20 May, 2022

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Sri Lanka: Financial Meltdown, Time For Reforms & Re-Start

By Harsha Nagahawatta

Harsha Nagahawatta

An economy, political and social system of a country is inseparable and intrinsically linked. This is well demonstrated by two recent events. One in my birth country, Sri Lanka and the other in my adopted country, Australia.

A week ago, on the first day of the election campaign, opposition leader Anthony Albanese could not recall the official cash rate and unemployment rate. A test of his preparedness of holding the highest office in the country. History repeating, a similar event happened to a previous leader, and his campaign derailed soon after that. In the developed world, that is how people, choose their representatives to the legislative council, through rigorous questioning. Australia has an economy worth US $1.6 trillion, 13th largest economy in the world, it needs competent people at the highest echelon of the decision-making process.

In the same week in Sri Lanka, the economy collapsed due to years of mismanagement, now heading for a political showdown, the country is officially bankrupt, unable to service the debt-ridden economy. This has been further exacerbated by external factors such as the Covid outbreak and the Russian-Ukrainian war.

Some were surprised by the events. People with little economic training, who know how to handle a household budget or a small business, would know that the writing is on the walls since years of budget deficits and balance of payment crisis by successive governments since independence. Without meaningful inflows, some in the society, including top rank politicians wants to maintain their French reverie lifestyle, money must run out sooner or later. What has happened is self-inflicted, sheer incompetency in financial management.

It is important to understand, what has led the country to its current situation. It is also time to ask, why some countries do well, even without basic resources, why a country like Lanka failed economically, politically, and socially and why economic management is an important element of any country.

Post independent Lanka

The country was occupied by three European invaders, occupied for over three and half centuries before gaining independence in 1948 from Britain. Although, all colonial European powers have looted Lankans wealth, the British handed over the country’s economy to a chosen few in a reasonable shape, subsequently governed by two parties, both with few political dynasties, pattern continues until today. The patriarch of the Rajapaksa family was in the first legislative assembly in Ceylon (former name before gaining full independence in 1972), hence governing of the country has been a family affair nearly 74 years.

First, Second youth uprising and ethnic conflict

The first challenge to family rule came in 1971 with the first youth uprising, an arm struggle followed by a second uprising in late 1980s. An ethnic conflict between majority Sinhalese and minority Tamil youth in the North that lasted nearly thirty years. All these conflicts had costed many lives, suffering, and a huge burden to the economy.

One thing that’s common to all these conflicts is, demand for a fair go, a just society, so all have the same opportunities, irrespective of ethnicity, social status, religious beliefs and political affiliation.

Although youths were influenced by communist ideology at the time, however, many were driven to fight against injustice of the system dominated by few families and their cronies.

Both youth uprisings were quelled by ruling dynasties with the help of Lankan Army, where also family members were dominated in high ranks.

Current and third youth uprising April 2022

The current uprising is unique, not driven by any known political party but by Millennials and Gen Z, inspired by the Arab spring uprising in the Middle East. There are thousands of citizens in the street protesting day and night, condemning nepotism, they have no leaders, but everyone is a leader, a real people’s movement.

They have demands, but no leaders to negotiate with. Their demands are very straightforward, a simple message, they want all politicians, who have been involved with corrupt practices, and looted the country for 74 years, relinquish their powers and hand the government to the people.

New Constitution and a system change

The constitution of any country determines the relationship of citizens with the government. Which is currently completely broken, people do not trust all elected representatives, irrespective of their political persuasion. It also specifies limits of power of the government and rights of citizens, which is essential to create a harmonious society, otherwise the constitution is not worth the paper it is written on.

If the constitution is weak, a toothless tiger, where it has no provision for individual liberties, checks and balances, accountability, transparency but allows few people to rob the country’s assets and move overseas, then there are serious flaws in that constitution.

Lanka needs meaningful constitutional reforms. The current executive presidency, reasons for all evil, has been misused by every head of state who have come to power for personal gains, since first introduced in 1978.  They all agreed to abolish executive presidency close to elections, but once in power, have not bothered to act. Perhaps, they all realised, what a honeypot is.

Only a few years ago, executive powers were further strengthened by the incumbent with 20th amendments. One would wonder how that happened, the truth of the matter is people voted with a two third majority, so it happened with the blessing of the general masses. So, the public also must take some responsibility for the current crisis.

In the current constitution, the president is above the law. Upon 20th amendment, the present incumbent had released a convicted murderer, who is a buddy, after the supreme court, highest jurisdiction of the land with a majority sentenced him with a life imprisonment, showing very little regard to judiciary, third pillar of the governance.

The same person who emphasis importance of ‘rule of law’ and ‘one country, one system’, has taken such decisions either through sheer ignorance or blatant disregard to the law. So many wonders, his suitability to hold the highest office in the country. Slogans alone would not be sufficient, they need to walk the talk.

With such decisions Lanka has become a laughingstock of the world. All signs of a crony capitalistic system, in which nepotism is encouraged and conflict of interest is non-existent. A whole mark of a system and a playground for dictators and despots.

When first introduced in 1978, by the JRJ, perhaps, he never anticipated such a blatant disregard by the regimes that followed after him. If he rose from the grave today, it’s quite plausible that he will be the first one to give his blessing to remove the current rotten system.

This current system needs to be uprooted, given it’s last rites and cremated, not to be reintroduced anywhere in the world. Lanka needs to go back to its old two-tier parliamentary democracy, where power is decentralised, second chamber (senate), should be given the right to scrutinise all bills. So that checks and balances are in place, so one individual, his cronies and few families should not be ransacking a country and bring a nation to its knees, that is a no brainer.

Also, citizens need to have faith in the system rather than playing the person, but the policy.  Lankans should come out of this aged mentality, where a single person is their saviour and expect miracles at the end of the electoral cycle, then be disappointed and elect a different person every few years.

Simply, if the system is robust enough that will keep elected representatives honest. This reminds me of a great line by Australian democrats in the senate (upper house) many years ago, saying that their job is to keep ‘bastards honest’ (elected representatives in the lower house).

Corruption and misuse of public assets

Systematic corruption and misuse of public assets by people who enjoy powerful positions within the government and in the bureaucracy has been a well-known fact among average citizens, considered as a normal, and accepted norm in Lankan society for decades.

All political parties should declare the source of their funding and be subjected to an independent audit.  Over the years, a well-known view among many, is that by becoming a politician is a fast path to a rich quick scheme – a lucrative job for friends and families.

It is time to end these practices, not only by politicians, but by average citizens, who consider what they pilfer is small and petty compared to elected officials. A massive cultural shift would be required to turn this tide through re-education. The corruption has infiltrated every facet of Lankan society, it is deep rooted and has costed dearly – it needs to be completely uprooted.

Freedom of information (FOI), whistle blower laws should be tightened and encourage investigative citizen journalism to expose corrupt practices of individuals and institutions.

Separation of powers and institution building

Independent democratic institutions managed by citizenry are the backbone of a functional democracy. The political parties and politicians come and go every few years, but institutions stay. Though these institutions are responsible to carry the mandate of the elected political party of the time, however they should also have freedom to advise the elected government impartially without political interference. These institutions should be headed by competent professionals with subject matter expertise. Unfortunately, in Lanka today, all these institutions are highly politized, only serving the agenda of the political party of the day.

All elected officials, politicians and higher officers should be held to high moral and ethical standards, declare their assets and interests before taking office and these requirements should be constitutionally mandated.

Inefficient Public Sector

For decades, all who came to power knew, the Lankan public sector is very large and inefficient.  In the past two major political parties who governed the country like their private assets, treated citizens like their domestic servants, and promised government jobs, expecting easy votes, and avoided hard decisions.

This has created a mentality among many, that a permanent job in the government sector is a secured employment for life. This has passed from one generation to another, hence a huge inefficient public sector today, which has been a massive burden to the country for some time now.

Lanka has three tiers of governments – local, provincial, and central. A massive bureaucracy is maintained at a huge cost and a burden to a small economy. It is time to re-think the whole governing structure, a small government should be encouraged.

Then there are many white elephants maintained at a huge cost, so-called state-owned enterprises (SOE’s) like Lankan Airlines, they’re all are monopolies, still lost making enterprises for decades propped up by the treasury. These enterprises are managed by family members of the ruling elite, another example of ‘jobs for boys’. A honeypot for cronies, a playground for chosen few to freely rip off the country’s assets.

There are many other SOE’s, all lost making enterprises funded by treasury at a cost to taxpayers, all need to be closely scrutinised, if the country wishes to turn the tide.

Educational Reforms

One may wonder how educational reforms are related to the current financial meltdown.  They all are linked.  Every citizen should be re-educated, through a program at the community level.  Non-violence, social cohesion through Inclusiveness and respect shall be re-introduced.

The best way to empower the general masses is through education. Countries like China, with a population of over a billion, managed to push millions of their citizens out of poverty, and create a wealthy middle class within a short period of 35 years, through education and economic reforms. Today, their universities are ranked side by side with the best universities from the west. Lanka needs an education system that can meet the demands of the 21st Century.

The first and foremost, primary objective of any education system is to produce law-abiding citizens, and pledge to uphold the country’s constitution, ethics and morals of the Society to the highest level.  The current system has had produced skilled professionals with paper qualifications, but not many with high integrity, moral values, or leadership qualities.

Secondly, the system should empower young people, encourage critical thinking, and challenge the status quo, as naturally leaders will emerge. Challenge to the status quo, should not be interpreted as disrespect to elders, but by challenging perspectives and looking through an objective point of view, this should be encouraged. In fact, there are many examples in Buddhist scripture, Pali canon, a philosophy that influenced much of the population, where Buddha challenged aged old practices of ancient India.

The new system should encourage young people to choose a profession as they wish based on individual skills and desires, and should not be driven by economic necessities along, as every profession, whether in private or public sector is essential for a functional society.

With carefully crafted reforms, Lanka can still preserve the ancient culture and various philosophies that have influenced it’s people for over a thousand years and ultimately become a modern society.

Interim Administration

All the above reforms discussed take time, at present, countries need a short-term solution to overcome current impasse, so supplies can be restored, and people can get back to their normal life, hence an interim administration.

Though, I am not a constitutional lawyer, but I am aware of one thing, people of the country chose the constitution, and decide who governs the country. They decide when to suspend the constitution and send the political elite home if they are the cause of all evil in the country. There is no power, above people’s power.

The current opposition, who ruled the country just only two and half years ago, was also an incompetent administration, not much different to current ruling party. In their watch, the central bank governor, a buddy of then PM, a Singapore dual citizen, involved with misconduct and left the country. Also, they were in the administration when the easter bombing happened, until now no one has been held accountable. In a country where accountability is in very short supply, no wonder protectors have any faith in all politicians.

Any country’s constitution is written by people for the people. If such a constitution does not serve that purpose, it’s time to throw out, and give a fresh start. Great revolutions or struggles have never been won by trying to preserve status quo, which is the central cause of the conflict. So, it’s time to give last rites to the present constitution.

Given above, there is a way forward, appointment of countries’ Chief Justice as an interim administrator with a reformist agenda and a small cabinet chosen from citizens to hold major ministries, who have shown highest integrity, competency, and professionalism.

There must be a serious vetting process, all those considered should declare their assets, and identify conflict interest, before elected to the public office. The current members of parliament can also participate this process but must be subjected to the same scrutiny as ordinary citizens.

Among various commissions, a public integrity commission is a must with real powers to surveil, investigate and prosecute.

It is time to give a fresh beginning, with meaningful reforms in all sectors – economic, social, and political. Though a painful austerity period is ahead, it should be considered as an opportunity for real change, it’s time for all citizens to be united under one banner and re-start. Every crisis has a silver lining, never to be wasted.

*The writer is a practicing charted professional engineer by profession, a dual-citizen, advocate of social justice, lives in Sydney, Australia, can be reached at hadna.company@gmail.com.  

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Latest comments

  • 2
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    Sri Lanka: Financial Meltdown, Time For Reforms & Re-Start
    —————————————————————————-
    Sri Lanka: Financial Meltdown, Time For all freemasons to be thrown out of all positions of power

  • 2
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    This has been further exacerbated by external factors such as the Covid outbreak and the Russian-Ukrainian war.
    ————–
    Covid is a total hoax.
    The Ukraine war is a giant exaggeration.
    I have seen several videos taken by ordinary people, proving there was no war in Kiev:

    https://www.youtube.com/watch?v=TTUZlcgPmgc

    The freemasonic media only deals with smoke and mirrors

  • 2
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    “Unfortunately, in Lanka today, all these institutions are highly politized, only serving the agenda of the political party of the day.”
    The above statement summarises the current situation in SL.
    People should put forward all their ideas for the future to be BRIGHT.
    Politicians should NOT RULE by creating FEAR in the minds of their citizens. Use of PTA; Use of a white vans; Use of thugs dressed as Monks;
    Using their stooges to control the Media (newspapers +TV); Use of Judiciary to suit the needs of rulers;

  • 3
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    The author has clearly summarised the failure of the governments based on the principle of family dominant politics over seven decades. They robbed this country and they have to be eliminated from the politics. We, people should not allow them to come up with any temporary Gil-mal proposals and solutions with the help of external powers to keep them in power. As the author suggested a Prime Minister from a professional Chief Justice who had a record of honesty who has nothing to do with these regimes and similar talented professionals who understand the subjects as Ministers with proper check and balances to handle the economic crisis and to create a well balanced constitution for the country.

  • 1
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    Sri Lanka experimented with communism, terrorism (JVP,) suicide terrorism (LTTE) apartheid (in LTTE areas), Executive Presidency, and civil war. This is rather tame compared to the West, which experimented with slavery, apartheid, racism, gender equality (Sri Lanka had the first female PM), colonialism, civil war, communism, democracy, gold standard, and world war. Sri Lanka can certainly survive, but it will require any number of reforms. Unfortunately the greater world overall is headed for a giant “reset” (monetary, political, etc.), so reform at this particular time is an ugly beast.

  • 3
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    Harsha, thorough detailed presentation on our self created mess and answers to solve. Obvious that 75 years of our political system is dysfunctional, bankrupt and failed. This may be the opportunity to change. Are Lankans upto the challenge??

  • 2
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    On the first day opposition leader could not recall official rate of currency and unemployment rate. Our Rajapaksas could not recall first or their last days. Yet one was FM ,other PM and President insists on staying. Our. ex CB head could not recall during his entire term.

  • 2
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    Harsha, as you said the economic problem was there since InDependence , but people preferred to be in denial. Anyone who has balanced household expenditures will be aware of this simple fact. Living beyond means leads to bankruptcy and that is what successive governments did for more than 75 years. The writing was on the wall in capitals . But people were in apparent denial not just constrained to economy, but everything else pertaining to growth, development and sustenance. They denied racial hatred, division, discrimination, immorality, inequality, suppression, political bankruptcy, moral bankruptcy, dysfunctional failed systems, nepotism, corruption, crime, political killings, pilferage, ……. So much so, now they are grieving. People seem to be in different stages of grief 1) denial followed by 2) shock / numbness 3) anger 4) Bargain ( IMF), 5 ) acceptance 6) depression/anxiety 7) If lucky reaching the last stage called closure / healing. Stages doesn’t need to be in that order and person who have made progress can always regress to one of earlier stages.

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