Mr. Mahinda Kautilya

By Maduranga Rathnayake

“...In the happiness of his subjects lies the King’s happiness, in their welfare his welfare. He shall not consider as good only that which pleases him but treat as beneficial to him whatever pleases his subjects...”- Kautilya

(January 11, Melbourne, Sri Lanka Guardian) Let us go back as far only as 1970s; the best part of the decade of 70 saw a theoretically rich yet practically abominable economic policy, not because the masses had to go through severe hardships, but it was utterly and pathetically misdirected and mishandled and contrary to the popular notion, even if it was not dismantled by THE JRJ, the island nation would never have, at that rate, gained any salvation. For one thing the Lady Prime Minister was not an economist, in any event she entering governance by a monk’s bullet, and her beloved so-called economic advisers were only pursuing nostalgically a dogma almost anachronistic in the then world economic times. JRJ only responded to a crisis, more a political response though his so-called open-economy serendipitously brought some results which, if rightly utilised, would have made the country economically sound; yet Ronie-JRJ economic combination too failing due to misdirection and mismanagement. The post JRJ period continued to be equally, if not worse, economically dark.

Today we witness a new Arathashastra- science of wealth and warfare, though the legendary Kautilya’s (or Chanakya) treatise Arthashastra similar in some respects to Machiavelli’s The Prince was a prescriptive text on monarchical style governance yet containing some precepts on just rule; this new Arthashastra of the Rajapakse regime is all about hoarding wealth and transporting it beyond-the-seas through an acute zero foreign exchange control policy; if only Kautilya were alive.

It is sad that over the past 30 years we have been unfortunate enough to see a number of decisions concerning critical economic aspects such as interest rates, income tax and foreign exchange etc. being taken purely on political, personal and nepotistic urges further jeopardising our ever fragile economy; loosing large sums of money and great many opportunities for growth and development.

One big problem has been political-funding; the key businessmen, who actually hold the strings of the economy, fund politicians and political parties at elections and the sums, to average people, are unthinkable, thus the white-clad politicians being obliged to their funders. Once elected to power, the politicians are obliged, much as they are required, to pay back their funders in money and kind which often involves making economic decisions which are beneficial to these funders however catastrophic such decisions might be to the national economy.

This time a sudden decision to wildly relax Forex control. While from an economic point-of-view there may hardly be any theoretical or practical reasons to be hundred-percent hostile to liberal foreign exchange and duty and tax policies, what is shockingly shocking is its perfect timing. Any other Central Bank in the world, of course our Central Bank is not any other Central Bank for that matter, would not dare to effect such a serious decision just a few weeks before a presidential or parliamentary election. Added to this horror is, as it is now being reported widely, the spine-chilling manner of the several personae of the four-year old drama flying off with sacks full of currency to be deposited overseas.

While this latest wild-prank of the Rajapakse regime re-emphasises the need to have an independent monetary board and a Central Bank governor and legislative changes accordingly, one would wander whether Mr. Shinawathra has, in fact, been discreetly consulted before the great decision was made!