The optimism that accompanied the Yahapalana government in 2015 has evaporated. We simply seem to have exchanged the misguided and dictatorial regime of Rajapaksa for the misguided and weak government of Sirisena/Ranil. There is a confluence of factors – political, economic, financial, inter-ethnic relations and international that are converging and will cause a major crisis within two years.
My title is a nautical term – The Perfect Storm. It refers to the convergence of gale force winds, strong tidal forces and huge waves that takes place in the Southern Atlantic in winter months. It is feared by seafarers as no ship could withstand it. This is a good analogy for what we as a nation face now. This is after experiencing a Storm in a Teacup (the No Confidence motion that was defeated in Parliament).
The coalition between the UNP and Sirisena’s wing of the SLFP (a brilliant piece of political engineering by Chandrika Kumaratunga) was fragile in the first place as it brought together disparate elements united only by their liking for the perks of power with no common ideology. The only way they could hold together was if the leadership had quickly implemented the Joint Manifesto – an excellent and rational policy document- so that the coalition could continue to win future elections. The main points were to eliminate corruption and bring those responsible for industrial scale corruption in the previous regime to justice, privatize loss making government corporations, foster National Reconciliation and Justice, attract FDI by providing a benign investment environment and bring down the cost of living.
Instead this is what actually happened.
Time was frittered away in taking action against the kleptocrats of the previous regime. All it required was special courts under new legislation.Now the chance is lost and the lesson for politicians is – you can get away with it if you stall long enough. This was made worse by the Bond scandal. This held the nation enraptured for 18 months with daily revelations of dishonesty and to make it worse the ultimate loser was the EPF – the common man’s retirement fund. This forever tainted the UNP with corruption – when the truth is that the money lost is a fraction of what the previous regime stole or what SriLankan Airlines or the CPC lose each year. This was the single most damaging blunder by the present regime relating to its reputation and moral authority to counter corruption – a cancer eating into our national life.
The ability of the government to take the unpopular steps necessary to achieve national progress is undermined by political infighting within the coalition. The earlier constitutions had the virtue of simplicity and accountability– in the pre 1978 constitutions Cabinet responsibility and the Post 1978 constitution an all- powerful Presidency. Now after the 19th amendment, no one quite knows who is ultimately in charge. The President dissolves the Prime Minister’s Cabinet sub-committee on Economic Management and cabinet ministers publicly criticize government policy.The result is decision making paralysis. The only voice of sanity is the Central Bank Governor Dr Indrajit Coomaraswamy, who has warned that political instability will threaten foreign investment and economic growth.
The problem is that as a Harrow and Cambridge educated economist and gentleman he is too polite. It would be more effective to be blunt and use Bill Clinton’s famous phrase “It is the economy, Stupid” to concentrate politicians’ minds on what is really important.
We face three more elections in the next two years – Provincial, Presidential and Parliamentary. These are distracting our leaders and preventing the difficult decisions necessary – and the nation is enthralled by this Political Theatre (by far the most entertaining in the world) while the affairs of the nation are left to drift.
* The Ceylon Petroleum Corporations is losing Rs 244 million a week and prices will have to be raised. The government’s hands are tied on this as they have committed to the IMF to implement a transparent pricing formula to link the local prices to the international benchmark price of crude oil. The same goes for the electricity prices charged by the CEB.
* The CPC is running a 50 years old refinery whose efficiency (or lack of it) is such that it would be cheaper to import refined products and close down the refinery.
* We have committed to the IMF to selling loss making corporations like SriLankan Airlines and hotels like the Hilton and the half completed Hyatt. This will be difficult as in the airline’s case the government will have to absorb $1 billion in past losses and our reputation for corruption in the purchase of planes and political interference is such that no reputed airline will touch us. In the case of the Hilton and the Hyatt the government will have to take a significant write off to attract a foreign buyer.
* There has been no significant FDI in the past two and a half years except for the aborted proposal to “build Volkswagens” in Sri Lanka. Actually this was a scam to get government land cheap and was denied by Volkswagen management in Germany.
* When the inevitable financial crisis hits us in two years the IMF will impose the same misguided conditions as they did in Greece in 2015 and which caused unnecessary hardship to their hapless people. This will involve higher taxes and reduction in expenditure on subsidies and services like health. This will deepen the recession, cause increased unemployment (in a country with no social safety net) and cause stress in a society with deep fissures along religious and ethnic lines. This may lead to more attacks on Muslims as there are no worthwhile Tamil targets left.
Ethnic relations : It should be remembered that the UNP led coalition won the 2015 election entirely on their promises of justice for the minorities and the Tamils and Muslims therefore overwhelmingly voted for them – Rajapaksa won the plurality of the Sinhala Buddhist vote. But after making unrealistic promises the government has done almost nothing. No justice for the victims of the war. No compensation, no new constitution and an Office of Missing Persons which after two and a half years has not yet found a single Tamil missing person (perhaps they should be asked to find Arjuna Mahendran who is the most prominent Tamil missing person! ). Instead of a new constitution the government could have taken simple administrative steps like recruiting Tamil speaking policemen and giving back the land taken by the Army for hotels and holiday homes. The Tamils in the North and East will be better off under a competent and benign Central government (I repeat competent and benign) till the wounds of war have been healed, and trust built between the two communities and leave it to a future kinder, wiser generation the task of a permanent constitutional settlement. After all we Tamils have waited 60 years since the Bandaranaike- Chelvenayakam pact and endured 25 years of war. Will another 20 years make a difference to our people? To complicate the situation further there are dark forces secretly inciting violence against the Muslims, who are the targets now as there are no viable Tamil targets left.
In the diplomatic arena we have made entirely unrealistic promises to the UN Human Rights Commission and Western governments and have done almost nothing to fulfill them. These organizations are not stupid and their patience is running out – goaded by the Tamil Diaspora with their equally unrealistic agenda of “Tamil self-determination”.
So after 70 years of independence,having received one of the highest levels of per capita aid in the world, having patrons with deep pockets like China (we are a willing and promiscuous pawn in the “Great Game” being played out between the US, China and India in the Indian Ocean), we are now facing an existential threat of our own making.
We are drifting towards a crisis and no one is paying attention. The public are distracted by our Political Theatre and the necessity of making ends meet on a daily basis amid the rising cost of living. The politicians are jockeying for position when the Government changes. In Colombo there are grand parties for the rich in five star hotels, even grander weddings at destination resorts and “parties” for rich young businessmen where cocaine and Russian girls are available at a price that will pay the expenses of the average family for a month.
To continue my nautical metaphor – this is exactly the same as when the band played dance music on the deck of the Titanic to distract the passengers when the ship was slowly sinking into the icy waters of the North Atlantic – and in our case the Captain and Chief Officer are arguing and pulling the wheel in different directions and the crew are escaping on lifeboats leaving the passenger stranded. Meanwhile the ship of state drifts helplessly towards the rocks where a Perfect Storm awaits us.