Fighting the US-India Resolution Starts with the Economy
Posted on March 20th, 2012

Dilrook Kannangara

The US-India resolution has nothing to do with human rights. It is all about creating a platform for US-Indian military and political presence in the island for their geopolitical needs. Sri Lankan government is unable to say no to India. If the Indian government is against any policy, the Sri Lankan government retracts it. India’s anti-Sri Lanka policy is as clear as clarity can be but there is absolutely nothing the government can do about it. India as it is comprises only part of the problem. The economy is in the hands of Indians and most exports are to USA. This is the problem that really bites. Due to this Indian-US stranglehold of the economy, there is nothing the government can do against any Indian-US moves.

The Five Layers of Indian Economic Exploitation

Indian economic exploitation of Lanka works at five different layers. The topmost layer is Indian companies operating in Lanka at a very large scale. From profits to systems to senior employees, everything goes to India. As they dominate almost all profitable business avenues, they essentially block local investors getting into these industries. Indian Oil Company is a national crime. Ceylon Petroleum Corporation was profitably operating the petroleum distribution arm which was the only profitable arm of CPC. There was no need to sell it out to IOC.

The next layer is Indian business operations pushed through the Indian government. Recently India demanded all the oil exploration blocks in the north western sea. The KKS cement factory is another example.  

The next layer is tax concessions and import duty wavers for Indian goods. This has given Indian goods an unfair advantage over locally manufactured goods and goods from China, Indonesia, etc. Going further along this path India wants to push CEPA Agreement so that the remaining industries can also be sucked up by Indian companies.

The next layer is Indian economic and military partnerships with Lanka. In 2002 the then government had to extend the lease of Trincomalee oil storage facilities to India. More than the oil storage tanks, India eyes the Trincomalee harbour and its strategic importance. Few other similar Indian involvements are in the island operated under sham commercial deals.
The last layer is the vast number of businesses owned and operated by locals of Indian extraction. Indian extraction refers to peoples that are represented in India currently. Obviously they are not native to Lanka. From Maharajas to Pettah businesses, people of Indian extraction control the national economy. Given their economic and political clout, there is no way Sri Lanka can make decisions not supported by or not supportive of India.

India indeed is an economic parasite and so are pro-Indian economic entities in the island.

If the island nation were to do what is best without Indian meddling, all these five layers of Indian economic exploitation must be defeated. Sri Lankans who are unique and native to Sri Lanka must take over the economy. They have no special bond with India; they have no relatives in India and they see India as an outsider. None of them consider India to be their homeland.

USA the Biggest Export Destination

USA is the top export destination with 22% of all exports by value. If USA were to restrict Lankan exports, it will have a huge impact economically and politically. It is a matter of time USA uses trade treaties to get Lanka toe their line. However, this 22% is misleading. Largest exports to USA are garments. Although the export revenue recognises the total cost of the finished product exported, the real local value addition is the cutting and making charge which is less than 1% of the garment’s cost. All other input are imported. Therefore if the US market for garments were to be lost, it proportionately reduces imports as well. The net impact is very small economically. However, a million workers may be unemployed. The government must develop other industries to employ them. Garment and EPZ based industries are highly exploitative industries based on modern day slavery. These cannot uplift the living conditions of most of their workers.

New export income generating goods and services should be found. Exports to China, Brazil, Indonesia, Russia, Middle East and other emerging economies should be increased based on good they demand.

The Way Out of This Dilemma

Defence and provincial councils demand $2.6 billion every year. It is such a colossal amount of money. Although it makes perfect political, defence and economic sense to maintain a strong military, there is no sense in continuing with Provincial Councils. Without provincial councils, there is a robust governance structure comprised of Grama Sevaka officers, Pradeshiya Sabhas, Urban Councils, Municipal Councils, the Parliament, two-sets of ministries and the President. Provincial Councils cost $1.1 billion this year which means the dissolution of the PC system can save $1.1 billion a year.

The economy should be brought into the hands of patriots and native Sri Lankans who have no second homeland. All Pettah wholesale businesses should be replicated by state operated commercial entities that are already in place including Lak Sathosa and Building Materials Corporation. This can benefit the consumers, control inflation, bring in state revenue, employ patriotic Sri Lankans, manage the supply, promote regional development and employment and weaken the Indian clout in the island economically. Over 60% of Singapore’s economic activity is produced by state owned business entities owned through Tamasek Holdings. Even most of the remaining 40% comes from privately held businesses owned by persons with close connections to the Singaporean government. This phenomenon is also present in Malaysia. Western economists call this system “ƒ”¹…”crony capitalism’. It is way better for Sri Lanka to follow this highly successful (though controversial by western standards) model than allow Indians to ruin the economy.

In this context, the taking over of “non-performing” previously privatised entities is a very good move. However, these must be managed commercially. The main objective should be profit generation while serving the community.

They were hurriedly privatised to collect money for the war, over governance through provincial councils and associated corruption. IMF and IBRD were quick to lend more loans as sweeteners the more the state sold off its silver. Co-chairs or donors followed suit. Today these “generous” donors/co-chairs have become the biggest financial burden on the country! Most privatised entities were grabbed by the other unpatriotic section of the population “”…” the pro-western camp. This further strengthened western dictates.

Dismantling these two anti-national elements is the only way to sustainably defeat serial US-Indian resolutions.

Once a nationalist economy is created, the nation can pick and choose who can meddle in internal affairs; not otherwise.

It is a stepped process that should move from one profit making venture to another. No state entity capable of making profit should be sustained by taxpayer funds. That will create a new expertise in the country which is what this nation needs mostly “”…” entrepreneurship. The state can invest in commercial entities that become the training schools of entrepreneurship while earning profit of course. In the case of previously privatised “non-performing” entities, there is no investment as the state is authorised to take them over without incurring any cost!

All previous attempts to create a nationalist economy failed. The Senanayake-Jayawardena model failed due to the lack of networks spanning procurement, production and more importantly selling. The Bandaranaike model failed due to the absurdity of the socialist economic system. The Premadasa-CBK model failed due to the state’s inability to balance its accounts needing to sell enterprises for money. Now everything has come together to forge ahead. This opportunity will be lost unless it is seized at least now. The humongous public sector should be slowly but steadily transformed from a massive tax burden to a national asset with a lesser overall burden.

Once the economy has been salvaged from US and Indian cronies, new opportunities to benefit from Asian Tigers will emerge. At the moment US and Indian cronies owned businesses have avoided China, Russia, Malaysia, Indonesia, Brazil, Middle East and other emerging economies for obvious reasons. An economic partnership maturing into a political alliance is what this nation needs to sustainably fight off US-Indian resolutions.  

It is now our turn to learn the lesson. India is an untrustworthy partner intent on exploiting other nations economically and politically. Even if India changes its stand in the last moment it will be once again temporary; India will force the US resolution, letter to letter, on Sri Lanka by other means under a different name.

Making Indian businesses lose to native Sri Lankan controlled economic order is the first step towards economic and political dignity of this small yet proud nation.

The government must not forget to reward the people of many ethnicities who stood by the government at times of foreign threat. They are the natives. And the government should not forget to punish those who sided with Tamil Nadu chauvinistic politics when the nation was in danger.

The often claimed notion unity is strength is partly misleading. Unity with enemies within is disunity. The recent threat to the nation clearly split out those who love the nation and those who don’t. And those who are dependable and those who aren’t.

12 Responses to “Fighting the US-India Resolution Starts with the Economy”

  1. Leela Says:

    It a well known fact that Tamil tigers or LTTE had blasted Rajiv Gandhi, himself an ex-prime minister and a grandson of India’s first Prime Minister. Yet, India couldn’t catch LTTE leader, Pirapakaran, the man who was accused and found guilty to have given the order to kill Rajiv.

    At long last in 2009, Sri Lankan forces had eradicated LTTE and send its leader Pirapakaran to hell in the face of all the opposition from known and unknown Eelamist backers in Tamil Nadu and its white neo-colonialists called International Community.

    Instead of congratulating Sri Lankan commanders for doing the job that India failed, I mean putting the noose around the killers of its ex-prime minister; India’s present Prime Minister Singh has decided to scratch the back of the killers of ex-prime minister for shear political expediency. What an irony!

    You have been right, right through Dilrook; India has no shame what so ever. We have to build a load of cesspits for them.
    Leela

  2. Christie Says:

    “Fighting the US-India Resolution Starts with the Economy”

    It should be India-US Resolution…

    Recent economic exploitation of Ceylon started in 1792 when British brought in Vellars from the Malabar coast to collect taxes from the locals. These Vellars collected taxes and kept some for themselves and cheated the British. These Indian colonial parasites do it today. They hardly pay any local taxes and send all profits to India or the West.

    At last real Sinhala contributors to thie site has woken up.

    I have repeatedly brought up the issue of what India is up to when it comes to Indian Empire that was the British-Indian Empire. Thanks Lankaweb as my letters to news papers, comments and posts to websites and representations to local politicians are never taken. In the mid of 1980s my representations were taken up by great leaders like Hon Lalith Athulath Mudali and Hon R Premadasa who were killed by the Indian Tamil terrorist outfit.

    Latest Indian actions gives us a clear platform to stand up to Indian colonial parasites and Indian Imperialists ( Indiyanu jadawadaya).

    India is the biggest buyer of armaments in the world in the past five years.

    India has enough resources to invade the island nation and intall an Indian regime within the Island with Indian colonial parasites in the island. In this scenario Indian colonial parasites will govern most of the island and a small area in the south will be governed by Sinhalese socialists like the JVPiers and some UNPiers.

    It is a chilling idea for the non-Indians in the island. But this is what I know for a long time. I learned this from Indians in the West like UK, Australia and from Indian colonial parasites from Singapore, Malaysia and Fiji.

    We should not only liberate ourseleves from Indian imperialists but lead the freedom of all other victims of Indian colonialism and imperialism.

  3. Dham Says:

    Fully agree with Dilrook. Economic war need not be declared by should be launched silently.
    Few easy steps to start with.
    1. Reduce taxes of Chinese made cars so that they will cost 1 lakh more than Bajaaj. This can easily be done. Increase Bajaaj taxes to enable this. Reason – safety. make sure Nano will not meet this safety standrads. This will get rid of all Idian crap of our soil.
    2. Increase/Decrease taxes for buses based on safety, compfort, noice level etc so that Ashok Leyland and Tata will have no chance.
    3. Impose a tax on foriegn own petrol sellers. Take this money and reduce Lanka Petrol prices.

    4. Do not let forigners to buy Lanka land by using names of lankans – crack down on this.

  4. sena Says:

    I hope the extent of the control of Sri Lankan economy by Indian commercial interest is some what exaggerated in this article as it may be a surprise to many. The writer has good suggestions to wean out such stranglehold, but it will take a long time for the transition during which the people have to make sacrifices and under go hardships and most importantly establish good, honest and productive work habits which is currently solely lacking due to wide spread corruption, lack of integrity, selective enforcement of law and order and as the writer point out bloated non-productive public sector including excessive administrative structures. The most important question is does the ruling class comprising politicians, officials, business people and the educated want the current structure to change as they are beneficiaries and may not want to run the risk of loosing the advantages.
    The war was won largely on the shoulders of rural poor and sadly the economy is also shouldered by the poor blue collar workers toiling in and out of the country. And more sadly the eighty year investment in higher education has contributed very little to the economy and on the contrary it has become a burden to the tax payer due to demand for jobs.. To tackle the so called external economic parasites, we have to tackle the problem of internal parasites who depend on the productivity of the blue collar workers and import demands of their expensive life styles have resulted in a severe balance of payment crisis for the country which also make the government weak kneed. An essential requirement for economic resilience is to have local technology capabilities. At the moment we do not have substantial capabilities in any of the technology areas be it agriculture, healthcare, light or heavy engineering, finance and management etc. As soon as possible planners should engage the professionals (especially engineers, scientists, and medical doctors) to evaluate suitable technology areas and establish businesses and knowledge base. We do not have to do original R&D for this purpose and should bank on technology transfer and adaptation.

  5. lingamAndy Says:

    Dilrook Kannangara

    Ref: The Five Layers of Indian Economic Exploitation- Fully aggred !
    FYI, Before 1983 All these Five Layers(90%) was control by Sri Lankan N&EP Tamils !
    Now these SL Tamil live in Western world as Econimic refugees.

    there is nothing the government can do against any Indian-US moves- Aggeed !

  6. aloy Says:

    Dilrook,
    Do not encourage the formation of any more state enterprises. Look at Sri Lankan Airlines. Incompetent stooges creep in and mismanage the thing. Only a few days ago they have got a loan of $ 170m. to pay debts. You create the most promising state entity and appoint the best qualified Sri Lankan to head it. The next day he will try to skim the coffers to find money to send his children to overseas university or build his dream house. You cannot blame him because his immediate boss may be doing the same thing. I think that the government should leave all economic activities to private sector and concentrate on keeping law and order.

  7. AnuD Says:

    Do not encourage the formation of any more state enterprises.

    Govt Enterprises are not the problem. Appointing henchmen and not appointing capable people to those places are the faults. Even Sri Lanka, had State enterprises did very well. What did the subsequent Govts did. They disassembled those and wrecked.

    Besides, New face of the Capitalism is State enterprises. See, what China is doing. Most companies are govt owned. So, the Govt is the Richest and, on the other hand, because of that ownership, Govt has money to spend public. By that way, wealth can be distributed among poor and wealth can be used to raise the living standards of the poor.

    See, why India and China are developing two different ways. India has modern maharajas and dirt poor people. Yet, in comparison to the Indian govt, Chinese govt is very rich. In other words, Chinese govt has more money to spend in the country.

  8. Dilrook Says:

    Sena:

    Indian commercial interests are not exaggerated. In fact they may be underestimated.

    Your concerns about officialdom, corruption, internal parasite, local technology are very valid. They are the challenges that must be overcome. However they are not reasons for not doing what needs to be done.

  9. Dilrook Says:

    Aloy:

    Bank of Ceylon, Peoples Bank, NSB, etc. are doing very well though they can do much better.

    Singapore is a good example of how state owned enterprises can do extremely well. As AnuD says, it is not the concept but other matters that are the ills. You may recall there were plenty of profit making state owned entities that were sold off as privitisation. Only loss making ones remain. This proves this model works.

    As AnuD says the new face of capitalism or Asian capitalism is state owned commercially managed enterprises.

    Though controvercial I support what western economists call crony capitalism in place of Indian cartel capitalism. Political cronies are still better than Indian cartels in doing their own business without government funds. This is what happens in Singapore and Malaysia and is a good alternative for Sri Lanka in the interim (until a better solution is implemented). It is also inevitable in Asian capitalist economies.

  10. sena Says:

    A common feature of most countries that have substantial technological prowess is that those capabilities evolved as a need for defense. A positive outcome of the recent military activity is the enhanced technical capabilities within our armed forces. Now in peace time these capabilities and the human resources and facilities can be effectively used as a incubator to set up and develop technologies for civilian use and for developing new industries.

  11. aloy Says:

    Dilrook,
    Your assertion that fighting US-India resolution should start with the building of the economy is very correct. This is a slow process that will take many years if pursued correctly. To my mind there is no fast track solutions. Just like in Singapore and now in Thailand they should maintain law and order and leave the rest to the private sector. Once every body knows the rules and systems work smoothly state enterprises can take over. However the state enterprises do not belong to anybody unlike the private entities. Therefore these will be as good as their head. Once that head is changed things will fall apart. I myself have worked in two such institutions. One was State Engineering Corporation during the time of Dr. Kulasinghe. The second was RDA/RCDC under another prominent engineer. Both these fell apart after the head was changed.
    There is a universal law in thermodynamics that applies to all systems. That is ‘entropy (disorder) in any given system tends to increase if left alone without an external force being applied on it’. In the case of a private company the external force comes from the shareholders. In the case of a state enterprise it comes from the politician who himself is the disorder as he cannot escape from his people of his area having different ideas or his greed to grab wealth himself. We must emulate the capitalist system in the US and in India ( the present day problem in the US was created by George Bush after he went to war with many countries. When he took over from Clinton it was a surplus economy). There are many private companies in construction industry today in SL who are running their businesses very efficiently. We must give them a chance to grow without giving big contracts to foreign companies. We must also try to revamp institutions like CEB which are very inefficient and is a burden to the consumers who have to pay the highest rates in the region for their inefficiency.

  12. Dilrook Says:

    Sena and Aloy

    Absolutely.

    The military silently did a great job in repairing roads, bridges and even some cultivation! There is more they can do. However, since we relied on imports for almost all military technology, the techno aspect is low.

    This happened in ancient times. Armies were raised, used and then dismantled. Not a wise thing to do today. After winning wars, these armies were used for irrigation, etc. development. Armies included not just the fighting cadre but also the industrialists making swords, arrows, spears, etc.

    Many good performing entities relied on persons than systems. When they left the entity collapsed. Corporates posses perpetual succession. For it to be effective there should be robust systems in place. Seeking profits forces to put the house in order.

    Revamping the CEB is a must. However I take exception to the case with regards to the CEB monopoly. Power generation and power distribution should be seperate. Power distribution should have responsibility centres managed profitably. CEB employees are paid a very high salary for nothing. Government cannot bring it down given the critical importance of the service. To handle them, multiple electricity generating companies should be created. Keeping the option of buying electricity from India is not a bad option. Bargaining power of the CEB union has to be crippled.

    State owned corporations and entities need Constitutional protection. Otherwise a well functioning corporation becomes the target of corrupt politicians to sell off for commissions.

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