Part III of the Central Bank Anniversary Oration Central Bank should play role of a smart wife to mo

The story so far

 Monday, 17 September 2018

In Parts I and II of this series, it was presented that Central Banks, created by society and not by politicians, have the mandate to preserve the value of money which the public holds on trust. The Central Banks could do so by producing money by using a prudent formula. That formula requires them to produce the required quantity of money to facilitate the economy to conduct the growing volume of transactions with the expansion in trade and output.

If they produce more money than necessary, the excess money, in a small open economy like Sri Lanka, will cause the demand to exceed the supply. Since the supply in the short run is insensitive to the quantity of money, it leads to an increase in the prices causing a decline in the value of money. In addition, in an import-dependent open economy, a part of the increase in money will flow out of the country, generating balance of payments difficulties and eventually putting pressure on the exchange rate to depreciate.

It is the profligate budgetary policies pursued by Governments that compel Central Banks to produce more money than necessary. In view of this risk, Central Banks throughout the world have been given a degree of independence from the Government. In the case of Sri Lanka’s Central Bank, the Parliament which enacted the Monetary Law Act under which the Central Bank has been established has given independence to the Bank with respect to its policies, budget and key personnel.

However, to exercise this independence, it was pointed out that that those who run the Bank should be nurtured in an independent culture, facilitated by an independent institutional framework. Yet, the recent commentators on Central Banking have pointed out that Central Bankers could be classified under four categories.

First it is the hawks, who believe that the value of money should be protected by not producing money more than necessary. Hence, they seek to protect the independence of Central Banks by saying ‘no’ to governments’ demand for printing excessive money. The second category, called doves, is in the opposite. They believe that money should be printed to support economic growth, and therefore the Central Bank should follow an active money printing policy. The third, called swingers, will vacillate from one view to another, depending on the benefits they could harness by taking a particular stand, hawkish or dovish. The fourth category is ‘pigeons’ who would seek to protect the Central Bank while making peace with the governmental authorities.

Today, we will present the last part of the series.


Central Banks’ wider role: Government oversight needed

Historically, Central Banks have assumed a wider role in their respective economies than their main mandate of ensuring price stability. Thus, whenever a government had faced the problem of finding a suitable institution to handle a specific issue, the Central Bank had been the obvious government saviour. They have ranged from handling financial system stability to managing superannuation funds.

In the case of the Central Bank of Sri Lanka, two co-objectives and many other ancillary functions had been assigned to it from time to time. The co-objectives added to it in an amendment effected to Monetary Law Act in 2002 requires it to attain ‘economic and price stability’ and ‘financial system stability’. The scope of this latter function has been widened considerably after the global financial crisis of 2007-8. Accordingly, when the financial sector is in distress, the Central Bank as its regulator is required to work in close collaboration and consultation with the Government to preserve its stability. Today, a Central Bank like the Central Bank of Sri Lanka cannot just be content with addressing only macro-prudential issues relating to a financial system. It is required to pay equal attention to micro-prudential regulatory aspects as well.

In that game, in the first place, a Central Bank cannot allow banks which are ‘too big’ or ‘too important’ to fail in the market. In the second place, given the current socio-political situation in the country, it cannot allow even banks which are ‘too small’ to fail as well. Rescuing such a failed bank requires the infusion of both liquidity and capital.

Central Banks can provide liquidity through their normal liquidity windows without compromising their price stability objective and entailing long term adverse implications on their role as the regulator of the banking system. However, the provision of capital by a Central Bank for a failed bank has adverse implications for both these functions. It amounts to the Central Bank expanding the monetary base permanently, on the one hand, and getting into playing the role of both the ‘player and referee’ simultaneously, on the other. Hence, that capital should come from the Government.

As Charles Goodhart, member of the Monetary Policy Committee of the Bank of England and formerly an economist at the London School of Economics, had argued in a paper presented to the Bank of International Settlements on the changing role of Central Banks in 2010, “Government insurance of the systemically important parts of our financial systems will remain in place for the foreseeable future. As the ultimate provider of such insurance, governments will want, and need, to maintain a close involvement with the conduct of systemic stability”.

In addition, the other functions of the Central Bank, namely, handling the public debt, managing foreign exchange and operating the payment and settlement, too should receive close government oversight. Increased government oversight means compromising the Central Bank’s independence. But it is unavoidable, given the expanded workload of a Central Bank.



Inflation targeting and Central Bank independence

Today, there is another important development which brings the issue of Central Bank independence to public debate. That is the adoption of a new monetary policy management system called ‘inflation targeting’ by Central Banks. In inflation targeting, as is well known, a Central Bank will take measures to control inflation directly, by announcing publicly a low inflation target for a number of years and stick to it no matter what pressure is brought on it by outside forces.

This is a more credible way of conducting monetary policy, since a Central Bank working under the inflation targeting regime has to take full responsibility for its success or failure. Previously, when the actual inflation rate exceeded the Central Bank’s target range of inflation, there was always space for it to pass the blame on to an outside party such as the Government.

But for a Central Bank to take full responsibility, it should have freedom to decide on monetary policy independently of the Government’s fiscal operations. This requires the Government Budget to be independent of the Central Bank, more than the Central Bank being independent of the Government. For that, the Budget should go through a number of reforms. First, it should build a stable and growing revenue source. Second, it should cave in profligate expenditure programs. Third, it should pursue a more credible deficit management system. Fourth, it should develop its own borrowing power outside the central bank to meet its financing requirements. Fifth, there should be a broad political consensus to continue with this type of budget consolidation policy as a matter of national importance.

The attainment of this last requirement may be difficult, but not impossible. A similar type of budgetary policy was adopted successfully by Singapore’s old guard in late 1960s, as revealed by Goh Keng Swee, the city state’s first Finance Minister, in an article published in 1992. According to Goh, the Singapore’s old guard did not believe that Central Bank credit could bring in prosperity to Singaporeans. Prosperity came through hard work done by them at all levels of society as students, undergraduates or workers.

More recent examples of disciplining the budgets have come from Thailand and the UK. According to the data relating to the annual budget deficits in Thailand, as tracked by the Federal Reserve Bank of St Louis, after the financial crisis of 1997-8, there has been an increase in the budget deficit to 9% of GDP in 1999. But since then, the progressive consolidation of the budget has reduced the deficit gradually converting it to a surplus 1% of GDP by 2003. Since then, the budget has vacillated between surpluses and deficits but remained within a corridor of 3% of GDP. In the UK, despite it being a coalition government, the budget deficit which amounted to 10% GDP in 2010 was progressively and gradually reduced through a tight fiscal program since then. In 2017, it was only 2% of GDP.
Sri Lanka’s move toward a flexible inflation targeting system

The present management of the Central Bank has resolved itself to adopting a flexible inflation targeting system, and is now in the process of converting its policy architecture to facilitate its full implementation shortly. The details of this system have been presented by the Bank in Box Article 01 of its Annual Report for 2016.

This is a policy measure taken by the Bank in the correct direction. It also has received the government’s acceptance as announced in its Vision for 2025. Admitting for the first time that loose fiscal, monetary and exchange rate policies in the past aiming at boosting short-term economic growth without introducing the needed structural adjustments have been the cause of the present economic malaise, the Vision document has pledged to introduce the necessary legislative and operational changes to facilitate the implementation of the flexible inflation targeting system by the Bank.

The necessary legislation requires the enactment of a new Monetary Law Act with restraints for the Bank to monetise the fiscal deficits. In other words, the Government, while making the Budget independent from the Central Bank through fiscal reforms, should grant more operational autonomy to the Bank.



Independence should be followed by accountability

However, independence without accountability will have the adverse repercussion of creating a monster within the sovereign Government of Sri Lanka. That will not be acceptable to either the political authority or to the public. Hence, greater public scrutiny and oversight should be exercised over the work of the Central Bank once it is granted a greater degree of autonomy. There are a number of ways to introduce greater accountability in the work of the Bank.

First, it is necessary to introduce a nomination, screening and selection process for the Governor and the board members, as is being done in the case of the Bank of Canada or the Bank of England. The present method, though it is not a reflection on the incumbent office holders, is marred with the possibility of subjugating themselves to the wishes of the political authorities which have appointed them.

Second, the administration and financial works of the Central Bank should be transparent and fully disclosed to the public. At present, such a disclosure policy has been adopted by Bank of Canada with respect to foreign travel and entertainment by senior officers and board members of the Bank. Third, provisions should be introduced to facilitate the Central Bank management and the board to present and clarify the rationale and objectives of the Bank’s policy measures to special Parliamentary committees that should be supported by experts in the field. This type of public oversight will serve to check on the behaviour of those who run the Central Bank.
Conclusion

In conclusion, it should be recognised that in a sovereign state there cannot be another sovereign institution. Hence, the independence of the Central Bank should be subject to public oversight. While the Bank should collaborate with the government, the government should also learn to appreciate the important service being performed by the Bank.

The political leaders are difficult customers and Central Bank managements would find it difficult to put the rationale of their policies across to them effectively. The solution suggested by the first Sri Lankan Governor of the Central Bank, the late Mr N U Jayawardena, was that the Bank should keep on nagging the Government until it begins to realise and appreciate the Bank’s position. It has also been argued that the relationship between the Government and the Central Bank should be that of a husband and wife.

A good wife will see to it that what husband does is for the overall welfare of the family. However, in my view, the wife should be a smart wife and not merely a good wife. That is because a good wife, having accommodated the demands of the husband may run the risk of being pregnant every year, whereas a smart wife could at least have a gap between pregnancies.
(W A Wijewardena, a former Deputy Governor of the Central Bank of Sri Lanka, could be reached at waw1949@gmail.com )

Ragging: A Youth Excitement Turned Sadist Ritual

By Ameer Ali –SEPTEMBER 17, 2018

Dr. Ameer Ali

Ragging in the universities of Sri Lanka, India, Bangladesh and Pakistan is an imported Oxbridge tradition from British colonial days. It originated as a week of initiation to new entrants, so that they may socialise with their seniors and get acclimatised to habituating in a new environment of highly motivated young adults. By the time a student qualifies to receive education at tertiary level in these countries that student is at least on the verge of crossing his or her teen years to enter adulthood. Thus ragging as a form of harmless teasing and rough jokes played on new arrivals became a test of social gregariousness without endangering the recipient’s physical and mental traits. At the end of that week of initiation all undergraduates, from the first to the final year, are expected to become a unified community sharing the values of a cultured young elite. This was, in essence, the story of this imported tradition introduced even in the days of the University College at Maradana. Who introduced it is still a mystery. Even the general public tolerated the youngster’s innocent pranks from which they themselves at times had a good laugh.

Today, and tragically, that cherished, harmless and youthful amusement has become a sadist and maniacal ritual causing psychological trauma, physical torture and mental humiliation to freshers. Some of the sordid and morally debased incidents of ragging that had left permanent scars on the lives of dozens of first year students and that had received wider publicity are, in actual fact, symptoms of a cultural and moral sickness untypical of any civilized community. This is not to paint the entire community of undergraduates with the same accusatory brush. However, there seems to be a notable number of uncultured juvenile elements entering universities and other institutes of higher learning, including privenas and surprisingly the security forces, who do not deserve to be there in the first place. The disease has become endemic. How did this come about?    

University education in Sri Lanka, which was once the fortress of an English speaking urban elite, was democratised in the nineteen sixties and made available to all students who were academically qualified to receive it. In the context of the time it was a welcoming change. Language was made no barrier, although without proficiency in English Sri Lankan graduates will find it difficult to enter today’s globalised professional market.  Students from rural areas are now entering in large numbers to more than a dozen state universities partly because of lowered entry requirements. This is where the problem arises. Successive governments started cutting corners to promote their populist agenda. Instead of allocating sufficient resources and concentrated effort to raise the standard of teaching and learning in provincial schools, governments simply adopted the option of lowering entry criteria for university entrance, which enabled even mediocre students have access to higher learning. In order to cater to the intellectual level of these under-achievers even professors had to lower their teaching standard, which consequently deprived the more capable students from getting the best out of university learning. This is a point often misses the attention of policy makers. (I am stating this from personal experience). Over the years, as senior academics retired the new generation of lecturers had to come from a pool of graduates who were not necessarily the best talented academically. No doubt there were brilliant exceptions to this general observation.

However, standard of university education declined as a whole, academic courses became less rigorous and examinations less demanding. Libraries, where undergraduates are expected to read and research transformed into venues for gossip and romance. Students were left with plenty of time to engage in activities totally alien to academic life. For some senior students ragging provided an opportunity to vent their frustration over a prospective vacuous future. To put it bluntly, what does it matter to a student whether he/she spends three, four, five or even six years to complete a general degree when that student is going to be unemployed at the end of it? On the other contrary, if a student could see a promising future at the end of the university career and if that student realises that the opportunity cost of that future becoming costly by prolonging the stay in the university, then that student’s attitude and behaviour is bound to change. As things are now there is an aura of hopelessness among undergraduates in Sri Lanka. Ragging may be one of the expressions of that hopelessness. In this sense, it may be argued that ragging at present is actually a symptom and not the disease.       

Ragging has discouraged many an exceptional student with excellent entry qualifications from entering state universities. Several who entered later dropped out because they did not want to fall victim to this sadist ritual. How can parents who sacrificed everything for the sake of their son or daughter tolerate the child being molested, tortured and harassed by a mob who has no empathy for human feelings?    

In addition to the academic decline there is also a breakdown in student discipline. In this breakdown national politics played a crucial role. Politics is the bane of the country impinging into almost every sector of life. With an explosion of undergraduate population university campuses became recruiting centres for political party foot soldiers. In the competition for party recruitment ragging has become a weapon to be utilised discriminatingly between supporters and opponents. This actually turned ragging into a form of gang war. If leaders of these gangs were taken to task by university authorities their party headquarters from outside brought pressure on the disciplinarians to get their supporters pardoned. If the incident was reported to the police and went to a court of law there again politics entered to rescue the accused. Ragging in this context reflects the general deterioration of law and order in the country.

Can this cancer be eradicated? Not in the immediate term, but certainly in the medium and long term provided fundamental reforms in the nation’s education system are undertaken in order to upgrade the quality of teaching, learning and examining, while university authorities are empowered to tackle indiscipline without interference from political leaders.  In the current state of play both seem to be impossibilities. To start with, how can one expect a parliament populated by representatives, a significant number of whom have not completed even the intermediate level of education successfully, to comprehend the values of higher education and need for reforming the system? Will such representatives have any clue of what university education is all about? Their behaviour in the parliament itself is a kind of ragging. Secondly, even if the minister of education with a team of dedicated civil servants and educationists embark on reform plan, will that minister be able to command enough financial resources from the treasury? True, there was foreign assistance before to improve the quality of higher education but ragging was not an issue seriously considered at that time. Without a willingness to tackle this cancer no reform will yield its desired results. What is needed is a bipartisan commitment on the part of the government and opposition to sacrifice their populist agendas in the interest of future generations and win back not only the nation’s lost prestige in higher education but also create a conducive environment for staff and students in our seats of higher learning.    

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On Shifting Sands in Sri Lanka

The dangerous disconnect between politico-social liberalism and politico-economic democracy seems to be informing many of the government’s economic policies. Sans popular support, democracy cannot survive.

by Tisaranee Gunasekara- Sep 16, 2018

“Without liberty, the understanding would be to no purpose, and without understanding, liberty (if it could be) would signify nothing.” ~ Locke (An Essay Concerning Human Understanding)

( September 16, Colombo, Sri Lanka Guardian) The Economist Intelligence Unit (EIU) doesn’t always get it right. In May 2018, it predicted that Nawaz Sharif’s party, PML-N, will win Pakistani elections scheduled for July. That was wrong. In April 2016, it predicted that Hakainde Hichilema will win Zambian elections scheduled for August. Wrong again.

According to the EIU, the SLPP win most parliamentary seats and form a government while an associate or relative of Mahinda Rajapaksa will win the presidential election. A reasonable prediction given how badly the Sirisena-Wickremesinghe government is failing.

More than 600,000 Lankans in 11 districts are severely affected by the drought. One wouldn’t think so, listening to President Sirisena’s cashew-diatribe or watching Premier Wickremesinghe’s antics, from Gam Peraliya to turning the Temple Trees into a wedding destination for a brief hour of ignominy. This is not good-governance, not even by the most generous stretch of the term. This is stupid-governance, characterised by ineffective policies and clownish acts.

The dangerous disconnect between politico-social liberalism and politico-economic democracy seems to be informing many of the government’s economic policies. Sans popular support, democracy cannot survive. To gain and maintain that popular support, democracy must be able to satisfy “the relatively modest expectations of everyday life.”[i] Austerity measures work politically only if they are perceived to be shouldered by all. When a disproportionate share of the burden of budget cuts and tax increases are imposed on those at the bottom of the income totem pole, austerity can undermine governments and destabilise political systems.

“The Sri Lankan government should undertake an assessment of the human rights impact of both its economic reform policies and infrastructure projects.”[ii] Juan Pablo Bohoslavsky, the Independent UN Expert on the Effects of Foreign Debt on Human Rights, opined after his recent visit to Sri Lanka. He also talked about the need to maintain social spending and implement progressive taxation. Excellent advice, if only the government has the brains to understand.

In this month alone, the price of flour and all flour-based products went up; the government increased the price of fuel, again, and announced an increase in train fares, two measures which will further burden the already overburdened segments of the populace, including the drought-stricken. There is not even an acknowledgement about the economic pain of the people. The President, the PM, the Finance Minister and the ministers sound tone-deaf whenever they speak, as if they inhabit a different plane of existence.

Into this breach, the Rajapaksas will step in.

Racial and religious fears find fertile grounds in high prices and emptying pockets. The Rajapaksas will exacerbate this discontent with fake news and extremist rhetoric, direct it and ride it to power, proving the September forecast of the Economist Intelligence Unit right.

Who will wear the crown?

Thomas Paine said, “It is the pride of the kings which throws mankind into confusion.”[iii] In our times, it is often the idiocy of democrats which enables kings to re-emerge and throw mankind into confusion.

A curious statement by the Director of the government’s Information Department indicates the irrational landscape on which next elections will be waged. The statement debunked a piece of fake news being disseminated over the internet – that 250 Indian families have been settled in the Nedunkerni village.[iv]

Sri Lanka has no real immigrant problem, the way the West has. Yet an issue is being manufactured out of this non-existent problem, adding new layers to old Sinhala-Buddhist insecurities. What we are witnessing is the deliberate irrationalisation of the political discourse, and, through that, the electoral landscape. When fake news is used to generate fear, and that fear is used to sow confusion in public spaces, the door is opened for politics of salvation, and for that mythical strong leader who can deliver us from evil aliens.

The leader as exorcist and saviour – a role tailor-made by the Rajapaksas for the Rajapaksas.

“My son [Namal Rajapaksa] can’t be a presidential candidate since they have now raised the minimum age to 35 years, instead of 30, so he can’t be considered in 2019,” Mahinda Rajapaksa told The Hindu. “My brother is certainly a contender.” Had the 19th amendment not included that clause, Mahinda Rajapaksa would have anointed his eldest son as the SLPP’s presidential candidate. Given the monumental stupidity of the Sirisena-Wickremesinghe administration, Namal Rajapaska could have become the next executive president in Sri Lanka.

A sobering thought, that.

According to Manthri.com, a website monitoring the performance of Lankan parliamentarians, Namal Rajapaksa is not among the top 10, 50 or even 100. He is ranked 146 out of 225[v], which places him firmly in the category of non-performers. He did no better in the theatre of street politics. The Janabala Meheyuma – and its inevitable failure – is symbolic of a young man who tries to stride like a colossus in shoes way too big for his dainty feet.  During his years in the political limelight, the eldest Rajapaksa scion has said or done nothing to demonstrate even a minimal capacity to hold a position of power with responsibility. Yet, according to his father, age is the only factor which renders young Namal unsuited to presidency. That is how politics of hereditary rule works.

Whether the 19th Amendment can save Lankan democracy – or not – remains to be seen. But it has saved Sri Lanka from the burlesque rule of a Baby Doc. A Namal Rajapaksa presidency would have degenerated into a deadly farce within weeks. That tragicomic future of a president swaggering about, on paternal stilts, need not be feared, at least not till 2025.

The Rajapaksas remain today what they always were, a Family Inc. There might be others in the SLPP more suited to the position of presidential candidate than a Rajapaksa offspring or sibling, but like in any monarchy, they are disqualified by the fact of birth. Whatever the Rajapaksas occupy, be it a political party or a country, it becomes their fief, a wholly family-owned entity which can be ruled only by a born-and-bred member of the family. However hard the non-Rajapaksa leaders of the SLPP labour, they will always be debarred from the summits by a feudal-ceiling.

Had the Sirisena-Wickremesinghe government stayed halfway loyal to its mandate, the Rajapaksa spectacle would have been nothing more than a source of amusement. Safe in a democratic Sri Lanka, it would have been possible to laugh at the shenanigans of fathers, sons, brothers, uncles and nephews, our very own political reality show. But the government has lost all sense of direction; it has no political, economic or moral compass. Abandoning one’s own mantle and trying to steal the opponent’s mantle doesn’t work, as the disastrous performance of the Swedish Social Democrats demonstrates.

“These are unsettled times for democratic politics,” Chantal Mouffe wrote commenting on Sweden[vi]. In countries like ours, where when bedrock institutions are absent or weak, times are dangerous. If the Rajapaksas return to power – and they have an excellent chance of doing so – Sri Lanka will cease to be a democracy, again, this time probably for a long time.

The Exorcist-Saviour

The DA Rajapaksa museum case is indicative of how dictatorial rule works in reality. The Rajapaksas, in pursuance of their dynastic project, created a museum for their parents in Hambantota.[vii] It would have been non-controversial, commendable even, had they used their own money or raised funds via the Rajapaksa Foundation. Instead public funds were used for the purpose to the tune of more than Rs. 80 million.[viii] A part of this money was repaid by the Rajapaksa Foundation, but only after the family lost power. There is 40 million more due.

That is how ‘efficient dictators’ work in practice.

The myth of the efficient dictator is just that – a myth, deliberately created by actual or would-be dictators. It seems to have originated in Italy, with Mussolini’s promise to turn the Italian Railway into the best in Europe. He didn’t. But in an audioscape where counter-voices were criminalised and banned, any lie could flourish and even become embedded in the collective memory as ‘facts’.

The ‘Strong Leader’ myth really flew with the birth of Asian Tigers. The main reason for the miraculous development achieved by East Asia’s NICs (Newly Industrialising Countries) was geo-politics. Sans the Cold War, the Chinese Revolution and the Korean War, the Tigers might have been just ordinary cats. The West needed economic successes to counter the gathering ‘Communist’ influence in East Asia. A version of Marshall Plan was implemented, especially in South Korea and Taiwan. “Taiwan became a key post on the West’s defence perimeter… Over the 1950’s economic aid equalled about 6% of GNP and nearly 40% of gross investment.”[ix] American aid financed more than 80% of South Korean imports in the 1950’s.[x]  Americans, so hostile to land reform in the rest of the world, championed sweeping land reforms in South Korea and Taiwan, which did much to settle the ‘peasant question’ and combat rural poverty. The NICs could become industrialised in such a short time because a super power was willing to provide them with investments and markets. Thanks to American generosity, the NICs could undertake developmental measures without imposing politically destabilising burdens on the masses.

That was how Chiang Kai-shek became transformed from a failure in China to a spectacular success in Taiwan.

Most of Asia, Africa and Southern America lived under civilian or military dictators until the 1990’s; none of them reached the developmental heights achieved by the NICs. That in itself should suffice to debunk the mythical nexus between dictatorship and development. But in the politically motivated populist retelling of the Asian-Tiger story, these facts are ignored; sole focus is on tough rulers and obedient people. If you want to become the next Tiger, get yourself a good dictator, the aspirant dictators (and their supporters) tell populaces tired by the ineptitude of democratic governments.

This is essentially what Ashok Pathirage of the Softlogic fame did at a forum organised by the International Chamber of Commerce in Sri Lanka (and names Fireside Chats, in imitation of former American President Franklin Roosevelt’s series of radio shows.) “We need a strong leadership; what we need is a little bit of a dictator.”[xi] Mr. Pathirage did not say who he had in mind to play the role of a ‘little bit of a dictator’. There was no need. Mr. Pathirage, like Vendaruwe Upali Thero, is obviously waiting for the return of the Rajapaksas in general and a Gotabhaya Presidency in particular. It is instructive to remember that the Hitler analogy was birthed not by the critics of Gotabhaya Rajapaksa, but by one of his most fervent admirers.

The love affair between dictators and crony capitalists is both old and universal. Dictators have their favourite capitalists. Such favoured ones can grow, at the expense not just of the general public but also of the rest of entrepreneurs, especially the less/non-connected ones. Like in every other sphere, in the economy too, dictators will enact policies which are good for themselves and their entrepreneurial cronies. They will implement those policies with little regard to public sentiment or rules and regulations.

Adolf Hitler mesmerised the land of Goethe and Beethoven to the mouth of abyss and beyond. Fortunately for Sri Lanka, Gotabhaya Rajapaksa lacks such powers of mesmerisation. He cannot win the presidency without the charisma of Brother Mahinda and the organisational capacity of Brother Basil. Like in any family-centric organisation, the various kin-rivalries will plague the SLPP for a while. The comedic failure of Namal Rajapaksa’s bird-brained attempt to capture governmental power by bringing busloads of supporters to Colombo was a result of just such a rivalry. But in the end, the family is likely to unite, offering some brother as the exorcist-saviour of the nation. Driven to insanity by the Sirisena-Wickremesinghe administration’s misrule, the voters would trample to the ground the not inconsiderable democratic achievements of the last three years, and rush to embrace the ‘good dictator’.

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[i] Eric Hobsbawm – Revolutionaries

[ii]https://www.thehindu.com/news/international/assess-human-rights-impact-of-reform/article24928414.ece

[iii] Common Sense

[iv] http://colombogazette.com/2018/09/11/sri-lanka-denies-reports-it-settled-250-indian-families-in-a-village/

[v]http://www.manthri.lk/en/blog/posts/parliamentary-activity-of-mps-most-discussed-in-social-media-this-week–6

[vi] https://www.theguardian.com/commentisfree/2018/sep/10/populists-rise-progressives-radical-right

[vii] https://www.youtube.com/watch?v=yPE7sWf2tmM

[viii] https://www.colombotelegraph.com/index.php/da-rajapaksa-foundation-owes-slrdc-rs-47-million-for-rajapaksa-memorial/

[ix] Models of Development: A Comparative Study of Economic Growth in South Korea and Taiwan. Edited byL Lawrence Lau and Lawrence Kilen

[x] Two Koreas, One Future? – edited by John Sullivan and Robert Foss

[xi] Top Business Tycoons Frustrated with Government Policy Inconsistencies – Financial Times – 31.8.2018

Fake news: Democracy in danger

Jeevan Thiagarajah-Monday, September 17, 2018

In 2014, at the World Economic Forum, the rapid spread of misinformation online was considered the 10th top trend in terms of global significance.

Fake accounts on social media (i.e. those which either do not have a human user behind them, or are run by a human who pretends to be someone else) are the foot soldiers in this form of warfare. They can be used to amplify messaging and force hashtags into the trending lists. On occasion, they can be used to intimidate or block other users.

The online falsehoods and false accounts detailed above can be used in short-term and long-term ways. Short-term uses focus on a specific event, such as a vote, demonstration, natural disaster or security incident, and attempt to achieve an effect by the massive and sudden deployment of false stories or accounts.

Longer-term operations typically focus on promoting or attacking a particular point of view. This can range from partisan and one-sided coverage, through hate speech, and into incitement to violence. In extreme cases, online hate speech can be a contributing factor in individuals’ decision to commit terrorist acts. This was the case of British citizen Darren Osborne, who drove a van into a crowd outside a North London mosque in 2017, and who was found by a judge to have been “exposed to racists and anti-Islam ideology” via Twitter.

For Sri Lanka, election campaigns and tensions between different social, religious, political, economic and ethnic groups are likely to be the main targets of any such attempts, as the campaigns tend to gradually inflame tensions and hollow out the political centre at the expense of the fringes. Relations with neighbouring countries can also be the focus of targeted disinformation or influence campaigns.

We are highly susceptible to organised and deliberate disinformation campaigns trying to interfere with democratic processes, destabilise society and undermine institutions. We are a small and multiracial society that can be easily overwhelmed by a larger adversary taking advantage of our societal fault lines.

An aggressor could attempt to “peel off” one particular ethnic group or religion, using social media and disinformation to appeal (as the case may be) to deeply ingrained historical, cultural issues, setting off one group against others, or even against the government. Data-driven political consultancies (whose methods may involve disinformation) appear to have been engaged by political parties, as well as individual candidates.

A number of responses are needed to deal with this challenge. In all responses, legislation should be the last resort. As far as possible, information, even false information, should remain outside the purview of government. This is essential for the health of democracy.

Amplification networks are best dealt with by the social platforms. Governments should therefore engage with platforms, especially Facebook and Twitter, to find a means by which networks of false, automated or inauthentic accounts, can quickly be shut down.

It is therefore important to educate internet users in the basic principles of digital awareness and hygiene, and to work with the platforms on solutions, rather than against them. Essential skills such as how to identify a bot or a troll can be taught without recourse to sophisticated software or analytical techniques. Such skills are vital for normal users, and particularly for media outlets, which can otherwise amplify fraudulent accounts.

Online insertion points are best dealt with by civil society, researchers and the platforms, working in combination. Researchers can identify websites or social media accounts which repeatedly post information which is demonstrably false; these can then be flagged to the platforms. Given the sheer size of the platforms, it is not practical for them to monitor their content unaided.

Many countries have called for a tough stance to be taken against fake news, including the US, UK and Germany, or to put in place more effective measures to counter fake news. Germany, for example, is considering a draft law that will require social networks, websites, including Facebook, to remove fake news which amounts to illegal content from their platforms. So, make the network itself responsible. Social networks which fail to comply with such a request could face very stiff fines. In Germany, it is being suggested €50 million – that is a lot of money – under the draft legislation.
Successful falsehoods tend to have four components

* They have an instant emotional appeal;

* They claim authority by referring to an unimpeachable source;

* They have an insertion point into the information space; and

* They then have an amplification network which passes them on to a broader public. Stories which lack one or more of these elements tend to fail.

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Combat disinformation

In some countries, the best anti-disinformation websites and portals are run by citizens, journalists, or a coalition of both. In many instances, it is the citizenry and journalists (as well as media experts, branding experts, and marketing consultants) who are better placed to act, and to act quickly, to combat disinformation. Ukraine’s Stopfake.org, which positions itself as public service journalism, is a crowd sourced journalism project that launched in 2014 to combat fake news spreading across the Internet during Ukraine’s crisis in Crimea. The widely-respected site provides fact checking, verifies information, and refutes incorrect reports and propaganda about events in Crimea, which are widely believed to originate from Russia. In Indonesia, the volunteer run Turn Back Hoax, which has been online since 2016, has grown into an important resource for Indonesians to check the veracity of memes and fake stories.
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Key developments

* First, the number of platforms and channels by which falsehood can be spread has increased radically. On Facebook alone, the number of active monthly users grew from 100 million in Q3, 2008, to over 2 billion in Q4, 2017.

* Second, the relatively low cost of creating an online platform has made it far easier for those who spread falsehoods to look like traditional reporting outlets, without adhering to traditional editorial standards.

* Third, social media have allowed peer-to-peer interactions on an unprecedented scale, allowing malicious actors to bypass traditional editorial verification and spread their falsehoods (literally) unchecked.
* Fourth, the borderless nature of the internet has made it much easier for foreign actors to impersonate internet users in the target country, and thus to infiltrate target communities.

* Fifth, modern editorial techniques have made it progressively easier for malicious actors to create false or misleading content, ranging from photo shopped images to doctored videos which can make a speaker appear to say something they did not.
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Fact-checking groups

Governments should not seek direct involvement in this process; however, they have a valuable role to play in bringing the tech and analytical communities together to facilitate cooperation. The appearance of authority is best countered by fact-checking groups, which have proliferated in recent years. These have the expertise to expose the various techniques of falsehood, and the reputation to make their work more credible. Many fact-checking and verification operations now exist, such as First Draft, Snopes and Politifact in the U.S., MalditoBulo in Spain, Les Décodeurs of Le Monde in France, the Bellingcat group, the Atlantic Council's Digital Forensic Research Lab and numerous units within major broadcasters such as the BBC. 

Drug peddling opposition politicos sabotaging the police drug eradication program after making a police informant Namal a prey !

(Lanka e News -17.Sep.2018, 4.35AM) Capitalizing on a tape recording purported to be of one Namal Kumara Warakapola who was working as a police informant some time ago, a group of heroin peddlers and rogues of the opposition party ( it was during the Mahinda Rajapakse regime container loads of heroin were unloaded cannot be forgotten) have started a mudslinging campaign against the Police in order to scuttle the successful raids launched to seize heroin in the Gampaha district by the IGP recently ..

This drugs eradication operation was commenced by IGP Poojitha Jayasundara and Deshabandu Tennekoon on 19 th August in Western , Northern and Gampaha districts , and it is proving most successful. Owing to this the drug peddlers in Gampaha are in a deep predicament with the raids exceeding 200 %. Inspired by this it is the aim and ambition of the police to completely eradicate the drug scourge in Gampaha within 2 months.

Due to this success , the opposition bankrupt politicians who are godfathers are trying to make the police informant a prey and are slinging mud at the Police. This was best illustrated when Mahindananda Aluthgamage a confirmed ace rogue declared ‘ Now I have no faith in the Police. If the police asks me to come , I shall not go.’ It can be inferred from this the rogues by referring to the tape recording of the police informant are trying to escape from the net of the police.

Namal Kumara is a police informant who successfully crept into Sinhala racist organization and assisted in the arrests of extremists including Arambepola Rathanassara , Dan Priyasad , Janitha Meepage and Amith Weerasinghe . Namal Kumara had walked over 11 kilometers alone in the night to apprehend Amith Weerasinghe. He himself has disclosed that. DIG Nalaka Silva of the Terrorism prevention unit had promised Rs. 600,000.00 to Namal as a reciprocation for the information supplied by him .However the promised amount was not paid.

The opposition heroin peddlers capitalizing on the resentment of Namal over this have made the latter an easy prey for their foul designs. . The media briefing held recently was an outcome of that. It has by now come to light some of the the recorded tapes were given to him by the heroin peddling opposition bankrupt politicos. In any case one objective was clear in that. That is , to drive a wedge between the president and the prime minister.

The president and P.M. who perceived the actual aims and objectives , instructed the IGP to conduct an investigation immediately and to report. The IGP has already entrusted this task to the CID.

A tape recording of the publicity campaign of the drug eradication raid program launched by the IGP in Gampaha is hereunder 

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by     (2018-09-16 23:15:01)

Deciphering the Jana Bala Demo (JBD)

Not a flop (about 75,000), but it was fun and frolic not a political avowal

It was a damned good baila show(http://www.dailynews.lk/2018/09/06/local/161836/jo%E2%80%99s-janabalaya-turns-carnivale)

Kumar David-September 15, 2018, 12:00 pm 

After a tamasha comes the time of reckoning and by this I mean not the day of judgement, but as an accountant would reckon, the balance sheet – the profit, the loss and the balance. First on the plus side, it was big, not massive but not a flop either. The organisers promised 200,000 and ferried in about 75,000 – you think a bit more? Ok I won’t quarrel. My estimate relies on aerial photos on the web and in the newspapers. If I spent an hour dividing photos into 1cmx1cm counting squares I could make a more accurate estimate, but who cares? The point is that though only a third of the promise materialised it is comparable to Wembley Stadium on Cup Final Day (90,000); not bad. Second on the plus side is that the revellers had a good time. Like the Royal-Thomian of old, two or three sakkili bands, folks dancing in the streets, merrymaking and phoney slogan shouting. The organisers proved that they have access to numbers and can induce the faithful with offers of transport and the promise of a good time to visit the capital city and enjoy a day out. Gastronomic delights, like rice and curry packets and in the case of the men, tots of liverish if anti-social libations of the ‘old-stuff’ to wash it all down with were on generous offer.

Is this damning with faint praises? No; not at all. Yahapalana cannot repeat this feat on any comparable scale. It’s no secret that this is all about girding up to the next election cycle. Then the all-important question is ‘who do you despise less’. From the vantage of elections; the planners displayed another upside. They had access to boodles of cash and cash makes the electoral cow moo. February 10 showed that the Sinhala-Buddhist electorate was fed up with incompetence in bringing rogues to justice, Sirisena fifth-column inspired infighting, and two years of economic stagnation. "You have had two years and bungled. Enough is enough!" the electorate said. The query on every tongue was did the Jana Bala Demonstration (JBD) affirm that this trend has gained strength. I make no secret of my greater distaste for the despotic Rajapaksa power centre than the incompetent Ranil-UNP outfit, but believe me I am scientist enough to distinguish between what I like and an objective assessment. For reasons I will now outline I doubt that the ‘Rajapaksa cause’ has consolidated its advantage or made visible progress in the months since February.

It has been reported that Mahinda Rajapaksa declared during run up preparations for JBD that his forces would converge on Colombo, make the country ungovernable and had declared: "We will surround the capital, camp in the city and stay put until this government is evicted." But mass power to disrupt governance did not materialise, instead it was a carnival of fun and frolic. Those who recall May Day rallies of yore, or old enough to remember the August 1953 Hartal will recall how deadly serious the mood, how thoroughly demonstrators grasped the matters in conflict and above all the timbre of leadership – Hyperion to a Styr. Simply put, JBD was not a gathering of conscious and motivated citizens who understood the issues around which they had supposedly mobilised.

What were the supposed issues? Here is how Colombo Telegraph summarised it: "The protest, organised by the Youth Wing of the Sri Lanka Podujana Peramuna led by Namal Rajapaksa, agitated against the proposed ‘separatist constitution’, selling national assets, protecting the accused in the Central Bank bond scam, exacting political revenge, attacks on the Buddhist clergy, imprisonment of ‘war heroes’ and imposition of new taxes. It drew crowds from all parts of the country". OK there is one point here that has merit; the government is dragging its feet over the bond scam. The reason is that the actual beneficiary (via the said ‘accused’) is the current incumbent and then candidate in the 2008 presidential tussle. It is also correct that value added tax has gone up but it is too complicated to undertake an assessment of the government’s failed economic strategy here. That will have to await a fuller critique, best done after 2018 all-year economic data become available. Watch this space!

Arranging the succession(https://newsin.asia/sri-lanka-can-be-a-communicating-point-between-india-and-pakistan-whenever-they-want-to-talk-says-namal-rajapaksa/)

Exacting "political revenge" is code for indicting, prosecuting and imprisoning Rajapaksa era rogues and murderers; this is exactly what this government has failed to do. And there is no reason to believe that these impotent UNP leaders will at this late stage sprout scrota and grow guts to drag villains off to court and lockup. What people should be demonstrating against is the incapacity to seek "revenge" on those who pillaged the nation, raped, abducted and murdered during the Rajapaksa decade. President Sirisena according to reports is now making himself an obstruction to justice. Folks in the rally know all this but their attitude is "Our lot are only slightly worse scoundrels than the other lot" – ung okoma horu.

Now to the most important of the opposition’s rallying cries, distributed in three points in the Colombo Telegraph summary. Let’s pull them together. The ‘separatist constitution’; attacks on the Buddhist clergy; imprisonment of ‘war heroes’. The purpose of this portfolio of slogans is unmistakable, it is to incite racial tension, fall back on wells of deep chauvinism and provoke anti-Tamil and anti-Muslim sentiments in the bleaker psyche of susceptible citizens. This wicked agenda did not resonate with on-lookers nor did it enthuse the marchers themselves. Bahu claims the racist cry (https://www.youtube.com/watch?v=JnQryg2hKfw – in Sinhala) did not echo in the streets and was not taken up by the public. My other sources agree. So, is chauvinist incitement beginning to fall flat? I hope so, but I am not reassured. But he is right on another point: Salvation for this government lies in enacting the new constitution. He is, however, far more confident than I am of the ability of Ranil and the UNP to get anything important done in the next two years.

Then there is the Namal factor; or rather the war of the Rajapaksas which was evident in the jamboree. Basil seems to have been left on the side-lines. A high-profile attendee, Gota, has previously been touted as the opposition’s presidential candidate; but there’s a hitch! Big Brother himself rode in (not on a piebald stallion but standing in a grey-green jeep) charming, resplendent in white, a twinkle in his eye and a smile that does credit to his dentist. Reading the leaves, it seems the opposition has swallowed Nihal Jayawickrema’s shifty story hook line and sinker and is set to petition the Courts in earnest seeking a third innings for Big Brother.

If GL and his bunch of black cloaked dimwits proceed along these lines one possibility is that the government may find reasons to drag the match on for as long as possible in order to compound uncertainty in the SLPP. The worst would not be the uncertainty of candidature but the multiplication of infighting in the ranks of the hopefuls. Will Court interventions flop? Will the Courts play along with parliamentary (with Mr Speaker’s connivance) or government procrastination? Will Gota abandon the Stars & Stripes, if so how long can he delay jumping flagship America? The leading role given to Namal, the side-lining of Basil and the de-facto side-lining of Gota (that else is the message of Big Brother striding into JBD to the rapturous adoration of the flock) surely implies that the game plan is as follows: Another innings or two for Big Brother and thereafter the succession to pass directly to Eldest Son. Do you foresee another civil-war, this time inside the Rajapaksa wildlife park?

Two of the Dead-Left’s aging helmsmen showed their faces while their parties lie in tatters. Greed for one final round of Cabinet perks springs hope eternal in their asthmatic breasts. The Dead-Left is a cranky existential nonentity, but in the context of this pandemonium it has taken to promoting its own Quixotic challenger. But every SLPP and JO body I have quizzed declares that brother Chamal has as much chance as a three-legged donkey at the Ascot Derby.

There is however one useful thing Dead-Left leaders can do prior to their long overdue final public appearance in the obituary columns. They can campaign within the Joint Opposition in favour of the new constitution. It is no secret that Dead-Left leaders and cadres (I am in contact with dozens) know full well that the term ‘separatist constitution’ is racist rubbish. They know that many so-called ‘war heroes’ are war criminals. As for justice-obstructing, novice-monk sodomising, late dining men draped in saffron robes, sometimes referred to as clergy, every soul in the Dead-Left despises them. The problem is that most cadres and two leaders believe that they must turn a blind eye for the sake of playing along with the Rajapaksas. But with their mortal souls in exit mode in the departure lounge, if they were to take a stand against chauvinism inside the Opposition at least the last page on their copybooks will not be blotched and besmirched.

Let me sign off by saying that the JBD challenge fell flat; it was game and set (only) to Yahapalana. But no, not yet match! There is time more; but Yahapalana shows no inclination towards reincarnation, the constitution seems a non-starter. So, what do we have? A championship match where both contenders wrestle with one hand tied behind their back and their mouths stuffed with crap. Consequently, the outcome of the parliamentary elections in 2020 is far from certain; the presidency is floored by uncertainty. Hmm time for a short nap you might say.

Prominent member of Yahapalana gov. is behind Keith Noyahr’s abduction: JO

2018-09-16 

The Joint Opposition said today that a prominent member of the yahapalana government was behind the abduction of journalist Keith Noyhar.

Issuing a special statement on behalf of the Joint Opposition, its MP Dalles Alahapperuma said the CID obtained a statement from former President Mahinda Rajapaksa about the 2008 abduction, assault and release of Keith Noyahr.

The statement said, “In the days that followed, there was an attempt on the part of government politicians, the state media, websites connected to the government and by some NGO activists, to allege or insinuate that the former President was involved in the Keith Noyahr incident. A few weeks after that, on September 12, the CID obtained a statement from former Defence Secretary Gotabaya Rajapsksa as well, about the Noyahr incident. Thus we see that there is a surreptitious attempt to create the public perception that the Rajapaksas were responsible for this assault on a journalist. It is now ten years since this incident took place and it is important to remind the public of certain facts relating to this case.

The abduction of Keith Noyahr took place on 22 May 2008. This was followed by attacks on two more media personnel, Namal Perera and Mahendra Ratnaweera on 30 June 2008. On 8 July 2008, the then Chief Opposition Whip UNP Parliamentarian Joseph Michael Perera made a special statement in Parliament about these incidents under the title “Threats to journalists” where he emphatically stated that these attacks on media persons are being carried out by a special team under the then army commander and that they had obtained this information from a person directly involved with this special team. The Army commander at the time these incidents took place was Lt. Gen. Sarath Fonseka. If a journalist faces a threat, we have to assume that it is connected to something he may have written.

In this regard, the article titled “An army is not its commander’s private fiefdom” which appeared as the ‘Military Matters’ column written by Keith Noyahr on 11 May 2008 i.e. ten days before he was abducted and assaulted; is a vital clue as to who would have had a motive to attack Noyahr. However we see that the CID is deliberately trying to avoid taking into consideration Keith Noyahr’s article of 11 May 2008 and Chief Opposition Whip Joseph Michael Perera’s special statement in Parliament on 8 July 2008. We believe that the reason for this reluctance is because the person responsible for the abduction of Keith Noyhar is a prominent member of the yahapalana government.

Instead of following the clues which may indicate who would have abducted and assaulted Noyahr, the police are engaged in a dishonest attempt to mislead the public by investigating the phone calls that are said to have been exchanged between various individuals to have Noyahr rescued. Since we cannot simply stand by and allow the CID to ignore vital clues in the purported investigation they are making, we will make a request to the police to follow up on the line inquiry that reveals itself through the article that Noyahr wrote on May 11,2008, and the special statement that Chief Opposition Whip Joseph Michael Perera made in Parliament on July 8, 2008. If we do not receive a satisfactory response from the police to this request, we will present the relevant facts to the Courts,”