Colombo Telegraph

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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