Opinion A third victory

The main opposition United National Party (UNP) is likely to win 59 seats,and the Marxist-nationalist Janatha Vimukthi Peramuna (JVP,or People’s Liberation Front) seven. The main Tamil party Ilankai Tamil Arasu Kadchi,which represents the old Tamil National Alliance (TNA),won 14,all from the north and east where Tamils form the largest single ethnic group. The TNA was considered a surrogate for the Liberation Tigers of Tamil Eelam (LTTE),defeated militarily last May.

In recent elections in Sri Lanka the misuse of state resources and state media by the governing party has become the norm,and this election was no exception. However,the opposition has accepted that the poll itself was fair.

Rajapaksa interprets the victory as an endorsement of his programme called “Mahinda Chinthana” (Mahinda Vision). With regard to the Tamil ethnic issue,Mahinda Chinthana is for the current provincial councils but only within a unitary state. That means significant devolution — that the Tamils,backed by Delhi,want under a more federal dispensation — is unlikely to happen.

Rajapaksa was a leading critic of the evils of the “authoritarian” executive presidency when he was in opposition. Mahinda Chinthana talks in vague terms of converting the executive presidency to a “trusteeship” but it is unlikely that anything meaningful would be done to scale back the office’s powers.

However,Rajapaksa may want to get rid of the two-term limit on the presidency — an ambition that his predecessor Chandrika Kumaratunga also had,but failed to achieve. Rajapaksa is much better placed than Kumaratunga to do this because he needs only about half a dozen MPs to cross over from the opposition to give him the two-thirds majority to change the constitution. He is likely to get them by offering ministerial positions and other perks.

Rajapaksa’s main challenge will be to raise the quality of governance and improve the economy. Mahinda Chinthana promises to create a “society with high values,free from corruption and fraud” although his first term was marred by allegations of widespread corruption extending to the highest levels,and a failure to protect the integrity of the Bribery Commission that is the main instrument in the fight against corruption.

Rajapaksa also talks in grandiose terms of making Sri Lanka the “emerging wonder of Asia.” Certainly,his administration has made a major effort to improve economic infrastructure,including power,roads,and ports. In the past few years western donors have scaled down assistance to Sri Lanka even as India and most notably China have become major donors. The latter accounted for $1.2 billion,or 50 per cent of total assistance,in 2009.

Despite the global recession,economic growth has remained positive for the past two years. Tourism picked up after the war ended. Inflation is low. The IMF gave a standby loan of $2.6 billion in May 2009 when foreign reserves fell to a precariously low level — below $1.0 billion,adequate only to finance about three weeks worth of imports. Since then reserves have risen to over $5.0 billion.

However,the government has failed to keep to its fiscal targets. In 2009 the budget deficit to GDP ratio was supposed to be 7.0 per cent,but owing to a fall in tax revenue and an increase in spending the actual turnout was 10.2 per cent. The IMF has suspended the third tranche of its loan until the 2010 budget is presented to the new parliament later this month. Rajapaksa faces the politically difficult task of having to cut spending and raise taxes. Recent record increases in natural rubber prices and a good tea crop may help to ease the pressure.

However,there is another danger looming in the horizon. On account of unsatisfactory human rights conditions in Sri Lanka,the EU has decided to suspend,effective August 2010,the tariff concessions given to the country in 2005. Unless Rajapaksa takes some difficult decisions — such as reactivating the Constitutional Commission established in 2003 under the 17th amendment to the constitution to improve governance — he will have a difficult time delivering on his economic promises.

The author is executive president of a Kandy-based think-tank