US Financial Terrorism: IMF & CBSL Loot Worker Pensions
Posted on October 15th, 2023
e-Con e-News
‘Before you study the economics, study the economists!’
e-Con e-News 08-14 October 2023
‘War is robbery, commerce is generally cheating’
– Benjamin Franklin (who described people as ‘tool-making animals’)
The IMF & World Bank’s ‘tough love’ and sweet hemlock about eliminating ‘corruption’ & ‘transparency’ mainly aims to sabotage a national movement focused on economic self-reliance & self-determination. The IMF’s critics meanwhile fail to place the IMF & World Bank plans in a history of interference in & deindustrialization of Sri Lanka’s economy from 1948 itself, nestling deep in the soul of Soulbury independence. Corruption after all is another word for commerce, no? What’s an economy dominated by merchants & moneylenders, and the parliamentary representatives they finance, supposed to do?
Almost 3 decades after terrorists blew up the Central Bank, this repository of the highest number of PhDs per square foot here, is now blowing up the country. The Central Bank of Sri Lanka (CBSL, designed by a US Federal Reserve operative) is now plundering ‘half of the future incomes of the Employees’ Provident Fund (EPF) & Employees’ Trust Fund (ETF)…’
‘No other country has exclusively targeted pension funds in DDR (domestic debt restructuring) because no civilised administration would plunder the only means of survival of their workers after their retirement,’ declares Dhanusha Pathirana, ‘economic analyst’, who fingers the hidden hand of local capitalists in this great DDR robbery. We shall have to wait to find out what exactly the EPT/ETF has so far invested in. But Hamilton Reserve Bank lawsuit in New York claims Sri Lankans are robbing elderly US citizens pensions who generously invested in Sri Lankan bonds! Yet what did these bonds invest in?
Meanwhile, CP Chandrasekhar, Amali Wedagedara & Charith Gunawardena of the newly minted Institute of Political Economy (IPE) argue that the IMF ‘structural adjustment reforms have also destroyed opportunities for growth in local manufacturing industries & agriculture sectors.’ But what would these ‘opportunities’ have amounted to in terms of actual industrial transformation? They do not describe. Instead, they lament the effect of IMF games ‘on Sri Lanka’s Poor’. ‘Poor’ however is a 16th century Elizabethan construct to disguise the eviction of England’s rural population – ‘Sri Lanka’s Impoverishment’ is after all what they long seek (see ee Focus)
ee Focus also begins a Wenhua Zongheng series on the attempts by China to assist in Africa’s industrialization. Who in this world at this time can show us how they themselves have struggled to achieve modernity? Finally, ee examines Shenali Waduge’s reminder that ‘Sri Lanka Needs a Happy-Economic Model & So Does the World’. We glimpse at the first major critic of modern (machine) capitalism during its first crisis – Simonde de Sismondi. Only a few analysts (as Marx, Lenin, Luxembourg earlier) have been sharp to link the great Sismondi to the present national movement’s dominant romanticism, anarchism etc. Nationalists may surely object to such ideological fore-genes!
Nevertheless, ee invokes the Communist Party of Sri Lanka’s siren for socialist & nationalist forces to unite, and begins to serialize Idirimagen Idiriyata, the CPSL’s ‘Alternative Development Program’.
• Almost 70% of the country works in the informal sector, with only 8% doing formal-sector jobs. So warns the Institute of Policy Studies (IPS) report Sri Lanka: State of Economy 2023. But what’s the problem? Workers in the informal sector ‘have no social protection and, as a result Sri Lanka should look at creating more good jobs that will guarantee social protection like EPF/ETF. In addition good jobs will provide adequate remuneration, rights at work’. No kidding! But can IPS recommend a modern industrial plan that could provide such ‘formal-sector’ ‘good jobs’ , or do they wish more of the same shill-and-be-shilled: consumer services? Selling more workers ‘West’ (which includes US-occupied Korea & Japan)?
The white man (the IMF’s master) is at the same time adding fuel to the carnage in West Asia. That should make working there more lucrative no doubt. And as for the prices of that fuel, wonder what all the IMF forecasts & prognoses will be now? The IMF etc however, carries on regardless. They demand ‘rule of law’ and yet oppose ‘elections’. ee estimates bourgeois elections as an expensive (capitalist-media-driven) fraud but but but…
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• Elections Threaten US Plans – Last week, after the IMF grandly ‘suspended’ their ‘plan’, they released their 139-page Governance Diagnostic Assessment (GDA), which makes 16 demands. One demand involves the government abolishing the Strategic Development Projects Act. It’s for noble reasons no doubt: They want ‘an explicit & transparent process’ to evaluate proposals & costing of investment promotion conditions.’ That’s it? And whose projects would qualify now? MCC?
Another interesting IMF ‘priority’ demand: ‘Corruption risks around state-owned land, estimated at approximately 80% of the country, are particularly severe due to the combination of lack of clarity around titles, the absence of a property registry, and ambiguity in processes for the divestiture of state property.’ Alright? What land does the IMF wish to sell? And what’s the hurry?
And so another team of officials from the IMF is expected next week to hold ‘extensive discussions’ on the ‘suspended’ ‘2nd tranche of the Extended Fund Facility’. Hasn’t their previous chatter been ‘extensive’? Has anyone counted the number & cost of the suits leaving & entering Sri Lanka whose sole purpose is to help Sri Lanka’s debt-ridden economy? Look at the number of ADB Executive Directors who arrived last week! The problem it turns out is, elections? And the IMF is full of democratic doom&gloom: ‘full economic recovery is not yet assured.’ And the economists echo: ‘The most serious threat to the continuity of the IMF program arises from the elections next year.’
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• Just to warm things up further: ‘Civil society groups & lawyers organized a human chain’ on October 4, for ‘10km on the main road from Jaffna town to Maruthanarmadam in the Northern province’, claiming a Mullaitivu judge was threatened to resign and flee the country.
On Oct 11, India launched a ferry service connecting Nagapattinam in Tamil Nadu with Kankesanthurai in SL’s Northern Province ‘to enhance connectivity’.
On Oct 15, President Ranil Wickremesinghe began his visit to China. He will address the 3rd Belt & Road Forum, to mark the 10th anniversary of the Belt & Road Initiative (BRI).
The President will return to a 20 October that has been declared ‘a day of total shutdown’ for Tamil political parties to ‘unite in Jaffna to urge international powers to intervene over the continuous deprivation of justice & protection for Tamils under Sri Lanka’s Sinhala Buddhist dominance’. These same international powers (including India) now certainly promoting justice & protection in Palestine, no doubt?!
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• The IMF claims it was ‘caught off guard’ by the ‘debt deal’ Sri Lanka struck with China this week, which the media calls ‘tentative’, and ‘in principle’. China called on ‘multilateral institutions & commercial creditors to take part in Sri Lanka’s debt restructuring based on fair burden-sharing’.
In Morocco, ‘the IMF & creditors like Japan, the US & India’ held talks on a debt restructuring plan ‘without the participation of China, which would include safeguards to prevent favourable payment terms to China’!
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• On October 13, ‘Sri Lankan Civil Society Initiative on Anti-Corruption Reform for Economic Recovery’, hosted ‘Pathways to Debt Sustainability & Governance Reform’ – ‘a closed-door event alongside the IMF Annual Meetings in Marrakesh, Morocco’. Civil Society? Closed door? Corruption? Well, here we go:
‘IMF Senior Mission Chief for Sri Lanka Peter Breuer, US-funded Verité Research Executive Director Dr Nishan de Mel, Transparency International SL Executive Director Nadishani Perera & Global Sovereign Advisory Senior Research Analyst Theo Maret spoke on a panel moderated by Thomson Reuters Emerging Markets Correspondent Jorgelina do Rosario.
Since it was a ‘transparent, closed-door’ event, we do not know what transpired. But they discussed the 2 recent governance diagnostics on Sri Lanka by civil society & the IMF and how the ‘IMF, the government, & the country’s creditors’ (where’s civil society here?) could achieve the ‘restructuring’ of Sri Lanka’s debt.
The ‘Civil Society Governance Diagnostic Report on the Anti-Corruption Landscape of Sri Lanka’ was released in mid-September, with ‘34 governance reform recommendations for Sri Lanka aimed at addressing the root causes of Sri Lanka’s current crisis’ .
In late Sept, after its grand suspension to cause middle-class hearts to flutter & demand a crackdown on unions, etc (few people even know what the IMF is doing in Sri Lanka, according to a USAID CPA Survey) – the IMF released its governance diagnostic on Sri Lanka – the first ever IMF governance diagnostic in Asia – making its 16 demands. Dollar-rich ‘civil society’ and the dollar-printing & un-civil IMF wish to improve ‘rule of law, transparency & accountability’.
The 139-page-long report on ‘Sri Lanka: Technical Assistance Report – Governance Diagnostic Assessment’ unveils the country’s corruption at ‘high places’.
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• On October 10, the ‘Intergovernmental Group of 24 on International Monetary Affairs & Development (G24) called on the IMF ‘to remain a quota-based institution in order to bolster the voice & representation of emerging market &developing economies, who now account for a larger share of world GDP. And also wants: ‘correcting regional underrepresentation in the IMF’.
On October 11, quite blasé to the fires blazing in West Asia, the IMF & World Bank & its allies released the Marrakech Principles for Global Cooperation, muttering their old mantra: ‘strengthening governance, the rule of law, trade, and the business environment to attract new investment and generate jobs. And here is the key: ‘catalyzing private sector finance’.
And while they make no mention of their escalating wars (IMF calls Israel’s economic performance ‘impressive’) they said thus: ‘Addressing fragility by effectively utilizing mechanisms for supporting fragile & conflict-affected states and jointly addressing global sources of food & energy insecurity’.
On 7 September, US Undersecretary for International Affairs Jay Shambaugh had acknowledged (a 1st time for the US) the imbalance in IMF governance, by giving ‘a bit more information on what it would take for the US to accept an increase of China’s IMF quota shares’. China is quite aware that the IMF is rigged, and demands that all multilateral institutions like the IMF & World Bank also restructure. These demands by China, the Anglo media steadfastly refuse to mention.
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• The manoeuvrings that Sri Lanka’s foreign policy officials (80% dedicated to meeting India’s concerns, apparently) have to squirm in, to obtain a more favorable deal from the white man, is truly cringe-worthy. Midst all manner of media buzz about a Chinese ‘spy ship’, a US naval ship Brunswick sailed unheralded by the anglomaniacs into the port of Colombo for an extended visit until Oct 15, to see ‘some of the tourist attractions in the country’. The oceanic floor alone must bore them?
Meanwhile, the Island headlined: ‘Govt finally allows Chinese ship visit… Chinese research vessel Shi Yan 6 would arrive in Sri Lanka in late November, Foreign Minister Mohamed Ali Sabry said on Monday (9). The Foreign Ministry had granted approval for the arrival of the ship, he added. The ship is expected to arrive in Sri Lanka on 25 Nov. Initially, they wanted to come in Oct. We asked them to come in Nov. They again asked if they could come in late Oct. We have maintained our position that they must come in late Nov. This is the situation, now.’
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‘It appears that the main reason why State District Court of New York
got involved is simply that someone, somewhere in the US government
took particular exception to how Hamilton Reserve Bank’s lawyers
presented the US position on sovereign debt restructurings.’
– ee Economy, SL’s US Cavalry is Here: Too bad they didn’t bring any big guns
ee knows little about financial finagling, but it appears the US, England & EU want Sri Lanka to acknowledge its finances are going to be officially determined elsewhere: eg, the US Court in Southern District of New York (SDNY), in media-blindfolded Manhattan. The Financial Times does not tell us what the US government found exceptional about HRB’s take on US interference in Sri Lanka. ee keeps also wondering why the media keeps teasing readers about this ‘London Club’, who are obviously involved in Sri Lanka’s debt jugglery. Yet they don’t go into much detail:
In September, London Club came up again when France & England joined the US at the SDNY court to support Sri Lanka’s request for ‘a 6 month freeze on any litigation’ on its debt, by filing an ‘amicus brief’. Occupied-Japan’s Nikkei-owned Financial Times of London then went on to say such briefs are usually filed ‘by people, organisations or countries that aren’t themselves party to any legal case, but have a strong opinion on how it should go. France is naturally interested in the Sri Lanka lawsuit as it hosts the so-called Paris Club, where government-to-govt debts are restructured. England is part of the Paris Club, but presumably cosigned the amicus brief because it historically oversaw the London Club, the less formal group for private creditors to negotiate with sovereign borrowers.’
On 4 October, EconomyNext reported on Ranil Wickremesinghe at Germany’s Berlin Dialog: ‘Sri Lanka also has to talk with private creditors. We have to talk with the Paris Club, plus India, then we’ll talk to China and then go back to the London Club.’
So other than wishing to affirm we all know that the Sri Lankan economy has been taken hostage by Manhattan & London bankers & their lawyers… what else?
On 12 Oct: ‘Sri Lanka’s private creditors have sent a proposal on how to restructure $12billion of overseas debt, including a new type of bond designed to ease repayments in case of future economic pressure.’ The article rather mysteriously, or designed to create mystery, quoted: ‘2 sources with direct knowledge of the matter’. Further on it adds: ‘Representatives for the government did not respond to a request for comment. A spokesperson representing the creditor committee did not reply to a request for comment.’ So who is this ‘Creditor Committee’?
One article credited this story to Reuters and another to Channel NewsAsia, owned by Singapore national public broadcaster Mediacorp, with headline: ‘SL bondholders sent $12bn debt rework proposal to government – sources’.
‘The proposal sent on Oct 2 provides a write-down, or haircut, on both capital & interest, added the sources who declined to be named because the talks are private. The proposal foresees new ‘step-down’, ‘Macro Linked Bonds, which will automatically lower coupon payments starting in 2027 if Sri Lanka fails to meet some of the economic targets linked to its IMF program’. – see ee Economy.
• Gaming Sri Lanka’s Debt – The London Financial Times suggests the Hamilton Reserve Bank lawsuit relates to ‘collective action clauses that allow all of the country’s bonds to be aggregated for voting purposes’. This apparently means a ‘majority’ decides on the terms. The HRB bond however, ‘lacks aggregation features and has long been flagged as vulnerable to ‘holdout’ creditors’. FT observes: ‘Delays by official creditors create a window for private creditors to exclude themselves from a bond workout… The long delays caused by official sector squabbling are creating new strategic options for private creditors.’
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