Photo courtesy of Dhananjaya Samarakoon
Sri Lanka will enter into negotiations with the International Monetary Fund next week. Led by Ali Sabry, the country’s Finance Minister, and Nandalal Weerasinghe, the Governor of the Central Bank, the delegation will leave for Washington today. Speaking to Bloomberg, Mr Sabry admitted that Sri Lanka will need $3 to 4 billion for the rest of the year. Now that the country has defaulted on sovereign debt worth $51 billion, it is in a position to exclude debt servicing from its calculations, at least for the next eight months. While this is hardly cause for celebration, many consider it better than the alternative.
What was the alternative? Mr Sabry has more or less criticised Ajith Nivard Cabral and former Treasury Secretary S. R. Attygallefor resisting calls to go to the IMF. EconomyNext depicts the latter two as proponents of what it calls Modern Monetary Theory, which it defines as “an extreme form of Keynesian stimulus.” Given how much it’s associated with Mr Cabral’s personality, MMT has become a byword for money printing, which in turn is associated with increasing inflation. The consensus of the neoliberal right, in other words, is that Sri Lanka was growing unsustainably and now needs to brake a little.
The neoliberal right considers going to the IMF as a foregone contingency that we should neither question nor reject. It’s no small irony that commentators who, barely a year ago were criticising the government’s economic policies, have backtracked, praising Ministers and officials for toeing their line. It’s also no small irony that economists and pundits who once urged the country to seek IMF support, arguing that it would bring much needed relief to people, are now adding the caveat that it will come at a price: austerity for the masses, ostensibly for the upper classes but also for the middle classes.
As Dayan Jayatilleka noted in his Daily FT column last week, these are all highly convenient narratives. But myths need demystifying. The conventional view that IMF reforms will shield the poor and gnaw at the very rich breaks down when you consider that most Sri Lankans can’t be classifiable as very poor or very rich; they belong to an insecure middle class that has come to define Sri Lanka’s economic situation well. As Dr Jayatillaka rightly asks, at what point does the bitter medicine administered to this class by the IMF turn into poison? At what point will this class rebel and refuse to take the medicine?
Sri Lanka’s middle class is unique, a sui generis category that cannot be defined in relation to middle classes elsewhere. Its problems need to be dissected although they haven’t been yet. All one can say is that it is both upward-aspiring and dependent on state patronage. This is a curious enough dichotomy but it has come to epitomise probably the most intriguing group to emerge from post-independence Sri Lanka. What that means, in essence, is that while clamouring for agency, access and freedom, our middle class is more or less also restricted by state patronage through subsidies and public services, in particular services like health, education, public utilities and local government.
The truth of the matter is that after all these decades the country’s economic situation has still not helped our middle class resolve the contradiction between their aspirations and their needs. They have aspired upward and tried to free themselves of state overreach but they have also become heavily dependent on state patronage, particularly through public services, subsidies and welfare. Moreover, we are a country that runs on imports, a country that has not yet transformed into a production economy. In such a context, the middle class has had no choice but to entrench itself in import-dependent fields. Not even the IT sector, a mainstay for our educated youth and a crucial element in the ongoing protests against the Rajapaksa regime, is an exception to this. What that means is that the professional, educated and young middle class is operating on rather shaky ground.
In terms of their social composition, the protests that sprang a little over a week ago at Galle Face were unprecedented. While middle class protests have unfolded and taken place here, even under British rule, middle class agitation has been something of an oddity in the post-independence conjuncture. What agitation that sprang up among them essentially focused on privations imposed by the state as in the outpouring of anti-government sentiment in the last few years of the 1970-1977 regime. As Dr Jayatilleka has observed in Long War, Cold Peace, Sri Lankans will not tolerate a regime that imposes material privations. This is a point the United Front administration only belatedly learnt to its cost.
On the other hand, radical agitation of the sort that the J. R. Jayewardene government encountered in its first few years did not involve the middle classes. That sort of agitation was left to the lower classes, particularly workers and peasants, to take up. While the UNP government followed a Thatcherite line in suppressing working class agitation in the early 1980s, its authoritarian tendencies sparked off a peasant uprising in the latter part of the decade, an insurrection helped in no small part by the government’s proscription of the JVP. Middle class agitation at this juncture, if it figured in at all, was limited to civil society outfits brave enough to take on the Jayewardene administration.
My view is that the middle classes never really suffered in this period because the policies enacted by the UNP government, such as public sector divestment and privatisation, did not affect them adversely, if at all. As Steven Kemper suggests in his study of advertising in Sri Lanka, the middle classes generally benefitted from the culture of neoliberal globalisation that the UNP unleashed. Although following an IMF and World Bank line, the Jayewardene and Premadasa regimes ensured enough support for, and from, these groups. The situation was basically the same under the Chandrika Kumaratunga administration.
Under the Rajapaksas, however, the dynamics changed, significantly. Hailing from a rather different political order, the Rajapaksas peddled populist measures and dynastic politics, eventually ensuring continuity for themselves. They were able to mobilise rural and working class support but it was by tapping into middle class support that they were able to propel themselves into power. This was true especially of Gotabaya Rajapaksa; from the southern heartland to Colombo suburbs, the lower and upper middle classes voted en masse for him. Yet the Rajapaksas’ brand of dynastic politics could not cohere with middle class ambitions. This is the dialectic that governs middle class opposition to the First Family.
Unfortunately for the middle class, whether they are aware of it or not, Sri Lanka’s political culture is a pale reflection of its economic system. Yes, this is a country where corruption has swept into every other sphere and arena, a country where what you want to do is all too often determined by who you know. And yet, in the absence of an industrial production base, power elites will continue to forage for everything they can get a hold of, leaving the scraps for everyone under them. That is why, until we address the elephant in the room that is Sri Lanka’s economic problems, we can’t hope for proper reforms. But that is precisely what IMF discourses of neoliberal restructuring sideline.
I will not get into whether the protests have suffered or progressed because of these developments, except to say that leaderless as they are, they remain invigorated by an educated and professional middle class. Contrary to what media outlets are saying, this is not a youth-dominated movement. Yet it is very much led by youth, specifically middle class youth, that finds its hopes for the future clashing with the political setup. They have been hemmed in by import restrictions on the one hand and out-of-control inflation on the other, while the economic model which sustained them for so long has collapsed. They now feel they have nothing to lose by standing up until the Rajapaksas stand down.
It is this, more or less, that has fuelled their agitation today. Incensed by the excesses of the Rajapaksas, they have come out to the streets and called for a new political order. Along the way, not a few of them peddle the IMF line, convinced that the country’s ills can be solved by neoliberal restructuring. What is ironic, if not tragic, is that such solutions may give them breathing space in the short run but will almost certainly administer a bitter medicine in the long term. Whether this medicine will turn into poison is anyone’s guess. It all depends on what Mr Sabry’s delegation negotiates. For the sake of the country, one can only hope that they will negotiate a better deal, not a bitter one.