Courtesy The Island

Last week, there were three incidents related to the UNP, the main partner in the ruling coalition; three important developments which, together, may be an indication of things to come.

The first was the heat and fury generated at a meeting on Tuesday at the party headquarters where the former Pradeshiya Sabha members and sitting provincial councillors of the UNP had given vent to their grievances against the party hierarchy.  The complaints themselves weren’t new.  It was pointed out that UNP provincial councillors and former local government representatives were powerless even to give a supporter a job or get a transfer carried out, that there were unresolved cases of political victimisation some going back to the 1990s, and that it was impossible to contact any minister in the government even over the telephone much less meet them in person.

What was new was that even Kabir Hashim had been booed by the assembled crowd. This is probably the first time that such an incident has taken place on that scale within the UNP even though there have been isolated instances of the rank and file venting their frustration.  One website reported that the irate UNP people’s representatives had even loudly charged that the government was only doing the bidding of foreign powers without paying any attention to the party rank and file. Whether the implications of this open revolt will sink into the UNP leadership which usually has a Marie Antoinette like attitude towards the party rank and file is debatable. But the development of a situation like this when the party is preparing for elections next year, does not augur well for the UNP.

It is a moot point as to who is to blame for the present impasse with regard to the local government elections and those for the Northern, North Central and Sabaragamuwa provincial councils. After the presidential elections last year, president Maithripala Sirisena dissolved the local government institutions which were largely SLFP and UPFA controlled without giving them the one year extension sanctioned by the Local Government Authorities Elections Act, mainly because the lower ranks of the SLFP were staunchly with Mahinda Rajapaksa. It may also have been a way for him to show his gratitude to the UNP by making certain that the SLFP/UPFA will not have the advantage of having the LG representatives and the resources of the LG institutions when the parliamentary elections were held.

At that early stage, the reason given for the postponement was that these elections would have clashed with the Parliamentary elections.  The dissolution of these authorities naturally took away the edge that the SLFP/UPFA had.  It would have been to the UNP’s advantage had the local government elections been held immediately afterwards, but at this point it became obvious that the Maithripala Sirisena faction of the SLFP feared being wiped out, as they had at the General Election.  Now however the government is running out of excuses to postpone the local government elections; even members of the Sirisena faction have opined that the elections will have to be held even if the SLFP (Sirisena faction) comes third in the contest.

Sparring over electoral systems

Another dispute with respect to these elections among the key members of the coalition that brought Maithripala Sirisena to power was about the system under which they would or should be held.  The Sirisena faction favours the new electoral system because they think their only chance of survival will be if they are able to blackmail the Joint Opposition with the cry that they will be splitting the SLFP vote and facilitating the victory of the UNP in the various wards of the LG institutions. It is interesting to see that the UNP has not attached any credence to the hope that a split in the SLFP will help them to prevail at an LG election held on the new hybrid first past the post and proportional representation system.   If they did, the UNP too would have wanted the LG elections held under the new system. The excuse for holding the LG elections on the old system is that they cannot be postponed indefinitely and that the country cannot wait for the delimitation of the wards to be completed, as required by new laws.  As of now Lakshman Kiriella of the UNP, Anura Kumara Dissanayake and the SLMC have shown a preference for holding the LG elections according to the proportional representation system. The Joint Opposition does not mind whichever way the elections are held. That leaves only the SLFP (Sirisena faction) insisting that the elections should be held only according to the new system.

After a succession of SLFP (Sirisena faction) ministers saying that the next LG elections should be held only according to the new electoral system, last Friday President Sirisena himself sang the praises of the new electoral system in public saying that in 1989 when he entered parliament for the first time, he spent less than Rs. 100,000 on the election whereas when he contested in 2010, he dares not say how much he spent to get elected.  He added that the electoral system breeds corruption because of the huge sums of money that have to be spent on getting elected. President Sirisena is of course right. There is no doubt that this system of election where where a candidate has to cover an entire district at the parliamentary election should be changed.

Which side will win this debate about elections systems is yet to be seen. Last Friday, former President Mahinda Rajapaksa told the media after a function at the Abeyaramaya that he does not mind the election being held under either system. Some UNP ministers think it will be more advantageous to them to go in for the provincial councils straightaway without facing the local government elections although it is is difficult to see how this will help them because the trends that would affect the local government elections will also manifest themselves at the PC elections as well. The UNP seems to have made up its mind that the proportional representation system will be more advantageous to them which is why the PC elections – which will have to be held according to the proportional representation system – may seem more attractive to the UNP.

The worm turns

Another interesting development was the press conference that three UNP parliamentarians Mujibur Rahaman, Hector Appuhamy and Thushara Indunil held at the UNP headquarters. All three had obviously been told to lash out at the SLFP ministers who were criticising the UNP in public. Rahaman said that the SLFP ministers were criticising the UNP saying that the UNP has a deal with Basil Rajapaksa to destroy the SLFP. He said that the internal problems of the SLFP should be solved within their Darley Road headquarters. He issued a warning to the SLFP(Sirisena faction) to stop criticising the government or to leave and added that the government will not fall even if they leave.

This is the first time the UNP reacted officially to the criticism that members of the SLFP (Sirisena faction) have leveled against the government. The interesting thing was that this broadside from Rahaman came just a day before the vote on the third reading of the budget which makes it all the more significant.

That may have been the UNP’s way of impressing upon the SLFP (Sirisena faction) that they were not needed to keep the government going. In fact the UNP has no need of the 35 or so SLFP members of the government because they can easily obtain the support of the TNA to maintain their majority or in the alternative they can simply absorb some members of the Sirisena faction and form their own government. it must be remembered that the constant protestations by Sirisena faction members that they were anti-UNP even though they were in a government led by the UNP and their efforts to drive home the point by attacking the UNP on certain selected issues, was damaging the UNP’s standing among the floating vote and the youth vote.

The Sirisena Faction worthies try to make out that they are in fact the pristine  members of the SLFP adhering to the policies of S.W.R.D.Bandaranaike but had been constrained to form a government with the deplorably capitalistic, reactionary and unbelievably corrupt UNP only to save our war heroes from war crimes allegations coming from the West. Some like minister Soysa was also in the habit of saying that they formed a government with the UNP only to protect the membership and rank and file of the SLFP from the attacks of the UNP. Whatever the excuse, the UNP was always portrayed as a villain and the members of the SLFP (Sirisena faction) always try to outdo the Joint Opposition in their criticisms of the UNP so much so that it was becoming untenable for the UNP to appear on talk shows with members of the SLFP (Sirisena faction) to represent the government.

With a UNP member seated by his side the SLFP (Sirisena faction) minister would describe the UNP as ‘horu’ as Lakshman Seneviratne did a few days ago on the “Balaya” programme on Hiru TV.  With just three members of the Joint Opposition on COPE, it still put out a report that left the UNP with egg on their faces. The antics of the SLFP (Sirisena faction) has given cause for much snickering and merriment among members of the Joint Opposition because every blow that members of the SLFP (Sirisena faction) aimed at the UNP weakened the very government that they were both partners in. Who would not like to see the enemy devouring his own rear end?

The impression that this writer gets by talking to people is that the attacks on the government by those serving in it have only gone to confirm everything that the Joint Opposition has been saying about the government. There is of course no precise way of gauging whether it has improved the standing of the Sirisena faction among voters. But from what this writer knows about politics, there can be only two sides, either you are in the government or out of it, you cant be in it and claim to be not of it and expect the people to buy that.

The third most interesting development in the UNP is the resolution that was passed in the working committee on Thursday endorsing the policy of devolving power within a unitary state and the need to have a President who carries out his functions ‘on the advice of the prime minister and the cabinet of ministers’ and to abolish the proportional representation electoral system in favour of a hybrid of the first past the post and proportional representation systems. The resolution also said that the special powers now wielded by president Sirisena would be retained. (Perhaps what this meant was that they would be retained till the end of president Sirissena’s term of office.)

The first to criticise this resolution was the pro-yahapalana website Lankaenews which published a blistering article accusing the UNP of having ‘betrayed’ the pledge given to the people to abolish the executive presidency completely. They pointed out that the very first pledge in the memorandum signed by Ranil Wickremesinghe and Ven. Maduluwawe Sobitha Thera and 98 ‘civil organisations’ was to abolish the executive presidency.  They had pointed out that when the 19th Amendment was introduced, there had been a similar play on words with the pledge to abolish the executive presidency becoming merely an exercise to reduce or modify some of those powers.

Lankaenews has warned that to change the executive presidency only to the extent stated in the UNP’s resolution may offer some relief when the President and prime minister are from two different political parties, but if they happen to be from the same political party, the old dictatorial tendencies will once again manifest themselves. It has to be said that this website is one of the few yahapalana partners who even speak of abolishing the executive presidency now.

Leasing out the Hambantota Port

In one of the great ironies of politics, the first public property sold by the UNP led government is the Hambantota Port which was built by the Rajapaksa government. The proceeds from of the sale of public properties was one of the main sources of revenue expected to be raised to cover the budget deficit in 2016 but so far the government has not been able to sell any of the properties it wanted to dispose of such as Sri Lankan Airlines and the hotels owned by the government. An MOU was signed last week for the long lease of the Hambantota port to the China Merchant Holding Company for 99 years for a sum just over one billion USD. The Rajapaksa camp which had an anti-privatisation policy was up in arms against the virtual sale of the control of the Hambantota Port. A 99 year lease with a Chinese company with the private party owning 80% of the lease means a virtual sale.

At a press conference held to oppose the privatisation of the Hambantota Port, parliamentarian Wimal Weerawansa said that another Chinese company  the China Harbour Engineering Co had offered 740 million USD for a 65% stake in the harbour which would mean that the Sri Lankan government would be entitled to 35% of its income but that this offer had not been accepted. President Mahinda Rajapaksa who along with the other parties aligned with him have always maintained a strong anti-privatisation stance went on record saying that they will have to make a decision about this privatisation of the Hambantota Port once they come back into power.

In the meantime, the Joint Opposition’s new political party, the Sri Lanka People’s Front, launched its bhikku front with a meeting at the Bauddha Mandiraya at Thunmulla. Former President Mahinda Rajapaksa attended the gathering at the initial stages and left early. The monks present had blessed the former president and called upon him to take over the leadership of the political forces opposed to this government and to lead the campaign against the new Constitution which seeks or facilitates division, the proposed ETCA with India and the privatisation programme. Thereafter, 16 district committees were formed by the bhikkus present with a convenor for each district to carry forward the work of the organisation.

The IMF’s optimism and gloom

Last Friday, the IMF published its first review of the Extended Fund Facility given to Sri Lanka. The government has received about 325 million of the 1500 USD loan from the IMF up to now. It was observed in this report that the government’s reform program aims to reduce the fiscal deficit, rebuild foreign exchange reserves, and introduce a simpler, more equitable tax system to restore macroeconomic stability. The IMF observed that Sri Lanka’s performance under the Fund-supported program has been broadly satisfactory despite challenging circumstances.

Macroeconomic and financial conditions have begun to stabilize, inflation has trended down, and the balance of payments has improved, the report stated. However, the IMF warned that international reserves remain below comfortable levels and that the structural benchmarks due in July?September were not met, but mentioned that the authorities have been making progress toward their completion which is now scheduled for December 2016. They had also observed that risks to the programme emanate from the ‘political challenges’ of maintaining momentum for sweeping tax reforms and implementing related fiscal and structural reforms.

They observed that the lack of progress in revenue-based consolidation, a further decline in growth, and additional losses from state-owned enterprises would call for more difficult adjustments. These would further increase the risk to debt sustainability, given the already high level of government debt. The IMF also warned that the outstanding financial obligations of state owned enterprises remain large at over 11% of GDP at the end of 2015, and stressed the need to Introduce automatic pricing formulas for fuel and electricity and to reduce the discretionary aspects of the price-setting process. The IMF also observed that public debt had reached 80.4% by the end of last year (2015). According to the latest Central Bank report, it was 70.7% at the end of 2014 which indicates the quantum of loans taken by the present government in just 12 months. Even as new loans are being taken, old ones are constantly being paid back. What has increased is the loans outstanding – which means that the present government has been taking new loans much faster than they have been repaying the old ones.

Foreign-currency denominated debt accounted for 47 percent of the total, while debt owed toofficial and multilateral creditors accounted for about a quarter of the total. The largest segment of the foreign currency denominated borrowings of the present government were in the form of Sri Lanka Development Bonds.

What is most interesting about this IMF report is that it had said that the Fiscal consolidation envisaged under their program would steadily reduce public debt which is expected to come down from 80.4 percent in 2015 to 70.1 percent in 2021. What this means is that when it comes to public debt, it will take a full five years from now just to bring the public debt figures to the level at which the Rajapaksas left it at the end of 2014! What does that say about the economic management of the present government? The IMF has also warned that if the fiscal consolidation programme stalls and continues to underperform as it did this year, there was the risk of the debt to GDP ratio actually increasing to 86% by 2021 instead of coming down to 70% as envisaged.