By Rajan Philips –

Rajan Philips

Mikhail Sergeyevich Gorbachev who died last Tuesday was hardly known outside the Soviet Union when JR Jayewardene made himself Sri Lanka’s President in 1978. Seven years later, on 11 March 1985, Gorbachev would be become the General Secretary of the Soviet Communist Party. He was relatively young at 54 years of age and was the first leader of the Soviet Union born after the October 1917 Bolshevik Revolution that turned Tsarist Russia into the Union of Socialist Soviet Republics (USSR). He was also the one to preside over the dissolution of both the Communist Party and the Soviet Union. He announced his resignation as Soviet President and Commander Chief on Christmas Day 1991. The changes he unleashed in little over six years are still reverberating throughout the world and more so in the attritive war between Russia and Ukraine, the two largest republics of the old USSR.   

Mikhail Sergeyevich Gorbachev

Sri Lankans have had a split attitude towards the Russian revolution and the Soviet Union thereafter. There were those who were fascinated and inspired by the October revolution, and others who felt threatened and were fearful of its ripples reaching the shores of feudal Sri Lanka. Such fears were not unwarranted. The Sri Lankan Left movement that emerged in the 1930s was both inspired by the example of the Soviet Union and also vigorously carried into Sri Lankan politics the bitter ideological disputes among Russian Bolsheviks. The UNP governments after independence were markedly pro-western and anti-Soviet in their foreign policy. The SLFP governments after 1956 took a much friendlier attitude towards the Soviet Union as part of their non-aligned approach to international relations. 

JR Jayewardene

The Third World exuberance over global decolonization in the 1960s further augmented the Soviet-Sri Lankan relationship. The Soviet Union and other East European socialist countries became new destinations and scholarship sources for young Sri Lankan students and professionals seeking university education and qualifications. New cross-sections of Sri Lankan society benefited from the new foreign openings, which until then had been limited to students from traditional elite circles going to western, mostly British, universities. Literary connections were established through translations of writings between the Russian and Sinhala and Tamil (more via South India) languages.        

The economic nationalism of the era led to the opening of several industrial corporations directly based on Soviet financial and technological support, in areas where import substitution became necessary and for which there had been no private sector interest despite years of trying. What no one remembers now is that state industrial corporations were first established by GG Ponnambalam, the self-acknowledged “unrepentant opponent of socialism,” but a brilliant Minister (of Industries) in the DS Senanayake (UNP) government after independence. Some of Ponnambalam’s initiatives were against the opinions of World Bank experts, but they were equally expertly rejected by Ponnambalam. His ministry even delicensed failing private industries, so much so that Pieter Keuneman, a young Communist MP at that time, mockingly called Ponnambalam the “vitriolic minister” for ‘dissolving’ small private industries. 

The highpoint of Sri Lankan economic nationalism in the 1960s was the nationalization of the petroleum industry and the setting up of the Ceylon Petroleum Corporation (CPC) to take over what was then the monopoly of three global multinationals, Shell, Esso and Caltex. Interestingly, it was the UNP government (1965-70) of Dudley Senanayake that built the country’s first and only oil refinery in Sapugaskanda for the state petroleum corporation to refine crude oil from Iran for local consumption and potential exports. Through all the economic crises and shortcomings of industrial corporations that marked the 1970-77 United Front government, the CPC’s performance at Sapugaskanda was steady and even a new urea plant was built next door (by the State Fertilizer Manufacturing Corporation) to produce urea (for use as fertilizer in domestic agriculture) based on naphtha, a byproduct from the refinery. 

However, the economic changes after 1977 hugely increased the demand for petroleum products, and for electricity, and the CPC and CEB were stretched virtually overnight beyond their production capacities. The UNP government decided to export naphtha, shut down the new fertilizer factory and handed it over to a private business (Mascons) for producing nails! As I wrote a few weeks ago, it is now poetic justice for Ranil Wickremesinghe to be called upon as President to put Sri Lanka’s petroleum and electricity houses in order after they were neglected and mismanaged over 17 years (1977-94) by the UNP government of JR Jayewardene in which he (RW) was a cabinet apprentice. 

From Gorbachev to Putin

It was during the same 17 years that President Jayewardene introduced fundamental changes to Sri Lanka’s political and economic systems. And over six years (1985-91) midway through that period, General Secretary Gorbachev launched far reaching changes within the Soviet Communist Party on the then famous planks of glasnost (openness) and perestroika (restructuring), hoping for the inner-party changes to spill over into the broader Soviet society and institutions. Gorbachev pursued both political and economic restructuring, in contrast to China which focused on a thoroughgoing economic restructuring while maintaining the Communist Party’s strangle hold over the Chinese political system and society. The changes worked in China but failed in the Soviet Union. 

China did not have the burdens that Gorbachev had to unload off the Soviet Union: a complex and multi-ethnic federal system under the control of a single Party; the costly system of political and military control over Warsaw Pact countries; and the blood sucking war in Afghanistan. In addition, the Soviet economy that recorded impressive strides in the pre-war and post-war periods (a fact now acknowledged by mainstream economists) had irretrievably fallen to the pits during the long, soporific tenure of Leonid Brezhnev (the fall is generally attributed to Cold War military budgets and poorly advised resource allocations production priorities). The Soviet political system was also not easily amenable to radical changes because of its entrenched bureaucracy, depleted institutions and a stunted civil society. 

At the same time, Gorbachev’s changes created far reaching effects in Europe and worldwide. He pulled the Soviet Union out of the Afghan quagmire. He successfully forced nuclear disarmament treaties on the US and on NATO. And he let the Berlin Wall fall, which many consider to be the beginning of the post-colonial phase of globalization. East European countries broke free of the Warsaw Pact and the Soviet Union itself, much to Gorbachev’s mortification, imploded leaving Russia alone in a new winter of discontent without a Tsar and without a Politburo. He was reviled in Russia but was celebrated in the west. For all their public adulations, however, western leaders, especially the US, did not purposefully and sincerely support Gorbachev achieve his perestroika goals.

While Prime Minister Thatcher and President Reagan publicly warmed up to the man, they did not persistently overrule the hawks in their administrations and in NATO who resisted change on the grounds that they could not trust Gorbachev. The American Right believed that it was America’s economic strength and military might that forced the Soviet Union to accept ‘defeat’ in the Cold War and adopt glasnost and perestroika changes. This thesis has been consistently debunked by western historians, most notably by Oxford University’s Archie Brown who has reminded that Gorbachev’s emergence in the Soviet Union had nothing to do with any US policy. 

The West’s biggest betrayal has been over its unwritten undertaking to Gorbachev that NATO will not expand into Eastern Europe following the dissolution of the Soviet Union and the Warsaw agreements. NATO and the West went ahead expanding and collecting new members regardless of Gorbachev’s protestations from retirement. The NATO expansion is the most weighted single factor behind the emergence of Putin and now his war in Ukraine. 

Nina Khrushcheva, a Professor at the New School in New York and the great-granddaughter of Khrushchev who ordered the Berlin wall built in 1961, has recalled in her obituary what Gorbachev told her when she asked him why he did not send tanks to Germany in 1989 to protect the wall: “We shouldn’t dictate to sovereign countries their way of life.” Gorbachev stood by that principle all through his six years in office, and has lived by it for over thirty years after retirement. 

On the other hand, Gorbachev’s principle of non-interference has been repudiated not only by Russia’s Putin but also by the West and NATO. To wit, the dismemberment of Yugoslavia, two invasions of Iraq, another long distance war in Afghanistan, and continuing imbroglios in the Middle East and North Africa. And the Western countries that fomented and cheered disruptions in Eastern Europe as democratic revolutions, are now having democracy threatened in their own countries by new populist manifestations of the old forces of race, bigotry and fascism. The emergences of Boris Johnson in Britain and of Donald Trump in America are not accidental aberrations. While Britain has been able to get rid of Johnson without too much fuss thanks to the parliamentary system, the US with its presidential system is stuck with Trump even after getting him out of office after a single term.    

From JRJ to Ranil-Rajapaksa

For the rest of the world, the collapse of the Soviet Union and the emergence of China as a market-economy powerhouse have meant the removal of the Socialist Second World from the world order. The Left Parties in the Third World lost their external reference points for their argument for socialism in their countries. In Sri Lanka, the 1977 victory of JR Jayewardene was an electoral repudiation of the people’s experience of what was politically bandied as socialism over nearly two decades. But President Jayewardene’s agenda went beyond more than reviving the economy and relieving people of their scarcities. 

While Gorbachev’s reforms in the Soviet Union were intended to open up politics and facilitate power sharing, Jayewardene’s agenda was to centralize and personalize executive power behind the facades of the old parliamentary system. Where Gorbachev failed, President Jayewardene succeeded almost perfectly by his expectations. But forty five years on, what was once celebrated as calculated political success has turned out to be a wholesale disaster for the country. Both economically and politically. 

If the emergence of the Rajapaksas exposed the faults of the presidential system, the failed presidency of Gotabaya Rajapaksa has made everyone sick and tired of it. Enter Ranil Wickremesinghe, the apprentice in 1977 and now the elder statesman – first as Gotabaya’s Prime Minister, then as Acting President, and now as interim President, but actually carrying himself as if he is a new President elected by the people. It is not clear if President Wickremesinghe is now intending to get rid of the executive presidency, or if he will try to keep it at least one term longer so that he can make one last kick at it. 

In addition to being President, Mr. Wickremesinghe is also his Minister of Finance. On Tuesday he presented the interim budget replacing Basil Rajapaksa’s non-budget for 2022. It was really a precursor to the IMF’s statement a day later that the IMF Team in Colombo and government officials have reached staff-level agreement to support the authorities’ economic adjustment and reform policies with a new US$2.9 billion funding facility over a 48-month period. The agreement is subject to ratification by the IMF Board in Washington. 

The expectation is that the IMF agreement would help Sri Lanka obtain debt relief from Sri Lanka’s creditors along with additional financing from potential multilateral partners to help ensure debt sustainability and additional funding support. The infamous ‘haircut’ that creditors should agree to have for everything to work, is yet to come and the discussions around it are reportedly being facilitated by Japan. China remains non-committal even as its agreement over its debt repayment by Sri Lanka is essential for reaching agreements with other bilateral creditors and private lenders. Haircuts can be significant and varying arrangements have been used for different countries by the IMF in the past. The Russian experience in 1998-99 involved a rather ‘tough haircut’ (50-70%) for external creditors and more favourable treatment in dealing with domestic debt. 

There are already calls for delaying domestic debt restructuring and for using different mechanisms to deal with it, in order to prevent such outcomes as the Employees’ Provident Fund going bankrupt and domestic banks suffering significant losses. A related  political question that should be raised is about the ‘haircuts’ that Sri Lanka’s parliamentarians, especially SLPP MPs, are willing to take for themselves. Already, many MPs are known to be against early elections to ensure that their pensions are safe, and SLPP MPs are not looking for any haircut but prioritized compensation for damage to their properties during the May 9 violence that was in fact provoked by their own leaders. The President will have his hands full in determining who in parliament will get haircuts and who will get compensation and in which order. 

Mr. Wickremesinghe had it easy lecturing helpless government clerks in Anuradhapura that they should either work or go home. His words will carry far sharper sting if he were to say to Nivard Cabraal that he is not entitled to any pension, to his Ministers that they will be fired if they don’t show results, to SLPP MPs that they are not qualified to be Ministers, or to former Presidents that they are not entitled to government pensions and retirement residences if they continue to be active in politics and remain ministers or lawmakers in parliament. Mikhail Gorbachev lived for over thirty years after his retirement on meagre government support to which he was entitled. He did not look for any American Green Card but chose to remain in Russia, occasionally defending his legacy even though his legacy was already dead.