The Economy: Potential Impact of 20A

Sam Samarasinghe aka SWR de Samarasinghe, in Daily Mirror, 20 October 2020, where the title reads “Socio-Economic Implications of the 20A”

  The draft 20th Amendment (20A) to the Constitution is being opposed by the main opposition parties and some segments of civil society and professional groups. The most politically significant opposition comes from some leaders of the Sangha who played a major role in the election of Gotabaya Rajapaksa as President. They want a new constitution as the SLPP promised, but not the 20th Amendment. In general, the main criticism of 20A is that it would create an authoritarian Government run by the Executive President without the usual checks and balances that the three main branches of government, legislature, executive and judiciary have in a normal democracy. 

It is also public knowledge that some of the leading monks who back the SLPP and are critical of 20A are very close to premier Mahinda Rajapaksa

The most politically astute player in Sri Lankan politics is Prime Minister Mahinda Rajapaksa. The 19th Amendment vastly empowers the prime minister and sharply reduces the powers of the president. It also ensures several essential features of good governance such as limiting the number of ministers that is popular with the people. It is the prime minister who stands to lose the most from 20A. It is also public knowledge that some of the leading monks who back the SLPP and are critical of 20A are very close to the prime minister.   
Justification: Supporters of 20A advance two main reasons to justify it. The first is that a more powerful president (commander-in chief) will be better equipped to strengthen national security. I will leave that to national security experts and won’t discuss it here. The second is that the economy would benefit if the president is empowered to make quick decisions unencumbered by red tape and any other delays that the other two branches of government, the legislature and the judiciary could cause, if they act independently. Singapore is usually suggested as the example of a powerful executive steering a country towards economic success.   
Singapore model: There are substantial differences between Singapore and Sri Lanka that make it very hard for us to copy the essential features of Singapore. Singapore has a population of 5.7m people occupying a land area of 700 sq km. Sri Lanka’s population of 21.8m occupies a land area of 65,600 sq km. Singapore is a city state. Singapore’s first prime minister Lew Kuan Yew established a system of governance that has some authoritarian features. For example, freedom of speech is limited in the country. But it also has some features that help good governance. It has zero tolerance for corruption, has honest and competent technocrats to run the government, and has one of the most open economies in the world. None of these features are currently found in Sri Lanka. Given Sri Lanka’s current political culture, favoured economic and nationalist ideologies and the limited availability of resources, it is hard to believe that 20A would lead to the creation of a Singaporean model in Sri Lanka.   
Ethnic diversity: There is one important similarity between Sri Lanka and Singapore; the ethnic diversity of the two populations. In Sri Lanka, about 75% are Sinhalese, 10% Muslim and 15% Tamil. In Singapore, 74% are Chinese (C), 9% Indian (I), 13% Malay (M), and 3% “Other” (O). This demography provides what is called the CIMO framework for public policy. S’pore is not a post-racial utopia. But it has maintained remarkable ethnic harmony. Lee Kuan Yew explicitly stated that the country would be a multi-racial and multireligious nation where all would be treated equally. Legislation such as the Maintenance of Religious Harmony Act, laws that require all public housing to be integrated and all political parties to nominate candidates belonging to the different ethnic groups help maintain ethnic harmony and understanding. Sri Lanka’s model of governance is nowhere near this in handling the concerns of the minorities. 20A also does not directly address such issues.   

The security consideration apart, the only justification that one could think of for 20A is that, in theory, a more authoritarian regime could produce better results in economic and social progress than the democracy we have had over the last seventy-two years. But whether that theory is valid or not depends on the evidence that is available.   
Economy: It is a myth to assert that Sri Lanka made no economic progress in the last seventy years. Between the early 1950s and 2019 Sri Lanka’s GDP grew at an annual average rate of about 5% under democratic governance. Per capita GDP increased from about $200 to $4,000 over seven decades. In 1977/78 the country moved up from being a “low income” country to a “lower-middle” income country. The economy had the potential to do even better. But external factors such as high oil prices, and fluctuating prices for tea, rubber and coconut exports were an impediment. Internally, the war diverted money from investment in development to the military. Bad policy choices such as nationalization of plantations, excessive state control of the private sector and inward-looking economic strategies in the 1960-77 period retarded economic growth. After 1977 the public has supported a more market-oriented economy. There is no convincing evidence to suggest that an authoritarian regime is a necessary condition to boost growth. Better economic policies that are more equitable and have the support of all ethnic groups under democratic governance should be able to accomplish that goal.   
Human development: For a relatively poor developing country Sri Lanka did very well in human development in the past seven decades. The adult literacy rate increased from 63% in 1953 to 92.5% in 2018. Life expectancy at birth rose from 57.6 years for males and 55.5 years for females in 1952 to 72.0 and 78.6 respectively in 2012. It is reasonable to argue that democracy played a critical role in producing these results. Having to ask for the vote at least once every five years compelled the rulers to respond to the needs of ordinary people ranging from better schools, better healthcare, better roads and public transport, better housing and so forth. The fact that the state provided education from primary school to university and healthcare using tax funds is testimony to that fact. 20A could lead to a break in this vital link between the rulers and the ruled.   
New elite coalition: The 1956 “People’s Revolution” ushered in an informal coalition consisting of the Sangha (Buddhist monks), Veda (Ayurvedic physicians), Guru (Sinhala schoolteachers), Govi (Farmers), Kamkaru (manual workers) known as the Pancha Maha Balawegaya (Five Great Forces). There are signs that this is being replaced with a new and more elitist “national security” coalition that consists of western doctors, university professors, lawyers and other professionals, military officers, business owners, and company directors and executives drawn mainly from the Sinhalese community. This is the more privileged segment of society. They are especially concerned about national security. Although one incident is not a reliable sample, one member of this coalition who is a political novice and now state minister asking the treasury to fund a list of items including an umbrella that she needs for her official duties betrays a lack of sensitivity to the needs of the common people, many of whom are suffering from the negative economic fallout of the Covid-19 pandemic. The Sangha shares the national security concerns of this new coalition and supports the demand for a new constitution. But the objection that some of them have expressed for 20A may be a hint that they are not too happy how a more authoritarian regime that the 20A is likely to produce would respond to the needs of the vast majority of ordinary Sri Lankans who are their Dayakayas (followers).  
Economic crisis management: It is possible that the drafters of 20A may also have thought of strengthening the executive to better able to handle the looming economic crisis. The second phase of the Covid-19 pandemic that the country is currently facing will have serious economic consequences unless brought under control quickly. The IMF in its latest World Economic Outlook assessment issued two weeks ago expects Sri Lanka’s GDP to fall by 4.6% this year and grow back to the 2019 level in 2021. This is not good for jobs and incomes. Between 2021 to 2025 each year the country needs about $4.5b. to service its foreign debt. With earnings from tourism and remittances from Sri Lankan migrant workers down it would be difficult to meet this commitment. The possible solutions include debt restructuring in negotiations with lenders. That can lead to politically unpopular decisions such as handing over Hambantota Port to China on a 99-year lease. The government may be forced to accept the USA MCC grant of $480m. that many who support president Rajapaksa strongly object to. Negotiating a new Extended Fund Facility with the IMF will force the government to accept conditions such as limits on government spending that can also be unpopular. All of the above and more will be a little easier to handle if 20A is enacted to increase the powers of the presidency.   

Conclusion: From an economic perspective the case for 20A is weak. An authoritarian government that it is likely to produce is most unlikely to make Sri Lanka a second Singapore. Sri Lanka has achieved significant economic growth under democracy. Growth can be further improved with better policies under democratic governance that has the support of the people. An authoritarian government that is not accountable to the people and may begin to cater to a small privileged segment of society may even undermine the substantial degree of equity and human development that we have achieved in the past seven decades.



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