Photo: Sri Lanka in crisis. Source: Daily Times - Photo: 2022

Sri Lanka Needs a Balanced Economic and Foreign Policy

Viewpoint by Darini Rajasingham-Senanayake *

COLOMBO (IDN) — A shortage of exorbitantly privileged American Dollars, the global reserve fiat currency, which is not backed by gold, silver, oil or drugs, is the purported reason for Sri Lanka’s compounding crisis and the international media narrative of ‘famine’ in the country.

The financial crisis that has brought the strategic Indian Ocean Island nation to a standstill, which coincidentally stymies protests, originated with an International Sovereign Bond (ISB), debt trap and Default in April this year.

Such defaults, often staged, render countries in the Global South vulnerable to International Monetary Fund (IMF), ‘bailouts’, structural reforms, austerity measures, and a ‘firesale’ of strategic assets that tend to benefit Euro-American holders of Odious Debt, including vulture funds like Blackrock, as well as, the governments that back them. (The Spider’s Web: Britain’s Second Empire | Documentary Film

The Washington Consensus and Paris Club, in the business of ‘debt restructuring’, do not distinguish between illiquidity and insolvency.

As Sri Lanka’s economy has come to a virtual halt due to a sovereign default for the first time in the county’s 70 plus years of independence due to a purported lack of dollars to import fuel, the question is: why did Prime Minister Ranil Wickremasinghe who took office with a promise to help save the country on May 15, chosen to ignore the POLICY OPTION to import oil and gas from Russia which has de-dollarized and does NOT require or trade in dollars?

Sanction-hit Russia, against which the dollar has been weaponized, is selling oil at steeply discounted prices to neighbouring India, whose Indian Oil Company, ironically, sells petrol and diesel in fuel-starved Sri Lanka. Would not the current shortage of ‘exorbitantly privileged’ and increasingly weaponized US dollars in normal circumstances compel any county with an independent foreign policy to de-dollarize and trade in a basket of currencies?

Should not Sri Lanka’s policymakers and the 225 members of parliament (whom the people on the streets wish would “Go Home”) urgently reach out to Russia, Iran, or any other country rich in oil that does not ask for dollars? Or is saving citizens from economic ruin and Famine NOT a policy priority of the current Colombo regime? And, if not, why not? Coincidentally, who makes economic policy decisions, for would it not be logical that a country suffering fuel shortages and ‘famine’ due to a lack of dollars, de-dollarize?

Should not Sri Lanka exchange its world-famous “Green Gold” for Russian Black Gold or oil? Tea, Sri Lanka’s green gold, once made the island one of the richest colonies of the British Empire, and many Russians and citizens of the post-Soviet republics love to drink it.

A Manchurian Candidate, Famine, and the IMF

Nobel-prize-winning economist Professor Amartya Sen long ago showed us that Famine is a Policy Choice resulting from poor access to and distribution of food rather than an absolute lack of food production. So too, it seems is the seemingly self-inflicted fuel shortage, a policy choice of Mr. Ranil Wickremasinghe who took office as Prime Minister on May 15, 2022 with the military on the streets and citizens under curfew in what appeared to be a regime change operation similar to the one in Pakistan that saw Mr. Imran Khan ousted a month earlier. Mr Khan accused Washington of a regime change operation in Pakistan and showed evidence.

Wickremasinghe’s appointment by erstwhile US citizen President Gotabaya Rajapakse was preceded by real and staged, albeit social media and digitally controlled Aragala people’s protests that tipped into one night of violence. RW claimed he would save Sri Lanka and solve the strategic island’s $ 50 billion debt crisis.

Shortly after taking office, Wickremasinghe proclaimed that Famine and 15-hour power cuts were ahead, which begs the question; why did he do nothing between May 15 and July to source the needed oil, gas and jet fuel from Russia or any other country that does not trade in petrodollars (Iran for example), to keep the economy going and avert Famine? 

Wickremasinghe only dispatched his energy minister to Qatar for oil in the last week of June when the country was at a virtual standstill and food shortages apparent, notably when the IMF team was in Colombo.

It is increasingly apparent that Wickramasinghe chose to wait until an IMF team arrived on June 18-29, as the Lankan economy stood at a standstill. Meanwhile, citizens waited days and died in fuel queues, while schools and government institutions shut down due to transport and fuel shortages.

The IMF team arrived with special US government “financial advisors” and legal firms Lazard, Clifford, and Chance, seemingly to bail out ISB traders and holders. A week later, on June 6, following the IMF team’s departure, BBC World News ran a ticker message stating: The Sri Lankan Prime Minister says that his country is bankrupt, and the economy has collapsed!”

For a comparative perspective on the relatively small amount of Sri Lanka’s debt relative to the Wealth of the Nation that sits on major Indian Ocean trade routes and sea lanes of communication with significant ocean and mineral resources, it is noteworthy that the President of Ukraine, a country of 44 million people, estimated that his country’s post-war reconstruction would cost a whopping $ 750 billion (or three-quarters of a Trillion), while Elon Musk bough Twitter for $44 million!

Sri Lanka, located at the centre of the Indian Ocean with a population of 22 million, was listed by the World Bank as an Upper Middle-Income County (MIC) in 2019, and one of the wealthiest countries in South Asia with high Human and Social Development indicators has a debt estimated at a mere $ 50 billion. Almost 50% of this is owed to US-based ISB holders.

Somehow the data on the stage default for IMF intervention, and now the ‘famine’ narrative doesn’t quite add up! This begs the question: was there intent to stage a fuel blockade and food shortage, bring the county to a standstill and deepen the debt to GDP ratio and inflation numbers, along with the famine narrative and ex post facto datafication to legitimize the Washington Consensus’ intervention in this strategic Indian Ocean island’s “Domestic Affairs” at this time while distracting from analysis of the ‘Staged Default’?

Moreover, the 2015 Central Bank Bond scam set the stage for Sri Lanka’s current woes –- the debt trap built up through speculative and reckless ISB borrowing, rent-seeking and Odious Debt. Hence, questions arise, does RW, Washington’s Manchurian Candidate for Prime Minister of Sri Lanka who was implicated in the island’s biggest financial fraud the Bond scam at the Central Bank in 2015, and appointed recently during the first round of IMF talks that commenced on May 12, 2022 work in the interests of Sri Lankan citizens? 

Something smells fishy: Fuel Crisis or Hybrid Cyber Air-Sea Blockade?

It now appears that Prime Minister Wickremasinghe may have exacerbated Sri Lanka’s debt entrapment by failing to formulate a balanced and Non-Aligned foreign policy to enable the country to source it fuel supplies and keep the economy open in the interests of the citizens.

Something smells fishy about the current seemingly self-inflicted fuel embargo: Ships bringing much needed oil and gas to the island in the middle of the Indian Ocean seem to have disappeared into thin air while the IMF was in town even as the dollars spent also appear to have disappeared—aided by cyber-hacks?

As the fuel ships scheduled to bring oil to Sri Lanka in June mysteriously disappeared on the high seas, there was high drama at the BIA Colombo’s International harbor with the grounding of a Russia Aeroflot Airlines flight following a scenario of Over the Horizon (OTH) Lawfare, to damage diplomatic relations with a long-standing friend of the people of Sri Lanka.

Following the Aeroflot incident in the first week of July, a Turkish Airlines flight was also mysteriously damaged during the usual monsoon winds! All these events compound the economic crisis and loss of confidence with the UK government issuing “travel warnings” for tourists.

Is there a de facto cyber blockade on the island, whose fisheries sector and food security have been decimated by four years of economically devastating lockdowns on various pretexts; starting with the mysterious 2019 Easter Sunday ISIS-claimed attacks that targeted the tourism-dependent island’s economy and coastal fisheries communities and food security, followed by two years of Covid-19 lockdowns 2020-2021 with a ban on import of chemical fertilizer. Now in 2022, fuel shortages as hybrid maritime trade warfare roil the world?

Back in 2020, two ships, MV Diamond and MV Pearl, mysteriously leaked oil into the eastern seas and on the western coast near the Colombo Port, causing a natural environmental catastrophe outside South Asia’s most crucial harbour that also saw a Data hack at the time. Were these tests or a dry run for bigger and better maritime trade blockages and cyber operations to come?

Is Sri Lanka suffering from the policy myopia of the current US-backed regime in Colombo? Is it controlled by external actors that work against the interests of a sovereign people whose right to self-determination, food and energy security is underwritten in the United Nations Charter?

Is the current seemingly staged fuel crisis and the global media narrative of “famine” and soup kitchens to distract us from the Colombo Regime’s failure to steer a balanced and non-Aligned foreign policy that serves in the interests of citizens and national economic policy sovereignty? Somehow the data and the famine narrative of the Corporate global and local media houses don’t quite add up on the ground!

Muddying the Water: Datafication and Ex-post facto crises deepening after Default

Sri Lanka will present a debt restructuring program to the IMF by August to secure a bailout package, Prime Minister Ranil Wickremesinghe told Parliament on June 6. But the question remains: Did the Colombo regime make a deliberate policy choice to compound Sri Lanka’s debt crisis by not reaching out to Russia to source the island’s energy needs??

According to an economist at Johns Hopkins University, Steve Hanke, who tracks price increases in the world’s ‘trouble spots’, Sri Lanka’s inflation is now at 128 per cent, second only to Zimbabwe’s 365 per cent! Its Debt to GDP ratio, which was at 112 per cent at the time of Default two months ago, is now estimated at 136 per cent.

While the IMF team was in-country, the Coalition for Economic Democracy called for Debt Cancellation as protests escalated amid austerity. A week after the IMF team left town, Wickremasinghe claimed that Sri Lanka’s economy was shrinking, and the current economic growth rate was between negative four and five!

Ex post-Facto datafication to deepen and prolong economic crisis following Default is one of the characteristics of IMF engagement in countries like Argentina, now on a record-breaking 21st IMF bailout program! So too, Greece and Lebanon.

But just last week, Argentina’s Minister for Economy, who negotiated the IMF deal, was forced to resign due to massive protests in Buenos Aires against the austerity measures in the wake of Covid-19 debt. Ex post facto deepening of financial crises triggering social unrest in vulnerable countries prolongs and justifies IMF interventions and extended facilities.

This, in turn, enables further debt trapping and deepening of the crisis to ensure that the Washington Consensus may tighten their grip also through Digital Colonialism via an envisaged “social safety net” guaranteeing access to Sri Lankans’ data and further datafication with related big data companies GAFAM, Google, Apple, Facebook, Microsoft and Amazon.

This may also entail gaming the global and local corporate media narrative crafted with an army of Digital Nomads on extended visas perched on the strategic island. Some exaggerate ex-post the crisis and mask the staged Default with famine and soup-kitchen stories.

All this of course, helps distract from the fact that there may be a fundamental miss-fit between the staged Default, the country-specific Data and the global media narrative vis-a-vis the scope and size of Sri Lanka’s financial crisis and the lived reality of people on the ground in fuel queues?

South-South Corporation and Local Experts

Sri Lanka needs to look east at this time of staged Default and compounding fuel and food crisis and work with the BRICS Bank — the New Development Bank (NDB), of emerging economies Brazil, Russia, India, China and South Africa, which prioritizes South-South co-operation to steer an independent foreign and economic development policy that serves the interests of her citizens.

The NDB is expanding with new members, but the Staged Default and IMF’s bailout may stymie such economic and development policy autonomy, which also requires that the country have an independent foreign policy that serves the interests of its citizens.

There is an ex post facto numbers game ongoing with new debt to GDP ratios and inflation figures being compiled at this time of datafication for the IMF report. Steve Hanke claims that at Johns Hopkins University, Sri Lanka’s current inflation is now at 128 per cent. Several research programs at JHU, including Area Studies Programs during Cold War 1.0, were and are known to have received significant Central Intelligence Agency funding.

JHU experts also collaborated with the World Health Organization’s Covid-19 Global Database. They played the Covid-19 numbers game, promoting economically devastating lockdowns leading to debt traps and asset-stripping vulnerable countries in the Global South.

In the context of big power geopolitics in the Indian Ocean, with Cold War 2.0 hotting up in the Global South for its natural and human resources in Sri Lanka (like Ukraine), a cyber-proxy war site of great power rivalries, questions may well be asked: Who does PM Ranil Wickremasinghe work for? The people of Sri Lanka or his Washington backers?

At this time the trillion-dollar question is who will draft the Report that Ranil Wickremesinghe plans to present on behalf of Sri Lankan citizens for a debt restructuring program to the IMF in August for a much-hyped and long-awaited ‘bailout’ and whose interest will this report serve? On cue, he noted in parliament: The expert companies we have hired are preparing a debt restructuring programme, and we will hand over the report to the IMF in August this year.

These expert companies, no doubt, include Lazard, Clifford and Chance, Rothschilds and the various international accounting and legal firms and experts that work for and with hedge funds and vulture funds that engage in speculative and reckless lending while preying on the wretched of the earth.

But what of Sri Lanka’s legal luminaries, experts, and citizens’ voices? Are they bereft of the skills, intellectual capacities, and expertise to write reports on how to restructure odious debt to the IMF’s satisfaction?

Or is the report just another Washington Consensus Cold War and Colonialism 2.0 project? When will an IMF Report factor in Global South voices and perspectives and the call for DEBT CANCELLATION? [IDN-InDepthNews – 07 July 2022]

* Dr Darini Rajasingham-Senanayake is a social and medical anthropologist with expertise in international development and political-economic analysis. She was a member of the International Steering Group of the North-South Institute project: “Southern Perspectives on Reform of the International Aid Architecture”.

Photo: Sri Lanka in crisis. Source: Daily Times

IDN is the flagship agency of the Non-profit International Press Syndicate.

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