Image Courtesy the Hindu
“We have not abandoned our people, neither will we do so.”
Mahinda Rajapaksa (Budget 2023, second reading debate)
The seminal event of the 2023 Budget cycle was not Budget 2023. The Budget was more good than bad, but too tepid overall to be an inflection point. The real stunner was the speech by Mahinda Rajapaksa during the second reading. To call it the first salvo of his Third Coming is no exaggeration.
The morning after he lost the 2015 presidential election, Mr. Rajapaksa returned to Medamulana, clung to a window in his ancestral pile, and blamed traitors and conspirators for his electoral loss. “We must remember they got their majority vote from Eelam,” he told his supporters. Sinhala-Buddhists, the true owners of the Motherland, have lost power which can be regained only by bringing the Rajapaksas back to power. That anti-democratic and racist interpretation of the 2015 presidential election would form the basis of Rajapaksa political platform for the next five years, starting with the Mahinda Sulanga rally in Nugegoda and ending in Gotabaya Rajapaksa’s historic victory.
Like that Count from Transylvania with nocturnal habits and strange appetites, the Rajapaksas won’t stay politically dead. And they can keep on returning so long as enough Sinhala-Buddhist voters wallow in minority phobia.
Traitors and Conspirators form a key thesis of Rajapaksa theory of politics. “It has been revealed who was behind the crisis,” Mahinda Rajapaksa said during the Budget debate. “The people will come to know more information in the near future. These elements are not letting this country rise. Instead they attempt to ensure the country’s downfall… It was their puppets who put on a show recently. The economic collapse was an organised act. They caused the destruction of the economy. As evidenced by past incidents, these groups have acted in the same manner every time the country was making progress.”
The corollary of the Traitors and Conspirators thesis is that the Rajapaksas never have to own their crimes, errors, and stupidities. It’s always someone else’s fault.
The debt crisis, and the resultant sovereign default, for instance, is the fault of the Sirisena-Wickremesinghe administration. That government took “the largest debt in the shortest period,” claimed Mr. Rajapaksa, prancing about on his moral high-horse.
The website factcheck.lk analysed the issue factually by comparing interest due to pre 2015 debt and the increase in debt between 2015 to 2019. Accordingly, 117.6% of rupee debt and 59.3% of the dollar debt incurred under the Sirisena-Wickremesinghe administration was to service pre-2015 debt. So 89.8% of the total debt incurred by the ‘Good Governance’ administration was to pay the interest on the debt outstanding by 2015.
A few days before the 2019 presidential election, then finance minister Mangala Samaraweera asked candidate Gotabaya Rajapaksa how he was going to make good the revenues that’ll be lost from his tax cuts. Mr. Rajapaksa didn’t bother to answer because most of the electorate didn’t bother with facts. So the Family slashed and burned the country’s tax base. In one year, tax revenue fell from 11.6% of GDP in 2019 to 8.1% of the GDP in 2020. The money lost to the nation was pocketed by business and professional classes. The ordinary masses who bear the brunt of indirect taxes got nothing. Though VAT was slashed from 15% to 8%, inflation increased in January and February, proving that the benefit of VAT reduction accrued not to poor people but to business owners.
Having gutted national income, the Rajapaksas increased expenditure, burning the candle at both ends. President Gotabaya’s project of providing state employment to 50,000 unemployed graduates and 100,000 Samurdi recipients without OL was quintessential Rajapaksa economics. The military was involved in selecting candidates and training them. Today most of them waste their time and public money in various state institutions. In these already overstaffed entities, there’s no work for 150,000 new employees.
The SLPP’s Rise from the Ashes campaign had to be abandoned because enough Lankans still remember that the ashes are from the fires the Rajapaksas themselves lit and stoked. Meatier issues, more incendiary slogans are needed. Mr. Rajapaksa, in his budget debate speech, gave a hint about the way ahead. No selling of national assets, he proclaimed, not even loss-making ones. Selling national assets equals undermining national security equals betraying the nation. Rata, Jathiya, Agama, Ape Hamuduruwane, Rana Wiruwo, Janathava… Terrify the country into strangling itself with the Kurahan satakaya, again.
Factually-challenged Counts of Medamulana
In 2007 December, Mahinda Rajapaksa, with an entourage of 35, paid a private visit to the UK to watch the graduation of his second son from the Dartmouth Naval College. When the president demanded that not only he but his entourage be accommodated on the return Sri Lankan flight of his choice, the management said a polite no. It was the height of the holiday season. Acceding to the presidential request would have meant offloading 28 paid business class passengers. A furious president chartered a Mihin Lanka flight. Doubtless, like Basil Rajapaksa’s recent bill at the airport lounge, people paid the price. (Was Prof. GL Peiris, now reborn as anti-corruption crusader, a part of that entourage, one wonders).
Emirates-appointed Sri Lankan CEO, Peter Hill, would have thought he was making a sensible business decision. In fact, he was causing lèse majesté. When Mr. Hill’s work visa came up for renewal in January 2008, a petulant government said no, and demanded a greater say in the management of Sri Lankan. Emirates refused and opted not to renew its 10 year contract. (Incidentally Mr Hill returned in September 2022 to manage a local private airline).
Since the Chandrika Bandaranaike Kumaratunga government sold a 44% stake of Sri Lankan to Emirates for 70million dollars, the airline’s fortunes had revived. By 2007/8 its accumulated profit was 9.29billion rupees. In 2007 alone, it made a net profit of 5billion rupees. Then Sri Lankan fell back into the patriotic Sri Lankan hands of the Rajapaksas. In the first year itself, the airline made a loss of around 9billion rupees. By the end of 2021, the accumulated loss was 372billion rupees.
Is Sri Lankan national asset or national liability?
In the year 2020-21, Sri Lankan loss was a staggering 45billion rupees. If that money had been spent on social welfare, the 56,000 children facing severe acute malnutrition and the 2.43million people who are on the verge of malnutrition (according to the WFP) could have been fed not just adequately but sumptuously. That then is the real choice.
At a Himalayan 860 billion rupees, the losses of SOEs in the first four months of 2022 is higher than their total loss in 2021. So, do we pump more money into a host of SOEs or do we help the wretched of Sri Lanka to survive? And when the Rajapaksas wage the patriotic battle to save the nation by saving Sri Lankan, where would the Opposition be?
In his budget debate speech Mahinda Rajapaksa said, “There is no benefit to the people by merely presenting the budget or by inciting them.” That was a double swipe, at Ranil Wickremesinghe for just presenting the budget without giving relief to the people and at the opposition for inciting the people.
Mr. Rajapaksa’s claim that Budget 2023 does not provide relief is as specious as his other claims. True, defence costs should have been pruned and were not. Yet, the money allocated to education and health exceeds money allocated to defence (including police), possibly for the first time in a long time. Total defence allocation is 539billion rupees while the total allocation for health and education is 554billion rupees. The allocation for social welfare is 852billion rupees amounting to 10.08% of the total budget. These are positive developments, despite the Budget’s pie-in-the-sky estimates and silly contradictions.
That the Rajapaksas should ignore these positives is understandable. In their eyes, only they can be praised since We did the best work (Api thamai hondatama kale). Unfortunately instead of adopting a nuanced approach, the Opposition too has opted to be blind to these positives. Ranil Wickremesinghe should be criticised for trying to clamp down on constitutionally guaranteed right to peaceful protest. But do his many political wrongs justify voting against the budget wholesale, relief measures and all?
Has the Opposition decided to oppose anything Ranil Wickremesinghe does, simply because he does it? How else can they accuse him of being right wing/reactionary and then slam him for embracing progressive taxation? It is one thing to question how the tax money would be spent, as the Supreme Court did, when it gave its nod to the Inland Revenue Amendment Bill, stating that “corruption and wastage of public finance must be addressed and violators dealt according to law irrespective of standing.” But it is another thing to scream that people are being taxed. People were always taxed indirectly, with the lower income groups bearing the brunt. The new tax policies tries to right that wrong, a little.
As world slips into recession, the issue of fair taxation has assumed a global importance. The General Assembly recently mandated the UN to play a global tax leadership role. The IMF has come out in favour of Latin American nations’ adoption of progressive taxation. As Nigel Chalk, a top IMF official said, in backing Chile’s ambitious tax reforms (including a capital income tax), “A tax reform that generates more revenue, and puts more money in social systems, in supporting lower income families, supporting middle class, that’s definitely a more progressive system…” (Reuter – 2.11.22). It’s one thing to savagely criticise increasing Cess on paper (thus school books), quite another thing to oppose re-imposition PAYE taxes. If Ranil Wickremesinghe actually brings in a wealth tax, will the Opposition oppose that too? Where will this irrationality end? In an alliance led by the Rajapaksas to save the Motherland by saving the SOEs?
When the bough breaks
There was no danger of Budget 2023 being defeated. Had that happened, the parliament would have stood dissolved. And the SLPP is not ready to face elections, not yet. It is for that, and no other reason, did the Rajapaksa-led SLPP support the budget.
The alliance between Ranil Wickremesinghe and the Rajapaksas is an opportune one, like most political deals. Both sides have something to gain from it. Each side is using the other. The Rajapaksas do not enjoy playing second fiddle to anyone and would cut the ground under Ranil Wickremesinghe as soon as they feel strong enough. Mr. Wickremesinghe would do the same to the Rajapaksas when he can.
So once the use value diminishes, the Wickremesinghe-Rajapaksa alliance will fall apart. That is a political inevitability. The only question is who cuts whose throat first.
The Rajapaksas are the greatest threat to Sri Lanka’s democratic health, economic sanity, and public well being. As was amply proven in the last two plus years, they are structurally blind when it comes to anything other than familial interests, in the narrowest possible sense. Just one example would suffice. Had the preferential vote contest between Nipuna Ranawaka and Dulles Alahapperuma (not to mention Kanchana Wijesekara) been better managed, the Rajapaksas could have ensured their nephew’s victory without antagonising two faithful acolytes who had served them well for decades. But such restraint is alien to them. Like Vellupillai Pirapaharan, extremist responses are in their political blood.
So the Rajapaksas in power or in a position of serious influence would retard the task of getting Sri Lanka out of this abyss of Rajapaksa creation. Currently, they have no control over economic policy even though they can win some concessions, like the appointment of state ministers. Even that influence will diminish when President Wickremesinghe becomes constitutionally able to dissolve the parliament at will.
Which is why the Rajapaksas will look for an issue that can set the country on fire. It could be the restructuring of the SOEs. It could be a wealth tax. Or a proposal to solve the ethnic problem, or even a prelude to such a solution, such as the full implementation of the 13th Amendment or returning military-occupied North Eastern lands their owners. If none of these happen, there will be the suffering of the masses which is not likely to abate for a while.
The Rajapaksas probably know that any attempt to dress as economic saviours will not carry conviction. But if the Motherland is in danger, if international conspiracies are afoot, if traitors are at work, then the patriotic banner can be unfurled. Mahindagamanaya 3 will not be different to Mahindagamanaya 1 or 2. The Family will divide everyone else, appeal to the worst in Sinhala-Buddhists, and encourage reactive extremism in minorities.
The Rajapaksas are focused on regaining power. Ranil Wickremesinghe, Sajith Premadasa, and Anura Kumara Dissanayake are preoccupied with hurts and resentment, pique and chagrin. By the time they see the common danger, the Kurahan satakaya might be close to throttling the nation, again.