The Pride of the Nation – 20th Century Industrialization in Sri Lanka

The Pride of the Nation – 20th Century Industrialization in Sri Lanka

e-Con e-News 17-24 August 2019

• This is the 70th ee so far, examining how the economy can be transformed. This ee surveys the significant yet straitjacketed attempts to establish industrialization in Sri Lanka throughout the 20thC.

     100 local industries were set up by governments after ‘independence’ – in 1948 they were called: “The Pride of the Nation” – but then destroyed if not undermined after 1977! (see ee Focus, B1)

• This week saw the Prime Minister (who once promised, with German ambassador in tow, to make Volkswagens here) now with Indian High Commissioner in tow, getting headlines to blare: “Mahindra opens first automotive assembly plant in Sri Lanka.”

     Yet, this politician and his party – proud ‘modernists’ – may not know the difference between pre-industrial assembly (manufacture) and modern machine industry. Would even one part be machined here from steel forged from our own iron? Every modern country has content laws, demanding that a certain % of whatever is sold there, having to be made capital-intensively there. Not for us, apparently. (For the huge iron deposits in SL, see ee Focus B1, also ee Sovereignty, C1)

• As last ee noted: the main reason the English even claimed intention to establish industry here in 1916, was due to “Emden Psychosis” – fear of being cut off from England during WW1 (which also produced the first major workers’ state – the USSR!) England again broached industrialization when their rivals, Imperialist Japanese and Nazi Germany, advanced to meet at the Suez in the 1940s! (WW2 produced several workers’ states, including China, Korea Cuba, Vietnam)  So what will WW3 bring?

• The last ee Central Bank Special showed how the English colonial game systematically sabotaged attempts to invest in a modern industrial country, and how under US administrators and their brown local stipendiaries (officials & unofficials, CPAs, CPIs, Advocatas, etc), who’ve taken over the English singsong, have prevented the Mahabankuva from both challenging the dominant merchant & usurer interests, always undermining attempts to truly industrialize. (see ee Focus, B1, A Brief Survey of 20thC Industrialization in SL)

A1. Reader Comments

A2. Random Notes

A3. Quotes of the Week

A4. A Very Personal Ingrisi History of the World – 1870s: The Great Divergence

B.   ee Focus

B1. A Brief Survey of 20th Century Industrialization in Sri Lanka

B2. United Front Policy on Banks & Creation of Credit for State-led Industrialization

B3. A Warning from ‘our’ Central Bank to a Future Government – by Garvin Karunaratne

B4. Vietnam Model Mantra – by Vichara

C. News Index

D. History of the World continued…


A1. Reader Comments

• “The ee Central Bank Special was one of the best ees yet. Impressive the amount of research that must go into these. Good to see more writings on banking and their relation to industrialization.”

• “Good stuff. Why doesn’t ee get some of this printed in newspapers?”


A2. Random Notes (‘Seeing Number in Chaos’)_________________

• “The first Ministry of Commerce, Industry & Labour in Ceylon under English rule was assigned to a Registrar General’s Department Division called the Bureau of Commercial Intelligence!” (see ee Focus B1)

• Oh, look! The Central Bank declares elections must not change policies? So what are elections for? ‘Constitutionalists’ also wish to postpone elections? (see ee Quotes). Eminent economists are also claiming, elections are bad for economy! (see ee Economists) So what kinda democrats are these?

• University of Colombo Economics Prof Srimal Abeyratne says tillers are becoming 3-wheeler drivers. His answer: Sell their paddylands! He won’t say: Set up modern industry. What mimics of imperialist policy our economists are! No mention of fitting industrial production to the agricultural cycle, capturing the home market! We recall resurgence of Japan’s auto-industry in the 1970s happened with outsourcing parts-making to rural people’s attics! (Check ee Agriculture)

In another Sunday Times column, Abeyratne claims 6% of Western Province population provides 40% of the GDP! What he ignores is, most of the wealth is generated from rural workers entering WP workplaces, or by going abroad thru Katunayake! (see ee Economists!)

ee started just before Oct 2018’s so-called 52-day ‘coup’: We ask ee readers to examine the very first ees starting in Sept 2018. It shows the economic crisis that led to October’s political foofaraw.

• Here’s e-Con e-News 30 Sept 2018: Money market dealers have been urged to refrain from speaking to the media over conditions in the market particularly the movement of the rupee against the US$.The ‘request’, which some dealers said was a directive, came during a recent meeting with senior Central Bank officials and dealers. The move came as the banking regulator assessed ways of halting the depreciation of the rupee.”–

And whatever happened to: “NY Times allegations: CID commences probe (2018-10-03) The Criminal Investigation Dept had commenced recording statements in connection with the NYT report which alleged, a Chinese company had funded the campaign of former President Mahinda Rajapaksa in Jan 2015. (Can you imagine the US government commencing a public investigation on a report from our media about what the Yankees do here!)

• It was amusing to see Kili Mahendran’s MTV News1st anchor Faraz Shauketally sparring with analyst Malinda Seneviratne. Thumping one key over and over again about retail murder, Shauketally promoted Sajith P, talking about the ‘international community’, i.e. white (& honorary white) nations! So it is that white settler countries, having wiped out entire continents of people, are now arbiters of human rights. Perhaps this whiteness is what enables Colombots also to erase the murder of 70,000 people and yet also speak of ‘human rights’. Sajith could surely tell us about that too: NATO snow is one helluva eraser! –

• What is the relationship between economics and politics? One metaphor is from the construction industry: base & superstructure. Another from chemistry: sublimation. And from psychology: dissimulation! The metaphor we currently like is: celestialization! Look how the earth-bound clay of hands and feet make the gods dance and stars twinkle in the cosmos!


A3. Quotes of the Week_____________________________________

“If as suggested by the Central Bank we should not make any change in our economic policies then the question crops up as to why have a new Government, or rather why have elections at all?” (see ee Focus B3, Karunaratne)

• “In a recent article, Dr Nihal Jayawickrama has argued, the 19th Amendment has reduced the President into purely a Ceremonial Office and therefore asks why squander billions of rupees in an island-wide election to choose the next President? At this last moment he is proposing a constitutional amendment to thwart the presidential election and elect a new President from the existing Parliament or an Electoral College! Of course there are many elite groups who are against island-wide or even local elections although they may talk about democracy. I wonder whether any of these people, including Jayawickrama, raised any objection when billions of rupees were robbed through bond scams under the Wickremesinghe regime.” –

• Left Academic Hysteria – ‘Even the most intelligent people, including politically literate leftist university academics, can say quite the dumbest things… Here’s an example of dumb-ass pseudo-intellectualism: “…one can imagine the situation when a chauvinist MR regime usurps state power.” In the first place, MR isn’t running for the Presidency. In the second place even if he were to have run and won, or his nominee GR wins, it would hardly qualify as “a regime…usurps state power”, because he would have assumed state power democratically through an election, through the free vote of the people! What may come afterwards is another matter, BUT HOW ON EARTH CAN IT BE DESCRIBED AS AN “USURPATION OF STATE POWER”? The author may say that he meant in a post-election situation, but that’s not the “usurpation of state power”, that’s the change in the CHARACTER AND ROLE OF THE STATE i.e. it may become a “Sinhala Buddhist State” as Nalin de Silva openly argues for. But even that is not the “usurpation of state power by the chauvinist MR (sic!) regime”! The “usurpation” of state power occurs only if the transfer of power is illegal and illegitimate as in a military coup. Is it a “usurpation” when someone the Left doesn’t like, wins a democratic election? But that’s what the imperialists thought whenever someone they didn’t like, won an election! What’s the difference in the methodology and mentality? What do these people teach?’ – Dayan Jayatilleka responds to Ahilan Kadirigamar’s The Left, Democratic Space and Presidential Elections

• “Q: In the last decade, the term BRICS [Brazil, Russia, India, China, S Africa] has become popular in Brazil. These countries began to articulate themselves and threaten US hegemony in the international scene. Is it possible to say that the election of Bolsonaro, who is so close to Trump, can dismantle this organization? A: We should never exaggerate groups of nations. When they come together to create some kind of grouping, we should not exaggerate what it is. BRICS was always going to be only as good as the class character of the government in the different States…”

• “The US Embassy in Colombo and its Ambassador must certainly be enjoying the divine links to President Donald Trump he himself announced earlier this week. What would a decent world think of his recent threat to release European ISIS prisoners back into their own countries? Referring to his trade war with China, he suggests having the backing of a ‘higher power’, with suggestions of the deity: Looking up to the sky, with his palms open, and declaring: ‘I am the chosen one!’ Adding: ‘Somebody had to do it. So I am taking on China. I’m taking on China on trade. And you know what? We’re winning.’” –

English Garbage – “One of the most shameful, the most dirty, and the worst paid kinds of labour, and one on which women and young girls are by preference employed, is the sorting of rags. It is well known that Great Britain, apart from its own immense store of rags, is the emporium for the rag trade of the whole world. They flow in from Japan, from the most remote States of S America, and from the Canary Islands. But the chief sources of their supply are Germany, France, Russia, Italy, Egypt, Turkey, Belgium, and Holland. They are used for manure, for making bedflocks, for shoddy, and they serve as the raw material of paper. The rag-sorters are the medium for the spread of smallpox and other infectious diseases, and they themselves are the first victims.” (Marx, Capital, Chapt15)


A4. A Very Personal Ingrisi History of the World________________

1870s: The Great Divergence

• South Asia and China had led the world economically. Now Europe and its white-settler territories overseas outdistanced the non-European populations of the world, with better chances of survival, longevity, and stature as an indicator of health – midst massive English-caused famines in Asia, Africa & the Americas – Victorian Holocausts, the true Victoria’s Secret.

• In northern Anglo America, destruction of the boreal forest (which provided pulp for all newspapers to hide ‘Free World’ secrets), mass destruction of the buffalo, and starvation of the original people (in those places where we now get our parippu & wheat!) enabled their ‘success’ story.

• Modern scholars would go on to celebrate the uniqueness of Europe, ignoring the acquisition of colonies by European powers, the role of the state and state-backed violence in the competition to steal lands, and control over labor power, raw materials, and markets since the emergence of capitalism, marked out the victory of European powers. 1875: Canada and the USA also began to show an upturn.

Illegal European emigration peaked, 1870s-1910s. Migrants accounted for 40.9%, 35.9%, 30.1%, 29.2%, 23.2%, and 22.3% of the 1900 populations of England, Norway, Portugal, Italy, Spain, and Sweden. European countries, especially England, supplied the investment for white settlers to be fed, housed & equipped before they could settle down and begin producing. Investment flow from Europe to temperate lands in which European migrants settled was supported by the surplus extracted from the dependencies of the European powers on Asian, African and real American people. Overseas migration raised living standards. Yet English investment overseas and transfer of surpluses from the colonies to the metropolitan heartland, are almost totally ignored in the mainstream literature. (continued in ee Section D)


B. Special Focus____________________________________________


B1. A Brief Survey of 20th Century Industrialization in Sri Lanka

Dedicated as always to SBD de Silva

200 companies were set up in 19thC ‘Britain’ alone, to grow coffee and tea in Lanka, paying a 10% dividend! ‘Public works’ to support their slave plantations monopolized local government budgets – for ports, roads, rails, and electricity, and war-making! Such ‘public’ works escalated after their local “legislative council” gained the power in 1840 to influence government expenditure.

    The Wellawatte Weaving & Spinning Mills, one of the few manufactories set up under the English in 1883 by Darley, Butler & Co., assembled rough cloth for the plantations and prisons – using cotton from India, spindles from Lancashire, looms from Blackburn, engines & boilers from Glasgow.

     Meanwhile, England’s ideological institutions – the churches, schools, media, etc – taught that Ceylon had little resources outside of remaining an agricultural society, and the state should never engage in industrial exertion. Caution & pessimism & downright obstruction if not sabotage! – this “national anthem” – continues to this day. In the absence of an industrial education & culture, it is not uncommon to hear people, using the latest imported industrial devices, parrot such negativity: that we should not undertake such an industrial path or have the state invest in it. Yet state industrialization was the true national demand for most of the 20th century.

• In 1923, when ‘Ceylonese’ gained the majority of the legislative council, they were restricted to begging for English capital and technical advice to assist local ‘entrepreneurs’ to start industry. From 1931-48, with limited ‘self-government’, some feeble attempts were made: a Ministry of Commerce, Industry & Labour was assigned to a Registrar General’s Department Division called the Bureau of Commercial Intelligence! But again, to attract private companies to pursue industry.

    In 1934, the Ceylon Banking Commission openly favored state-directed industry to cater to a home market, noting the indifference of private capital. They observed that millions were being wasted on promoting export of raw materials.

    In 1935, Dr RD Guha’s First Interim Report as Technical Advisor on Industries recommended several industries to be set up. Industrial surveys and investigations were also undertaken for the Dept of Commerce & Industries. They reported favourably for the following industries: Cement, Tile & Pottery, Tannery, Ceramics, Coir, Steel, Textiles, Caustic Soda, Synthetic Ammonia, Power Alcohol (Ethanol), Nicotine, Fine Chemicals.

     Some of our abundant natural resources were listed: 1 Iron Ore – an estimated “6 million tons of surface deposits in the southwestern sector of the Island, averaging about 52% iron, sufficient for the iron & steel requirements of Ceylon for over 100 years. These deposits have slight traces of phosphorous, require no mining, and are capable of being worked into pig iron by using the electrical furnace method.” 2. Kaolin – large-scale deposits of the “finest Kaolin in the world along the coastal belt from Colombo to Galle… excellent raw material for the paper industry… and its obvious use in the ceramic industry …it can also be used in the textile industry” etc, etc. The report listed other great possibilities: It did not mention petroleum, but the Mannar sea fields are one of the main reasons for the imperialists wishing to divide the country, let alone that we sit pretty between Africa, W & N Asia, Japan and the Pacific, and the great ocean about us. (As for our Kaolin, it has now been captured by Japan’s Noritake; as one ee reader pointedly asked, how may we take it back!?)

     In 1938, a separate Dept of Commerce & Industries was set up, as the CBC had recommended. The Dept conducted surveys to show we have the raw materials to develop industries. The state council allocated Rs3mn for private capital to set up model factories, and even promised to fully underwrite shares, but again, private capitalists showed no such interest.

     With their WW2 in 1939, hastened by English fears of Japanese invasion cuting them off from East Asia and Europe, the state here set up a plywood factory plus other pilot plants, and sent people to train abroad. Successful small-scale government factories creatively improvised using old machinery: for plywood (to make tea chests & building board), glass, steel rolling (1941, for rolled bars), acetic acid (1941 for rubber) paper (1943), quinine for drugs, ceramics (for jars, with local clay).

     But by 1946 – abundantly clear the private sector had absolutely no interest in setting up industry, nor in gainfully training and employing Sri Lankans for such endeavours – with the success of the state industries, the Ministry of Commerce & Industry made proposals for a Post-War 5-year plan for industrialization, to make large-scale cement, steel rolling, caustic soda, hydrogenation of coconut oil, sulphuric acid, textiles, and also for power, heavy chemicals (fertilizer, too), and cotton spinning.

With such plans proclaimed, even by the UNP, were we declared “independent.”

     Yet despite such words, no action ensued – 4 Ministers of Industrial Development were appointed in 5 years. With no upgrading, those industries – once “the pride of the nation” – were made to incur heavy losses.

• The notorious World Bank Mission of 1953 condemned emphasis on state enterprises, and recommended “small industries” instead. The Gunasena Commission (1953), looking into the losses, nonetheless applauded the ministry’s “romantic resourcefulness in conjuring up [factories] out of practically nothing in order to provide for the starving needs of a country during a period of direst difficulty.”

     The situation was indeed still dire – after the World Bank ordered cutting the rice ration, the 12 Aug 1953 Hartal erupted. Oliver Goonetilleke, Minister of Finance & the Treasury (later Governor General), told a conference in Sidney in Dec: “People in my country do not have 3 square meals a day!”)

     Meanwhile, the Gunasena Commission of 1953 also condemned the “advance account system” used for government departments, as unsuitable to industrial enterprises, and promoted England’s “corporate form” as most appropriate for state enterprises, recommending “the eventual transfer of these undertakings to private ownership”.

     The UNP government, addicted to mercantile/plantation bribes, warned of a rising industrial proletariat. It thus reversed policy towards state enterprises, devising a 6-year program of investment, and a State Sponsored Corporation Act (1955) to get state enterprises to “serve private enterprise”, setting out to destroy public sector enterprises. But were soon thrown out of office.

• The new 1956 Mahajana Eksath Peramuna govt insisted on state development of industries as a major objective: allocating 2.3 billion rupees, mostly for 7 industries under the state (for Iron & Steel, Cement, Chemicals, Fertilizers, Salt & byproducts, Mineral sands, & Sugar, Power Alcohol, Rayon), with 23 under state/private ownership, and 82 industries for the private sector.

     As the UNP’s 1955 ‘denationalization’ Act did not allow new state industries, the State Industrial Corporations Act No. 49 of 1957 (which followed much of the 1955 act, but did not support transferring them to private owners) constituted industries for Textiles & Carpentry (1958), Ceylon Hardboard (1959), Industrial Estates (1960), Ceylon Tyre, State Engineering & Ceylon Steel (1962, yes, the year of the attempted coup), State Hardware (1963), Ceylon Fertilizer, State Flour Mill & Ceylon Fisheries (1964).

     Economists Nicholas Kaldor, Joan Robinson, Gunnar Myrdal and Kenneth Galbraith, invited by the Planning Council that initiated the 10-Year Plan, recommended state development projects as imperative. This is when CB Deputy Governor DW Rajapathirana (formerly Commissioner of Income Tax, his son singing the same anthem now as economic advisor to the current President) told Robinson that the government philosophy was to start industries and then hand them over to private interests: Robinson asked, “Why?” DWR said this was the IMF philosophy as well. Robinson replied, “It is not enough to have a philosophy, you have to have the right philosophy.”

     Yet in 1957, the management of state enterprises was transferred to state ‘corporations’ to presumably limit political/ministerial caprice, and use “business principles”. Still there were problems with this corporate form as well. Now there is no question that suitable forms of flexible operation of state industries had to be evolved with better research and planning overall, to prioritize needed industries, their functions and objectives, workers and raw materials. Assassination and attempted coup, outright bribery and repression followed.

     The next UNP government of 1965 did not change the act, and even created a State Fertilizer Manufacturing Corporation (1966, due to balance-of-payment issues), let alone unparalleled unemployment and strikes. With the return of a United Left Front (ULF) government in 1970, several new state enterprises, State Rubber Manufacturing, State Pharmaceuticals (1970), Sri Lanka Tobacco and State Graphite (1971) were established.

     Then came the 1971 insurrection, massive world oil and food price hikes. Yet 28 state industrial corporations eventually produced cement, steel, tyres, ceramics, sale, hardware, textiles and sugar for domestic consumption, with corporations for Industrial Development, Development Finance and Industrial Credit created to support “entrepreneurs”. For agriculture, the Gal Oya and Mahaweli Development Boards were meant to develop river basins and help settle landless peasants, with the People’s Bank and Agricultural Credit Corporation enlarging the supply of farm credit. 100 corporate bodies thus appeared after independence with over 60 relating to industry, commerce and utilities. (See, MLA Cader, State Industrial Corporations in Sri Lanka, 1975).

     It was our greatest attempt at economic independence in the 20thC. The next UNP government of JR Jayawardene smashed all these industries, first by using thugs to drive out the most talented and dedicated workers. After their catchers had robbed and run them into the ground, their media raised the chorus higher of how a program of state industrialization will not work, and neither should the state promote them. The best were privatized and handed over to private companies, as the anthem of non-state involvement screeched higher crescendos.

• SBD de Silva would have been the first to admit that they had a weak understanding of the ramifications of a program for industrialization, dealing with the ‘creative’ sabotage by merchant monopolies, and also the strategies needed in a policy of import-substitution. Industries (unlike the present ‘Garment Industry’ that does not make a thread or pin) need local supply chains, where “One Thing Leads To Another”. This is why he spoke of a holistic political-military-economic strategy.

     ee understands life as struggle, with no ‘happily ever after’ – there are setbacks and advances. Of course mistakes are made (people who claim to not make mistakes are lost utopians). Science learns more from error than easy success! Also, simple profit&loss accounting fails to note the overall rise in skills and experience, etc., that these industries advanced. SBD de Silva would laugh at such nonsense:           For instance, Sunday Island columnist Rajan Philips, a presumed LSSPer and lover of Hillary Clinton, caricatured the early attempts: “After SWRD’s untimely death [note, not murder! –ee], non-alignment became a cherished Bandaranaike principle in foreign policy for the SLFP governments of Mrs Sirimavo Bandaranaike (1960-64 & 1970-77). The SLFP governments also forged new economic and educational ties with East European countries. But these ties were motivated more by ideological inspirations than trade or economic considerations, and the resulting industrial corporations established in Sri Lanka with Soviet assistance all ended in failure within their first 25 years. Soviet educational ties have also disappeared after the collapse of the socialist second world.”

     SB responded: “Philips’ notion of failure is not good or bad – it’s sheer ignorance! Because even if there was a loss, a lack of industry would have led to further greater losses elsewhere – as is now evident, with no modern production taking place. And industrial policy did not ‘fail’ – it was strangled and sabotaged!”

• All great national leaders of a century ago in Asia, Africa and the Americas, from Anagarika Dharmapala to Sun Yatsen, Ataturk, Abdel El Krim to Nasser & Nkrumah, to Mahatma Gandhi, Lenin, Mao and Ho Chi Minh, Marti to Mariátegui, saw industry as fundamental to breaking from colonialism.

     These leaders differed however on the profound political-military-economic tasks involved and of the very basis of modernity – some (Gandhi) called for petty merchantry and petty handicraft production, others (Lenin) for controlling the very ‘commanding heights’ (a cannonading metaphor) of a modern industrial economy, requiring knowledge of modern machinery: engineering, physics, chemistry & biology, but also deploying the greatest science – the laws of social motion – as analyzed by Marx, who identified the medley of transitional material forms that sustain liberation.

• After 11 months of weekly ee’s (all dedicated to SBD de Silva) we are now convinced more than ever that all the 20th-21stC mass murder, coups (attempted, silent & successful), bribery, etc – not just in Sri Lanka, across Asia, Africa and the real Americas – have been to very specifically prevent the rise of modern industrial societies, that would enable extracting the claws of the parasitic imperialist system that still dominates planet earth.

     Country after country, leader after leader, has been deposed, arrested, tortured, murdered – it is no surprise that the same fate met SWRD, under whom many of the 100 industries were set up. Despite ignorant calumny, SWRD’s name should be up there with the unnamed, many murdered, or deposed: from Mossadegh in Iran, Nasser in Egypt to Sukarno in Indonesia, from Lumumba in the Congo to Nkrumah in Ghana to Cabral in Guinea-Bissau, to Sankara in Burkina Faso to Machel in Mozambique to Ghaddafi in Libya, from Arbenz in Guatemala to Allende in Chile, Bishop in Grenada, Aristide in Haiti, we can go on… Yet, against all odds we shall strive… And it is within these odds we strive to also recall such people as GVS de Silva and SBD de Silva, along with others like Philip Gunawardene, TB Ilangaratne, and many more…

     Upcoming elections, delayed and if not postponed or jilmaated, may only vaguely enunciate what needs to be done. Only those organized forces, Left nationalist, regardless of vote outcomes, must make clear what is needed. It is not just a matter of defeating neoliberalism.

• Next ee will examine why ‘liberal’ changes were effected due to English fears during WWII, e.g. grants of ‘free education’, minimum prices to tillers, wage awards to workers, etc, and then began to be dismantled the moment workers’ organizations – built up in the early 1900s, and the threat of communism (which had defeated the Nazis) was itself dismantled, at least in Eastern Europe…


B2. United Front Policy on Banks & Creation of Credit for State-led Industrialisation

ee was asked if there ever anything akin to Japan’s system of CB “window guidance” in the works? Was the nationalization of Bank of Ceylon and setting up of People’s Bank in 1961 linked to industrial policy? Why weren’t we able to nationalize more of the banks? Is it true that part of the reason LSSP was expelled from UF in 1975 was due to disagreements over bank nationalization?

“The expulsion of the LSSP had to do with Sirimavo’s ‘right-turn’ after 1974, when the Left showed its strength (particularly at 1975 May Day – the CPSL had a tremendous display of marchers dressed as Vietnamese with ‘coolie’ hats).

     The fundamental problem with the UF was that the workers’ parties teamed up with the essentially petty bourgeois SLFP. Adolfo Gilly shows how the petty bourgeois peasant revolutionary forces of Zapata and Villa captured state power in Mexico and didn’t know what to do with it. They were replaced by the Mexican equivalent of sangha-veda-guru (teachers, army officers, civil servants, petty shopkeepers) united under the regime of Carranza and Obregon, who established a state-led industrialization policy – but which was unstable, evolving into the current bourgeois regime. The SLFP followed this model, with a Bonapartist, vacillating leadership. Hence, the nationalization policy had to be fought for. Wikileaks (see links below) shows, Left leaders bargained with Sirimavo, asking for more radical measures in return for agreeing to reductions in the free rations.

     There were two issues in Aug-Sept 1975 – who was to control the estates after nationalization, the LSSP plantations ministry or SLFP agriculture ministry? and nationalization of banks. (see Wikileaks)

     The nationalization of the BoC and the formation of the PB probably had more to do with the relative scarcity of state funds than with the industrialization policy. The biggest item on the budget was always the free rice ration – it was by doing away with it that JR was able to reduce income tax so drastically, so that current state income is almost entirely indirect taxation.

     Another factor was the SLFP’s fear of industrial democracy or direct democracy. Whereas Philip’s cultivation committees under the Paddy Lands Act and the Multi-Purpose Co-operatives had the equivalent of ‘universal franchise’, by the 1970s the UF reduced the power of the electorate in both cases, increasing that of the member of parliament. The People’s Bank may also have been a similar centralizing measure, since the PB had been the Co-op Bank.

     Under the UF government only the Left-held ministries and that of TB Subasinghe (originally in LSSP, who broke away later from SLFP) instituted employees’ councils. The large state corporations in the other sectors continued with their bureaucratic administrations. Fear of 500,000 plantation workers with their own workers’ councils might have influenced Sirimavo’s decision to take away nationalized estates from the LSSP – apart from it representing the largest sector of the economy.

Here are the related Wikileaks Cables on the 1970 UF Government and the USA:


B3. A Warning from ‘our’ Central Bank to a future Govt – Garvin Karunaratne

The Senior Deputy Governor of the Central Bank, Nandalal Weerasinghe has warned any new Government: Follow the beaten track or else there will be chaos. (SL Risks losing debt market access if future govt policy changes”, AdaDerana, 9/8/2019). I would tend to think there could have been some substance in this warning if the last 4 years, quoted by him, had any macroeconomic stability. We have today to face an international debt of some $60bn, a good lot of which has been piled up in the last 4 years because at the end of 2014 the debt stood at 42.9bn (SundayTimes, 23/1/17).

     To my thinking, the last 4 years has been a shambles. Last time I was in Colombo, Heinz Vinegar and Heinz Tomato Sauce from the USA was what was available. Our shoemaking industry has almost ceased and shoes from India taken over. Our local industries have crashed causing unemployment and increased imports. Local industries and with that local employment had almost ceased with the result that our youths have to migrate abroad to find a means of sustenance. Under FDI foreign companies that bring in some investment in foreign currency at the initial stage do trade in local rupees but import all ingredients with our foreign exchange and take away their profits converted to foreign currency. Our experts do not yet understand that we are the net loser.

 …If as suggested by the Central Bank we should not make any change in our economic policies then the question crops up as to why have a new Govt, or rather why have elections at all.

 …The 1956 General Election brought in the socialist nationalist Govt of PM SWRD Bandaranayake… instrumental in bringing about socialist policies like the Paddy Lands Act and Sinhala Only Act, which ushered in an era for the common man. It was unfortunate he was assassinated in a few years.

     The 1965 Govt of the UNP PM Dudley Senanayake concentrated on agricultural development making the country self-sufficient in paddy the staple crop while implementing a rice ration scheme. This was a major achievement.

     In 1970 Dr NM Perera Minister of Finance said in his Budget Speech 1970: “An entirely new structure for planning is being established (within which) each local authority will be the focus for development planning and plan implementation. Popular participation will be secured through the Divisional Development Council in which the elected organs of the village, the cooperative society, the cultivation committee, the village council will have a planning and coordinating role in the overall development of their area.”

…Though planned with great care, this plan received a major setback due to the JVP Uprising of April 1971, when the JVP youths staged a one-day takeover of the country…

     The Govet of PM Sirima Bandaranayake came up with a major development program: The Divisional Development Councils Program which established employment projects providing employment to 33,271 youths…

     In 1977 a major change in policy was made by the Jayawardena Govt… embracing with open arms the neoliberal policies as advised by the IMF. The use of foreign exchange was liberalized that enabled rich people to proceed on overseas holidays, send off their children for overseas study, and liberalized imports, meeting the expenditure from the sale of assets by privatization or by raising loans. This inevitably paved the path for the country to become indebted. This process was dictated by the IMF to help Developed Countries as stated in The Report of the Independent South Asian Commission on Poverty Alleviation: Meeting the Challenge:

     …The industrialized countries for the first time since WW2 are in need of markets for their products and services… So they have put into effect the Structural Adjustment Program (SAP). The main prescription for SAP is, therefore, a reduction in govt expenditure which falls… on the poor. This has often been accompanied by devaluation, increases in the prices of public utilities and import liberalization.

This policy laid down by the IMF in 1978 has been followed till today and has seen the country continuing an import and sell economy. Local production has been totally sacrificed. Most of the ills the people face today can be traced to this policy of the IMF, imposed on Sri Lanka from 1978 onwards.

     Though the Finance Minister of 1978, Ronnie de Mel said: “Foreign Aid and foreign assistance… will be necessary to finance this total transformation of our economy… Investment and trade, development and production should be our goals rather than increased doses of aid. Continuous begging for Aid is not good for our national self-respect and is also self-defeating. We should, therefore, stop being a nation of beggars… and place our emphasis on product development, growth, and employment.” (Annual Budget Speech: 1978) However noble the aim, we ended up as beggars within a few years. In 1978 the Rupee was devalued by 104% and the bank interest rate was increased – entrepreneurs had to get loans at 24% interest. This made many entrepreneurs give up their industries. Imports flooded in.

     Cracks in the economy became evident. Even the World Bank queried in 1986: By 1986, the deterioration of the economy had become evident. The growth rate of the GDP slowed to under 4%, unemployment rose to about 17%, and gross official reserves declined to less than 2 months’ imports (World Bank: Trends in Developing Economies, 1990) This was when the foreign debt was at $4bn. Following on these policies, by 1989 the foreign debt was at $5bn and gradually increased to $11.3bn by 2005, $22.8bn by 2011, $30.6bn by 2012, $42.9bn at the end of 2014, and close to $60billion today.

     It is seen that elections have brought about major changes and the cry from the Central Bank is not going to stop changes happening. What is important is to find out whether the changes have made a contribution to the country.

…Having worked in the service of our Government for 18 years I have had to serve new Govts that changed policies and we had to make changes and show results. It is up to the Central Bank to act according to the wishes of the newly elected Government.

…To my thinking, the major task of the Central Bank is to safeguard the foreign exchange that our country earns. In today’s internet-dominated world endless foreign institutions nibble at our foreign exchange. Gone are the days when money is transferred to local banks. Money gets transferred now within a few minutes with little or no records being kept. Institutions like UberEats, PickMe and Internet Tourist Hotel Booking Companies trade in local currency but take away profits in our foreign currency where we are the net loser. Not a dollar comes in but the profits are taken away in our dollars. The Central Bank has its hands full.

     Instead of making Warnings to a new Government it is up to the Central Bank to put its house in order and serve the country.

For full text, see:


B4. Vietnam Model Mantra – by Vichara

ee offers this analysis with the understanding that Vietnam, Laos and Cambodia were bombed into the Stone Age by the US and their allies. Vietnam’s railroads are lined with graves as a reminder of this. Also, socialism can only be built after a certain level of productive forces and relations have been achieved…Our next ee will offer an analysis of the examples of Singapore, Taiwan, Korea, etc, and why comparisons can be fraught. All these East and Southeast Asian countries have long been viewed as ‘balconies’ to watch and to invade China, which is their main goal now.

During the last few weeks many economists and politicians including the Prime Minister have contrasted rapid economic development in Vietnam with the sluggish growth of the economy of Sri Lanka. They seem to suggest that Vietnam should become the new development model to be adopted by Sri Lanka particularly to attract FDI. It has become the new Mantra to solve our economic problems.

The primary objective of FDI is profit both short term and long term. Short-term profit is ensured by cheapened labor and other inputs, adequate infrastructure, ease of doing business and incentives on investment. Long-term profit is guaranteed by stability of the host state, security of investment and predictability of rules and regulations. Access to domestic and international markets of products of the FDI influences both short and long term profit.

            Let us look at the comparison: Sri Lanka had reasonably ‘stable and strong’ governments in the JR era when Sri Lanka pioneered an open market economy and free trade zones. During the second MR era the emphasis was on infrastructure development, which attracted a fair flow of FDI. Thereafter attempts by the government to attract FDI had very limited success.

            Sri Lanka has had no stable government since 2015. We also have had a fractured society and political parties with opposing development agendas and foreign-relations policies. Sri Lanka has lacked a coherent set of development policies since the Mahinda Chintanaya of the MR regime.

            Vietnam has a relatively homogenous society and is ruled by a strong and stable single-party communist government. According to the World Bank, Vietnam exhibits a high level of political stability with an average political stability index of 0.15 for the period 2010-2014, relatively high compared to other Asian countries.

            FDI is attracted by fast-growing economies. Annual growth rate in Vietnam averaged 6.52% from 2000 until 2019, whereas the Sri Lankan economy saw robust annual growth at 6.4% over the course of the 2003-12 period and was also able to attract FDI. But since 2015 it has gradually declined to 3.1 in 2019. In this background FDI has been wary in coming to Sri Lanka.

     The labor force offers a key competitive advantage of Vietnam to attract foreign investment as well as sustaining future growth. Vietnam is known for its young, hardworking, highly literate and easy-to-train labor force. In 2015, Vietnam’s workforce counted about 54.61 million people; Sri Lanka’s labor force is 8.5 million. Unlike in Sri Lanka, labor discipline and productivity are high in Vietnam. Normal working hours are 8 hours per day (or 48 hours per week based on a 6-day working week). Overtime hours will not exceed 50% of the normal working hours or 30 hours per month or 200 hours per year. Vietnam has only 11 public holidays inclusive of 5 days for Tet, whereas Sri Lanka has 25 public holidays inclusive of the full-moon holidays.

     The main strategy adopted by Vietnam to attract FDI is to offer appropriate infrastructure and services and provide them with incentives in special economic zones. Vietnam has established 18 coastal economic zones with up to 325 state-supported industrial parks throughout the country. They offer a wide range of incentives to investors, including tax breaks (or even zero tariffs) on selected items, lower or exempted corporate income tax, and reduced rents and fees.

     More than anything else, Vietnam has a locational advantage of proximity to developed and fast-developing economies in the region like China, Hong Kong, South Korea and Japan. There is also a cultural affinity between Vietnam and these countries. The SAARC neighbors of Sri Lanka do not fit in to that description and also compete with Sri Lanka for FDI.

     The regional countries mentioned here represent the lion’s share of FDI into Vietnam. Hong Kong leads all FDI investment accounting for around 30% of total investment in the recent past. South Korea and Singapore come in at second and third, followed by China and Japan.

     An important point to note is that China has been increasing its investment in Vietnam rapidly. Vietnam has benefited due to companies moving manufacturing to Vietnam as costs in China started to increase. The US-China trade war has accelerated the process.

     Foreign direct investment into Vietnam has increased at the rate of nearly 7% year-on-year.During Jan-May 2019, their foreign invested sector produced US$70.4bn from exports, that accounts for 70% of the country’s total export turnover. As of May 2019, there were 28,632 FDI projects with a total registered capital of US$350.5billion.

     It is just a pipe dream for us to adopt Vietnam as a model for rapid development through FDI, as Sri Lanka does not possess the advantages enjoyed by Vietnam. Only when there is a stable government and a strong political leadership can we even hope for a momentum in the right direction. Externally let us hope that there is a trade war between India and US when Indian investors might look at Sri Lanka as a surrogate location just as the Chinese are doing with Vietnam.


C. News Index______________________________________________

C1. Sovereignty (ee is pro-politics, pro-politician, pro-nation-state, anti-corporatist, anti-expert, anti-NGO)

ee Sovereignty news emphasizes sovereignty as economic sovereignty – a strong nation is built on modern industrialization fueled by a producer culture.

• Maritime Domain Awareness (MDA) & Undersea Data Cables (UDCs) & Routes where SL is certainly a Geo-Strategic Hotspot

• Titanium Sands extends high-grade zone at acquisition tenure in Mannar Island

“Valuable rare earth minerals (REM) in Mannar Island and Pullmodai are being handed take over by US quadrilateral group partner companies – Japan and an Australian including Titanium Sands, with Rishad Bathudeen demanding more land in Mannar Island (after Willpattu deforestation & land grab), supposedly for a ‘wind plant’ – in the absence of a National Energy Security Policy on exploration & exploitation of our Rare Earth Minerals (REM) which makes for vulnerability to asset stripping as long as the govt lacks the skills and expertise to do due diligence in the sector. Fisher livelihoods will also be impacted in absence of national fisheries policy and an overarching policy on Sri Lanka’s Indian Ocean living and non-living resources, making the country vulnerable to asset stripping. There is need to consult local communities in Mannar, one of the most impoverished regions of Sri Lanka, conduct environmental impact analysis and ensure benefits to them, rather than rush to sign Singapore mediation convention in the context of all these agreements.”

• US warns SL on investment, military ties after Army Chief promotion–military-ties-after-Army-Chief-promotion/

• SL says international comments on choice of army chief abridges sovereignty

• Govt withdraws State Lands (SP) Bill

• US Deeply Concerned by Shavendra’s appointment as Army Chief

• Teplitz says $480mn US Millennium Challenge deal is to help poor

MCC project will help Sri Lanka attract more investments from other parts of the world as more companies are trying to de-risk their investments from China.

• SL has potential to attract US firms exiting China: US envoy Teplitz

• SL to transform land registration, traffic & market access with MCC grant

“It was said, 1.2mn acres in the Trincomalee-Colombo corridor are to be sold to the Americans at the rate of Rs24 per month per acre,” Siriwardhane recalled. “There is no truth in that statement,” US Ambassador Alaina B Teplitz said “MCC does not have an interest in the port of Trincomalee,_traffic_and_market_access_with_MCC_grant-3-15538-10.html

• India Death Trapper

Apart from all these considerations, the increasing presence of China in Sri Lanka can bring us into conflict with India who looks upon South Asia as India’s area of influence, which position it jealously guards. We cannot afford to play games with India; they can clutch us in a death trap as it happened earlier over the LTTE issue. – Gnana Moonesinghe

• Akashi Kaday Avith

Sr Japanese diplomat & UN administrator Yasushi Akashi called on Opposition Leader Mahinda Rajapaksa at Wijerama Mw. Former External Affairs Minister and SLPP Chairman Prof GL Peiris, MP Keheliya Rambukwella & Opposition Leader’s Secretary Harsha Wijewardane were also present

• Why rush to sign onto Singapore’s Mediation Convention?

• The Gotabaya Rajapaksa quandary – Rajeewa Jayaweera

“GR has managed to revoke his US citizenship against all odds despite at least one case against him in a US court of law. Some wonder if an understanding has been reached to arrange the signing of the much-criticized & now stalled SOFA and MCC Agreements through some underhand method in the event of a GR presidency. MR recently received US Ambassador Alaina Teplitz at his residence and once again with visiting Principal Deputy Asst Secretary Alice Wells a few days ago. Wells also met PM Wickremesinghe but ignored President Sirisena. More clarity of his plans for SOFA & MCC is necessary.”

• China says US & UK fomenting Hong Kong unrest (with Timeline)

“Recently, leaders of ‘Hong Kong independence’ groups secretly met with officials of the US Consulate General in Hong Kong. The day after their meeting, the groups said on social media that they plan to boycott classes in Sept.”


C2. Security (the state beyond ‘a pair of handcuffs’, monopolies of violence)

ee Security section focuses on the state (a pair of handcuffs, which sposedly has the monopoly of violence), and how the ‘national security’ doctrine is undermined by private interests, with no interest in divulging or fighting the real enemy, whose chief aim is to prevent an industrial renaissance.

• State of Emergency won’t be extended: Def. Sec.

Defence Secretary Shantha Kottegoda today said…

• Prez instructs armed forces to maintain security

Sirisena, who discontinued the state of emergency, has issued a separate regulation under the same law to summon the armed forces for active service if and when necessary in all the administrative districts of the country.

• Change of guard in Army today?

Army Chief Mahesh Senanayake unlikely to get extension, retirement due…

• SL Army Commander post goes vacant midst tussle

current Army Chief Lt Gen Mahesh Senanayake officially retiring from service yesterday. President Maithripala Sirisena looked set to appoint Army Chief of Staff Major Gen Shavendra Silva as Commander over the weekend… Silva’s promotion to Commander would jeopardize SL’s cooperation with UN Peacekeeping and prevent defence cooperation between US troops and the SL Army under the terms of the Leahy Amendment.

• Maj. Gen. Sathyapriya Liyanage appointed Army’s Chief of Staff

• Coimbatore on alert after intel about terrorist intrusion from SL

• IS has found footing in SL, India, says leading conflict monitor

According to data released by Armed Conflict Location & Event Data (ACLED), a US-based conflict monitoring and crisis mapping body

• 2 resigned state ministers sworn in

Mohamed Cassim was sworn in as the State Minister Health, Nutrition & Indigenous Medicine, while Ali Zahir Moulana was sworn in as the Primary Industries & Social Empowerment State Minister.

• Will India dump its “No-First-Use” nuclear policy?


C3. Economists (Study the Economists before you study the Economics)

ee Economists shows how paid capitalist/academic ‘professionals’ confuse (misdefinitions, etc) and divert (with false indices, etc) from the steps needed to achieve an industrial country.

• On July 1, World Bank recently classified Sri Lanka as an Upper-Middle-Income Country (MIC) based on questionable GNI data. However, this is promotion to Upper MIC is contrary to empirical data: following the Easter Economic Terrorism attacks the country suffered significant economic losses. Economic growth forecasts were significantly reduced, jobs lost and people pushed into poverty, etc. This sudden promotion is clearly to force and fast track signing the MCC compact without time for discussion and debate, because upper MIC status means Lanka is not eligible for MCC Aid, so MCC can take it away unless it is signed fast – this was explicitly stated by LKI’s WIgnaraja at the Pathfinder discussion on MCC. Of course this upper MIC status is also good news for Ranil Wickramasinghe’s election campaign – a double whammy! The mystery is that no Economist or Poverty think tank has challenged this World Bank reclassification of SL as an UMIC in the wake of Easter attacks!

• Mind the remoteness! – Abeyratne

“About 40% of our national GDP is born in the Western province that consists of less than 6% of the land area of the country. The rest of the country covering 8 provinces and 21 districts produces the balance 60%… If we think it is the ‘infrastructure’ that economic activities and people bring together, it is wrong: Massive investment in Hambantota is more than a confirmation that investment alone would not bring higher growth to the area. It is, obviously a result of a set of factors underlying the concept of ‘connectivity’ – both internal and international connectivity that eliminates the barriers to concentration of people and economic activity.” What Abeyratne ignores is that most of the wealth is generated from rural workers entering WP workplaces, or by going abroad!”

• Shanta Devarajan: Economist who cannot get disconnected from his motherland

We begin a new series on conversations with SL’s top economists, penned by our columnist WA Wijewardena… We believe he is best suited to write this series, going by the twisted proverb ‘Set an economist to catch an economist’… Devarajan was the Chief Economist of the World Bank Group overlooking the affairs in the S Asian region: “World Bank doesn’t take sides but remains neutral… Guided by this policy, I even visited the Maoists in Nepal in one of their fighting bases in the mountains. Contrary to what the media had projected, they were reasonable people willing to listen and generate a dialogue with the outside world. Their grievance was that the rulers had violated all norms of democracy and they pledged that they would establish a democratic regime in the country when they would come to power.”

• Fiscal slippage will undermine economic stability – Sanderatne

“The large deficit is likely to increase inflationary pressures that increase the cost of living and causes severe hardships, especially to the lower end of wage earners. This in turn leads to higher wages that in turn increases the costs of production and erodes the country’s competitiveness in international markets… Electoral politics and fiscal consolidation are incompatibles.”

• Fiscal consolidation derailed by increased expenditure – Sanderatne

“The current [pre-election] spending spree of the govt is likely to derail the fiscal consolidation process, destabilize the economy and slow economic growth… An election year is a severe constraint to fiscal consolidation that is crucial for economic stability and economic growth. Political compulsions could drive the country to the brink of a fiscal cliff.”

• New area of data analytics for economic prosperity

A group of professionals recently passed out from universities are collecting and analyzing data for decision making at the Analytics Unit of the Ministry of Economic Reforms & Public Distribution.

…this unit modeled on Singapore-style is capable of driving entirely unprecedented paradigms of development in nearly every sector in the country, claims Harsha

• SL Economic Summit to discuss “Global Dynamics in the Next Decade”

Chamber of Commerce said issues mostly centre on trade wars, Brexit, and the next policy step by the US Federal Reserve… Presenters include Shri Suresh Prabhu, former Minister of Commerce & Industry, Civil Aviation of Govt of India; Nirukth Sapru, CEO Vietnam & ASA Cluster Markets, Standard Chartered Bank; Mangala Yapa, Chairman of the Board of Investment, SL. Panelists feature Dr Hans Wijayasuriya, Chairman, Ceylon Chamber of Commerce; Dhammika Perera, Co-Chairman (Non-Executive) Hayleys; and Vish Govindasamy, Group Managing Director, Sunshine Holdings PLC. Dr Ganeshan Wignaraja, Executive Director, Lakshman Kadirgamar Institute of International Relations and Strategic Studies in SL will moderate the session.

• Prabhat Patnaik on the state of the Indian economy:

“Unemployment rate is higher today than it has been over the last 45 years. We know several sectors in which people are being retrenched. Automobile sector is the obvious one which people keep talking about. And then you find that even for a number of consumer goods, demand is not high. Industrial production is virtually stagnant. And now we know, from what the former Chief Economic Advisor said, that even the GDP figures have been grossly overestimated.”

• The IMF’s Latest Victims – Jayati Ghosh

In 2013, the International Monetary Fund produced a report acknowledging that it had “underestimated” the effects that austerity would have on Greece’s economy. Yet the Fund has made the same mistakes in its subsequent deals with Argentina and Ecuador…


C4. Economy (usually reported in monetary terms)

ee Economy section shows how the economy is usually measured by false indices like GDP, etc, and in monetary terms, confusing money and capital, while calling for privatization and deregulation, etc.

• Donald Trump inspires SL legislator to slash freedoms of people

“Trump is raising import duties in US,” Opposition legislator Vasudeva Nanayakkara said. “If such a powerful country is raising import duties, a small country like SL should not give in to globalization.”

• Critical economic decisions before polls

“VAT will not be charged from housing projects which sell housing units that are sold not exceeding Rs25mn each… In addition, the locally produced rice bran oil manufactured out of locally produced red rice will also be exempted from VAT.”

• Sajith vows to throw away Neoliberalism

“According to the Minister, 54% of the national income is enjoyed by the wealthy minority in the country while the poorest 20% of the country only receives 5-4% of the national income.”

• Price of legally produced arrack is beyond reach of common man” – Harry Jayawardena

Jayawardena further noted, about 225 licenses were in the hands of 6 individuals… currently controlling over 250 retail outlets out of approximately 1,000 outlets in the name of their relations, friends and kith & kin, thereby defrauding the State of billions of Rupees whilst the regulators turn a deaf ear and blind eye… This is about 1/5th of the distribution channels.”

• Economy in the First 10 years after – “The prospect of independence frightened the planters”

‘In 1950, Indian economist BB Das Gupta pointed out, with an aggregate national income of Rs30 per head per month, the development of the tea and rubber industries “has not necessarily meant general economic development of the country”, which was still “extremely underdeveloped”. There was a savings deficit as well, since poverty was rampant and widespread: a report in 1951, for instance, noted that “only some 10% of the population” were earning an income of over Rs200 a month.’

• China expands Shanghai free trade zone to pull in investment


C5. Workers (Inadequate Stats, Wasteful Transport, Unmodern Plantations, Services)

ee Workers attempts to correct the massive gaps and disinformation about workers, urban & rural, and their representatives (trade unions, etc), and to highlight the need for organized worker power

• Eran blames former Govt for reducing trust in CSE

“There is a complaint on the loss of Rs12bn of EPF money during that era. Capital losses incurred in Ceylon Grain Elevators, Piramal Glass, Galadari Hotel, and Laugfs Gas are widely known. Those days, Laugfs Gas was listed in the secondary board – Dirisaviya at the CSE.”

• 3wheeler Federation decides to operate without meters

Due to the monthly increase in petrol prices, the Lanka Self-Employed Professionals’ National Three-Wheeler Federation… facing difficulties when altering the meter rates each month due to the monthly petrol price hike… the govt is in the habit of revising the fuel prices according to the fuel pricing formula on the 10th of each month.” More than 150,000 three-wheelers are fixed with fare meters. Due to monthly fuel hike, we have to change the amount charged per kilometre,” he said.

• SL aircraft carrying 50% extra crew due union deal (note the text somewhat contradicts the headline?)

State-run SriLankan Airlines is carrying up to 50% extra crew above regulatory requirements on some aircraft types due to a collective agreement with unions…

• MR multiplied Public Service

“MR, during the SLPP inaugural convention, stated, “When I took office, there were 700,000 public workers. But when I gave over the country to the current government, we had about 1.5mn public workers in our workforce. We always believed graduates should be provided with jobs.” Is that GR’s vision for this country?’

Island Editorial – Presidential hopefuls and challenges

The education sector is in a shambles. School admissions are characterized by a mad scramble and corruption. Supplementary tuition has taken precedence over school education… crisis situations in the health and transport sectors, poorly managed socially welfare system. To hang or not to hang drug lords is not the only question that the country has to find an answer to.

• Global challenges and proto-fascism

“Moreover, the establishment is viewed as a bulwark of liberal multiculturalism. The new right-wing populists attack the public sector in favor of a vindictive capitalism that protects the investments of the few who have made it. They try to convince working class whites especially that they must exclude others to defend what they are in the process of losing. The social base of white supremacy, however, is staunchly (upper) middle class. Gotabaya doesn’t have a solution to the structural problem of Sri Lanka’s dependency. Instead, he proposes regime stability for investors. He and his supporters attack current PM Ranil Wickremesinghe for signing the country away. They are as desperate, however, to attract foreign capital. The ‘urban professional classes, retired military actors, and nationalist bureaucratic elements,’ as Ahilan Kadirgamar put it in his column in the Daily Mirror, identify with the mercantilist, competitive ideology of the proto-fascist base in the Western countries. That means advertising Sri Lanka as a paradise secured by a strongman.”


C6. Agriculture (Robbery of rural home market; Machines, if used, mainly imported)

ee Agriculture emphasizes the failure to industrialize on an agriculture that keeps the cultivator impoverished under moneylender and merchant, and the need to protect the rural home market. Also, importation of agricultural machinery, lack of rural monetization and commercialization, etc.

• State agriculture insurer fails – Abeyratne

The Agricultural and Agrarian Insurance Board, sole state sector insurer for agricultural risk management, has failed to achieve revenue targets due to management inefficiency and malpractices…

• Farmers turn 3w drivers, so sell farmland – Abeyratne

In Diyatalawa, the majority of tuk-tuk drivers were the farmers in the surrounding areas. Some of them have virtually abandoned farming to shift to the tuk-tuk business, while others have made farming a “part-time” work, in order to devote full time or more time for the tuk-tuk business. In addition, I found there were craftsmen such as carpenters, sales workers, and even retired public sector employees…

It is highly unlikely that farming in SL could guarantee an income as such, and a regular income. One of the major issues is related to “small-scale farming” practices in SL. On the one hand, the average farm size which is estimated to be little more than 1 acre, has been considered to be too small for an average family to produce a competitive output and to earn a sufficient income. On the other hand, even those small farm plots get fragmented from generation to generation and get smaller and smaller. Consequently, small-scale farming has increasingly become commercially unsustainable …much of the rural farm lands in Sri Lanka are under government ownership so that the farmers actually do not have the legal rights to convert it to a productive asset. This has prevented the long-term land consolidation too. The farmers too hold on to their “unproductive” lands, in spite of the lack of commercial viability.

• Reviving SL’s cascade tank system helps farmers cope with water shortages

The UNDP said the 7-year project ending in 2024 involves rehabilitating 325 reservoirs, of an ancient water distribution structure known as the cascade system. The selected 16 cascades consist of hundreds of small reservoirs known as “tanks”, all connected by irrigation channels.

• SL to re-take to state aquaculture areas for mangrove regeneration

Sri Lanka plans to re-take unused coastal areas released for aquaculture and salterns as part of a project to re-generate 10,000 hectares of mangroves.

• SL’s first Temperature & Humidity Controlled Warehouse Complex for Perishables will be opened in Dambulla in Oct this year, said Dr de Silva, the Indian govt has provided a grant of Rs300 mn and the SL government had to bear the balance cost of Rs225million.


C7. Industry (false definitions, anti-industrial sermons, rentier/entrepreneur, etc)

ee Industry section notes the ignorance about industrialization, the buying of foreign machinery, the need to make machines that make machines, build a producer culture. False definitions of industry, entrepreneur, etc, abound.

• Mahindra opens first automotive assembly plant in SL, expands global footprint

The CKD assembly plant was inaugurated by PM Ranil Wickremesinghe, his Cabinet of Ministers, Malik Samarawickrama, Indian High Commissioner Taranjit Singh Sandhu, M&M Ltd Managing Director Dr Pawan Goenka, M&M Chief of International Operations Arvind Mathew…Mahindra Ideal Lanka will localize 4: battery, tyres, seats, exhausts. The plant is expected to provide employment to about 200 people directly and indirectly over the next 2 years.

• India’s Nicobar container port plan seen threat to SL transhipment business

• ADB approves $160mn loan to modernize, improve efficiency of SL’s Railway Sector

Sri Lanka Railways moves 136.7 million passengers and 2 million tons of goods annually. However, the market share of the railway sector has progressively declined over the years…

• SL startups need to think Israel

 “Thanks to democratization of technology, modern day innovation is not limited and Sri Lanka should follow countries like Israel – the country with the most start-ups worldwide, Co-founder of SEAFUND, Manoj Kumar Agarwal told Business Times in an interview at the Kerala Start-up Mission in Thiruvananthapuram, India last month… major global companies including Microsoft, Google, Cisco, and Intel have research and development centres in Israel.”

SL generates 7,000 metric tonnes of solid waste per day, Western Province accounting for nearly 60% of waste generation. Each person, it’s estimated, generates an average of 1-0.4kg of waste per day

• Brandix’s state-of-the-art clothing factory reduces environmental pollution

The Brandix building at Batticoloa has been designed according to the US Green Building Council & American Society of Heating, Refrigerating & AIR Conditioning Engineers. (ASHARE)

• Computer Chips is the future business

“Dr Pradip K Dutta, Group VP of Synopsys Inc said 700 million people (!) who live in rural India below the poverty line have to come out of the doldrums by engaging with the electronic industry.” Referring to the US Intel company as the chip designer, he said Synopsys is found in the inner sanctum of sophisticated software that Intel manufactures as a tools company. Chips have become more complex as a collection of transistors in a miniscule chip contains billions of transistors that Synopsys helps design which is 70% of the company’s business. Synopsys Lanka  is a fully owned subsidiary of Synopsys Inc, Mountainview, CA, US.

• Hemas Hospitals opens a state-of-the-art laboratory in Seychelles

• Modi Govt plans to make India a $10trillion economy by 2032

One proposal is to temporarily slash the Goods & Services Tax (GST) on automobiles, which is currently in the highest slab of 28%. The government is also working on an attractive package for scrapping of old vehicles to boost auto sales, he said.

• Chinese-funded Gin-Nilwala project clouded by malpractices


C8. Finance (Making money from money, banks, lack of investment in modernity)

ee Finance tracks the effects of financialization, pointing to the curious role of ratings agencies, again false indices, etc.

Privatization of  People’s Bank exposed by Bimal Ratnayake, opposition

“Sri Lanka’s JVP and opposition legislators attacked an amendment to a governing law of state-run People’s Bank allowing it to raise debt capital and increase authorized capital exposing stark differences between the island and fast-growing Vietnam”.,_Vietnam_exposed_by_Bimal_Ratnayake,_opposition-3-15587-1.html

• Amendment of People’s Bank Act: Any sinister motive?

“The removal of the requirement to obtain the prior approval of the Monetary Board and the determination of the methodology of a debenture issue through the intervention of the Ministry appear to be a license to be granted to the Bank Authorities to freely decide the supplementing of any sum of funds through debentures. Judging from their performance over the years and the failure to put the bank on a real commercial footing sounds an alarm bell which should receive the attention of all.”

• Central Bank slashes rates to revive economy

• Sr Congress leader Chidambaram arrested for corruption, sent to CBI custody for 4 days

Senior Congress Party leader and India’s former finance minister Palaniappan Chidambaram, arrested from his Delhi house late Wed evening in the INX Media case, was today sent to four days in the custody of the Central Bureau of Investigation


C9. Business (Rentierism: money via imports, real-estate, tourism, insurance, fear, privatization)

ee Business aka ee Rentier focuses on diversions of the oligarchy, making money from unproductive land selling, tourism, insurance, advertising, etc – the charade of press releases disguised as ‘news’

• Unclaimed container mountain in Colombo port believed to contain global waste

There are as many as 1,000 unclaimed 40’ containers at the Colombo Port and most are believed to contain hazardous waste from other countries… He said that there was the danger of SL-Singapore Free Trade Agreement paving the way for more hazardous foreign waste being imported here.

• PM Modi appealed to middle-class sections of the population to plan to visit at least 15 domestic tourist destinations in the next 3 years, he appealed to small traders and shopkeepers to start insisting on digital payments.


C10. Politics (Anti-parliament discourse, unelected constitution)

ee Politics points to the constant media diversions and the mercantile and financial forces behind the political actors, of policy taken over by private interests minus public oversight.

• Dr NM Perera’s 40th death anniversary commemorated at Ruwanwella

“When the English rulers allowed the neglected rural people to die in their thousands during the malaria epidemic of the 1930s, it was NM and the LSSP leaders Colvin, Philip, Dr SA Wicks and Leslie, who took medicine and food to the affected people and saved their lives”… DEW Gunasekera, leader of the SLCP, gave a comprehensive account of the magnitude of the economic and political crisis facing the country. NM had balanced the budget, and reduced foreign debt. Prof Tissa Vitarana, leader of the LSSP, said that his party has given a set of policies to Mahinda Rajapaksa to solve the country’s problems… Dinesh Gunewardena, the leader of the Joint Opposition and the MEP, mentioned the role of NM and Philip in strengthening the state sector through the establishment of the People’s Bank, the NSB, DFCC and NDB, and the other Finance Institutions.

• Presidential Election: Into Anarchy or Out of Anarchy?

 “Jayawickrama has ridiculed both Gotabaya Rajapaksa and Sajith Premadasa, without mentioning their names… If, and only if, Sajith is selected as the candidate of the UNP and of the broader UNF coalition, Sri Lanka might evolve in a direction where the two major political forces (also others) could forge relative consensus on important issues in contrast to what appears as extremely divisive, manipulative, narrow and extensively foreign-aligned present regime of Wickremesinghe which has completely betrayed the aspirations of the 2015 change. If they fail, the JVP and the Left parties with the assistance of the people’s democratic forces should be ready to take the battle further. The immediate task however is to overcome the present anarchy in a democratic fashion and also changing the economic policy direction.”

• EC’s power to reject prez election nominations

If the Elections Commissioner has rejected a nomination under Section 14(1)(a), and an aggrieved party goes to court, the Supreme Court also must take note of the fact that the presidential elections law contemplates a very early decision. The lawyers will also have to demand that the Court take note of it. If there is a signed declaration by the candidate, the Commission cannot go behind that and conduct an inquiry whether that declaration is true or false. The Commission will then be looking beyond the “contents of the nomination paper.” If the Commission acts bona fide, it can only look at the contents of the nomination paper.

• Another secret game; Ranil concealed Presidential election amendments

• Will Sajith Remain or Split?

“Thanks to a cabal around Dudley… the UNP leader became paranoid… After the abortive JVP revolt of April 1971, JR began exploring – presumably from a class interest perspective – the possibilities of greater cooperation with the SLFP… While the major contradiction between Dudley and JR… the lesser contradiction between Senanayake and Premadasa cropped up… Premadasa wanted to cleanse the UNP of its traditional feudal-capitalist attributes and broad-base it into a party of the common man.”

• With Senaratne, among the other ministers backing Premadasa: Kabir Hashim, Malik Samarawickrema, Mangala Samaraweera, Thalatha Athukorale, Ranjith Madduma Bandara, Chandrani Bandara and Harin Fernando. Ministers backing Wickremesinghe are Sagala Ratnayake, Akila Viraj Kariyawasam, Ravi Karunanayake, Vajira Abeywardena, and Lakshman Kiriella…. Backers of Premier Wickremesinghe and deputy Sajith Premadasa met Minister Rajitha Senaratne, with Ministers Ravi Karunanayake, Champika Ranawaka, Naveen Dissanayake, Arjuna Ranatunga and representatives of the party wanting to form the Democratic National Front (DNF). There were heated exchanges, but no decisions were reached.

• Sajith an epitome of ‘clean’ politics: President

Sirisena said Housing & Construction Minister Sajith Premadasa was the only minister he met in the last 25-30 years in SL politics who had not stolen public funds, killed anyone or engaged in corruption.

• “Sajith received his education at St Thomas’ Prep School & Royal College before being enrolled in the Mill Hill private school in Britain for O-L. He joined the London School of Economics for undergraduate studies thus spending the greater part of his teens and 20s rubbing shoulders with elite British youth as opposed to rural & urban youth of govt schools & universities of SL.


• Presidential election – sleepwalking into anarchy?

Why is it then that, in full and complete knowledge of the purely ceremonial nature of the office of the next President, the major political parties are preparing to squander billions of rupees, and put at risk the personal security of thousands of citizens, in an island-wide election spread over 100 days, to choose the next President?… Does no one realize we could well have a President belonging to one party and a Prime Minister belonging to a different party, and a repetition of the shambolic relationship that now prevails between the PM and the President, the pantomime that we have been subjected to in the name of “yahapalana”?

• Gota-land? – Tisaranee Gunasekera

Mahinda Rajapaksa made a portentous statement to the Virakesari: “In reality, further to the (19th) constitutional amendment, the PM has more powers. I’m the Prime Ministerial candidate. So we have to work together”

• The case for a Sajith Premadasa Candidacy

Sajith is the only UNPer who has the bitter battle experiences of fighting the popular and powerful Rajapaksa clan on their own home turf, the patriotic Ruhuna.

• Gotabhaya Rajapaksa: Presidential candidate like no other

There are also swirling news stories that PM Ranil Wickremesinghe is secretly helping Gotabhaya Rajapaksa to navigate the citizenship traps that were supposedly inserted in the 19th Amendment to stop the Gotabhaya candidacy.

• Give second-preference to DNF/UNPer to halt Gota: Tick both preference 1&2 – David

Ceylon Tamils, Muslims & Upcountry Tamils (let’s add Catholics to round off) add to about 30% of the population. If these minorities vote as a block against any candidate, as happened to MR in 2015, he is finished.

One consumer, One vote?

“Consumers of Colombo make purchase decisions on a different parameter to the rest of the country. Democracy, freedom of media, equality in front of the law can be strong triggers that induce brand selection in Colombo whilst out of Colombo will be more basic criteria like cost of living, roads built, etc… a typical rural consumer, who is almost 80% of Sri Lanka, has a mindset that is totally different.


C11. Media (Mis/Coverage of economics, technology, science and art)

ee Media shows how corporate media monopoly determines what is news, art, culture, etc. The media is part of the public relations (corporate propaganda) industry. The failure to highlight our priorities, the need to read between the lines. To set new perspectives and priorities.

• Why nationalization signals ‘The End’ of the film industry

“Now that film distribution has been nationalized, Sri Lankan consumers may have to bid farewell to their beloved Marvel, DC, and Disney movies. [ee – this fool really thinks Marvel, DC and Disney are “our film industry”: it shows who she’s batting for.] In 1971, the then government stepped in and centralized all film distribution under the NFC. The result was the performance of the industry declining, as highlighted in the 1997 Senaka Bandaranayake committee report.”

• What the data reveals – Groundviews

During the constitutional coup in Oct last year, those who supported the unconstitutional PM wanted elections no sooner than they realized the courts wouldn’t uphold the President’s actions. This was distinct in the data… the support and interest, for whatever reason, the UNP generated during the 52 days of the constitutional coup, has evaporated…


D. A Very Personal Ingrisi History of the World _____________________________________

1870s: The Great Divergence (continued from A4 above)

• A large proportion, if not the majority, of settlers from European countries were now agricultural laborers, tenants & poor tillers, general laborers, & domestic servants, displaced by capitalism. Waves of emigration raised wages in England’s rural areas and declining occupations, easing their urban crisis. They also accelerated the rate of urbanization of the remaining population and left European countries with a proportionately larger fraction of a skilled labor force. Mass migrations were driven by the increase in population growth rates in most European countries, resulting from declines in mortality, and by the prospect of earning higher incomes in the US.

Democratic struggles by workers and other poor people plus public action improved the standard of living of some nations. The state and society in major European countries, with Scandinavian countries as pioneers, pushed schemes for public education, for relief of distress through poor laws and other basic social insurance schemes, creating new public health facilities for more masses. Breakthrough in controlling infectious diseases after the discovery by Louis Pasteur and Robert Koch of the germ theory of disease and spread of public health throughout the industrial towns.

• The need to maintain industrial & military competitiveness or outdo socialists produced legislation and public action. In Germany, social insurance was introduced by Bismarck, accompanied by repressive, antisocialist legislation. Sweden & Norway were rich in human capital, agricultural land & other natural resources, but poor in industrial capital and production. They became industrial nations via access for many of their agricultural, forest, and mineral products to fast-growing English markets, which expanded through the surpluses transferred from the colonies, and returns of English investment overseas. Vast numbers of Scandinavians also emigrated to European overseas settlements, US, etc.

• Average European, N American, Australian or New Zealander outdistanced most other human beings in health & longevity, 1870s-1945. The tributary surplus along with the capitalist profits from the North Atlantic seaboard supported the luxury of the European upper classes, and helped clean up the cities and bring down mortality rates in Europe. Delivery of the new private and public health system to N Atlantic seaboard was not due to internal developments, but the unequal interdependence into which England (the first-mover capitalism of Europe) had entangled the rest of the world to permit the resources generated by the labor of the non-white populations of other continents to be sucked into the project of further accumulation comprising investment in both physical and human capital in Europe and the overseas lands settled by Europeans.

– Excerpts from A Very Personal Ingrisi History of the World, Krisantha Sri Bhaggiyadatta


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This site was inspired by the dedicated scholarship and work of S.B.D. de Silva, author of "The Political Economy of Underdevelopment"

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