By GarvinƒÆ’-¡ƒ”š‚  Karunaratne, Ph.D.(Michigan State University)

ƒÆ’‚¢ƒ¢-¡‚¬ƒ…-The Indian Government told Obama to mind his own business after the American President urged India to do more to lift curbs on foreign investmentƒÆ’‚¢ƒ¢-¡‚¬ƒ”š‚.(The Economist: July 27,2012))

ƒÆ’-¡ƒ”š‚ A few months ago Secretary of State Hilary Clinton when she visited India urged the Indian Government to allow multinationals into the retail trade in India. Manmohan Singh was not gullible.

ƒÆ’-¡ƒ”š‚ India is sticking to its guns to defend employment for its own people and to enable Indians to enjoy the profits of retail trade.ƒÆ’-¡ƒ”š‚  The US wants to snatch retail trade in India because then the profits of retail trading to millions in India would flow to the USA.

The investment is on a non taxable basis(tax haven) and the local country does not get a cent.

The US has been trying actively to pressurize foreign countries to open up for investment, so that multinationals from the US could come in,ƒÆ’-¡ƒ”š‚  spread their wings wide, bring some dollars, cash them to meet local expenses and when the investment brings in profits take it to the US.

ƒÆ’-¡ƒ”š‚ It was not long ago that President Bill Clinton tried to twist the arm of the Prime Minister of Bangladesh.:

ƒÆ’‚¢ƒ¢-¡‚¬ƒ…-Despite the overtures of President Clinton on his current visit to Bangladesh(inƒÆ’-¡ƒ”š‚  2002), the Prime Minister of Bangladesh has refused to change BangladeshƒÆ’‚¢ƒ¢-¡‚¬ƒ¢-¾‚¢s long held stance against the liberalization of gas exports, until all local needs were met and a fifty year reserve was assured. President Clinton had earlier announced $ 97 million in food aid, $ 84 million in clean energy initiatives and $ 8.6 million to reduce abusive child labour, a ƒÆ’‚¢ƒ¢-¡‚¬ƒ”¹…”debt for natureƒÆ’‚¢ƒ¢-¡‚¬ƒ¢-¾‚¢ swap and forgave $ 6 million in BangladeshƒÆ’‚¢ƒ¢-¡‚¬ƒ¢-¾‚¢s external debt but Prime Minister Sheik Hassina stood her ground stating that ƒÆ’‚¢ƒ¢-¡‚¬ƒ”¹…”we would like to lead a life of dignityƒÆ’‚¢ƒ¢-¡‚¬ƒ¢-¾‚¢. It is said that the decision of the Government of Bangladesh disappointed the US and British companies as well as the World Bank.. The idea was to prise open the gas reserves of Bangladesh for exploitationƒÆ’-¡ƒ”š‚  by the Developed Countries and in this process Bangladesh would be offered a pittance and the bulk of the wealth created will go to the Western Companies.ƒÆ’‚¢ƒ¢-¡‚¬ƒ”š‚ (From: Karunaratne: How the IMF Ruined Sri LankaƒÆ’‚¢ƒ¢-¡‚¬ƒ”š‚¦, Godages)

Sri Lanka has also the Eppawala Phosphate venture to talk of.ƒÆ’-¡ƒ”š‚  There the plan of the US was for the US multinationals- Freeport McMorgan and IMC AgricoƒÆ’-¡ƒ”š‚  to excavate, process and send the processed phosphate overseas within 30 years, paying Sri Lanka around $ 30 a ton while the world market price was around $ 300. The entire Anuradhapura District would have been filled with mountains of gypsum and environmentally damaged. This move could only be stopped with a Supreme Court order.

ƒÆ’-¡ƒ”š‚ InƒÆ’-¡ƒ”š‚  every instance of foreign investment one can find a catch where with a small initial investment in foreign currency, the multinational creates production/ trade in such a manner that riches flow to the donor Developed Country.

ƒÆ’-¡ƒ”š‚ Foreign Investment, FDI – Foreign Direct Investment as it is usually called is very peculiar in that it is sought by the donors as well as the receivers. The donor wants to prise open the assets of the host country to exploit its resources, work on a tax haven, paying no taxes, use cheap labour for production and ship the products.ƒÆ’-¡ƒ”š‚ They emphasise the word investment and do not refer to it as exploitation.ƒÆ’-¡ƒ”š‚ In the donor country, the sales bring in massive profits and taxes. On the other hand the debt ridden Third World countries tend to go behind foreign investment merely to snatch the foreign funds that are initially brought in, because this enables the country to meet itsƒÆ’-¡ƒ”š‚  foreign exchange commitments like servicing loans because the country is indebted.ƒÆ’-¡ƒ”š‚  ..ƒÆ’-¡ƒ”š‚ 

ƒÆ’-¡ƒ”š‚ IndiaƒÆ’‚¢ƒ¢-¡‚¬ƒ¢-¾‚¢s economy is strong and can rebuff the US. India is not interested in accepting all foreign investment offered..

ƒÆ’-¡ƒ”š‚ The IMF also supports FDI. The IMF has already successfully performed its task of making most Third World countries indebted. This was a task that the IMF commenced doing in the late Seventies. Then most Third World Countries balanced their books, had exchange control systems and they used the foreign exchange in the national interest. There was local development and employment for the people. It was a production based self sufficiency- cum sustainable typeƒÆ’-¡ƒ”š‚  of economy, where local people were activised to produce and offered incentives. The Developed Countries found that they could not sell their manufactures because the Third World countries were producing their own requirements. This situation had to be changed. The IMF was enlisted to make the countries indebted. This the IMF did by giving ;loans on a liberalised basis. The countries were advised toƒÆ’-¡ƒ”š‚  abolish exchange control, liberalize the use of foreign exchange. Every country that sought help from the IMF to meet the doubling of oil prices in the SeventiesƒÆ’-¡ƒ”š‚  was trapped and made indebted. Thereafter the Superpowers and their protƒÆ’†’ƒ”š‚©gƒÆ’†’ƒ”š‚© the IMF could rule them.

ƒÆ’-¡ƒ”š‚ Let us see what the IMF did to Tanzania.:

ƒÆ’‚¢ƒ¢-¡‚¬ƒ…-Tanzania was also targeted. In 1977, Tanzania had a vibrant economy that could boast of reserves for five monthsƒÆ’‚¢ƒ¢-¡‚¬ƒ¢-¾‚¢ imports. To quote Cheryl Payer:ƒÆ’‚¢ƒ¢-¡‚¬ƒ¢-¾‚¢the IMNF in routinr consultations adfvised Tanzanian leadersƒÆ’-¡ƒ”š‚  that their reserves were embarassinglyt large and might lead the countryƒÆ’‚¢ƒ¢-¡‚¬ƒ¢-¾‚¢s aid donors to reduce their contribution. A poor country, the IMF argued should not hoard its reservesƒÆ’-¡ƒ”š‚  but spend them in order to develop more rapidly. They persuaded the Government to abolish the foreign exchange budgeting systemƒÆ’‚¢ƒ¢-¡‚¬ƒ”š‚¦ and lift controls on imports; by the end of 1978, Tanzania had only reserves for ten days worth of imports. Then the IMF imposed its Structural Adjustment reforms. Tanzania which had aƒÆ’-¡ƒ”š‚  stable self reliant economy was broken doiwn and brought to its knees.(From Lent and Lost:1991)

ƒÆ’-¡ƒ”š‚  It is not only the IMF that destroys the Third World. The WTO(World Trade Organization) too imposes its restrictions and makes countries liberalize their economy to world trade.

ƒÆ’-¡ƒ”š‚ Sri Lanka was not an indebted country in 1977. It balanced its books, there was no deficit budgeting. It owed $ 750 million only on project funding, where the investment would have brought a return that could pay the servicing of that debt. That was the basis on which loans were then given. However the UNP accepted the Structural Adjustment ProgrammeƒÆ’-¡ƒ”š‚  in 1978 and thereafterƒÆ’-¡ƒ”š‚ ƒÆ’-¡ƒ”š‚  we liberalized the economy, abolished the industries we had and built up a import and sell economy, leading to an international debt of $ 9,772 million by 1995. India did not liberalize its economy and that is why President Obama had to dictate to Manmohan Singh.

ƒÆ’-¡ƒ”š‚ Once a country becomes indebted itƒÆ’-¡ƒ”š‚  gives up controlling the foreign exchange it earns and allows the foreign exchange it earns to be used not in the national interest but for financing imports and for the rich in the country to use as they wish. TheƒÆ’-¡ƒ”š‚ ƒÆ’-¡ƒ”š‚  foreign debt increases purely because the country has to borrow more to service its debts. Sri Lanka is in this plight since 1978.

ƒÆ’-¡ƒ”š‚ The Lesson that we have learnedƒÆ’-¡ƒ”š‚  from Manmohan Singh, the erudite Prime Minister of India is thatƒÆ’-¡ƒ”š‚  we have to safeguard our country, our people and our assets. If we do not heed to his warning woe be unto us, because we will cause our own ruin. FDI needs to beƒÆ’-¡ƒ”š‚  checked and re checked to ensure that the country its people and even its sovereignty is not taken for a ride. Let not the electricity supplied from micro turbines and let not the water provided by foreign investorsƒÆ’-¡ƒ”š‚  create profits that will end up in foreign countries.

ƒÆ’-¡ƒ”š‚ Instead of FDI we have to develop our production, aim at self sufficiency and a self reliant economy. That is the task being attended to by our Ministry of Economic Development..I came to know recentlyƒÆ’-¡ƒ”š‚  that flowers are not imported and this has been a boonƒÆ’-¡ƒ”š‚  to local producers. This is a feather in the cap of the Ministry of Economic Development.

The Ministry of Economic Affairs is successfully attending to economic development in its programmes like DiviNeguma, but unless it takes charge of agriculture and livestock it cannot hope for a major breakthrough. Lessons have to be learned from earlier programmes of development. The famous Community Development Programme of India, the flagship of Prime Minister Jawarlal Nehru, the largest development programme the democratic world ever tried,failed because it did not involve agriculture and livestock.

Recently our President is reported to have said that our country is not interested in signing the CEPA with India. That is a decision in our national interest.ƒÆ’-¡ƒ”š‚  It is necessary to step up the activities of Divineguma and Gama Neguma to the extent of offering employment to every person. That will bring about local production that will save our foreign exchange.

ƒÆ’-¡ƒ”š‚ SriƒÆ’-¡ƒ”š‚  LankaƒÆ’-¡ƒ”š‚  has just been able to liberate itselfƒÆ’-¡ƒ”š‚  from the jaws of death at the hands of monster Prabhakaran. The entire Nation owes a great debt to President Rajapaksa.ƒÆ’-¡ƒ”š‚  But all will be lost if we sell our country to foreigners who come to us with the sugar coated pill of foreign investment to take away our wealth. We have to develop our production and aim at self sufficiency and self reliance. That forms the nucleus of a new paradigm for development.

GarvinƒÆ’-¡ƒ”š‚  Karunaratne, Ph.D.(Michigan State University)

September 7, 2012