Conflict of a different kind

Farmers in their traditional clothes carry leaflets in baskets for distribution, during a demonstration in Colombo demanding higher prices for their bumper rice crop. - SENA VIDANAGAMA/AFP

Sri Lanka, which has suffered two decades of continuous civil war, is now being threatened by widespread unrest and popular dissatisfaction with the government's neoliberal economic strategy.

HUNDREDS of unemployed graduates camp outside the Fort Railway Station in central Colombo, participating in the two-month old dharna and daily relay fasts. They are part of a wider set of protests that have shaken Sri Lanka in the past months. The young graduates are drawing attention to the chronic difficulties in finding employment which are increasingly being faced by those who pass out of Sri Lankan universities.

But elsewhere in the country, it is not only the jobless who are protesting. The island nation, which has already suffered two decades of continuous civil war and almost continuous lack of security resulting from that strife, is now being threatened by widespread unrest and popular dissatisfaction with the government. There has been a growing wave of strikes and other agitations against the government's economic policies, and greatly increased cynicism about the government's chances of achieving success in the peace talks with the LTTE (Liberation Tigers of Tamil Eelam).

In September, more than 80,000 public sector employees went on strike for 13 days, demanding a pay rise, and resisted severe intimidation including the use of army personnel as strike breakers. Railway workers managed to close down the entire rail network of the country for two days, as part of their protest against government plans to corporatise and eventually privatise the railways. Other public sector workers - in the income tax department, in public sector banks, at the electricity board - have been agitating against plans to restructure (that is reduce employment) and privatise some activities of these bodies.

Even farmers have taken to the streets in desperation at the economic squeeze they have been forced into. Tens of thousands of farmers participated in protest rallies. Last year, the government increased the administered prices of fertilizers and several other inputs by several times and removed the minimum guaranteed crop prices, even as small cultivators in Sri Lanka were being hit by the low international prices of their output. Farmers are now demanding the restoration of the guaranteed prices system for crop output, to protect them from the ravages of the world market and the effects of subsidised cultivation in the North.

Predictably, the universities in Sri Lanka are hotbeds of ferment and dissent. There have been lecture boycotts by students, rallies and even clashes between government supporters and their opponents, which have forced at least one university (Jayawardenapura University in Colombo) to close down in mid-September.

Meanwhile, tensions in the war-torn regions of the North and East remain high, with the much anticipated peace agreement still unresolved and the displacement and distress of low-intensity war still very much in evidence.

Interestingly, public anger seems to be equally directed against the main party in the ruling coalition - the United National Party (UNP) led by Prime Minister Ranil Wickremasinghe - and the main Opposition People's Alliance led by President Chandrika Kumaratunga. Effigies of both leaders are routinely burnt on the streets, suggesting that both parties are blamed for the people's current plight. The political gainer from this public dissatisfaction has been the Janatha Vimukti Peramuna (JVP), a party which has moved from socialist origins to an increasingly Sinhala chauvinist rhetorical and ideological position.

While the apparent inability to provide some kind of viable solution to the ongoing civil war in the North (despite the ceasefire agreement signed in February 2002) is an important reason for public concern, the real causes behind the protests are economic. While the Sri Lankan economy has grown at an average of 5 per cent per annum despite the war (or perhaps because of the effects of huge war spending by the state) there has been deterioration in living and working conditions of possibly the majority.

In fact, the growth of the Sri Lankan economy - at an average of more than 5 per cent per annum over the 1990s - exhibited substantial volatility and there are also doubts about its sustainability, because of the large build-up of public debt it has been associated with. By the turn of the decade, the fragile nature of the growth process and the increased external vulnerability of the Sri Lankan economy were exposed when there was a mini-balance of payments crisis, resulting from a temporary decline in aid inflows and export receipts. In 2001, GDP (gross domestic product) fell by 1.3 per cent. The subsequent recovery in 2002 and 2003 has not been associated with employment increases, but with further cutbacks in the public sector and in the provision of basic services.

Sri Lanka underwent a major neo-liberal economic reform starting from the late 1970s. The process was marked in the 1980s with the replacement of a universal system of food distribution with targeted food stamps and other changes deigned to reduce the welfare redistributive schemes of the state and continued with an intensified programme of fiscal retrenchment and privatisation of state assets, including plantations, from the early 1990s.

THE economic policies adopted during the last two decades were oriented towards accelerating "growth" through liberalisation, export orientation and privatisation with the assumption that growth would trickle down and reduce poverty. However, even the World Bank, which was actively associated with promoting these policies, now admits that neither adequate growth nor poverty reduction has been achieved during this period. While the rate of growth of output increased in the 1990s, it is noteworthy that it was associated with lower rates of employment expansion than the previous two decades, which were characterised by lower rates of aggregate GDP growth.

There is no doubt that there were fairly major changes in the structure of production, as the economy moved from being dominantly agriculture-dependent to a much greater reliance on manufacturing exports, especially of garments. However, these massive shifts in production structure were not reflected in employment patterns: while the share of agriculture in total employment declined from 42 per cent to 36 per cent, the share of employment in the manufacturing sector remained absolutely stagnant, at only 15 per cent, between 1990 and 1999. As in other South Asian countries, the increase was in services employment, which is likely to have been operating as the refuge sector for workers unable to find jobs elsewhere.

It is true that open unemployment rates have declined, but this is likely to reflect more of the discouraged worker effect than an actual increase in job availability. Further, even the official reports admit that the so-called `employed' include those who have worked for as little as one hour a week in paid employment, and are significantly underemployed. Meanwhile, employment contracts have become more fragile and less secure.

Even the Sri Lankan government's document "Connecting to Growth: Sri Lanka's Poverty Reduction Strategy", written in 2002 with the "assistance" of the World Bank, admits that neither growth nor poverty reduction has been achieved during this period. Rather, this strategy has in fact compelled the poor to bear a much heavier burden and to sacrifice social security, social development and also human and democratic rights that had been won through political struggle during the previous decades.

Nevertheless, the present economic strategy of the government involves an even more aggressive process of pushing through privatisation and reduction of public services, as well as providing even more incentives to foreign capital. The experience with these already failed policies is what is giving greater strength to the now continuous protests by people's organisations in Sri Lanka. But it remains to be seen whether such protests can be channelled into progressive demands for a rethinking of the basic neoliberal economic strategy, or will be diverted into chauvinistic and divisive political programmes.