The two main establishment parties in Sri Lanka—the ruling Sri Lanka Freedom Party (SLFP) and the opposition United National Party (UNP)—for the first time signed a formal coalition agreement last week. The grand alliance has been hailed by corporate leaders and the media as an “epoch making achievement”. In reality, it is another sign of the country’s deep political crisis.

The SLFP and UNP have been bitter rivals for power for more than 50 years and have rejected all previous appeals to form a government of national unity. The desperate hope in ruling circles is that this new political formation will somehow end the island’s escalating civil war and provide the means for pressing ahead with an agenda of market reforms to boost foreign investment.

SLFP general secretary Maithripala Sirisena and UNP chairman Malik Samarawickrama signed the memorandum of understanding (MoU) on October 23 at the president’s official residence, Temple Trees. Under the two-year agreement, the UNP has promised to assist the government in “resolving” four main issues—“conflict in the north and east,” electoral reform, “good governance” and social development.

The “structure for collaboration” is yet to be decided between Rajapakse and UNP leader Ranil Wickremesinghe. A section of the UNP leadership, including Wickremesinghe, is extremely reluctant to accept any cabinet posts; knowing full well that the party will have to face the inevitable hostility generated by unpopular policies. At this stage, Wickremsinghe has proposed that the UNP remains on the opposition benches.

Both party leaders are conscious of what is at stake. At the signing ceremony, Rajapakse warned: “Let this nation not go down the precipice due to differences between political parties.” Wickremesinghe later told a press conference that during “a crisis, when the people are affected, the opposition and the government work together. It is very rarely that an opposition supports the government.... We have come to this crucial phase in our country’s history.”

Central to the crisis is the renewed civil war. Rajapakse narrowly defeated Wickremesinghe at last November’s presidential elections by signing electoral pacts with two Sinhala extremist parties—the Janatha Vimukthi Peramuna (JVP) and Jathika Hela Urumaya (JHU). Following his victory, the military initiated an escalating covert war of assassination and provocation against the Liberation Tigers of Tamil Eelam (LTTE). Open warfare erupted in July when Rajapakse ordered the military onto the offensive.

Prior to reaching an agreement with the UNP, the SLFP had been negotiating a coalition with the JVP. These talks collapsed, however, after the JVP insisted that the government tear up the 2002 ceasefire and wage a more aggressive war against the LTTE. Rajapakse is acutely aware that openly declaring war would create great political difficulties for the government. He has attempted to disguise the military’s operations as “defensive”, both to contain widespread antiwar sentiment at home and to retain international backing.

The SLFP turned instead to the UNP, which had signed the 2002 ceasefire and held peace talks with the LTTE in 2003. The SLFP-UNP agreement does not represent a step towards peace, however. The deal is not based on a return to the 2002 ceasefire and thus continues to give the military a free hand. The UNP, which was responsible for starting the war in 1983, is just as steeped in Sinhala chauvinism as its rival. Its turn to peace talks in 2002 was not out of concern for the impact of the war on working people, but reflected frustrations in corporate circles that the conflict had become a barrier to foreign investment.

While no detailed joint policies have been announced, the Sunday Leader has published the contents of several discussion papers drawn up by the two parties. The document on the “conflict in the north and east” declares: “The state has the paramount duty to protect the sovereignty of the country by all means at its disposal, including military action when appropriate.” At the same time, it calls for a political solution to “the ethnic issue”—in other words, to the discrimination against the island’s Tamil minority that provoked the war.

These formulations allow the government to posture as peacemakers, while continuing to wage an aggressive war. The UNP has agreed to return to the all-party conference sponsored by Rajapakse to propose a political settlement to the war. This conference, which includes JVP representatives, has been nothing more than political camouflage for the military’s offensives against the LTTE.

The SLFP-UNP agreement was signed just days before a round of peace talks in Geneva last weekend. The deal was immediately hailed by the US embassy in Colombo as a sign that the island’s two main parties “were determined to work together to find a political solution to the conflict.” In fact, as Washington is well aware, the government, with the UNP’s backing, is making harsher demands on the LTTE than was the case in 2002. Not surprisingly, the Geneva talks broke down with no proposal for another round.

The JVP political bureau, which is openly campaigning for all-out war against the LTTE, has condemned the new coalition as a UNP trap that will “dilute the limited moves to defeat separatist terrorism”. The JVP plans to organise meetings in several districts, including Colombo, hoping to capitalise on anti-government discontent. At a rally on Wednesday, JVP secretary Tilvan Silva warned: “If he [Rajapakse] fails to come back to the right track, we will be forced to dethrone him and replace him with someone else.”

The JVP campaign is a rather desperate attempt to rebuild support after its previous entry into an SLFP coalition government in 2004 produced widespread disillusion over its failure to fulfil its promises. While there is no popular support for war, many working people are deeply hostile to the social impact of the government’s economic policies. The JVP has focussed its attack on the UNP, knowing full well that it is widely hated for the accelerated pro-market reforms it implemented between 2002 and 2004.

Economic policies

The joint SLFP-UNP discussion papers on economic and social policies outline a series of austerity measures that will inevitably widen the gulf between rich and poor, including:

* A “national health fund” has been proposed, financed by “citizens” along with business taxes. Free public health care, which was established in the 1950s and 1960s, has been whittled away by successive governments. A fund would entrench the present two-class health system: an expanding private sector for the wealthy and a deteriorating public system for the majority of the population.

* Limited welfare support for the poor will now include “social market elements”. Under this scheme, subsidies will increasingly be “targetted”—that is, limited to the very poorest layers of society. The policy is in line with IMF claims that broad subsidies only benefit the rich. While the wealthy have undoubtedly gained, the purpose of the IMF policies is not to help the poor, but to slash overall social spending.

* Further restructuring and privatisation of the public sector, including transport and communication, is to be carried out. The government is to promote the “concept of share owning society”, in which “every person in the society [will] be a share holder in these ventures”. The beneficiaries will be those who have the money to buy up shares in privatised enterprises. Most people will face higher prices for essential services.

* In the agricultural sector, a “farming for the market” scheme is proposed, particularly to encourage exports. Those who will reap the benefits will be agricultural businesses and better off farmers with the ability to grow for the international market. The vast majority of Sri Lankan farmers have neither the capital, land nor know-how to switch from staple crops to more lucrative exports.

Big business has responded enthusiastically to news of the SLFP-UNP alliance, with sharp rises on the Colombo share markets. Federation of Chambers of Commerce and Industries (FCCI) chairman Nawas Rajabdeen outlined the expectations of the corporate elite. “Partisan politics and the power play between the major parties had forced successive leaders to ignore unpopular yet critical reforms. They have merely taken refuge in popular politics with short term effects,” he declared.

The formation of the SLFP-UNP coalition marks a turning point in Sri Lankan politics. While the conservative UNP has always been an unashamed advocate for vested corporate interests, the SLPF has in the past attempted to make a populist appeal, particularly to the island’s rural Sinhalese.

The SLFP came to prominence in the 1950s on a combination of Sinhala communalism, socialistic phrasemongering and promises of reforms. The party never had anything to do with socialism, but was based on a program of national economic regulation. Its limited social reforms and Sinhala chauvinism were aimed at containing and dividing an insurgent working class.

As in other countries, however, the globalisation of production over the past three decades has destroyed any basis for a nationally regulated economy. The SLFP has followed the UNP in implementing market reforms to the point where their programs are indistinguishable. The protracted assault on the social position of working people has generated widespread hostility and anger.

The government’s response—whether led by the UNP or SLFP—to mounting opposition has been to stir up anti-Tamil chauvinism to confuse and divide workers. This dependence on communal politics produced the civil war in the first place and has led to its renewal. The UNP and SLFP have no solutions to any of these intractable problems other than to place the full brunt of the war and economic crisis onto the backs of working people.