24 September, 2020

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Sajith Is In Gota’s & Ranil Is In Mahinda’s Pocket

By Kumar David

Prof. Kumar David

The economy is hard pressed; the state is being militarised: Sajith is in Gota’s and Ranil is in Mahinda’s pocket

What will happen up to and on 25 April is all but certain; still unsettled details such as the fracas in the UNP are of limited consequence. Today is the Ides of March so don’t tempt providence. From long before 44 BC, when they dispatched Caesar, the Ides (plural) were days for settling debts; before they were occasions for revelry but that soothsayer’s “Beware the Ides of March” ruined it. Afterwards, it was mourning; formalized to three days by Claudius (reigned 41-54 AD). Paradoxically the Ides of March lap the vernal equinox, the coming of spring. Funny fellows these Romans! They did the best-known assassination in human history on what should have been a day of joy. 

After that diversion to shake off your Sunday stupor, allow me to introduce some rough and ready numbers. Not election predictions; just pegs to hang this conversation. I propose the following pegs. The SLPP (including Sirisena’s rump) will win about 125 seats; the UNP (Sajith and Ranil whether they contest separately or together will not matter much) say 65 seats; the TNA about 15; the NPP (JVP) and other odds and ends about 10. This leaves 10 to float this way or that; the pegs I told you are a rough reckoner. The point is not peg precision but usefulness, since now these pegs burst into perspective.

1. The government led by MR and will have a stable majority.

2. GR will enjoy 19A-constrained presidential powers; or to put it in more brusquely the two-thirds to amend the Constitution will not be available on 26 April. 

3. What shenanigans will then follow (I have zero trust in Sajith and Ranil) or how many MPs will be purchased to reach the nirvana of 150 – well your guess is as good as mine.

4. The bottom line is that without repealing 19A MR will be more powerful than GR. 

5. Nevertheless, the government will be able to legislate without restraint.  

6. GR as president will have a free run to use and abuse the security apparatus; deja vu.

7. What influence GR’s Viyathmaga business tycoons and ex-military cabal will command depends on how many are included in the candidate list and win seats. I think not many.

The conclusion is that politically it will be something of an Ides of March for Gota; the old Mahinda cabal of disreputable ministers and family hangers-on will consolidate. My friends who are Gota loyalists have a “Just see after the election” song on their lips. They are whistling in the wind. It will be a no change through-train I reckon. Economic policy making will stay under the control of Mahinda and his cabinet; so, I wish to orient this piece to reflections on the economy.

Things look bad, maybe very bad. Not due to the actions of this government, it has not even got started, but because many ongoing trends are negative. I am not only referring to slowing of economic activity and global supply chain disruptions due to coronavirus. This will pass and even in the worst case the world will be over the worst economic hurdles by late this year. What I am pointing at is a number of crucial domestic factors, debt, growth, exports, reserves and development projects, all of which are not doing well. I had a shot at arranging this list in order of importance but that was difficult. 

For those who like in-depth reading I recommend Chandra Jayaratnne’s “Citizens await pre-election budgetary report, Namini Wijedasa’s “Govt cash strapped projects” (Sunday Times 8 March), Weeraratna’s “Trade and budget deficits” (Business Times 8 March) and  Nimal Sandaratne who repeats himself half a dozen times – is he paid by the word? -in exactly the same words in “Only a small balance of payments surplus” (Sunday Times 8 March),  but his repetitious refrain is worth noting. You certainly cannot accuse me of being behind times because all these sources when you read this column will be just one week old.

Prior to ploughing into Lanka talk I need to say a little about the world scene. I did not foresee in February when I dispatched by piece for 1 March that it would be so prophetic. The world economy is gummed up since China is the central cog in the manufacturing supply chain. Breakdown of these chains has had more serious knock-on effects than looming recession in the US. Recession threatens Japan and South Korea already, it will reach America and the West as lock-down continues. The global economy stands on five pillars; manufacturing, communications, energy, transport and finance. China is the heart of industry and infrastructure construction; it’s the hub of goods and components supply and sends components for communication systems and computers the world over. The slowdown has reduced its oil and coal demand upsetting the Middle East and Australia. A global stocks market slump is on. The 10-year US Treasury Yield has fallen to its lowest ever as cautious investors, wary about the health of the economy, flock to safe havens.

The flight to the bottom over oil price has commenced. The two largest exporters Saudi and Russia failed to agree on production quotas, hence price is plummeting. West Texas Intermediate and Brent have both fallen to the lowest in decades. S&P, Dow, Nasdaq, Hang Seng, Nikkei, Straight Times and Kospi are see-sawing as markets turn crazy. Are we on the brink of a Minsky Moment? There seems to be no sliver lining; the virus is feeding into asset-price boom demons that the Fed, ECB, BoJ, BoE and other central banks conjured up from the depths. The corona virus was the trigger, the real demon was in the fundamentals. Putin is playing the devils game by encouraging oil prices to plummet. His game is the bring about the collapse of American shale oil.  The break-even price for fracked-horizontal is $60 a barrel; ruin of shale production will trigger a recession in the US. At current trends 50% of US shale production will soon stop.

Gluttony for uncouth food started it in Wuhan, but China has been of service to the world in combatting the virus. Draconian measures, a showpiece of what needs to be done brought it under control, but an example hard for others to emulate. Hubei Province and many cities – 500 million people – were locked-down; two hundred million went home to the countryside for Lunar New Year but the government slowed their return for fear crowded trains, busses, factories and housing will speed up spread.  Western democracies can’t do this sort of thing. But China getting its act together won’t restore the global supply chain instantly. Production in China will be up within eight weeks but the rest of the world will not be safe till late summer (Northern Hemisphere). The oil price shocks and layoffs are likely to trigger a recession in the United States. This scenario will not help the Sri Lankan economy.

My Ides of March quip about Gota and the SLPP’s bad luck to have captured the presidency too soon and be poised to win a parliamentary election next month has bite to it. The four articles I named before all say that things are not looking up; their collective consensus is that economic prospects are dismal whoever is president, prime minister or government. The gloomy domestic scene is mediated by worsening foreign debt prospects both short and long term. The government is too broke to pay for work already done on major projects, and trade deficits remain so large that despite some improvements, balance of payments surpluses are small. In an overarching picture the government is embarrassed to release the ‘Pre-Election Budgetary Position’ (PEBP) as it is legally required to do by law. 

To add a little detail from the aforesaid pieces, the treasury is heavily in arrears in payment for work done in mega projects on the Central Expressway, water supplies, urban development and housing. Nilmini Wijedasa estimates current arrears at Rs26 billion. Sanderatne says though the trade deficit declined by $2.3 billion in 2019 the balance of payments surplus was only $0.38 billion. According to Weeratarna, 2018 imports were $22.2 billion while exports were just $11.7 billion and hence the deficit $10.3 billion (not $10.5 billion because the Central Bank does its sums in an odd sort of way). In 2019 thanks to tougher import controls this $10.3 billion trade deficit was brought down to $8.3 billion.

Balance of payments, the trade deficit less remittances, tourism earnings and foreign flows into the stock market, should have improved by $2.3 billion if these items remained unchanged. But tourism earnings fell steeply after April 2019, foreign investors in the stock market took some of their money away, and workers remittances declined for a variety of reasons. The result is that the 2018 balance of payments deficit of $1.7 billion did not reverse all the way into a surplus of $0.6 billion (not 2.3-1.7) in 2019, but stopped short at $0.38 billion. The PEBP according to law to be has to be reported by the finance ministry within three weeks of dissolution of parliament. It will make plain borrowing including $2 billion being negotiated with China, the MCC grant which the government will now accept with its tail between its legs and requests for IMF handouts. Revenue and expenditure projections also have to be shown. Chandra Jayaratne is no doubt taking impish delight in highlighting the government’s obligations to report this data. 

The sting in today’s column is in the tail. Sajith and Ranil are not talking about, militarisation of state and corporations, interference with the CID, the military sizing CID files, interference with prosecutions, messing with courts, appointment of loka-horu to the cabinet and nepotism in corporate appointments. Why oh way are Ranil and Sajith not taking advantage of an opportunity to expose the government and make electoral gains? I think because both opportunist games up their sleeves. Sajith sees Gota, short of a two-thirds majority to amend the constitution, will need his help. He will cut a deal for provisions to suit himself in a putative 20A and he will betray 19A. Ranil neds Mahinda’s help to tide over the bond scam and stay comfortable with benefits from the state (security, vehicles, allowances). When Ahimsa Wickremesinghe (Lasantha’s daughter) says Ranil threw CID sleuths investigating her father’s murder under the bus when he (and Sirisena) saw where the probe was going, I find it entirely believable. Now it’s up to the JVP to say “Out with these insects” and take on the role of principle opposition since Sajith and Ranil are shirking.

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    This comment was removed by a moderator because it didn’t abide by our Comment policy.

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    Looks like we both agree on this one. My last comment to your previous article was same except for the last para (back door deals of RW/Sajith) which you may be aware and majority Lankana are clueless. The loosing side may actually benefit from comming elections but overall Silly Lankans will continue to be the biggest loosers. Jeyawewa.

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      The Best part of this article:
      “Sajith and Ranil are not talking about, militarisation of state and corporations, interference with the CID, the military sizing CID files, interference with prosecutions, messing with courts, appointment of loka-horu to the cabinet and nepotism in corporate appointments. Why oh why are Ranil and Sajith not taking advantage of an opportunity to expose the government and make electoral gains? “

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    KD , just to clarify my point even Chinese economy will suffer if US and Europe are hit with recession. Still the biggest market for Chinese manufactured goods are North America and not China. If Trump is re-elected he will tighten the nooze on China to the extent their eyes will not just bulge but fallout of their sockets. The Democrats also will not alter the current China policy because of popular support behind it (in my opinion such policy was long due).

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      Sajith is a Maharajah/Dayan Jayatilleka/Rajapaksas puppet… kick him out and make Karu the leader of the coalition if not I will definitely vote for a third force in the elections…

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    I thought that Sajith is in Kili Mahendran’s pocket?

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      He is a multi-pocket dweller

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    Rajapakse’s electoral popularity is not because of their ability to manage the economy. Far from it. Primary reason for the popularity is their credentials as Sinhala-Buddhist nationalists. They will win on that basis. However, once in power, people will ask them to do miracles. Few understand the economic issues and geopolitics, or care to learn about them. People want a good economic life for the least effort on their part. When that’s not forthcoming, there will be unrest. And that’s when the big stick will be taken out and the military cabal in the higher echelons of power will show their capabilities. Perhaps this will be the necessary evil. Given the people we are, no other leader would be able to manage the country in these difficult times. Flaw, as always, is not so much with those who govern us, but with us who elect them.

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    Even CoronaVD can not stop Dr Kumar’s unstinted backing of JVP Prince and his 3 % Party..
    How cool …

    Wonder where can Dr Kumar’s mates collect 10 Seats, when the UNP Voters in Colombo are now permanently separated into Elite and Dalit Factions with Dr Rani’s close Buddy Deputy Galleon in charge of the Elite and the UNP Opposition Leader nominate Keselwatta Kid leading the Dalits.

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    Usual Sunday nonsense of a failed Leftist suffering from a bad case of ‘relevance deficit syndrome’.

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    The loyalty to each other of the major players in the political game has never been so obvious. While earlier attempts to conceal these deals were largely successful, they do not seem to bother much anymore. The 22 million scapegoats will again be sacrificed for the benefit of this cabal of bandits whose worst enemy are the very voters themselves who remain blissfully unaware of these realities.

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    For Trump to get elected first he must overcome COVID…… Then he has to get his people tested and that too at the Government expense.
    Then, China has agreed to purchase $ 95b worth of Agricultural products from the USA by reducing tariffs to 5%………….. Its only on the cards. China can feed her population with or without.
    China has gone into assist Italy/Iran & Iraq……. Someday, Italy will open the door to the EU for China.
    As for crude, future from Iran & Iraq.
    Of course not only Sajith but his entire Telephone party.
    Saw Faraz Shauketally interviewing Harsha De Silva where the interviewee says he did not want to talk politics. But bragging about his association on an Indian donation of Ambulances.
    Sajith pestering him to contest from Colombo…… How Harsha feels sorry for Haduneththi whose party secured only 3% at the PE elections & indirectly expecting JVP to back his candidacy in Colombo………….. All in all it was indirect politics & focusing on himself & his abilities.
    News 1st Dawson Road is anti Ranil but certainly pro telephone party.
    Also Faraz interviewed Montague Jayawickreme’s Grand Son or Nephew contesting from Matara. You will see many more Telephone contestants given exposure in future programs.

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    Kumar David did not talk about THIRTY YAHAPALANA HAD BOT RETUNED THEIR SUPER LUXURY HIGH POWERED AUTOMOBILES ESSENTIAL TO GO DEMOCRACY MOSTLY ON UPCOUNTRY SLIPPERY ROADS. I suspect they keeping those to become ministers as National list MPs. if the will have the same of parliamentary seats, not electorates, 12 from Sajith and Ranil will have 12 seats. i HEAR, SOME CARS COME TO PICK daily needs from the Colombo markets but only the driver is there

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    JVP is just another bankrupt paty. They WILL BECOME JUST LIKE ONE THREE WHEELER PARTY. JVP has proved that they are not worth at all and they are another politically bankrupt party “THOSE WHO LIVE WITHOUT SWEATING FOR THE MONEY THEY GET” .

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    A political analyst from the national list candidate has accepted that their people can be bought out. They are politically bankrupt, so , they we like the YAHAPALANAYA again. It is simply saying we know we are going to sink, so, let us come with you. See who are helping and going to help Sajith, There are bond scammers there. Raajitha, PENTHOUSE (it says, two houses together) stay with RANIL because they want a shot at higher places later. Othetwise, they all contest with the Telephone.

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    UNP’s main allies are TNA and MUSLIM parties. Forget about Tamil and muslim contribution to the country. Just note how Ranil, Sajith is deputy Leader, PENTHOUSE RAVI the LIAR is another deputy leader, KIRIELLA is another commis kaakkas, how all they did the bond scam when they accepted to the govt help people. UNP and their allies made Sri lanka a mess when they had only 42 seats and after R PEMADASA UNP could not produce a president.Sajith Pemadasa is a not as saint. He kept silent all that time. Most probably, he did not know what way to go. Even if he comes, he will be another puppet and others have to feed him INPUT.

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    We do not have to wait until November to know the real Corona impact to us Lankan,s. I had experienced first hand , the first two recessions while living in West . Then Dot. com bust and real estate/stock market bubble were blamed as primary reasons. There was no Corona then. This time around we have Corona witch has its own course added to over heated market , global issues, election year, OPEC conflicts, banks with huge write off loans (in Asia) will be different scenario compared to past. Virus related recession is not a common crisis most countries have dealt with. So lets wait for 6 to 9 months, to know the outcome for a failed nation like ours.

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    Kumar

    They are not in each others pocket. They are all in bed together having a foursome.

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    If Sajith is in Gota’s pocket and Ranil is in Mahinda’s pocket, revocation of 19A will put Mahinda in Gota’s pocket. I hope those casual slacks can take the weight.

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    It looks like the Moderator has self isolated himself after catching Corona

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    After recession was officially declared , today the word economic DEPRESSION is mentioned in few quarters. Many of us will not know the true meaning or the impact because we did not live in that period. The last I believe was between 1929 and 1930, but the impact lasted until 2032. So Silly Lankans are due for a exciting new phase/ government.

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    After recession was officially declared , today the word economic DEPRESSION is mentioned in few quarters. Many of us will not know the true meaning or the impact because we did not live in that period. The last I believe was between 1929 and 1930, but the impact lasted until 1932. So Silly Lankans are due for a exciting new phase/ government.

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      Mate, you got a point,
      Diasporians will be okay, with those Oodles of Noodles , the instant of course hoarded in their Cupboards alongside those Toilet Rolls…

      And Suren Surendran’s 4 Billion USD in Savings Accounts ,although it is earning Zero Interest.

      Thank God our Lankans have that USD 1 Billion and Renmembi 2 Billion line of no interest Credit ,to import Noodles from the Mainland, where the CORONAVD is under control.-

      No wonder Dr Rani is begging the Prez Nandasen for an All Party Conference although Keselwatta Kid is supposed to be the UNP Boss for the Election.

      May be Dr Rani wants to get an allocation from that Chines Funds to import the Cheese , Ham, Frozen Beef Red Label , and Chilean Wine for the Elite , Anglican , Vellala and the new addition Wahabi Faction of Dr Rani’s UNP for the Easter and Sinhala Tamil New Year celebrations before the Election..

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    Sorry the impact lasted until 1932

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    Dear David

    Should we not have all the elected working together for another 10 years until the Nation is given a platform for tangible development away from all the wrongs we have had for the past 70 years?? time for change also comes in the form of one Parliament/one poole of technocrats and less of party politics??

    We blamed the major parties for most of the blunder in the past?? now the Nature has done 360 degrees and showing the one and only way forward that is to unite?? should not all other language/religious parties loose their identity and let the people choose what they want? how they want it?? join hands and offer their capabilities too for the same objective??

    The concept is less enemies and more friends?????? will this not help our Nation building activity and our immediate needs…shortage of capabilities?? do we have to be suspicious all the times?? say all other parties join hands and plan together/execute projects together will be a great start for brighter future??

    I agree plenty of reasons for being not so trusting but what are the alternatives??? the journey should start somewhere being realised slowly should be supported??? a journey violently interrupted in 1977 elections the biggest blunder from North and South our beloved Motherland never recovered requires new beginnings? out of the box thinking???is happening is it not??

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