Confusion worse confounded

By G. H. Peiris-November 11, 2018

The ‘Opinion’ co-authored by Professors Savitri Goonesekere and Camena Guneratne titled ‘Constitutional Governance in a Parliamentary Democracy’ (The Island of 7 November) is the third in a series of attacks by the ‘Friday Forum’ on President Sirisena’s alleged violation of the constitution. In the present onslaught, there is a shift of focus from their earlier advocacy of employing the ‘objective and intention’ of the framers for determining the impact of a disputed constitutional provision, to highlighting the preeminence of Article 33 A of the ‘19th Amendment’ which stipulates that the President "shall be responsible to parliament for the due exercise, performance and discharge of his powers, duties and functions under the Constitution". Claiming that "it is parliament that must decide whether he has acted lawfully from the 26th of October 2018", the two professorsurge the immediate summoning of the prorogued parliament without waiting until the 14th of November (as notified by the President) so as to enable the parliament to decide whether the ‘regime change’ the president initiated and his prorogation of parliament constitute violations of the Constitution.

Parliamentary and Presidential Powers

A component of the Goonesekere-Guneratne submissions that lacks clarity relates to the interpretation accorded to the phrase "shall be responsible to parliament". Does this phrase mean that the president requires prior or postfactum parliamentary approval for exercising his powers, duties and functions – in short, did the ‘19thA’ enforce a transfer of presidential powers to the parliament?If it is ex post facto approval that are referred to in the submissions, is there any constitutional stipulation on how soon the president must seek such approval?

Having carefully gone through the Constitution of Sri Lanka as it stands at present (with all its amendments) I do not find any departure from the stipulation that the powers of adjudication over constitutional disputes are vested exclusively in the Supreme Court and not in the parliament. Indeed an implicit acknowledgement of this fact in the somewhat ludicrous professorial ‘alternative’ suggested for avertingthe crisis is "for the President to go before the Supreme Court, the third agency that represents the sovereignty of the people under Article 4 of the Constitution, and seek a clarification on the lawfulness of his action in this time of crisis"– a pronouncement endorsed by the entire ‘Friday Forum’ galaxy! If they actually believe in what the professorial duo say about this ‘Crisis’, one wonders why they have refrained from submitting their grievance to the Supreme Court?

Misrepresentation of the relevant Constitutional Provisions

I am reluctantly compelled to state that there is an element of intellectual dishonesty in the attempt made in this ‘Opinion’ to sanctify the Article 33A and to elevate it to the status of an overarching provision, and to link it to the principle of ‘Rule of Law’ that has been universally recognised as a corner-stone of democratic governance (which I was taught in the HSC course on ‘Government’) even before my first year at the university.

The version of the Constitution that could be accessed through the ‘Parliament’ website indicated how that Article has been incorporated

Paragraph 6 of ‘19A’ reads as follows:

6. The following Article is hereby inserted immediately after Article 33, and shall have effect as Article 33A of the Constitution:-

33A. The President shall be responsible to Parliament for the due exercise, performance and discharge of his powers, duties and functions under the Constitution and any written law, including the law for the time being relating to public security."

THERE IS NO MENTION IN THIS PARAGRAPH THAT THE ENTIRE ARTICLE 33 IS REPEALED.This is confirmed by the fact that in the document published as The Constitution of the Democratic, Socialist Republic of Sri Lanka by the government after the insertion of the foregoing amendment, Article 33 in May 2015 reads as follows:

33. (1)It shall be the duty of the President to –

(a) ensure that the Constitution is respected and upheld;

(b) promote national reconciliation and integration;

(c) ensure and facilitate the proper functioning of the Constitutional Council and the institutions referred to in Chapter VIIA; and

(d) on the advice of the Election Commission, ensure the creation of proper conditions for the conduct of free and fair elections and referenda.

(2) In addition to the powers, duties and functions expressly conferred or imposed on, or assigned to the President by the Constitution or other written law, the President shall have the power –

(a) to make the Statement of Government Policy in Parliament at the commencement of each session of Parliament;

(b) to preside at ceremonial sittings of Parliament;

(c)to summon, prorogue and dissolve Parliament; (my emphasis)

(d) to receive and recognize, and to appoint and accredit Ambassadors, High Commissioners, Plenipotentiaries and other diplomatic agents…

Why is it that the two spokespersons made no comment on 33 (2) c?

If I have made an error here, I shall be most grateful for a well-informed correction.

Misunderstanding the Nature of the Crisis

I fully agree with what the ‘Friday Forum’ has said about the existence of a crisis. There is so obviously a crisis (stemming from geopolitical considerations) for those who installed the Yahapalana regime in 2015 – the more powerful members of the NATO, their allies and their lackeys (including those of the Colombo-based NGOs); the Modi government of India (referred to in an article authored by an Indian scholar which I have cited elsewhere); the pro-secessionist outfits in the "Diaspora"; and those whom the LTTE installed in the political mainstreams of Sri Lanka. There is also a crisis of sorts by those who secured prestigious posts in State-sector institutions as rewards from their political masters for loyalty and support. The seriousness of the crisis varies. Perhaps the most calamitous prospects are faced by several persons in the elite levels of the ousted regime who are likely to be called upon to answer for the damage they have caused to the nation, their abuse of power and their vindictiveness at a personal plane.

The irony I see in the Goonesekera-Guneratne ‘Opinion’ is their disregard of the fact that President Sirisena’s reforms were intended to avert an aggravating crisis. Even if the ‘Friday Forum’ does not care a damn about the alleged assassination plot, the unprecedented scale of the ‘Central Bank Scam’ and several other large-scale financial misdeeds such as those involving the airline and the Kerawalpitiya power plant, the imprisonment of members of the security forces who are regarded by the overwhelming majority of our people as "national heroes" who saved the country from peril,mainly for the appeasement of the western powers to whom the Wickremesinghe administration has made absurd commitments (while certain unrepentant collaborators with LTTE by word and deed have rewarded with all manner of favours), the bilateral economic agreements the former has entered into with the backing of only his close circle of cronies, the members of the ‘Forum’, if they wish to safeguard their self-respect, cannot ignore considerations such as the denial of the democratic rights of the people by the absurd delay of the Provincial Council elections, the evidence of the huge erosion of people’s support to the UNP indicated both by the Local Government polls of February this year, as well as the seething unrest at almost all levels of our society generated by the maladministration of the ousted regime.

The flash election: A political way out or an instance of one mistake leading to another?

The constitutional crisis has spawned a live debate about the constitutionality of President’s action among many citizens, such as politicians, lawyers, academics, civil right activists, and religious leaders. 

 Monday, 12 November 2018

Adverse economic consequences of executive action

In a flash move, Parliament was dissolved last Friday by President Maithripala Sirisena, claiming he had powers to do so under the Constitution. It was not a sudden executive action, but the culmination of a series of actions he had been taking during the previous 14-day period. It all started when he sacked the incumbent Prime Minister Ranil Wickremesinghe and appointed the former President Mahinda Rajapaksa in his place on 26 October 2018.

Since Wickremesinghe refused to step down and continued to claim his right to premiership, there were two Prime Ministers, one sacked and the other just sworn-in. As I pointed in a previous article (available at: http://www.ft.lk/columns/With-this-man-made-Constitutional-crisis--economy-will-be-the-casualty--resolve-it-quickly-or-perish/4-665587), it had led to a man-made constitutional crisis needing a quick fix to save the economy from a possible collapse.

Instead, the President prorogued Parliament till 16 November, claiming again that the new Government under Rajapaksa needed more time to prepare a Budget. The opposition cried foul play, but he continued to appoint Ministers for various portfolios in several rounds, giving priority to those who had crossed over from the ruling United National Party.

Meanwhile, the Ministry of Finance, on the direction of Rajapaksa who got the finance portfolio, had announced a relief package, nicknamed ‘midnight goodies’, causing a derailment of the Government Budget from the path it had taken toward better budgetary management in the recent past. The adverse consequences of this move on the economy, taxpayers and the exchange rate were analysed by me in a previous article (available at: http://www.ft.lk/columns/Hastily-delivered--midnight-goodies--will-derail-budget--despite-assurances-by-Finance-Ministry/4-666082).

When the pressure was built by the international community for reconvening Parliament to enable it to choose the Prime Minister, the date of reconvening the Parliament was advanced by two days to 14 November. The dissolution orders were issued when Parliament was to be reconvened on this date.

Debate over the constitutionality of the President’s action

The constitutional crisis has spawned a live debate about the constitutionality of President’s action among many citizens. Those debaters are composed of a cross-section of the community, such as politicians, lawyers, academics, civil right activists, and religious leaders.

Those who support the President argue that he has discretionary powers in the Constitution to hire and fire a PM, prorogue or reconvene Parliament, or dissolve Parliament. For them, what he has done is totally in accordance with the Constitution.

Those who oppose him, drawing on the literal meaning of different sections in the Constitution, present a case where he does not have such powers in the Constitution at all. Both sides have generously been supported by lawyers, who have accordingly begun to enjoy a field day in educating the public of the issue at hand.


Sri Lanka is a republic and not a monarchy

However, it appears that those who are in the debating mode have forgotten that Sri Lanka is a republic – a democratic socialist republic for that matter – and not a monarchy. The discretionary powers claimed by those who are supporting the President are in fact enjoyed only by a monarch. Even then, according to ancient Indian tradition, as postulated in The Laws of Manu, a guide book for kings to follow written around 3rd century BCE, a king should use his discretionary powers for the benefit of all those in his kingdom who look up to him for protection, survival and prosperity.

Says Manu in Chapter 7 of the Laws: the king has power to punish people but he should not use it discretionarily but in accordance with accepted laws and principles. One question which he should ask himself when meting out punishments is whether his use of powers would make everyone happy in the kingdom. If the Rod of Punishment is used properly with due consideration, it makes all subjects happy, while improper use will destroy everything. Therefore, even in the case of monarchs who are supposed to have discretionary powers, those powers should be used only with one objective in mind. That is, whether the exercise of those powers will lead to greater happiness among the subjects. If they do not, the king is advised by Manu not to use those discretionary powers.

Heads of republics should have prior training

The case of a republic – derived from Latin to mean ‘an entity of people’ – is completely different. Today, the head of a republic is designated President, meaning one who presides over an entity of people.

Hence, he has no powers which are not being enjoyed by the people who belong to the entity that he presides over. Plato, the Greek philosopher who lived in the 5th to 4th centuries BCE, presented the case of a city state which he called the republic in the book carrying the same title.

The contents in the book are presented in the form of a dialogue between Plato and his Guru, Socrates. Plato does not call the head of the republic the President, but the Guardian. For a republic to function properly, he insists that the Guardian should be a philosopher who has been trained in that art thoroughly before he assumes that position.

A philosopher here is not in the modern sense of a philosopher, but one who knows the right and the wrong, and could avoid the wrong if it is to the detriment of the people in the entity. When Socrates probed into that conception by questioning Plato whether it would be possible to train a greedy human in the art of philosophy, Plato gives the example of a dog who would always do things to please his master. If a dog can be trained in that art, so could a human being too. It is difficult but not impossible, according to Plato.

Presidential action should be through consultation

When we examine the behaviour of the Guardians of republics today throughout the world, we observe that in a majority of cases, they do not show the signs of being pre-trained in that art altogether. Those who elect them to guardianship never ask the question whether they had undergone a similar training and acquired the needed discipline. As such, they are just elevated to that high position, even though they do not possess a proper understanding of what a republic is, or what role they should perform in their new position as guardians.

If they have been trained, they would always use those so called discretionary powers in consultation with the main stakeholders. This applies to the whole range of work they do as guardians, such as the appointment or the dismissal of a Prime Minister, prorogue, convene or dissolve Parliaments, and fixing dates for conducting elections.

Even though Great Britain is not a republic but a monarchy, the monarch has always followed these rules to the letter. A similar practice is found in other dominions like Australia, New Zealand, and Canada. Even in Sri Lanka, before the promulgation of the 1978 Republican Constitution, the Governor General or the President, as the case may be, had the habit of consulting the Prime Minister whenever he had to perform these duties by the people. In the case of the present Constitution, this requirement has not been written into law, but the fact that it is a republic and not a monarchy has made it clear that such a consultative process is necessary before the President uses his discretionary powers. Since Sri Lanka’s present President had not followed this process in his executive actions in the last two weeks, his action has not been in accordance with the Constitution.

Huge economic costs of Presidential actions

The economic costs of what the President had done in the last 14-day period have been enormous. Two international credit rating agencies, Moody’s and Fitch Rating, had flagged Sri Lanka over the uncertainty created by the constitutional crisis created by the President.

The corollary would be for Sri Lanka to pay a higher interest rate when it goes to the market to borrow in foreign exchange in order to repay its maturing debt. As a clue to this, the prices of all sovereign bonds which Sri Lanka had issued in the past had fallen across the border, the deepest being the bonds due to mature in a few months’ time. As a result, the present market interest rates on these bonds have increased by about 2% to 5% in the last two-week period.

As I have argued in my previous article under reference, the constitutional crisis has brought in uncertainty and the markets do not like it. When they react to this uncertainty, they punish the market participants ferociously. This is already evident in the case of the operations of the share market and the Government securities market. In the case of the share market, the foreigners had sold on a net basis shares amounting to about Rs 8 billion or $ 45 million. In the Government securities market, the total sales have been about Rs 21 billion or $ 120 million. Altogether, foreigners who do not like uncertainty have taken out of Sri Lanka about $ 165 million and it has put pressure for the rupee to depreciate in the market. This is indeed a dreadful experience for those in power, as well as those who are being ruled by them.

Impact on the Budget

The flash dissolution of Parliament has created another vital issue for the country’s budgetary operations. The Budget for 2019 was to be presented to Parliament on 5 November. However, due to the prorogation of Parliament a week before that date, the presentation of the Budget was made a non-event. It was then reported that the Government was contemplating to present a Vote on Account to Parliament when it was to be reconvened on 14 November.

A vote on account 

A Vote on Account is not a budget but permission given by Parliament to the Ministry of Finance to continue for the first three months of 2019 with the same expenditure, revenue, and borrowings, as approved by Parliament when it passed the Budget for 2018. The weakness in Votes on Account is that they do not contain new budgetary policies, and therefore are not aligned to the on-going reform program relating to Sri Lanka’s budgetary policy. To cover the balance 9 months after the lapse of the Vote on Account, a proper budget was to be presented by the new Government to Parliament. Though it is a better option than not having a budget at all, that mini-budget would not be able to present a comprehensive set of new budgetary policies. As such, as far as the budgetary reforms are concerned, the year 2019 will be a complete write-off.

Rescue clauses authorising President to spend money

When the Parliament was dissolved before it could meet on 14 November, this option too became a non-event. Now, Sri Lanka does not have a budget for 2019 and as a result, the Ministry of Finance would not be able to raise revenue for carrying out the public services in the country. However, sections 150 (3) and (4) of the Constitution provides for the President to authorise the payments for public services and the costs of the general election out of the Consolidated Fund of the Government for three months. These sections are rescue sections in the absence of a proper budget or a Vote on Account approved by Parliament, which has the authority concerning the public finances of the country. However, when implementing this, the Ministry of Finance will meet a new set of difficulties.

Consolidated Fund is a cash-flow account

The Consolidated Fund is simply a copy of the cash book of the General Treasury. It starts with an opening balance at the beginning of the year. All tax and non-tax revenues, interest incomes and proceeds of loans are added to that opening balance. Then, from the total fund availability, expenditure of the Government on account of both recurrent and capital items, payment of interest and repayment of loans are deducted. The closing balance is then taken forward for the next year.

Consolidated Fund in Sri Lanka doesn’t have money

Because of the deficit financing which Sri Lanka has been incurring throughout its post-independence history, the opening and closing balances of the Consolidated Fund are always overdrawn. It is similar to the overdraft balance in the bank account of a private entity. According to the Annual Report of the Ministry of Finance for 2017, at the beginning of the year, the Consolidated Fund had been overdrawn to the extent of Rs 187 billion. With a very bad budgetary operation during the year in which out-payments were much bigger than the inflows, the year had ended with an overdrawn balance of Rs 286 billion. The latest number available for 2018 has been that pertains to the end of April 2018. As at that date, the Consolidated Fund had been overdrawn to the extent of Rs 145 billion.

How to fill the gap in the Consolidated Fund 

What it means is that in terms of the Constitution, the President can authorise payments out of the Consolidated Fund. But without new revenue sources, it would always be in deficit and to finance the deficit, the Ministry of Finance will not be able to borrow money, since that borrowing program has not been approved by Parliament. Hence, due to the flash dissolution of Parliament before a proper budget or a Vote on Account is approved, Sri Lanka will run into a serious budgetary crisis.

Not too late to unravel the entanglement

It appears that the President has moved from one mistake to another through his executive action done without proper consultation in the last two-week period. This has entwined the whole country and the economy in an entangled web of mistakes. It is still not too late for him to unravel this entanglement.

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

Life pinches them like new shoes !

Cobbler family beneath banyan tree forced into separation by poverty  

2018-11-13

Having persisted working as a street-based cobbler for seven years, their family’s survival hangs by a thread. You may chance to spot the shoemaking couple by the Lipton Circus; seated by the side of the road on their rugged mat, their plastic bagged belongings beside them, eagerly waiting for someone to stop by in need of their services.   

Anusha, a mother of four, claims that on a good day they may earn a gratifying thousand rupees the most, adding that on most days they have to deal with a penniless reality.   

They weren’t always vagrant and destitute she says. Anusha recalls a time her family was able to afford the rent and live under the same roof owing to a steady income from their mango business. Following its failure, the children; two teenagers and the others aged seven and nine, now reside with an aunt in Thotalanga (Colombo 14) and are visited by their parents only once every few weeks. This arrangement was made with their children’s best interests at heart. The pair was adamant that financial disability should not obstruct their education and wellbeing. The oldest will in fact be sitting for (his) the Ordinary Level Examinations this year. 
The struggling parents face countless endeavours on a daily basis; their biggest challenge these days being the rain. The downpour not only ascertains a lack of clients, but also leaves them unsheltered, drenched and starved.   

Health issues   

Anusha recalls being chased away by security officials as she brought to light ‘a game of constant running, hiding and returning’ to their impermanent settlement underneath the Banyan tree.   

In addition to these challenges, they also battle health related problems like diabetes which inadvertently develop new expenses.   

Having witnessed her nimble fingers expertly take on various tasks of repairing, it was remarkable to hear that this craft was one they’d picked up by watching others at work. It was one they had to learn out of sheer desperation, but due to an obvious lack of business, a rise in the cost of living and a difficulty to restock needles, wax and other essentials, it is one they are struggling to continue with. While Anusha tends to their meagre mending work, her husband wanders the streets in search of odd jobs which fetches a few extra rupees.   

Although their dwellings, their garments and their lifestyles are evidently worn out and insipid, the adversaries named poverty and hardship find their resolve and faith to be invincible. The duo, who claim to be church-goers, have even assembled a humble altar of religious pictures on their worn out coir mat- a symbol of colourful hope amidst a dreary reality.   

 If their sympathetic tale, their admirable parental sacrifices and their unwavering faith aren’t enough conviction of their deserving condition, their one request will ensure it. When asked what they require most urgently, Anusha assured us that while hunger and thirst were bearable burdens, separation from their children was not. It is therefore a house that they desire the most, to reunite their family and to escape homelessness.   

Philanthropists are urged to aid them by any means to meet their genuine request. They may be contacted on 0753234404 or found at their usual spot near the United Motors showroom nestled under the shade of the Banyan tree.   

Pics by Damith Wickramasinghe   

Qatari cash can’t stop Israeli bullets

A wounded protester is evacuated during Great March of Return protests east of Rafah, southern Gaza Strip, on 9 November.Mahmoud BassamAPA images

Maureen Clare Murphy-10 November 2018


One Palestinian was killed during the 33rd consecutive Friday of mass protests along the eastern perimeter of the occupied Gaza Strip.

The protester slain Friday was identified by Gaza’s health ministry as Rami Wael Ishaq Qahman, 28. He was shot east of Rafah:

 

Another Palestinian was killed by Israeli forces one day earlier.

Muhammad Abu Sharbin, 21, was fatally shot when a group of youths reportedly approached the boundary fence east of al-Maghazi refugee camp in central Gaza on Thursday.

More than 220 Palestinians have been killed by Israeli forces in Gaza over the past seven months, all but approximately 50 of them fatally wounded during Great March of Return protests in the boundary areas.

Nearly 40 more Palestinians were injured by live fire during Friday’s protests, including six children and a paramedic.

Israel continued to use lethal force against unarmed protesters despite a reported agreement with Palestinian factions in Gaza to ease tensions along the boundary.

But on Friday, Yahya Sinwar, the leader of Hamas in Gaza, denied there was any such agreement with Israel. He said his faction was reaching “understandings” with Egypt, Qatar and the United Nations to lift the blockade.

 

Palestinian protesters continued to approach the boundary fence and confront Israeli soldiers on Friday:

 

Organizers had stated earlier in the week that though the protests would continue until Israel’s 11-year siege is fully lifted, demonstrators would not approach the Gaza-Israel boundary fence.

Qatari officials brought in $15 million in cash to Gaza in recent days, disbursing it to some 30,000 civil servants hired by Hamas since 2007 whose salaries hadn’t been paid in months.

The money will also be used to create 10,000 jobs in Gaza, where unemployment is currently nearly 55 percent – believed to be among the highest rates in the world, if not the highest.

The Qatari funding is the first installation of a total of $90 million pledged by the Gulf country for Gaza to be paid over the following six months.

“Members of Hamas’ military wing will be paid from tax proceeds collected by Hamas in Gaza and not from the Qatari funds,” the Israeli daily Haaretz reported.

The funding has been approved by Israel, which is reportedly vetting which civil servants in Gaza get paid.

A top Qatari diplomat, Muhammad al-Emadi, paid a brief visit to a Great March of Return protest on Friday.

Reuters reported that “as the diplomat’s convoy departed, some youths threw stones that smashed a window on his bodyguards’ car – suggesting not all Palestinians were pleased with Qatar’s intervention.”

Video shows part of the incident:

 

Certainly not everyone is happy with Qatar’s infusion of cash and fuel for electricity into Gaza.
Palestinian Authority leader Mahmoud Abbas has insisted that any international projects in Gaza remain under the auspices of his West Bank government. But reports this week indicate that he has promised not to thwart what appears to be a de facto truce between Israel and and Hamas by imposing further sanctions on the Strip.

Palestinian Authority leaders vehemently reject such a truce, saying it would cement the split between the West Bank and Gaza.

Meanwhile a Palestinian man crossed the Gaza boundary, reaching an Israeli community before being arrested on Friday.

Israel claimed that the man, who was unarmed, set fire to a greenhouse in the area, though earlier the Israeli military said that it had accidentally started the blaze by firing a flare during the arrest.

Video shows the flaming structure:

 

On Wednesday, a Palestinian fisher was reportedly killed by Egyptian navy fire while in waters off of Gaza’s southern coast.

Mustafa Khalil Abu Odeh, 30, from al-Shati refugee camp in Gaza City, was hit by two bullets, the head of Gaza’s fishing syndicate told media.

He is the second Gaza fisher to be killed by the Egyptian navy this year. Abdullah Zeidan, 33, was shot and killed in Gaza’s southern waters in January.

In the occupied West Bank, Israel returned the body of a Palestinian killed by its forces weeks earlier.

Muhammad Yusif Alayan, from Qalandiya refugee camp near Ramallah, was shot and killed by Israeli police in Jerusalem in September.

Police said at the time that the man charged at a Jewish man, knocking him to the ground, and then ran towards the officers who fired at him while he waved a screwdriver. No Israelis were injured during the incident.

Videos show crowds receiving Alayan’s body in Ramallah on Friday:

 

Two Israelis were lightly injured after an unidentified shooter opened fire on a bus near the Beit El settlement near the West Bank city of Ramallah on Wednesday.

A Palestinian who allegedly shot and killed two Israelis at a West Bank industrial settlement last month remains at large.

The military surrounded the alleged gunman’s home and called on him to turn himself in on Wednesday. But Ashraf Walid Suleiman Naawla, 23, was reportedly not there at the time.

Naalwa’s family members have been detained and interrogated.

On Thursday Israel’s high court froze a demolition order against the home of Naalwa and his family after an appeal by the Israeli rights group HaMoked.

Since late 2015 Israel has accelerated the demolitions of the family residences of Palestinians alleged to have attacked Israelis, a form of collective punishment Israel never applies to Jewish perpetrators.

Such collective punishment measures violate the Fourth Geneva Convention and other international laws and thus are war crimes.

Israel kills six Palestinians, including Hamas commander, in Gaza raid: Reports

Prime Minister Benjamin Netanyahu cut short visit to Paris and was returning to Israel after violence erupted, spokesman said

Local reports in Gaza said Israeli planes fired at open area near the incident (AFP/filephoto)

Sunday 11 November 2018 

An exchange of fire erupted during an Israeli military raid in the Gaza Strip on Sunday, leaving six Palestinians dead including a commander in Hamas's military wing, while potentially dashing hopes that a recent agreement might restore calm.

Prime Minister Benjamin Netanyahu cut short a visit to Paris and was returning to Israel after the violence erupted, a spokesman said. Israeli Defence Minister Avigdor Lieberman was holding consultations at Israel's military headquarters, his office said in a statement cited by Reuters.

"During operational activity in the Gaza Strip, an exchange of fire evolved. More details to follow," an Israeli army statement said.

Palestinian security sources said the clash occurred east of Khan Yunis, where six people were killed and seven wounded, according to the Gaza Health Ministry. Local reports in Gaza said Israeli planes fired missiles near the incident.

The Times of Israel

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In a statement, Hamas’s armed wing, the Qassam Brigades, said Israeli undercover forces in a civilian vehicle infiltrated three kilometers into Gaza and fatally shot one of its commanders, the Wahington Post reported. It said militants discovered the car and chased it down, prompting Israeli airstrikes that killed “a number of people.”

During the pursuit, Israeli aircraft fired more than 40 missiles in the area, witnesses told Reuters.

A Hamas spokesman denounced a "cowardly Israeli attack."

After the clash erupted, sirens were reported in southern Israel, indicating rocket fire from the Gaza Strip, AFP said.

Residents of Israeli communities near Gaza said the scope of these airstrikes was exceptional and “sounded almost like a war,” Haaretz said.  The Iron Dome missile defense system intercepted at lease two projectiles during the subsequent exchange of fire. Residents of Gaza border communities received directions to remain near shelter.

Israeli military spokesman Jonathan Conricus said all Israeli soldiers involved had returned to Israel. "IDF operated in the Gaza Strip, exchange of gunfire ensued," he wrote on Twitter, referring to the Israel Defence Forces. "All IDF soldiers back in Israel. Several alarms have sounded in southern Israel."

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Palestinians denounce Hollywood stars' $60m for Israeli army 'terror'

Gaza's Health Ministry reported the slain Palestinians were: Hamas commander Nour al-Din Muhammad Salama Baraka, 37; Mohammed Majid Mousa Al-Qara, 23; Alaa al-Din Muhammad Qwaider, 22; Mustafa Hassan Mohammed Abu Odeh, 21; Mahmoud Attallah Musabeh 25, and Alaa Fawzi Mohammed Fseifes, 19.

The violence may have shattered a potential turning point after months of bloodshed along the Israel-Gaza fence, where at least 218 Palestinians have been killed, and more than 23,000 others wounded since the beginning of protests on 30 March.

In late October, Israel and Qatar reached an agreement for Doha to send funds to pay Gaza's civil servants, who hadn't been paid since September 2013.

Qatar announced that a first $15m instalment - out of a $90m total payout - was to be delivered on Friday and go to paying the salaries of employees working for the Hamas-led authorities in Gaza.

The Qatari funds also went to pay for emergency fuel supplies, which are expected to increase the number of hours of electricity available in Gaza from four to nearly 10 per day.

Demonetisation is Now Paying Dividend in India

It is necessary to view the demonetization measure not as an isolated step to root out corruption and black money but as part of the several other measures to achieve this objective. Demonetisation measure is a first step and mother of the reform measures to root out corruption.

by N.S.Venkataraman-Nov 11, 2018

( November 11, 2018, Chennai, Sri Lanka Guardian) With the next Indian parliamentary election only a few months away, critics of Narendra Modi government and opposition parties are leveling several criticisms and allegations which are not adequately backed by reliable facts and figures. In the coming months, it is likely that the criticisms will become more sharp and more vicious. With constant campaign by the critics and opposition parties, that are bordering on generating personal hatred against Mr. Modi and which are highlighted by the media and even supported to some extent by section of the media , it appears that atleast some section of the people will be carried away by such propaganda.

Of the several criticisms , the most focused one in the coming months would be the demonetization decision of the Modi government two years back.

What critics say ?

The demonetization decision is criticized on the following three counts.

The first criticism is that In the currency circulation of around Rs. 18.5 lakh crore, if almost the entire amount have been returned to the banking system after demonitisation as claimed by the Modi government, then it only means that there is no black money. Surprisingly, such criticism has been made even by the former Finance Minister in Manmohan Singh government , who should know better. He has asked “where is the black money?”

The second criticism is that the black money in India is more in the form of gold that is hoarded and cash invested in real estate. While demonetization was aimed at bringing out the black money in cash form, why has Modi government ignored the hoarded gold and tax evaded black money invested in real estate?.

The third criticism is that while it is claimed that demonetization has wiped out the black money, the ground reality is that black money is in circulation in India today and almost returning to the level of pre demonetization era.

Criticisms not based on sound logic :

A careful analysis would indicate that the above criticisms are not based on sound logic.

When almost the entire currency in circulation before demonetization, part of which was not routed through the banking system and was the tax evaded black money which contributed to parallel economy, was brought back into the banking system after demonetisation, the objective of the demonetization to wipe out the black money was largely achieved. The question of the former finance Minister “Where is the black money” is totally illogical.

The parallel economy was causing havoc in the country ,which contributed to high level of corruption and misuse of the tax evaded black money in the parallel economy for unlawful activities like fostering terrorism etc.

With regard to the criticism that the hoarded gold and real estate bought with the black money has not been attacked by the demonetization measure, the fact is that demonetization measure was followed by several steps to curb the corruption, of which one of the important one was anti benami Act. After the promulgation of anti benami act, around 17,000 high value real estate transactions were attached by the government, which means that the owners were deprived of the property and the money invested by them in such real estate was lost.

With regard to the hoarded gold, Modi government has launched around 35,000 surveys to locate such hoarded gold , cash etc. and has already seized around Rs.. 4000 crore worth of gold and cash hoarded. The tax evaders have confessed with regard to the undisclosed income of around Rs. 52000 crore. For all this money, they have been paying heavy penalty to the government.

Demonetisation yielding dividend :

The demonetization measures are yielding results, as the number of those who have submitted returns to the income tax authorities which was 3.8 crore in the year 2014 has now reached 6.86 crore during Modi government’s four and half years of governance. In this four and half years, the number of persons who have paid income tax have gone up from 6.4 million in 2014 to 12.4 million in 2018. In other words, in the last sixty years till 2014, only 6.4 million people were paying taxes. Now, after the four and half years of Modi governance, the number of tax payers have gone up by around 100% to around 12.4 million.

The above figures are highly impressive showing that demonetization measures are paying dividend, which has resulted in significantly expanding the tax base in India and the income tax collected.

How poor people benefited by demonetization ?:

The critics ask as to how the poor people have been benefited by demonetization measures and they claim that the poor people have suffered. On the other hand, the fact is that Modi government has launched many proactive programmes to help the cause of poor people such as construction of thousands of toilets for poor house holds, construction of houses for people belonging to lower income group, construction of hundreds of kilometres of road ways, extension of electrification to several villages and remote areas and others. Large investments are going into such essentially welfare oriented projects and such investments have been possible due to the money collected after demonetization by way of taxes, recovery of hoarded money and penalty imposed on undisclosed income. Most of these investments have been managed without imposing additional taxes and even the income tax slab rates are being steadily reduced. Modi government’s scheme to introduce health insurance for poor is a measure of great significance and importance.

Wiping out shell companies :

While introducing the demonetization measure, Prime Minister Narendra Modi clearly and categorically said that demonetization measure is only the first step in rooting out the corruption and many more stringent measures would be followed. True to his words, he introduced number of anti corruption schemes.

Amongst many measures, one of the most significant one is the identification of shell companies and forcing their closure. In the past, several operating companies have floated other letter pad companies that have bank account but little or no operation. Such letter pad companies were used by the company owners to divert part of the income of the operating companies to these non operating letter pad companies, which are called as shell companies. When Modi government insisted that all companies should submit their PAN number to the banks which were linked to the mobile number of company owners and their Aaadhar number, the companies without PAN number were identified and removed. The money in possession of shell companies in the bank are frozen. Further, directors of shell companies were largely barred from acting as directors in other companies. So far, around two lakh of such shell companies have been closed and another around two lakh companies are being investigated. This is one of the very important steps in rooting out corruption.

Bankruptcy law :

Another significant step initiated by Modi government is the introduction of Insolvency and Bankruptcy Law. Earlier, when companies became sick and defaulted in paying interest and principal amount to the banks , the companies got closed and employees were thrown out of jobs. But, the owners of companies went almost scot free and were not deprived of their assets.

With the introduction of Bankruptcy law, when the companies default in payment to the financial institutions, the matter is referred to the Insolvency Board and the owners are divested of the ownership of such companies and proposals to take over of such companies by other companies are invited.

Fearing such law, around 23000 companies have now come forward to settle their accounts with the financing institutions ,which resulted in financing institutions receiving about Rs. 83,000 crore after the introduction of Insolvency and Bankruptcy Law.

Need for holistic view of demonetization:

It is necessary to view the demonetization measure not as an isolated step to root out corruption and black money but as part of the several other measures to achieve this objective. Demonetisation measure is a first step and mother of the reform measures to root out corruption. Therefore, it is necessary to take a holistic view of the demonetization strategy of Modi government.

More measures needed :

With regard to the criticism that the black money is now being generated even after demonetization measure, one has to accept that this is a fact. Obviously, the corruption is deep rooted in Indian society and seem to have become part of life. There are many cases where bribe givers are also bribe takers and the distinction is becoming thinner. In such circumstances, the remedy is introduction of more stringent measures similar to what have been taken in the last four and half years by Modi government.

Finally, it needs to be recognized that demonetization measure as such is sound in principle and there is no need to be apologetic about this.

Criticism in vacuum :

Former Prime Minister Dr. Manmohan Singh has criticized the demonetization measure in harsh terms. However, he has not suggested any alternate method to bring out the tax evaded black money into banking system. Is the job of Dr. Manmohan Singh done by criticizing demonetization measure but not suggesting any alternate strategy? Is it not criticism in vacuum ?

The Old and the New Silk Roads

China’s bid for dominance in global trade and politics, but not in finance

Kumar David-November 10, 2018, 12:00 pm 

This piece is in danger of falling between two stools. I want talk about a magical digital exhibition of the Mogao caves at the north-western end of the Hershi Corridor which is the gateway into Xinjiang Province (where tens of thousands of Muslims are interned for brain-washing today) which borders Central Asia; but I also want to comment on the ways in which new silk road (Belt and Road Initiative – what an ugly clunky name) differs from the great Silk Road of long ago. Let’s see how I bridge the dichotomy. The Old Silk Road (OSR) was a 6,500 km overland network from the ancient capital Xian through fabled cities Samarkand and Bukhara into Persia and thence Damascus and Mediterranean ports Tyre and Antioch and then by sea to Rome; or via a more northerly overland route to Cappadocia in modern Turkey and to ancient Byzantium.

The Han Dynasty (206 BC-220 AD) whose capital was Xian consolidated the route through north-western China and Central Asia. Silk was not the only product; the Chinese exported tea, sugar, porcelain, and spices. Most exports were luxury goods; imports were cotton, ivory, wool, gold, and silver; two-way commerce thrived. There was also a less important maritime network linking Chinese ports to South East Asia and India. Not only commerce but ideas and philosophies (and later on disease like the plague) traversed the OSR, prime was the transmission of Buddhism to China. Emperor Asoka is said to have sent missions but I could not find evidence on my travels on the OSR some years ago. Monks and scholars traversed the route in later centuries, spent many years in India and took back texts which were translated into Chinese. Traditional Chinese people call themselves Buddhists (practices are different from Lanka), not Confusions, because the latter is more ethics and a code of conduct. There are about 200 million people who accept Buddhist philosophy in China today.

A famous group of about 1000 Ajanta-like caves dug into a rock face in Mogao is near the modern town of Dun Huang. The first cave was dug in 366 AD (or 332?) by itinerant monk Le Zun who experienced visions. Soon he was followed by others and over centuries the caves won imperial patronage. The high point was the Tang Dynasty (618-907 AD), the pinnacle of Chinese civilisation. After the Tang, the caves were neglected, and by the Yuan (Mongol) Dynasty (1279-1368) forgotten till rediscovered in the early 20-th Century. This was mixed a blessing; "archaeologists" from Hungary, Japan, Russia, France and America robbed everything they could carry away from books to petit statues and small murals.

What I want to introduce is a breath-taking digital exhibition created by China’s Dunhuang Academy in collaboration with scientific institutions to preserve and display high-fidelity displays of murals, grottos and stucco images. High-fidelity photography, laser scanning, digital databases and multi-media technologies create an "as if you are there" experience. I was captivated by a visit to the Hong Kong Heritage Museum where the exhibition is on display for three months. It is stunning; capture the QR-code beside each exhibit on a mobile phone and it will link you to an information bank about the exhibit. While viewing large replicas or wall-to-wall murals move a cursor on a table top version and a pointer moves on the big exhibit giving a commentary on the selected portion of the original. I urge you to visit the websites below for an experience of a grand show. Remember, as you "walk" through the video that these are not web images but an amazing laser and digital, light and sound show that you could physically walk through if only you were here.

https://www.e-dunhuang.com/cave/10.0001/0001.0001.0254| https://m.youtube.com/watch?v=2Y54iHtfxgQ

This then is the right moment to switch to the New Silk Road (NSR), China’s attempt to reshape the world for a Chinese Century. Oh, maybe it’s only a return to square one; for all recorded history, except from the rise of capitalism to today, China and India were the largest global economies.

The New Silk Road

OSR was an artery of trade in exotic and luxury merchandise but commerce is only one of the purposes of NSR. It is in addition an arena of geopolitical rivalry, a growth model for new economies, and a market for China’s burgeoning economy. On the infrastructure side, the skeleton is:

a) Two railways one through Russia to Europe, one through Central Asia to the Mediterranean

b) A land route through Pakistan to the Indian Ocean

c) An interconnected rail network in Thailand, Burma, Malaysia and Bangladesh

d) A short new railway line into Mongolia and Russian Siberia

e) Maritime routes, harbours and railways in the Indian Ocean littoral, East Africa and the Mediterranean to Greece – the new Hambantota Port is one such harbour

There is big money involved but it is hard to get a handle on quite what’s what. Estimates put the long term cost at $1 trillion and $340 billion of contracts have been awarded to Chinese construction companies already. China says $50 billion has been earmarked for infrastructure development in other countries (Thailand, Laos, Malaysia, Indonesia, Bangladesh, Sri Lanka, Pakistan, Kenya, Ethiopia and Greece) but in view of the scale of the undertakings this is woefully inadequate. Malaysia’s Mahathir Mohamad cancelled three NSR projects valued at $30 billion citing internal fiscal problems. "Deferred until such time we can afford and maybe reduce costs". The Chinese vice finance minister responded "We know debt sustainability of participant countries is a complicated issue, but we will take care of it". Clearly, China is keeping a fat wad in its back pocket for a rainy day.

Where is the big picture that China is painting taking the world? (If you are seeking everyday details the web is saturated with data). There are four headings under which I will explore the big picture implications of the NSR for China and the world: What’s in it for Chinese industry; what’s in it for countries on the route; Chinese geopolitics and the standoff with the US; and finally China’s Achilles’ heel, finance-capital. Though brief it will help you get a bird’s eye view.

China’s construction overcapacity

China’s infrastructure building capability is prodigious unlike the west and especially the US where underinvestment in transport and infrastructure is horrifying; China pursued an infrastructure-based development strategy and its engineering and construction experience including highways, bridges, tunnels and railways is unmatched. Leveraging this capability to Asia and Africa when overcapacity in construction, cement, steel and manpower has surfaced at home is quite natural. This natural extension of an infrastructure-driven economic development model has promoted growth and is reshaping an Asian and African economic continuum.

Impact on countries along the route

To keep this comment manageable I will confine myself to Asia and Africa and leave out the Central Asian countries (Kazakhstan, Uzbekistan, Kyrgyzstan and Tajikistan) and Mongolia and Russia. In Africa I will mention only Kenya and Ethiopia and in Asia only Indonesia and Pakistan; that’s quite enough for a good sample - about Sri Lanka you know as much as I do. China’s total trade volume along NSR-route countries is $1 trillion annually and created $1 billion in additional annual revenue and 180,000 jobs in those economies.

The Mombasa–Nairobi 470km railway will reshape Kenya for generations though the price was hugely inflated by corruption in the host country, a phenomenon Lanka is very familiar with. At $3.2bn it is Kenya’s biggest infrastructure project, cuts travel time by 6 hours, carries a million passengers and 600,000 tons of cargo a year and created 45,000 jobs during construction. Ethiopia’s Eastern Industrial Zone (EIZ) is a China-built hub where dozens of Chinese manufacturers have set up plant and employed thousands. Significantly, it has transferred China’s state-led economic model for Ethiopian modernisation. The EIZ inspired similar zones across the country and is turning Ethiopia’s fast growing economy into an industrial hub. The most important long-term impact will be the transfer of the Chinese state-private economic model to Ethiopia.

Agriculture accounts for 40% of Ethiopia’s GDP and 85% of employment. The China inspired model is critical to its aspiration to become a middle-income economy. There are worries as in Sri Lanka whether partnering countries will be encumbered with large debts. The two differences are that Africa is borrowing for development and adopting an economic model while Lanka borrowed for showcase projects and to rob, and learnt nothing about development. The entrenchment dirigisme economic strategies as an alternative to failed neo-liberalism and liberalism will be the pivotal long-term impact of NSR in late-developing countries.

China is building Indonesia’s first high-speed 140-km Jakarta-Bandung railway. The project is running behind schedule due to land clearance issues and is likely to be a year or two behind its 2019 completion target. The China–Pakistan Economic Corridor is the most important NSR single country initiative. It invests in transport, energy and a major new port but there seem to be financing hiccups. By June 2018, 10,000 freight rail trips had been completed between Europe, Teheran and China. Trains out of the UK are often loaded with Scotch – hooray!

The Asian Infrastructure Investment Bank was set up to lend to NSR projects. China put up $160 billion but I am not sure how the participation of other countries is coming along and reveals China’s limited experience with finance-capital which I will mention at the end.

Geopolitics and the trade war with the US

The trade war with the US has rapped China on the knuckles and taught it a harsh lesson. It must diversify export markets, build infrastructure ties with Asia and Africa, reduce barriers to trade, align standards and address excess capacity in Chinese industry. NSR led export growth also helps inland provinces Xinjiang and Yunnan. Economic growth will pacify Xinjiang’s Uighur Muslim population and blunt separatism better than naked repression and internment of hundreds of thousands in virtual concentration camps. No Colombo state ever dreamt of using economic goodies as a tool to blunt Tamil separatism because they were all driven by racial hostility.

South Asian countries Pakistan, Nepal, Sri Lanka, Bangladesh, and Afghanistan will strengthen basic infrastructure and enhance Chinese trade and military influence. The NSR initiative is a way to extend influence at the expense of the US in the fight for regional leadership. The trade-war with the US is motivating China to redouble its efforts to find new export markets. GDP in 2018 Q3 declined marginally to 6.5% on an annual basis, but more serious is that domestic (Yuan) debt is at a huge $5.8 trillion dollar-equivalent because provincial governments have been on a spending spree. Hence turning too rapidly to the domestic market has its limits.

China is a novice in finance-capital

China does not have the experience of London and New York in capital deployment and nowhere near as deep pockets as American finance capital. Chinese banks have little experience in controlling risk or allocating resources efficiently. These weaknesses will slow down the big splash that China hopes to make via NSR. My guess is that it will be decades before the full fruits of NSR emerge. The yuan has just joined the dollar, euro, yen and pound in the IMF’s special drawing rights basket and this may help China challenge the petrodollar as the sole currency of the oil trade. This is a first step but not a substitute for learning to play with the big boys in the game of finance-capital which is now hegemonic in global capitalism.