WASHINGTON DC, Aug 25 (IPS) – Sri Lanka has been confronted with an unprecedented political and financial disaster for the reason that starting of 2022.
The dominant narrative attributes the disaster to the confluence of the COVID-19 pandemic, the Ukraine battle, China’s ‘debt entice diplomacy’ and – most significantly – the corruption and mismanagement of the ruling Rajapaksa family.
Western mainstream media celebrated the so-called aragalaya (wrestle, in Sinhala) protest motion that led to the ouster of the Rajapaksas and upholds the IMF bail-out as the one resolution to the dire financial scenario.
The aragalaya protests emerged from real financial grievances, however did not develop an evaluation past the ‘Gota, Go Dwelling’ demand for Gotabaya Rajapaksa to resign. Influenced by native and exterior pursuits with their very own agendas, the protestors exhibited little-to-no consciousness or critique of the worldwide political financial system and the monetary system on the root of the nation’s disaster.
In 2022, the United Nations Conference on Trade and Development (UNCTAD) reported that 60 % of low-income international locations and 30 % of rising market economies are ‘in or close to debt misery.’ Whereas the small print differ from nation to nation, the historic patterns of subordination which have given rise to world crises are the identical.
The Sri Lankan disaster is an illustrative instance of convergent world debt, meals, gasoline and power crises dealing with a lot of the world. It’s company media bias and narrative management that deflects from this evaluation.
The island’s extreme debt and financial disaster should be seen in a broader world context because the end result of a number of centuries of colonial and neo-colonial developments, and the disastrous and inevitably self-destructive capitalist paradigm of countless development and revenue. Debt just isn’t “an easy quantity however a social relation embedded in unequal power relations, discourses and moralities…and…institutionalized energy.”.
Colonialism and Neocolonialism
The event of export agriculture and the import of meals and different necessities underneath British colonialism turned Sri Lanka right into a dependent ‘peripheral’ unit of the worldwide capitalist financial system.
Adopting ideologies of modernization and improvement and theories of comparative benefit, the capitalist crucial built-in self-sustaining indigenous, peasant, and regional economies into the rising world financial system, by means of the appropriation of land, pure assets, and labor for export manufacturing.
Monocultural agriculture, mining, and different export-based manufacturing disturbed conventional patterns of crop rotation and small-scale subsistence manufacturing that have been extra harmonious with the regional ecosystems and cycles of nature.
Plantation improvement contributed to deforestation, lack of biodiversity and animal habitats. Whereas a small native elite prospered by means of their collaboration with colonialism, most individuals turned poor, indebted, and depending on the vagaries of the worldwide marketplace for their sustenance.
Though colonized international locations together with Sri Lanka gained political independence following World Battle II, unequal trade continued underneath neo-colonialism. Phrases of commerce deprived the ‘Third World’ with their labor, assets and exports grossly undervalued and imports overvalued.
The dynamic is healthier understood as poorer international locations being over-exploited slightly than under-developed. Rising populations mixed with corruption and inefficiency of native governments gave rise to endemic overseas trade shortages and financial crises in Sri Lanka and lots of different international locations.
The debt aid and help given by the IMF, the World Financial institution and bilateral establishments from the International North have been mere band-aids to maintain the ex-colonial international locations tethered to the worldwide monetary and financial buildings. Publish-independent Sri Lanka went to the IMF 16 occasions earlier than the present 2023 bail-out which seeks to additional perpetuate the county’s cycle of debt dependence.
The switch of monetary and useful resource wealth from poor international locations within the world South to the wealthy international locations within the North just isn’t a brand new phenomenon. It has been a permanent characteristic all through centuries of each classical and neo-colonialism. Between 1980 and 2017, growing international locations paid out over $4.2 trillion solely in curiosity funds, dwarfing the monetary help they obtained from the developed international locations throughout that interval.
At present, worldwide monetary establishments – notably the IMF and the World Financial institution – stay outdoors political and authorized management with out even ‘elementary accountability’. As critics from the International South level out, “The overwhelming energy of monetary establishments makes a mockery of any critical effort for democratization and addressing the deteriorating socioeconomic dwelling situations of the folks in Sri Lanka and elsewhere within the International South.”
Financialization and Debt
Company and monetary deregulation which accompanied the rise of neoliberalism beginning within the Seventies has given rise to financialization, and the rising significance of finance capital. As an increasing number of elements of social and planetary life are commoditized and subjected to digitalization and monetary hypothesis, the true worth of nature and human exercise are additional misplaced.
As a 2022 United Nations Report factors out; meals costs are hovering as we speak not attributable to an issue with provide and demand however attributable to price speculation in extremely financialized commodity markets.
A handful of the biggest asset administration firms, notably BlackRock (at present value USD $ 10 trillion) management very giant shares in firms working in virtually all the main sectors of the worldwide financial system: banking, expertise, media, protection, power, prescription drugs, meals, agribusiness together with seeds, and agrochemicals.
Monetary liberalization superior when rates of interest dropped within the richer international locations after the worldwide 2008 monetary disaster. Growing international locations have been inspired to borrow from personal worldwide capital markets by means of Worldwide Sovereign Bonds (ISBs) which include excessive rates of interest and brief maturation intervals.
Though particulars usually are not obtainable to the general public, BlackRock is reportedly the most important ISB creditor of Sri Lanka. Most of Sri Lanka’s overseas debt is ISBs, with over 80% of Sri Lanka’s debt owed to western collectors, and never – as projected within the mainstream narrative – to China.
IMF debt financing requires international locations to satisfy its acquainted structural adjustment situations: privatization of state-owned enterprises (SOEs), cutbacks of social security nets and labor rights, elevated export manufacturing, decreased import substitution and alignment of native financial coverage with US and different Western pursuits.
These are the identical goals as classical colonialism, they’re simply higher hidden within the extra advanced trendy system and language of world finance, diplomacy and help.
An unlimited array of policies exacting these goals are effectively underneath manner in Sri Lanka, together with the sale of state-owned power, telecommunications and transportation enterprises to overseas house owners, with grave implications for Sri Lanka’s financial independence, sovereignty, nationwide safety and the wellbeing of her folks and the surroundings.
The IMF strategy doesn’t tackle long-term wants for bioregionalism, sustainable improvement, native autonomy and welfare. A small susceptible nation reminiscent of Sri Lanka can’t change the trajectory of world capitalist improvement by itself.
Regional and world solidarity and social actions are essential to problem the deranged world monetary and financial system that’s on the root of the present disaster.
International South Resistance
For the reason that Seventies, main collaborative tasks have been initiated by growing international locations and the UNCTAD to develop a multilateral authorized framework for sovereign debt restructuring. But they’re futile within the face of the highly effective opposition of collectors and the safety given to them by rich international locations and their multilateral establishments, and the UN has did not uphold dedication and implement a debt restructuring mechanism.
Sri Lanka was a world chief in efforts to create a New Worldwide Financial Order, the Non-Aligned Movement and the Indian Ocean as a Zone of Peace within the Sixties and 70s. Within the early years of their political independence, international locations all through Asia, Africa and Latin America sought to forge their very own paths of financial and political improvement, unbiased of each capitalism and communism and the Chilly Battle.
These included African socialist tasks reminiscent of Tanzania’s Ujamma, import substitution applications in Latin America and left-wing nationalism and decolonization efforts in Sri Lanka and lots of different international locations.
Nearly with out exception, these nationalist efforts failed, not solely attributable to inner corruption and mismanagement but additionally attributable to persistent exterior stress and intervention. Large efforts have been taken by the International North to cease the International South from shifting out of the established world order.
A living proof is the nationalization of oil firms owned by western international locations in Sri Lanka in 1961 and the backlash towards the left-nationalist Sri Lankan authorities which dared to take such a daring transfer.
The western response included the 1962 Hickenlooper Modification handed within the U.S. Senate stopping overseas help to Sri Lanka and to “any nation expropriating American property with out compensation.” In consequence, Sri Lanka misplaced its credit score worthiness, the home financial scenario worsened, and the left-nationalist authorities misplaced the 1965 elections (with some covert US election support).
Observing these developments, political economist Richard Stuart Olsen wrote: “…the coerciveness of financial sanctions towards a dependent, susceptible nation resides in the truth that an financial downturn might be induced and intensified from the surface, with the ensuing improvement of politically explosive ‘relative deprivation’…”
These observations resonate with Sri Lanka’s present repetition of the identical vicious cycle: an externally dependent export-import financial system; worsening phrases of commerce; overseas trade scarcity; coverage mismanagement; exterior political stress; debt disaster; shortages of meals, gasoline and different necessities; mass struggling; and political turmoil.
Geopolitical Rivalry
Sri Lanka’s current financial disaster – the worst for the reason that nation’s political independence from the British – should be seen within the context of the accelerating neocolonial geopolitical battle between China and the USA within the Indian Ocean. Many different international locations internationally are additionally caught within the neocolonial superpower competitors to regulate their pure assets and strategic areas.
There may be a lot hypothesis as as to if the debt default on April 12, 2022 and political destabilization in Sri Lanka have been ‘staged’ or deliberately precipitated to additional the US’s ‘Pivot to Asia’ coverage, the Indo-Pacific Technique and the Quadrilateral Alliance (USA, India, Australia and Japan) in its competitors to confront China’s $1 trillion Belt and Highway Initiative and counter China’s presence in Sri Lanka.
It’s well known in Sri Lanka that ‘The policy of neutrality is the perfect defence Sri Lanka has to discourage world powers from making an attempt to get management of Sri Lanka due to its strategic location.’ Though President Gotabaya Rajapaksa claimed to pursue a ‘neutral’ overseas coverage, the Rajapaksas have been seen as nearer to China than the west. After Prime Minister Mahinda Rajapaksa and President Gotabaya Rajapaksa have been compelled to resign, Ranil Wickramasinghe – a politician who was resoundingly rejected within the earlier elections by the citizens however is an in depth ally of the west – was appointed as President in an undemocratic transition of energy.
To what extent have been Sri Lanka and her folks victims of an externally manipulated ‘shock doctrine’ and a regime change operation, offered to the world as inner disintegration attributable to native corruption and incapability?
Whereas it isn’t attainable to offer definitive solutions to those points, it’s mandatory to contemplate the obtainable credible proof and the geopolitics of debt and financial crises in Sri Lanka and the world at giant.
Paradigm Shift
Because the locus of world energy shifts from the west and a multipolar world arises, new multilateral partnerships are rising for improvement financing, such because the New Improvement Financial institution (NDB) – previously known as the BRICS (Brazil, Russia, India, China and South Africa) Improvement Financial institution – as options to the Bretton Woods and different western dominated establishments.
Nevertheless, given controversial tasks, reminiscent of China’s Port Metropolis and India’s Adani Firm investments in Sri Lanka in addition to their tasks elsewhere, it’s essential to ask if the BRICS signify a real different to the prevailing political-economic mannequin based mostly on domination, revenue and energy?
Dominant political energy in our period is about propaganda, management of narratives and exploiting ignorance and worry. Within the face of worsening environmental and social collapse internationally, there’s a sensible want for a basic questioning of the values, assumptions and misrepresentations of the dominant neoliberal mannequin and its manifestations in Sri Lanka and the world.
On the root of the disaster, we face is a disconnect between the exponential development of the profit-driven financial system and a scarcity of improvement in human consciousness, i.e., in morality, empathy, and knowledge.
Finally, dualism, domination and the unregulated market paradigm have to be questioned to discover a balanced path of human improvement, based mostly on interdependence, partnership and ecological consciousness. Such a path of improvement would uphold the ethical principles mandatory for long-term survival: rational use of pure assets, applicable use of expertise, balanced consumption, equitable distribution of wealth, and livelihoods for all.
This text is derived from the creator’s new ebook: Asoka Bandarage, CRISIS IN SRI LANKA AND THE WORLD: COLONIAL AND NEOLIBERAL ORIGINS: ECOLOGICAL AND COLLECTIVE ALTERNATIVES (Berlin: De Gruyter,2023) https://www.degruyter.com/document/isbn/9783111203454/html?lang=en]
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© Inter Press Service (2023) — All Rights ReservedOriginal source: Inter Press Service