Within two months of winning the presidential election, the Rajapaksa Government is firmly on the path of entrenching its position in parliament with the upcoming polls. The UNP’s infighting is continuing and the Opposition forces are unable to forge a much-needed coalition. The Rajapaksa juggernaut is inching towards a Government with two thirds majority in parliament needed for constitutional changes to consolidate authoritarian power.   

Even as the Rajapaksa regime races forward with tremendous speed and acumen towards the sole short-term goal of capturing a significant majority in parliament, they are saddled with two major medium-term problems. First, tumultuous external relations characterised by increasing geopolitical polarisation and global economic distress. Second, a stagnating and crisis prone domestic economy. In this political economic context in Sri Lanka, what should be the engagement and demands of progressive actors?   

Political consolidation

The return and success of the Rajapaksa Government is as much a result of their considerable investment in the Sri Lanka Podujana Perumuna (SLPP) and the leadership of the Rajapaksa brothers committed to recapturing state power as it is the inability of the UNP led by Ranil Wickremesinghe to retain power and for that matter to govern. In Sri Lanka’s history, there is no other Prime Minister and leader of the main party in opposition that has had such a disastrous track record as Wickremesinghe’s. He would be doing the country a great service, except of course the Rajapaksa regime’s interest of consolidating power, by leaving politics. People’s perceptions during rapid times of change are often shaped by ideological shifts and popular discourses. And with just a few months left before general elections, President Rajapaksa is making all the right moves, including projecting the image as a simple leader committed to disciplining state institutions serving the people and delivering on his election promises of tax cuts, wage hikes, increased state employment and expanded higher educational intake. 

• (SLPP) and the leadership of the Rajapaksa brothers committed to recapturing state power as it is the inability of the UNPparliament
• The President has promised GDP growth of 6.5% over the next few years in his election manifesto

While reaching out to the voters with goodies, the Government is also taking full advantage of the Ranjan Ramanayake phone recordings, which have further undermined the legitimacy of not only the previous Government, but of the numerous political actors that have been recorded in sensational voice files.   
In a time when party politics is re-configuring – the newly-formed SLPP is swallowing the much older SLPP and the UNP is on the verge of splitting – parliamentary polls are going to be a zero sum game. It should be noted that electoral politics are usually not a zero sum game; coalitional political gains and voter turnout dependent on political mobilisations that can change the size and character of the game. In any event, this time the advantage will be to the SLPP, while the smaller parties, particularly ethnic minority parties and the JVP, have the unenviable task of ensuring dissent in parliament.   

Economic challenges

For the Rajapaksa regime, their political and economic fortunes are diverging; the political situation is most favourable for consolidation, while the economic dynamics are crippling. A decade of post-war investments in large infrastructure and the related external debt have pushed the country into a debt trap. The large debt repayments on the order of US$ 4 billion due this year have to be rolled over with much more costly new loans, even as the rating agencies are downgrading Sri Lanka. Reduce the cost of borrowing from the global capital markets would mean, yet another IMF programme with its neo-liberal conditions attacking welfare measures for the people. The other option is to borrow from large bilateral donors who in turn will try to extract economic stakes to boost their geopolitical interests amidst hegemonic rivalries. 

Into this difficult economic mix, President Rajapaksa has promised GDP growth of 6.5% over the next few years in his election manifesto. Against such high expectations, Sri Lanka would be lucky to show half that growth over the next couple of years. In the past, high GDP growth under the previous Rajapaksa Government of 8% in 2010, 8.4% in 2011 and 9.1% of 2012 before it declined to 3.4% in 2013 and 5% in 2014 were a consequence of high levels of investment above 30% and even as high as 39% of GDP (Finance Ministry Annual Report 2018). However, such investment was not productive; investment in urban real estate and infrastructure increases GDP growth in the short-term by stimulating the construction sector, but does not lead to sustained growth as with investment in production including factories creating longer-term employment. Indeed, then as it is now, the bulk of foreign investment coming into Sri Lanka is focused on speculative build-out.   

"Just a few months left before general elections, President Rajapaksa is making all the right moves, including projecting the image as a simple leader committed to disciplining state institutions"

For the moment, the Rajapaksa regime is focused on tremendous drive for the elections, and its major tax cuts have reduced state revenues, and they claim investment projects will only begin with their Budget after the elections. And with at least five years in power assured, what path of economic development will they consider? Without adequate domestic savings for investment and declining global appetite for investment in real estate, aiming for high growth will require privatisation and concessions to the private sector to entice foreign capital. Such neo-liberal economic policies come with risks of failure given the economic environment, and even if successful would mean dispossession for the people coupled with rising inequalities; for example electricity, transport and educational costs will rise if those sectors are privatised.   

Alternative trajectory

The question that I am often asked is about the alternative. What can a small developing state do amidst global decline? I argue that we have to reset our ambitions and settle on lower levels of GDP growth, but with the political will to redistribute wealth. That means increasing direct taxes, including property and wealth taxes, which have to be redistributed through social welfare investment and services.   

While the Government and our public commentators warn about the dangers of external extraction and imperialist inroads, they forget or conveniently avoid the class question that is at the root of imperialism. Extraction and exploitation of our resources, whether it is by the Americans or the Chinese, is linked to the class structure of Sri Lanka’s capitalist economy. Rather than allow external powers and their agents in the form of local comprador elite to accumulate by dispossessing and exploiting our people, we need to change the structure of the economy and reduce inequalities, where extraction itself becomes difficult. In other words, it is far more difficult to extract from free education than fee levying private education, and say agricultural production for local consumption – for which there is still great demand – than cash crops produced for exports.   

The Rajapaksa regime’s shift towards economic policies focused on redistribution are unlikely given their business class base of support. Furthermore, addressing such class inequalities always requires a class force to intervene with the state, and for that workers and people’s struggles will be important, particularly in a time when authoritarian power is being consolidated. We are caught in the conundrum of the political triumph of the Rajapaksa regime and an economic morass affecting the citizenry. In these difficult times, progressive forces have to preserve the democratic space even as the questions of equality and social justice are brought to the fore.