Ilankai Tamil Sangam

24th Year on the Web

Association of Tamils of Sri Lanka in the USA

Dude, Where's My Country?

by Roy Ratnavel

According to 2006 World Development Indicators (all the figures are in USD) published by the World Bank, Singapore’s GDP is $106,818 million vs. 20,055 million for Sri Lanka. Since Sri Lanka has almost 5 times more population than Singapore, this puts Sri Lanka’s per capita income at a dismally low level.

In fact, even Sudan – a chronically weak North African country - enjoys a higher GDP ($21,098 million) than Sri Lanka and attracted about six times more foreign direct investment than Sri Lanka in 2006: $1,511 million vs. $233 million. Apparently, global investors think that Sudan is less risky and has better prospects than Sri Lanka. How bad should a country be, to be considered a worse place to invest than Sudan?

While the Sri Lankan GDP is growing higher than in the past, the debt is growing at a faster rate than the GDP.

I was on a long flight recently. After settling uncomfortably into the narrow seats of the Airbus 340, a stewardess in a blue uniform burst into the familiar pre-flight safety speech that has become a ritual of modern air travel. Minutes later the seatbelt sign was turned-off, but I stared morosely out the window, unmoved and not looking forward to the next six hours. The passenger next to me, however, was playing a video game on a fancy laptop with awesome graphics and speed, which seems to have had enough memory to launch a mission to Mars. I could have easily fired-up my laptop as well, if it wasn’t for the fact that mine looks and acts eerily like the commodore 64 version, and my silly attempt to launch such an archaic machine would only make me look like a first generation upright in terms of computer technology. So, aI opted not to look ridiculous in front of my fellow passenger. I think of myself as a pretty observant individual. But evidently, at some point when I wasn't looking, my laptop went seriously out of date. My friends have dryly informed me that, yes, this occurred sometime between when I fled the hellhole Sri Lanka and the tech bubble of 2000. I've been busy, ok? But I digress.

As boredom descended upon me at 30,000 feet and 800km/h, cursing speed, I remembered that I had a book in my briefcase underneath the seat in front of me. I immediately dove like the plane was going down and took posession of it. The book was written by André Kukla, a psychology professor and titled Mental Traps: A Field Guide to the Stupid Mistakes that Can Ruin Your Life. The book basically dabbles in the philosophy of doing nothing and claims that, since doing nothing causes us to procrastinate, it would be wise to give-up the habit altogether. It was an intriguing book and reading the few chapters hit home for me in the context of Sri Lanka from its independence from the British.

It is very obvious that Sri Lankan politicians’ chief accomplishment so far since independence from the British is to turn the country into a crossroads of corruption and a basket case. They changed the name from Ceylon to Sri Lanka for no obvious reason, before setting the country on ‘auto’ pilot at a ‘low economic altitude,’ causing the country to crash. At this time, Sri Lanka is one of the most backward countries in the Eastern hemisphere. Sri Lankan politicians have a PhD in the philosophy of doing nothing, with an undergrad in corruption – if not, they are just a few semesters away. It seems, since independence, the country went up the staircase and then down the shaft. Therein lies the crux of the island's self-inflicted tragedy.

Against this backdrop, I have come to the realization that - when people ask me where I am from and when I answer ‘Sri Lanka’ - they look at me as though they are examining a fossil. It's as though they have seen the tacky commemorative Sri Lankan presidential swearing-in ceremonies, which always have the tracings of a low budget Bollywood movie, with the sinister-looking, chest-thumping, thuggish politicians – current President included - surrounded by Sri Lankan army generals decorated heavily with gold braid and badges and painfully light on smarts.

The Cato Institute issues an interesting compendium of information called "The Improving State of the World," in which it revels that even the poorest countries are enjoying the most dramatic rise in living standards. Sri Lanka, I believe, is one of the few countries on the planet which marches on shamelessly with deprivation, disease, war and misery that continue to affect a wide range of people of that country, regardless of ethnicity, religion or race. Equal opportunity indeed – Bravo! For billions of people around the world, these are the best of times to be alive. From China to Chile, more of us are living longer, healthier and more comfortable lives than at any time in history; fewer of us are suffering from poverty, deteriorating standards of living and hunger – thanks to the liberating forces of capitalism and technology. Except, of course, Sri Lanka. Over 50% of its population earns less than US$2 a day. What a marvelous achievement by its leaders. I am sure their mothers are proud.

Sri Lanka is one of the basket cases of a country that can be easily taken for a failed state, or at least deserves a place on the wall of shame of the world's horror spots. A country unfortunate enough to continue to suffer from horrendous misgovernment by kleptocratic elites and Buddhist monks, who persist in rejecting the free market, fair democracy and sound economic policies. As such, it could be a great case study for a Macro Economics 101 class under the chapter ‘How not to run a country.’

Sri Lanka's biggest problem is its corrupt politicians and the Buddhist monks.  It is remarkable how the leaders of Sri Lanka, who have been elected by the people with a mandate to better their lives, have turned around and ruled the country to please the communal-minded, war-mongering, saffron bathrobe-wearing, uneducated monks. What an unholy alliance. The monks – weapons of mass economic destruction - unofficially became the economic and policy advisors of Sri Lanka. In that process politicians have fattened their wallets, destroyed the country and drove it into the ditch. A remarkable achievement, indeed. To a point, it makes me wonder, when Charles Dickens depicted the industrial town as hell on earth in ‘The Old Curiosity Shop,’ whether he was, in fact, referring to the current state of Sri Lanka – minus of course ‘the industry.’ Thus far since independence Sri Lanka has managed to become a world-class leader in self-inflicted wounds and a heaven for pedophiles.

The fall of communism gave birth to Globalization in earnest in 1989. The world has advanced so much in almost two decades, while Sri Lanka has slipped back into the dark ages in that same time period, simply by the politicians continuing to have the same old mundane argument of who came to that regrettable island first. What a joke. As far as these politicians are concerned, Globalism doesn’t exist since Microsoft Word spell-check still puts a red line underneath it.

To understand the ever-changing global economy, one has to pay close attention to trends. In today's integrated world economy, countries are constantly challenged to connect the dots between economic developments in one-region and market consequences elsewhere around the world. This is true for almost all democracies with an open market economy.

Many people may believe that Sri Lanka is a democracy with an open market system and, therefore, it should also see the benefit. Well, the answer to that is Sri Lanka is only a democracy and claims to have open market system by definition, not by deed. Perhaps it comes under philosopher Willard Van Orman Quine’s definition about a ‘belief’ system. He once noted that our belief systems are like a series of concentric circles; some are central to who we are, and some are on the periphery and subject to change relatively quickly. Those that are central, we may hold even when there is abundant evidence they are false, because it is too difficult to give them up. Yes, Sri Lankan politicians are still delusional.

Sri Lankans are, of course, immune to the psychology of mismanagement, but are aware of it and for some reason cling on to hope by trying to believe that somehow it is a great country and things will get better.  It appears that they are collectively experiencing something like Elizabeth Kübler-Ross’s five stages of grief. Current status is denial, and it echoes stages two to four: anger, bargaining, and depression. Let’s hope they soon get to stage five – acceptance.

Arithmetically, of course, one nation's increasing deficit tends to correspond to another nation's increasing income. So naturally, the ever-expanding Sri Lankan economic misfortune has been highly expansionary for countries located in close proximity to Sri Lanka. Singapore is a good example of such nation – a country with people of many ethnic and religious backgrounds, but who somehow have found a balance to work together in order to increase their collective economic pie, instead of arguing about who came to the country first. But Sri Lankan politicians still can't figure it out. Singapore got its independence in 1956. Sri Lanka got its in 1948 – dead on arrival.

Collectively, Sri Lanka is a great example of a country living at the subsistence level, which neither can enter the global pricing structure, nor can ever influence it. At this rate – ‘never.’

According to 2006 World Development Indicators (all the figures are in USD) published by the World Bank, Singapore’s GDP is $106,818 million vs. 20,055 million for Sri Lanka. Since Sri Lanka has almost 5 times more population than Singapore, this puts Sri Lanka’s per capita income at a dismally low level.

In fact, even Sudan – a chronically weak North African country - enjoys a higher GDP ($21,098 million) than Sri Lanka and attracted about six times more foreign direct investment than Sri Lanka in 2006: $1,511 million vs. $233 million. Apparently, global investors think that Sudan is less risky and has better prospects than Sri Lanka. How bad should a country be, to be considered a worse place to invest than Sudan?

While the Sri Lankan GDP is growing higher than in the past, the debt is growing at a faster rate than the GDP. Countries around the world have dramatically improved their balance sheets in recent years. They have done this by taking advantage of globalization, the increased flow of trade and lower interest rates to pay down debt or refinance existing debt at more attractive terms. Sri Lanka has done neither. For example the external debt skyrocketed from $5,863 million in 1990 to $10,887 million in 2004.  At this pace, the external debt can outpace the GDP very soon.  In addition, the Sri Lankan aid per capita almost doubled from $14 in 1999 to $27 in 2004. Running a country on handouts makes Sri Lanka one of the ‘bums’ of the global village. Ironically, the politicians got rich in the same period. Maybe it is just a coincidence, but the expansion of what economists call “excess borrowing” seemed to coincide closely with the failed war efforts over the last decade.

With all indications that - I am just now beginning to grasp - corrupt-thugs will always run that country and, as a result, the future generations of Sri Lankans will be overrun by corrupt, thuggish politicians like rats in Hamelin. For example, Keheliya Rambukwella is now the Minister of Policy Development & Implementation. Imagine that! It certainly deserves an exclamation point. This man makes as much sense as a guy speaking Swahili while high on amyl nitrate poppers. The only thing he is missing is a giant pair of shoes and a red nose. Ironically these are the same politicians who like to discuss the inevitability of Sri Lanka's collective starvation over six-course dinners and wash it down with fine wines. What Sri Lanka desperately need is flexible, acceptable, visionary leaders – there is no substitute for that.

The country remains a tragedy today – an essentially rich island impoverished by the egotism and the vanity of fanatical Buddhist monks, who still think the country belongs to Buddhists only. Successive Sri Lankan leaders – the ‘Lords of the fanatics’ - have compounded these faults by what seems, even to its admirers, to be evidence of corruptly amassing fortunes. They built a terrorized and pauperized country that cannot not feed itself, that depends for survival upon external subsidies and handouts, and that will eventually collapse in economic ruins – if it hasn’t done so already. Murder and torture are not economic weapons.

Experience suggests that a country is likely to do better when its politicians, as a group, are responsible, rather than when they have thrown responsibility to winds, as is the case so far in Sri Lanka. Once again, if history is any guide, these political dinosaurs will continue to be on their path of destruction.

A country that is embracive and responsive enacts fair laws that create the right conditions for a better future for the people to look forward to, is a country with great ‘democratic and economic fundamentals,’ and therefore worth being proud of.

I am embarrassed to say that I was born in Sri Lanka. In fact, count me somewhere between embarrassed and very embarrassed. Hence, I renounced my Sri Lankan citizenship the minute I received my citizenship from my adopted motherland. I clearly remember that day when I called the Sri Lankan high commission and asked the lady who answered the phone to “take me off the list,” of course to her amazement. It felt good. I refuse to be identified as a Sri Lankan in the its current form. Once I did, but not anymore. I am not a Sri Lankan. Of course, I will always be a Tamil.

This brings me back to the beginning – the book. Mental Traps by André Kukla, fortunately gives good advice on exactly how to avoid or overcome mental traps. The bottom line is that most of us are prone to foolishness or stupidity in our thought processes, but if the thinking that goes on when we're trapped remains below the level of consciousness, we can't even begin to change it. I certainly recommend this book – over Buddha’s teachings – as a mandatory reading to the current thug President Mahinda and the destructive Monks. It will most definitely help to enlighten them on the Stupid Mistakes that Ruined Their Country.

The civil war that is bleeding this nation is basically a creation of a long line of dumb politicians. Compounding this is the angry deflecting bravado of a military unable to admit defeat, impotence and its own ample share in the common disaster. A visionary leader would have a better chance of solving these problems. If the government can provide peace and stability to all ethnic groups, there is a chance that Sri Lanka may get out of this mess. What matters are the practical consequences of Sri Lanka’s future actions and the long-term implications for its continued existence as a nation with peace and prosperity.

At the height of the Vietnam War, crusty Republican Senator George Aiken of Vermont once told President Lyndon Johnson that,  "I'm never keen for doves or hawks. I think we need more owls." In the context of Sri Lanka, owls, alas, so far have not ruled the country since independence. Hawks, there have been a-plenty, and a disastrous mess these hawks have made in Sri Lanka, from which no easy escape beckons. A chalk outline is being drawn around Sri Lanka and its government can't even recognize it. The country is certainly only a few economic cycles away from a toe-tag.

With respect to disasters, as the saying goes, we ain't seen nothing yet. Sri Lanka has been neglected by its corrupt and thuggish politicians since the independence, has inadequate laws, a dysfunctional political system and a broken economy. Against these daunting uncertainties, is there anything Sri Lankans can do aside from hoping for the best?

As they say in the Boy Scouts: Be Prepared.

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Mr. Ratnavel's answer to the question, "Didn't Sri Lanka's GNP grow at 7% last year?"

The problem with the 7% GDP number is that, as the old saying goes, "Turkeys
can fly on a windy day" ( a tail-wind per se).

Here are my points:

* Emerging mkts generally had a massive run over the last few years due the cyclical global commodity run.

* Because an economy is growing at 7% does not mean it is doing well. In Sri Lanka's case, it is easy to grow an economy from a low base number. In other words, the US for example is growing at 3% a year. Although it is a lower number than SL, it one of the most successful economies in the world. 3% of 11 trillion is much larger than 7% of nothing.

* One year's GDP numbers are very misleading. We need to look at long-term trends. This trend is below average for SL decades after decades. Also, it worth paying attention to per capita numbers. SL has one of the lowest in the world: less than $2/day for the average person.

* Since countries like SL don't have access to cheap capital, they rely heavily on Foreign Direct Investments (FDI). But figures show SL is not the place where global markets think the money should be invested. This is troubling.

* I also made comparison to Singapore to show the divergence between the two economies since independence - massive difference. Ie: missed opportunity due to war.

* Most of SL's numbers are coming from what economists call"Labour Arbitrage" - a fancy term for cheap labour. Once companies finish exploiting that, the game is over for the country. Unless the country slowly becomes a manufacturer like China. SL has no infrastructure in place for that - currently.

Other points:

*    Blooming debt - especially more of a concern is that the growth rate of 'debt' is higher than growth rate of 'GDP'
* Ramped inflation and higher nominal rates - this makes expansion harder for domestic companies
* Lack of middle class - as result no internal buying power 
* Infant mortality rate is on the rise
* Life expectancy is falling (part of it due to war)
* Malnourishment, etc...

The corruption, incompetent leadership and government inability to accept political reality has created a tragic outcome for everyone on the island.

Hope this helps...if you have more questions, please do not hesitate to drop
me a line. I am open to discussion.

Cheers,