35-1. The global financial crisis that erupted in September 2008 with the collapse of the US investment bank Lehman Brothers was not a conjunctural economic downturn, but a fundamental breakdown of the capitalist order. Optimism that the trillions of dollars injected by governments to prop up the financial system and major corporations had restabilised the economic system has rapidly faded. The bailouts and stimulus packages effectively transferred the mountains of bad debt of private swindlers and speculators onto the public books and are now being imposed on the working class in every country in the form of austerity measures. The economic crisis is still unfolding and taking more malignant forms. Australian SEP National Secretary Nick Beams explained: “A breakdown does not mean that capitalism comes to a halt. It signifies the opening of a new period of history, in which old structures, both economic and political, as well as ideologies and ways of thinking, give way, and new forms of political struggle develop in which the fate of society itself is up for decision.”^[1]

35-2. The worsening economic crisis will further exacerbate geo-political antagonisms—in the first place between the United States and China. The rapid economic rise of China inevitably brings it into competition with its more established rivals and other emerging powers such as India, as it scours the world for energy, raw materials and markets. To protect its shipping lanes, China is expanding its military, especially naval, power, but this in turn threatens the longstanding US dominance in the Western Pacific and the Indian Ocean. Now the world’s largest debtor nation, the United States has already lost its post-war position as the world’s economic hegemon and is recklessly using its residual military might to undermine its rivals. The US will not peacefully relinquish its previous dominance and China, which is wracked by its own acute economic and social instabilities, cannot allow Washington to dictate terms. This intensifying rivalry, which is already evident in trade and currency disputes, inexorably draws in other powers and threatens to drag humanity into another catastrophic world war.

35-3. Asia as a whole has been transformed into an arena of intensifying competition between the US and China. To shore up its previously dominant position in North East Asia, Japan is strengthening its military alliance with Washington. India, which harbours its own ambitions to be a global power, has established a strategic partnership with Washington. In every country, the ruling class confronts a basic dilemma: how to balance between China, now the largest trading partner of virtually every country in Asia, and the United States, which is still the world’s largest economy and strongest military power. The devastating consequences of this geopolitical struggle are already evident in Afghanistan, which has been reduced to a US-dominated colonial outpost in Central Asia, and neighbouring Pakistan, which is convulsed by political crisis and conflict.

35-4. Sri Lanka has been drawn into the vortex of this competition as a result of its central position astride the Indian Ocean’s major shipping lanes. The end of the island’s protracted civil war in 2009 intensified the rivalry between the US, China and India for the dominant position in Colombo. As the LTTE’s defeat appeared imminent, the US belatedly recognised that China had greatly expanded its influence by providing military and economic aid to Sri Lanka. In return, Beijing had been allowed to develop a major new port in the southern town of Hambantota as part of its drive for strategic harbour facilities in the Indian Ocean, including in Burma, Bangladesh and Pakistan. The importance of the island for Washington was underscored by a US Senate report in December 2009, which flatly declared that the US “cannot afford to lose Sri Lanka.” Like its counterparts throughout the region, the Sri Lankan government is engaged in a precarious balancing act that will not prevent the island being drawn into a conflict that will have catastrophic consequences for the working class.

35-5. The war restarted by President Mahinda Rajapakse in 2006 left the island in ruins. With the backing of all the major powers, the government and army waged a brutal war of attrition in which tens of thousands of Tamil civilians were killed and towns and villages reduced to rubble. The war was accompanied by far reaching attacks on democratic rights and the imposition of new economic burdens on the working class. Pro-government death squads working closely with the military killed or “disappeared” hundreds of people including journalists and politicians. SEP member Nadarajah Wimaleswaran vanished in March 2007 while travelling to the navy-controlled island of Kayts. The government, which blocked any investigation of the case, is politically responsible for his disappearance and likely murder.

35-6. The end of the civil war has not brought the “peace and prosperity” promised by President Rajapakse. Having mortgaged the island to the hilt to pay for the war, the government has been compelled to make ever deeper cuts to public sector jobs, services and subsidies to the meet the demands of the International Monetary Fund (IMF). Wages have been effectively frozen for the past five years while prices, including those of basic staples, have skyrocketed, creating hardships for large sections of the working class and oppressed masses. The vast gulf between rich and poor is underscored by the latest social statistics showing that the poorest or bottom 20 percent of society receive only 4.5 percent of total household income compared to 54.1 percent for the top 20 percent. None of the pressing needs and aspirations of working people find political expression in any section of the Colombo establishment. The opposition parties—the UNP and JVP—fully supported the government’s war and the pro-market economic agenda being dictated by the IMF on behalf of international finance capital.

35-7. The political weakness of the Sri Lankan bourgeoisie is highlighted by the Rajapakse government’s dependence on the country’s huge security forces built up over a quarter century of civil war. Nearly two years after the end of the war, draconian emergency powers are still in force and none of the troops have been demobilised. Instead, the military is intruding into aspects of government previously regarded as strictly civilian, such as the huge Colombo slum clearance program that will forcibly displace 60,000 families. The militarisation of life is summed up in Rajapakse’s exhortations to workers to sacrifice like soldiers to “build the nation.” Increasingly the Rajapakse regime has functioned as a politico-military cabal operating with scant regard for parliament, the constitution or the courts. The police state apparatus is above all directed at the suppression of any opposition by the working class and rural masses.

35-8. None of the underlying issues that led to the protracted civil war has been resolved by the LTTE’s military defeat. Six decades after formal independence, the Sri Lankan bourgeoisie has only managed to cling onto power by fracturing the island along communal lines. It has maintained unity solely by force of arms, currently manifest in the massive military occupation of the North and East. The legitimate grievances and anger felt by Tamils over decades of entrenched discrimination will inevitably erupt in new forms. The necessary political lessons have to be drawn, however. The LTTE’s defeat was not primarily a military one, but was the product of the inherent weaknesses of its political perspective. From the outset, its aim was to carve out a capitalist Eelam on behalf of the Tamil bourgeoisie with the backing of India or other regional and world powers. When these same powers decisively turned against it, the LTTE was reduced to impotent pleading to the “international community” to halt the military onslaught. The only social force in society capable of waging a struggle for genuine democratic rights against the Sri Lankan bourgeoisie and its imperialist backers is the working class. However, the LTTE was always organically opposed to any orientation to unite workers—Tamil and Sinhala—on a class basis. Its indiscriminate attacks on Sinhalese civilians played into the hands of the Colombo establishment and deepened the communal divide. In areas under its control, the LTTE rode roughshod over the democratic rights and social needs of working people. Thus, as it made its final stand, the LTTE leadership was completely incapable of making any broad appeal to Tamil masses, let alone to the working class throughout the island and region. The LTTE’s collapse is graphic proof of the bankruptcy of all tendencies based on bourgeois separatism.

35-9. The past quarter century of war has tested out every political tendency. Only the SEP has proven capable of waging a consistent political struggle in defence of the democratic rights of Tamils and working people as a whole, as an essential component of its strategy for a Socialist Republic of Sri Lanka and Eelam. The SEP’s ability to withstand attacks, political and physical, from all sides stems from the strength of the principles on which it is based. The defence and development of the theory and strategy of Permanent Revolution is the only means of fighting for the political independence of the working class from all factions of the bourgeoisie. In conducting an uncompromising struggle for Trotskyism over more than four decades, the SEP has struck deep roots in the working class and established itself as the only party that defends the historic interests of working people.

35-10. Sri Lanka demonstrates in microcosm the complete failure of the national project in all the independent states established throughout South Asia after World War II. Nowhere have bourgeois governments been able to meet the aspirations of the masses for decent living standards and basic democratic rights. Hundreds of millions of people are mired in poverty and backwardness. The decades-long civil war in Sri Lanka finds its parallels throughout the region in the reactionary exploitation of communal, ethnic and language divisions by rival sections of the ruling elite to further their own narrow interests. As the working class enters a new period of revolutionary convulsions, it is necessary to draw the essential political lessons. It is only through the unification of the working class within and across national borders that the necessary revolutionary force can be developed for the overthrow of the outmoded system of capitalism and its replacement by a world planned socialist economy. The SEP seeks to revive the best revolutionary traditions of the BLPI and bases itself on the ICFI’s program by fighting for the unity of workers and the oppressed masses for a United Socialist States of South Asia as an integral part of the world socialist revolution.

35-11. Persistent economic crises, sharpening inter-imperialist antagonisms, the growth of militarism, deepening social inequality and the profound alienation of ordinary people from existing political parties and structures are all unmistakable signs of a new protracted period of wars and revolutions. The upheavals in North Africa and the Middle East are the latest confirmation that the crisis of capitalism is generating immense class struggles. However, there remains a huge gap between the advanced character of capitalist breakdown and the present political consciousness of the working class. That can only be overcome through a patient and intransigent political struggle by the revolutionary party against the agencies of Social Democracy, Stalinism and Pabloism that block the independent mobilisation of the working class. In doing so, the SEP will encourage and assist the development of new independent organisations of the working class. Through a consistent political struggle in the working class, the party will seek to forge the necessary alliance between the proletariat and peasantry that is essential for the establishment of a workers’ and peasants’ government.

35-12. The central issue, however, remains to construct a revolutionary leadership to raise the consciousness of the working class to its international and historic tasks. Only a party based on the most advanced scientific theory that has drawn the necessary lessons of the previous strategic experiences of the international working class is capable of fulfilling that role. The International Committee of the Fourth International and its sections alone embody the historical heritage of contemporary Marxism—that is, of Trotskyism. It is on that basis that the SEP and its sister parties of the ICFI seek to educate, mobilise and unify the international working class, confident that the most far sighted and self-sacrificing workers and youth will be won to its banner and provide the material forces for carrying out the world socialist revolution.