British colonialism and "divide and rule"

Indi recently alluded to a British policy of "divide and rule" in administering its colonies.  Lord Elphinstone is supposed to have said “Divide et impera was an old Roman maxim, and it shall be ours”, post the revolt of 1857 in India.

What does this mean in practice? A definition on the internet is

 "the policy of maintaining control over one's subordinates or opponents by encouraging dissent between them, thereby preventing them from uniting in opposition."

While this may be a good military strategy, as a system of rule it dubious at best or counterproductive at worst. A historian with the  International Islamic University, Islamabad, Akhtar Hussain Sandhu argues that:

" The very principle can be practical in a battlefield to cut the numbers of the enemies or create rift among the confronting forces but this strategy cannot be used by the rulers who seek peace or law and order in the region under their possession. Not unrest and communal clashes but regional peace and communal or factional harmony can better serve the aspirations of a conqueror who decides to stay and rule". (Reality of ‘Divide and Rule’ in British India, March 2015).

Regardless of whether the British practised this or not the burning question in India and Sri Lanka today is why post-independence rulers have adopted this tactic.

The open economy and corruption

I was chatting to a professor of economics a few days ago and he mentioned something interesting:people associate the opening of the economy with an increase in corruption. He said that this is one reason why the 'free-market' is unpopular in this country.

Liberal ideas, especially those related to market economics are definitely unpopular. The Professor's insight is interesting, it is a plausible explanation for at least some of the hostility to markets. This confusion can be easily cleared up.

The UNP government that was elected in 1977 did two things:

1. a partial, somewhat polticised liberation of market forces and
2. a dismantling of governance institutions, principally through the new constitution.

Corruption expanded mostly because of the dismantling of the systems of governance. The  liberalisation was also politicised, which created new opportunities for corruption.

Admittedly, some genuine reforms did take place including replacing quantitative restrictions on imports with tariffs  and revising the tariff structure to achieve greater uniformity; financial  reform: adjusting interest rates to levels above the rate of inflation, opening the banking sector to foreign banks and freeing credit markets to determine interest rates, reducing restrictions on foreign investment, with new incentives for export-oriented foreign investment under an attractive Free Trade Zone (FTZ) scheme.

Unfortunately too many reform measures were politicised and lead to crony capitalism, resulting in increased corruption and rent-seeking.

 “The UNP government commenced a program of economic liberalisation in 1978, reversing the two decades of socialist economic policy. The economy began to improve and there was an upsurge in domestic and foreign investment. Despite this deregulation, the government retained enormous powers of patronage. Large-scale projects needed government approval, firms needed all sorts of permissions and authorisations to do business and a range of services were still provided by government including security. The returns from investment in Sri Lanka increased exponentially but so did the opportunities for corruption owing to the remaining government controls on trade and investment. The governing party was able to use these powers to benefit party supporters and to buy electoral support. This practice of highly politicised liberalisation led to higher levels of corruption on an unprecedented scale”[1]

Dismantling the governance mechanisms was an absolutely illiberal move. Liberals believe in limited government : government that is bound by known laws. The centralisation power in a presidency while dismantling checks on the executive, reducing the oversight of parliament and the courts was thus profoundly illiberal. 

The UNP had the opportunity of a lifetime. Even with all their stupidity, if they had not instigated the ethnic violence of 1983 our trajectory would have been different. The next watershed was in November 2003 when Chandrika Bandaranaike sabotaged a reform process that showed real promise. In 2015 another UNP government squandered, stupidly and needlessly the last opportunity.

Now there will be no further discussion of markets or liberalism. 

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[1]Ruwan Wathukarage, ‘Independence of the Judiciary in Sri Lanka: An institutional Analysis of its Woes’, [2007] LAWSASIA Journal,  186