13 July 2021 12:08 am Views - 9107
The Rajapaksas, of course, took the familial tradition of Sri Lankan politics to a new high. Rajapaksa brothers returned home from their residency in the United States to take up key government positions, and with a presidency for life almost within grasp after the 18th Amendment, the first family controlled half of the budget allocations during the second half of Mahinda Rajapaksa presidency.
Therefore, when Basil Rajapaksa was appointed the Minister of Finance last week, having entered Parliament to fill the national list slot vacated by Jayantha Ketagoda (who resigned to make room), It made at best a timid progression in the dynastic enterprise. Now the four Rajapaksa brothers are president, prime minister, minister of finance and minister of irrigation. (A key slot or two is missing, the Speaker and probably the Chief Justice).
However, if anything, what should interest a political observer is that Basil Rajapaksa’s advent took place at a time that the popular approval of the government is at an all-time low. If there is an election, a credible opposition could win-only that the current main opposition is a long way off becoming one.
Basil himself is in a catch 22 situation. The presidential ban on chemical fertilizer is downright absurd But, walking back on it would mean the loss of the face of the President
Governments lose popularity while in power, however, the rapid collapse of popularity of the government should concern its stakeholders. Even the pro-government television channels, who tend to shun the criticism of the president – probably because some thinks he is above reproach, and others, with grim memories, do not want their media stations torched- are airing snippets of public disgruntlement.
Some might argue that the change of fortune of the government was predicted for much of the hype of Gotabaya Rajapaksa and the SLPP was harnessed through whipping up fear psychosis, anti-minority dog-whistling and vague economic policies.
However, the government could have carried on much longer, while harnessing these primordial energies. The collapse of popularity is in part due to factors beyond its control: Pandemic. But, to a good deal, it is also due to its own making and mismanagement, not just the pandemic. In international comparison, Sri Lanka’s handling of the Covid-19 is not bad after all, as much as it isn’t exemplary. But that hasn’t registered in the popular opinion, in part because, they were made to believe in the superior military efficiency in fighting the pandemic. Still, the party could still have gone on, had not been the tremendous economic shock of the pandemic and the mismanagement of the government finances.
To make matters worse, it is the quintessential SLPP voters, the proverbial 69 lakhs, that face the brunt of the economic shock as food prices skyrocketed and the cost of living has soared. The economy is in a slump though in statistics it grew by 4.3% in the first quarter of 2021 recovering from a contraction of 1.8% last year. The spike of the pandemic in the second quarter would dent the supposed uptick in the first quarter.And the debt servicing is a challenge with US$ 29 billion to be paid from now and 2026, against US$ 4.4 billion of existing foreign reserves. Money printing would further devalue the Rupee, which trades in parallel markets for 225-230 per US$!
Enter Basil
Basil Rajapaksa enters the fray as the government has made a mess of the whole business of governance. SLPP underlings say, with an aura of authority that he has seven brains.
Basil is no Raghuram Rajan. His two brothers feel it is safer to share the government among the sibling, than those lacking the bloodlines. His brothers also consider him as the smarter one in the family.
Therefore, while Basil may not make economic miracles or the long term microeconomic stability, neglect to which for too long is at the core of Sri Lanka’s fiscal troubles, he can perhaps fix some of the self-inflicted follies of the government. Indeed, there were initial signs that he was trying exactly that.
Social media and political circles buzzed with reports that the government was planning to lift the ban on the import of chemical fertilizer, a major grievance of the farmers, who have held countrywide protests.
Basil Rajapaksa should know these protests are only a prelude to a major showdown, which would be played out after the harvest when the farmers realize that a shortsighted policy had cost them, in the most optimistic estimate, a quarter of the harvest. That is large enough to push many of them to poverty. However, the President’s office responded with a swift rebuttal. There is no change in the policy, President’s spokesman said.
Basil himself is in a catch 22 situation. The presidential ban on chemical fertilizer is downright absurd. But, walking back on it would mean the loss of the face of the President. Consider another prospect: Sri Lanka’s looming debt and foreign exchange crisis. It would be whimsical to argue that the country could ride it without going for an IMF programme.
But, that is an anathema to the President, who might desire to tinker with the foreign reserves until his term ends, though how feasible that calculation itself is open to question. The government provides no convincing plan to service debt after mid next year.
But, Basil Rajapaksa, who might be harbouring presidential ambitions may not want to procrastinate a crisis that will explode closer to the next presidential election. Nor would anyone desiring the presidency wants to inherit a system that was made infinitely worse by his or her own volition.
But, can the new finance minister convince his brothers to go for an IMF programme, before the situation becomes progressively worse? Unlikely. Though Sri Lanka will go to IMF only after all the hell broke loose.
Another prospect, though not as consequential as the above two scenarios, but still important in terms of foreign policy. Can Basil Rajapaksa nudge the government to reach out to the US government to restart the Millenium Challenge grant of US$ 480 million? Whether the US is still interested in cooperation in the wake of rights concerns is a different question. Those are typical dilemmas that Basil Rajapaksa would face.
He confronts not just a crumbling economic system, but also a dogmatic rule of his siblings. Probably, his ‘seven brains’ might be of little use when his hands are tied.
Follow @RangaJayasuriya on Twitter