(2010) Politics and Power in a Market Economy.

In: Camilla Orjuela, ed. Power and politics in the shadow of Sri Lanka's armed conflict. Sida Studies No.25, Sida.

The purpose of this chapter is to provide a framework to understand how politics and power operates within the market oriented economy of Sri Lanka. The chapter consists of five sections. The first section creates the background for the discussion that follows by analysing the social composition of the political class that rules Sri Lanka today. It discusses how the political power enjoyed by the English educated, westernised colonial elite was diluted due to the impact of electoral politics. It also shows how their influence continues through the control of key levers of power.

The second section focuses on the political management of liberal economic reforms begun in 1977. Given the social composition of the political class, the key issue was how to manage those social groups within the political class who were not direct beneficiaries of liberalised policies. This section elaborates on three mechanisms – institutional design, patronage and coercion – that have been used to overcome this political problem.

The third section focuses on the fate of the poor in this context, and the existing social relations that conspire to keep them in poverty. On the basis of findings from available literature, this section identifies social groups that can be categorised as the poor. This is followed by an analysis of structural factors that keep them in conditions of poverty. Three factors . access to assets, powerlessness and vulnerability form the focus of this analysis.

The fourth section tries to link this debate with the politics of the United National Front (UNF)-led negotiations with the Liberation Tigers of Tamil Eelam (LTTE) within the framework of the ceasefire agreement, through a discussion on social contradictions of liberal economic policies. It demonstrates how UNF.s insensitivity to the socio-economic contradictions of liberalised policies contributed to its defeat in the 2004 general elections and undermined its strategy of negotiations.

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