Tamil diaspora to protest President Sirisena's speech at the UNGA

SULOCHANA RAMIAH MOHAN- SEP 23 2018

The TGTE of the Sri Lankan Tamil Diaspora, US Tamil Political Action Council (USTPAC) and various other Non-Governmental organizations and activist groups propose to hold a protest rally against President Sirisena’s participation at the 73rd United Nations General Assembly (UNGA).

The rally is mainly due to President Sirisena’s assurance to his peoplea that he would urge the UNGA to make a case for the removal of war crimes charges against the country’s Tri-Forces during the civil war.

The President who has already left for the United States is scheduled to deliver his speech on 25 September.

The President’s website states that at the 73rd Session of the United Nations General Assembly on 25 September, President Maithripala Sirisena will announce a set of new proposals for consideration at the March 2019 Session of the United Nations Human Rights Council (UNHCR). He will also submit these proposals to the UN Secretary General António Guterres as well as UN High Commissioner for Human Rights, Michelle Bachelet.

He will address the inaugural session of the Nelson Mandela Peace Summit today (24).

The notice by these organizations quoted that they would be holding a rally outside the UN General Assembly in New York City, on 25 September from 12:00 noon – 2:00 p.m. Further denoting that they would be protesting while the President addresses the UNGA.

It is supposed that Tamils from Canada are flying to New York to join in the protest. They are calling on the UN to refer Sri Lanka to the International Criminal Court and do justice by them.

Southbound rupee and northbound CoL

Further depreciation of the rupee is inevitable

 Tuesday, 25 September 2018

The Sri Lankan Rupee hit a record low of 170 per $ last week, and the Minister of Finance warns of further depreciation. This is inevitable given the chaotic state of the nation’s economy.

While the rupee turns south, CoL (cost of living) has no other direction but to go north. Prices of all imported final and intermediate goods will have to increase unless artificially controlled, at heavy cost, through subsidies, which will earn the wrath of IMF, the CEO of Sri Lanka’s economy.

Whether the rupee is depreciating due to external pressures, as the Governor of Central Bank contends, or domestic mismanagement, it is the poor consumer who ultimately falls victim to this volatility.

This is the price a small economy like Sri Lanka has to pay for adopting the neoliberal free market model while (a) ignoring the basic condition of balancing the national budget, (b) neglecting the domestic production sector, (c)borrowing at will to spend on glamorous and politically motivated projects and (d) allowing corruption to run riot.

Currency stability is a must to keep prices steady and inject an element of certainty and predictability in private economic planning, management and investment. To achieve that stability in an open economy domestic budget deficit and current account deficit in the balance of payments must be kept manageable. Sri Lanka has failed on both fronts, particularly during the last couple of decades.

The causes for this failure go beyond simple macroeconomics. There is a limit to Central Bank’s intervention in the currency market. There are fundamental issues which have to be tackled boldly on bipartisan basis if the economy were to remain competitive, rupee value steady and households make both ends meet.


National reconciliation

To start with, the immense cost of the foolish civil war and the snail-paced progress in achieving reconciliation continue to thwart the prospects of a vibrant economy emerging in the near future. Officially published growth data and economic and financial measures recommended by pundits do not reveal the noneconomic reality that impinges upon the economy.

How does one expect the national economy to perform at its optimum when a significant sector of its population resource remains frustrated and being unable to cooperate fully in the process of national development? In a plural society economic development must be a concerted national effort and should result from the synergy of the whole rather than from energy of its parts.

Public policies should be politically, ethnically, religiously and culturally neutral if they are to pull the nation together in the drive for growth and development. Domestic production sector will yield only suboptimum results if sections of its participants are deliberately or subtly kept out of it for political or other reasons. Even when policies are neutral, their execution is not.

Entrepreneurship and innovative talent are not the monopoly of any demographic group and no policy or program should discriminate between the different components of the social plurality. There is a lot for Sri Lanka to learn in this respect from the experience of a successful plural society like Singapore.

Although on surface, national reconciliation does not seem to be strictly an economic issue, yet in reality it is strongly linked with the nation’s economy. To ignore this fact and drag the issue without final solution is to jeopardise the future real economic growth and development.


Live within means

Secondly, it is simple common sense that a prudent householder should live within his or her means to avoid falling into debt and lose family assets. This principle applies equally to a nation and its government. However, there are expenses that a government has to incur to increase wealth and prosperity with distributive justice. To meet those expenses government has to raise revenue. The issue is how to raise that revenue economically and efficiently with fairness.

There are only two alternatives to raise revenue: taxes and borrowing. A third option, foreign aid, is now out of fashion. Without going into details of these options, it can be stated summarily that Sri Lanka’s borrowings have not been strictly driven by economic necessity, while taxes have not been based on principles of efficiency and equity.

As a result, reckless borrowing, more to satisfy the political whims of leaders than to create a productive economy, has increased national debt, and the burden of servicing that debt has fallen even on the shoulders of people who are not yet born. (Let us remember that it was foreign debt that forced the once mighty Ottoman Empire to lose its North African territories,which were colonised by European powers in the 19th century.)

On the other hand, the tax structure has shifted the burden of obligation disproportionately on the unaffordable. The super-rich, through various mechanisms and concessions have been allowed to slip out of the tax net. As a result Government tax revenue is far below the actual taxable income generated in the economy.

The unwillingness of the Government combined with the incapacity of its Tax Department to nab high income earners while resorting to borrow without limit has worsened budget deficits. A debtor’s currency therefore has to depreciate forcing prices to rise and when that rise combines with falling disposable income to the lower stratum of society CoL becomes unbearable to the majority.


Rampant corruption

A third element that makes CoL even more unbearable is the rampant corruption in the public sector. With the Central Bank’s bond scam corruption has reached its pinnacle. This is a malignant cancer, which without immediate surgery will kill the polity and economy.

For an ordinary citizen, nothing moves, according to public opinion, from a Government clerk’s desk to that of the minister in charge without bribing someone. How does the Tax Department for example expect to raise revenue when its own assessors after issuing tax notice from the office visits the recipient after office hours and advice for a fee how to dodge the tax? Even the Bribery Commission appointed to eradicate this evil is itself being accused of corruption.

The private sector, which is expected to operate with greater efficiency, has no choice but to function in a corrupt public environment absorbing thereby unnecessary costs, which, ultimately, will be passed on to the final consumer. Thus, a depreciating currency, gross neglect of local production through discriminatory public policies, recurring budget deficits, falling exports, rising imports, unfair taxes and rampant corruption, all end up in accelerating the rise in cost of living.

Neither the Yahapalana Government, which is disunited, disabled and bankrupt of originality in economic direction, nor the Joint Opposition, which is simply focused in trying to oust the rulers through Janabalaya, seems to have any credible solution to bring down the escalating cost of living.

The rupee’s southbound, CoL’s northbound journeys are the end product of other issues discussed earlier. Reconciliation, budget deficits, unfair taxes and corruption have made difficult for householders to make both ends meet.

While income through legitimate means fails to satisfy even the basic needs of ordinary families, the more daring among them resort to illegitimate means in search of supplementary income. That leads to other more despicable social evils and criminal offences.

Within the ruling neoliberal economic model, tinkering at the margins is not going to bring relief to householders. The fundamental issues have to be tackled with determination even if it involves a partial and temporary curtailment of some civil liberties.

Sri Lanka desperately needs a third alternative to pull itself and its people out of the current malaise.

(The writer is attached to the School of Business and Governance, Murdoch University, Western Australia.)

Rupee Crisis: Mahinda Cries, “Ehi Passiko” 

By Shyamon Jayasinghe –SEPTEMBER 25, 2018

Shyamon Jayasinghe

“Stamp your foot and tell Mr Rupee: “No. You shall not go down!” Or, Like Jesus Christ addressing Lazarus, the dead man: ‘Rise and come forth.”

Ehi Passiko

“Ehi Passiko,” is a methodological statement in expressed in Pali and attributed to the Buddha. The sage asserted that his Dhamma must be experienced to to be proven. “Come and experience”(ehi passiko)! Former Sri Lankan President, Mahinda Rajapaksa has said the same about his solution to the currency crisis. Hand over back to me and you will experience the solution like seeing something currently unseeable, in broad daylight.

Seen the Video?

I am thoroughly amused watching a video doing the rounds on Facebook. It is issued with a caption in small lettering: “Sinha Lokaye Sinhaya” (The Lion in the World of Lions). The lion is none other than former tough man Mahinda Rajapaksa. He is fortified by a ring of advisors that includes the former Central Bank Chief, Nivard Cabraal. It is a media  conference in Colombo over the subject of the falling rupee. This is where MR, with his customary bluster, announced: “Give the government to us and you will see the solution.”The video doesn’t give the speech but it does show a hilariously classic cameo of the proceedings where  a media guy asks him if he could specify a broad  time- frame for solving the crisis as promised. 

The oral response and the body language of our dear old leader, Mahinda, shows up his vacuous mind when it comes to even basic economics and finance. When the question was posed, Mahinda’s face went into a pale blank. He showed he was clearly out of depth. Turning his back to his former loyal Nivard Cabraal, Mahinda didn’t even seem to have grasped Cabral’s laboured prompt. A long delay for comprehension would have left the audience gasping for breadth, laughing. Hence, Mahinda blurted out an irrelevant response: “All this rise is due to the present situation,” said he.

Mind you, I am not exaggerating, this is a performance of the former President who, embarrassingly, also held the portfolio of finance over his ten year rule as supremo of Sri Lanka. If Mahinda didn’t know the answer to the question raised he obviously wasn’t serious when he said he would fix the problem if only he was returned his power. Did Mahinda think that this is like fixing a leaking tap or, at higher lever, fixing the indiscipline in our universities. Give a firm decision! Stamp your foot and tell Mr Rupee: “No. You shall not go down!” Or, like Jesus Christ addressing Lazarus, the dead man, “Rise!”

Read More

Extra-ordinary times warrant extra-ordinary measures

" Agriculture has the potential to increase the GDP in the short run. At present 60 percent of the agricultural produce is lost due to wastage and attacks by animals. Transport and processing costs should be lowered by the application of new technology and other means to give relief to both the producer and the consumer. For example, the gap between the cost price of the paddy farmer and the buying price of rice of the consumer is too great. Perhaps the traders and processing entrepreneurs may be reaping possibly a super profit"


Jayatilleke de Silva-Tuesday, September 25, 2018

The Sri Lankan Rupee is sliding. It is Rs. 170 to a dollar at the time of writing this column. It may slide further by the time you read it. On January 1, 2018 it was only Rs. 150 to a dollar. That means a 13.3 percent devaluation in the last 8 months. It is apprehensive to speculate on when and at what point it would stabilize.

External causes are mainly responsible for this situation. The trade war initiated by the United States against China, EU, Canada and Mexico has caused the commodities produced by these countries more expensive and US goods relatively cheaper. Besides the United States has imposed sanctions on Iran and Russia and it penalizes even third countries for trading with those countries. Thus, the rule-based international trading system is disturbed. The demand for the dollar has increased causing it to appreciate vis-à-vis other currencies.

In addition, Sri Lanka’s trade deficit has widened on account of the value of imports exceeding that of exports. In 2017 Sri Lanka’s trade deficit reached US $ 9.4 billion. It is expected to be around US $ 10 billion this year. This is despite a slight increase in exports. The volatile situation in the Middle East and sanctions on Iran have caused world oil prices to swell. It is another factor pushing up import costs.

Expatriate workers

Trade deficit is mainly responsible for the weak balance of payments. The decrease in remittances from expatriate workers in the Middle East also contributes to this situation.

In this context it is obvious that our economy is in dire straits. Added to all these woes is the debt burden. Sri Lanka has to spend almost 90 percent of its income to pay foreign debts. Thus, almost the entire surplus product of the country is spent on debt payment and debt servicing. Next year when the grace period of several large loans expires it will increase exponentially.

Whatever benefits we accrue from export orientation are absorbed by the donor countries and agencies and we remain a pauper as before. Without replenishing our external reserves, without increasing domestic production and savings it is difficult to prevent the slide of the Rupee by temporary measures.

The devaluation of the Rupee is accompanied by a meteoric rise in the cost of living where the lower income population will find it difficult to make ends meet. The middle classes would slide down into indebtedness.

This is an unprecedented and an extra-ordinary situation. Unfortunately, its gravity has not being understood by the Government and political leaders.

They are merrily engaged in comic soap operas oblivious to the impending disaster. They are fighting over language and religion when the very physical existence of the poor is threatened with death by starvation, deprivation, want and curable diseases. They are like crabs dancing in the boiling water.

Extra-ordinary times warrant extra-ordinary measures. Sri Lanka should negotiate and attract FDI selectively and invest them in productive industries leaving aside cosmetic and some infrastructure projects for the time being. For example, the Kurunegala - Habarana new railway project could be postponed. Priority should be given to projects to overcome harmful effects of drought and floods and develop food production. Similarly, the destructive proposal to build a leisure zone for foreigners and the local rich and the novae rich by reclaiming a large area from the sea from Colombo to Ratmalana should be abandoned. Much more urgent is to eradicate or reduce alarming malnutrition among children under five years which has increased on a mass scale.

All non-essential imports should be curtailed or heavily taxed. This should include first of all motor vehicles for personal use. The same goes for gold imports. Fruits and vegetables that are imported could be discouraged. As far as possible import substitution industries should be started selectively without considering it a dirty practice as defined in the neoliberal lexicon.

Agriculture has the potential to increase the GDP in the short run. At present 60 percent of the agricultural produce is lost due to wastage and attacks by animals. Transport and processing costs should be lowered by the application of new technology and other means to give relief to both the producer and the consumer. For example, the gap between the cost price of the paddy farmer and the buying price of rice of the consumer is too great. Perhaps the traders and processing entrepreneurs may be reaping possibly a super profit. Improving communications and knowledge among the farmers could help reduce the seasonal gluts and scarcities in the vegetable market. A wide agricultural extension service could help in this matter.

Essential goods

A safety net should be provided to the low-income groups by way of a package of essential goods including, rice, coconuts, dhal, dried fish etc. at a subsidized price under a ration system. Rationing, subsidies etc. are emergency measures to be resorted to in emergencies. Economic planners should find out ways and means of finding the extra money needed by suitable income tax and saving measures.

We often hear of appeals to the public to tighten their belts. Unfortunately, it goes with the rich and the powerful fattening themselves through opulence. There is no equitable distribution of sacrifice. While working people are asked to bear difficulties with existing low salaries, proposals were mooted to increase those of the parliamentarians. While people suffer from deprivation Provincial Councillors decide to use chairs worth more than Rs. 800,000 to cushion their posterior. Cabinet and other Ministers number more than 100 and new ones join them at regular intervals heaping an enormous maintenance expense on the public. Yet often the House is adjourned for want of a quorum.

Extra-ordinary measures do not mean declaring a State of Emergency or mobilizing the armed forces (regular as well as voluntary) for active service. On the other hand, it means mobilizing the masses for the implementation of the extra-ordinary measures. 

Baddegama pradeshiya sabha chairman of Bud party is in S.Korea to accomplish his human smuggling operation !

(Lanka e News -23.Sep.2018, 11.30PM) While Jameel the bearer of a Sri Lankan diplomatic service passport was arrested in Italy for human smuggling , there are reports reaching Lanka e news that a bankrupt politico of the Bud party with a state service passport has gone to South Korea to complete his human smuggling operations.

This scoundrel is none other than Baddegama pradeshiya sabha chairman Anura Narangoda who won on the Bud party ticket .

Narangoda had collected Rs. 600,000.00 each from three individuals , that is Rs. 1.8 million in all to smuggle them to South Korea via his human smuggling operation. Narangoda is already out of the country with the group to complete his illicit mission. His plan is to leave them there after reaching S. Korea. What is unpardonable is , Narangoda is abusing his pradeshiya sabha position to accomplish his human smuggling operation. It is sure this rascally pradeshiya sabha member who is carrying on this smuggling operation is going to get trapped . It is sure when that happens unfortunately it is the country’s image that is going to be tarnished.

---------------------------
by     (2018-09-23 22:42:59)

The fate of the rupee: Central Bank is caught with ‘Devil’s Alternative’

 Tuesday, 25 September 2018

During 2011/12, the then administration of the Central Bank had spent $ 4.2 billion out of its reserves in a desperate bid to defend the rupee. Yet, it could not prevent the depreciation of the rupee by 13.5%. Similarly, in 2015, under the present Government, the Bank had spent $ 1.2 billion to protect the rupee only to experience a depreciation of the rupee by 9%. Sri Lanka today is in the same critical situation

Not all are losing when the rupee depreciates

The recent depreciation of the rupee against the US dollar in the market has apparently driven the entire nation to a panic mode. While it had been a field day for the media and opposition law makers, the public, made up of both gainers and losers when the rupee depreciates, have temporarily forgotten the gains and chosen to be driven by the sentiments of losing.

For instance, those in the export of goods and services and those who send remittances back to Sri Lanka stand to gain when they get more rupees for every dollar they earn or remit. But those who consume imported products and those who plan to avail themselves of foreign services like travel abroad, education or healthcare services will lose since they have to now spend more rupees to buy dollars.

The Government is a net beneficiary of depreciation

The Government on the other hand, as I have pointed out in my previous article titled ‘Rupee’s sad destiny of one way journey to depreciation’ (available at: http://www.ft.lk/columns/Rupee-s-sad-destiny-of-one-way-journey-to-depreciation/4-654254), is a net gainer in this depreciation game. That is because though it has to find more rupees to finance the current year’s external debt servicing, it earns more rupees by way of higher import duties when imports are valued at a depreciated currency and when it borrows in foreign exchange and sells those dollars to the Central Bank.

For instance, in 2018, if the exchange rate depreciates by one rupee per dollar, the Government is to earn an additional amount of Rs. 4.5 billion, more than double the increase of Rs. 1.7 billion by way of servicing the external debt. Of course, this is not a valid reason for a Government to allow its currency to depreciate in the market. That should happen, as is the case of Sri Lanka at present, when the fundamentals in the foreign sector are at odd, namely, when the country fails to earn enough foreign exchange to meet foreign exchange payments year after year. To address that issue, economic policy makers in the Government should have a different set of policies.


Panic causes to choose the worse data

The reference exchange which panic-makers have used had been the average selling rate of dollars by banks when they do transactions among themselves in what is known as the interbank spot foreign exchange market. The rate published by the Central Bank in this connection had been the actual average transaction rate pertaining to the previous day’s business (available at: https://www.cbsl.gov.lk/rates-and-indicators/exchange-rates). However, commercial banks quote in this market not only a selling rate but also a buying rate which is about Rs. 4 lower than the selling rate.

The Central Bank which compiles the data publishes both the buying and selling rates and also an indicative rate which is the mid rate between them. For all purposes, the Bank and other agencies like the Customs use this indicative rate. According to Central Bank data, as on 21 September 2018, commercial banks had offered to buy dollars for Rs. 166.78 per dollar and sell them for Rs. 170.66. Accordingly, the underlying indicative rate had been Rs. 168.03 per dollar. However, since the selling rate had been higher, the movement in that rate had been used to drive panic into the heads of the public.


Devaluing the rupee through the FEEC system 

Since independence till 1968, Sri Lanka had a single fixed exchange rate at Rs. 4.76 per US dollar. As the country did not have sufficient foreign exchange balances to maintain this fixed exchange rate, the rupee was under constant pressure for downward rate adjustment which was called ‘devaluation’ in that fixed exchange rate system.

By 1966 when the problem became chronic as well as acute, Sri Lanka decided to go for a dual exchange rate system instead of fully devaluing the rupee. In this dual exchange rate system, the essential imports were at the official exchange rate. All others were at a premium of 65% above the official rate under a system called Foreign Exchange Entitlement Certificate or FEEC system. It was equivalent to levying of a tax of 65% on users of foreign exchange.

Since a greater part of imports were at the FEEC system, it was a lucrative revenue source for the Government. As such Dr. N.M. Perera who as an opposition member had accused the Government of being a black market foreign exchange seller under the FEEC system did not see the necessity for its abolition after he became the Minister of Finance in 1970.

This practice of partial devaluation was continued till 1977 when it was abolished under the new flexible exchange rate system introduced by the Government. Under this system, the rate was unified at Rs. 15.56 per dollar representing an effective devaluation of 7% over the FEEC rate.

Under the flexible exchange rate system, the value of the rupee against the dollar was allowed to be determined in the market. Accordingly, any decline in the value was called ‘depreciation’ as against ‘devaluation’ in the previous fixed exchange rate system. Similarly, any increase in the value was termed ‘appreciation’ as against ‘revaluation’ in the fixed exchange rate system.


Blame-excuse game played by politicians

Since then what Sri Lanka has experienced has been a continuous decline in the value of the rupee. It had been the practice of politicians in the opposition to charge the government in power for failing to maintain the value of the rupee. Those in power had been defending their position blaming outside forces for the sad fate of the currency. However, since no action is being taken to remove the fundamental causes for the depreciation of the rupee, it continues its sad one way journey to depreciation. As such, when the political power changes hand, the blame-excuse game is now played by the very same politicians who now play the opposing roles.

Figure 1 shows the decline in the value of the rupee against the US dollar from 1995 to mid September 2018. As the graph demonstrates, it is a continuous depreciation with some bumps in certain periods. It is therefore important to indentify the causes for the rupee to depreciate in the market continuously in this manner.


Avoiding a deficit in the current account

If a country is interested in stabilising the value of its currency, there is only one recipe for it. That is, it has to earn sufficient amount of foreign currencies to meet the demand for foreign currencies from its own citizens.

Foreign currencies are earned by countries by selling goods, known as exports, selling services and selling factor services to foreigners. These are being topped-up by a non-selling foreign exchange flow, called inward transfers, which a country gets by way of gifts. In banking parlance, they are known as remittances by Sri Lankan workers abroad.

On the other side, Sri Lankans demand for foreign currencies to import goods, buy services from outside and pay for factor services like paying interest on loans and profits for investments. To these payments are added the gifts which Sri Lankans extend to foreigners, known as outward transfers.

These transactions could be amalgamated into an account called the current account of the balance of payments by recording the first category on the credit side and the latter on the debit side. The essential requirement for a currency to be stable is that this current account should be balanced or if it has deficits, those deficits should be offset by similar surpluses in other years. If there are continuous surpluses, the country earns more foreign currency than it needs.

Unless those surpluses are lent to other countries, the country may experience a continuous appreciation of its currency. If there are continuous deficits, it has a shortage of foreign currencies. These shortages have to be filled by borrowing from other countries and it would help the country to temporarily stabilise its currency. But it would add to its foreign debt driving it to a malady known as debt trap. It makes the matters worse and the country is, therefore, destined to experience a one-way journey toward depreciation of its currency.


Sri Lanka’s dismal track record in the current account

This latter situation is the one which Sri Lanka has experienced during the entirety of the period since 1977. Its current account has been in deficit and, when measured as a percent of the size of the economy or GDP. That deficit, though low at about 2% of GDP today, has been as high as 16% in early 1980s.

When the current account deficit goes up, the country is in the habit of pressing the panic –button talking about the necessity for introducing the needed external sector reforms. But on the other side, when it goes down even by a small magnitude, it falls into a state of complacency, ignoring the risk and danger it is facing.

During the period from 2012 to 2017, the current account deficit has been on average at 3% of GDP a year. Therefore, there has been pressure for Sri Lanka rupee to depreciate. What the previous administration did was to borrow abroad and use the proceeds to release the pressure in the market. It is like giving some pain killer to a cancer patient to relieve of his pain. It is not a cure. Hence, the wound begins to fester within the body without proper medication. One day when the cancer becomes acute and it is too late to administer any medication, the patient would succumb to his illness.


The inactivity of the new Government 

This was known at the time when the new Government took power in January 2015. But the Central Bank’s Monetary Board as well as the Minister of Finance behaved as if there was no economic crisis.

The Central Bank Annual Report for 2014, released in April 2015 under the stewardship of the new Government, talked complacently about the stability of the rupee during 2014. That was against the US Dollar. It had been more complacent when it had reported that the rupee has appreciated on average against the currencies of its major trading partners during 2014.


Nominal and real effective exchange rates

To assess this average change in the value of rupee against its trading partner currencies, the Central Bank calculates two effective exchange rate indices, one for rupee’s nominal value and the other for its real value. The fact that both these indices have appreciated in 2014 means that Sri Lanka has lost its competitiveness against exports and gained a preferential advantage for its imports. This is an ailment because it suppresses exports and encourages imports, the main cause for the rupee to come under pressure for depreciation in the long run.


Financing the foreign exchange shortage by continued borrowing

Figure 2 shows the movement of the real effective exchange rate (REER) of Sri Lanka as against the movement of the nominal effective exchange rate (NEER) during 2010 to July 2018. It is seen that till January 2012, both indices have moved comfortably side by side to each other. However, since then, REER had been continuously appreciating while NEER had remained below 100 throughout.

An appreciated REER will erode the competitiveness of Sri Lanka’s exports thereby acting as a tax on the export earnings and a subsidy on imports. Both have caused the widening of the country’s trade deficit from $ 9.4 billion in 2012 to an estimated deficit of $ 11 billion in 2018. Since the remittances which are the main financing source of the trade deficit have been stagnating at around $ 7 billion, it has resulted in a current account deficit of around $ 3 billion that has to be financed by borrowing from abroad. This is the tactic used by Sri Lanka throughout the period and it has increased its foreign indebtedness beyond its ability to service.

For instance in the next 12-month period, the repayment of debt and payment of interest on such debt will be about $ 6.2 billion; as against these commitments, the free foreign reserves available have been only $ 7.7 billion. If Sri Lanka is to use its foreign reserves to defend the rupee, it has a space of only $ 1.5 billion. This has reduced the Central Bank to making a critical choice: what would happen to the Sri Lanka Rupee after it has spent the freely available reserve of $ 1.5 billion?


Thai fiasco should be a learning point for Sri Lanka

Countries which have gone for this choice have ended up with extremely bitter results. For instance, as I have documented in my book titled ‘Central Banking: Challenges and Prospects’ (p 191) just prior to the Asian financial crisis of 1997, the Bank of Thailand in a vain attempt at defending the Thai Baht at 25 Baht to a dollar had spent about $ 25 billion out its reserves. When the reserves were all exhausted, the Bank had to allow the Baht to go for a free fall causing it to decline to a level of 50 Baht to a dollar.

The Governor of the Bank, Rerngchai Marakanond, was later charged by the Government for losing the nation’s precious foreign exchange balances. On being found guilty, he was imposed the biggest fine in Thai history amounting to Baht 186 billion which was equivalent to $ 4.6 billion. Hence, it is a risk for a central bank to lose the nation’s foreign reserves to vainly defend the currency when the market forces are all exerting pressure for it to depreciate.


When the market pressure is high, no amount of foreign currency sale will help Sri Lanka 

This is a choice involving Devil’s Alternative, as described by the British novelist Frederick Forsyth in his novel under the same title. When someone is faced with the Devil’s Alternative, whatever he does leads to enormous costs. This was amply described by Governor Indrajit Coomaraswamy when he addressed a recent summit in Colombo (available at: http://www.ft.lk/top-story/Crux-of-currency-crisis-/26-663273).

Drawing on two failed examples from Sri Lanka’s recent past, he is reported to have revealed that during 2011/12, the then administration of the Central Bank had spent $ 4.2 billion out of its reserves in a desperate bid to defend the rupee. Yet, it could not prevent the depreciation of the rupee by 13.5%. Similarly, in 2015, under the present Government, the Bank had spent $ 1.2 billion to protect the rupee only to experience a depreciation of the rupee by 9%.

Sri Lanka today is in the same critical situation. It could spend a massive amount from its reserves which have been built basically out of borrowed money to protect the rupee. But it would then have to default its foreign loan servicing commitments and still allow a free fall in the value of the rupee when it does not have any more foreign reserves to defend the currency. Either way, Sri Lanka is to suffer for failing to address the critical external sector issues in the past.

This is certainly a devil’s alternative for Sri Lanka.

(W.A. Wijewardena, a former Deputy Governor of the Central Bank of Sri Lanka, can be reached at waw1949@gmail.com.) 

Karu as candidate? UNP needs a dark horse-a candidate whose baggage does not carry within itself dark secrets of corruption and nepotism

  

“A dark horse, which had never been thought of, rushed past the grandstand in sweeping triumph.”
~Benjamin Disraeli  

2018-09-26 

In the last few columns, I have tried, maybe in vain, to make a case for a plausible scenario in which a Presidential Candidate representing the same UNP-led coalition that brought current President Maithripala Sirisena to office could be successful again.

Maithripala Sirisena, although he did not seem to be formidable as a Presidential candidate, eventually proved to be above average and an ideal mix which an unsuspecting electorate would accept.

However, the coalition Government that was formed after the electoral victories in January and August in 2015, though it has managed to survive, the breakage of the relationship between the UNP leader and Prime Minister Ranil Wickremesinghe and President Sirisena who is barely holding on to the leadership of the Sri Lanka Freedom Party (SLFP), seems almost final and done.

That is a very sad ending of a once-promising political partnership that was in the making. The ideological differences alone between the United National Party (UNP) and the Sri Lanka Freedom Party are wide and vast enough and too disparate to survive in nasty and cruel political storms.

The UNP needs a fifth horseman, so to speak who will be seen as a deliverer beyond all expectations

In the meanwhile, the Rajapaksas seem to have woken up from their defeat-ridden slumber that followed the immediate aftermath of the 2015 Presidential Elections.

The sheer magnitude of power and access to the national coffers and the natural proximity to the luxuries of administrative power machinations has apparently awakened them to muster their forces for another game of national ransacking and corruption-ridden governance.

The disqualifying elements of the Rajapaksas and their cohorts have been articulated not only at the last Presidential Elections, the parade of their kith and kin to and from the various investigative bodies has gone a long way to convince a curious electorate as to how and what these political hooligans of the Rajapaksa era corrupted a gullible civil service which ultimately became even more corrupt than their corruptors!

Nevertheless, the following changes and their inescapable cascade of consequential by-events have at times struggled to transform the political landscape of Sri Lanka.

1. The defeat of the Rajapaksa Presidency
2. Election of Maithripala Sirisena as President as a common candidate of a coalition of socio-political forces of Sri Lanka
3. Election of a UNP-led Parliament
4. The evisceration of the 100 Day programme
5. Bond-Scam scandal
6. The eruption of the fissures between President Sirisena and Premier Wickremesinghe
7. Non-event of the Rajapaksa prosecution to an end
8. Local Government Elections
9. Resultant meandering in the political woods

Each of these events and sub-events has engendered another sequence of events which in turn have turned into a cause and thereby producing a never-ending cycle of cause and effect dynamic.
Whatever happens in the aftermath of each event or sub-event, what one must bear in mind is the universal truth of facts and hard cold facts that definitively have had a serious impact on the lives of all Sri Lankans.

Political pundits and statisticians have gone back to their drawing boards. They ponder, more often than not, on the what-if phenomenon of life and in that maddeningly uncertain socio-political drama, they have repeatedly failed to understand one simple and crushingly ugly fact that facts do matter in the ultimate analysis of politics and its history.

In the context of such an unequivocal brutality of the political life of a nation, the current impasse in today’s scenario looks natural and inconsequential. A reversal to a once-defeated power-cabal, which is the Rajapaksa rule, seems, at least to their own political friends and supporters, a vindication of their deeds and thoughts.

Sloganeering that consisted of electric chairs, selfless patriotism and sovereignty of the nation that ruled a frenzied world of delusion and cultivated deceit are looming ominously on the horizon again.

It is going to be extremely difficult and practically impossible to confront an emotion-driven mob and convince them that what occurred in the recent past was corruption, nepotism and the avaricious pursuit of power and is no good for the greater good of the country.

It is no secret that given the right social and political milieu, excessive expression of deeply held prejudices and partialities would be welcome as an open invitation for unrestricted assault on reason and justice

Sloganeering and political branding have its own niche and it has been proven beyond a shadow of a doubt by Donald Trump in another part of the world- an advanced capitalist society such as the United States of America.

Don’t ever forget that just before the Nazi takeover Germany was a well-educated, steeped in high cultural and social values. They were a steeply-read nation that enjoyed Wagner’s serene music and Van Gough’s sensitive lines of painting as their pastime.

It is no secret that given the right social and political milieu, excessive expression of deeply held prejudices and partialities would be welcome as an open invitation for unrestricted assault on reason and justice.

We in Sri Lanka experienced this obscenity of political propaganda under the Rajapaksa cabal.
Entrenched in a bubble of all-consuming power and greed, the Rajapaksas released within this bubble a force under the cover of patriotism and partisanship for the land, the race and the faith.

The same forces are threatening to raise their ugly profiles today and the unhindered participation of the mob variety of the average men and women in the country do not seem to care.

Forthcoming Presidential Elections are being planned and scheduled against this backdrop. It is no easy task to challenge them.

The UNP’s task looks even more desperate. The repeating mistakes and misjudgments are taking the Party of Ranil Wickremesinghe to the edges of extinction and sure death.

Superficial operational adjustments introduced into the traditional structures of the Party do not seem to produce a fundamental change in its very outlook.

The coalition and its operational arms that delivered the Presidency to Maithripala Sirisena need to be mustered and coalesced to a new Presidential candidate. Who could it be? That is the proverbial sixty-four million dollar question.

Here are some of the would-be contenders:

1. Ranil Wickremesinghe 2. Sajith Premadasa 3. Navin Dissanayake 4. Dark Horse candidate  

Arguments for and against the current leader of the UNP and Prime Minister of the land, Ranil Wickremesinghe have been made almost to exhaustive lengths
and breadths.

In fact, they seem to have been foreclosed. The overwhelming loyalty of the Northern and Upcountry Tamils and Eastern Muslims towards Wickremesinghe is beyond doubt.

It is not conceivable that any other aforementioned candidate would enjoy such uncontested loyalty from the minorities, except perhaps Navin Dissanayake.

The leadership of the Tamil communities, both Northern and Upcountry, has been quite vocal about their political grievances and their adherence to the fundamentals of reconciliation and Tamil homeland concepts.

A reversal to a once-defeated power-cabal, which is the Rajapaksa rule, seems, at least to their own political friends and supporters, a vindication of their deeds and thoughts.

Political expediency and misplaced sense of patriotism might derail Sajith Premadasa on these fronts, yet he might be of the opinion that his popularity among Sinhalese Buddhists and especially amongst the Buddhist Clergy, cultivated over a decade or so by giving away ‘goodies’ of sorts to the temples around the countryside, would overcome the deficit that he has with the Northern Tamils.

Yet, one brutal fact that Sajith needs to confront is, despite all these efforts towards pacifying the Buddhist Clergy, he has not been able to translate that gesture into votes.

Even in the recently held LG Elections, he did not win his electorate, nor could he secure the district.

The argument that he is in the SLFP den- Rajapaksa-led Hambantota- cannot hold water as a leader is supposed to carry his own electorate when all other chips are down.

Navin Dissanayake, on the other hand, did manage to win not only his electorate; he managed to win his entire district, Nuwara Eliya which in the context of a Presidential Election is a microcosm of the country.

Nuwara Eliya within its geographical boundaries has some ancient Sinhalese Buddhist villages. Both Kotmale and Hanguranketha from which Navin Dissanayake’s paternal grandmother and grandfather respectively hailed, are steeped in tradition and culture that is unmatched by some other such villages in the country.

If the people of such tradition and culture could depart from the rest of the normal pattern of voting, it certainly speaks volumes for such an allegiance to a political leader in the district. Gamini Dissanayake, Navin’s father, enjoyed such unquestioned and unquestionable personal loyalty from his supporters. Navin, it looks like, has retained that loyalty.

Yet, both Sajith and Navin might not be able to gather around them the coalition forces that assembled around Maithripala Sirisena in 2015.

That is not due to a special personal attraction of Sirisena; it is solely due to the fact that the coalition Government that was formed after the 2015 elections failed to deliver on its election pledges.

The UNP and its friends need a dark horse; a candidate whose baggage does not carry within itself dark secrets of corruption and nepotism; a fifth horseman, so to speak who will be seen as a deliverer beyond all expectations.

Only Karu Jayasuriya, the current Speaker of the House of Parliament, fits into that module- a dark horse or the fifth horseman.

I will delve into this possible candidate in my next column, yet could not suppress the urge to throw this thought out for our readers to ponder upon. Fifth horsemen or a dark horse candidate who could possibly mount a formidable challenge to any ‘Pohottuwa’ candidate, a Rajapaksa or any other, has more than an outside chance of victory in the next Presidential Elections.

The writer can be contacted at vishwamithra1984@gmail.com

Act against University ‘Bond Scams’

September 25, 2018, 9:44 pm 

By Liyanage Amarakeerthi Professor, University of Peradeniya

The Minster of Higher Education is after some eight hundred million of rupees. In the country of ours, which has become a land of grand corruption, the words "minister" and "millions" might look boringly familiar. And, of course, even the luxury cars of ministers that look like wheeled-castles, routinely demonstrate that ‘ministers’ and ‘millions’ are inseparable. This time, however, the minister is going after a different kind of millions. Our colleagues at universities owe those millions to the universities. Those academics have gone to foreign countries intending or pretending to pursue postgraduate education, but never returned as they promised. They are legally bound to return in person or return the money they owe. These ‘bond violators’ in all universities, reportedly owe the country nearly nine hundred million. Of late, the Minister was quite vocal about those millions, while we were busy talking about the millions and billions ministers and former ministers owe the country.

While I disagree with the minister on many things related to education, I could not agree more with him on this ‘bond scam.’ Those millions must be recovered. I also know of several of those violators. There could be many justifiable reasons for them to stay back in those richer and better countries. For example, some of those academics did not even finish their postgraduate training. Instead, they have established small companies that provide janitorial services. Perhaps, there is a message right there for the minister. For them, that janitorial work there is far better than the professorial work here! But I do not think so. Being a qualified and committed university don here is still one of the best professions in the country. Therefore, this ‘bond scam’ concerns me greatly. For one thing, I have signed a few such bonds. Some have returned and others haven’t. The minister must go after them and recover the money.

In addition to the money, there is something else that needs ministerial attention. Legal action against those bond violators can take years. Universities are also not particularly quick in attending to those matters. Thus, academics remaining in the department of studies to which those violators belong, have to work beyond regular norms covering the duties of people who would never return. For covering someone else’s duties some able scholars have put aside their own research, publication and creative work. Thus, the committed academics are punished for their commitment! Moreover, even after the legal processes are over, universities take even more years to fill the position vacated by those violators. In some cases, the relevant departments might not even be able to retain those cadre positions. All these aspects need to be considered when calculating what the violators owe us, the system.

There is an even more significant aspect about this. There are some qualified academics in the Sri Lankan universities, who have joined the system with doctoral training earned with the support of scholarships they have personally won. These people, though a few in number, are an extremely unlucky group. They will never have ‘study leave’ and other benefits given to those who join the system with just a first degree. For example, when I won a Fulbright Fellowship to study for my Masters’ degree, and a series of other scholarships from the University of Wisconsin for pursuing my PhD, I did not have a university appointment in Sri Lanka. When I joined the Sri Lankan university with the doctoral training, I knew that I would not receive any paid ‘study leave’ for further studies. Many have joined the system with quality doctoral training obtained with no support from the Sri Lankan university system. Some of them would have earned much higher salaries and other benefits had they stayed back in the countries such as the US.

Here, I have a suggestion for the Minister: we have often heard our political leaders requesting the educated Sri Lankans in foreign countries to return home to make it the Knowledge Hub of Asia. So Mr. Minister, establish a reward system where those who have already earned PhDs, and other academic credentials, are placed above those who are still to begin thinking about their postgraduate work. What happens currently is nearly insane. In some cases, those who already had doctoral training are paid less than those have not even begun theirs, because their service period is longer! And those with longer service get other benefits such as university housing and the like. Their hard work of many years must be recognised, but not over those who have earned academic credentials without any of support of the university. When recovered, that ‘bond money’ can be used to create a system to reward those who are willing to join our universities with PhD earned their own.

Political national service

Each government offers various political appointments to academics loyal to it. Those appointments are called "national service"- a euphemism for political appointments. But, more often than not, this is a way of creating opportunities for cronies of politicians to make money. Some of those appointees have very little knowledge, skills and creativity to ‘serve the nation.’ What they usually do is serving the party. The present government also has called up many academics for ‘national service.’ The previous regime was quite notorious in this respect.

Here again, I have a suggestion for the minister: limit the duration of ‘national service.’ It should not be more than two years. Right now, any university lecturer if he or she has the government’s blessing, can be on ‘national service’ until the government is defeated. So, theoretically, one can be in ‘national service’ for decades. Until that person returns someday, the university has to keep his position intact. And those years of ‘national service’ are counted as his or her ‘service’ at the university, and relevant benefits are claimed accordingly!

With such practices, we will not be able to create the ‘knowledge hub.’ So, Mister Minister, go for those millions. Of course, it is a nothing for a minster, but a lot for us.

Maldives opposition leader Ibrahim Mohamed Solih candidate wins presidential election

Former President of the Maldives Mohamed Nasheed addresses a press conference at a hotel in Colombo. Photo by LAKRUWAN WANNIARACHCHI / AFP

 By Agencies | Sep 24, 2018 12:05 pm

Colombo: Opposition leader Ibrahim Mohamed Solih won the Maldives’ presidential election, results showed Monday, a surprise defeat for President Abdulla Yameen, following campaign observers said was rigged in the strongman’s favour. Results released by the Elections Commission early Monday morning showed Solih had secured 58.3 per cent of the popular vote.

Celebrations broke out across the tropical archipelago with opposition supporters carrying yellow flags of Solih’s Maldivian Democratic Party (MDP) and dancing on the streets. There was no response from Yameen after the results were announced.

Solih had the backing of a united opposition trying to oust Yameen but struggled for visibility with the electorate, with the local media fearful of falling afoul of heavy-handed decrees and reporting restrictions. There were also no other candidates at Sunday’s election held with all key dissidents either in jail or exile. Earlier in the night, Solih had called on Yameen to concede defeat once the tally showed he had an unassailable lead.

“I call on Yameen to respect the will of the people and bring about a peaceful, smooth transfer of power,” he said on television. He also urged the incumbent to immediately release scores of political prisoners.

Yameen, who was widely tipped to retain power, had jailed or forced into exile almost all of his main rivals.

Before the polls opened, police raided the campaign headquarters of the opposition Maldivian Democratic Party (MDP) and searched the building for several hours in a bid to stop what they called “illegal activities”. There were no arrests.

Mohamed Nasheed, the head of the MDP, said the vote would “bring the country back to the democratic path”. Yameen would have no option but to concede defeat, said Nasheed, who was elected president of a newly-democratic Maldives in 2008 but currently lives in exile.

“He will not have people around him who will support him to fight on and stay,” he told AFP.
The polls were closely watched by regional rivals India and China, who are jostling to influence Indian Ocean nations. The European Union and United States, meanwhile, have threatened sanctions if the vote is not free and fair.

Many voters across the Indian Ocean archipelago said they stood in line for over five hours to cast their ballots, while expatriate Maldivians voted in neighbouring Sri Lanka and India. The Elections Commission said balloting was extended by three hours until 7:00 pm (1400 GMT) because of technical glitches suffered by tablet computers containing electoral rolls, with officials using manual systems to verify voters’ identities.

An election official said the deadline was also extended due to a heavy voter turnout, which was later declared at 88 per cent. Yameen voted minutes after the polling booths opened in the capital Male, where opposition campaign efforts had been frustrated by a media crackdown and police harassment.
Some 2,62,000 people in the archipelago — famed for its white beaches and blue lagoons — were eligible to vote in an election from which independent international monitors have been barred. Only a handful of foreign media were allowed in to cover the poll.

The Asian Network for Free Elections, a foreign monitoring group that was denied access to the Maldives, said the campaign had been heavily tilted in favour of 59-year-old Yameen. The government has used “vaguely worded laws to silence dissent and to intimidate and imprison critics”, some of whom have been assaulted and even murdered, according to Human Rights Watch.

Before the election, there were warnings that Yameen could try to hold on to power at all costs. In February he declared a state of emergency, suspended the constitution and ordered troops to storm the Supreme Court and arrest the judges and other rivals to stave off impeachment.

Yameen told supporters on the eve of the election that he had overcome “huge obstacles” since controversially winning power in a contested run-off in 2013, but had handled the challenges “with resilience”.

The crackdown attracted international censure and fears the Maldives was slipping back into one-man rule just a decade after transitioning to democracy.

India, long influential in Maldives’ affairs — it sent troops and warships in 1988 to stop a coup attempt — expressed hopes the election would represent a return to democratic norms. In recent years Yameen has drifted closer to China, India’s chief regional rival, taking hundreds of millions of dollars from Beijing for major infrastructure projects.

Gaza children killed by Israeli snipers, air attack

Palestinian protesters gather during confrontations with Israeli occupation forces east of Gaza City on 21 September.Dawoud Abo AlkasAPA images

Maureen Clare Murphy-21 September 2018

Israeli forces killed a Palestinian man during protests along the eastern boundary of the occupied Gaza Strip on Friday.

The slain protester, killed east of Gaza City, was identified by Gaza’s health ministry as Karim Muhammad Kullab, 25.

The ministry reported 300 injuries during Friday’s protests, 100 of them requiring hospital treatment.

More than 50 people were injured by live fire, four of them seriously and one critically.

One Israeli soldier was reportedly lightly wounded by shrapnel.

Kullab is the sixth Palestinian in Gaza killed by Israeli forces this week.

On Wednesday, Israeli forces shot 15-year-old Muamin Abu Iyada during protests east of Rafah on Wednesday night, killing him.

Two others were shot and killed during protests on Tuesday and two more killed in an airstrike on Monday.

According to Al Mezan, a human rights group based in Gaza, Israeli warplanes launched two missiles at a group of protesters late Monday night when they approached the boundary fence east of Khan Younis in southern Gaza.

The bodies of Naji Abu Assi, 16, and Alaa Abu Assi, 19, were recovered by Palestinian medics hours later. “Both had shrapnel injuries on various parts of their bodies and one of them was torn to pieces,” Al Mezan stated.

Around 140 Palestinians have been killed during demonstrations along Gaza’s eastern boundary since the launch of the Great March of Return series of protests on 30 March.

Those killed during the protests have included nearly 30 children, as well as two journalists and three paramedics, and three persons with disabilities, according to Al Mezan.

Some 5,500 have been injured by live fire during the protests, including 900 children.

Amnesty International has said it has not found any evidence of protesters posing a threat to the lives of soldiers behind the fence that would justify the use of deadly force.

The protests, which have been held every Friday since their launch, have increased in frequency in recent days. Protests have been held on weekdays “and include naval marches and night sit-ins near the separation fence – activities which do not threaten the life or safety of Israeli soldiers,” Al Mezan stated.

The protests are calling for an end to Israel’s blockade on Gaza, now in its 11th year, and in support of the right of refugees to return to their original lands and property on the other side of the Gaza boundary fence.
Two-thirds of Gaza’s population of two million are refugees.

“We will continue”

“We will continue our peaceful marches to fulfill our demands and liberate our lands,” one protester says in this video:

"مستمرون في مسيراتنا السلمية حتى تحقيق مطالبنا وتحرير أراضينا".. الشبان يوجهون نداءً للوقوف مع غزة وكسر الحصار عن شعبها في جمعة "كسر الحصار". pic.twitter.com/ntCZyVrJnd

— شبكة قدس الإخبارية (@qudsn) 21 September 2018

The young man urges leaders in the Arab world, whom he accuses of complicity with Israel, to stand with the Palestinian people in Gaza resisting the siege.

Yahya Sinwar, the leader of the Hamas movement in Gaza, said on Friday the ongoing protests show the world “how the Palestinian people on their land are a model of giving, loyalty, sacrifice and the service of humanity.”

خلال مشاركته في مسيرات جمعة "كسر الحصار".. رئيس المكتب السياسي لحماس بغزة يحيى السنوار: "هذه المسيرات انطلقت لتحقيق هدف شعبنا في فك الحصار". pic.twitter.com/UfASnamlUM

— شبكة قدس الإخبارية (@qudsn) 21 September 2018

Anticipating a rise in the number of protesters, the Israeli military deployed additional occupation forcesalong the Gaza boundary ahead of Friday’s demonstrations.

Occupation forces are said to be operating under orders to use live fire against Palestinians launching incendiary kites and balloons, which have landed in southern Israel in recent days.

Collective punishment threat

The head of COGAT, the bureaucratic apparatus of Israel’s military occupation of the West Bank and Gaza, said that collective punishment measures would be used against the general population in Gaza.

Apparently referring to naval protests held earlier this week, Kamil Abu Rukun stated that “The Hamas terror organization is using fishermen and forcing them to participate in riots.”

Abu Rukun said that the Israeli military would “use an iron fist” against such “rioters” and would reduce the permitted fishing area from 6 to 3 nautical miles off the Gaza coast.

Palestinian protesters sail boats during a demonstration against the Israeli blockade on Gaza along the maritime boundary with Israel near Kibbutz Zikim, north of Beit Lahia in the northern Gaza Strip, on 17 September.Ashraf AmraAPA images

Under the 1993 Oslo accords signed by Israel and the Palestine Liberation Organization, Gaza’s fishing zone was supposed to extend 20 nautical miles out from shore. But Israel has never allowed this and the furthest Gaza’s fishers have been able to sail has been 12 nautical miles out.

Over the past decade, Israel has reduced the permitted fishing area to 6 nautical miles, and sometimes less, and has frequently fired on fishing boats.

Israel has killed eight fishers since 2000, according to Al Mezan.

Gaza UNRWA workers go on strike to protest layoffs

Since US aid cuts, 956 UNRWA employees in Gaza have been dismissed and thousands remain at risk of losing their jobs

Agency serves nearly five million Palestinian refugees ( MEE/Mohammed A Alhajjar)

Ghazal Othman

Mohammed A Alhajjar-Monday 24 September 2018

GAZA CITY, Palestine – Thousands of workers went on strike in the Gaza Strip on Monday to protest US funding cuts for the UN Palestinian refugee agency, which have led to the dismissal of hundreds of its staff members in the besieged enclave.

Earlier this month, the United States announced it was cancelling all aid for UNRWA, the United Nations Relief and Works Agency, sending shockwaves through Palestinian society.

Last year, Washington – UNRWA’s largest donor until recently - supported the agency to the tune of $364m.

With all US support now pulled, UNRWA is scrambling to make up the shortfall in order to continue providing key services including education, healthcare and food assistance.

The UN has warned that such vital programmes will be cut unless $217m is found to replace the US aid.

The agency serves nearly five million Palestinian refugees who depend on its aid. More than 700,000 Palestinian were forced out of their homes in the events leading to the establishment of the state of Israel in 1948. Survivors and their descendants still live in camps across neighbouring Arab countries, the West Bank and Gaza.

Hundreds of UNRWA workers have already been laid off, with more dismissals feared to be on the horizon as the cuts begin to bite.

More than 13,000 employees from all sectors of the agency – including schools and medical clinics - staged a strike in Gaza on Monday. More than half of the population in the impoverished coastal enclave of two million are refugees.

So far, 956 UNRWA employees in Gaza have been dismissed and hundreds of teachers are at risk of having their contracts cancelled.

The labour union for UNRWA employees had called on all staff members to commit to the strike and participate in protest activities on Monday, stressing that everyone is under threat of being let go.

"We want to send a message to UNRWA that it must return to dialogue," Amal al-Batsh, vice-head of the labour union, told Middle East Eye.

"The labour union will not waive the rights of its employees. UNRWA should maintain its staff if it really wants to continue to provide its services."

She added that laying off so many staff members amounts to a crime against Palestinian refugees.

Even for those who are still employed, job insecurity has paralysed the family life of many Palestinians, Batsh said.

Wejdan Matar, an UNRWA employee, said that the strike would continue until the agency reverses its decisions.

Matar said her hours were cut by the agencies, and she does not know how much her pay will be decreased. She added that it was difficult enough to make ends meet on a full salary.

The labour union has announced it will hold a press conference on Thursday outside UNRWA’s Gaza offices, threatening "unprecedented measures" in retaliation to the layoffs.

'Dismissing employees is a great crime and a malicious policy,' sign reads (MEE/Mohammed A Alhajjar)

"If UNRWA does not take back its decision before Thursday, it will be surprised by what we are going to do," said Ahmed Lubbad, vice-head of the services sector.

Many of the Palestinians who went on strike on Monday voiced their fears over the layoffs.

"I previously worked with a different international institution, but when I got a job at UNRWA I had to resign from that job, thinking I found what I has been missing all along: job security," said Jabir Thabet, a mental health worker who has been an UNRWA employee for three years.

Thabet was converted to a part-time employee because of a lack of funding. He called the decision a "violation of my rights".

"I refused to sign the [new] contract because it does not meet my needs of a father like myself who is responsible for a family and rent."

Ismail al-Talaa, who has been working for UNRWA for 15 years as spokesman for the emergency program, was dismissed by UNRWA and given no notice – only a message saying: "Thank you for your cooperation with us, you have been dismissed".

"It felt like a bomb that exploded in all of us. After 60 days of protests, we have been told that the decision is still in effect," he added.

READ MORE►

The two-state delusion

Palestinians in Gaza, which has been under a devastating Israeli blockade for 11 years, have been staging demonstrations against the UNRWA cuts for some time.

In July, an aid worker tried to set himself on fire after being dismissed by UNRWA.

Cancelling the aid, the US State Department accused UNRWA of being an "irredeemably flawed operation". Washington is also trying to change the definition of Palestinian refugees in a bid to take the right of return out of final status negotiations.

Sabri al-Malwani, a mental health worker, said on Monday he is the breadwinner for eight people in his family.

"UNRWA's decision is a capital punishment, not only on 1,000 employees but to over 10,000 refugees; each employee is responsible for a large number of dependants," he said.