Committee for the Abolition of Illegitimate Debt

What is the conjuncture [1] in Sri Lanka, two years after the surge and ebb of the citizens’ movement (‘Aragalaya’); and in the run-up to a presidential election scheduled for late this year – the first ballot of the people since August 2020?

The crisis is over. Or that is what we are being told. Foreign reserves rose to US$5,400 million as at the end of May 2024 – including the unusable Chinese yuan swap equivalent to nearly US$1,500 million and extended to the end of this year (CBSL 2024b: 7). The rupee has appreciated against all major currencies, exchanging now at almost LKR302 to the US dollar (CBSL 2024b: 8). Core inflation Inflation The cumulated rise of prices as a whole (e.g. a rise in the price of petroleum, eventually leading to a rise in salaries, then to the rise of other prices, etc.). Inflation implies a fall in the value of money since, as time goes by, larger sums are required to purchase particular items. This is the reason why corporate-driven policies seek to keep inflation down. (that is, excluding fuel and food prices) is under 5%, and expected to remain at this level this year. The bank interest Interest An amount paid in remuneration of an investment or received by a lender. Interest is calculated on the amount of the capital invested or borrowed, the duration of the operation and the rate that has been set. rate for borrowers has come down to 9.50%. After six successive quarters of contraction over 2022 and 2023, the economy is forecast to grow by 2.2% this year.

For these blessings, hosannas must be sung to the ministry of Ranil Wickremesinghe, and the gospel of the International Monetary Fund IMF
International Monetary Fund Along with the World Bank, the IMF was founded on the day the Bretton Woods Agreements were signed. Its first mission was to support the new system of standard exchange rates.

When the Bretton Wood fixed rates system came to an end in 1971, the main function of the IMF became that of being both policeman and fireman for global capital: it acts as policeman when it enforces its Structural Adjustment Policies and as fireman when it steps in to help out governments in risk of defaulting on debt repayments.

As for the World Bank, a weighted voting system operates: depending on the amount paid as contribution by each member state. 85% of the votes is required to modify the IMF Charter (which means that the USA with 17,68% % of the votes has a de facto veto on any change).

The institution is dominated by five countries: the United States (16,74%), Japan (6,23%), Germany (5,81%), France (4,29%) and the UK (4,29%).
The other 183 member countries are divided into groups led by one country. The most important one (6,57% of the votes) is led by Belgium. The least important group of countries (1,55% of the votes) is led by Gabon and brings together African countries.

http://imf.org ’s (IMF) reform programme. This is the narrative of the Sri Lankan crisis as financial: one that begins and ends, with a bankrupt treasury; and being excluded from commercial borrowing, following downgrading of its sovereign credit risk rating was downgraded even before the external debt default after April 2022.

Economic crisis
Except, what manifested in the realm of public finances was, and is, also an economic crisis. It is a crisis rooted in the structure of the national economy and its interrelation with the global economy: what is produced and what is consumed; what is exported and what is imported (or more precisely the terms of trade); and how income and wealth are distributed across society.

In the first five months of 2024, imports climbed to US$7,238 million; while exports crawled to US$5,067 million (CBSL 2024b: 3). The stock of usable foreign reserves is sufficient to finance under three months of imports. The balance Balance End of year statement of a company’s assets (what the company possesses) and liabilities (what it owes). In other words, the assets provide information about how the funds collected by the company have been used; and the liabilities, about the origins of those funds. of trade deficit is widening and not narrowing. It has been bridged through bilateral loans from India (almost US$4,000 million), and multilateral loans from the Asian Development Bank, the IMF, and the World Bank World Bank
WB The World Bank was founded as part of the new international monetary system set up at Bretton Woods in 1944. Its capital is provided by member states’ contributions and loans on the international money markets. It financed public and private projects in Third World and East European countries.

It consists of several closely associated institutions, among which :

1. The International Bank for Reconstruction and Development (IBRD, 189 members in 2017), which provides loans in productive sectors such as farming or energy ;

2. The International Development Association (IDA, 159 members in 1997), which provides less advanced countries with long-term loans (35-40 years) at very low interest (1%) ;

3. The International Finance Corporation (IFC), which provides both loan and equity finance for business ventures in developing countries.

As Third World Debt gets worse, the World Bank (along with the IMF) tends to adopt a macro-economic perspective. For instance, it enforces adjustment policies that are intended to balance heavily indebted countries’ payments. The World Bank advises those countries that have to undergo the IMF’s therapy on such matters as how to reduce budget deficits, round up savings, enduce foreign investors to settle within their borders, or free prices and exchange rates.

(US$3,000 million) since the external debt default in 2022.

These only add to the total external debt stock Debt stock The total amount of debt , which is now US$37,000 million (up US$5,000 million from April 2022). More than a year into Sri Lanka’s 17^th programme with the IMF, bilateral creditors last month including China deferred repayment until 2028 (i.e., the year after the current IMF agreement ends). But they have not conceded a haircut or reduction in its quantum. The private creditors who hold the largest single share Share A unit of ownership interest in a corporation or financial asset, representing one part of the total capital stock. Its owner (a shareholder) is entitled to receive an equal distribution of any profits distributed (a dividend) and to attend shareholder meetings. of Sri Lanka’s debt are still holding out from cropping a bare minimum of 30%. The multilateral agencies consider their loans as inviolable and no attempt has been made for their reduction. In the matter of this government’s negotiation of foreign debt restructuring, Aesop’s fable comes to mind:

A mountain was in labour, uttering immense groans,

and on earth there was very great expectation.

But it gave birth to a mouse.

The export basket remains undiversified – apparel-wear; petroleum products (bunkering and aviation fuel); tea; other crops (especially coconut and coconut-related); and rubber products, in order of volume of earnings. Destinations for exports are limited too. The demand for ready-made-garments in the United States and Western Europe continues to contract over 2024, with serious implications for women’s employment, incomes, and livelihoods in Sri Lanka.

The composition of imports is constant from before the crisis. Fuel; textiles and textile articles (inputs for the garment industry); machinery and equipment; chemical products; and building materials (cement, tiles, aluminium, steel), are the four largest categories. Their top three sources are India, China, and the United Arab Emirates. Even if there is policy intention and political will (which there is not), to substitute for these imports, this is not easily done. The raw materials (oil, gas, cotton, steel, and iron, etc.) are absent; and access to the technology and know-how cannot be presumed. Other categories of lesser volume – medical and pharmaceutical goods; plastics and related products; paper, paperboard, and paper products; and vegetables – are more promising candidates for domestic production in the short-to-medium term. As the government relaxes the 2020 ban on vehicle imports in the run-up to elections, the trade deficit will only widen exponentially.

In this scenario, the growth in foreign reserves, rather than indicative of the resolution of the crisis, is accounted for by four things: Central Bank Central Bank The establishment which in a given State is in charge of issuing bank notes and controlling the volume of currency and credit. In France, it is the Banque de France which assumes this role under the auspices of the European Central Bank (see ECB) while in the UK it is the Bank of England.

ECB : http://www.bankofengland.co.uk/Pages/home.aspx purchases of US dollars on the forex market; improved tourism receipts; increased migrant worker remittances; and the moratorium on sovereign debt Sovereign debt Government debts or debts guaranteed by the government. repayment. Direct foreign investment flows, which IMF and World Bank policies arduously court, have been lacklustre to put it mildly. In 2023, some US$712 million from abroad made its way into logistics services, telecommunications, hotels, and manufacturing (CBSL 2024a: 41). This was under half of the government’s stated target of US$1,500 million. The delisting of ExpoLanka and NestleLanka from the Colombo Stock Exchange earlier this year suggests that multinationals are bearish on foreign portfolio investment flows into the local bourse too.

An almost doubling in the number of tourist arrivals in the first five months of this year, has propelled receipts to US$1,406 million (CBSL 2024b: 9). For comparison, gross earnings from tourism in the first quarter of this year alone, will exceed revenue from tea exports over the entirety of 2024. Meanwhile, money sent through official channels by Sri Lankan women and men working abroad between January and May 2024 amounted to US$2,624 million (CBSL 2024b: 9). The export of apparel items, which is Sri Lanka’s largest chunk of manufactured goods, will only reach two-thirds of the volume of workers’ remittances this year. It was the extreme dependence on foreign tourism and migrant remittances that amplified the shock of the Covid-19 pandemic in 2020-2021, when the former dried up and the latter dwindled. This vulnerability to external blows remains unaddressed.

Further, if not for the suspension in servicing of commercial and bilateral external debt, the government would have needed to source an average of US$6,000 million annually from 2022 onwards. It is the suspension of repayment of private creditor and bilateral debt, and the Indian and World Bank lending in 2022, that has given public finances the margin to pay for vital imports – from fuel and fertiliser to pharma and food.

If Sri Lanka is on the ‘road to recovery’, as governing politicians, economic pundits, and western diplomats reassure us, why is the public unpersuaded? The most recent poll finds that 4 out of 5 (80%) respondents in a sample of 489, think the country is “heading in the wrong direction” (IHP 2024b). The number who disagree with that assessment has remained under 5% since polling began as the crisis spiralled over the first quarter of 2022. “These negative views are widely held, with little difference by gender, income level, urban and rural areas, voting preferences, and people’s views of [the] Aragalaya. But younger Sri Lankans have been increasingly more likely than older adults to say the country is on the wrong track”, say the pollsters.

Even big business, the privileged constituency of this government and its IMF-backers, exhibit little enthusiasm. The latest Business Confidence Index records 96 points (LMD 2024). This is lower than it was a year ago (108 points), in the afterglow of the sealing of the IMF loan agreement at the end of March 2023. Sri Lanka’s big apparel companies are aggressively near-shoring production across East and North Africa, while downsizing and merging factories at home.

Social crisis
Sri Lanka’s crisis is not only an economic crisis either. It wasn’t then, it isn’t now. It is also a social one. Sri Lanka is a highly unequal society, with inequalities steeply rising with the entrenchment of neoliberalism in the past four decades. Between 2019 and 2023, the Gini coefficient measure of inequality deteriorated from 3.77 to 3.85 (World Bank 2024: 7). Before the current crisis, and during the pandemic, the bottom 50% of the population already subsisted on only 17% of the share of national income and 3.8% of the share of wealth; while the richest 10% wallowed in 40% of the income share and 65% of the wealth share (UNDP UNDP
United Nations Development Programme The UNDP, founded in 1965 and based in New York, is the UN’s main agency of technical assistance. It helps the DC, without any political restrictions, to set up basic administrative and technical services, trains managerial staff, tries to respond to some of the essential needs of populations, takes the initiative in regional co-operation programmes and co-ordinates, theoretically at least, the local activities of all the UN operations. The UNDP generally relies on Western expertise and techniques, but a third of its contingent of experts come from the Third World. The UNDP publishes an annual Human Development Report which, among other things, classifies countries by their Human Development Rating (HDR).

2023: 19). These gross disparities can have only intensified in the wake of falling employment and income, higher household expenses owing to inflation, and growing insecurity, during the crisis.

The number of those in waged work has dropped to just over eight million persons. The labour force participation rate for women slumped further to 31.3%, or under half that of men (DCS 2024: 1). This indicates that more women have withdrawn from employment or given up seeking waged work; as they absorb the social costs of the crisis through increased unpaid care work. Youth unemployment has increased to 17% (DCS 2024: 4); and is particularly high among those recently out of school. Since the crisis began, 45.8% of employed individuals experienced a pay or allowance cut or income loss; 48% reported a reduction in working hours; 47.3% had a work break or temporary absence; and 14.2% lost their job.

Mostly owing to reduced hours of work, 60% of households recorded a loss in income (DCS 2023: 3). Their three top coping strategies were to limit their expenses; cutback on sustenance; and use up their savings. Around 22% of households were driven into debt by the crisis, raising national household indebtedness to 55%. The main reason given for new borrowing and credit is to buy food for own consumption (DCS 2023: 7). The flight of the middle-class to settle in the West, and the working-class for temporary employment in West Asia, East Asia, and Eastern Europe, is unabated. Several hundred ex-military personnel have enlisted as cannon fodder on both sides of Russia’s war in Ukraine, citing economic hardship at home.

Poverty shot up to nearly 26% of the population or 5.72 million people last year (World Bank 2024: 7). To be pauperised becomes plain in many ways. With rising household expenses for food, transport, health and education, more than one million households were forced off-grid, unable to afford the enormous hikes in electricity bills (de Silva 2024). Upon the devaluation Devaluation A lowering of the exchange rate of one currency as regards others. of the Lankan rupee in 2022, prices of imported goods including essential foods, trebled. From Sri Lanka’s 5.6 million households, a whopping 1.7 million stopped consuming powdered milk – a longtime import staple (Ranasinghe 2024). The percentage of children under the age of five who are underweight was 16.2% in March 2024, up from 13% two years before (FHB 2024). Food insecurity had worsened to 24% of households in December 2023, compared to 17% in March of last year (WFP 2023: 1). In the estate sector, a staggering 51% of all households are food insecure. Of school-age children, 54.9% have been affected in some way (DCS 2023: 2). Principals and teachers confirm high levels of absenteeism and irregular attendance. Starkly, Sri Lanka’s population has declined: with a drop in births, a rise in deaths, and heightened out-country migration (Hannan 2024).

Political crisis
Following the Aragalaya booting out Gotabaya Rajapaksa in July 2022, the Sri Lanka Podujana Peramuna (SLPP—People’s Front) strong armed the office of the president for Ranil Wickremesinghe; in exchange for him safeguarding the personal security and political survival of la prima famiglia. Through this pact between the party of government and the leader-for-life of the United National Party (UNP) the political crisis generated by the socio-economic convulsions of 2021-2022 was submerged. It is resurfacing in the lead-up to the presidential election expected between mid-September and mid-October this year.

Two years ago, the political system experienced its greatest crisis of legitimacy since decolonisation in 1948. Public outrage over the rapid descent into socio-economic dislocation and chaos, and the floundering of those in power, was directed not only at the executive but also legislators, traditional political parties, and politicians. The government’s failure, to first prevent and later mitigate the collapse of daily life, became generalised and historicised: “225 ma epa” (in context: throw out all 225 parliamentarians – that is, not only the governing SLPP); and “Avurudu 74ka Sapaya Avasan Karamu” (in context: let us end the 74-year curse since independence – that is, of the political class).

However, Wickremesinghe’s (s)election by the largest party in parliament; his years of experience in government and thereby familiarity to the people; and his self and public image as the natural counterpart of international creditors and western powers, reassured those looking for leadership where there was none. The ouster of Gotabaya Rajapaksa and earlier his extended family from the offices of state, removed the most visceral object of rage from sight. Around the same time, the supply of imported essential goods financed by Indian and World Bank loans began increasing, which defused some of the discontent among the social classes that could afford them after the rupee devaluation.

The consensus across political and civil society (a handful aside) that an IMF loan agreement with its associated policy conditionalities is the only way out for a bankrupt country in debt default, made it seem that those at the top for once agreed on the sources of the crisis, and its solution. The repressive apparatus that was conflicted at times in its response to the uprising, returned to character armed with Wickremesinghe’s orders. State violence, arrests and intimidation, and counter-terror laws were liberally used. This confluence gave ballast to a sinking political system. It also demobilised the Aragalaya. For all the fashionable talk of Sri Lanka as a ‘failed state’, its political and bureaucratic institutions – eroded in reputation and trust as they are – weathered a mighty storm.

Nevertheless, some features of this moment indicate that the political crisis is far from resolved. These could be sketched as follows. A parliament that lost its acceptability during the economic crisis; and within which all manner of wild and unimaginable alliances are being made. A government that delivered its parliamentary majority to its arch-rival to realise his dream of the presidency, that electoral fortune kept denying him. A regime in power glued together by shallow self-interest. An opposition in parliament at one with the government on capitulation to the IMF, disagreeing only on the ways and means to subject the people to its dogmatism. And nowhere on the horizon, a mass social and political movement of the exploited, advancing on an anti-systemic path to power.

In Parliament, the distribution of seats does not reflect the sentiment of the people. Clearly the SLPP has lost the confidence of much of the 69 lakhs who voted for Gotabaya Rajapaksa. This has not stopped the rotten majority aligned with Wickremesinghe from enacting in haste 75 news laws in two years, with more in draft. One among them being the Economic Transformation Bill that codifies the quantitative fiscal targets in the ongoing IMF agreement, to bind all future governments irrespective of their manifestos to ‘fiscal consolidation’, that is austerity actions. Locking all this in place is a leader with no mandate for sweeping economic reforms, steamrolled by a legislature whose majority was elected on an economic nationalist platform.

The public has little faith or confidence in its representatives; which is not the same as them throwing out the crooks and charlatans at the next general election. The hold and working of clientelism is intact (Munasinghe & Kumara 2023: 25-28); as is the patronage politics of the right-wing parties. Curiously, even the leftists among the supporters of the National People’s Power (NPP—Jathika Jana Balawegaya) appear to believe that the genuine wave of popular support for their presidential candidate will naturally translate into a parliamentary majority – which Anura Kumara Dissanayake needs to govern, if elected president. Even if Dissanayake were to win, amounting to an upset of historic proportions; and rides on the unbridled executive authority of his office for advantage in a general election, how will a party that polled under 4% of the popular vote in 2020 winning 3 seats, reach the threshold of 113 seats to form a government, in a debased culture of money politics?

The SLPP group which had 145 seats is fractured in almost every direction. Its coalition partners began peeling away from the SLPP in 2021. Since then, several SLPP parliamentarians have joined Wickremesinghe’s cabinet of ministers. In his preference for a general election before the presidential poll, Basil Rajapaksa sought to reassert control over his parliamentary group and thereby increase his leverage Leverage This is the ratio between funds borrowed for investment and the personal funds or equity that backs them up. A company may have borrowed much more than its capitalized value, in which case it is said to be ’highly leveraged’. The more highly a company is leveraged, the higher the risk associated with lending to the company; but higher also are the possible profits that it may realise as compared with its own value. over Ranil Wickremesinghe. He would have used the nomination process and the preferential voting system to weed out those whose loyalties are divided or suspect. The SLPP still tries to turn its post-Aragalaya liabilities Liabilities The part of the balance-sheet that comprises the resources available to a company (equity provided by the partners, provisions for risks and charges, debts). into its assets. The blame for the catastrophe lies with Gotabaya Rajapaksa and the 2022 people’s uprising; and not the ‘war victor’, and engineer of post-war ‘mega-development’, Mahinda Rajapaksa, nor of course the president-in-waiting, Namal.

To mark themselves apart from Wickremesinghe for electoral gain, father and son make off-stage noises against privatisation of state-owned-enterprises; taxation of the poor; implementation of the 13^th Amendment to the Constitution; and economic integration with India; while their party keeps providing the president with his legislative majority. If their ‘inside-outside’ approach to the Wickremesinghe regime is to continue, then they will not field their own candidate at the presidential election, to business magnate Dhammika Perera’s disappointment. The bargain will no doubt include future cabinet berths for Namal Rajapaksa and his family’s closest supporters within the SLPP (Rohitha Abeygunawardena, Johnston Fernando, etc.).

The main opposition Samagi Jana Balawegaya (SJB—United Peoples Power) which had 54 seats, has grown from SLPP defections (Nalaka Godahewa, G. L. Peiris, Chandima Weerakkody, among them). The blurring of ideological convictions and sheer political opportunism makes it possible for the SJB – positioning itself as a relentless critic of the Rajapaksa clan – and those who until recently were acolytes of Mahinda, Basil, and Gotabaya, to embrace one another. The SJB has also lost some of its numbers to the UNP from which it sprung. Others (Rajitha Senaratne, Rohini Wijeratne) are biding their time to cross over to Wickremesinghe’s camp. Field Marshal Sarath Fonseka is estranged from the party of which he is Chairman. He is unhappy that the SJB has welcomed former high ranking military commanders once associated with the Rajapaksa regime, who are his old foes in the armed services. SJB MP Champika Ranawaka is another ploughing his own furrow. This is not to say he will not align with whomever can advance his presidential aspirations in the next cycle. His political journey from chauvinist to ‘smart’ nationalist, leveraging digitalisation for the entrepreneurial aspirations of the youth, illustrates his judgement on the currently limited purchase of Sinhala racism.

The chaos of this conjuncture, perhaps also of the political expression of Sinhala Buddhist nationalism, is captured in the amalgam that is the Sarvajana Balaya (SB–‘Universal Force’). In this alliance are those betting the other way from Champika Ranawaka on Sinhala ethnonationalism – Wimal Weerawansa, Udaya Gammanpila, Channa Jayasumana and Gevindu Cumaratunga; the dregs of the parliamentary Left – the Communist Party and the Democratic Left Front; and arriviste capitalists Dilith Jayaweera and Anuradha Yahampath. These three groups were part of Gotabaya Rajapaksa’s regime: the first, because they saw him as the saviour of the Sinhala nation; the second, because they considered economic nationalism as anti-imperialism; the third, because he was not a traditional politician and promised to take counsel from professionals, technocrats, and entrepreneurs. Each of these groups were attached to successive Rajapaksa regimes. They then fell out with Gotabaya Rajapaksa at the onset of the crisis, conveniently absolving themselves of collective responsibility. In their new platform, the ‘entrepreneurial state’ for “innovation-led growth”, has been added to the stock-in-trade of Sinhala racism masked as patriotism. Beyond as a vehicle for media and advertising mogul Dilith Jayaweera in this presidential election, its constituents aim is to hang onto as many of their seats as possible.

Across the Tamil and Muslim political parties with representation in the Northern, Eastern, North-Western, Western, and Central provinces, there is disorder too.

Among Tamils in the North and East, three stances with reference to the presidential election are being canvassed by rival parties, and rival factions within parties and alliances. These are (i) boycott: as none of the three main candidates is committed to power-sharing beyond the inadequate 13^th Amendment (Tamil National People’s Front); (ii) contest with a common Tamil candidate to put forward the demand for a political solution based on self-rule (Democratic Tamil National Alliance, ITAK Sritharan faction, CV Wigneswaran, some civil society organisations); and (iii) support one of the three main Southern (i.e. Sinhalese) candidates based on willingness to address Tamil grievances (ITAK Sumanthiran faction). The bottom line is that the Sinhala polity views the limited and unsatisfactory 13^th Amendment as a ceiling for Tamil political aspirations; while the Tamil polity in large measure cannot consider it even to be a floor.

In the two largest Muslim parties, neither Rauff Hakeem nor Rishad Bathiudeen are in control of the parliamentary group of the Sri Lanka Muslim Congress (SLMC) and All Ceylon Makkal (Peoples) Congress (ACMC) respectively. Several of their members had previously supported the Gotabaya Rajapaksa SLPP regime, providing it the two-third parliamentary majority it lacked to pursue its Islamophobic practices. These scoundrels are now with Wickremesinghe. There should be no surprise if the SLMC and ACMC desert their SJB alliance partner to join a Wickremesinghe-led government.

Among Hill Country Tamils, the Ceylon Workers Congress (CWC) is already in government and supportive of Wickremesinghe’s presidential candidacy. Its rival the Tamil Progressive Alliance (TPA) currently aligned with the SJB has no principled difference with Wickremesinghe but is blocked from realignment with him by the CWC’s veto. Even if the TPA leadership remains with the SJB, they may not be able to prevent one or two of their number from defecting. Unlike in the South, the mood among Tamils and Muslims in the North and East and Hill Country, favours Wickremesinghe in comparison to his two main rivals. Their political parties are conscious of this too.

The UNP leader has recomposed a new bloc around him. It shares some similarities with the Rajapaksa regimes of 2010-2014 and 2019-2022. Inside the legislature, the congeries span former Rajapaksa stooges – from the SLPP (Nimal Lanza, Prasanna Ranatunga, Mahindananda Aluthgamage, S. Viyalendran and Ali Sabry among them); the Sri Lanka Freedom Party (SLFP e.g. Nimal Siripala de Silva, Duminda Dissanayake, Angajan Ramanathan), the Eelam People’s Democratic Party (EPDP); the Ceylon Workers Congress (CWC); the Thamil Makkal Viduthalai Pulikal (TMVP i.e. ‘Pillaiyan’); the National Congress (A. H. M. Athaullah) and the Tamil Progressive Alliance (Aravindh Kumar). But it also includes opponents who were in the SJB (Harin Fernando, Manusha Nanayakkara, Vadivel Suresh, A. H. M. Fowzie). Outside of parliament, the Liberation Tigers of Tamil Eelam (LTTE) former Eastern commander and ex-SLFP MP and Rajapaksa minion Vinayagamoorthi Muralitharan (‘Karuna Amman’) has endorsed Ranil Wickremesinghe.

The incumbent president looks almost certain to stand as a ‘common candidate’, on a non-UNP electoral symbol to ease the discomfort of those who were pitted against him until the other day. His pitch is clear. “Will you move forward with me, who comprehended the problem from its inception, offered practical solutions, and delivered results? Or will you align with those grappling in the dark, still struggling to grasp the issues?”, he demanded in his address to the country on June 26 (Wickremesinghe 2024).

Only to the disbelief of himself and his new champions in mainstream and social media, Wickremesinghe though is still trailing third (13%) in interviews of 17,134 voters, that has SJB leader Sajith Premadasa and NPP leader Anura Kumara Dissanayake pegged at 39% each (IHP 2024a). Hence, the suggestion by partymen that it is in the national interest to postpone the presidential election, therefore extending Wickremesinghe’s term in office for between two to five years. While so far there has been public tolerance of the indefinite deferral of provincial council and local government elections, seasoned politicians are aware of the risk in doing the same with the presidency and parliament. Wickremesinghe may rue the fact that he did not hold local government polls as scheduled, allowing people to blow off steam which will now happen at the next national election.

Though yet to declare his candidacy, Wickremesinghe is in pre-election mode, and not averse to ‘populism’ akin to the Rajapaksas to broaden his narrow social base. The ‘Urumaya’ (heritage) programme of distributing freehold land titles to two million households is administered from the Presidential Secretariat and not the Ministry of Lands. MOP fertiliser will be distributed free to paddy farmers this year, and subsidised for tea smallholders. In urban areas, 50,000 families in government housing will have its ownership transferred to them. Twenty kilos of rice are being distributed free each month to 2.7 million poor households. ‘Special allowances’ for 622,495 beneficiaries of the Aswesuma welfare benefits programme have been extended to the end of this year. Public sector ‘executive’ grades have been granted a special allowance of their own: LKR25,000 monthly from July onwards. Development funds have been allocated to each divisional secretariat which are administered by the provincial governor, who is a presidential appointee. These projects are branded with the image of the president to make the connection clear. In the estate sector, 10,000 new houses have been promised to workers and the government intervened to increase the daily wage to LKR1700 (against the protests of companies that are yet to honour the LKR1000 wage increase of 2021). In ‘Operation Yukthiya’ (justice) between December 2023 and May 2024, a staggering 130,000 drug-related arrests were made.

The only southern parliamentary party untainted by tie-up with SLPP splinters or other floor-crossers is the National People’s Power (NPP). It has not appealed to those deserting the SLPP parliamentary group. In fact, both the UNP-SLPP and the SJB have more often focussed their fire on the NPP, rather than each other. This works well for the outsider. It magnifies the divide between the discredited political establishment and itself. As this fear rises to fever pitch, the pressure grows for the pro-capitalist parties to unite around one candidate – Ranil Wickremesinghe being their preference – to secure victory against Dissanayake.

The NPP has gained support from the base and other layers of the SLPP outside of parliament now disenchanted by the Rajapaksas. Its rallies have drawn the common people who turned out for the SLPP in 2018, 2019, and 2020. Exceptionally, in comparison to other political parties and the prevailing patriarchal culture, it has mobilised women qua women in several rallies and local meetings. It has recruited among ex-military and police personnel, business people in small and medium enterprises, professionals from banking and finance, academics, and others from the public sector, retired public servants, and others, formerly attracted to the mixture of ethnonationalism and governance by experts of the Gotabaya Rajapaksa camp. Its message to the electorate is that it has zero tolerance for corruption; and stands for a domestic production-based economy. This plays well with daily-waged workers and the petit-bourgeois alike.

The NPP’s existence and continuance is the discretion of the Janatha Vimukthi Peramuna (JVP—People’s Liberation Front), which remains a Marxist-Leninist party inflected by Sinhala Buddhist nationalism. However, what the JVP-NPP now offers is not a break with capitalism, but to be an ethical substitute to the parties that have divided the spoils of power between them for 76 years. It promises to be a responsible manager of a state-directed mixed economy. Outside of the elite, it is not seen as threatening by the Sinhala nation because it does not propose changing the unitary status of the state, for power-sharing with Tamils and other numerical minorities.

This survey would be incomplete without registering an absence. As the NPP is arguably more centre than left, when all others have gravitated to the right, what of the political space to its left? The disarray among traditional political parties has not, in and of itself, created conditions for the growth of the socialist left. The People’s Struggle Alliance (PSA—Jana Aragalaya Sandanaya) announced on June 19, has staked its claim to be an authentic left alternative. Unlike the parties in parliament, it is unequivocally opposed to the IMF agreement, and for a political solution to the Tamil national question beyond what is in the current Constitution. Presently it consists of three organisations: the Frontline Socialist Party (FSP–Peratugami Samajawadi Pakshaya), the New Democratic Marxist-Leninist Party, the Samajawadi Janatha Sansadaya (SJS–Socialist People’s Forum); former student leaders, and several independent activists associated with the Aragalaya and progressive causes before and since. It brings together some who have been aligned at least since the 2022 people’s uprising, including in the formation and functioning of the ‘people’s council’ as an alternative to political power through parliament. What it does not yet bring though, is the attachment of social groups and numbers that can shift the balance of class forces in favour of the exploited and the oppressed.

Conclusion
In the wake of socio-economic catastrophe, and with the reinforcement of the dependent capitalist trajectory of Sri Lanka’s economy since then, there is no change of philosophy among the elite. There is no talk of industrial policy, or boosting national production, or expansion of the home market through redistributive taxes and investment in public services, or controls on prices of essentials including food and energy. For the rich and powerful, it is business-as-usual.

This refusal to rethink its paradigm of development – if only to avert another debt default, once international borrowing on the money market Money market A short-term market where banks, insurance companies, corporations and States (via the central banks and Treasuries) lend and borrow funds according to their needs. resumes after 2027 to bridge the chronic gap between import expenditure and export earnings – is also constitutive of the conjuncture. There has been no displacement of neoliberalism as the ruling ideology of the ruling class nor its publicists in think-tanks, university economics departments, and the mass media. “While the adjustment process may provoke resistance, and potential backlash from affected groups and vested interests, it is essential for the country to stay the course on reforms …” advises the World Bank (2024: 11).

Up to now the consensus in favour of the IMF agreement, and its mediation in Sri Lanka’s crisis, has not been shaken by the ongoing socio-economic crisis of the majority. The public stance of the three leading presidential contenders and their respective camps is adherence to the IMF programme (Dassanayake and Gamage 2024). Wickremesinghe is adamant that there is no alternative to, or within, the current agreement. The SJB’s Premadasa claims he will renegotiate, to reduce the tax burden on the poor and to increase social welfare. However, his economic team are evangelists for ‘fiscal consolidation’. Meanwhile Dissanayake’s NPP has said it will continue the IMF’s debt restructuring programme “… but in a manner which is not harmful to the working-class people while taking steps to enhance the manufacturing sector” (Tennekoon 2023). Neither Premadasa nor Dissanayake have said what they will do if the IMF is adamant not to revise its parameters and timelines. Outside of the modest ranks of the radical left campaigning to #ExitIMF17, there is no movement of resistance to austerity. Those who do stand up for their own rights (mostly public sector workers and unemployed graduates) and those of others, are greeted by water cannons and tear gas in public spaces, the Online Safety Act in cyberspace, and the menace of brute force and imprisonment everywhere.

In the lead-up to the presidential election, the message to the people is, “vote for whom you like, but stick with the IMF programme”.

This crisis is not over. Not for the dominated classes. Nor for the dominant.

References

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