Ranil’s Neoliberal Policies: A Death Knell For Working Class Sri Lankans
Pitasanna Shanmugathas
Several months ago, this writer and several others predicted when Ranil Wickremesinghe was to be appointed President that he would likely advocate for neoliberal policies exacerbating the hardships of the poor and the working class. As President, this is precisely what Ranil has done. Ranil’s neoliberal policies, once in full effect, will constitute a death knell for working class and poor Sri Lankans while enriching foreign corporations and the Colombo elite.
Against the backdrop of Ranil’s neoliberal policies is the ongoing food insecurity crisis in the country, the devastating impact of which has been sharply highlighted within a recent report by the World Food Programme (WFP). The WFP report—summarized by Adaderana—highlights that 36% of households are food insecure while 76% of households have “resorted to food-based coping strategies.” Food prices are an issue for nine out of ten households—“with limited purchasing power, over 50% of households are purchasing food on credit.” Female headed households, about 44 percent, are facing greater hardships than male-headed households. The situation is reportedly more precarious for those in the estate areas as they experience higher levels of acute food insecurity than those in urban and rural households. The disparity in the food insecurity crisis between the North and South of the country is also quite stark—“while 48% of all households in the Southern Province and 45% in the Sabaragamuwa Province have become food insecure, the North and the East face much less of a problem, with scores of 26% and 25%.” Ranil’s neoliberal policies will only escalate the current food insecurity crisis.
On September 1st 2022, the Sri Lankan government reached a preliminary agreement with the International Monetary Fund (IMF) for a 48-month extended fund facility (EEF) valued at US $2.9 billion. To be in good graces with the IMF, Sri Lanka is required to implement structural adjustment policies requiring the privatization of state-owned enterprises(SOEs), the elimination of the social safety net (government administered welfare programs), and essentially, Sri Lanka is required to adjust its economy to be in compliance with the neoliberal interests of the West.
The 2023 Sri Lankan budget is an indication that the nation is on track to be in good graces with the IMF at the expense of the welfare of everyday Sri Lankans. The 2023 Sri Lankan budget states: “The government is currently maintaining 420 state-owned enterprises. Fifty-two of these generate over 86 billion rupees [US$236 million] in losses.… A unit has now been established at the Ministry of Finance with the specific task of restructuring SOEs. Initially, measures will be taken to restructure Sri Lankan Airlines, Sri Lanka Telecom, Colombo Hilton, Waters Edge, and Sri Lanka Insurance Corporation (SLIC) along with its subsidiaries, the proceeds of which will be used to strengthen foreign-exchange reserves of the country, and strengthening the rupee.”
Interestingly enough, a lot of the privatization policies mentioned in the 2023 budget—although in conformity with the structural adjustment requirements of the IMF—actually align with the views previously expressed by Wickremesinghe when he was Prime Minister of the country back in the early 2000s. On December 5th 2002, as Prime Minister, Ranil Wickremesinghe put forward a poverty-reduction strategy paper (PRSP) with the stated objective of achieving an annual growth rate of ten percent. The PRSP begins by fondly reminiscing about the neoliberal reforms spearheaded by Ranil’s uncle ( President JR Jayewardene) in the late 1970s during the reign of the United National Party (UNP), but the PRSP states that post-1994 Sri Lanka has “lost momentum” and the PRSP goes onto advocate remedies to bring Sri Lanka back into momentum, such as the following: privatizing Ceylon Electricity Board and Ceylon Petroleum Corporation, privatizing or partly privatizing public services like health care, education, and social services, privatization of the electricity sector, privatization of the urban water supply, leasing domestic airports to private operators, provisions that would allow international companies to monopolize profits, labor market “flexibility” that would strip workers of protections, creating additional export processing zones, and corporate tax cuts.
As noted at the time by Sarath Fernando, Secretary of the Movement for National Land and Agricultural Reform (MONLAR), “Sri Lanka’s Poverty Reduction Strategy is obviously a package of economic reforms designed to carry forward the Structural Adjustments that the World Bank and IMF have been imposing on Sri Lanka over the last two and a half decades, under different names. The economic policies adopted during the last two decades have been oriented towards accelerating “growth” through liberalization, export orientation and privatization, with the assumption that growth would trickle down and reduce poverty. PRSP admits that neither growth nor poverty reduction has been achieved during this period. This strategy has in fact compelled the poor to bear a much heavier burden and to sacrifice social security, social development, and also human and democratic rights that had been won through political struggle during the previous decades.”
In fact, the PRSP was so outrageous that a broad segment of organized Sri Lankan society—more than 125 entities consisting of trade unions, non-governmental organizations, farmer, fisher, and estate workers organizations, women’s organizations, environmental organizations, rural communities, people affected by the process of privatization of State enterprise—all condemned the PRSP within a wide coalition known as the Alliance for Protection of National Resources and Human Rights (ANRHR).
The 2023 budget represents Ranil’s crowning achievement which is that he is able to finally implement the harsh neoliberal and privatization policies that he always wanted to implement. Only difference this time is that Ranil is able to frame the narrative to the Sri Lankan public in a manner that it is the IMF that is compelling him to impose such austerity measures in order to increase the country’s foreign reserves and rescue Sri Lanka from its current economic crisis. When, in reality, these are the types of economic policies Ranil has wanted to implement in Sri Lanka for decades. The current economic crisis in Sri Lanka merely provides Ranil with a convenient excuse that he can sell to the Sri Lankan public in hopes of preventing any large scale protests that can derail his neoliberal ambitions.
Let’s take a few specific examples of how Ranil’s economic policies as President are a reflection of Ranil’s PRSP policies coming to fruition.
Wickremesinghe in his 2002 poverty-reduction strategy paper expressed a desire to partially or fully privatize the healthcare system in Sri Lanka. The Wickremesinghe government is slowly fulfilling the mandate of its 2002 PRSP and that is evident through the 2023 budget’s proposed introduction of paying wards in public sector hospitals. Tharaka, a junior staff member at Colombo National Hospital, asserted that the paying ward system is “a major step towards the privatization of healthcare. Its purpose is profit and, in the process, a large number of existing employees will be thrown out…The creation of paying wards is like pushing patients into a frying pan. I’m against it. Even now, patients have to bear a lot of expenses for tests and buying medicines while getting treatment at government hospitals. Half of the required medicines are not available in government hospitals, and there are waiting lists for months for examinations and surgeries. After paying wards are created, even the existing free facilities will be withdrawn.” Nayana, a Gampola Base Hospital nurse, said: “If paying wards are created in hospitals then we will have to work like slaves. Because the unions are silent and the media is not publishing any information about it, patients and health workers are confused about the privatization of the public health service.” The Health Workers’ Action Committee (HWAC) in Sri Lanka has launched a campaign to oppose the Wickremesinghe government’s move to introduce paying wards in public sector hospitals.
The Ceylon Petroleum Corporation (CPC), an important source of the island’s oil supply and energy security, is something which Wickremesinghe had advocated be privatized back in his 2002 poverty reduction strategy paper, and is on the IMF’s chopping block, proposals to privatize the CPC were previously met with strong resistance by protests from workers. In October 2022, CPC workers organized a protest strike against the proposed privatization. “Some 4,000 workers at various levels, including technicians, clerks, executive officers and engineers participated in the industrial action.” The protests took place despite the Wickremesinghe government’s threat of penalizing the CPC workers under the draconian Essential Public Services Act (EPSA) which essentially stipulates that “any person or organization that violates essential services orders faces conviction, after summary trial before a Magistrate” and is “liable to rigorous imprisonment” of two to five years and/or a fine of between 2,000 and 5,000 rupees ($US11-25). The “movable and immoveable property” of those convicted can be seized by the state and his or her name “removed from any register maintained for profession or vocation.” Presently, the Wickremesinghe government has brought electricity, petroleum, and health services under the draconian law as a way to ban worker strikes. The CPC worker protestors succumbed to the government’s threats and the protests ended. Under the Wickremesinghe government, the CPC, as it presently appears, will be handed off to state-owned enterprises of foreign countries.
The tactic by the Wickremesinghe government of utilizing EPSA to compel CPC workers to end their strike and return to work is eerily reminiscent of the tactic utilized by President Ronald Reagan in 1981 when he declared that air traffic controllers who were on strike that did not return to work within 48 hours would lose their jobs. On August 5th 1981, Reagan fired 11,345 striking air traffic controllers and barred them from ever working again—in a move that played a significant role in weakening the power of trade unions in America. The Professional Air Traffic Controllers Organization, the union that called the strike, “had been decertified and laid in ruins.” The tactic by Wickremesinghe is also reminiscent of the more harsher tactic utilized by his uncle, JR Jayewardene, in the July 1980 general strike when President Jayewardene overnight fired 40,000 workers asking for a salary increase to meet the rising cost of living standards, such rising standards were a consequence of the UNP’s neoliberal policies at the time. Over 100 of the fired workers would go onto commit suicide in the years that followed. The longstanding policy of the UNP has always been to crush workers’ rights—by any means necessary.
Similar to the labor market flexibility provisions outlined in Wickremesinghe’s 2002 PRSP designed to reduce protections for workers and non-wage labor costs to employers, as President, Wickremesinghe announced changes to the labor legislation which he asserted were “necessary for economic transformation.” Wickremesinghe claimed that an insurance scheme will be imposed to cover private sector workers who lose their jobs, in reality, such a scheme is likely to make it easier for businesses to fire workers while maintaining low wages—a core demand of the corporate elite.
In 2022, Wickremesinghe further showcased his disdain for the public sector by forcibly retiring 30,000 public sector employees when he lowered the retirement age of state employees from 65 to 60. The Wickremesinghe government announced that it will not fill the vacancies. Instead, all government recruitment will be frozen in order to cut down government spending supposedly so that Sri Lanka can obtain its USD $2.9 billion loan from the IMF.
Academic Asoka Bandarage highlights the implications of the privatization policies outlined in the 2023 budget: “Many Sri Lankans prefer to work for the government sector given job security and retirement and other benefits. There are concerns that “privatization can result in lower salaries and benefits as well as retrenchment and high employee turnover,” and that privatizing SOEs that enjoy monopolies can result in “corporations making decisions based on profits rather than on public benefit.”
Significant land privatization efforts, Asoka Bandarage notes, are also in the 2023 budget. Incidentally, Wickremesinghe’s 2002 PRSP criticized government regulations constraining “foreign participation” within Sri Lanka’s agricultural lands which the PRSP claims has resulted in the reduction of productivity “in the plantation sector specifically and more generally the agricultural sector.” What is Wickremesinghe’s solution? Privatize Sri Lanka’s land to prioritize export production over local production. Bandarage points out that the 2023 budget has some significant proposals to this effect which were introduced quietly without any public discourse: First, Clause 12.1 on Lands for Agricultural Exports states: “A vast amount of land belonging to Janatha Estate Development Board [EDB), Sri Lanka State Plantation Corporation (SPC), and Land Reform Commission (LRC) remains without being cultivated or productively utilized for a long time…. “Accordingly, a program will be devised to allow investors to productively utilize them in a manner to increase both the production and exports. Hence it is expected that large parcels of unutilized/unproductively used lands will be leased out on long-term basis to grow exportable crops.…” Second, Clause 13.1 of the 2023 budget on Disposal of Government Lands states: “Activities related to the disposal of government lands are carried out by district secretaries/government agents through divisional secretaries/additional government agents … such duties were also allocated to Sri Lanka Mahaweli Authority and Land Reform Commission, which were established for special requirements at a later stage … there are occurrences of discrimination and malpractice as … activities related to disposal of lands…“Therefore … a program will be prepared during the next year to enable preliminary activities in relation to disposal of all government lands including the disposal of lands under the above two institutes only by the divisional secretaries.”
There are some Sri Lankan organizations, like the Advocata Institute in Colombo, which is affiliated with international neoliberal organizations like the Atlas Network, strongly backing Wickremesinghe, by exploiting Sri Lanka’s current economic crisis, arguing that the full privatization of SOEs is the only way for the country to emerge successful from the current crisis—an absolute death knell to the peasantry and local working-class population. Wickremesinghe has cushioned his privatization reforms in flowery language—framing the reforms as finally allowing Sri Lanka to be able to create “an internationally competitive workforce with high skills in the next ten years.” In reality, the privatization reforms in the budget will create a cheap and disposable workforce that international capital can exploit—a longstanding ambition of Wickremesinghe’s PRSP.
While legitimate criticisms can be made about the government’s flawed management of SOEs, the solution, however, is to implement reforms and regulations that would tackle and bring transparency and accountability to major issues of mismanagement and corruption plaguing these SOEs. The solution is not to privatize such SOEs which would end up further hurting the working class, much to the economic benefit of the corporate elite. Furthermore, Sri Lanka’s ineffective taxation system needs to be reformed so that the Colombo elite finally begin to pay their fair share in taxes. Presently, the indirect taxation burden is disproportionately on working class Sri Lankans. Political economist Mick Moore has previously attributed the “institutionalized pressure for tax exemptions” as contributing to the “hollowing out of Sri Lanka’s revenue base” which he noted played a role in creating a fiscal crisis within the nation—and this practice has clearly contributed to the economic crisis Sri Lanka is facing presently. Since 1977, the Sri Lankan government has been inept in effectively collecting direct taxes from its citizenry and this is because that is what is in the best interests of the wealthy class of Sri Lanka. The wealthy class of Sri Lankans, Moore asserts, comprise of “those who pay little or no direct tax on their (fast-growing) income, property values and other wealth, and are not directly impacted by the degeneration of under-funded public education, health and social protection systems.”
The tax reform introduced by Wickremesinghe in the latest budget, however, is predicted to escalate the cost of living crisis in the country, this is according to economist Dhanush Gihan Pathirana who stated that “the indirect tax component reflected by goods and services taxes is projected to rise as much as 80% next year, as opposed to the 60% increase in direct taxes, reducing the direct-to-indirect tax ratio of the economy to around 29% from 30.3% in 2022. This means that the problem of hyper-inflation will be further aggravated once the proposals come into effect. A falling direct-to-indirect tax ratio indicates that a greater share of the fiscal burden is being paid by ordinary consumers, causing internal price levels of essentials to rise further…. Despite an ongoing crisis of accessing basic human rights, the government of Sri Lanka is busy colluding with the business elite, finding new ways to open more sectors of the economy to private profiteering, and slashing workers rights.”
Amidst all this neoliberal misery, a possible silver lining to Wickremesinghe’s presidency that people have pointed out is that President Wickremesinghe publicly announced a few months ago that he wants to solve the decades long ethnic tensions in the country between the minority Tamils and the majority Sinhalese community. The minority Tamil community has expressed skepticism and mild optimism at the prospect. Wickremesinghe has created a self-imposed deadline to solve the decades-long ethnic tensions by next month (the anniversary of Sri Lanka’s independence). In reality, Wickremesinghe’s call to solve Sri Lanka’s decades long ethnic tensions is a clever tool to placate and silence opposition among the Tamil political parties towards Wickremesinghe’s disastrous neoliberal reforms. In this regard, Wickremesighe’s ulterior plan is already working. During last November’s vote on the budget, the Tamil National Alliance (TNA)—the main Tamil political party in Sri Lanka—abstained, allowing the harsh measures to pass in Parliament. The rationale for doing so, according to TNA Parliamentarian M. Sumanthiran, “We oppose this budget, but for one reason we have decided not to cast a vote against it… The president has said that he is taking steps to resolve the longstanding Tamil national question, although we are skeptical.”
The TNA might feel that its abstention from voting on the disastrous budget proposal is already starting to pay off—given that, much to the joy of the Tamil political party, Wickremesinghe on December 13rd 2022 called an all-party conference (APC) to “resolve the national ethnic question.”
Interestingly enough, on August 3 1995, when Wickremesinghe was Prime Minister—the President (Chandrika Kumaratunga) was part of the rival People’s Alliance (consisting of a coalition of political parties, most notably, the Sri Lanka Freedom Party), and Chandrika had presented to the public an outline of her constitutional reform proposals known as the Union of Regions proposals. The August 3rd Union of Regions proposals sought to divide the island into eight autonomous regions, and Sri Lanka instead of being known as a unitary state, would be recognized as a union of regions. As highlighted in an article by author Partha Sarathy Ghosh, the August 3rd proposals advocated that regions be “fully autonomous both in terms of executive and legislative powers. Article 76 of the Constitution which gives absolute power of legislation in the country to the Parliament is to be abrogated as the same power is now to be shared by the Regional Councils as well.” The August 3rd proposals went beyond and even sought to resolve many of the problems faced within the Indo-Lanka Accord. The Indo-Lanka Accord was a political-constitutional reform solution imposed onto Sri Lanka as a result of the catastrophic intervention of India’s peacekeeping forces in 1987 at the invitation of President JR Jayewardene. A fundamental problem with the power sharing mechanisms in the thirteenth amendment to the Indo-Lanka Accord is that whatever powers the central government gave to the regions could unilaterally be taken away by the central government. In addition to abrogating Article 76 of the Constitution, the August 3rd proposals abolished the concurrent list as contained in the 13th Amendment born out of the Indo-Lanka Accord. By removing the concurrent list, the August 3rd proposals made powers between the Central Government and the region more defined and distinct, and the proposals implemented checks that made it more difficult for the Central Government to unilaterally usurp powers given to the regions.
The proposals, with the removal of the concurrent list, advocated that “the respective powers of the Centre and the regions are contained in the Reserved List and the Regional List, respectively. To ensure that the Centre does not meddle in the affairs of the region, [the proposals] clearly provided that the Chief Ministers cannot be removed from office so long as they enjoy the confidence of the Regional Councils. The Governors are not supposed to be the watch dogs of the Central interests as is the case in India and their appointment by the President will be strictly with the concurrence of the Chief Ministers. To resolve disputes between the Centre and the Regions or between and among the regions, there will be a permanent commission on devolution appointed by the Constitutional Council. The Commission would have powers of mediation as well as adjudication.”
Upon the release of the August 3rd proposals, academic Paikiasothy Saravanamuttu asserted that the proposals were “federalism in all but name.” At that point in time, the proposals were the most far reaching and progressive in Sri Lanka’s history. The proposals devolved a significant degree of political power to the regions, and the proposals would have given the Tamil minority dominated North and East of the country unprecedented autonomy over issues such as policing, fisheries, agriculture, education, finance, and the proposals advocated constitutional provisions that were previously non-existent which would make it difficult for the central government to unilaterally usurp the power it had given to the regions—a long stemming fear and grievance of the Tamil minority. The Tamil Tigers, the extreme separatist rebel group, responded to the proposals by demonizing and subsequently assassinating one of the main drafters of the proposals (moderate Tamil politician and Harvard constitutional law lecturer Dr. Neelan Tiruchelvam). Wickremesinghe responded to the proposals by refusing to negotiate with them. President Chandrika Kumaratunga needed a two-thirds majority in Parliament to implement the constitutional reform proposal, which meant she needed Wickremesinghe and his United National Party’s political support. Consequently, Chandrika diluted the proposals in subsequent years in an effort to get Wickremesinghe to agree. Wickremesinghe refused to negotiate with the proposals because he did not want to give Chandrika the political victory of ushering into the country a new constitution. When the proposals were formally presented in Parliament in the year 2000, specifically, August 3rd 2000—5 years to the day Chandrika publicly introduced them—Wickremesinghe responded by literally setting on fire in the chambers of Parliament the proposals that Chandrika introduced. A few years ago when this author met and spoke with former constitutional affairs minister GL Peiris, one of the architects of the 1995-2000 constitutional reform proposals, Peiris lamented that Sri Lanka’s constitutional reform/peace process ended when Wickremesinghe literally set fire on the proposals: “The United National Party burnt them on the floor [in] Parliament. That is the only occasion on which I have seen fire physically in the chamber. The United National Party came to the chamber and set the document a light. So, it literally went up in flames. So, that was the end of the peace process.” The leader of the political party, the Tamil United Liberation Front, Veerasingham Anandasangaree, told this writer: “[Ranil Wickremesinghe] lighting the draft bill and dropping it on the table. He should have been charged for treason for that in Parliament.” Wickremesinghe committed this treasonous act despite the fact that by the year 2000, the civil war had killed thousands of civilians, and a constitutional reform solution could have provided the needed incentive to resolve the war peacefully.
In an address to Parliament in 2017, Wickremesinghe chuckled as he fondly reminisced about taking part in burning the 2000 draft constitution: “I think even we burnt the 2000 draft constitutional package,” he chuckled turning to his UNP colleagues for corroboration.
This is the same individual—Wickremesinghe—that now wants Parliament to vote for a political or constitutional reform solution that he will put forward to resolve ethnic tensions. If this situation weren’t so tragic, it would be comical.
However, it is already quite evident that whatever political solution to the ethnic issue Wickremesinghe will put forward in Parliament will be mere bread crumbs thrown at the Tamils in comparison to the proposals envisaged during the 1995-2000 process. There is already evidence of this. During Wickremesinghe’s meeting with the all party conference, he refused to immediately discuss any substantive power sharing issues and stated, “Let’s talk about the constitutional amendment and devolution of power later.” Such procrastination on the part of Wickremesinghe isn’t all that convincing of his genuine desire to solve the ethnic problem by next month (the anniversary of Sri Lanka’s independence), as he claims. The Tamil minority politician Sumanthiran responded: “Without any major amendments to the provisions in the Constitution, other laws with regard to power sharing must be implemented and the Provincial Council elections held.”
However, any political solution put forward that merely implements remnants of the flawed thirteenth amendment will be wholly insufficient towards addressing the legitimate grievances of the Tamil community under a united Sri Lanka.
It is uncertain how Sri Lankans will overcome the darkness that is the neoliberal catastrophe Ranil and his acolytes will impose on the country. In Sri Lanka, the Socialist Equality Party (SEP) has called on workers to mobilize opposition en masse towards Ranil’s policies: “the SEP calls on workers to form their action committees in every factory, workplace, plantation and neighbourhood, independent of the unions and all capitalist parties including the SJB, JVP and TNA… We call rural poor also to form their own action committees. Reject the IMF austerity agenda! No to wage cuts! No to pension cuts! No to starvation and malnutrition! Ensure sufficient food and a nutritious diet for all! Repudiate all foreign debts! Seize the assets of the super-rich and nationalize the major banks and corporations under workers’ control!”
Some might say the SEP’s agenda in its entirety is overly ambitious and somewhat impractical but this kind of pressure—on a nationwide scale—could be what is needed to scare the Colombo politicians into finally implementing economic policies which hold the wealthy elite accountable and benefit the vulnerable and working class.
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