• Divided Govt. brought together by SJB’s volley at Gammanpila
• Basil seeks to answer billion-dollar question: Do we have dollars?
• KDU Bill exposes policy divisions between governing alliance factions
• Karu appeals to Opposition parties to fight autocracy, not each other
• Upset over SJB accusations in Parliament, RW ignores coalition talk 

Amidst a series of protests initiated by various sectors and a strike action launched by the education sector trade unions, the Government led by President Gotabaya Rajapaksa and Prime Minister Mahinda Rajapaksa managed to show its strength in the Legislature by defeating the No-confidence Motion (NCM) moved by the main Opposition Samagi Jana Balawegaya (SJB) against Energy Minister Udaya Gammanpila with a two-thirds majority in the House.  Despite friction within the governing Sri Lanka Podujana Peramuna (SLPP) alliance, all bickering factions as well as several members of the Opposition joined forces to defeat the motion.  The two-thirds support received to defeat the motion had Finance Minister Basil Rajapaksa written all over it. In fact, a few hours before the final vote was taken on the no-faith notion in Parliament after a two-day debate, Basil assured Gammanpila in the governing party lobby in the House that he need not have any doubts about the outcome of the vote since the motion will be defeated.  Seeing Gammanpila making his way to the Chamber after preparing his response speech, Basil had said: “Whether you make a response speech or not, the motion will be defeated by a two-thirds majority. It’s done.”  Basil’s words earned cheers from the governing party members in the lobby at the time.   Gammanpila nevertheless prepared a lengthy response speech where he answered all questions and criticism aimed at him during the two-day debate.  Finally, the NCM was defeated in Parliament with a majority of 91 votes, as 152 voted against it and 61 voted in favour. A total of 12 MPs abstained.   Three SLPP MPs were unable to attend the debate and vote on the NCM, as they are currently ill. The MPs concerned are Chamal Rajapaksa, Wijeyadasa Rajapakshe, and Udayakantha Gunathilaka.   According to Leader of the House, Minister Dinesh Gunawardena, the governing MPs who were absent have been unwell for the past few days.   He had also noted that three Muslim MPs from the Eastern Province who had voted with the Government during the constitutional amendment debates, also did not vote.  While the SJB continues to count on the masses’ ability to comprehend the dynamics of governing party politics, the governing SLPP has managed to temporarily silence its critics with the latest show of strength in the House.  It is evident that the Government’s victory lap would be a short one, given the growing multiple crises on the Government’s hands. Compounded by a growing economic crisis, the continuing agitations across the board would have a definite toll on the Government if measures are not taken to address the issues.  Nevertheless, it is in this backdrop that a statement by President Rajapaksa last week on his candidacy at the next presidential election took the spotlight.  President Rajapaksa last week expressed his intention of contesting for a second term during a meeting with owners of media institutions held last Monday (19).  The meeting was convened by the President to apprise the media owners of three key programmes followed by the Government – the Covid-19 vaccination drive, the move to organic agriculture, and increasing the country’s renewable energy power generation to 70%.  However, the news that went viral on all media platforms was the President’s plans to contest for a second term.  During the meeting, explaining the Government’s policies, the President had noted that he had three years to implement them as well as five more years afterwards, implying the time frame of a second term.  No-faith motion  Following the defeat of the NCM against Gammanpila in Parliament last week, the SJB is continuing its islandwide protest campaign.  The NCM was a political move aimed at gaining political capital, and the SJB was of the view that members of the governing SLPP who had openly criticised the fuel price hike and Gammanpila’s failure to prevent it would not be able to vote against the motion if they were to cast a conscience vote.  However, the SLPP parliamentary group, backed by Basil, worked to ensure that the motion was defeated by a two-thirds majority.  The Janatha Vimukthi Peramuna (JVP) and United National Party (UNP) were of the view that the NCM was an ill-timed, miscalculated move.  JVP Leader Anura Kumara Dissanayake said in Parliament that the NCM was an unwise decision by the SJB without realising the political changes taking place.  He told Parliament that the no-faith motion was a political decision and called it a media show, adding that it had only united the groups within the governing alliance, which had started to criticise certain actions of their own Government.  “We noticed that several government groups such as Dayasiri Jayasekara and Vasudeva Nanayakkara, vociferously raising a voice against the Government. But, this NCM had united them to protect the Government and the Energy Minister,” Dissanayake said.  Nevertheless, the JVP stated it would support the NCM on the grounds that Gammanpila had failed to pass down the benefit of the fuel price reduction in the world market by utilising the Fuel Price Stabilisation Fund and to find alternatives to prevent the fuel price increase.  As stated by Dissanayake, the SLPP stated that despite debates and arguments within the governing party over the fuel price hikes, the governing alliance would not allow the Opposition to have its way against a member of the Government. “We informed the party’s stance on the matter (fuel price hikes) at the time. Although we called for Gammanpila’s resignation at the time, we would not support his removal due to any moves of the Opposition. If he wants to resign, that is a different issue. As a party, we decided on 18 July that we would not support the no-faith motion,” SLPP General Secretary MP Sagara Kariyawasam said the day before the vote.  Last Monday morning (19), the NCM was presented by MP S.M. Marikkar and MP Kabir Hashim was to second the motion. However, Leader of the House Minister Gunawardena raised objections when Hashim seconded the motion saying Marikkar had failed to present the NCM and propose it to the House.  Chief Opposition Whip Lakshman Kiriella then noted that the NCM had been printed in the Order Paper of Parliament.  Speaker Mahinda Yapa Abeywardena, after looking at the Order Paper, said only the item and name of the MP is in print. Therefore, the Speaker noted that first the NCM had to be duly presented and then seconded.  Marikkar then stood to read the NCM and to properly propose.  However, Ministers Wimal Weerawansa and Prasanna Ranatunga objected to allowing Marikkar to speak twice.  Finally, Prime Minister Rajapaksa resolved the issue by requesting that Marikkar be permitted to propose the NCM since the Government was ready to face it and defeat it.  “Let MP Marikkar present the proposal, we have no objection because we are ready to defeat it,” the Prime Minister said.  Marikkar, before reading the proposal, called on the governing MPs: “Learn from your Prime Minister.”  Seconding the motion, Hashim noted that the main Opposition SJB had already won the support of the people regardless of whether the motion is defeated by the governing party.  He explained that the fuel price hike has had a devastating, cascading effect on the local economy. Also, he noted that the governing party members would not be able to return to their constituencies after justifying the fuel price hikes.   Meanwhile, former Prime Minister Ranil Wickremesinghe moved an amendment to the motion.  RW’s support  News of Wickremesinghe’s attempt to move an amendment to the NCM surfaced last Sunday (18).  While there were reports the previous week of a group of UNP seniors discussing the possibility of amending the motion to include the entire Government, no final decision on the matter was known until last weekend.   Wickremesinghe decided that an amendment should be made to the no-faith motion to expand the responsibility of the fuel hikes from Gammanpila to the Government, as it was a move that had eroded faith in the Government.  Hearing of Wickremesinghe’s move, the SJB MPs were displeased, as it was viewed as a move by the UNP Leader to bring together all factions within the governing SLPP against the NCM.  Wickremesinghe proposed two amendments to the motion tabled by the SJB to the effect that Parliament resolves that it has no faith in all the cabinet ministers.  In accordance with Standing Order 43, Wickremesinghe gave notice of the following amendments to the motion. 

1. In line 37, delete the word “Energy” and add the words “Energy and all other Ministers in the Cabinet”. 
2. In line 37, delete the words “Cabinet Minister” and add the words “Cabinet Ministers”.  

Responding to the amendments in Parliament, Chaminda Wijesiri alleged that Wickremesinghe was trying to help the Government and SLPP General Secretary Kariyawasam.  “Mr. Kariyawasam, you can now escape your predicament thanks to Ranil Wickremesinghe. Now, you can say that what Gammanpila did was wrong, but since the amendment proposed by Ranil Wickremesinghe covers the entire Government, I have to vote against the No-confidence Motion. You can save face like that. However, there is nobody in the Sajith Premadasa camp who strikes political deals like that,” he charged.  However, the SJB decided to disregard Wickremesinghe’s amendments.  Also, Speaker Abeywardena rejected the amendment proposed by Wickremesinghe.  “The amendment handed over by Mr. Wickremesinghe is not relevant to the scope of the no-faith motion as per 43 (4) of the standing orders, which say any amendment to a motion should not interfere with the status of it. It has no relevance to the original motion as per 43 (5) of the standing orders. The amendment to the no-faith motion is therefore not acceptable,” the Speaker announced.  Basil shows dollars  Apart from the no-faith motion, the Government is grappling with the difficult economic conditions in the country.  However, Finance Minister Basil Rajapaksa last week assured the governing party members that despite statements that the Government was running low on US dollars in its reserves, there was no crisis situation.  Addressing the governing SLPP parliamentary group last Sunday (18), Basil had explained to the MPs that there was no need to worry about the foreign reserves situation, as the country had experienced far worse in the past.  He had noted that there had been times when the country had recorded around $ 1 billion in its reserves but had managed to emerge from it.  Basil had further noted that the present foreign reserves crisis was being exacerbated by an official at the Central Bank and another bank in the country.  “This situation will be resolved. There is no need to worry. We are going to start issuing LCs (Letters of Credit) shortly and the present situation will ease out,” Basil had said.  Basil’s explanation to the parliamentary group was well accepted by some members while some others have continued to remain sceptical.  Nevertheless, addressing the Cabinet of Ministers last week, Basil had explained that the Treasury did not have funds to allocate for any new projects and that ministries have to work within their budgetary allocations.  Basil had noted that it was a temporary move, as the country was still reeling from the Covid-19 impact of 2020.  “While the Government earned the lowest revenue last year, the expenditure was one of the highest in 2020. Some of this effect continued till this year. Hence, we have to be very careful with our expenditure,” the Finance Minister had added.  Hearing these words, several ministers had moved to hold their respective cabinet papers, saying they will continue with the relevant programmes using the ministry’s budgetary allocations.  Downgrade fears  Meanwhile, issuing a statement last Monday, Moody’s Investors Service (Moody’s) placed the Government of Sri Lanka’s Caa1 foreign currency long-term issuer and senior unsecured debt ratings under review for downgrade.  The decision to place the ratings under review for downgrade is driven by Moody’s assessment that Sri Lanka’s increasingly fragile external liquidity position raises the risk of default. This assessment reflects governance weaknesses in the ability of the country’s institutions to take measures that decisively mitigate significant and urgent risks to the Balance of Payments.  Although the Government has secured some financing, mainly from bilateral sources, its financing options remain narrow with borrowing costs in international markets still prohibitive. Due to large and sustained capital inflows through a credible external financing strategy being absent, Moody’s expects Sri Lanka’s foreign exchange reserves to continue declining from already low levels, further eroding its ability to meet sizeable and recurring external debt servicing needs and increasing Balance of Payment risks. Extremely weak debt affordability – with interest payments absorbing a very large share of the Government's very narrow revenue base – compounds the debt repayment challenge.  The rating review will focus on assessing whether the sovereign is able to use a period of time provided by its current foreign exchange reserves and bilateral arrangements to implement measures that widen and increase its financing sources for the medium term, and thereby avoid default for the foreseeable future.  Nevertheless, the Government hit back at Moody's Investors Service, stating that an unwarranted announcement by Moody’s re-emphasises the need for the Sri Lankan Government to revisit its relationship with rating agencies.  The Finance Ministry issued a statement noting that it was surprised over the announcement by Moody’s Investors Service, “at a time when the GoSL has diligently lined up adequate funds to repay its maturing foreign debt liabilities, including the International Sovereign Bond (ISB) maturing at end-July 2021. “Moody’s has placed Sri Lanka’s rating ‘under review for downgrade’, although this does not imply a downgrade. However, Moody’s action could create uncertainty among investors who have kept faith in Sri Lankan ISBs and other investments,” the Ministry said.  However, the statement said that the GoSL has taken all measures to repay the upcoming ISB maturity of $ 1 billion due in end-July 2021.  “The Sri Lankan economy has shown strong signs of broad-based recovery, with a real GDP growth of 4.3% in the first quarter 2021. The domestic vaccination drive is continuing at full force, providing confidence of a continued improvement in economic activity, combined with a possible strong rebound of the tourism sector,” it said.   It was later learnt that the Finance Ministry response had been issued without the Minister’s knowledge. Basil had in fact revealed this during a meeting convened at the Ministry. Treasury Secretary S.R. Attygalle, who was also at the meeting, had immediately apologised and vowed such incidents would not take place in the future.  A few days later, Basil claimed that he had been handed over a Treasury without money and would therefore require some time as well as support from all sectors of the country. The path ahead for the Government is not a rosy one.  It is in this backdrop that the US State Department on Thursday (22) released the Investment Climate Statements for 2021 and in it, termed Sri Lanka as a challenging place to do business, with high transaction costs aggravated by an unpredictable economic policy environment, inefficient delivery of government services, and opaque government procurement practices.    It added that investors noted concerns over the potential for contract repudiation, cronyism, and de facto or de jure expropriation.  “Public sector corruption is a significant challenge for US firms operating in Sri Lanka, and a constraint on foreign investment. While the country generally has adequate laws and regulations to combat corruption, enforcement is weak, inconsistent, and selective. US stakeholders and potential investors expressed particular concern about corruption in large infrastructure projects and in government procurement. The Government pledged to address these issues, but the Covid-19 response remains its primary concern. Historically, the main political parties do not pursue corruption cases against each other after gaining or losing political positions.”  However, the statement noted that while Sri Lanka is a challenging place for businesses to operate, investors report that starting a business in Sri Lanka is relatively simple and quick, especially when compared to other lower middle-income markets.  Nevertheless, scalability is a problem due to the lack of skilled labour, a relatively small talent pool, and constraints on land ownership and use. Investors note that employee retention is generally good in Sri Lanka, but numerous public holidays, a reluctance of employees to work at night, a lack of labour mobility, and difficulty recruiting women decrease efficiency and increase start-up times. A leading international consulting firm claims the primary issue affecting investment is lack of policy consistency.  According to the US Department of State, while the incumbent Government largely promoted pro-business positions, including announcing tax benefits for new investments to attract foreign direct investment (FDI), the Government also made interventionist policies to arrest the ongoing economic fallout from Covid-19. This in turn has altered the field of FDI towards manufacturing-intended, to the domestic market. It added that Sri Lanka’s import regime is one of the most complex and protectionist in the world. US stakeholders have raised concerns the Government does not adequately consult with the private sector prior to implementing new taxes or regulations, citing the severe import restrictions imposed as a reaction to Covid-19 as an example.    “These restrictions, quickly imposed without consulting the private sector, further complicated Sri Lanka’s import regime. Similarly, stakeholders have raised concerns that the Government does not allow adequate time to implement new regulations. Additionally, the Sri Lankan Government has banned the importation of several ‘non-essential’ items since April 2020 in an attempt to curtail foreign exchange outflow as the Sri Lankan rupee depreciated around 5% year-to-date in 2021, and is expected to come under further pressure.”  KDU Bill on the 3rd   Despite the economic challenges, the Government is working towards achieving its goals in other sectors. The controversial Kotelawala National Defence University (KNDU) Bill is to be taken up in Parliament on 3 August.  President Rajapaksa last Sunday informed the governing party parliamentary group that the proposed Bill will be taken up in the House and passed the same day.  He had explained that a one-day workshop on the proposed piece of legislation and its motives will be held on 2 August for the governing party parliamentary group.  Several SLPP MPs including the likes of Gevindu Kumaratunga had expressed concerns over certain clauses in the Bill and the possible threat to the country’s free education structure.  After listening to the concerns expressed, President Rajapaksa had requested the MPs to present the amendments they believed would address the concerns.  The President had pointed out that the intention of the proposed Bill was not to hinder the free education system in the country, but to prevent the country’s foreign exchange from flowing out of the country, to encourage the younger generation to remain in the country by providing them with options to pursue higher studies in their country. It is in this backdrop that a gazette notification was issued last Tuesday (20), stating that Section 23 of the Universities Act No. 16 of 1978 will be amended to allow the Education Minister, in consultation with the University Grants Commission (UGC), to “establish a university for a specific purpose”.  However, the academic community, the undergraduate students’ body, and Opposition political parties condemned the recent gazette notification on amending the Universities Act.   Karu takes charge  Former Speaker Karu Jayasuriya meanwhile had taken the initiative to bring all Opposition political parties on to a single platform.  The National Movement for a Just Society (NMSJ), led by former Speaker Jayasuriya, met on the 17th, last Saturday, and saw the attendance of representatives of the country’s main Opposition parties, including the SJB, UNP, Tamil Progressive Alliance (TPA), Tamil National Alliance (TNA), and the All-Ceylon Makkal Congress (ACMC).   However, the JVP was a notable absentee at the meeting.  Consensus was reached on four key issues that need to be addressed by the Opposition in Parliament.   The four core issues were: the abolition of the 20th Amendment to the Constitution, the need for economic revival, commitment to human rights, and protection of the independence of the judiciary and justice system.   According to TPA Leader Mano Ganesan, the key issues were agreed upon by the attendees, including Premadasa, UNP Deputy Leader Ruwan Wijewardena, “43 Brigade” Movement Leader Patali Champika Ranawaka, and Samagi Govi Peramuna Convenor Hemakumara Nanayakkara.  Ganeshan had requested that national unity of all ethnic groups be addressed as well.  SJB MP Dr. Rajitha Senaratne had said after the meeting that it was the beginning of a united opposition.  “We are fearful for the future of this country. In the face of this oppression, we must show the strength of the public,” Jayasuriya had said at the conference.  Premadasa had called for the defeat of the “anti-democratic trends” practiced by the Government.   Speaking to the media after the meeting, SJB General Secretary Ranjith Madduma Bandara had said that the Opposition had agreed that it must be united in its stance against the breakdown of democracy, the economy, and the justice system.  “Committees were appointed to address these issues and work against oppression by the Government,” Madduma Bandara had said.  UNP Deputy Leader Wijewardena had said that the all-party conference summoned by the National Movement for Social Justice is a positive step, as such a move to form a common platform is what people want today.  “No political party in the Opposition can go on its own and do their own things, as what people want is a common platform to resolve their issues,” Wijewardena had said, adding: “The UNP Leader may participate in the next round of discussions.”  No coalition for RW  However, UNP Leader Wickremesinghe was of a different view.  Speaking at an online discussion with journalists from the North, Wickremesinghe had said that the public are no longer looking for coalition governments. Instead, he had said, the voters are only interested in electing a government that can solve their problems.  When asked whether he would join Premadasa to overthrow the Rajapaksa Government, Wickremesinghe had said that it would be best if he said as little on the matter as possible.   “During the recent NCM, they spent more time attacking me than they did the Government,” Wickremesinghe had said.  He had further noted that joining together to overthrow a government is one thing, but without a national framework, it would not be a sustainable future.   According to Wickremesinghe, the UNP learnt that lesson in 2015 when they lost the Sinhala-Buddhist vote bank. TNA gets tough The TNA, meanwhile, had said, at the meeting convened by the NMSJ, that the TNA would not be moving forward with them unless the Tamil national question is considered as a primary issue that needs to be addressed by the movement.  “During the discussion yesterday, I proposed that the Tamil national question should also be included in the movement’s core issues, as I consider it to be the most important problem in the country. It led to a three-decade war, where over 100,000 people lost their lives. The militaristic defeat of the Liberation Tigers of Tamil Eelam (LTTE) did not solve the issue. If the rest of the Opposition involved in the NMSJ movement is not willing to see that, then we would be continuing forward by ourselves. We do not have to be dependent on anyone else,” TNA Spokesperson and parliamentarian M.A. Sumanthiran PC had told the media after the meeting.   Sumanthiran had said that when the movement was first convened under late Ven. Maduluwawe Sobitha Thea, a power-sharing solution to the Tamil national question was identified but was pushed back in the subsequent years and had failed to deliver some of its topmost promises, including the abolishment of the executive presidency.  The TNA MP had added that since the Chairman of the NMJS, Jayasuriya, had assured him that further discussions on the matter would take place, he had requested that the process be transparent so that the Sinhala people are also aware of their (Tamil people’s) demands.   Govt. meets NGOs  The Government meanwhile has met with representatives of civil and non-governmental organisations recently.  Speaking during the meeting, Foreign Minister Gunawardena had said that Sri Lanka will deal with human rights and reconciliation matters in an open and transparent manner.   Gunawardena had stated that the Government would deal with openness and transparency regarding the issues of human rights and reconciliation among ethnicities that have arisen in the international front.   Justice Minister Ali Sabry had also participated in this meeting held at the Foreign Ministry.  “Various misconceptions are being circulated in the international arena regarding the Prevention of Terrorism Act. In fact, we as a government have appointed a cabinet subcommittee to look into and amend certain provisions of this Act. Also, a committee of officials has been appointed to assist them. We are doing all this openly and transparently. The same is true for reconciliation as well.   Our Government has taken steps to maintain inter-ethnic reconciliation and equality. As a government, we are bound to look into any shortcomings in them, and take necessary steps,” Gunawardena had explained.  State Minister of Regional Co-operation Tharaka Balasuriya and Foreign Secretary Jayanath Colombage had also participated in this discussion.  Civil society activists who participated in the discussion included Ven. Kalupahana Piayarathana, Dr. P. Saravanamuttu of the Centre for Policy Alternatives, Rohana Hettiarachchi of PAFFREL (People’s Action for Free and Fair Elections) , Bishop Asiri Perera of the Methodist Church of Sri Lanka, Dr. Joe William and Dr. Jehan Perera of the National Peace Council, Dr. Hilmi Ahmed of the Sri Lanka Muslim Council, and civil society activist Dr. Dayani Panagoda.  Many issues related to the human rights situation and Sri Lanka’s reconciliation programme were discussed openly and at length.