Privatizations meet mounting resistance LIKE many other third world countries, Sri Lanka is under intense pressure to privatize state-owned sectors of the economy and end social support for the poor in order to obtain desperately needed financing from the international banks and institutions.
International Viewpoint spoke to Vasudeva Nanayakkara, a leading member of the Sri Lankan NSSP (Nava Sama Samaja Party - Sri Lankan section of the Fourth International), a member of parliament and president of the United Federation of Labour, who has been in the forefront of campaigning against the sell-off of his country's wealth. The interview took place in Amsterdam in May.
W HAT was the situation before the privatizations? Was there a very big state sector?
From colonial times services such as railways, health and education and posts and telecommunications were government departments. After independence these were continued and expanded to provide an infrastructure for the economy. Then in the 1950s and early 1970s, when populist governments came to power, a series of manufacturing industries such as steel and textiles were set up by the government or with government cooperation.
This generated employment and led to greater economic activity and cohesion. Areas of the economy were developed that would never have been under private investment — with long gestation periods and low returns during the initial years.
There was much corruption, as in all Third World countries. The government in power used the state sector as a propaganda tool and put in position their supporters and main backers. We can say that the state sector was politically infested and bureaucratically jammed. • So what has changed? Why has the government decided to privatize?
If you look at the private sector you will see systematic plunder and exploitation of the people on the one hand and on the other the transfer of resources out of the country by those for whom the local currency no longer matters. Then there is a big black economy which has developed alongside, and which also bleeds the country. Thus, when we criticize the state sector, we should not overlook the nature of the private sector, which is even more unpatriotic and damaging to the country. Political patronage is always linked up with the state sector. It is no secret that the state sector developed under populism was an exercise in state capitalism. The state sector kept on feeding the private sector. Very often foreign and local suppliers make huge gains out of it by giving low quality and charging high prices. In 1977, a new government took power which had a new strategy of linking up with the IMF and World Bank and liberalizing. Import controls were lifted, foreign investments allowed in freely, privatization developed and so on. Privatization is unpopular in the coun try. Despite all the corruption and inefficiency the people got the minimum services from the government sector while the manufacturing sector provided employment and skills. In this situation the government had to use a variety of gimmicks and incentives to placate the public. The privatization was called "peoplization" . They said, before you have been managed by bureaucrats, but now we are going to let the people buy shares. However, workers were not impressed, recognizing the threat to jobs. In many cases the government issued shares to the workers - in the case of road transport 50% of the shares. They were encouraged to retire, take a golden handshake; but after a year the rate of inflation had eaten away the golden handshake, and many people were in
June 8, 1992
difficulties.
Resistance began, and reached a height over the attempted privatization of two state banks which controlled 60 to 70% of the country's financial activities. These state banks were doing very well even in the face of foreign competition, particularly after the collapse of the Bank of Commerce and Credit International (BCCI). This was a disaster in Sri Lanka; particularly Sri Lankan workers in the Middle East had put their money in BCCI. The state banks agreed to compensate people. pensate people.
As usual it was explained how privatization would bring greater efficiency, but popular experience has been that it usually means that services are lost and prices go up along with unemployment. This time the bank employees resisted along with a campaign of pickets and demonstrations.
Finally the prime minister and the finance minister got up in parliament and said: "we are very sorry but we have to announce that the state banks are bankrupt; we have to tell you the truth", hoping in this way to provoke a run on the banks, so that they would have to seek foreign assistance. But everyone understood that this was part of a conspiracy by the government and foreign bankers. Then there was a vote of no confidence in the ministers. This privatization effort failed.
Nationalized tea plantations
Then there are the tea plantations which are all nationalized. The idea is to give them over to the foreign companies. Increases in profitability here, at a time of declining prices, can only be achieved through rising unemployment, and harder work for no more wages.
First, the government was forced to rule out ownership by foreign companies in favour of local companies; then they retreated on that as well, saying that the workers would continue to be government employees, but independent management would be brought in. Even this plan has not been carried out.
The administrative workers' unions have launched a big campaign to refuse to handle any work related to denationalization. When the foreign companies' representatives come to look around there is sabotage and they have to go away.
However, the workers have not yet moved- they have not yet been directly affected; they are under the influence of a leader of the plantation workers' union who is also a government minister, but resistance is growing.
Recently there was a march of 180 miles to protest against privatization, unemployment, the cost of living and the anti-Tamil war in the North. Altogether some 100,000 people took part in the initial stages and then for the last stretch another 100,000 joined. People know that the background to the government's schemes is the World Bank and IMF's plan for squeezing the Sri Lankan masses in the interests of foreign investors.
All the opposition parties have been involved in the anti-privatization movement, including dissidents from the ruling United National Party. The NSSP has been in the forefront in educating the people on this question and exposing the World Bank plan. We have led our trade unions along with others in pickets and played an important role in organizing the march. Our General Secretary is also coordinating chairman of the committee resisting the privatization of the plantations and we have an influence in the bank workers movement.
On May 25 there is to be a strike in the plantations and throughout the administration.
We need resolutions of support from the international labour movement, but also information about the multinationals operating in the country such as Nestlé, Levers, Bata and others — they pretend to be benefactors.
We will also benefit from having what we are doing publicized. We have had some successes, as is true also in India, where an anti-privatization movement is growing. It is not like in the former Soviet Union and Eastern Europe. There there was so much oppression and economic stagnation that people welcome any change and only a very few will be inclined to resist at first. *