The government lost its majority in Parliament in June, after the Sri Lanka Muslim Congress (SLMC) decided to withdraw its support. The backing of the ten JVP members will increase the strength of the PA in the 225-member legislature to 118. The MOU will be in force until 4 September 2002. Under the pact, the government is expected to cancel the proposed referendum on the constitution, reconvene Parliament and make radical changes in policy and practice:
1) A constitutional amendment to establish four independent commissions - Police, Public Administration, Elections and Judiciary - should be tabled in Parliament before 24 September.
2) The independent commission on the Media should be appointed within six months and a Constitutional Council before 5 October.
3) Constitutional amendments to abolish the executive presidency should be presented in Parliament within six months.
4) An electoral system ensuring reasonable representation to all ethnic groups should be introduced within six months.
5) The plans to privatize public property such as water resources, banks and insurance ventures should be suspended until September 2002.
6) New trade or financial agreements which may be detrimental to the interests of the country should not be signed.
7) Action should be taken before 30 September to write off loans given to farmers by state institutions between 1999 and 2001.
8) A task force should be appointed to supervise recovery of large outstanding loans to businesses within three months.
9) Action should be taken to prevent price rise of essential needs such as milk food, rice, wheat flour, sugar, fuel and medicines.
The accord also ‘demands’ a number of austerity measures. The JVP insists that the Cabinet should be reduced from 41 to 20 before 12 September, MPs should contribute half their salaries to the Consolidated Fund for a year and the construction of the palatial presidential residence should be suspended. Foreign travel of ministers and government officers will be curtailed, import of luxury cars for them will cease and fuel issued to them will be limited. The leasing of large buildings for government use will be reviewed.
A Panel will be appointed within a month to prevent corruption in government purchases, including weapons and equipment for the war. A parliamentary select committee will also be appointed within three months to recommend measures to improve local industries, and committees of experts to advise all ministries, within two months.
The PA has agreed to adopt policies that would eradicate discrimination on the basis of nationality, religion, sex or political affiliation in recruitment for employment in government institutions. Parliament will be dissolved at the end of one year and free and fair elections held under the new electoral system.
The agreement gives a new lease of life to the government, but presents grave difficulties. Observers say many of the measures included in the pact are needed to ensure transparency, accountability and good governance, but some provisions may not be acceptable to certain sections. The business community which is reeling under the impact of the LTTE attack on the Colombo airport, may be concerned over the provisions relating to finance. The reduction of the Cabinet and the rise of the JVP may evoke discontent among PA’s constituent parties.
Some observers believe that the government will not be able to implement the agreement. IMF loans are conditional on government progress in meeting prescribed fiscal and monetary targets and structural reforms. The government is already committed to divestiture of its stakes in some companies, privatizing the National Insurance Corporation and restructuring of state banks.
The most controversial clause in the agreement relates to the ethnic conflict. The PA government has agreed with the JVP that there would be no proposals on devolution of power or any other peace proposal that may lead to controversy, ‘until broad consensus is reached through wide-ranging consultation with all segments of society’.
The Tamil political parties are extremely concerned and view this as a conspiracy by senior members of the PA to derail the Norwegian peace process. The Liberation Tigers of Tamil Eelam (LTTE) have described the pact as a serious blow to peace. The JVP has made it clear that it supports continuing the war until the LTTE is defeated and opposes Norwegian or any other foreign involvement in conflict resolution.
President Chandrika has an option to put an end to the difficulties. She could dissolve Parliament after 10 October and call for new elections. Analysts believe that without any guarantee of outright victory in fresh elections, the President may wish to continue the alliance with the JVP even at the cost of peace.