People’s sovereignty in reverse gear

25 August 2015 02:44 am - 1 - {{hitsCtrl.values.hits}}

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One of the major concerns of the Sri Lankan economy was the current account deficit in the Balance of Payments (BoP) coupled with the depletion of the external foreign reserves. Sri Lanka’s trade deficit widened in July 2015 as exports fell dragged down by lower export earnings. However, the oil import bill has come down significantly and that alone should have given a positive BoP. Further, the import prices of rice and sugar also declined compared to the corresponding period in 2014. During the year, the Sri Lankan rupee depreciated against the US dollar over 4 percent. The rupee closed at 134.00 per US dollar last week with the Central Bank intervening to keep the currency falling while printing money to keep interest rates down. “I don’t know how long we can hold this currency as exports are falling,” said Dr. Harsha de Silva, Policy Planning and Economic Affairs Deputy Minister of the interim government.

Due to the rupee depreciation, the prices of essential food items will go up despite the government announcing a reduction of prices of a series of items including coriander, which is good as a remedy for viral flu. Unfortunately, at present, the Sri Lankan exports are not doing well. The tea prices in the Colombo auction have decreased during the first seven months compared to the corresponding period last year mainly due to the subdued demand from the main export markets such as Russia, the Middle East, etc. The Central Bank said that the trade deficit during the first six months of 2015 increased by 15.6 percent to US $ 4,086 million.

It is reported that the new government will pursue a social market economy. However, only very few people remember that President Mahinda Rajapaksa government also came into power in 2005 emphasizing the same old ‘socially-oriented market economy system’ to uplift the economic welfare of the people. You will also recall the slogan of the 1994 PA government of Chandrika Kumaratunga: ‘open economy with human face’. Does it mean the government will continue to pump in money for the fertiliser subsidy? So this is nothing new.

The government ministers of the United National Party (UNP) had emphasised during the election campaign that raising spending and giving salary increments will give a boost to the economy, repeating the standard Keynesian doctrine. If state spending is financed purely by taxes, growth will be neutral, as somebody’s money in the private sector will be taken and given to the state sector. If the spending is financed by excess liquidity or actual printed money, then we could expect the foreign reserves to go down.

Forming a national government through defeated members
In the recent memorandum of understanding signed between the UNP and Sri Lanka Freedom Party (SLFP), the two parties pledged to ensure “ethnic and religious reconciliation”. The agreement pledges constitutional reforms to ensure ethnic unity and uphold the rights of minorities. It remains unclear how the two parties will favour extensive devolution of power to the North-East Tamil speaking people. The Constitution will be amended to incorporate greater devolution, perhaps without referring to the word “federalism”. Nevertheless, it is argued that the 13th Amendment has gone to the edge of the unitary state concept (vide Supreme Court determination in 1986).

There seems to be a general consensus among the right thinking people that it is wrong to appoint defeated candidates to Parliament through the National List. All four major parties, including the UNP, have so far nominated 11 defeated members to Parliament out of a total of 29 positions allocated under the National Lists. These National Lists have previously been gazetted for the benefit of the voters and the defeated candidates’ names were not there in the gazette.

The SLFP is the main culprit as they not only nominated seven defeated candidates to Parliament but ignored the views of the other constituent party leaders. One can argue that this move is against the letter and spirit of the Article 3 and 4 of the Constitution. This is because unlike the Indian or the U.K. Constitutions, our constitution vests sovereignty in the people. “…The Members of Parliament hold a mandate and are agents of the People.” These are the extracts of the judgement delivered in 1987 on the 13th Amendment to the Constitution by Justice Wanasundera.
Therefore, this act of appointing defeated candidates could be construed as going against the will of the people and the mandate given by the voters at the elections just concluded. A friend of mine asked me yesterday in lighter vain, whether it is possible to collect some marks from the so-called “National List” and enter the university in the event a student who sits at the GCE Advanced Level exam fails to receive the cut off marks.

Reverse crossovers
It is reported that some 20 SLFP Members of Parliament (MPs), including the defeated candidates, have decided to support the national government concept and accepted portfolios. This will enable the elected MPs and even defeated candidates to carve out portfolios and privileges in Parliament. A section set to support former President and MP Mahinda Rajapaksa and sit as an opposition group in Parliament. However, they stand to lose the party membership as the SLFP party is in total control of Maithripala Sirisena, who happened to be the Executive President.

One can argue that this is a “reverse crossover” situation and going against the party decision to form a national government. Then another question would arise. Can an elected MP of the United People’s Freedom Alliance (UPFA), say Mahinda Rajapaksa, nominated to contest under the beetle symbol by the SLFP as a constituent party, remain in Parliament as a UPFA opposition member, disregarding the directives issued by the SLFP leadership? Under the Constitution, can he do it without being unseated?

The Article 99(13) of the Constitution says that if an MP who is expelled by his party challenges the validity of his expulsion in the Supreme Court, his seat will fall vacant only if and when the Supreme Court holds the expulsion to be valid. As for the jurisdiction of the Supreme Court, some consideration of the merits of the case could also be made without limiting to the procedural review only. The current election law requires the voters to mark their ballot paper for the party of their choice first and thereafter for their preferred candidates of that party. It was recognized that the exercise of a person’s freedom of association to join a political party necessarily meant the acceptance of certain constraints on his freedom of speech. On the other hand, it can also be argued that MPs are entitled to act according to their own judgment and conscience. There are a number of Supreme Court decided cases in this regard.
In the case of Sarath Amunugama and others vs. Karu Jayasuriya and others (expelled from the UNP) the then acting Chief Justice Amerasinghe and two judges unanimously held that the expulsions were invalid for want of procedural propriety. Even in Tilak Karunaratne vs. Sirimavo Bandaranaike case in 1993, it was held that he had ‘taken every possible step’ within party forums to agitate his grievance before going public. Hence, his conduct was justified and his expulsion invalid.

In the case of Basheer Segu Dawood vs. Ferial Ashraff and others, the petitioner was a member of the Sri Lanka Muslim Congress (SLMC) which, together with another party, formed an alliance known as the National Unity Alliance (NUA). At the parliamentary elections of 2000 the petitioner’s name appeared on the NUA list. It appears that he did not secure enough preference votes to get elected by vote but was nominated as a National List MP for the NUA.

Subsequently, the leadership of the NUA expelled him and informed this fact to the Secretary General of Parliament. Segu Dawood challenged his expulsion in the Supreme Court. It was held that as the MP was a member of the SLMC and not the NUA, he could not be expelled by the NUA. Here, the UPFA during the campaign has categorically said that they would not join a national government with the UNP and the manifesto of the UPFA is silent on that issue. Therefore, one can argue that joining a national government is going against the mandate and not vice versa.

Sovereignty is in people
The economic sovereignty is defined as the power of the national governments to make decisions independently of those made by other governments. One can argue that both the economic and political sovereignty of the people are on the reverse gear.

As stated above, during the last couple of months, the foreign reserves have plummeted as the authorities had to defend the external value of the rupee by selling dollars lying to the credit of the gross official reserves. At the same time, Sri Lankan authorities have resorted to raising money through issue of treasury bonds/development bonds. It seems that the government had to rely on the Central Bank via the monetary policy to run the economy as opposed to fiscal measures. As stated in the World Economic forum, 2015 publication, central banks are increasingly caught between domestic political pressures and alleged monetary policy and supervisory independence. Through increasingly politicized central banks, they use unconventional tools to advance their government’s policy interests.

The Nobel laureate economist, Sir Arthur Lewis argued that developing countries should orient more of their trade toward one another and move in the direction of economic integration. Economic integration occurs whenever a group of nations in the same region join together to form a regional trading bloc by raising a common tariff wall against the products of non-member countries while freeing internal trade among members. As for Sri Lanka, sadly none of the election manifestos put up by the political parties have touched on the need to have the ‘economic integration’ as a strategy to improve the economic welfare of the people of this country. In the absence of economic integration, Sri Lanka may not have sufficiently large domestic markets. This means, the local industries could not lower their production costs through economies of scale. Our politicians are still talking about old slogans such as an export-led growth strategy, import substitution and socially-oriented market economy.

Benjamin Franklin expressed the concept as “….In free governments, the rulers are the servants and the people their superiors and sovereigns. The sovereignty of the people means the authority of the government is created by the consent of the people. It is a fundamental right guaranteed under the constitution. When they see it’s not happening they tend to resort to extra parliamentary activities and agitations.”

(Jayampathy Molligoda is a Fellow member of the Institute of Chartered Accountants of Sri Lanka and holds a Master of Business Administration (MBA) from the University of Sri Jayewardenepura. He is currently Director/CEO of a leading Regional Plantation Company in Sri Lanka and can be contacted through jayampathy@bpl.lk)

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Comments - 1

sacre blieu Wednesday, 26 August 2015 01:32 PM

Politicians pampering themselves with all the goodies and enrolling the baddies, is nothing new and the temptation for enhance of their personal wealth is great and very attractive. Now the elected members will want duty free vehicle permits when most of the vehicles they have are good for another few more years, and there should be ample serviceable vehicles left in the pool. The final decision, as in Shakespeare , TO BE OR NOT TO BE. Respect the mandate of the people. You all, politicians and most businesses have made enough money,in a sense, mostly looting the economy, and should be taken to task.

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People’s sovereignty in reverse gear

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