20 August, 2017

ETCA Or Any Other Policy Is Destined To Fail If Not Properly Managed

By W.A Wijewardena

Dr. W.A Wijewardena

Dr. W.A Wijewardena

The best economic policy doesn’t guarantee its success

A country may have the best economists who could come up with a set of best economic policies. Simply because a ‘policy is the best’ does not mean that it would be a success. That is because policies are implemented in the field among people of diverse interests, tastes and ambitions. The list of such people is long. But the key characters, loosely called ‘stakeholders’, include the people at large, critics, Parliamentarians, bureaucrats and foreigners. A policy becomes successful only when it is managed properly among its stakeholders.

Getting support of the people for policies without tears and pains

Economic policies in the past, specifically those intending to introduce market reforms, budgetary discipline, stability in the domestic prices and the exchange rate, have been failures mainly because of the bad policy management. These policies become necessary when a country has ‘lived beyond its means’ creating vast holes within the economy which cannot be filled with available resources. The inevitable corollary is the ballooning of the country’s indebtedness to its own citizens in the case of domestic debt and to foreigners in the case of foreign debt. This, however, worsens the country’s ailments because, now, more and more resources have to be utilised to service the creditors.

The reversal of the trend calls upon people to sacrifice the wellbeing which they have been enjoying unabashedly. But when the situation becomes chronic and acute, as was the case with Greece in the recent past, there is no alternative except getting people to tighten their belts. But, how to get the people to tighten the belts without ‘tears’ and ‘pains’ is the challenge before governments that are required to introduce such painful economic reforms.

Critical economic crisis faced by Sri Lanka

Sri Lanka today is exactly in such an economic mess. Its debt levels have grown beyond its ability to service them without tightening the belts of the Government. In the recent past, the money spent by the Government for repaying debt and paying interest has been more than the Government revenue. Hence, without funds for maintaining the normal services, the Government had to incur more debt not only to repay the principal but also to pay interest on the past borrowings.

This is a critically vulnerable situation for Sri Lanka. Despite the growth in the economy, the Government revenue had fallen as a ratio of the country’s total output, known as the Gross Domestic Product or GDP. Since there was no corresponding cut in the expenditure, the deficit in the budget remained stubbornly high. An artificial reduction in the budget deficit as a ratio of GDP was attained not by cutting the Government’s consumption expenditure, but by curtailing its capital expenditure. The result was the slow growth of the country’s capital stock stunting its future growth potential.

Central Bank making losses partly due to interest outpayments

Since actual growth was below expectation, the Central Bank sought to address the issue by loosening the monetary policy. Interest rates were kept deliberately at low levels, while banks were compelled to extend credit. A part of the Government’s financing requirements were met by resorting to a process known to ordinary laymen as ‘printing of money’. It increased the liquid cash levels among the people compelling the Central Bank to take it away from them by paying interest creating new money in a second cycle when commercial banks chose to park such excess liquidity with the Bank. The result was a net interest out-payment. In 2014, the year in which the new system was introduced, they amounted to Rs. 18 billion in comparison to Rs. 3 billion in 2013. Such interest out-payments not only added further liquidity to the existing excess liquidity but also caused the Central Bank to incur losses in its overall operations.

Excess money leaking out of Sri Lanka via imports

The excess money in the hands of the people forced them to spend more on imported products since the low interest rates which the Central Bank had introduced to stimulate the economy had discouraged savings. The corollary was the increase in the import bill, on the one hand, and creation of a deficit in the trade account of the country, on the other. The country was fortunate because it could temporarily part-finance the deficit out of the remittances received from Sri Lanka’s workers labouring abroad. However, there was still a deficit in the current account of the balance of payments and therefore, the country had to borrow more to finance the deficit in its external sector. This put pressure on Sri Lanka’s exchange rate to depreciate in the market.

Vulnerability of growth based on services without faster growth in real agriculture or industry

Economic growth in the past had basically been attained by allowing the services sector to grow faster. This was specifically manifested by a fast growth in trading activities, telecommunication and banking services. However, in the absence of a corresponding growth in the real agriculture and manufacturing, the services sector soon reached its saturated point. The result was the failure of the services sector to generate a continuously high economic growth as it had done before. Hence, the growth rate in Sri Lanka is now slowing down.

Failure to inform people has been costly for the present Government

This situation was well known when the new Government came to power in January, 2015. Hence, what the Government would have done was to conduct a quick survey to assess the country’s true position and alert the people. This was not done. Instead, the Central Bank in its Annual Report for 2014, issued in April, 2015, had continued to hide the true situation from the public as it had done during the reign of the previous Government. Hence, lulled by the rosy picture painted by the Central Bank, in the eyes of the public, the current economic crisis has been an ailment created by the present Government.

This would have been avoided had the Government disclosed the full facts to the people right at the formation of the new Government in January 2015. Such a disclosure would have prepared the people to face the hard economic realities that are to come in their way in the attempt of the Government to rescue the economy. Such a disclosure policy would have enabled the Government to marshal the support of the people to introduce the painful policy action which it is required to take now to put the economy on a sustainable growth path.

Outside ‘auditors’ reading the Sri Lanka economy correctly

Though the true picture relating to the economy has been kept secret to the people, it has been known to the outside auditors of the country all throughout. Such auditors consist of the rating agencies which have to rate the country’s creditworthiness, IMF and the World Bank which have to provide balance of payments and development support, respectively, to the country.

Having dug into the hard economic data of the country and having made a realistic risk assessment regarding the country’s future debt servicing capabilities, the Fitch Ratings has downgraded Sri Lanka international credit standing from -BB to +B and changed the country’s future economic outlook from stable to negative. Though the Moody’s Rating Services did not downgrade Sri Lanka’s international credit rating, the report it has submitted had warned about the possibility of Sri Lanka’s defaulting its external debt.

The Standards and Poor’s Rating Agency had earlier downgraded Sri Lanka from -BB to +B while assigning stable status to the country’s economic outlook. However, going by the Fitch Ratings, S & P has changed its opinion on the economic outlook of the country from stable to negative. In addition, it has placed Sri Lanka on the watch list and warned that, if the country did not put its house in order within the next 12-month period, even the current rating at +B would be changed by the agency for the worse in the future. What this means is that hiding economic facts does not serve the long-term interest of the new Government.

Anyone who is interested in knowing the true position of the country can do so by referring to the alternative publications done by numerous independent think-tanks. The Institute of Policy Studies and Verite Research are two such independent think-tanks that have realistically analysed the country’s true economic picture.

ETCA has been badly managed

The inaction of the Government has been seen in the management of the opposition to the proposed ETCA to be signed by Sri Lanka with India. As this writer had argued in the previous articles in this series, the secrecy maintained by the Governmental authorities on ETCA had allowed critics to label it as an outright sell-out of the country to India. The critics have become popular among professionals because they have highlighted certain issues directly relevant to them. The arguments presented by these critics seem to be plausible but cannot hold water when a thorough analytical study is done on the issue.

Misconceived failure of ILFTA

The critics have argued that the Indo-Lanka Free Trade Agreement or ILFTA has been a failure. To support their argument, they point to the widening trade gap in absolute terms with India since the signing of ILFTA. According to them, the trade gap that stood at $ 531 million in 2001 has jumped to $ 3,828 million in 2011 before declining to $ 2,549 million in 2013. Hence, the critics say that ILFTA has favoured India and not Sri Lanka. This is a misconception and a conclusion arrived at by glancing at the information available on the surface.

Trade under ILFTA 2000-2013Trade under ILFTA 2000-2013

Source: EDB and calculations of the author

In ILFTA, the differences between the size of the two countries were taken care of

However, a study done by the Export Development Board in April 2014 has gone into the depth of ILFTA and reported a different story. When signing ILFTA, the difference in the size of the two countries was taken into account and sufficient safeguards were introduced to protect the interests of Sri Lanka in the event of the mighty India swallowing the country. Accordingly, Sri Lanka was permitted to have 1,180 items under tariff lines without duty reduction, also known as the negative list, when it imported goods from India.

In the opposite, India was allowed only to have 429 items at six-digit level on the HS Code in its negative list. When Sri Lanka’s negative list is converted to six-digit level on the HS Code, its negative list is substantially large protecting the interests of Sri Lanka. Hence, the fear that India was to swallow Sri Lanka through ILFTA had been harboured without foundation.

The growth in trade deficit is via imports outside ILFTA

When Sri Lanka’s trade with India after the implementation of ILFTA in 2000 is separated into those items coming under ILFTA and those outside ILFTA, the picture shows a completely different scenario. This is presented in the Table. Since Sri Lanka’s negative list is too vast, almost 90% of its imports from India are outside ILFTA. Since they are subject to normal Sri Lankan tariff rates, they would come to Sri Lanka irrespective of whether there was a free trade agreement or not. That is because those goods are needed by Sri Lankans either for consumption or for use as inputs for further production. If they had not been imported from India, they would have been imported from some other country.

Sri Lanka’s exports mainly via ILFTA

On the other hand, India had a very short list of items in its negative list of items that are not entitled to receive duty concessions. As a result, almost 90% of Sri Lanka’s exports to India had been covered under ILFTA. These exports included spices, natural rubber and rubber products, poultry feed, insulation wired and cables, copper and copper based products, paper and paper products, furniture, garments and ships and floating vessels.

Trade gap attributable to ILFTA has shown mixed results

The trade gap between Sri Lanka’s exports to and imports from India under ILFTA during 2001 and 2013 has shown mixed results. On one side, the gap had been kept at a low level indicating that both imports from and exports to India have been almost at equal levels. On the other, during this period, trade gap under ILFTA was in favour of Sri Lanka in five years; it was in favour of India in eight years. Thus, it is not possible to dismiss ILFTA straightaway as an agreement favouring India outright.

Indian State Governments’ prohibitive taxes should be neutralised by giving full duty waiver by the Central Indian Government

It is also pointed out that India’s State Governments do not cooperate with the Central Government and therefore charge additional duties when Sri Lanka’s products enter those states. The cases in point are Tamil Nadu and Maharashtra. This is inevitable since India’s State Governments are empowered to charge their own duties when such goods are moved through those states. What should be done to protect the interests of Sri Lanka’s exporters is to negotiate with the Indian Central Government to give completely a zero duty level to such goods under the new agreement to be signed.

Losing steam on ILFTA after the initial years

The opposition to ETCA is based on the perceived failure of ILFTA. The failure has been viewed from the point of India having a huge trade surplus with Sri Lanka. But this perception is erroneous, as pointed out above, since that trade surplus has been in connection with goods that have not been covered under ILFTA. However, the recent trade data with a declining share of exports under ILFTA show that Sri Lankan exporters have not been so active as they had been in the initial years of the implementation of the agreement. It appears that they have lost steam in their attempt at penetrating the Indian market. This is also a policy management issue. Thus, it is the responsibility of the Government to address such issues in continuing bilateral negotiations with India, on the one hand, and having continuous consultations with the country’s private sector, on the other.

A continuous dialogue a must for success

To be successful, it is necessary that all stakeholders involved in economic policies should be constantly kept informed of the correct facts. Such knowledge building helps to take the fear out of the vulnerable groups by empowering them. Such an empowerment will serve another purpose: That is, it will provide ammunition to ordinary laymen to assess logically and critically the arguments put forward by critics and arrive at their own conclusions. This is necessary for successful implementation of painful but essential economic reforms. This is what the Government should do in its economic policy management if it desires to attain success in policies.

*W.A. Wijewardena, a former Deputy Governor of the Central Bank of Sri Lanka, can be reached at waw1949@gmail.com

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Latest comments

  • 4
    1

    Dr Wijewardena has given us plenty to think about.

    WE must engage with the rest of the world, including our nearest neighbours. WE must bring in much needed foreign investment. BUT, first WE must get our act together. WE must have the best brains working for us. WE must have all the facts in the open so that ALL stakeholders have the chance to shape the final result.

    Why do we get the feeling that some of the detail relating to ECTA is under covers? Who is playing coy Roy?

    • 5
      3

      Spring Koha

      We must also demand a piece of the pie that India is baking.

      We are not begging, but demand as a right.

      • 2
        1

        Native Vedda, Absolutely!

        It should be no quarter asked, no quarter given.

        We had better safeguard our equitable share of the pie, because, for sure, our equal friends in the north will not be doing us any favours.

        AND, YES, NO BEGGING.

        Begging is so very yesterday.

      • 2
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        @Native Vedda
        What makes you think we can do anything other than Beg from India ?

        • 2
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          maalumiris

          “What makes you think we can do anything other than Beg from India ?”

          What else does this thrice blessed country do better than going around with a begging bowl?

          Between 2005 and 2009, during the peak of the war Hindia lent this island more than $1 billion. The loan/grant was given towards war expenditure.

          Since the war had ended Basil been to Hindia on several visits. Hindia promised to build free 50,000 houses.

          Hindia has already opened a few language labs and hospital.

          This island should be looking after the poor in India not the other way around. For example building a few toilets perhaps.

          This country should have sent relief goods to India just after the tsunami, not the other way around.

          This island should have sent a peace-keeping force to Kashmir, not the other way around.

          I can go on, and on, and on ….

          • 2
            0

            @Native Vedda

            “I can go on, and on, and on ….”

            Yes indeed … and you do it so very well !

            • 2
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              maalumiris

              “Yes indeed … and you do it so very well !”

              Thanks to smart ass patriots.

              • 2
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                @Native Vedda

                Well, at least you admit you are no patriot, just a foul-mouthed, sit-on-the fence type – with no real position of your own

                • 2
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                  @maalumiris
                  You have been very rude to Native Vedda ! Apologise this instant !

                  @Native Vedda
                  I apologise for my unnecessary outburst

                  • 1
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                    maalumiris

                    “@maalumiris You have been very rude to Native Vedda ! Apologise this instant ! @Native Vedda I apologise for my unnecessary outburst”

                    Come on, I am no patriot as some Sri Lankies want to define patriotism. I am no patriot as some smart ass patriots want to define it.

                    By the way, you don’t have to apologise for anything you say in this forum.

                    I thrive being insulted. It’s a lot of fun.
                    I am not a masochist either.

                • 1
                  2

                  maalumiris

                  “Well, at least you admit you are no patriot,”

                  Two quotes from the past to clarify my thoughts on patriotism, which I also think is a convenient place to hide, crooks, tyrants, racists, bigots, ……:

                  Patriot: the person who can holler the loudest without knowing what he is hollering about.

                  -Mark Twain

                  Patriotism is not a short and frenzied outburst of emotion but the tranquil and steady dedication of a lifetime.

                  – Adlai Stevenson

  • 2
    1

    Forget CePA and ETCA. Let’s go the whole hog and have an Economic Union with India, with a common currency. It is quite obvious that we can’t manage a modern economy, so let someone else do it for us, even for a limited period.

    • 3
      3

      Old Codger

      “Forget CePA and ETCA. Let’s go the whole hog and have an Economic Union with India, with a common currency.”

      You are asking for trouble.

      We the little islanders value our imagined “sovereignty” more than our lively-hood.

      Since we defeated the LTTE and bashed the Tamils, we consider ourselves as one of the leading super powers of this world.

      We also command the international resource markets, financial systems, finest armed forces, and leaders in academic excellence and science and technology.

      Lets keep gloating, it is very inconsiderate of you to prick our ego.

      Since USA is the largest debtor country in the world we too want to be in par with them.

      Therefore don’t mention the debts that this island owes India which amounted to more than $1 billion for the war afford. I am not sure we have repaid the entire amount.

      Now that India has provided several currency swap facilities amounting to more than $1.4 billion, we are still top in the great game.

      I think you should stop belittling this great island nation.

      • 2
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        OK, let’s have an Economic Union with Maldives then? Even they seem to manage better.

        • 2
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          Old Codger

          “OK, let’s have an Economic Union with Maldives then? Even they seem to manage better.”

          You are missing the point.

          Since this is the greatest nation on earth, SAARC, EU, NAFTA, ASEAN, Gulf Council, African Union, NATO, Russian Federation, China, Common Wealth, NAM countries …. have been queuing to join us, not other way around.

  • 2
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    @Old Codger, @Native Vedda

    I love the Mutual Admiration Society that you guys have set up between yourselves. !

    It must be comforting to exchange view with someone who always agrees with you 100%!

    :)

    • 2
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      maalumiris

      “It must be comforting to exchange view with someone who always agrees with you 100%!”

      Re-read our comments once again please.

      Could you point out where have we agreed.

    • 1
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      maalumiris,
      Great minds think alike, so they say!
      But seriously,
      Find somebody who is as literate as you seem to be and set up your own society. Most of the critics seem to have no better arguments than “they bombed us with parippu in 1987” or “the trade gap with India has increased after the FTA”
      A good example is SJ below,who says:” If we cannot learn from the Free trade Agreement of 1998, can we try learning from Nepal and Bhutan? “.
      It has been pointed out ad nauseam that the increase in the trade gap comes largely from vehicle imports, which are NOT included in the FTA. Buses, trucks,and cars are very high value items. In 1998, Indian cars and bikes were looked down upon as being of low quality.Where else could we get them from now? China? Korea? Ask any bus owner!
      If the critics keep repeating this same discredited mantram every time, it is not our fault.The FTA has NOT failed. Some of our people simply are no good at business except with state protection. This is the real reason for the protests.

      • 2
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        @Old Codger

        See, I still have hope this country can improve with judicious and strategic planning. Unlike you who probably are finding it very difficult to divorce yourself from a colonial mind-set where we are stupid and everything else is awesome., brilliant and must be emulated – and because we are a small country, it is our lot in life to be steamrollered by bigger economies ? As you said, Indians are hard customers and we agree there.

        Thanks but no thanks

        Yes, you are probably right that Tatas and Ambassadors have contributed to this trade imbalance. Why is that ? It is because the original FTA or whatever agreement that was signed was not done properly and allowed vehicles to be exempt

        What’s to guarantee that the mysterious FTA you are peddling will not do the same and end up increasing this imbalance ? Are you going to guarantee it will not ? Will you warrant that our unemployment rates (bad enough already) will not rise ?

        Are you going to trust to luck and your recommendations to make sure it works ? Will you pay out the dole if you are wrong ?

        I say you know no better than anyone else here and are just whistling in the dark – making you equally stupid as all the rest of us

        • 2
          2

          maalumiris

          “Yes, you are probably right that Tatas and Ambassadors have contributed to this trade imbalance. Why is that ? It is because the original FTA or whatever agreement that was signed was not done properly and allowed vehicles to be exempt “

          You should talk to the Sri Lankan local Tata agent as to why they had imported so much third class vehicles from India while the best ones are being produced by Germany, Sweden, Italy, USA, ……. Japan. Korea, France, …..

          Does FTA shove Indian manufactured motor vehicle into local agent’s throat? Sri Lanka has no obligation to buy Indian vehicles. There are other reasons they continue to import them.

          It is up to the local agent and government to find alternative modes of transport, such as කරත්ත (karatta) cart pulled by bulls, bicycles, Ravana’s Puspak Vimana (flying machine), Superman’s flying technology from planet Crypton, Tarzan/Spiderman leaping exercise, Horse/Elephant ride, ….. rickshaws (pulled and pedalled), teleporter, …… hyperloop, Human magnetic levitation, …………..

        • 1
          0

          Maalumiris,
          You still haven’t understood what I (and Dr.Wijewardena) are trying to make clear.
          He says (supported with data):
          “When Sri Lanka’s trade with India after the implementation of ILFTA in 2000 is separated into those items coming under ILFTA and those outside ILFTA, the picture shows a completely different scenario. This is presented in the Table. Since Sri Lanka’s negative list is too vast, almost 90% of its imports from India are outside ILFTA. Since they are subject to normal Sri Lankan tariff rates, they would come to Sri Lanka irrespective of whether there was a free trade agreement or not. That is because those goods are needed by Sri Lankans either for consumption or for use as inputs for further production. If they had not been imported from India, they would have been imported from some other country.”
          So, clearly, the FTA has NOT contributed to the trade gap.

          Now,you say:
          “Yes, you are probably right that Tatas and Ambassadors have contributed to this trade imbalance. Why is that ? It is because the original FTA or whatever agreement that was signed was not done properly and allowed vehicles to be exempt.”
          Dear Maalumiris, vehicles are NOT exempt.Otherwise we would be able to buy a Maruti for 5 lakhs.
          I never called you stupid.You seem more literate than many of the other critics. So please check out the facts that Dr. Wijewardena has clearly explained.
          Trade involves buying and selling. If a lot of the stuff we want is cheap in India, doesn’t it make sense to buy it from them? It is the total trade gap that matters, not the gap with any particular country. If we have something we can sell to them, well and good, but if not, we simply sell it to somebody else .
          Could we for example avoid buying computers and electronics from China?
          The problem is that we spend for imports more than we earn with our exports . That is not India’s fault, it is ours. If you pay a visit to India, you will see that they have many many new highways and airports, but they are not as shiny and sophisticated as the ones in debt-ridden Sri Lanka. We could learn from them how to live within our means.

          • 1
            0

            @Old Codger

            My Bad – I misread your post. My apologies

            Since you agree with Dr. W’s position, and as long as this proposed FTA is equitable to all, I have nothing further to add

            Though I am not sure I want SL to become India (esp in the social arena)

            • 1
              0

              Maalumiris,
              You should watch the ongoing “Gammedda” segment on Sirasa. It will show you exactly what sort of prosperity exists in SL. Some people in Trinco survive on boiled rice. 40% of the population are on Samurdhi. And of course a million women are slaves in the Middle East. I wonder who is making the $4000 per capita GNP?

              • 2
                1

                Old Codger

                You raised an important question.

                Without any form of subsidy can the country sustain agriculture as a viable economic sector?

                Then what do you do about it?

                Small holdings do not provide enough for the farmer, has become inefficient and loss-making.

                Collectivisation, mechanisation, adapting best practices, lifting ceiling on land ownership, are some measures that should be considered as a long-term sustainable alternative to existing structure.

                This then warrants other employment creation schemes.

                • 1
                  0

                  N.V,
                  “Small holdings do not provide enough for the farmer, has become inefficient and loss-making.
                  “lifting ceiling on land ownership, are some measures that should be considered as a long-term sustainable alternative to existing structure.”
                  I once read an analysis which concluded that the Sinhala business community was decapitated by the SLFP governments which nationalized
                  transport, the plantations,ports, Insurance and the graphite industry.
                  It is very difficult now to slaughter the sacred cow.
                  Why do we need a national airline, for example?

  • 2
    0

    If we cannot learn from the Free trade Agreement of 1998, can we try learning from Nepal and Bhutan?

    Al long as India wants to play Big Brother, it is good to be on the alert. Now the Big Brother has Big Bully to support him to boost the “Choke China” agenda.

    • 2
      2

      SJ

      “Now the Big Brother has Big Bully to support him to boost the “Choke China” agenda.”

      You too agree with the peacefully rising middle Kingdom.

      Of course China is a peace-loving country, it loves a piece from Russia, a piece from Kazakhstan, a piece from Pakistan, a piece from Kyrgyzstan, a piece from Tajikistan, …… a large piece from India and a whole nation of Tibet and now claims ownership of entire South China sea and surrounding islands.

      Of course, China is being choked.

      • 0
        0

        NV
        Thanks for agreeing on “If we cannot learn from the Free trade Agreement of 1998, can we try learning from Nepal and Bhutan?”
        Like you, I too do not want the Middle Kingdom to meddle in our affairs.
        However, the Middle Kingdom stopped its border claims where they stood in 1949.

        You can call China anything, but Sri Lanka has always had a reliable non-interfering friend in China despite a series of regime changes.
        China may change its ways, perhaps sooner than later. Until then its record is no threat to South Asia.

        It is India which is (along with Pakistan) illegally occupying Kashmir, has gobbled up Sikkim, is bullying land-locked Bhutan and Nepal. Manipur and Nagaland were not part of India and were annexed after independence.

        It is not a matter of resisting any one foreign domination, but all foreign domination, especially of those with a poor record in our matters.

        My fear is that when China is choked the US economy will die. I dislike US imperialism but like the American people.

        • 2
          2

          SJ

          “However, the Middle Kingdom stopped its border claims where they stood in 1949.”

          On 19 February 1979 Vietnam claimed to have stopped Chinese invasion after inflicting heavy losses on 12 divisions of Chinese Red Army (PLA).

          The Chinese aggression on Russia in 1969 was an open secret.

          China never stopped claiming two large pieces of Indian land the Aksai Chin and Arunachal Pradesh.

          China’s border dispute with North Korea has not been settled yet.

          China wants the whole Taiwan to itself.

          Bhutanese enclave is still occupied by China.

          Scarborough Shoal is occupied by China however, Philippines does want it back.

          China has put a claim on Myanmar’s Kachin State.

          China gobbled up Tajik’s 1,158 square kilometres territory in January 2011.

          Part of Kazakhstan was relinquished to China after heavy bullying.

          Another bullying resulted in Kyrgyzstan ceding to China about 125,000 hectares of territory.

          ………….

          If I could jog your memory a bit,

          What was China doing in Vietnam, Laos, Cambodia, Korea, … Nepal, Rhodesia,… Somalia, Uganda, …..

          Don’t forget the king Vira Alakeshwara was captured and dragged all the way to China where he was made apologised to the Emperor.

          “My fear is that when China is choked the US economy will die.”

          It is an American problem let them worry about it.

          “You can call China anything, but Sri Lanka has always had a reliable non-interfering friend in China despite a series of regime changes.”

          Yeah I believe you, which country has been the trusted supplier of weapons to this island after 5th April 1971?

          Do you really think China’s foreign policies have been benevolent and benefit less developed countries?

          China also loves a piece of land in Colombo port.

          • 2
            1

            My point is that India and the US pose the biggest threat to this country– not China.
            The Sinhalese and the Muslims are reasonably well aware of it. The Tamils, stuck in the colonial mindset, are a bit slow to learn.

            Keep jogging, good for you…. But not the way some did into Manusmrithi.

            • 2
              2

              SJ

              “My point is that India and the US pose the biggest threat to this country– not China.”

              You haven’t got any point.

              The biggest threat to this country is from within, as we have seen or heard since 1948, not from outside.

              If you are paranoid about Indian intention that is your problem. There is one way it can be solved, by relocating this island near to the South China Sea. Or as a counter strategy to the Indian one, invite China to rule the entire island. I am sure you will be much delighted with Chinese rule than with your own rule. I thought the Mao worshipping Chinese communists are extinct and assigned to history. It turns out to be not the case.

              “The Sinhalese and the Muslims are reasonably well aware of it.

              Are they?

              ” The Tamils, stuck in the colonial mindset, are a bit slow to learn.”

              The Tamils are stuck in the Sangam period, The Sinhalese are stuck with Mahawamsa myth going back to 600 BC, Muslims are longing for a Caliphate and the Christians are awaiting to see a kingdom of god.
              On the other hand, some of you are dreaming for a Kindom of Mao.

              “Keep jogging, good for you…. But not the way some did into Manusmrithi.”

              It is possible some of them jog straight into Manusmrithi, Some of them jog straight into Maoism. Some of them jog from Maoism back to Manusmrithi.

              Please do some research before you start typing. Then you do not need to wriggle out of the corner.

              If you do not treat your family well, strangers will grope your wife, mother, sisters, daughters, …. aunts, ….

              Please stop complaining and start caring about your family, strangers have no reason to interfere with your women folks.

              • 0
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                Keep jogging.
                Good for you.
                But watch your step, don’t go astray.

  • 2
    1

    A scholarly presentation indeed. ETCA apart, the looming economic crisis, dwindling foreign reserves, Balance of Payments intractability and grave choices ahead are highlighted.

    The writer sees a little glimmer in worker remittances. we have to understand the limitations in this type,of which about 52% is from Middle East, certainly not from high earners.

    World Bank estimates international migrants at 250 million and their remittance in 2015 at a little over $ 600 billion. Indians rank first by remitting around $ 72 billion in 2015. Professionals compose the highest segment.

    By comparison however small Sri Lankan diaspora or their remittance may be, one has to recognize the amount locked up and held back certainly for other uses. Tamils by far the larger diaspora segment have a strong reluctance to remit due to lack of trust and want of goodwill. If the sentiment is lukewarm in the last 7 years who can claim that the nation and the government have been more than lukewarm in the effort at rapprochement and reconciliation.

    It is unwise to treat the Tamil Diaspora as insignificant. A study showed that it is a third of SL Tamil population and among recent emigrants in 30 years, having the largest share (at 35%) of educated and employable among them. May it be noted that the second generation has entered the stream of professionals years back.

    It may also be perceived that as recently as last year on no less than 2 occasions they helped rescue the nation from despotism and even economic chaos, of course with streaks of self interest wishing for fair governance.

    When abused in November 2005, their inaction ushered in tyranny and blood letting. When crisis stalks the land and the economy, help can be forthcoming
    at this time of need. Trust needs to be built to bolster their perceived ideas of secure investment climate.

  • 3
    2

    All over the world, it has happened more than one time, two sides get into an agreement.

    then the powerful side or the conniving side, start doing what they want and not what should be done.

    Ultimate result will be Indian businessmen and Sri lankan Politicians gang to destroy Sri lanka.

    By that Ranil Is dead too old to respond probably died just the way JRJ died and every body start cursing even his grave.

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