16 May, 2022

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JVP + FSP + … = Way Forward

By Ameer Ali

Dr. Ameer Ali

Any meaningful and lasting solution to the current economic crisis has to come not simply by restoring macroeconomic stability but more importantly and fundamentally by restructuring the economy. This structural approach had been overlooked by all previous governments except under the leftist coalition of Sirimavo Bandaranaike in 1970s, which ended in disaster for a number of reasons among which an absence of pragmatism played a key role. Once again structural issues are conveniently ignored in the diagnosis presented by the Minister of Finance in his address to the Parliament. It was more like a tutorial submission by a student in neoliberal economics taught by IMF than a thorough understanding of the structural problems that had bedeviled the economy for decades. For instance, what has changed in the economic structure of the country since the British left, except the growth of a few small and medium size industries struggling to survive with yesterday’s technology and preferential tariffs from EU, and a tourist sector hit by the pandemic and prevailing political chaos? The minister’s diagnosis only scratched the surface of the wound and not the bacteria that is lying deep in the body.

It is a global phenomenon that since the advent of economic neoliberalism, financialization of economies had run amok diverting resources from the real sector towards the financial sector, leaving the latter with excess capacity and under production. It is this resource diversion that had particularly hit food production in several developing countries. In Sri Lanka too the financial sector has grown faster than the real sector since 1977 under JR’s open economy leaving the real sector deprived of productive resources. Wrong priorities, misplaced incentives and policies on the run by governments in power had crippled the country’s food production and that of other productive sectors. Tackling such structural dislocation would involve political confrontation with existing power relations. None of the present political parties except JVP and FSP have even a semblance of an agenda to face this confrontation? The call for a systemic change is epicentral to all public protests that have become a daily occurrence. Unless that change is brought about there is no permanent solution the country’s economic agony.

The present regime has totally destroyed even the little strength that the economy had through reckless mismanagement, loot, corruption and waste. This is why aragalaya demands the regime to pack up and leave the parliament immediately. But the President has declared emergency for a second time as a last ditch to protect his crumbling fortress. Like the first, this emergency too will fail unless he is willing allow rivers of blood to flood the Galle Face Green. Unlike the youngsters of previous decades who were driven by political romanticism, this generation, thanks to the network world of instant information, cannot be bought by false promises and threatened with force. If President Gotabaya thinks that their struggle could be put down by his gendarmerie let him think twice. He will plunge this country into an even more serious crisis. It looks that the government and the parties in opposition except JVP have still not grasped the maturity, sentiments and resilience of the generation of protestors that is occupying the Galle Face Green and other city centres in the country.

Fiscal reforms, sustainable debt levels, budget discipline, flexible exchange rates, tight monetary policy etc. are ready made prescriptions contained in a typical IMF reform package. Even if these reforms were to be implemented in full unless the country’s real sector takes off there is less hope for sustainable economic revival. A primary condition for such revival is political stability.

In one of my previous contributions to this journal I alluded to the final stage of what took place in Tahrir Square in Cairo. I am afraid that GR is trying to replicate that experience in Seri Lanka. However, unlike Cairo where anti-Mubarak protestors did not have support from any political party inside the legislature, except the Muslim Brotherhood, which had a different agenda, aragalaya has support inside the parliament such as from JVP and other progressives from other parties. Outside the Parliament too there are civil society leaders, intellectuals and religious leaders who would not tolerate government’s highhanded actions to suppress the protests. There is also a vibrant expatriate society willing to lend active support to the ongoing struggle. Hence, GR would have to face a hostile world opinion. Is he going to challenge the whole world for a confrontation? His stupidity will certainly jeopardize even the IMF effort to lend support to the economy. Let those who are supposed to inject virtuosity allow sanity to prevail to save the nation.

Rajapaksa regime is living on borrowed time. Sooner it goes better for the country. But what is the alternative? Economy no doubt is the immediate concern. Dollar crisis has to be eased with added urgency to make living littler more comfortable to the masses. IMF assistance is a must, and CBSL with its new chief who has a proven record of expertise has to play an independent and heroic role. All that should however go hand in hand with structural reforms to the economy, which will entail fundamental changes in power relations. That requires a political regime with a progressive plan to spearhead those changes. From the stock of political parties that the country has at present, a broad coalition led by JVP + FSP promises the only way forward.

*Dr. Ameer Ali, Murdoch Business School, Murdoch University, Western Australia

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Latest comments

  • 1
    0

    The more they stay in power the will the discoveries of their history associated for gaining self benefits and losing The most luxurious possession, the richest treasure anybody has, is his personal dignity. the people are showing the IMF the failure of economic policy backed by 225 parliamentarian and future stability and Finance Minister accepting the failure how will IMF target a sustainable to shape improved futures goals that the Fund will be released.

  • 3
    1

    There is a long missing link:
    How does JVP (hopefully with FSP backing) take over from the GH green protesters?
    *
    I fear that AA is running short of ideas.

  • 3
    3

    “For instance, what has changed in the economic structure of the country since the British left, except the growth of a few small and medium size industries struggling to survive with yesterday’s technology and preferential tariffs from EU,…”
    The distortions in the economy are best seen in the fact that around 10% of able-bodied males prefer to drive tuk tuks as a preferred vocation. Imagine the waste of resources in just educating these guys for 10 years when all they needed was the ability to count the change?

    • 3
      0

      OC
      The guys find it profitable that way.
      Why were White Australians happier being on the dole than earn a living? (This was like 10 years ago.)
      It is all down to certain ‘laws of economics’ that government and opposition do not understand.

  • 3
    0

    JVP+FSP = PRSL Peoples Republic of Sri Lanka and China cancels debts.

    • 2
      1

      Wow! Hope so!

    • 0
      0

      S
      That is 10% of the debts, if your political sums are right.
      What about the rest, mostly to private lenders?

      • 1
        1

        The rest simply won’t be paid. With no Western nations or international lenders willing to lend, we will become dependent on countries like China, Cuba, and Vietnam for our existence. The JVP-FSP combination will usher in Communism and complete state control. Protests like Galle Face will be never be allowed. Can we imagine a time when we look back on the Rajapaksa criminals with nostalgia saying “Well at least we could protest a little”? It is a nightmare scenario.

        • 0
          0

          Paul
          Can you name one country that has achieved the feat that you have suggested.
          You are worried about complete state control. What did we have here all this while?
          *
          “Protests like Galle Face will be never be allowed” (Does this make Gota’s regime democratic?)
          More correctly, there will be no need for them when power is devolved..
          *
          There have been some protests in Cuba and Venezuela, often incited by the US. No non-violent protest was interfered with by the state.

      • 2
        0

        SJ as you point out, most of the debt is owed to private lenders. It would take a long time to repay but most nations exist on debt dont they?

        • 0
          0

          S
          Not most, all nations have debts.
          The question is their affordability.
          If a good part of the GDP goes on servicing loans, what will happen to the economy?

  • 3
    1

    Yes, AA! JVP-FSP is the way forwards! (Hey,…what happened NPP…did they change their name?)…add a Sajith coalition to it too, to tie in just a few IMF loans if possible (selling a little bit to the Ams is ok). MMT might work splendidly too, then.

    Guess, the Rajapaksan plan is to implement the hard-labor rigorous Austerity measures, after they put the Motherland into this mess. Might have worked with far less rigor if Gota did it at the start of his term. But no, his ideology, unbelievably, is the ultra-capitalistic Donald Trump one meant for a rich country like America. So, if they to go Socialist now it will be a Kingly socialism with *Them* as Kings, holding the money of the hardworking-suffering-Lanka-Masses, and the Masses, their slaves. Maniacal Rajapaksan dreams indeed! Sci-fi horror story in the making.

  • 1
    1

    Yes, Dr Ameer Ali,
    .
    I agree that the JVP must take the lead; they contest elections as the NPP, and that, too, is welcome.
    .
    A week ago, at 11.45 pm, I was preparing for bed, my alarm set for 5.30 am on Sunday, May Day.
    .
    More observations to come, but basically, the problem for the NPP, at village level, is that they lack funds, and recognition as the major and credible force that they ought to be.
    .
    On Sunday, we travelled to Matara in a bus hired by the NPP; I asked my fellow travellers about the FSP, and they agreed that they are a committed lot. There was general agreement, but the main problem seems to be that the FSP membership is wedded very closely to Marxist ideology; their split from the JVP had been precisely because of the formation of the NPP which accommodates guys like me who have little inclination to study Das Kapital.
    .
    We all agreed to persuade the FSP to join the NPP. If my writing seems to suggest that I’m an important member of the NPP, that is wrong; I’m only a fairly enthusiastic supporter.
    .
    Panini Edirisinhe/ Bandarawela

  • 1
    1

    Yes, Dr Ameer Ali,
    .
    I agree that the JVP must take the lead; they contest elections as the NPP, and that, too, is welcome.
    .
    A week ago, at 11.45 pm, I was preparing for bed, my alarm set for 5.30 am on Sunday, May Day.
    .
    More observations to come, but basically, the problem for the NPP, at village level, is that they lack funds, and recognition as the major and credible force that they ought to be.
    .
    On Sunday, we travelled to Matara in a bus hired by the NPP; I asked my fellow travellers about the FSP, and they agreed that they are a committed lot. There was general agreement, but the main problem seems to be that the FSP membership is wedded very closely to Marxist ideology; their split from the JVP had been precisely because of the formation of the NPP which accommodates guys like me who have little inclination to study Das Kapital.
    .
    We all agreed to persuade the FSP to join the NPP. If my writing seems to suggest that I’m an important member of the NPP, that is wrong; I’m only a fairly enthusiastic supporter.
    .
    Panini Edirisinhe/ Bandarawela

  • 2
    1

    “From the stock of political parties that the country has at present, a broad coalition led by JVP + FSP promises the only way forward.”
    Why cannot think beyond the stock for immediate purpose ?

    • 0
      0

      A
      Why don’t you give it a try?
      If you get out of the cage of narrow nationalism you may succeed.

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