Political Column

Political Column

JVP’s dilemma on two fronts
By Out Political Editor
The recent disclosures in these same columns about the happenings on the Petroleum front, particularly on the privatisation programme and the entry of a third-player from neighbouring India are now fuelling a serious political crisis within the new, or nearly-new, UPFA Government.

Adding fuel to fire is the fact that neighbouring India is slowly, but surely, tightening its grip on this vital sector of Sri Lanka's economy. Comments made by this newspaper were taken up during the recent visit of Opposition Leader Ranil Wickremesinghe to New Delhi. It is almost certainly going to be an item on the agenda during next week's visit of President Chandrika Kumaratunga to India.

From all accounts, there is some division in India as well about the Indian petroleum corporations digging their heels deeper in Sri Lanka, just as much as others are promoting the proposal. Senior Indian Government (GOI) officials are concerned about the duplicity of views current in Sri Lanka, within the UPFA Government, and in the media.

It is an open secret that Treasury Secretary P.B. Jayasundera, and by corollary, the political leadership of the UPFA Government, are for Bharat Petroleum (BPC), another GOI owned enterprise, to be given the third player slot whilst the trade unions of the Ceylon Petroleum Corporation (CPC), especially those headed by the JVP, and Power & Energy Minister Susil Premajayantha are dead opposed to what Dr. Jayasundera is planning to do.

In a recent interview Dr. Jayasundera said that "there would be no problem in bringing BPC, except if IOC (Indian Oil Corporation) and BPC decide to merge".

Dr. Jayasundera observed that "the Government had to maintain cordial relations with the bidders, whoever they be, adding that "if not, the country would run the risk of not receiving any bidders for future tenders". He went on to say that "the Indians have shown concern over the anti-Indian sentiment building in the country".

In another interview in a state-run newspaper, Dr. Jayasundera said, "We need to be realistic and understand the capabilities of the CPC. As the CPC is unable to handle the market, there is no harm in a third player coming-in, to be more competitive. The CPC must concentrate on its refinery and make sure it could supply oil to all the players".

All this seems not to have gone down well with the CPC trade union and the workers. For one thing, the workers might feel that they can have a good time at the CPC, once the dumping ground for political stooges from Kandy, some of whom did not have a desk or chair to work at. The JVP is opposed to privatisation as a political principle. It continues to slam the UNP regime for selling, as it calls it, the chairs and beds in a house (the silver) to fill the State coffers, and makes a meal of the fact that it has ensured that no State-owned enterprise has been privatised.

And they also see Dr. Jayasundera as the chief impediment to their view that it is not in Sri Lanka's long term interest, to hand over the third player slot to another Indian Government-owned player, such as BPC, when IOC is already one. Their view is that the good doctor in order to placate the coffers of diminishing foreign reserves is bending backwards to obtain the US$ 150 million credit line from the Indians while at the same time not giving much thought to the sensitivities and dangers that surround, giving two-thirds of a strategic sector such as petroleum, to the Indians.

One does not need to consult astrologers to predict a battle royal looming between the hardline JVP trade union leaders such as K.D. Lalkantha waiting in the wings to instigate the unions to take action and cripple supplies for whatever time it takes for the Government to cave in. The unions say it is the good doctor who only in May this year, soon after the elections that brought in the UPFA into the corridors of power, told Dow Jones "privatisation is not the policy of the Government. For State enterprises - we will move toward a business-oriented management style".

In the meanwhile, the Indians too seem to entertain second thoughts. Having possibly sensed the anti-Indian sentiment anguish, the Congress Government's Minister for Petroleum, Mani Shankar Iyer, had admonished BPC for trying to steal the show from IOC in Sri Lanka. It was reported that, quite categorically, he has asked BPC to lay off Sri Lanka! It was also reported that the Minister took this decision at the instigation of IOC. A CPC high-up when contacted said "our information has always been that IOC was against BPC coming in as this would spoil its fortunes in this market since BPC knows all the ploys and nuances of IOC. The previous BJP govt. always showed interest in controlling this strategic sector in the island for reasons other than commercial," he added. It is not clear why the Congress Government has had a change of heart at this stage.

Meanwhile, Lanka IOC (LIOC), i.e. the local company of IOC, has now received Rs. 250 million from the subsidy due to it of Rs. 2.5 Billion or US$ 25 million which is a mere 10% of what is owed to it by the Treasury. This, an ex-Treasury type said "is a carrot to lure the Indians to give the promised US$ 150 million as credit, early".

A delegation consisting of CPC Chairman Jaliya Medagama and the Commercial Manager K.S.W. Kottachchy left for New Delhi last week as reported in this newspaper to negotiate the terms and conditions with BPC and with other GOI officials for purchase of Petroleum products on a "term contract".

It is further reported that the delegation was sent under the direction of Dr. Jayasundera. Officials of the Ministry of P & E are complaining that it is the Treasury Secretary who is giving directions and having the Ministry face the music from the unions.

The payment of the subsidy, even though meagre, stands in good stead for LIOC (the local arm of IOC) who can now proceed with the Initial Public Offer to sell Public Shares in the Stock Exchange, a move that is being scheduled for after the budget. One thing is for certain. P & E Minister Susil Premajayantha, in-charge of the Petroleum sector, is an unhappy man. On the one hand he has to pander to the demands of the CPC unions and on the other, leave it to Treasurywallahs to determine the destiny of the CPC and the petroleum sector for which he is responsible. He is said to be livid of not being consulted on fuel price hikes, which he comes to know from the media like everyone else.

This Wednesday, Finance Minister Sarath Amunugama and Treasury Secretary Jayasundera held discussions with SLFP trade unions at the Petroleum Corporation in a bid to douse the flames raging over the privatisation policy notwithstanding protests from the JVP. The Minister and the Secretary explained at length the financial difficulties the UPFA Government is facing, and if the proposed sale of a part of CPC to BPC does not go through, they had said, the Government could fall apart, economically.

The duo had indicated that BPC was now willing to pay around US$ 85 million, having first indicated it was willing to pay only US$ 55 million. Under the new terms and condition, the Sri Lanka Government (GOSL) will continue to hold 51% of the Retail marketing company. It is now to be seen whether the JVP unions will also cave-in not wanting to upset the Indians.

These new developments are bound to put added strain on the once monolithic JVP. The Lalkantha trade union faction is already disturbed by the cosiness on the part of the JVP leadership with their PA allies. There is the JVP faction that believes that the party is drifting away from the voters due to its association with the PA's policies, especially on the free market, privatisation and the issue of negotiating with the LTTE on the proposals for self-rule (ISGA).

The petroleum privatisation is especially a tricky issue for the JVP leadership given their close ties with India - once-upon-a-time, not so long ago, their arch-enemies.

Students of politics will recall that of the four lessons imparted to faithful cadres by the original Rohana Wijeweera leadership in the 1970s was the Dangers of Indian expansionism. In the 2nd JVP led insurgency from 1987-89 they banned Indian imports and murdered those who even imported low-cost Indian drugs for the people.

The new JVP leadership has reasons to be grateful to the Indians. They were helped to escape the ruthless military crackdown of that 2nd insurgency by slipping into India, and from there to Europe, and there was this helping hand to be a part of the Government in April this year.

But Marxist-based parties like the JVP are quite adept at dealing with these ideological and practical dichotomies, and they can always rely on the archetypical Marxist stance "the end justifies the means".

But for now, Lalkantha & company are in a bit of a spot. Do they cripple the petroleum sector with their strike-action, or do they pretend not to know what is happening before their eyes. Possibly, their one prayer would be that the Indian Government itself will put a stop to Bharat Petroleum (BPC) from entering this market in view of the spoiler role they would be playing to IOC, what their Minister of Petroleum Mani Shanker Iyer has been referring to.

To shift gear from brewing issues in the country's petroleum sector and the accompanying under-currents within the UPFA Government's coalition partners, fresh moves to jump-start the stalled peace process are also taking place on the sidelines of the political canvas.

Time, they say, is a good healer. If that is true, what is equally true is that time can also make things worse. At least politically that is the dilemma for the island nation of Sri Lanka. A fractious war, a fragile ceasefire and a faltering peace process are wearing down a nation already battered by a worsening economic crisis and plummeting public confidence.

There is no prescription or a panacea for all these ills.
The only one, UPFA leaders believe, would be some new spark to ignite and kick-start the stalled peace talks. They believe shaking hands at the negotiating table and bandying words would place things in the top gear. Even if that does not bring about dramatic results, the forward movement would mean aid would begin to trickle in from donors. That would be like oxygen to the ailing.

In this backdrop President Chandrika Bandaranaike Kumaratunga's move to consult the newly formed National Council for Peace and Reconciliation (NACPR) later next week is significant. Insiders say she wants to sound them on an elaborate policy framework to take the peace process forward. The contents are being kept a closely guarded secret until she makes it public, possibly in an address to the nation. She has already declared in her inaugural address to the NACPR that a settlement to the ethnic conflict should be within the parameters of the Oslo statement and the Tokyo declaration. If the LTTE agrees to provide an undertaking on these twin issues, will President Kumaratunga then agree to talk on their proposal for an Interim Self Governing Authority (ISGA)? Some UPFA insiders think so. One of them declared "agreeing to talk on the ISGA does not mean the Government accepts the proposal in toto. It only means the Government will give ear to what the LTTE has to say on the proposals and give its own position. What is good and acceptable will be given. That again would have to be within the parameters spelt out by President Kumaratunga."

That confirms Norwegian Special Envoy Erik Solheim's statement to The Sunday Times last week that the LTTE's demand for ISGA is not a "take it or leave it position." As he asserted, it is, however, a demand they insist should be discussed. There is no change in this stance.

Last week LTTE Political Wing leader, S.P. Thamilselvan, made a hurried call to protest at the remarks his group's own spokesman, Daya Master had made. The latter had told a US news agency the LTTE was willing to discuss the Government's counter proposals - a remark that was to give rise to jubilance in some quarters about what was perceived to be a dramatic breakthrough.

There was no such breakthrough for two reasons. Firstly, the LTTE has not changed its position that ISGA should be the basis of discussion. The only shift is its willingness to hear any Government response or proposal at that point. Secondly, there is no such thing as a Government counter proposal. At most, what the Secretariat Co-ordinating the Peace Process (SCOPP) has in its hands is a position paper which spells out what the LTTE wants and the Government's response or answer to it.

Indications that the stage is being set for a Government stance to discuss ISGA came on Thursday night. Dilan Perera who heads a Deputy Minister's Forum told state run television that the Government should discuss the ISGA proposals with the LTTE. What has the JVP to say to that?

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