The first seriously adverse reaction from the Government going before the World Bank and the International Monetary Fund (IMF) in Washington was felt at Rambukkana this week. A third and unbearable increase in fuel prices was about the tipping point at home. Ever since the post-1977 liberalised economy, people have become far more mobile in [...]


No early end to the crisis; no easy way out either


The first seriously adverse reaction from the Government going before the World Bank and the International Monetary Fund (IMF) in Washington was felt at Rambukkana this week. A third and unbearable increase in fuel prices was about the tipping point at home.

Ever since the post-1977 liberalised economy, people have become far more mobile in the country. Almost every household today has some kind of ‘wheels’ and these need fuel. In the pre-1977 years, students walked, cycled or ‘bussed’ to school. Not any more by the looks of the number of vehicles from 2 wheelers to 3 to 4 to 10 outside city schools throughout the country. All their owners complaining first of the shortage and now of the price of fuel.

The Government was given sufficient notice of the impending fuel crisis. It was slow to act. In fact, it didn’t know how to act. During the uncertain months of the Iranian revolution of 1979, the J.R. Jayewardene Government was faced with a similar crisis. The liberalised economy saw an influx of vehicles. A newly set up Free Trade Zone was worried about power cuts. The Sapugaskanda oil refinery only worked on Iranian light crude oil and supplies were disrupted. Foreign Minister A.C.S. Hameed was in Zimbabwe at a Non-Aligned conference when he got a call from his leader: “Shahul, go and find oil from anywhere”.

Minister Hameed flew first to Baghdad and then to Libya where he met Col. Muammar Gaddafi who said he wouldn’t let a Sri Lankan Minister return empty-handed and obliged. Those were the days of non-aligned solidarity. Transport Minister M.H. Mohamed was dispatched to Saudi Arabia. And a crisis was averted.

This Government distanced itself from these oil producing countries with its domestic policies and even at this late stage, Finance Minister Ali Sabry might well be asked to fly from Washington to these countries to try to salvage the situation. Solving the fuel crisis will lighten the public’s wrath against the Government and help President Gotabaya Rajapaksa ride the storm he is weathering.

It is a powder keg situation out in the country. After the talks in Washington, the Finance Minister has cautioned that things are going to get worse before it gets better for Sri Lankans. And a spark is all it takes to ignite a major social explosion. Thankfully, the unfortunate incidents at Rambukkana earlier this week did not conflagrate even though there was incendiary rhetoric to stir up the volatile situation in Parliament and outside.

A dispute between the Speaker and the Opposition Leader over what the President had told the Speaker showed that legislators cannot even agree on a conversion. In clarifying what he said, the Speaker eventually conceded that what the President said was that he was willing to allow Parliament to decide on a Cabinet if he lost his majority in the House.

That didn’t sound like much of a concession from the President who is hanging on to office by a thread. It is just that the Opposition does not have the numbers either, and Parliament as a whole is not ready to bring down the Government without consensus on with whom, or how, the next Government will be formed.

The Prime Minister is also on the firing line and the country has two lame ducks at the helm of state affairs – the President and the PM. And yet, despite the battle cry from inside and outside Parliament being for the exit of the President and the PM, the search for successors is limited to a faceless, nameless, “anyone” or “someone” — a leap in the dark to the unknown.

The Government’s last ditch attempt to save itself from a humiliating ouster is to agree to fast forward constitutional, electoral and other reforms and bring back the 19th Amendment clipping the wings of the Executive Presidency with a vengeance.

At least some good must come out of this mass popular uprising if these reforms can be implemented, and soon. The goal should be the immediate introduction of laws that give powers to independent institutions. Take the case of bribery and corruption. The Auditor General’s reports say 75 percent of corruption stems from unsolicited bidding through Cabinet Tender Committees. A whole bundle of laws is awaiting passage in Parliament, but even the Opposition is not pushing for these. That is why the public outcry has extended to kicking out all 225 MPs.

The Executive Presidency was aimed at bringing stability to the country from an imperfect, unpredictable Parliament subjected to the vagaries of bribery and influence, and frequent collapses. That has not been achieved because the elected Presidents craved absolute power. Power corrupts and absolute power corrupts absolutely. The ‘system change’ called for, therefore, is to strengthen the judiciary, the graft commission, the police, the public service etc., freeing them from the pressures of politics. The 2001 attempt at this by way of the 17th Amendment has to be reintroduced and extended further.

And yet, all this brouhaha notwithstanding, who will find the dollars in the next few days and weeks to pay for the next ship bringing oil, medicines and food to a desperate people, for our banks not to collapse, stop the Central Bank printing billions of new notes destabilising the rupee, so that businesses can run their export oriented factories without power cuts and farmers now used to mechanised agriculture find fuel for their harvesters?

The focus this week was, therefore, more than on the Galle Face, Diyawanna Oya or even Rambukkana happenings, but on the outcome in Washington. Our front pages reports the events. The incumbent political leadership that milked nationalism to the hilt to stride back into the corridors of power has had to ultimately rely on the IMF – with India’s backing to bail the Country, the Government and the People out of the present abyss they find themselves in.

The news from Washington is only lukewarm for now. No rabbit has been pulled out of the hat. The request for an RFI (Rapid Financial Instrument) facility seeking urgent relief to settle outstanding BOP (Balance of Payments) issues seems to have been dropped by the wayside and an Extended Fund Facility (EFF) has only gotten to the table. Delays in appointing financial and legal advisers to negotiate have not helped. The World Bank this week discussed restructuring debt burdens for countries and a lack of transparency over how much they owe to China and the Bank’s President singled out Sri Lanka as a country delaying debt payments until reaching a point of crisis.

It will not be easy to secure IMF support despite the brave front put forward by the Finance Minister. Sri Lanka’s long standing welfare-state days are numbered and the Minister himself has forewarned of a “painful couple of years” ahead, not just weeks or months.


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