Why Sri Lanka could be the IMF’s most spectacular failure

(Following is the excerpts of Dyan Jeyathilake’s article in the Sri Lanka Finacial Times of 16th March 2023)

Much of the discussion in and on Sri Lanka has either been a shrieking chorus of ‘Go to the IMF yesterday!’ coming mainly from the rightwing economists of the main Opposition, the SJB, or a no less shrill chorus of ‘beware the IMF!’ from the Oppositional left. My own ‘third position’ is different. It stands on two legs: ‘beware Ranil plus the IMF’ being one and ‘IMF beware of Ranil’ being the other. 

The first leg – ‘beware Ranil plus the IMF’ – is because the IMF recipe in and of itself is much less dangerous than the extreme economic ideas of Sri Lanka’s antiquarian Reaganite-Thatcherite rightwing economists. Those ideas inform the economic agenda of Ranil Wickremesinghe as manifested in his policy agenda in 2001-2003 and 2015-2019. These ideas were so repellent to the public that he was electorally rejected on both occasions, most dramatically in 2020. An earlier model of this rightwing policy package was one of the causes of a massive insurrection in the late 1980s and had to be completely re-programmed and reformatted by President Premadasa so that democracy and the market economy could survive. 

Ranil Wickremesinghe as President is seeking to implement his voodoo economics ‘Big Bang’ on the back of an agreement with the IMF in a classic example of what Naomi Kline has called ‘the shock doctrine’. 

The second leg of my argument is that just as Sri Lanka has to beware the IMF reform agenda, the IMF has to beware Sri Lanka which can go from quagmire to volcano and back within a year thanks to President Ranil Wickremesinghe.

The IMF has cleaned up its act somewhat. It hasn’t undergone quite the shift that the World Bank did when Robert McNamara took over after his Pauline conversion to the upliftment of the poor having failed to defeat the Communist-led Vietnamese liberation fighters. But the IMF is considerably better than it was, and this has been pointed out by no less a critic than Prof. Joseph Stiglitz in his positive evaluation of the agreement with Argentina.  

The problem arising out of an agreement with the IMF could have been mitigated had Sri Lanka presented its own national plan drafted by its best minds in the relevant field. This has not been done so far, though Yanis Varoufakis and Nishan de Mel have been saying just this independently of each other for a while. Neither the Government nor any political party of right, left or centre has a national plan or anything remotely like the best national team that Sri Lanka can deploy. My litmus-test would be whether Howard Nicholas, Nishan de Mel and Ravi Ranan-Eliya are on it. 

Sad as this is, it isn’t the worst thing about the current situation. What is most dangerous is that President Ranil Wickremesinghe is openly invoking the IMF in openly sabotaging the holding of the local authorities election and going on to leave the electoral calendar open-ended, avoiding a commitment to any election stipulated by the Constitution. By doing so, President Wickremesinghe is using the IMF as human shield in his agenda of remaining in office without elections.

Link EFF to elections

Sri Lanka is Asia’s oldest democracy. In fact, it is also Afro-Asia’s oldest democracy. It is over 90 years old. Ranil Wickremesinghe is using the IMF excuse to end Sri Lanka’s democratic character by blocking overdue local authorities’ elections and making no commitment to the inflexibly embedded presidential and parliamentary elections of 2024 and 2025. Instead, he enunciates a doctrine that makes democratic elections entirely dependent on his subjective perception of economic stability. 

Thus, Ranil has pitted the IMF program against democracy, thereby identifying the IMF agenda as something that is so fragile that it has a zero-tolerance of competitive democracy. By so doing he also fosters an identification between the IMF agenda and frankly authoritarian rule, turning the clock back to the bad old days of the IMF as an objectively anti-democratic associate of Latin American dictatorship.

Prospects are even worse for the IMF in its current dealings with Sri Lanka. Any stabilisation package which lacks a democratically elected administration as its partner, lacks legitimacy. It is therefore highly probable that the agreement will draw discontent along two, not just one, vector: the socioeconomic and the political. Had the IMF agreement been with a country with an elected President – at least one elected to the legislature in the first place, before he was elected by the legislature—it would have been finetuned by someone who had a mass base; an organic mass connection. 

Instead, you have an IMF agreement being used as a shield against the electoral process itself. This ensures that it is not only the standard socioeconomic backlash that the IMF agreement will generate but it will also run into the anti-autocracy/pro-democracy dynamic underway in Sri Lanka. 

The combination of a stabilisation package overlaid by an autocratic political agenda will discredit the IMF agreement. 

The confluence of a socioeconomic backlash and a political drive for democratic elections will blow the agreement out of the water, further discrediting the IMF. 

Anyone who watched the massive popular protests named The Aragalaya (The Struggle) which swept away the local Bolsonaro figure, Gotabaya Rajapaksa would get my point that the Sri Lankans are unlikely to take the burial of elections and imposition of austerity measures lying down.

Of course, Ranil Wickremesinghe has proved capable of meeting protests with methods that have led to the loss of life, including of a war veteran serving as a private security guard at the University of Colombo. On the President’s watch both the faculty of Law and Royal College at which he studied, came under CS gas attack. Mysterious para-military type units, suspected to be contractors, have yet to be identified by the Sri Lankan military.

What this does not mean is that an Aragalaya is ruled out as an option. What it means is that an Aragalaya-2 is going to be costlier in terms of human lives. 

When demonstrators carrying signs which name the IMF are clubbed and possibly killed, it isn’t going to make the IMF ‘brand’ look good.

The IMF should not underestimate our President. Sri Lanka had a robust two-party system. Those parties were the UNP and the SLFP. When Ranil Wickremesinghe took over the leadership of the UNP it had 94 seats. Now it doesn’t have a single elected member in the parliament. When the SLFP partnered with Ranil Wickremesinghe in 2015, it had been in office since 1994. During that partnership and due to it, the SLFP now has a pathetically few seats in parliament and is not the main Opposition. The backlash against the partnership with Ranil caused a huge split in the SLFP and the birth of the SLPP headed by the Rajapaksas. The SLPP is now partnered with Ranil having (s)elected him president through the legislature. It is now so weakened that it cannot hold an open-air public meeting. 

Ranil Wickremesinghe is pure kryptonite. Now he’s going global, as BFF of the IMF. 

So, what can the IMF do, given that it cannot interfere in politics? The states that are the mainstay of the IMF, such as the USA, can ensure that the local government elections are unblocked before the EFF is signed on March 20th, or it can keep the funds blocked until that happens even if it means going into the 2nd quarter of this year. Simply put, it should be ‘no elections, no EFF’. 

If that doesn’t happen, the IMF will learn that though it is (barely) beyond the decades of ‘IMF riots’ it has entered on the arm of South Asia’s Mr. Kryptonite, the age of the ‘IMF Revolution’. 

JVP-JJB’s Achilles Heel 

The JVP has been in existence since 1965, and has tried many political projects, which have all failed to secure governmental and state power. Almost no revolutionary/left movement founded at the time the JVP was born has failed to win governmental power even episodically. Many movements founded after the JVP (e.g., El Salvador’s FPL, founded 1970) have had a stint or two in power.  

The strategic concept of the united front is not an optional ‘app’ in serious Left theory and political practice. Originating with Lenin in 1921 at the 3rd Congress of the Communist International (‘Comintern’), it was developed by Trotsky, Gramsci, Stalin, Dimitrov, Ho Chi Minh and Mao. Mao named it one of ‘three magic wands’. It is in practice from Latin America to Nepal and Kerala. 

Despite the JVP’s varied experience, one thing has remained constant. Their utter sectarianism; their allergy to a century-long Left strategy which dates from Lenin to Lula: that of the United Front. By any logic, that constant or constant absence – no united fronts- and the only other constant, the absence of success in gaining governmental and state power, are causally linked.

The question is why is the JVP-JJB which is today, closer to governmental power through popular consent than it has ever been, still clinging vehemently to its antipathy to a united front, when such a front or its absence could be the factor that puts it over the top?

The question is sharper still when one adds the present realities: the blockage of the electoral path by Ranil Wickremesinghe and the need to lever it open through mass struggle. Anywhere in the world, unity decisively helps such struggles and its absence foredooms them.

What the FSP lacks in quantity it makes up for in quality. A JVP-led Left Front would present a left platform, a left program, a left option in the economic crisis and the struggle for basic democracy. 

(Link to the Full article)

https://www.ft.lk/columns/Why-Sri-Lanka-could-be-the-IMF-s-most-spectacular-failure/4-746362