces. Security experts warn of the vulnerability of supermarkets and retail outlets.

21st Amendment

The protests urging President Rajapaksa to quit has passed the 50-day mark. It seems paradoxical that despite protests to ensure this, issues have taken many other turns. Main among them is the proposed 21st Amendment to the Constitution. Instead of seeking to altogether abolish the executive presidency, the draft proposed by the new Justice Minister, Wijeyadasa Rajapakshe, is intended to reduce some powers of the President. Conversely the powers vested in the Prime Minister have been strengthened in some instances whilst mostly institutions under Parliament are sought to be empowered. More importantly, one provision seeks the exclusion of those holding dual citizenship. This will expressly remove Basil Rajapaksa, the former Finance Minister, who is also a citizen of the United States. This provision has won the backing of a sizeable section of the ruling Sri Lanka Podujana Peramuna (SLPP) coalition. Another section of some 25 MPs are backing Basil Rajapaksa who is directing a major campaign to undermine Premier Wickremesinghe’s efforts and stymie 21A.

The news that both the Samagi Jana Balavegaya (SJB) and the Tamil National Alliance (TNA) will not support the amendments in Parliament has geared the government into action. In a battle for numbers, sources close to President Rajapaksa said that as many as 50 slots as ministers and state ministers are being raised for SLPP members so they could be backers of 21A. Whilst some ministerial positions have been filled, more such positions as well as those of state ministers would be appointed stage by stage. This is after the nominees are consulted.

The 21st Amendment is also to contain provision where the post-judicial review would be possible. This means the examination of the actions of the legislature and to discern whether they are consistent with the Constitution. Actions determined inconsistent are declared unconstitutional, and hence null and void. Such provisions exist in the Indian Constitution too.

The proposed constitutional changes are through the replacement of Chapter VII A with a new one. They are focused largely on different areas. Among the highlights are:

• The re-establishment of Constitutional Councils. When Parliament adopted the 20th Amendment to the Constitution, these Councils were abolished. Instead, a Parliamentary Council was set up. If the previous CCs were empowered to nominate persons to several key positions, the Councils became a date stamp. They had to endorse or reject a nominee chosen by the President.
• Deletion of the words in the existing provisions that “in consultation with the Prime Minister, where he considers such consultation to be necessary.” It is to be replaced by the words “on the advice of the Prime Minister.” This is both in respect of the determination of the number of ministers, assignment of subjects as well as well as appointing MPs as ministers.
• Deletion of the words “the President may, at any time change where he considers such consultation to be necessary to be replaced with the words “on the advice of the Prime Minister.
• Deletion of the words “in consultation with the Prime Minister, where he considers such consultation to be necessary” in respect of MPs being appointed Deputy Ministers. This is to be replaced with the words “on the advice of the Prime Minister.”
• Deletion of the words “by death, removal, resignation or otherwise” and the inclusion of the words “by death, resignation or otherwise.”
• About appointment of acting ministers, deletion of the words “the President may appoint” and the inclusion of the words “the President, may on the advice of the Prime Minister, appoint.”
• Inclusion of a provision to prohibit “a citizen of Sri Lanka who is also a citizen of any other country.”
• The appointment, promotion, transfer, disciplinary control, and dismissal of police officers other than the Inspector General of Police, shall be vested in the Police Commission. The Commission shall exercise its powers of promotion, transfer, disciplinary control, and dismissal in consultation with the Inspector General of Police.

Opposition Leader Sajith Premadasa, said in a letter to Justice Minister Rajapakshe on Thursday that his draft 21A “contrary to the promises given by His Excellency (the President)” enables him to hold ministerial portfolios, which was not envisaged under the 19th amendment to the Constitution. “Instead of moving in the direction of reducing the executive powers of the President, your draft bill does the opposite by strengthening the President’s executive powers contrary to the provisions of the 19th amendment to the constitution.”  The SJB only sent its General Secretary Ranjit Madduma Bandara and Eran Wickremeratne for talks with Wickremesinghe on 21A. The National People’s Power led by the Janatha Vimukthi Peramuna (JVP) boycotted.

Earlier, the Bar Association of Sri Lanka (BASL) said it was “concerned that whilst the 21st Amendment will restore the provisions of the previous 19th Amendment to the Constitution as regards the Constitutional Council and the Independent Commissions, there are several vital provisions which were found in the 19th Amendment which are not incorporated into the draft 21st Amendment.”

Its President Saliya Peiris and Secretary, Isuru Balapatabendi said in a letter to Premier Wickremesinghe: “The provisions of the 19th Amendment precluded the President from assigning to himself any subjects or functions. However, the 21st Amendment does not incorporate such a provision and as such the President will be able to continue to retain Ministries and assign to himself any subjects and functions and of any Minister. The BASL is of the view that the 21st Amendment must include a provision amending Article 44 (2) of the Constitution removing the power of the President to retain Ministries and assigning to himself any subjects or functions. Such provision must be made as soon as the 21st Amendment is passed. In addition, the BASL observes that the President’s powers to prorogue and dissolve Parliament are left intact, in contrast to the 19th amendment to the Constitution where the President could dissolve Parliament only after four and half years following a Parliamentary election. The BASL is of the view that the provisions of the 19th Amendment relating to dissolution of Parliament should be restored.”

It is common knowledge that President Rajapaksa won an overwhelming 6.9 million votes at the presidential elections, something which President Rajapaksa prides himself even now and points out why there was no need for him to resign. How did he win such an avalanche of votes? His predecessor Maithripala Sirisena and his yahapalana government had turned extremely unpopular and corruption was strife. In other words, strategist Basil Rajapaksa’s political cunningness in forming the Sri Lanka Poudjana Peramuna (SLPP) and charting its victory at the presidential and later parliamentary elections to counter a key player in the yahapalana government, the United National Party (UNP) paid off. The SLPP ended up with a two-thirds majority at the parliamentary elections too. Conversely, the UNP lost all the 157 seats it contested, including the one in Colombo District, represented by its leader Ranil Wickremesinghe. Nevertheless, the latter entered Parliament with the bonus seat for some 240,000 votes his party received at the parliamentary elections.

What did President Gotabaya Rajapaksa do after a string of blunders that plunged the country in an economic catastrophe, the worst since independence in 1948? Amidst mounting calls for him to quit, he began shedding one Rajapaksa after another from the Cabinet of Ministers. There were no widespread calls to remove them except slogans of allegations over making money and demands to return it to the country. He did come under pressure from Colombo-based diplomats to have a government in place and demonstrate there was stability.

After others showed reluctance, placed conditions, or refused altogether, he turned to the sole MP from the UNP. He confessed to a confidant about the consequences he would otherwise have to face. There was one intermediary who went back and forth before the deal was clinched. It was Ranil Wickremesinghe, whom President Gotabaya, his brothers, nephews, and backers wanted to keep away from their family power centre who was gifted with the post of Prime Minister. The latter seized the opportunity, and the rest is history. They are unfolding every day as the man, a war hero, retreated from public limelight.

Defence portfolio

As reported last week, President Rajapaksa wanted to divest himself of the defence portfolio. However, he came under pressure from influential SLPP groups to retain it. Most of them pointed out it was necessary since the security forces could not help them during the May 9 incidents. It must be noted that as Commander-in-Chief, President Rajapaksa could have directed commanders of the tri-forces to take preventive action. The question is whether this was done. If it was not, there is no question, there is a serious lapse on the part of the President. One need hardly have probe teams going into the matter. What was the Ministry of Defence doing? Accountability and the Presidency are poles apart and that phenomenon is veering out of control. Another example is the CIO probe into May 9 incidents and how it has been botched up. One retired senior Police officer described the CID “as much worse than the Minor Offences branch of a provincial police station.”

Having got Wickremesinghe within his fold, President Rajapaksa, it is little known, tried to retain the finance portfolio to himself. He offered to appoint Anura Priyadarshana Yapa, as the Minister of State for Finance with full cabinet rank. However, Yapa, a former minister did not opt for that. Another prospective candidate who held the portfolio, had backed out after tearing down in Parliament relating his own travails. That was Aly Sabry. There were groups trying to persuade him to change his mind. The thrust was mostly by a group of Muslim businessmen. Among others who was in the run for the portfolio was current Health Minister Keheliya Rambukwella. But these efforts were not successful. Wickremesinghe put his foot down. He insisted that the portfolio be given to him if he were to carry out the assignment given. The result – he got two more subjects too – Economic Stability and National Policy. Not a single SLPP minister including Mahinda or Basil Rajapaksa has won such titles.

Black Monday probes

These developments come as lawyers, civil society groups and even Colombo based diplomats showed serious concern over the slow and selective pace the Criminal Investigation Department (CID) is conducting investigations into the Black Monday (May 9) incidents. The most glaring shortcoming, which has badly lowered the esteem of the Police Department and particularly the CID, is the non-arrest of Deshabandu Tennekoon, Senior Deputy Inspector General of Police in charge of the Western Province. This is despite a statement in Parliament by Ramesh Pathirana, a cabinet minister, that he openly defied instructions given by none other than President Rajapaksa. Police Chief Chandana Wickremeratne, who has come under a dark cloud himself, had told CID investigators he had given clear instructions to SDIG Tennekoon to ensure there were no attacks on the protestors.

It transpired before the Fort Magistrate, Thilina Gamage, this week that Tennekoon had thereafter held a Zoom conference with his subordinate officers. There, he is alleged to have urged them not to obstruct a group that was coming over to express their displeasure over the protestors. Magistrate Gamage asked why, despite a written request by the Attorney General, SDIG Tennekoon was not transferred out of the Western Province. This was to prevent any possible interference with the ongoing investigations. The Magistrate has called for a report from the Police Chief.

UNHRC sessions

The Sunday Times has learnt that these and other related developments will be among matters that will be raised, possibly in a new resolution on Sri Lanka, that will be moved at the upcoming September sessions of the UN Human Rights Council in Geneva. Substantial evidence has been collected by the prime movers and they will urge member countries to use legislation in their own countries to deal with those responsible for these human rights violations. This is the first time in the history of the CID that the conduct of an investigation has become so highly suspect and blatantly choosy. Public confidence in the CID has eroded and several international organizations have reacted in disbelief.

The CID has sought a directive from the Magistrate’s Court, Fort, to order the Secretary to the former Prime Minister, Mahinda Rajapaksa, to provide video footage captured inside Temple Trees. They have also sought a list of the participants at the meeting on May 9. Reports filed by the CID before courts included specific charges on the suspects. That covers setting fire to tents, assaulting peaceful protestors and being part of an unlawful gathering, causing injuries to persons among others.

On Friday, Premier Wickremesinghe met representatives of political parties to seek their views on the proposed 21A. Various views including the need for a referendum were expressed. Later, the participants agreed to support the constitutional amendment. The final draft will go before the Cabinet on Monday. A further round of talks is likely thereafter to reach finality. The first major challenge for the new government, no doubt, will be the passage of 21A. Whatever the outcome is, President Nandasena Gotabaya Rajapaksa, will remain in office.