Dr. Sudath Gunasekara Mahanuwara

 (Dr. Razeen Sally’s speech as reported is given immediately after this response)

I am no economist to comment on the observations of an internationally acclaimed top economist. It is a matter for an unbiased local economist who is more qualified or at least equally qualified in modern economics but who knows the local socio-economic and political context better than Sally and who also knows  our socio economic and political back ground as well, better than Sally to respond to his sweeping comments. 

But I have few big questions to ask him and the organizers of this event.  To me it appears that Sally is a byproduct of the modern liberal economic tradition of the West an agent of the Anglo-American school of thought, sometimes handsomely paid for the excellent marketing he does for Western International organizations like the IMF and World Bank and therefore obviously no friend of Sri Lanka.

 He also appears to be a strong critique of the present Government and its policies even better than the US Ambassador. But it is also obvious that he is completely ignorant that this country had been a bastion of Sinhala Buddhist civilization for 25 centuries at least. Therefore development of this country obviously has to go back to its roots based on what Schumacher the German philosopher has describes as Buddhist economics in his book Small is beautiful. Reading through Sally’s sweeping comments I would advise Dr Sally to first read Mahavamsa and few basic authoritative texts on the history and the socio-economic system of this country that enable it to prosper as one of the foremost nations in par with Rome even in the 2^nd century BC, before he ventures to advice on economic development in this country. 

The tone of his whole lecture from Alpha to Omega shows that he is a strong supporter and a product of western liberalism and a critic of China. To understand what the open economy, he applauds, did to Sri Lanka since 1977, you need not be an economist. But even an ordinary layman Sri Lankan villager knows the damage and destruction it has done to an awakening new Sri Lanka by killing the Industrial and agricultural infra-structure network painlessly built for decades by all the pre-1977 Governments with Russian and Chinese assistance and sometimes open grants from friendly countries,  by the open economy introduced by JR. Sally is boasting of.

For example it is reported that during that time IMF recommendations has completely destroyed our national industries such as Paper Mills corporation, National Weaving mills, Tyre corporation, Hardware corporation, Plywood corporation, Paranthan Chemical Corporation, Sugar Corporation, Oil and Fats corporation, Marketing Department Canning Facilities, Mineral Sand Corporation, National Milk Board, Co-op shops, and many more that had laid a firm foundation for a solid economic take off.

Are these the benefits Dr. Razeen Sally has described as successes of the policies of Ranil’s post 2015 Government did?. I my opinion what happen in 2015 was a mere relapse of the same system that failed again for a second time after 1977. It is the cumulative results of that economic and social retardation we are paying back today. His remarks are also often contradictory .For example in certain places he praises Ranils period where he was also a highly paid Consultant of Economic development for three long years. But at the same time in subsequent statement he criticizes Ranil very badly. Unfortunately he little realizes that he was also a party to those lapses, as a top economic Consultant to that Government. This is like the kettle calling the pot black,

Of cause being a Product of Western liberal economics I can understand his criticism about Mahinda and his approach to development in this country during his time. Mahinda in my opinion, in spite of few political weaknesses, is a product of the native culture definitely who knows much more on the native needs than the book economist Kelly.

I would strongly advice sally to read (if he has not so far seen them) When China Rules the World: The End of the Western World and the Birth of a New Global Order by Martin Jacques and the famous Clash of Civilizations and Remaking of World Order by Samuel Huntingdon (1997) before he takes off Singapore in his next lecture tour before he quote Marx, perhaps a fashion in some academics to demonstrate ones profundity.

In my humble opinion the Central Bank hiring sally an Assistant Professor in Economics of a Singaporean University for the celebrated 69th anniversary is a very big political mistake. It is just like the  appointment of An advisory Committee of a set of lawyers trained in Roman Dutch law (with a Portuguese, Dutch and English touch perhaps nursed in Greek and Latin traditions,  together with few young Tamils and Muslims decorated with academic titles on various subjects by this Government to draft a Constitution for Sri Lanka under the supervision of another top Muslim Lawyer who is also the Minister of Justice in this Government (who is not even an elected MP by the people and therefore not a peoples representative with whom the all-important and sacrosanct Sovereignty is supposed to lie) of this  country to prepare a draft Constitution for Sri Lanka which had been a Sinhala Buddhist country for over 2500 years. I see no between these two decisions.

So in this backdrop as a responsible citizen of this country, now I ask the following questions from the Central Bank Authorities who are responsible for inviting Kelly for this lecture.

Why did you invite an anti-Government man like this at a critical time like this?

Have you got the approval of the Ministry for his visit?

Why do the Government and the CB hire people like this as long term consultants (Kelly has stated in his speech that he had been CONSULTANt to the  Government of Sri Lanka on Economic reforms for 3 year during the Yahapalanaya regime)

What advice on Economic Development the Govt of Sri Lanka has got from him and how much of public funds was paid to him including  all other payments like Air fair , Internal travelling, hotel charges and secretarial fees  and

What benefit the country has got in return? (He himself has admitted that there was nothing)

Will the President inquire in to this unfortunate episode and take action against wrong doers and ask them to pay back the total expenses incurred, so that this kind of blunders will not happen at least in future.

PS Not only our CB but the whole system I think, at least now in hind thought has to learn to look inside without blindly depending on the in-appropriates Western models etc. We must try to find solutions from inside our own age old civilization. It applies to every field of knowledge.

 Just have look at our Legal system, Administration, Medical system and even the people’s dress and manners. All display their colonial mentality even after 73 years of so-called Independence in 1948. (Independence yet to be seen) It is high time at least now our Lawyers,  Engineers, Economists and above all politician begin to look inward deep in to the indigenous systems and indigenous technology all of which were born and bred in our own environment for millennia just like you and me, if you are really serious on real development, sustainability and stability in this country.

Govt. has failed comprehensively” on economic reform: Dr. Sally-(without COVID)

Thursday, 12 September 2019 01:21 -?      – 4312

Laankaweb

Dr. Sally, who is a visiting Associate Professor of the Lee Kuan Yew School of Public Policy of the National University of Singapore and a former advisor to the Finance Ministry.

 Dr. Sally went on to say that his observations were based on being a policy advisor for three years (What years? probably during the Yahapalanaya days as that was the time Sri Lanka imported all its experts like Arjuna Mahendra and Kelly) by the Government of Sri Lanka.

I give below a gist of his speech as reported by by Uditha Jayasinghe

Some expect miracles in 2020-22 (with Covid)

(Note this was a report published few weeks back although date of the lecture appears as Thursday, 12 September 2019 01:21 -?      – 4312 )

Govt. has failed comprehensively” on economic reform: Dr. Sally-(without COVID)

Thursday, 12 September 2019 01:21 -?      – 4312

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Govt. has failed comprehensively” on economic reform: Dr …

https://www.ft.lk/top-story/Govt-has-failed…

12/09/2019 · Dr. Sally, who said to be a visiting Associate Professor of the Lee Kuan Yew School of Public Policy of the National University of Singapore and a former advisor to the Finance Ministry, delivering the Central Bank’s 69^th Anniversary Oration yesterday gave a deeply-analytical, hour-long snapshot of global developments since the Great Depression and how political changes and economic

Economist Dr. Razeen Sally delivering the Central Bank’s 69th Anniversary Oration yesterday –?

 Pic by Shehan Gunasekara 

   Says Govt. squandered rare opportunity for liberal and economic reforms

    Claims Govt. did not have an economic plan and never developed one

    Refers to V2025 as Christmas wish-list” and SL becoming Singapore as rhetorical nonsense”

    Slams Govt. for appointments wholly devoid of talent and expertise” (which Government not specified)

    Says SL caught between the devil and deep blue sea as polls (polls when) approach

    Notes public will have to decide between continued drifting or relapse to illiberal policies (Is it the liberal policies of Ranil?)

    Warns modest institutional changes too weak to endure

    But optimistic that fights for reforms can continue

By Uditha Jayasinghe

The Government has failed comprehensively” to use the rare opportunity given in 2015 to formulate economic reforms, renowned economist Dr. Razeen Sally said yesterday, pointing out that even the incremental political and institutional changes it had managed to achieve were in danger of being reversed in the near future.  

Dr. Sally, who is a visiting Associate Professor of the Lee Kuan Yew School of Public Policy of the National University of Singapore and a former advisor to the Finance Ministry, delivering the Central Bank’s 69th Anniversary Oration yesterday gave a deeply-analytical, hour-long snapshot of global developments since the Great Depression and how political changes and economic transformations have gone hand-in-hand to create the environment that Sri Lanka currently finds itself caught up in.

Describing himself as a failed policy advisor to the Sri Lankan Government”, Dr. Sally recalled that Sri Lanka since independence followed mercantilism rather than the export-oriented industrial policies favoured by East Asian countries.

The introduction of the open economy in 1977 was spotlighted by him as the most important moment in Sri Lanka’s economic history, but acknowledged that it had mixed results, with protectionism intervening in fits and starts till 2005.

During the presidential terms of Opposition Leader Mahinda Rajapaksa, Dr. Sally said Sri Lanka under the ‘Mahinda Chinthana’ entered a period of de-liberalisation in the context of an illiberal democracy, chauvinist ethnic agenda, a combination of crony capitalism and crony socialism that was highly centralised and a foreign policy tilting strongly towards China”. However, this came to an unexpected end in 2015 – but the results were far from impressive in Dr. Sally’s view.

This was a once-in-a-generation window of opportunity for a combination of liberal and economic reform in Sri Lanka, probably the best since 1977. Ranil Wickremesinghe saw it that way and he and other senior UNP ministers have intermittently paid lip service to it since. On the political front we have seen modest successes but I suspect those successes are not major enough not to be reversed in the near future. I have my worries about that.

On the economic front it failed comprehensively. We have had some modest success in macroeconomic stabilisation, not least to correct the excesses of the present Government as well as excesses of the last Government, but I wonder whether that will hold into the medium term. I have my doubts about that as well,” he said.

Dr. Sally went on to say that his observations were based on being a policy advisor for three years (What years?) when he experienced the utter shambles” of the decision-making process at top ministries where meetings began late, ended late, there was no agenda, too many people speaking and no one listening or taking notes. He questioned whether any top private sector corporate head would ever run a meeting in this manner.

Dr. Sally then also critiqued the appointments made by the Government (which Government Present?) exempting Central Bank Governor Dr. Indrajit Coomaraswamy, who he insisted should be supported to promote the independence of the monetary institution further.

This Government came into power almost wholly devoid of talent and expertise, quite in contrast to the economic team that was put in place in July 1977. The LTTE and JVP did a spectacular job at destroying Sri Lanka’s political elite. The new Government came into power without an economic plan and it never developed one. But the devastation done to the existing economy and future growth he has not even touched

What it eventually came up with was two things – firstly, a Christmas wish-list of things that were going to happen by 2025, and, secondly, rhetorical nonsense about a Sri Lanka take-off and Sri Lanka becoming the next Singapore, which I consider to be ‘Orwellian duckspeak’,” he said, referring to the term George Orwell coined and later made famous in his book ‘1984’.

The collective failures of the Government have resulted in citizens being faced with an unenviable choice, Dr. Sally said, referring to a lecture he delivered three years ago titled ‘Sri Lanka: Three scenarios for the future’, where he described the options of economic take-off, continued drift for Sri Lanka, and third, a relapse into what defined the former Government.

Dr. Sally referred to the latter as a kind of Rajapaksa Government package of illiberal democracy, centralised crony capitalism, China as first friend, and a Sinhala Buddhist first ethnic agenda”. (The usual allegation by pro -western anti Sinhala anti Buddhist thinking) by so-called experts who do not know Sri Lankas history and the place of Buddhism in its marvelous past as a Sinahla Buddhist State .

With elections in the near future, there is no sign of the first scenario of take-off, rather I think what Sri Lanka is faced with is a choice between those two other scenarios, which is continued dysfunction and continued incompetence where the role of the State is too large and the role of markets too restricted. The other choice is for relapse, with another decisive shift towards the State. It is as if Sri Lanka is faced with a choice between the devil and the deep blue sea.”

He warned that a possible political shift at the next Presidential Election comes in the backdrop of increasing global uncertainty; created by trade wars, increasing protectionism, eroding of international organisations such as the World Trade Organisation (WTO) and dwindling foreign investment.

He pointed out that in 2007 as much as 3.5% of global GDP went into investment but this had reduced to 1.5% by last year. He opined that Sri Lanka was not immune from the loosening of a rules-based system of international governance and the rise of populist leaders.

My foreboding gets darker when I think of the external environment, because an external environment heading towards more potent mercantilism provides cover, not external discipline or exposure or corrective to continue drifting or see relapse. My worry is that institutions in Sri Lanka remain too fragile, more fragile than many in the Colombo chattering class appreciate to withstand such pressure.”

However, Dr. Sally attempted to end on a positive note and quipped that he was ending his oration with a quote from Karl Marx for the first time in his lecturing history.

Still, nothing is pre-programmed, nothing is completely predetermined. I do not believe that. I think there are still battles to be fought, battles of interests, of institutions, of taking advantage of particular situations, even crisis as windows of opportunity. Carl Marx said, ‘Men make their own history but they do not make history as they please. They do not make it under self-selected circumstances but under circumstances existing already, given and transmitted from the past.’ In other words there are still choices to be made out there and, as I said, non-violent battles to be fought.”