Lanka Citizen

The rebirth of the Sri Lanka Transport Board, more popularly known by the acronym CTB, last week is an acknowledgement that the privatisation of the public bus service has not been as successful as desired.

So many years have passed since private buses were introduced on our roads (or re-introduced) but neither the authorities nor the private bus operators themselves have been able to ensure a good enough service to the commuting public.While the privatisation of the road passenger transport sector certainly did have some notable benefits for hapless commuters, the main one being more frequent buses, it failed to solve all the problems that plagued the transport sector and spawned a new set of problems.

Buses may now be available every few minutes on most routes but the service thins out once the rush hour is over and late night services and those on less populous routes are far from adequate. This is because private bus owners shun less profitable times and routes.It is here that a public bus service is required since private operators cannot be relied upon to provide a good enough service.

Successive administrations have also failed to organise an adequate system where bus operators are compelled to operate services on less profitable routes and times just like the incentives given to private telephone companies to roll out their service in rural areas. Nor have the authorities been able to arrange a system that seems common sense to most people - joint time tables for private and public bus services to ensure a smooth, uninterrupted service.
Instead what we have seems like absolute anarchy – a private bus service that has been allowed to run amok and become a law unto them selves.

The competition among private operators has led to speeding and reckless driving. Private buses now invoke fear in the public mind and are seen as killing machines given the frequency with which they run down and kill pedestrians and other road users. Also, the public has had enough of rude conductors and aggressive drivers. Despite repeated promises by the private bus operators association, most bus crew still do not issue tickets and still resort to overcrowding. The National Transport Commission has also proved ineffective in trying to ensure private bus operators adhere to the law and in improving the service.

We saw recently how the private bus mafia went on strike and disrupted the public transport as they opposed increases in fines for roads offences. No government can tolerate such blatant attempts at blackmail. This outrageous attitude is one of the reasons that prompted the government to revive the CTB.

The move not only has been able to win bipartisan support in parliament but also has beenhailed by no less an organisation than the J-Biz (Joint Business Forum) which issued a statement welcoming the revival of the CTB. It is very rare for the business community to support a state venture and say it is better than the privatised bus service.

The Sri Lanka Transport Board has degenerated over the years and now accounts for only around 15 per cent of the bus transport service. The importance of an efficient public transport system has been underscored by the fact that even with only around eight per cent of the population owning private vehicles, there is already severe congestion on our roads and that if this were to merely double, the roads would become impassable and we would be in permanent gridlock. The private bus mafia, as they are now called with some justification, cannot be allowed to bully the public and government and hold them to ransom.

courtesy Sunday Times, o2.10.2005

By The Free Thinker

The debate on the most appropriate model for the national economic policy continues to heat up and the cross-fire between the supporters of the two proposed models continues. This article evaluates these two models, not from an economic textbook perspective, but rather from a “systemic” perspective. “Neoliberalism” is nothing else but “neo-colonialism” in disguise. Market fundamentalism lacks a human face. Unrealistic GDP growth does not make much sense if it marginalises major segments of the community and erodes social values.

Whichever party wins the Presidential and likely general elections, the challenge remains the same - to address issues concerning economic, political, social, cultural and technological development in a holistic manner. The absence of this would result in instability and an inability to provide a better future for all Sri Lankans.

UNPs neo-liberalism
It came as no surprise that the UNP is yet again pursuing an economic policy based on the ideology of “neo-liberal economic globalisation”. While the term ‘neo-liberal’ is not used explicitly, the core elements of UNP’s economic strategy leave no doubt that it has indeed been based on neo-liberal (where the primary focus is on economic growth through liberalisation of the market and the reduction of government intervention) economic ideology, despite being couched in populist pro-poor sentiment. As expected, large sections of the Sri Lankan business community (often the biggest beneficiaries from free market economic policies) gleefully welcomed it as the panacea for all the nation’s ills.

The UNP is advocating a “top-down” approach with accelerated economic growth eventually ‘trickling down’ as benefits to the masses. Central to the election pledge is the commitment for the creation and sustenance of a GDP growth rate of 10% over the next 10 years. High levels of economic growth do not automatically generate social and environmental benefits. In fact experience in most less developed nations has proved that all too often the converse is true. Besides, GDP does not measure quality of life, social progress, poverty eradication, human development or environmental quality. It is clear that the UNP has yet again failed to empathise with the masses and the almost 43% of Sri Lankans who live on less than US$ 2 per day.

The drivers of neo-liberal economic policies effectively redistribute wealth from the already impoverished to the rich, aggravating poverty and inequality, thus preventing the implementation of pro-poor poverty alleviation, human development and national development strategies.

Social cohesion
Democracy will also be eroded, as wealth, and thus power is concentrated in fewer and fewer hands. This is a threat to social cohesion, since if possession of capital equates to possession of power, then the minority (often urban) elite would ultimately control and conceivably coerce the thinking, beliefs, knowledge and behaviour of the impoverished (often rural) majority, creating a vicious cycle of being captured in the poverty trap.

UNP’s pledge to restore peace and harmony may only be wishful thinking if it continues to advocate economic policies which are responsible for creating economic disparities and socio-economic marginalisation in the first place.

Wealth distribution
History shows that the UNP’s open economic policies (post 1997 and 2002/2004) have left the country very dependent on the global economy and with a heavy debt burden. The disparity in wealth distribution has widened. The UNP policies are antithetical to the interests of the poor, both urban and rural. The ‘middle-class’ in this country has almost disappeared. The rich have got richer (much richer) at the expense of the helpless poor. The private sector has a very narrow base (heavily weighted towards the large and mega sectors) and the country is still awaiting the so-called “trickle-down” effect, which the UNP has been speaking about since 1977.

State intervention
The primary problem with reducing the government’s control however is that democratically elected governments are accountable to its citizens. The market, foreign investors, large multi-national corporations, and multi-lateral development banks are NOT. It is evident that yet again, the UNP has been misled by the architects of global economic hegemony, the global financial institutions institutions (IMF and World Bank).

One of the main arguments in support of the neoliberalistic approach is the ‘win-win’ theory of comparative advantage –i.e: that countries will benefit by investing in industries in which they produce goods most efficiently. This however is also its most significant flaw. The reality is that in this ‘information era’ which facilitates the rapid ‘mobility of capital’, it is increasingly difficult for ‘less developed nations’ (those with consequently unstable economies, low productivity and poor infrastructure) to attract or retain mobile investment capital.

It is the law of the jungle, where the strongest (in this case the more developed nations) not only survive but are also the only winners.

Western dominance
The prevailing form of neoliberal economy reduces the self-reliance of nations and encourages a high dependence on the global economy. It results in a loss of economic, political and social independence. It is thus inappropriate for less developed nations who will remain economic slaves of the West forever.

FDIs
The UNP believes that an open-door policy towards FDI, and the ability to offer competitive terms to attract investors, is one of the major factors contributing towards economic growth. While this is not totally incorrect it must be understood that harnessing domestic resources for development is a more sustainable path towards development. It is also wrong to assume that the capital inflow is substantial. A big portion of the capital is borrowed from local banks.

The SLFP pledges to implement the “carrot and stick” approach. Providing enough carrots to attract investors, but using the ‘stick’ when investors try to create a win/lose scenario in their favour. FDIs do not come as a matter of charity; they come to make profits, to make use of local resources, to take advantage of cheap or skilled local labour, or to capture the local markets against other foreign competitors, indeed even against local enterprises. In Sri Lanka we have seen this in the very successful local beverage (soft drinks) market, where household names such as “Elephant House” were replaced by the likes of Coca Cola and Pepsi. FDI therefore has to be attracted on more fair and equitable terms that create a win/win situation for both the investors and the host nation.

Privatisation
The fundamental rationale behind privatisation is that the public sector is corrupt and inefficient. This may be true. However to assume that the private sector is totally honest and efficient is an understatement and a seriously flawed assumption. In Sri Lanka we have witnessed fall-outs of unregulated privatisation. Six privatised companies (Mattegoda, Veyangoda, Kantalai, Hingurana, Bogala Graphite, and Kahatagaha Mines), were totally abandoned by their new owners – some of them by stripping their assets. The case of Kabool Lanka Textile Mills is another case in point. The investors left with the bank’s having to shoulder a very high debt burden. The privatisation of our education system has created a very dangerous trend too. It has created social segregation and an erosion of our core values.

Capital market liberalisation
The liberalisation of capital markets can have very damaging effects on local markets and increase the volatility of the economy. The Asian financial crisis was a prime example when this occured. The sudden and unexpected “flight of capital” depleted the reserves of nations overnight and resulted in wide spread social unrest.

Market-based Pricing
When a nation is ‘down and out’ the IMF recommends Market-based Pricing, a bureaucratic term for increasing the prices of food, water, and utilities. This cruel policy tightens the noose around the neck of an already suffering nation. The result of IMF removing food and fuel subsidies in Indonesia in 1998 created civil commotion. It almost appears that the IMF predicts this scenario but pursues this strategy nevertheless for obvious reasons. The fact is that while there are losers, there are winners too. Multinational corporations then move in and pick off valuable assets at throw-away prices.

Curbing state spending
Debt burdened government’s are advised to implement radical austerity measures designed to reduce the need for assistance and increase the government’s ability to pay off debts. In practice however this generally means cutting spending on education, health care and social welfare. Lacking proper educational opportunities and healthcare, low income people suffer. Lack of education, poor health and nutrition also inhibits domestic economic growth. This leads to a vicious cycle in which debt reinforces poverty and poverty increases dependence on external aid which increases debt levels.

Development with a human face
The role of Government should not be restricted to supporting the business community alone. The business community does not have to deal with unemployment, the national education and health systems, the next generation, foreign policy, extremist groups or sociological development. It is the government’s role to look after the interests of all stakeholders and this is the responsibility that the SLFP is committed to, in addition to being a ‘business-friendly’ government. The SLFP has vowed to establish a system of governance that is fair, equitable and sustainable, while maintaining the highest level of responsibility, accountability and transparency.

The SLFP is committed to delivering what is best suited for economic growth. But growth must have a human face. It must benefit the majority of the people, and this is what they intend to achieve. GDP growth alone does not alleviate poverty or reduce uneployment. The ‘delivery mechanism’ is more crucial than the debate over the interpretation of the various economic models. It is results that matter, and the electorate judges government’s by performance and not rhetoric. The SLFP’s economic policies differ from that of the UNF in that it is not the “one-size fits all” neo-liberal model, but rather a more customised business-friendly model that suits Sri Lanka.

Growth and development
Growth and development are not the same thing. Growth can take place without development and vice-versa. Growth, strictly speaking, is an increase in size or number. There are numerous examples of companies (or indeed people and nations) that have grown exponentially but have not developed. They are vulnerable and lack the internal capability to resist threat or challenge. Development on the other hand is not a condition or state but a process. It is an increase in capacity, ability, desire and potential. It is more a matter of psychological maturity, motivation, knowledge, understanding and wisdom. It is about the freedom of choice and physical and mental emancipation.

Conclusions
“The fact that globalisation has come does not mean we should sit by and watch as predators destroy us” — Mahathir Mohamed, Ex-Prime Minister of Malaysia. These powerful words capture it all. Malaysia experienced an attack by predators in 1997. It was only the wisdom of Dr. Mahathir that saved that nation from the fate that befell countries like Indonesia and Thailand who blindly followed the IMF advice.

While neo-liberal economic globalisation may suit developed nations with competitive advantages, it is totally unsuitable for a less developed nation such as Sri Lanka. This inflexible approach has proved particularly difficult for many less developed nations wishing to build up infant industries, promote local employment, protect cultural diversity and/ or restrict resource exports. This approach is very ‘extremist’ and therefore conflicts with sustainable sociological development. It leads to an increasing concentration of wealth and power in the hands of the few, and the marginalisation and impoverishment of the many.

It would make Sri Lanka puppets in the hands of vested Western interests and plunge us deeper into the whirlpool of aid dependence. The over-dependence on the global economy, could result in turning Sri Lanka into a “Banana Republic” (remember the mostly American banana growers who manipulated the governments in South America), with large multi-national conglomerates controlling our domestic and foreign policies with total disregard for our people.
We seem to forget that it is the flawed policies of the neoliberal model that fuelled social unrest in this country, namely the rising of the JVP and the LTTE in the post-1997 era. This approach creates ‘tunnel vision’. The lack of a holistic approach to the national economic policy could have far reaching negative implications for the country.

Neoliberal economic liberalisation has its merits of course, and it is not suggested that we “throw the baby out with the bathwater”. What is being proposed is that this model be customised to meet the specific strategic needs of this country based on its competitiveness and stage of development. This is exactly what the SLFP intends to do. The answer is the “balanced economic” model. The challenge is thus to create an environment that balances sustainable economic growth complemented with social development.

The Sunday Times Note: The author sent us a 5,800 word article which had to be reduced due to lack of space - )

Courtesy Sunday Times

The Hindu (October 14, 2005) reported: Mr. Ranil Wickremesinghe, leader of the Opposition United National Party (UNP) and one of the two major contenders for presidency recently proposed populist measures including more jobs and a promise to check deficit financing in his manifesto, said one of the main problems was the rising cost of living.

“The main issue are people’s issues,” he said. His manifesto, which he said was the “People’s Agenda” has three key slogans — defeat hunger, end unemployment and prevent separatism.

The manifesto identified “irresponsible and limitless printing of money” as the reason for the rising cost of living. He promised not to print currency to meet deficits, while taking steps to “strengthen the rupee and reduce the increase in cost of living.” He has also listed prices at which essential commodities such as milk powder and lentils would be sold.

The main business news agency in Colombo, Bloomberg also noted:
“Wickremesinghe has pledged to reduce the price of essential food items, including milk powder, and provide fertilizer subsidies and price guarantees to farmers. He will also try to boost the economic growth rate to 10 percent in a bid to create new jobs and lift incomes, according to his manifesto.”

‘77 Cyanide Memories for The 2nd Coming of the 500-year Samsara

When asked during the recent campaign who was responsible? The US / UK / Canadian government which supported the UNP to the hilt, said, “Not I”, and the IMF and World Bank said, “Not I”, and the Employers’ Federation of Ceylon (sic!) said, “Not I,” and the UNP said,”Not I,” and the 200,000 murdered and the 500,000 maimed sighed, “Ah! Samsara!.” Coming soon again to a theatre of war near you. Sponsored by your local private bank.

On 23rd September 1977, Mr. JR Jayawardena introduced a constitutional amendment in Parliament to make himself President, with full executive powers.

The first act of the new regime was to release Rs. 700 million to ‘liberalize’ import laws. The UNP government then announced a guaranteed weekly ration of flour and rice, in keeping with its electoral promises. Soon after, however, the UNP Finance Minister Ronnie De Mel visited the World Bank, the IMF and the imperialist countries belonging to the “Sri Lanka Aid Consortium ” in October 1977.

Under the previous United Front government, 60% of economy was nationalized or remained under state ownership or control: Local industries were encouraged to produce goods and protected from foreign competition. There had been a complete ban on imports, which included a prohibitive tax. Imports of foodstuffs had been also banned, and farmers in the northern Wanni district also benefited.

The UNP Government’s first Budget of November 1977, which was adopted by the National State Assembly (NSA) on 1st December 1977, abolished in one stroke the guaranteed supply of flour and sugar to the people, and at the same time subsidized petrol and fertilizer for big corporations. The Minister also abolished all exchange and import controls, resulting in the abolition of all public sector monopolies for the imports of medicines, milk, yarns, textiles, oil, etc. The UNP government then unleashed a flood of foreign luxury goods and durable consumer items into the country, from canned foods to cars and television sets (though there were no television channels yet.) The budget also devalued the rupee by almost 100% of the official rate.

The UNP government of 1977 swept all controls for capital away, and relinked the country’s economy to the changing needs of the imperialist economies. These measures involved: trade and payments liberalization, currency devaluation, high interest rates, an open door to foreign capital, the setting up of a free trade zone, and the virtual removal of social welfare subsidies, all done under the dictates of the World Bank and the IMF. The state sector comprising industrial and trading corporations as well as the plantations and transport were either privatized outright or came under the control of private business .

In January 1978, parliament debated the establishment of free trade zones covering a 150 square mile area, between the Maha Oya and the Kelani Ganga, during which debate the President of the country JR Jayawardene made his famous speech:

“So, we have demarcated a certain area. In that area, I want to say quite frankly, let the people of the world including our own capitalists come and make it a ‘robber barons’ area…. Let anybody come and invest … You cannot have industrial establishments having wildcat strikes … In this area there can be no strikes. .. So, if you are going to make this area an area where capitalists … invest, certain laws have to be made non-operable in that region.” (Hansard, January 19, 1978)

S.B.D. De Silva writes that the labor market was to be “tidied up along with an informal repression of militant trade-unionism,” and the repression of democratic rights. Violence was then unleashed on workers. Hundreds of workers at Dasa Industries in Kelaniya, “mostly young women,” enrolled into the union and struck work that January 1978, in solidarity with 27 male electrical workers who had struck work and were locked out

Their union noted: “A dastardly attack by UNP thugs on leaders of the newly formed Branch Union almost immediately afterwards, did not succeed in breaking up our newly formed Branch Union, but seriously impeded its expansion. The Jathika Sevaka Sangamaya, headed by JR Jayawardene’s “strong man” Cyril Matthew, the Minister of Industries, was the only Union recognized by Dasa Industries.”

Soon after the adoption by the government of the IMF and World Bank’s economic policies, an IMF resident officer was posted to Sri Lanka for the first time. In March 1978, a visiting World Bank official praised the government for its “courageous” budget and announced it would back the establishment of the massive Mahaweli project, and back the establishment of free trade zones where unions wouldn’t be allowed to exist.

International Banks and imperialist countries attending the “Aid Consortium” meeting in April then pledged a record Rs. 6.8 billion to back the government’s Ôcourage.’ The government’s subsequent budget then announced tax holidays for corporations, abolished price controls on most goods, and imposed heavier export duties on tea alone, ensuring continued low wage levels for almost 1 million plantation workers. The acceptance of economic control by the IMF and World Bank had unleashed unparalleled repression in many countries, and Sri Lanka would also soon be overwhelmed by political violence.

After a circular was issued on 15th September by the Ministry of Public Administration to all Government departments, services and corporations, meetings of employees in or near their workplaces were banned, and trade union militants were arbitrarily transferred or interdicted on various pretexts.

One union noted: “All this was done to prevent free discussion of the question of participation in the strike amongst the employees in the public sector. In the meantime, newspaper propaganda was given to alleged threats of racial and other disturbances being created in the context of the token strike, and volunteer units of the Army were called out. All this was for the purpose of building up a state of public alarm, and was obviously designed to pave the way for the declaration of a State of Emergency ultimately, if the Government thought it necessary to prevent the strike taking place by that means, or to resort to repression if it did.”

At their Annual General Meeting on 29th September, the Chairman of the Employers’ Federation of Ceylon had “seized upon the situation created by the Government’s actions and statements” in relation to the call for the token strike on 28th September, to call upon the Government, “to consider enacting as a matter of priority the necessary legislation to deal with political strikes in the private sector without the declaration of an Emergency.” The Chairman added that it might be desirable:

“To introduce legislation enforcing a total ban on strikes and lock-outs in essential services with provision for compulsory adjudication or arbitration and the requirement of a sixty per cent support of the workers through secret ballot for strike action in non-essential services.”

The Free Trade Zone had exacerbated other problems. Domestic production was seriously affected by the removal of protection after 1977. Export-oriented industrialization relegated indigenous enterprises ‘to the role of subcontractors to foreign firms.’

S.B.D. De Silva writes that the Free Trade Zone was dominated by a ready-made garments industry, and foreign firms enjoying tax holidays and other concessions “asserted themselves over established local firms.” De Silva points to a parliamentary committee discussion n 1979:

“Hon De Mel [Minister of Finance]: …Korea has exhausted her quota. Hong Kong has exhausted, Singapore is exhausting; so the only thing [the foreign investors] find attractive in Sri Lanka is to collar Sri Lanka’s quota. Do you agree?

Mr. A. Gnanam [a leading Sri Lankan industrialist] : I agree.

Hon. De Mel: Could Sri Lankan industrialists not have got the quota and done this industry without any foreign help?

Mr. Gnanam: … Sri Lanka has the best garment industries … If they were allowed to export [with a tax holiday] they would have done without the Free Trade Zone.

Hon. De Mel: In other words, the Free Trade Zone has only deprived the Sri Lankan industrialists!” (Hansard)

Meanwhile, the rise in imports, far exceeding tourism income and remittances from Sri Lankan workers in the Middle East, caused a rapid rundown in foreign exchange reserves. A trade deficit in 1978 was followed by a massive deficit in 1979. The foreign debt burden expanded drastically. The deepening crisis then led the government into “strategies of repression” in the eighties and after (De Silva).

Mass firings of workers, the cataclysm of war and mass murder followed.

When asked during the recent campaign who was responsible? The US / UK / Canadian government which supported the UNP to the hilt, said, “Not I”, and the IMF and World Bank said, “Not I”, and the Employers’ Federation of Ceylon (sic!) said, “Not I,” and the UNP said,”Not I,” and the 200,000 murdered and the 500,000 maimed sighed, “Ah! Samsara!.”

Coming soon again to a theatre of war near you. Sponsored by your local private bank.