Image: President J.R. Jayawaradene : the 1977 general election signified a turning point in the history of state formation in post-colonial Sri Lanka
(11 June 2018) July 1977 and May 2009 signify critical events in the post-colonial history of Sri Lanka. The election of July 1977 brought the centre-right United National Party into power, which inaugurated a new period of capitalist development. It emphasised the private sector, markets and openness to global capitalism. Regimes elected subsequently have continued with these policies. There are differences in how these policies have been implemented by different regimes depending on their political composition and internal ideological battles. But there has been no going back to a situation where pre-1977 ideas became hegemonic in economic policy. Therefore, if we look at the post-colonial economic history of Sri Lanka, post-1977 stands out as a new period.
A key development in this process was the People’s Alliance government, elected in 1994, accepting the broad direction of economic policies inaugurated in 1977. The main constituent elements of the PA government were the centre-left SLFP, and what in Sri Lankan political lexicon were called old Left parties. In the past, they had formed a Centre-Left political coalition. By aligning economic policies of Centre-Left parties to the ideology of a liberal economy, the PA government brought in a consensus among the political class regarding economic policies. Not only that, any serious opposition to the new phase of capitalist development from political parties that had an electoral base among the Sinhalese disappeared.
In addition to these new directions in economic policy, the 1977 general election signified a turning point in the history of state formation in post-colonial Sri Lanka. The primary factor was the Sinhala nationalist character of the state, and failure to develop a state structure that could accommodate the plural character of Sri Lankan society. This resulted in the Tamil United Liberation Front, the principal political representative of the Sri Lankan Tamil minority, contesting the July 1977 general election on a platform of a separate state.
The election result showed how polarised the country was. On one side the UNP, contesting the election on an agenda of a new period of capitalist development, won the election with a five-sixths majority in parliament. On the other side, the TULF, contesting on a separate state demand, swept the Northern Province and won the bulk of seats in the Eastern Province. The Tamil separatist struggle soon evolved into an armed struggle, with the Liberation Tigers of Tamil Eelam becoming the strongest militant group. The Sri Lankan armed forces were sent to the North in 1979 after the enactment of the Prevention of Terrorism Act. The armed conflict prevailed for more than thirty years. At times the LTTE controlled significant sections of the Northern and Eastern Provinces.
This meant that polarisation in the country due to challenges in state formation came into sharp focus right from the beginning of the new phase of capitalism in 1977. From this point, the Sri Lankan Tamil demand for a separate state, and the armed struggle that followed, became the biggest challenge faced by the ruling elite in their effort to promote a new period of capitalist development. Therefore, one of the major political objectives of the ruling elite was to regain control over territory of the Sinhala nationalist state. While Sinhala nationalism was an important driver to regaining control over the territory of the Sinhala nationalist state, this was also necessary for the development of capitalism. Another way of looking at this situation is to note that throughout the post’1977 period the implementation of economic reforms needed to strengthen capitalist development was carried out by a state where Sinhala nationalism was a dominant ideology.
The only political answer to the Tamil demand of restructuring the state was the enactment of the 13th amendment, and establishment of provincial councils. This was established due to pressure from India, reminding us that for all the talk of sovereignty the Sri Lankan state exist in a context of an international system. There is a body of literature that has shown the limitations of the 13th amendment as a solution to Sri Lanka’s intractable problem of building a state that has legitimacy among all ethnic groups. But even these provisions have not implemented successfully.
The politics of the inauguration of the new period of capitalist development in Sri Lanka was largely internal. But it coincided with a period of reforms in global capitalism that is now popularly known as neoliberalism. ‘Neoliberalism is a theory of political economic practices proposing that human wellbeing can best be advanced by the maximisation of entrepreneurial freedoms within an institutional framework characterized by private property rights, individual liberty, unencumbered markets, and free trade. The role of the state is to create and preserve an institutional framework appropriate to such practices’.1 The state was, of course, expected to set up a security apparatus and legal framework to secure private property rights and markets. ‘The market imperative was extended to areas such as education, health, social welfare and environmental pollution. If there were no markets operating in these areas, they must be created through state intervention if necessary’2.
The liberal ideas of transforming societies in the periphery of capitalism began to dominate in both economics and politics. This is best illustrated in the notion of liberal peace. Liberal peace views global capitalism and globalisation based on free markets as a benevolent system that incorporates more and more people into a market economy, bringing about an interconnected world that spreads prosperity and freedom into all corners of the world. The elements that go into promoting this political vision include developing a market economy, establishing liberal democracy, reforming the state based on liberal principles, addressing the problems of marginalised social groups such as women and minorities through a discourse of rights, promoting human rights, and strengthening civil society as a countervailing power to the state. These add up to a vision of the total transformation of aid-receiving countries based on liberal principles. The other key feature of this vision, which is often implied, is the continuation of Western hegemony, led globally by the United States.
This liberal vision of transforming societies is nothing new. Some of the ideas of trying to bring in peace and prosperity through free trade and transplanting liberal democratic institutions from the West were prevalent in the classical period of imperialism that focused on territorial domination. For example, these ideas are found in political thoughts of John Stuart Mill, an ideologue of classical liberalism.
Inaugurating liberal market policies in this global climate of liberal hegemony had a beneficial aspect for the Sri Lankan ruling, elite in their task of consolidating the Sinhala nationalist state. On one hand the new economic policies brought in massive support from developed capitalist countries of the West, multilaterals and Japan. The generally pro-Western foreign policy of the country augmented this support. First and foremost, this support was in the form of resources channelled through foreign assistance. There was budgetary support from the IMF, and support for public investment. This meant that, even when the government had to spend funds on a military strategy, there were always funds from external sources to continue with normal development activities.
Foreign assistance became crucial for the public investment programme. These public investment programmes were essential for carrying out the normal duties of a state, and to maintain relations with society while waging a war. This was especially important for sustaining relations with the majority Sinhala population. There was support from a large section of the Sinhala majority for a military agenda, based on an ideology of Sinhala nationalism. But the ruling regime could not rely on this support purely based on nationalist sentiments. Especially in a polity that is used to throwing out political parties in power, and expected so much from the state, support for a costly military agenda could evaporate if the state was not seen to be fulfilling other obligations towards society. The bulk of external assistance received during the period was on concessionary terms or at relatively low interest and with long-term repayment. This obviously helped the Sinhala nationalist state to manage public finances while implementing costly military strategy.
Apart from this direct support through resources, the country had legitimacy within the structure of global governance led by the West. In other words, Sri Lanka was never a rogue state, and in the eyes of Western countries did not come anywhere close to it. This also meant, in a world where economic sanctions are widely used for political purposes by developed capitalist countries, Sri Lanka did not come under such sanctions-until recently, when the country’s foreign policy strengthened relations with China.
The basic outcome of this relationship with developed capitalist countries and multilaterals was that the country could continue on the path of capitalist transition while waging an expensive civil war.
However, as argued above, the neoliberalism that prevailed globally in the post-1977 period was not just an economic project. It was also a political project that hoped to reform the world based on liberal principles in economics as well as politics. Most importantly, it also believed that these principles would bring in a peaceful world. Therefore, assistance to Sri Lanka had both these economic and political dimensions embedded within it. This included solving Sri Lanka’s conflict through political means and upholding democratic and human rights. While the ruling elite and external backers could see eye-to-eye when it came to promoting the economic agenda, this was not the case when it came to the liberal political agenda. Throughout the post-1977 period we see episodes where ruling elites clashed especially with Western developed capitalist countries, on issues related to political solutions to the conflict, democratic and human rights. In addition to this, the emphasis on the liberal political project strengthened many non-state actors in their struggle for rights in various spheres of society.
It was under the short-lived Wickremasinghe government from December 2001 to April 2004 that we see the hegemony of liberal peace in Sri Lanka. Faced with an economic crisis in 2001, the PA government that was in power sought the assistance of the Norwegian government to begin negotiations with the LTTE. But under the Wickremasinghe regime that came to power in December 2001, this initiative expanded into a strategy that included signing a ceasefire agreement with the LTTE that accepted that the LTTE was in control of one part of the country, a full-blown neoliberal economic agenda, and securing support from international actors from developed capitalist countries for this agenda. The collapse of this strategy paved the way for Rajapakse to come into power.
Rajapakse gave leadership to a task that many were hoping for due to different reasons. This was destroying the LTTE through military means, and consolidating the territory of the Sinhala nationalist state. This brought to an end violence challenges to the state that had begun in the early 1970s.
The obvious admirers of this development were Sinhala nationalists, and those who have always argued that the LTTE must be dealt militarily. There are sections of the Tamil and Muslim population who welcomed this for their own reasons. But at the same time important beneficiaries of this success were the capitalist class, for whom the prevailing civil war was a barrier to capital accumulation. Although there were many business people talking about peace during negotiations with the LTTE, they were looking for stability to continue with profit-making rather than peace. Similarly, the ideologues of neoliberalism were happy to see a barrier to economic growth disappearing. There were many international players who were happy with the outcome, because the LTTE posed a potential threat to maritime security in the Indian Ocean, which was fast becoming important for global trade. Obviously, India had its own reasons for welcoming the defeat of the LTTE.
The very fact that the Rajapakse regime gave leadership to bringing to an end a violent challenge to the state opened the space for a new trend in economic policies within the framework inaugurated in 1977. The Rajapakse regime was a combination of the hegemony of Sinhala nationalism, a highly centralised state with authoritarian tendencies, a prominent role for the security establishment and continuation of the new period of capitalist development – but with the state having a more directive role in the economy and greater emphasis on economic nationalism. As happened in the past, this was another case of the specific ideological orientation of the regime influencing how the new period of capitalist development would evolve.
During the Rajapakse regime there was no talk of going back to the economic policies that prevailed before 1977. But privatisation of state ventures was put on hold. The state was given a prominent role. Nevertheless, the end of the war made it easier for the private sector to expand its accumulation. Many in the private sector came to an understanding with the Rajapakse regime through various means. It is also possible that Rajapakse opened the door to new sections of capital.
In addition, the Rajapakse regime embarked on significant investment in infrastructure development. This had three objectives – incorporating war-affected areas into the rest of the economy, consolidating control over these areas for security reasons, building the infrastructure necessary for capitalist development and boosting the political image of Rajapakse. The latter was mainly through investment in the Hambantota district, the political base of the Rajapakse family.
A by-product of three decades of armed conflict was expansion of the security sector. Hence the character of the state at the end of the armed conflict was quite different to what prevailed before. By the end of the war the Sinhala nationalist state was backed by a well-developed armed force. A largely ceremonial army had expanded to a much more powerful institution. By the time the war ended the armed forces absorbed around 3 per cent of GDP, and close to 20 per cent of national expenditure.
The war ended with a significant presence of armed forces, especially in the Tamil-dominated Northern Province. There is no sign of any significant withdrawal of armed forces from these areas. The armed forces expanded their role into many social and economic spheres. Armed forces initiated their own economic ventures. The Urban Development Authority was brought under the Ministry of Defence. This meant many urban development programmes in the capital city of Colombo, which were essentially part and parcel of strengthening the new period of capitalist development, came under the Ministry of Defence.
When it came to the global context, the big departure during the Rajapakse regime from what prevailed since 1977 was the development of closer links to China, which by this time had become one of the new centres of capital accumulation. This is a product of post-Cold War global capitalism. In Asia, this has led to the emergence of India and China as new regional powers within a global political order dominated by the US. These two new powers have joined the US and Japan in a regional matrix of power relations. The relationships between these centres of power will be a major factor affecting Sri Lanka in future.
Two factors were important in Rajapakse regime developing a close relationship with China. First, China gave consistent material and political support in the military campaign against the LTTE. Second, given the surplus of capital available in China for investment abroad, China’s assistance could be secured for investment in infrastructure.
For China, Sri Lanka became both a location of investment of surplus capital and an ally in fulfilling her strategic interests in the Indian ocean, where global and regional powers are looking to assert their hegemonic powers. But, in the matrix of regional power relations this departure of Sri Lanka’s foreign policy from what prevailed since 1977 was not to the liking of other powers. Therefore, one sees during this period several efforts to put pressure on the Rajapakse regime. This took the form of pressure on the economic front, and continuous efforts to bring sanctions against the regime for human rights violations and war crimes during the last stages of the war.
In conclusion it has to be noted that the Rajapakse period initiated a departure from the hegemonic ideology that prevailed from the Jayawardena era. This included an economic policy that was more nationalist and gave a prominent role for the state within the neoliberal framework inaugurated in 1977, very little chance of moving beyond the 13th amendment as a political solution to the Tamil question, and bringing China in as a factor in our international relations. This contrasts with the agenda which prevailed before Rajapakse came to power – the continuation of economic reforms that emphasise markets and the private sector, constitutional reforms that can make some improvements on the 13th amendment and looking towards the developed capitalist West and Japan as the principal backers. But these are two ideological currents within a framework of developing capitalism and consolidation of a Sinhala nationalist state. These two ideological current are bound to dominate Sri Lankan political battles in the near future.
1 Harvey, D. 2007. ‘Neoliberalism as Creative Destruction’. The Annals of the American Academy of Political and Social Science 2007: 610; 21.
2 Harvey, D. 2007. Ibid.