When the Eagle cries
Posted on September 12th, 2017

Editorial Courtesy The Island

US Acting Assistant Secretary of State for South and Central Asian Affairs, Alice Wells is reported to have told a Congressional subcommittee that non-concessional Chinese loans have placed unsustainable debt burdens on Sri Lanka. ‘They are now of concern to the Sri Lankan people in the government,’ she has said. She sounds like the yahapalana leaders who used to clamour against China and Chinese loans while campaigning hard to dislodge the pro-Chinese Rajapaksa government.

Why have some western powers suddenly awoken to the debt burden of the developing world? In the past, they dominated the world through aid, which came with many strings attached. But, their economies are no longer strong enough to do so and they have, therefore, opted for the most economical way of achieving that objective. They are using human rights as a tool to control the developing world. This method has proved to be very cost effective. The western governments now have to fund only some influential INGOs and NGOs operating in the developing world instead of the so-called Third World governments which have an enormous appetite for aid, part of it is siphoned off by corrupt politicians and bureaucrats. They have succeeded in hijacking the UNHRC and using it as a bludgeon against the states, perceived to be hostile to them, and to protect their allies in spite of their grave human rights abuses.

China is now doing what the West is no longer capable of doing; it provides developing countries with loans without trying to run parallel governments therein. It has thus been able to expand the sphere of its influence extensively, posing new geopolitical challenges to the West. It is only natural that Chinese loans causes so much concern to the capitalist bloc, struggling to retain its grip on the world. Interestingly, Europe has had to soften its stand on some African nations, which it used to condemn for human rights violations in a bid to counter China’s growing influence in that region.

There is no love lost between the present Sri Lankan government and China. But, the former has no way of pulling out of China’s sphere of influence due to its economic difficulties. The UNP-led UNF government crashed in 2004 as it could not raise funds even by compromising national security and appeasing the LTTE. It was eyeing a 4.5-billion-dollar aid package which the US, Japan, the EU and Norway—which came to be known as the Tokyo Co-chairs of Sri Lanka’s ‘peace process’—promised; the implementation of their aid pledge was made conditional to progress to be made in negotiations with the intransigent LTTE, which stuck to its Eelam demand like a limpet. The present UNP-led yahapalana administration also expected the western powers which helped engineer the 2015 regime change here to help it financially. Else, it would not have taken on China to the extent of undertaking to scrap the Chinese-funded Port City project. But, it received nothing by way of financial assistance from its admirers in the West.

The Sirisena-Wickremesinghe government wouldn’t have had to swallow its pride and grovel before the Chinese leaders, begging for funds if the US and other western powers had provided it with the much-needed soft loans. Ironically, even some of the western powers critical of Chinese loans are dependent on China, which has been investing in euro zone government debt.

Washington’s concern over Sri Lanka’s debt burden should be appreciated. But, the question is what the US is going to do about it. On Nov. 01, 2016, Chinese Ambassador to Sri Lanka Yi Xianliang, did not mince his words when he asked the then Finance Minister Ravi Karunanayake, who was critical of the Chinese interest rates, why the latter had asked for another loan if the Chinese loans were so expensive. Those who are shedding copious tears for Sri Lanka, in a debt trap, should answer this question and make available loans at lower interest rates if their concerns about this country are genuine.

2 Responses to “When the Eagle cries”

  1. L Perera Says:

    The last statement “Those who shed copious tear for Sri Lanka……….” says it all.

  2. Dilrook Says:

    Chinese loans are just $7 million (after Hambantota deal) out of a total external debt (including direct borrowings) of $64+ billion. All Chinese loans are backed by assets. The problem is other loans.

    External borrowings by state corporations amount to $22 billion (not shown in Central Bank report). Japan is also a large creditor. Development bonds and sovereign bonds sold in foreign countries are also huge. If USA can help settle these debts, it will be very helpful.

    USA is also in a debt crisis with a public debt close to $18 trillion or 75% of the GDP. When direct borrowings by state entities is added the percentage comes close to 100%. A war in Korea would cost another $1 trillion. So USA is not in a position to help anyone.

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