Sri Lanka: What strategies are appropriate for us?

Aug 13, 2012 (LBO) – My book was launched August 6th. My task was to thank people. This was important because the preface of this rushed-to-print book was written solely by my co-author so this was my only opportunity.

I began by saying that no creative work was ever done by one person alone.
The evolution of the title exemplified this. The starting title was “Nodenagiyothatharamaga,” the second half of a Sinhala aphorism about people who get lost for the lack of knowledge. The publishers thought it was esoteric, so I fell back on the sub-title that could be translated as “implementing policy in the public interest.” This did not fly either. I was falling back further to bland “economic policy.”

My co-author said that I was really not talking about policy (in the sense of words-on-paper statements) but more about implementing. Thus emerged strategy: “kramaveda.” He also proposed “Galapena,” appropriate. Not one-size-fits-all, but what is appropriate for our conditions.

What was left was the question of “appropriate for whom?” My contribution was picking “apata” (for us) over the nation-centric “Sri Lankavata” (for Sri Lanka).

I went into all that detail because the title focused attention on a critically important question. Advocacy of fit-for-purpose, fit-for-conditions or appropriate policy and regulation has been the distinguishing feature of the approach of LIRNEasia, the think tank that I head. What my co-author and interlocutor had cleverly picked up was that this pervaded both the text and the environment we were living in.

How does one know what is appropriate?

Is it decided by the results of the one-before-the-last election, as a member of the audience suggested? Is it by the application of some decision rule such as “anything-but-neo-liberalism”? Is it on the basis of local historical precedent, as I seem to be suggesting by quoting Kautilya and historical village practices in support of a policy of charging for irrigation water?

I believe the better test is practical adequacy. It was more colorfully stated by Deng Xiaoping, the man whose bust adorns the lobby of the Bandaranaike Center for International Studies where the book was launched: “do not care if the cat is black or white, what matters is it catches mice.”

Applying the test

We had a money-losing airline called Air Lanka that could not provide good service because it did not have enough aircraft for the routes it wanted to serve. Its owner, the government, could not invest in aircraft because it had other priorities. When it wanted to, all hell broke loose because corruption was alleged.

In 1998, it was partially privatized and management was handed over to Emirates. Half its fleet was destroyed by the LTTE in 2001. But it came back without burdening the Treasury (or our money). Not only were the aircraft replaced, SriLankan (now rebranded) contributed dividends to Treasury. For example, it contributed LKR 1,000 million in profits to the government of Sri Lanka in 2007.

Then it was nationalized again. Another state-owned airline was created. They were more or less merged. The combined losses of SriLankanMihin in recent years are larger than the total amount disbursed as Samurdhi payments in those years.

In all three periods, we Sri Lankans had no difficulty getting in and out of the country. There were no complaints about the tourist trade being harmed by the lack of a government-managed airline.

The evidence is clear. Government management of an airline does not work. It is practically inadequate. This cat is incapable of catching mice. We need a different cat. The economic strategy appropriate for us is to get the government out of the business of operating airlines.

No electoral mandates, appeals to historical precedent, label checking. Just simple evidence. What works? What does not?