Right-sizing the Sri Lanka Army

About deaths, the veteran Indian diplomat turned security expert says that between 1983 and 2009, 80,000 to 100,000 people, including combatants from both sides, lost their lives. Among them were 30,000 to 50,000 civilians, 27,693 LTTE cadres, 23,962 Sri Lankan army personnel, and 1,155 men of the Indian Peace Keeping Force (IPKF)

ALLOCATION OF THE DEFENCE BUDGET

The Ministry of Defence has been allocated 410 billion rupees, with the army getting 209 billion rupees, the Navy 75 billion rupees and Air Force 66 billion rupees and a multi-task force getting 9.8 billion rupees.

The Ministry of Public Security has been allocated 129 billion rupees with 116 billion going to the Police. The Police and military have received 539 billion rupees. In an attempt to understand Sri Lankaʼs current economic crisis, some have pointed to Sri Lankaʼs high military spending as one cause of the country’s financial crisis.

As Sri Lanka embarks on this difficult economic recovery, it must rein in military expenditure and address the more dire needs of a suffering population. Sri Lanka which ranks 58 according to the size of its population and ranks 65 in terms of GDP, has the 17th largest military in the world. As a percentage of GDP, Sri Lanka spends nearly 2% on military expenses, an extraordinarily high amount for a country that does not face an existential security threat.

In addition, unlike other countries, Sri Lanka does not have a militaryindustrial sector that produces weapons or ammunition, either for itself or for export. Therefore, much of the capital expenditure incurred by the military is primarily for imports that hardly create any economic activity within the country other than for commissions for a selected few.

Many intellectuals are of the opinion that, even 13 years after the end of the separatist conflict, the military has not significantly reduced its numbers, nor restructured itself to suit the different challenges and realities of a postconflict, democratic country.

The Tri Forces and paramilitary groups such as the home guards total more than 350,000 according to publicly available data.

They further argued that as Sri Lanka faces its worst economic crisis in history, it is essential to drastically curtail military spending and prioritise expenditure to ease the burden on the public, by providing them essential welfare such as education and health and reducing the tax burden by reducing unnecessary spending. The 2023 Budget should have more seriously considered the impacts of the economic crisis and difficulties faced by the majority.

SOME ARGUE THAT THE ARMY SIZE IS FAR TOO BIG

Scholars have pointed out that Sri Lanka has an Army far too big for its size and population, and has a military that is ill-suited to meet the new strategic needs. It is further noted that, despite this assessment, no meaningful steps have been taken to rationalise the size of the army which is bigger than the British Army in size and expenditure pattern.

The evolution of a military doctrine suited to emerging threat scenarios is also not evident. Also, the concern is the size of the military in terms of the number of personnel, their salaries and pensions in light of the fact that the separatist war ended 13 years ago.

Then there is the related issue of the militarization of the civilian administration that is raised by the civilian society.

If Sri Lanka is to be rescued from the economic morass it finds itself in through an International Monetary Fund (IMF) bailout, it needs to reduce its military spending, which stands at 410 Billion Rupees for the year 2023.

Sri Lanka needs to carry out a Strategic Defence and Security Review to reduce its military spending and remove the military from engaging in commercial activities, that Sri Lanka meets the criteria required for the Generalized Scheme of Preferences Plus, and Sri Lanka re-engages with the United Nations Human Rights Council process and fully implements resolution 30/1; “and calls upon the Government to implement targeted sanctions. Sri Lankan politicians fear that even a significant reduction could trigger another insurgency which the country cannot afford. And traditionally, the armed forces have been used to aid the civil administration in Sri Lanka even in fuel rationing, de-hoarding, traffic control and tackling civil unrest. This is a factor militating against reducing the size of the forces. But there is a pressing need to reduce. Australian National University (ANU) National

Security College Senior Research Fellow Dr David Brewster told The Morning in September: “Sri Lanka’s armed forces are far too large and do not have the right focus or equipment. There are way too many soldiers, meaning that money is spent on personnel costs rather than equipment. “In order to modernise and refocus on current threats, the Sri Lankan armed forces (principally the Army) will need to be reduced in size, with much greater spending on the Navy and Air Force, with military personnel having much greater technical expertise. Sri Lanka is an island state, but its armed forces do not currently reflect this. Institute of South Asian Studies, National University of Singapore points out that despite the end of Sri Lanka’s civil war, Lanka’s defence budget has not seen a significant decline or any major change in its composition. The budgets appear to have no relationship to the emerging strategic environment and risks, and it can be observed that despite the radically altered strategic environment since the defeat of the LTTE in May 2009, defence expenditure keeps on rising annually which is a burden to the citizens, especially at a time of economic crisis. The share of government pension expenditure accruing to military personnel has risen from 14.5 per cent to over 17 per cent in just three years. Sri Lanka spent around US$1 billion on pensions, so military pensions cost the taxpayer approximately US$170 million per year. In the entire Asian continent, only Nepal and Tajikistan spend a greater share of their defence spending on personnel.

Another reason for the higher expenditure on personnel, according to scholars is that Sri Lanka does not have reserves.

PRESIDENT GOTA’S POLICIES DEEPENED THE CRISIS

Many policies of the administration of former President Gotabaya Rajapaksa led to the aggravation of the economic crisis. The tax cuts given in 2019, when Sri Lanka was already seeing low tax revenues, led to larger fiscal deficits, resulting in international rating agencies downgrading Sri Lanka, effectively shutting the country out of international capital markets. The COVID-19 pandemic, which led to a fall in tourists and remittance sent home by Sri Lankans working abroad, further exacerbated the situation. The chemical fertilizer ban was another mistake, as admitted by the former president himself, which led to agricultural output decreasing significantly.

The provision of 100000 jobs in the Government sector was another politically motivated but unwise decision by the former president. Fixing the currency exchange rate at 203 Sri Lankan rupees to the U.S. dollar by using up foreign reserves and deferring engagement with the IMF led the economic crisis to spiral out of control.

But a large share of the blame lies in the structural issues of the Sri Lankan economy. Macro risk factors, such as a 26-year-long civil war, cultural predispositions against foreign direct investment, public scepticism about privatization, populist policies, and low taxes have all led to where the country is at the moment.

WHAT NEEDS TO BE DONE?

Key Economic Reforms Needed for Sri Lanka include right-sizing the public sector including Armed Forces, Army in Particular.

According to Talal Rafi and Sirimal Aberatne, Sri Lanka requires wideranging economic reforms for longterm sustainable growth to service its debt obligations and to emerge from this crisis stronger. A stable monetary policy is important to keep macroeconomic stability and confidence in the local currency. The current economic crisis Sri Lanka is facing makes it very evident that an independent Central Bank is of the utmost importance. An independent Central Bank that can refuse to print money can force the Treasury to take fiscal consolidation seriously. Having more professionals in Central Bank committees and giving them a fixed term can allow them to make longterm policy decisions on interest rates and reserve requirements without political interference.

Tax reforms are essential for revenue-based fiscal consolidation, another prerequisite for economic sustainability. Instead of merely increasing taxes, the government should widen the tax base and implement a system to efficiently collect taxes.

Reform is needed to rein in state expenditure as well. State-owned enterprises (SOES) are a colossal drain on the state coffers. This has resulted in a deepening fiscal deficit. The management of stateowned enterprises is inefficient as the ruling parties use SOES for short-term political gains, resulting in a loss of focus on a long-term sustainable strategy for SOES. As the chairperson and the Board of Directors of SOES are appointed by the relevant government ministries, they tend to be political party loyalists. This leads to failures and Malpractices in almost all SOES.

PUBLIC SECTOR

In Sri Lanka, just over one in six of the country’s total workforce is employed by the state. The total state sector workforce amounts to 1.4 million employees, which resulted in 86 per cent of the government tax revenue in 2021 going to paying the salaries of state sector employees. To make matters worse, a staggering 71 per cent of government revenue goes to paying the interest on Sri Lankaʼs sovereign debts. Paying the salaries of state sector employees and interest costs alone results in a large fiscal deficit, which is managed by more borrowing and quantitative easing. This also leaves very little room for government investment in healthcare, education, and other development projects.

RIGHT-SIZING - ARMY IN PARTICULAR

Although right-sizing the Public sector, Armed Forces and Army in particular is a need of the hour, politicians are hesitant to openly discuss it as it can raise controversial questions and is a matter of debate. Furthermore, it is not very practical now in view of the local Government election scheduled in March 2023.

The Peopleʼs Liberation Army planned to reduce its 2.3 million strong Army to two million and definitely to reform a leaner and mightier force. Indian Army too planned to size down in areas which are not of operational importance due to budgetary constraints. It was thought practical to not only increase the budget allocation but to right-size the Indian Army.

The Sri Lanka Ministry of Defence needs to appoint a high-level study to determine and recommend a tooth-to-tail ratio, a military term that refers to the amount of military personnel it takes to supply and support (tail) each combat soldier (tooth).

The utmost important aspect of economic reform will be the right sizing of the 1.4 million public sectors, the armed forces and army in particular within the next 5-10 years without harming them and their families. It cannot be done hastily but need a scientific approach. Without this economic reform will only be a distant dream and no one cannot prevent Sri Lankaʼs situation from going from bad to worse.

The writer is an International Research writer carried out research, analyzing the defence expenditures and threat perspective in Japan, Sweden, Germany, United Kingdom, Australia, China, India, Bangladesh, and Israel to Sri Lanka. It was evident that Sri Lankaʼs defence expenditures were only second to Israel’s.

But in terms of GDP Sri Lanka was at the bottom and the threat perspective was very minimal at present other than an uprising of the local population against the Government due to economical hardship.

Finally, taking into consideration the factors and justifications given above President Ranil Wickremesinghe and the Government of Sri Lanka will have no other alternative or substitute other than right-sizing the public sector, Armed Forces and Army in Particular.

The writer is the former Security Forces Commander (Wanni), the competent authority for internallydisplaced persons in the North, the Colonel Commandant of Sri Lanka Sinha Regiment, the world top-ten in National Defence Studies (China), a Doctor in Economics and Architect of Wanni Bogaswewa Resettlement Project with 36 years of active military service, presently working as an international writer and researcher. The writer being an infantryman fought the same war against the LTTE for more than 20 years.