Bandula Kothalawala London,

Mrs Hillary Clinton, US Secretary of State, has let the cat out of the bag! She has confirmed that the US is opposed to the IMF loan to Sri Lanka. This follows the earlier news that the Obama Administration has instructed its Executive Director to block the IMF assistance to Sri Lanka.

That Mr Obama should go out of his way to punish a developing nation in financial difficulty for ƒÆ’‚¢ƒ¢-¡‚¬ƒ…-making too big a contribution to the global war on terrorƒÆ’‚¢ƒ¢-¡‚¬ƒ”š‚ and sully his incipient world stature so soon after his inauguration in January this year beggars belief. Of course, his action blends in perfectly with the long tradition of his predecessors and bears eloquent testimony to his countryƒÆ’‚¢ƒ¢-¡‚¬ƒ¢-¾‚¢s unsavoury reputation as a gendarme on the international scene. It is an open secret that the US diplomats, goaded by the UK and France, burnt a lot of midnight oil in the UN in their attempts to have Sri Lanka on the Security Council agenda, but failed to win support from Russian Federation and China. The failure in the UN led the three musketeers to transpose their shady manoeuvres from the corridors of the UN to the Board Rooms of the International Monetary Fund.

In 2008, the JaneƒÆ’‚¢ƒ¢-¡‚¬ƒ¢-¾‚¢s Intelligence Review estimated the annual income of the LTTE to be USD200m-300m, almost the entirety of which is raised in Western Europe, USA and Canada. These funds were used to finance the war which has caused the death of some 80,000 people, a large number of whom were Tamils, and maimed many more for life. The Central Bank of Sri Lanka in 2005 estimated the damage to the economy over the years to be around 25% of GNI. The three saintly nations who would not lift their little finger to curb fund-raising by the terror outfit are now hell-bent to stop the Government of Sri Lanka securing a loan from the IMF!

Sri Lanka has long been a member of the IMF with an unblemished record on debt servicing and on the fulfilment of her other obligations to the Institutions. Article I of the Articles of Agreement which sets out the purposes of the IMF makes no mention of any political role assigned to it. Neither does the Review of 2002 Conditionality Guidelines published in 2005 make any reference to withholding support for any political reasons, let alone, for a member taking legitimate action in line with the UN Charter to protect its independence, territorial integrity and sovereignty. The conclusions of the Article IV Consultations completed in October 2008 which, on the whole, support the GovernmentƒÆ’‚¢ƒ¢-¡‚¬ƒ¢-¾‚¢s management of the economy, provide no indication as to why Sri Lanka should be denied IMF assistance. Moreover, since the completion of the Article IV Consultation Mission, inflation has dropped considerably while the economy is projected to grow by at least 4% in 2009.

The US and other G7 nations, despite their publicly avowed passion for the welfare of the worldƒÆ’‚¢ƒ¢-¡‚¬ƒ¢-¾‚¢s poor, have long dictated the agenda of the International Financial Institutions to the detriment of developing nations. At present, five out of the 24 Executive Directors of the IMF are appointed by the United States, France, Japan, Germany and the United Kingdom while 19 others are appointed by 180 member countries.

The US has kept the presidency of the World Bank for itself since the inception while a French national has held the post of Managing Director of the IMF for most of the institutionƒÆ’‚¢ƒ¢-¡‚¬ƒ¢-¾‚¢s sixty-four-year history. Reforms of the International Financial Institutions have been systematically prevented by the US which holds approximately 16.75% and 16.38%of voting power of the IMF and the World Bank respectively. In 1997, a new allocation of Special Drawing Rights ƒÆ’‚¢ƒ¢-¡‚¬ƒ¢¢”š¬…” net addition to international liquidity ƒÆ’‚¢ƒ¢-¡‚¬ƒ¢¢”š¬…” which would help ease the balance of payments constraints of developing countries was agreed. As at today, 131 countries with 77.68% of total voting power in the IMF have approved it. However, the US with its 16.75% of the votes has been able to block it since 1997!

The self-appointed triumvirate has long been making a song and a dance about their profound concern and compassion for civilians in the war zone. Yet, the US and its allies did not even want to compile data on civilian casualties in the Iraqi war. When, in 2006, the Lancet published the result of a serious study and estimated that some 655,000 people lost their lives as a consequence of the Anglo-American invasion of Iraq, both the US and British Governments simply rejected the figures and said that they had no information on civilian casualties. On May 12, 1996, Madeleine Albright, US Ambassador to the UN claimed that the half a million children said to have died due to sanctions was a price worth paying! (“I think the price is worth paying”, according to the transcripts of the programme.). One might get a little insight into the callous disregard and utter disdain with which the US Government treated civilian deaths in conflict.

The shameful manipulation of their privileged and dominant position in International Financial Institutions by the US, UK and France is contemptible and condemnable. It was only in March 2009 that the Committee of Eminent Persons chaired by Trevor Manuel, Minister of Finance, South Africa, handed their Report on the reforms to the FundƒÆ’‚¢ƒ¢-¡‚¬ƒ¢-¾‚¢s decision making process to the Managing Director. The Report, according to the IMF Press Release, stresses the need for ƒÆ’‚¢ƒ¢-¡‚¬ƒ…-clearer lines of responsibility and accountability between various decision-making entities in the FundƒÆ’‚¢ƒ¢-¡‚¬ƒ”š‚. The performance of Mr Dominique Strauss ƒÆ’‚¢ƒ¢-¡‚¬ƒ¢¢”š¬…”Khan, IMF Managing Director, has so far been very disappointing. On the one hand, he has allowed himself to be bullied by the big boys to whom he owes his job. On the other, he seems to be too vulnerable to the charms of Eastern European blondes!