Covid-19 and Sri Lanka – Key challenges ahead – Sunil Bastian

When globalisation was the dominant concept for looking at the world, pandemics were discussed as a global security issue. The objective was to see how pandemics have an impact on global security, and how to prepare for them. Now that one is happening, it is interesting to look at the response. It is clear that the nature of states, their characteristics and what they should do, has come to the forefront of the discussion. This development is so pronounced that Daron Acemoglu, the co-author of the well-known book ‘Why Nations Fail’, speculates about the emergence of a Post-Covid State in an article published via Project Syndicate.¹

The relationship between globalisation and the state

In fact, the virus has become another occasion to undermine liberal assumptions about the relationship between globalisation and the state. Neoliberalism looked at this relationship as a zero-sum game, where the importance of states diminishes because of the global dominance of capitalism. But the historical experience at the end of the twentieth century turned out to be different. The neoliberal phase of capitalism created space for some countries to grow economically – these states have become stronger, and there are shifts in the world order. The rise of China is an example. Of course, these states have adjusted to global capitalism, but it is a world of competing states within a new world order in a context of global capitalism. Many critical writings, looking at political outcomes of the 2008 economic crisis, argued that the hegemony of neoliberalism as an ideology is over. The impact of Covid-19 seems to accelerate this.

The post-war Sri Lankan state and its relationship with society

One cannot avoid noticing how Covid-19 has highlighted some of the key characteristics of the post-war Sri Lankan state and its relationship with society. These are a few remarks on this issue.

A. One thing that stands out clearly in Sri Lanka’s response to the pandemic is that the security forces are being used as a key institution in dealing with it. A public health issue is dealt with by an institution that deals with security. This is, of course, backed by a legal framework that allows it. This development is much more than a specific event. It is a reflection of the nature of the post-war Sri Lankan state.

A key outcome of the 30-year war was the expansion of the armed forces. This has changed the nature of the state. The post-war security strategy involved maintaining the strength of the armed forces, keeping a presence of armed forces in the Northern Province, and continuing the discourse of terrorism and the PTA. During the post-2015 regime the last item manifested as an effort to bring in a new counter-terrorism law. This was legitimised using a notion of international standards. The other element of this security strategy was stabilising society through using the idea of reconciliation.

Given the fact that the nature of the state has changed as a result of the war and expansion of the armed forces, it is not surprising that the armed forces are playing this role in the pandemic. It is also not surprising that retired personnel from the armed forces have been appointed to positions of public administration. Retired army personnel are becoming a new group that is benefitting from the long-established Sri Lankan tradition of political appointments. This ever-expanding role of the armed forces in the Sri Lankan state has wider implications that demand attention.

B. It is very clear that coronavirus is having an impact on the economy. This is global. Due to the novelty of the situation, it is also not clear how the global economy will revive. Given the nature of the post-war state, one of the key issues is securing enough resources to sustain the post-war state. This will be a key aspect of the question of public finances within this economic crisis. This is complicated by the expansion of the armed forces and the changes in structure of the state during the war years. Today it includes national-provincial-district and divisional level institutions. While the provincial council system with limited devolution was a response to the Tamil demand for a separate state, decentralisation below district level was the outcome of a long-held belief that decentralisation can be a means of ensuring that the fruits of development reach the village level. This was one of the main responses to the 1971 insurgency. Therefore, during the Premadasa regime a new layer was added below district level. In addition, under the PR system of elections, in the post-1977 period cabinets have expanded in order to maintain regimes with various political fractions. On top of all this, interest payments, which are an outcome of funding the fiscal deficit with commercial loans, have become one of the most significant elements of government expenditure. External finances are one aspect of it. Given these developments, the politics of managing public finances to sustain the state will be critical. Deciding on priorities of public finances of a state is not merely an economic issue. It is a political one.

C. The Sri Lankan state that is facing these public finance issues is presiding over a highly unequal society. Forty years of liberalisation have resulted in significant changes in the economy. There is a drop in the importance of the share of agriculture in the economy. The smallholder peasantry finds it difficult to earn an income from the land they own. There is parallel growth in wage labour, with many being employed in the informal sector with low incomes. Institutions for protecting labour, even in the formal sector, are weak. Meanwhile, those at higher income levels have been able to increase their income at a higher rate. The cumulative effect is a significant level of inequality.

Lockdown due to coronavirus has woken Sri Lankan society up to the plight of wage earners. Despite the much-hyped idea that Sri Lanka was a welfare state, Sri Lanka never had a welfare state in the way that is understood in developed capitalist countries. For example, there was no support scheme for the unemployed. Given interest in the plight of the wage earners due to coronavirus, there is space for renewing a discussion on social policies focusing on socio-economic issues brought out by 40 of liberalisation. Make no mistake, making use of the situation business interests will be trying to get rid even the ineffective mechanisms to protect that exist at present.

Poverty alleviation is a conservative idea

There is a need to break the stranglehold that poverty alleviation has had in this area from the time the economy was liberalised. Poverty alleviation is a conservative idea linked to the neoliberal notion of growth and trickle-down. Its objective is to try to lift the living standards of the poor. It never focuses on how to control the accumulation of the rich. A greater focus on inequality can help to renew this discussion.

D. Coronavirus came to Sri Lanka in the midst of the latest political struggle among the political elite for presidential power. The presidential system was established in Sri Lanka to promote economic reforms. JR first talked about this in 1966. When he came to power in 1977, through a process tightly controlled by the UNP-dominated parliament, the presidential system was established. Since then, occupying the presidency and using its powers has been a major preoccupation of our political elite. From the time the presidential system was established, the political elite have tried to enjoy this power beyond what was stipulated in the Constitution, using it to dismiss parliaments before its term was over and trying to enhance the power of the presidency even more.

Unfortunately, a strong centralised presidency has support from several currents in Sri Lankan society. The key ones are, Sinhala nationalists who see a strong centre as a way of protecting the Sinhala nationalist state; those who are looking for stability for capital accumulation and economic growth; and those who support traditional notions of security, where state security is the main focus.

While the elections and participating in them are important, we need a much wider reflection about how democratic institutions have been internalised in Sri Lanka and their political outcomes. This will take us beyond equating democratic institutions with democratic politics.²

E. Coronavirus has once again demonstrated how far we are from a state that has legitimacy with all ethnic groups. Not only we do not have such a state, but in some respects we are in a worse situation than in 1977, when the TULF demanded a separate state

In the 1977 general election, when the TULF demanded a separate state in a combined Northern and Eastern Province, the TULF did not win a majority of seats in the Eastern Province. It is the UNP, which became the governing party, that had a majority in this area. Support of the Muslim population helped this. In other words, the party ruling at the centre had a base in a part of the country where there was a significant presence of minorities and was a part of a demand for a separate state. But today we have a head of state elected totally from Sinhala-dominated areas.

The territory of the Sinhala nationalist state has been consolidated at an enormous cost to the Tamil population. But even the minimal reforms to the centralised state brought in through the 13^th amendment have not gone anywhere. The focus on stabilising the state through reconciliation, which is a part of a post-war security strategy, has undermined many other areas of public policy reforms for a plural society. The post-war period has given rise to more extremist forms of Sinhala-Buddhist supremacy, and the Muslim population has become a new target. The Easter tragedy has made this worse. The pandemic once again brought out widespread prejudices against Muslims.

We need to open a discussion of promoting pluralism in Sri Lanka and go beyond the current preoccupation with transitional justice and reconciliation.

F. It is common sense to say, especially after recent events between China and India in the Himalayas, that Sri Lanka is located in an area that is becoming crucial in a geo-political context where an emerging China is challenging US hegemony. The Sri Lankan state is a product of history rather than a static entity. It has always evolved in an international context. At present there are three issues within Sri Lanka that are complicating our approach to dealing with the geopolitical challenges Sri Lanka is facing. These are, a) Lack of consensus within the political elite on foreign policy, and how their struggle for power is having an impact on this question, b) Challenges posed by difficult public finance situation. Although it is customary for economists to discuss external financial assistance purely as an economic issue, it is more relevant to pose it as a question of the politics of international economic relations. This is a better approach in the context of the current geopolitical contest and C) Our continued inability to manage internal state-society relations through methods that have a greater degree of legitimacy with different social groups.

28^th June 2020