8 August, 2022


Economic Woes Of Post-Civil War Sri Lanka Are Due To Lack Of Neo-Liberalism: A Rejoinder To Ahilan Kadirgamar

By Muttukrishna Sarvananthan

Dr. Muttukrishna Sarvananthan

Ahilan Kadirgamar terms the economic policies and programmes of the current regime in Sri Lanka “neoliberalism” in his polemical piece entitled Second Wave of Neoliberalism: Financialisation and Crisis in Post-War Sri Lanka. He also indirectly suggests that the current “second wave of neoliberalism” is a continuation of the open economy policy introduced in 1977 by the then government and the latter coincided with the armed struggle of Tamils militants. The insinuation is that the armed struggle of the Tamil militants was caused or aggravated by the open economic policies pursued in 1977 onwards and that the current “second wave of neoliberalism” could also potentially renew a conflict between the state and the minority communities, especially the Muslim community which has become the target of a hate campaign by fringe but hyper active groups of deviant Buddhist clergy in the past year or so. 

Ahilan Kadirgamar is not the first one to suggest causation between open economic policies and the civil war in Sri Lanka. To my recollection it was Charles Abeysekera and Newton Gunasinghe (jointly) were the first ones to suggest such causation in 1987. It was followed by David Dunham and Sisira Jayasuriya in 2001. None of the foregoing convinces this author.

It is a misnomer and a figment to term the present economic regime neoliberal for the following reasons:

  • Firstly, the regime of President Rajapaksa has not only avowed NOT to privatise any state-owned enterprises but gone further and reversed few major privatisations (total or partial) undertaken during the previous Kumaratunga government such as the privatisation of Air Lanka (partial privatisation to Emirates Airlines) and Ceylon Gas Company (total privatisation to Shell Gas Lanka). In addition, few privatisations such as the Sri Lanka Insurance Company and Lanka Marines were reversed on the order of the Supreme Court. Only the partial privatisation of Sri Lanka Telecom under the Kumaratunga regime survives renationalisation to date.
  • Secondly, expansion of the public administration in terms of recruitment of personnel (leaving aside the recruitment to the armed forces) under the Rajapaksa regime has been unprecedented after independence.
  • Thirdly, the Rajapaksa regime does not follow the principles of market forces as exemplified by the construction of a second international airport and a new harbor in Hambantota (hometown of the President) where clearly there are no viable markets for an airport or a sea port.
  • Fourthly, the Rajapaksa regime has established a new airline called Mihin Air where there is no market for a second airline which is loss-making ever since its inception; even the re-nationalised Sri Lanka Airlines is running at a colossal loss of over US$2 billion annually in the past three years.
  • Fifthly, the proposed Comprehensive Economic Partnership Agreement (CEPA) with India was put on hold by the current regime due to the pressure by handful of economic nationalist private companies.
  • Sixthly, the government’s non-responsiveness to the withdrawal of the GSP+ by the European Union is also part of its national socialist ideology whereby trade concessions is accepted only on its own terms.

In lieu of Ahilan Kadirgamar’s false characterisation, I would argue that the current economic regime typifies National Socialism (as opposed to International Socialism of the Marxists or Liberal Capitalism – aka Economic Liberalism or Neo-Liberalism) whereby a state-led and dominated economic programme is advanced justifying wanton recruitment to the low productive (or even negative) public services, protecting, promoting, and even justifying monumental loss making state-owned enterprises and military-owned economic enterprises as indispensable for national security, national interest, and sustenance of the welfare populist state, and nurturing and promoting enterprises of the majority ethnic community (and superiority of the same) by vilifying minority communities (especially the Muslim community) and violently attacking enterprises owned by Muslim minority community using proxy fringe violent groups of deviant Buddhist bigots (such as Bodu Bala Sena, Ravana Balagaya, et al). Next target could be the enterprises owned by the Christian and Hindu minority communities.

I acknowledge the economic woes of Sri Lanka highlighted by Ahilan Kadirgamar in his polemical piece. However, I beg to differ with him on the cause/s of economic woes experienced in recent times. I would instead argue that it is precisely because of lack of neo-liberalism that Sri Lanka is heading towards precipice, economically and politically.

*Muttukrishna Sarvananthan is a Development Economist and the Principal Researcher of the Point Pedro Institute of Development (http://pointpedro.org) in Northern Sri Lanka. He can be contacted at sarvi@pointpedro.org

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Latest comments

  • 0

    People; are a nations wealth and they should be given the opportunity to create/develop market forces rather than wait for the customer. A government’s priority is to legislate the right environment/conditions. Government’s role is to govern and leave it’s people to manufacture products and create services. One of the incentives offered to customers is trust/confidence in their product/service. The white elephant infrastructures can be turned around by promoting social harmony within all ethnic groups. Remember, social harmony precedes economic prosperity. The ‘two-face’ mentality of the ruling family cannot fool people all the time; ‘once bitten twice shy’

    • 0

      Nice to have a proper debate on the economy since that UNP clown Harsha de Silva has very limited analytic skills and is horribly Colombo-centric.
      Very good points Dr. Sarvananthan, but I think we need to be a bit more careful and subtle in our analysis of the beast that is Rajapassa and his putrid economic policies. IT is NEITHER fish flesh NOR Fowl!

      You are right to call it Nationalist Socialism Dr. Sarvi, BUT Akilan is right too since what we have is a NEO-LIBERAL FACE. Why do you think the World Bank and ADB are funding the Ministry of Defense and the consolidation of Gota’s DEEP STATE that fronts the military dictatorship with a FACADE OF DEMOCRACY Dr.??
      The economy is neither black nor white, neither fully neoliberal nor fully socialist nationalist. IT is something in between – to suit maximum looting by Rajapassa brothers, sons, extended family and cronies and ensure the transfer of public wealth into private hands.
      OF course, your analysis of neoliberalism is legal-rational profit making – but often the profits are privatized among a few as we have also seen in US and EU with the crash.
      When it comes to privatizing the public wealth today in Lanka- it all goes ONLY to the Rajapassa family and cronies who are hell bent on neoliberalism to legitimize their take over of public corporations and national assets.
      Now, boys, Akilan and Dr Sarvi you both should work together and engage the World Bank and Asian Development Bank that are funding the bloated military and the Ministry of Defense via UDA. The military needs should be DOWN SIZED and Right sized. These agencies are paying soldiers’ wages. They preach “good governance” but practice the opposite funding the Ministry of Defense which has NO TRANSPARENCY.
      Transparency international must take up this issue too. WB and ADB in Lanka should STOP pretending that they are deaf and dumb and be FORCED by civil society to STOP funding the Ministry of Defense and the military dictatorship..

      • 0

        Thanks, thanks! Right on! Lets’ talk economy – political economy for a change…
        Don, nice intervention and agreed, One part of the current equation is: enabling Rajapassa maximum looting and the other half is pure IGNORANCE and ARROGANCE..
        The white elephant port, airport, stadium, convention centre and god knows what else and the throwing of good money after bad to sustain these white elephants which should be shut down with Mihin, and other Rajapassa crony packed loss making enterprises that is the cause of the falling rupee is all about IGNORANCE AND EGO.
        Anyone with a bird brain would know that Hambantota a sleepy fishing village with a population of 300,000 cannot support an international airport or the planned medical and industrial hubs since there are NO SKILLED human resources, professionals or a demographic base to attract them. Hambantota is a DEVELOPMENT DISASTER which is really hard to comprehend. It has happened because of the lack of analysis by the DEVELOPMENT INDUSTRY – INOGS, UN, WB, ADB and the silence of the Lankan ECONOMISTS… The Nimal Sandaratnes and other dodos like Harsha de silva and that pathetic Govt. excuse that passes for think tank – Institute of Policy Studies

  • 0

    No it is due to Tamils grabbing ALL the economic opportunities in Jaffna, Mannar, Vavuniya, Mulativu, Kilinochchi, Batticaloa districts and in Colombo City.

    If others want economic prosperity this MUST be stopped one way or the other.

    • 0

      Views expressed are a curse to any country. Blaming at the entrepreneurs at their success as a result of smart work will never produce progress rather it will scare potential investors to the country. This kind of remarks will keep Sri Lanka in the ‘begging bowl’ syndrome.

  • 0

    “I would instead argue that it is precisely because of lack of neo-liberalism that Sri Lanka is heading towards precipice, economically and politically.”

    SPOT ON!

  • 0

    ” I would argue that the current economic regime typifies National Socialism (as opposed to International Socialism of the Marxists or Liberal Capitalism”

    What do you think rehabilitating LTTE killers and suicide bombers, providing free houses and every thing else to Tamils, including Tamilnadu Illegal immigrants during the LTTE time ?, who supported a terrorist group against the govt – a SOCIAL WELFARE STATE. ?

  • 0

    I have some problems with both Sarvi and Ahilan. I am planning to devote my next (Sunday 16) column, in part, to this exchage.

    Please read; thanks.

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