Sri Lanka: sliding into state capture

Originally used to describe late 1990s Russia, where a few oligarchs gained excessive control over the institutions of the state, ‘state capture’ is now used to describe the way that political elites in some countries systematically expand their control and consolidate their power. In this post, CSC Director Liz David-Barrett describes how one family in Sri Lanka is following the state capture playbook.

As a club that claims to stand up for democratic values, the European Union is getting some harsh and deserved criticism for failing to arrest democratic backsliding among its own members, Hungary and Poland, as well as being a bystander while neighbouring Turkey and Serbia also succumb to state capture.

But the European Parliament (EP) is now urging the Commission to take a stand on these issues further afield. Most recently in Sri Lanka but also, in the past year, in the Philippines and Pakistan, the EP is seeking to use the leverage that flows from the Union’s trade policy to call out assaults on the rule of law and human rights. In all three cases, EP resolutions have invited the European Commission to consider withdrawing the countries’ access to the Generalised Scheme of Preferences Plus (GSP+).

Events in Sri Lanka are following the pattern of ‘state capture’ seen elsewhere fairly closely. The playbook has three parts. First, change the rules of the game, by influencing the formation of laws, policies and institutions, for example through constitutional reform. Second, stuff state-owned enterprises and the bureaucracy with loyal appointees, to facilitate day-to-day stealing through public procurement or privatisations. Third, disable and undermine any checks and balances on power, including by intimidating and abusing the human rights of journalists and civil society groups.

In today’s Sri Lanka, a fairly fragile state that emerged from a 26-year civil war only in 2009, this concerted power grab is driven by one family, the Rajapaksas, who are now seeking to leverage their role in ending the war to capture the state for themselves.

Sri Lanka has a presidential system, with the prime minister serving as the president’s deputy as long as they are from the same party. Hence when Gotabaya Rajapaksa was elected president in late 2019, former Prime Minister Ranil Wickremesinghe resigned. The new president promptly appointed his own brother, Mahinda, as premier, and made him Finance Minister for good measure. More recently he relieved Mahinda of the latter role, but replaced him with another brother. A fourth brother meanwhile is Minister of Irrigation, state minister for Disaster Management and state minister for Home Affairs. Mahinda’s son runs another two ministries.

All in all, one family controls not only the allocation of funds across government, but most of the big-spending ministries through which most state funds flow. As of March, it was estimated that the family controlled 24% of the state budget. In addition to the President, six Members of Parliament are from the Rajapaksa family.  

Nepotism of this kind is not new for the Rajapaksas, although it has become more extreme since they were last in power in 2005-15. At that time Gotabaya served as defence secretary, while Mahinda was president, and the family also scooped up the roles of Finance Minister, Minister of Economic Development and Speaker of Parliament.  

Now back in office after a spell in opposition, the Rajapaksas seem desperate to make sure that they don’t lose power again. The three-part playbook is very evident.

Step one: Change the rules of the game

For any group that wishes to entrench its control over the state, a key early move is to change the constitution. The constitution sets out the rules of the game, so if the captor changes the rules, it can make sure that it always wins.

Hence it was no big surprise that the Rajapaksas’ dynastical government used its two-thirds parliamentary majority to push through a 20th amendment to the constitution in October 2020. The amendment weakened Sri Lanka’s anti-corruption agency, the Bribery Commission, removing the status that comes from being recognised in the constitution, as well as taking away its power to initiate investigations. The amendment also abolished the national procurement commission and the audit service commission.

The government also uses its majority in parliament to minimise parliamentary scrutiny of new laws. In April, the government introduced a bill on the Colombo Port Economic Commission, a controversial economic development project which has seen a Chinese state-owned company invest USD1.4 billion. Bills normally receive six days of scrutiny by the elected chamber. But, in an extreme version of the “taking out the trash” tactic for burying bad news while nobody is paying attention, the government announced this bill on Friday 9th April, in the knowledge that the following week held four days of state holidays. The government suddenly declared the intervening Monday a holiday too.

In this instance, the citizens fought back, taking 19 petitions to the Supreme Court. The Court – still fairly independent, despite a recent stuffing following the 20th amendment – ruled that several provisions should be subject to a two-thirds majority and a referendum. In doing so, it forced the government to water down the bill. Following the Determination of the Supreme Court, the Bill was still only debated for two days in Parliament before being rushed through, leaving no space for proper parliamentary scrutiny.

Step two: Use patronage power to expand control over state resources

In another textbook state capture move, the Rajapaksas have extended their reach over the implementation of policy by appointing a number of allies to leadership roles in state-owned enterprises, including more distant family connections, such as the in-laws of two of Mahinda’s sons. State-owned enterprises give out a large share of government contracts and do so with barely any transparency.

President Rajapaksa is a military man, and he has given out some other high-ranking government jobs to former military personnel, including the head of the Covid taskforce and the Minister of Public Security. Criminal justice reform is rumoured to have been entrusted to a former army commander. And former military officers have been appointed to the disciplinary task force for the public service, potentially changing the culture and autonomy of the bureaucracy.

Step three: Undermine checks on power

Civil society is a residual bastion of scrutiny, but it is under huge pressure. One lawyer who was a critic of the Prevention of Terrorism Act and an advocate for constitutional governance has been in custody since April 2020. Another activist, Asela Sampath, was abducted from his house, allegedly assaulted, and released on bail. Others who have merely written critical comments on Facebook have been arrested and detained for months on end.

Meanwhile civil society organisations receive unannounced visits from military intelligence, or are told that they need to inform the administration before applying for grants. Those working in the sector know that surveillance is widely used, and are having conversations with their families about how to respond if they go missing.

The state is intimidating journalists too, and the freedom of the press is threatened by the way that media industry owners are becoming cosy with the Rajapaksas. The president recently pardoned convicted murderer Duminda Silva, for example, and there are rumours that this may have been a quid pro quo in exchange for favourable coverage from the extensive television and radio empire owned by Silva’s brother. The owner of a large media group is believed to have played a key role in the successful campaign of President Rajapaksa. This media group which includes TV stations, a PR arm and an advertising arm is believed to have played an important role in moulding the psyche of the people towards supporting Gotabaya Rajapaksa. Sri Lanka has no rules on party finance, hence there is nothing to stop machine politics.

Sri Lanka is sliding into illiberal authoritarianism before our eyes and at an alarming pace. Yet another democracy is being dismantled, creating openings for superpowers in the region to expand their influence and raising the risk of a return to conflict in this fragile state. The EP move is a laudable effort to stand up for democratic values, but in a world where so many authoritarian leaders are working from the state capture playbook, democracy needs many more defenders.

A shorter version of this piece was published on the Global Anticorruption Blog here.