e-Con e-News

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‘Before you study the economics, study the economists!’

e-Con e-News 28 September – 04 October 2025

‘Ranil Wickremesinghe had been a shrewd driver & just before he left the office, he got the parliament to enact special legislation binding future governments to uphold the goals set by him. That legislation, the Economic Transformation Act or ETA had nothing to do with transforming the economy but adding to the law books the goals & targets set by IMF for its EFF (Extended Fund Facility) … If AKD fails to attain these goals, his government is liable to be challenged in courts.’– WA Wijewardena (see ee Economists, 1^st year of AKD Govt: Is it RW in driving seat with a difference?)

‘Sri Lanka permits 100% foreign ownership

in most sectors, with constitutional guarantees for investment protection & unrestricted repatriation of earnings, fees, & capital.’– US State Department Report

Despite all the ‘driverless’ remote controls, leghold traps & capital giveaways that grip the Sri Lanka government in bosom bondage, many US investors supposedly ‘remain wary given the NPP leadership’s historically anti-Western, Marxist-influenced ideology’. So claims the US government’s 2025 Investment Climate Statement, even as former members & ardent critics of the present government claim, the JVP’s brandishing of hammers & sickles and red flags & slogans about workers are but crimson icing for cakes programmed, made & baked elsewhere. (The standard ‘Old Left’ critique describes the JVP as an ‘ultraleftist’ decoction of the CIA, which has always been used to undermine any nationalist endeavours).

     The US is nevertheless warning investors to plan ‘exit strategies’: ‘Some senior government officials regularly castigate private sector-led economic growth & publicly promote state-owned collectivism as the country’s preferred investment model.’ And while the US government is publicly asserting its wish to make their own country ‘great again’, while claiming to end wars, even as they wage both horrific proxy – on Russia (Ukraine), West Asia (Palestine), China (Myanmar, Taiwan, etc.) – & undeclared wars (see ee Random Notes, Somalia) their stated aim in Sri Lanka is to ‘reduce state dominance’, and to ‘simplify approvals’ to privatize national resources.

     The US report thus whines about ‘rigid labour rules’ – ‘Rigid dismissal rules make restructuring [i.e., privatization] costly, while emigration has intensified shortages in IT, apparel, tourism & engineering.’ Interestingly, they make no mention of the damage to our state health sector by emigration (aka brain drain). Yet they highlight, ‘garment industry reports turnover rates of 40%’ and somehow also lament that despite such ‘rigidity’, ‘weak social protections & limited coverage for informal workers contribute further to labour market inflexibility’. Inflexibility is a euphemism for sacking workers easily. In fact, most business news is reported via such euphemistic synonyms for privatization, such as ‘market access’ etc.

     Also groaning about ‘restrictions on foreign participation’, the same US report says it is busy ‘eyeing’ the ‘ICT (information & communications tech), energy, aviation & defence’ sectors, while demanding further privatization. The US claims, the current administration suspended the unelected Ranil Wickremesinghe government’s ‘privatisation efforts upon taking office’. ‘The Economic Transformation Act, which was intended to abolish the Board of Investment and replace it with 5 specialised agencies, has not been implemented, leaving approvals fragmented and slow… The stalled privatization of deficit-ridden State-owned enterprises, notably the Ceylon Electricity Board, hinders development of cost-effective energy supplies crucial for industrial operations.’

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‘For Sri Lanka, US energy offers lower prices, diversification away from Middle East dependency, & the potential to turn Hambantota into a regional hub.’DKW Wegapitiya (see ee Industry, Energy imports from US offer the most practical & strategic solution)

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The latest (US-controlled) World Bank team to visit Sri Lanka, met parliamentary ‘finance oversight committees’, and also added their 2 cents to US energy demands. They duly call for ‘urgent energy, public sector & PPP reforms.’ Meanwhile, WKH Wegapitiya, the founder of LAUGFS, which runs ‘South Asia’s largest LPG transshipment terminal in Hambantota’, and recently tied up (described in apropos Trumpian hyperbole as ‘a beautiful partnership’) with Vallibel’s Dhamikka Perera, is claiming, despite being far far away, that ‘US energy imports… offer the most practical & strategic solution’ (to the US imposition of high tariffs), ‘to not only secure better terms for apparel exports but also position Hambantota as a gateway for US energy into Asia’ Wegaptiya appears to be blissfully unaware that ‘Middle Eastern’ oil is still US (Exxon)-controlled. (Vallibel is linked to Hayleys, Delmege, etc, see ee Focus, for their historical role in the English underdevelopment of the country).

     The US meanwhile, adding to the general merchant siren song of privatization, claims Sri Lanka’s 527 national enterprises, ‘including 55 designated as strategic… remain a major burden on public finances’. The US report, nevertheless, offers ‘a comprehensive overview of the investment conditions in over 170, providing a crucial starting point for US companies’!

     The US report inevitably gets around to its favorite war mongering tropes: ‘The Government’s decision to impose new taxes on service export firms while granting exemptions for [China’s] Port City projects has reinforced perceptions of uneven treatment. Corruption in procurement persists despite legislation passed in 2023.’ And purportedly lament their allies’ misfortunes: ‘Confidence was dented when Adani Green Energy exited a $400mn wind farm after the Government sought to renegotiate an awarded contract.’ (‘Confidence’ is yet another euphemism for merchant control)

     Other areas the US is clearly eyeing are the ‘restrictions on land & ownership’: ‘Foreign companies with more than 50% equity are generally barred from purchasing land, with only narrow exceptions… Caps of 40% apply across sectors such as agriculture, natural resources, shipping & education, while retail under $5mn, pawnbroking & coastal fishing are entirely prohibited.’

     The report also reveals how the US is salivating over ‘the country’s large, government-controlled pension funds, the Employees’ Provident Fund & Employees’ Trust Fund’. This was recently enunciated by their favorite parliamentary proxies, for the ETF & EPF to provide long-term funding to small & medium enterprises (SMEs, another euphemism for fronts that vend foreign industrial products).

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Standard Chartered Bank, SL, reported a total profit of Rs44,002,000;

HSBC SL Branch reported Rs45,931,350; Citibank USA, SL Branch

reported: 21,199,660, 2020-24 – ChatGPT

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There are 19,000 private equity funds, &

14,000 McDonald’s food outlets in the US

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• ChatGPT apparently cannot divulge how much profits, different banks and companies operating within Sri Lanka, remit, officially and unofficially, outside the country…. Last week, ee noted the sale of England’s HSBC’s retail operations in Sri Lanka. However, HSBC is in fact not totally withdrawing, but is holding on to its ‘Corporate & Institutional Banking’ business, which ‘enables 2-way trade & investment flows between clients operating in Sri Lanka & around the world’. In March, Standard Chartered Bank (SCB), had already said it would ‘divest its wealth & retail business in Sri Lanka’ while retaining its ‘strong presence in the country through our Corporate & Institutional Banking (CIB) business, which will continue to connect Sri Lanka to global opportunities whilst helping international clients access the market here’. SCB claims to be ‘one of the oldest foreign banks’ in Sri Lanka, with ‘a network of 7 branches across 7 cities’ (see ee Focus, for SCB’s role in England’s opium trade in China & colonial apartheid in South Africa).

     Multinational banks claim: retail banking (checking/savings accounts, small loans, mortgages) offer low-margin of profits compared to investment banking, wealth management, or corporate lending. They claim: ‘Shifting demographics, accelerated technological advances (fintechs, digital payment) & rising consumer expectations – all in an increasingly crowded financial services ecosystem’, make maintaining branch networks, ATMs & customer service staff costly. They don’t mention that in a fraught economic climate, going after ‘non-performing loans’, court cases & seizing goods already sold are messy affairs, better left to local actors.

     The claim for withdrawal is that traditional retail banks are now charging depositors / clients / customers to keep their money, offering minus to zero or low interest rates, while people have more profitable alternatives now, investing in a variety of other schemes, from term deposits to finance companies to stocks & crypto, etc.

     For example, multinational banks are supposedly ‘retreating’ from Africa including South Africa because the domestic financial sector & new digital challengers dominate (so says, US credit rating agency Moody). The MNCs have ‘struggled’ to break into the country’s retail banking market, but ‘entrenched local players & fintech startups’ have strong footholds. In Sept 2025, the South African Reserve Bank (SARB) gazetted the official closure of HSBC Private Bank in South Africa, ending 30 years of operations. HSBC’s South African client base is being transferred to FirstRand’s corporate & investment arm, Rand Merchant Bank (RMB). 5 major international finance groups have either closed their operations or scaled back in South Africa over the last 2 years. BNP Paribas shut down its corporate & investment banking business in May 2024. Barclays and Standard Chartered have ‘significantly reduced their presence; across Africa.  Moody’s claims the absence of standardized national identity (ID) systems in many countries, complicates compliance with strict ‘know your customer’ requirements. Foreign lenders are focusing on ‘large corporates & high-net-worth clients’ in urban centres, leaving vast segments of the population untouched.

     Yet, when we delve deeper into these investment ‘alternatives’, many of them, including so-called private commercial banks & finance companies are controlled by imperialist multilateral agencies operated by the World Bank, ADB, etc, or by so-called development banks, which themselves are only fronts for their industrial exporters’ associations. Last week’s World Bank team included the IFC Senior Country Officer Victor Anthonypillai. The IFC (International Finance Corporation) is the World Bank’s private lender, which has not only ‘lent’ money to private commercial banks (ComBank, etc.) but also to private companies like PickMe, Sunshine Holdings (which we suspect, with its palm-oil addictions, is either a Ceylon Tobacco Co or Unilever front) 

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In 2016, information was leaked to the Sunday Times (ST) that Englsand’s HSBC Sri Lanka branch allegedly passed ‘bogus’ loans to agriculture sector clients, to meet a Monetary Board (MB) stipulation that 10% of the loan portfolio of all commercial banks must go towards the agriculture sector. These loans were passed before the reporting date at the end of certain financial quarters, when the figures are officially conveyed to the Central Bank of Sri Lanka (CBSL). The CBSL was ‘informally’ aware of what was going on but, former Governor Arjuna Mahendran’s connections with HSBC (as its former Wealth Manager in Singapore) had allegedly helped avert trouble.

     HSBC is predominantly a corporate bank. The loans – which amounted to short-term cash injections to the relevant corporate clients – were then reversed after the reporting date. The ST knew the names of at least 2 companies involved but did not divulge them. These bogus loans helped HSBC to avoid the ‘penalty’ & to hoodwink the regulator. The MB had stipulated that, in the event any banks do not comply with the minimum 10%, the percentage shortfall as an equivalent amount in Sri Lankan rupees should be transferred to the refinance fund operated by the CBSL. Former Chief Executive Officer (CEO) Patrick Gallagher was implicated and transferred to HSBC London. The bank was also alleged protecting senior Risk Managers, with auditors ‘covering up the issue’. The Chief Risk Officer (CRO) was suspended in December 2015, but reinstated to protect Gallagher, compromising the compliance risk model. It is ‘always the local staff that suffer and have to pay the price’.

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• One of the merchant media’s favorite myths in still-colonized Sri Lanka is that the English created & maintained an uncorrupt civil service & police and companies, and Sinhala politicians ruined this ruling machinery. This ee Focus offers some ohay references from Krisantha Sri Bhaggiyadatta’s Very Personal Ingrisi History of the World, which endeavors to show the enduring link between the colonial state & top banks & companies in Sri Lanka today, such as Standard Chartered, HSBC, Keells, Hayleys, etc. These details date the rise of England’s merchants & agency houses, their forever-war-making state, which enabled the trade in chattel slavery of Africans, the indentured slavery of Indians & Chinese, and opium wars. Here then is the rule of a so-called aristocracy in England & their colony Scotland, which continues to this day in their colonial import-export plantation economy (especially Peninsular & Oriental Steam Navigation Co or P&O), whose corporate media has been one of the main architects of the charges of so-called ‘corruption’ in Sri Lanka, and the so-called promoters of the myth of the ‘Chinese Debt Trap’ via Hambantota.

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‘Societies that live closer to the equator are warmer.

Why are they also poorer?… People are not lazier,

they’re just less productive in higher temperatures.’

(see ee Economists)

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So insists a recent article headlined, Why Warm Countries Are Poorer. Yet, as SBD de Silva searingly argues, such climatic theories have always been ‘part of an ideology which rationalizes & naturalizes an existing social & economic order.’ This ee Focus continues Chapter 2 of SBD’s classic The Political Economy of Underdevelopment, where he details how at the ‘birth of capitalism’, the plantation colonies had first depended on white indentured labor, whose conditions were no better than the enslaved Africans they later came to depend on. SBD also suggested the various reasons why these white servants ‘precluded a uniform standard of treatment’, conditioning the ‘institutional basis of the plantation economy’, and giving rise to ‘absentee interests and enslaved labour’. He shows how ‘employment patterns & their economic roles’ determined the relations between workers, drawing from examples across the Americas (Canada, Puerto Rico, etc), Asia (Malaysia), Africa (East, South & West), and the Pacific (New Zealand), etc. The later division of the world between settler & non-settler colonies were also based on the ability of peoples to resist – security being a ‘a paramount concern’. There was also the strong economic competition from other merchants, peasants & workers. The promotion of a ‘structure of race relation… made manual labour degrading’ for whites in some non-settler colonies.

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ee Focus also continues Gustavus Myers’ History of Tammany Hall, about that infamous political machinery parading as a charity, as many NGOs do today. Myers here describes the inevitable concentration of power in one or a few individuals, and the art of ‘bossing’, recruiting compliant politicians, officials and workers while pretending to be honest and efficient. Denouncing ‘corruption, extravagance and waste’, while demanding kickbacks for contracts to supply municipal necessities such as water, roads & railways. Yet the age of kings is long over, as modern ‘princes’ operate through corporate boards or political vanguard parties, albeit through tight cadre networks…

Contents:

NPP Leaders are Anti-Western & Marxist: So says the USA