By Chandre Dharmawardana The Island

This Article is 4 Months Old

System Change: Is Sri Lanka to become an Indian ‘Pradesh’?

The Aragalaya came and went. The claim that “we need a system change in Sri Lanka” has become the main legacy of that upheaval that brought Sri Lanka to the cusp of a violent takeover by organised left-wing or right-wing groups. The call for a “system change” is nothing new. I remember how Mahinda Wijesekera, a JVP leader of the 1970s (who became a UNP minister) justified militant actions at the Vidyodaya campus (now SJP university) saying Raamuva Venaskireema ––”a change of frame”––was the main lesson of the campus. President Gotabhaya Rajapaksa’s non-confrontational approach may have fortunately averted bloodshed, but it delivered the country squarely into the hands of international Shylocks and their local financial and political agents.

President Ranil Wickremsinghe (RW) emerged as the perfect fit for the occasion, with immense administrative experience as a Prime Minister and minister many times over. RW’s libertarianism is “in sync” with the mindset of bankers in Washington and the dealers in Davos. RW may not be accountable to a public who had rejected him and his party unequivocally in 2020. By the same token, he can only be a caretaker President. However, the main demand of the public was that “ALL 225” parliamentarians must be sent home. The politicians, labeled as crooks, do not enjoy the trust of the public. Instead, RW has symbiotically protected even crooks to sustain his government, claiming the need for stability to “implement the recommendations of the IMF”.

However, a less publicised agenda for creating free trade zones familiar from the early days of Yahapalanaya seems to also exist.

The IMF’s position is simple – it will provide emergency money to Sri Lanka so that Sri Lanka can pay back its loans amounting to some fifty billion US dollars. The IMF’s priority is to protect the Shylocks while the borrower is brought down to pay up. Debt write-off is never on the table; in any case the outstanding lenders are NOT governments, be it China, Japan, India or even the USA. There is no Chinese debt trap or any other conspiracy trap except in the minds of some political spin doctors.

IMF loan or not, Sri Lankans have to cut down imports, live frugally, produce more, get rid of loss-making enterprises, and increase forex inflows. Given that most of Sri Lanka’s earnings are in the hands of a mere 1% of the population, the draconian impact of the IMF loan must also fall on this rich 1% via a wealth tax. New taxes have been levied heavily on local products, while sparing and encouraging imports that cost forex! Even issuing visas to incoming tourists is now done by a foreign company getting paid in forex. Local operators would have been paid in rupees.

Meanwhile, the raising of the wages of estate workers by decree, with little concern for the health of the estate sector, shows that RW would readily discard his avowed free-market ideology for short-term votes.

Nevertheless, everything on the table shows that the government, the Central Bank, and their economic advisors are following text-book free-market theories within the simplest of globalisation concepts that work for big nations with strong export economies. The proposition that a free flow of goods, services and talent, as well as the adhesion to a larger market leads to greater overall prosperity does hold in the long run. The free-trade agreements covering the European Union, or the USA, Canada and Mexico, and the failure of Brexit have shown this to be true. However, this prosperity benefits the bigger partners most, while the smaller partners have to accept the erosion of their own industries and start-ups in competing with those of the bigger partner, at least for a generation or two. Furthermore, a smaller country tying up with a behemoth may have to accept the waste products of the big brother, polluting industries and agree to provide cheap raw materials to profit from the trickle-down prosperity promised for the future. Canada and Mexico have played that subservient role for years in their “free trade” with the USA, and faced trade barriers in spite of agreed-upon “free trade”.

When Sri Lanka ties up with India, as seems to be the undeclared plan of the Ranil–Basil consensus, we can certainly expect and profit from the opening up of a much larger market for Sri Lankan goods. But has Lanka competitively priced goods to sell? We may expect a more stable supply of electricity and fuel when grid connectivity and pipeline connectivity with India are established. But then, as Germany found out with the dawn of the Ukraine war, its dependence on Russian oil exposed its vulnerability and lost sovereignty. Many of India’s neighbours, such as Sikkim and Nepal, found that they had become mere Indian dependencies through power lines and pipelines.

The change of the “system” to that of a Lanka-pradesh integrated even loosely with India, as well as the disbursement of business to Indian and international conglomerates will provide much “bakshee” to the politicians at the helm, while sacrificing a generation of indigenous entrepreneurs. This already happened under the first stint of the open-market under JRJ, but the wholesale takeover of business by Indian business could not happen then. However, given an overt or covert full free-trade agreement, Indian business will be able to bid at least on an equal footing, and in fact more clout than a local businessman. When a job is advertised, Indians can apply equally, and perhaps even find more favour with Indian companies. 

A recent report of the Madras Courier states that some 93,000 candidates applied for 62 “peon” posts in Uttar Pradesh police department  (https://madrascourier.com/policy/indias-unemployment-crisis/) ,which required a minimum eligibility of grade 5; however, there were 3,700 Ph.D holders and 28,000 post-graduates and many graduates. Once the “system changes, in Lanka Pradesh every Sri Lankan job opening can in principle profit from a vast pool of Indian candidates, with Sri Lankan applicants elbowed out.

The crushing youth unemployment in India belies the so-called economic miracle of Narendra Modi. The top 1% of Indian society now owns most of India’s wealth. The extreme rise in inequality in India under Modi is seen in the attached graph; the rich are getting richer, the poor are getting poorer, while the middle class is getting eliminated. Indian Elites have spread this claim of a vibrant and rapidly growing India in all sorts of fora including at the Oxford Union debates, while the reality is seen in scholarly reports of Indian and international research. The seeming prosperity of Modi’s India at the moment is not unlike the facade of prosperity that Sri Lanka had, under the Rajapaksas just after the end of the Eelam war.

Local apparatchiks of the RW–Basil consensus will benefit handsomely from the largess of Indian business as the latter establishes itself in Sri Lanka. The high-flying Adani Group, associated with Narendra Modi, has already positioned itself in ‘Lanka Pradesh’. The methods they use were documented in Hindenburg Research.com, 23rd January 2023 under the title “How the world’s third richest man is pulling the largest con in corporate history“. The Mannar wind turbine deal commits Sri Lanka to buying electricity from Adani at higher prices for many decades to come. How was this outrageous sellout to Adani signed? Was there an environmental impact assessment?

The Mannar wind farm is not only an economic sellout but also an environmental disaster, as detailed by the renowned biologist Rohan Pethiyagoda (https://www.youtube.com/watch?v=Nm5w2vMXgjI ). The importance of preserving bird migration patterns for insect control, cloud seeding, crop pollination, biodiversity etc., are unfortunately not at all appreciated by Sri Lanka’s ruling class or Adani and Modi. Unfortunately, even good science-based ecology has earned a bad reputation in Sri Lanka due to pseudo-science based environmental groups. These “environmental” NGOs, organic food vendors, Natha-Deyyo-arsenic cabals and others got Gotabhaya’s government to ban agrochemicals, created famine, triggered a farmer uprising, an aragalaya joined in, and made Gota Go Home

(https://www.realclearmarkets.com/articles/2023/01/05/the_us_must_learn_from_sri_lankas_green_policy_mistakes_873852.html).

The Indian continent and Sri Lanka have been separate geographic entities since the time of the last Ice Age some 10 centuries BCE. A unique biodiversity in Sri Lanka distinct from that of the continent evolved in Lanka. The physical separation has protected Sri Lanka from epidemics and infections that rage in insalubrious India. A land bridge and such links connecting Sri Lanka with India will completely upset the existing bio-ecosystem and inflame ethnic-identity politics. I had written about this (Island newspaper: 19th July 2015 ) when the then Yahapalanaya government proposed a land bridge to India.

To give just one example, the early work of Philips (1935) on Lankan mammals has been handsomely updated by Asoka Yapa and Ratnavira in their monumental ‘The mammals of Sri Lanka’ (2013). The 50 km separation of India has given the Island 126 species of mammals, and no other island of comparable size is as diverse, with 1/5 of this diversity endemic to Lanka! Since local politicians (“Vavullu”) cross easily from side to side, Sri Lanka even has over 15 species of bats. The diversity of plants specific to Sri Lanka can be discerned from the web pages dh-web,org/place.names/bot2sinhala.html.

What is true for biodiversity is also true for cultural diversity. The Hinduism of Jaffna relates to the early monistic form of the “Saiva Siddhanatha” due to saint Thirumular. In contrast, Tamil-Nadu Saivism is pluralistic and follows Aghorasiva, who rejected the “monism” of Thirumular. Given a land bridge, the more profitable northern Kovils will pass into Indian hands. The Saivism offered will become the Saiva Siddhanatha of Aghorasiva. While Sinhala and Tamil cultures co-existed within Lanka until the advent of Chelvanayagams “exclusive Tamil homelands” doctrine, any free access to the tycoons of Tamil Nadu will erode the identity of Lankan-Tamil and Sinhalese Cultures as well. The latter, used to centuries of such interactions may survive the challenge of a land bridge, while Lankan Tamil culture will be stifled by the embrace of Tamil Nadu.

All this does not mean that a free-trade zone with India should not be an objective for Sri Lanka. However, this has to be done from a position of economic strength and not when fire-sale conditions of disaster capitalism exist in the country. The first objective must be to achieve energy and food self sufficiency – perfectly achievable, as outlined by me in previous articles (e.g., Island article 12th August 2021). Then only should the nation seek unbridled international free-trade links⍐.