by Tamara Kunanayakam Courtesy The Island
Economist, Chairperson – UN Working Group on the Right to Development (2011 – 2015), and former Ambassador/Permanent Representative of Sri Lanka to the UN at Geneva
(Based on a Public Lecture at the University of Colombo, adapted for The Island)
Sri Lankan sovereignty – its supremacy in domestic policy and its independence in foreign policy – is under a two-pronged attack.
In Sri Lanka, the neoliberals seek physical appropriation of territory and all that it contains, targeting the very substance of sovereignty and independence – the inalienable right of the people to full and permanent sovereignty, including possession, use and disposal, over all their wealth, natural resources and economic activities. Without permanent sovereignty, there can be no independent domestic or foreign policy; without it, independence and sovereignty are but empty shells.
At the UN Human Rights Council, their ideological counterpart, the US neoconservatives lead the attack. US-led resolution co-signed by the Sirisena-Wickramasinghe Government legitimises unilateral intervention in its internal affairs and permits instrumentalisation of the UN Office of the High Commissioner for Human Rights to draft laws that facilitate appropriation and provide a long-term guarantee.
The larger objective is gaining control over the strategically located island to maintain US global hegemony by combatting the reemergence of a potential rival identified in the 2018 US National Defense Strategy as the reemergence of long-term, strategic competition by China and Russia, not terrorism.
Sri Lanka is fast losing its economic sovereignty. Policy choices are being ceded to the US Administration, IMF/World Bank, Western aid agencies, corporate-backed think tanks, transnational corporations, and a small clique of legal and financial consultancy firms in the multimillion-dollar privatisation business, giving advice, then profiting from that advice. People and nation have become dispensable commodities; their labour, wealth, natural resources, economic activities are on auction with foreign bidders determining their worth.
Sri Lanka is meekly following Washington further down the destructive path of neoliberalism, which, four decades later, has failed to bring about the promised wellbeing for all. According to the 2018 World Inequality Report, global inequality has grown since 1980 with the top 1% increasing their annual income by 205% and the top 0.001% by 636%, whereas average annual wage of the bottom 50% has stagnated. A 2017 Oxfam index ranks Sri Lanka 138th out of 152 countries in terms of relative commitment to reducing inequality, worse than Haiti.
Even ardent promoters of neoliberalism admit it has failed. On the 2008 financial collapse, David Rothkopf, a former senior US Commerce department official said, “This is a watershed. This is the end of 25 years of Reagan-Thatcherism, ‘leave it to the market, less government is better government’. That is over – period.” Martin Wolf, economic guru of Financial Times, called the day Bear Stearns collapsed “the day the dream of global free-market capitalism died.” French President Sarkozy agreed, “(The) idea of an all powerful market without any rules and any political intervention is mad. Self-regulation is finished. Laisser faire is finished. The all-powerful market which is always right is finished.”
The myth of the private sector being more efficient than the public sector has also exploded. The most important study on the efficiency of all European State enterprises privatized between 1980-2009 revealed they performed worse than those that remained public. A 2015 UNDP study found no model of ownership (public, private, or mixed) intrinsically more efficient than the other. iA telling case is British Metronet Rail, a Public Private Partnership (PPP), which became insolvent before the 5-year deal ended and was brought under court administration, costing the public over £400 million.
The role played by the Yahapalana partners in this onslaught is not a matter of bad management, bad governance, incompetence, incapacity, or an absence of vision. They have been placed in the positions they occupy precisely because of a shared vision.
The neoliberal project
The neoliberal project, a revival of 19th century laisser faire ideology, has its origins in the Mont Pelerin Society (MPS), a secretive organization founded in 1947 by Friedrich von Hayek of the Austrian School of Economics, with Milton Friedman of the Chicago School, later Economic Adviser to US President Reagan, Allan Walters, who became Chief Economic Adviser to British Prime Minister Margaret Thatcher, other neoliberals, members of the US oligarchy and European aristocracy.
Its project is Hayek’s globalist vision – an end to the constitutional nation-State and the global expansion of the oligarchy’s interests unhampered by State sovereignty. A supranational world government, as expressed in the International Paneuropean Union, would replace the nation State, a vision shared by the Nazis. Deregulation and liberalization will render impossible any State action on behalf of nation and people, giving free rein over the national economy to global corporate interests. It will no longer have control over the value of what the nation produces, its wealth, natural resources, economic activities, workforce, currency, or even be able to fulfill its international human rights and labour obligations.
The State will be transformed radically from an entity in which popular sovereignty is vested and duty-bound to protect the interests of people and nation into one that serves the interests of a small oligarchy, becoming more not less authoritarian. Its role will be to deregulate all legal and administrative controls that interfere with their operations, and then re-regulate to protect them from popular anger. The most discussed solution is imposing constitutional limits to popular power as best guarantee. The terms “rule of law” and “good governance” in HRC Resolution 30/1 and in IMF/World Bank/Western conditionalities refer to this new system of law and government. In Sri Lanka, it is known as Yahapalanaya.
Civilising mission
The project is advanced as a civilizing concept, associating Western civilization with progress and development, equating “big government” with totalitarianism. Today, in the human rights language, this civilising mission is translated as Responsibility to Protect. Legitimising their worldview as “common sense,” neoliberals have imposed the meaning of terms such as productive, progressive, scientific, modern, independent, freedom, etc. from the point of view of the key actors in global markets.
Infiltrating Government
MPS shapes economic policies by infiltrating and controlling governments through a powerful elite-led global policy-planning network of over 500 think tanks and numerous business schools, corporate-backed Foundations, media, and University economics departments transformed into ideological centres of neoliberal strategy. Funded mainly by US corporates and North American Governments, they produce neoliberal ideas and language under cover of supposedly impartial hubs of expertise propagating them through the mass media; training of business, political and social leaders, economists, journalists, and other professionals; drafting laws for parliamentarians, ministers, and heads of State; preparing publications for conferences and seminars; and introducing speakers for meetings and social encounters.
Transfer of power from public institutions to global corporates
Past decades have seen a massive transfer of wealth, resources, and power from public institutions to foreign corporates. Studies show the most significant shift has not been from public to private, nor State to market, but from local and national political agencies to global concentrations of economic power. In 2016, the 10 largest TNCs earned more than all countries in the world, their total worth US 285 billion equivalent to the wealth of 180 countries;ii and, 737 global banks, insurance companies and industrial groups controlled 80% of the value of all the world’s companies.iii
Corporate influence especially over countries of the South manifests itself through its sheer economic power; its ability to manipulate transfer prices through intra-company trade, inflating import prices and underpricing exports also to avoid taxation or circumvent limits to profit repatriation; its ability to wield influence in the political affairs of sovereign States – directly or indirectly, and when necessary, even obtain Western intervention to further or protect their interests. As a result, States’ ability to protect and promote the public interest has been significantly undermined, and citizens’ authority usurped.
MPS influence in Sri Lanka
An eminent Sri Lankan MPS member is Prime Minister Ranil Wickremesinghe, under whose influence it held a Special Meeting in Kandalama in 2004, when he was Prime Minister.iHis influence over policy needs no comment.
The two most visible MPS linked think tanks in Sri Lanka masquerading under the guise of impartiality, providing cover for the political establishment and profoundly influencing policy changes and far- reaching reforms – including Constitutional – are the Institute for Policy Studies and Advocata Institute. They illustrate how Western governments, corporates and their think-tanks function together to hijack State sovereignty; how foreign-funded, foreign-controlled entities unaccountable to people and State penetrate Government and work from within – without any impediment – to implement an alien agenda. They highlight the importance of knowing the sponsors and donors of reports from alleged think tanks that advocate sale of the country, and the lobbying connections of its authors.
IPS, Sri Lanka’s main economic policy think-tank claims it is “independent,” but only from the Sri Lankan State, not Western governments or their oligarchs. When established by an Act of Parliament in 1988, it was located in the Finance and Planning Ministry, but co-financed by the Dutch Government and run by a Resident Coordinator from the Dutch Institute for Social Studies. In 2006, it announced it was moving to full financial independence, but signed an agreement with the Dutch Government to finance construction of a new office building. Today, its direct and indirect donors have expanded to include Canada, the UK and Norway, US corporates, banks and equity funds channelled through the Hewlett Foundation and Bill & Melinda Gates Foundation. They finance its core activities via The Think Tank Initiative, a project of the Canadian government-owned International Development Research Centre to influence policy changes in the South by promoting the establishment of think tanks.
IPS plays a critical role for the Government, providing cover for unpopular policies and external involvement. In April 2015, only three months after his own appointment, Prime Minister Wickremesinghe appointed co-Mont Pelerinist and Hayek Medalist Singapore-based Professor Razeen Sally as IPS Chairman. Sally is Adjunct Scholar at Cato Institute, the most prominent US neoliberal think-tank founded by MPS member Ed Crane. He is also Founder/Co-Director of the Cato-related European Centre for International Political Economy linked to the most influential US neoconservative think tank Brookings Institution.
Sally and other Members of IPS Governing Board simultaneously hold key positions in Government. In July 2017, Finance Minister Mangala Samaraweera appointed Sally Senior Advisor. Indrajit Coomaraswamy is Governor of the Central Bank; M.I.M. Rafeek is Secretary, Policy Planning and Economic Affairs Ministry; and S.S. Mudalige is Director General, National Planning Department. Connected to the apex of State power is Sarath Rajapathirana, President Sirisena’s Economic Advisor, a Visiting Emeritus Scholar at the neoconservative American Enterprise Institute regarded as the “intellectual command post of the neoconservative campaign for regime change in Iraq.”
IPS was involved in organising the January 2016 Sri Lanka Economic Forum under the patronage of President and Prime Minister, bringing together – directly or indirectly – the Harvard University’s Centre for International Development, which works with the PM’s Office, BOI and the Development Strategy and International Trade Ministry, George Soros and his Open Society Foundation, the US Administration, and Corporates to prepare the Government’s three-year economic development plan that became Vision 2025. The PM’s Office declared it set the stage for in-depth analysis and discussion on developing government policy along areas identified by the Harvard team led by the Director Prof. Ricardo Hausmann. Subsequently, the PM’s Office and Finance Ministry reportedly sent teams to Harvard for a study course.
The Harvard operation, kept secret until the last minute, was funded by multi-billion dollar hedge-fund crook George Soros, whose “spiritual mentor” Karl Popper was an MPS founder. Soros became known as the world’s premier currency speculator after demolishing the British monetary system in 1992 in a single day and pocketing more than US$ 1 billion at the expense of the British taxpayer.
IPS aggressively promotes the sale of public assets and State owned Enterprises (SOEs) to Western corporates and replacement of Public Utilities Commission Board members with so-called “independent directors,” meaning foreign, because according to Sally, “having independent anybody in Sri Lanka is very difficult at the moment.” In an interview to Advocata Institute, Sally declared that the “first best solution to the running of SOEs in Sri Lanka is to have a timetable to privatize.” To combat popular opposition, he recommended starting with partial privatization putting into a holding company enterprises that operate in a commercial sphere, then “gradually” increasing private sector stakes until “the time is right politically” to move into majority private ownership.
Advocata Institute
Advocata, another influential think-tank linked to MPS and the US Administration, was launched in May 2016 at the Lakshman Kadirgamar Institute with as Chief Guest the then Deputy Minister of Public Enterprise Development Eran Wickramaratne, today State Minister of Finance. Its inaugural report, The State of State Enterprises written before the institution existed, disclosed the Advocata project – sale of all SOEs, non-strategic and strategic. It argued reform should go beyond the 55 strategically important SOEs, which, it claimed, had made enormous losses; a comprehensive productivity study should determine whether to shut down, privatise or hold under a holding company.
Three months later, Development Strategies and Trade Minister, Malik Samarawickrama, used Advocata findings to justify “far-reaching privatisation plans.” Atlas Network, founded by MPS member Antony Fisher to which Advocata belongs, declared it was a commitment to privatise strategic and non-strategic SOEs despite “immense political risk.” It claimed Advocata was “widely influential in this ongoing reform process” and had “spurred” the move to privatise, its report becoming the Government’s “go-to reference” on SriLankan Airines giving “the final push needed to get the government to put the struggling business up for sale.” Sri Lanka was among 10 countries Atlas considered it had “invested successfully” and won.
One month later, Cabinet approved the Prime Minister’s proposal to hire the US firm McKinsey and Company for US$ 2,3 million to establish a Central Programme Management Unit in his Office for “accelerated economic transformation” to monitor projects fast-tracked under a new Development (Special Provisions) Bill that would give sweeping powers to restructure and transform the economy. He proposed that Nika Gilauri, former Georgian Prime Minister under the pro-Washington neoliberal regime, be senor expert on the project.
Advocata recommendations for Budget 2017 included ‘reactivation’ of so-called Dead Capital, a doctrine articulated by Peruvian economist Hernando de Soto, MPS member associated with Advocata partner, Property Rights Alliance. It was referring to the some 987,000 acres vested in the Land Reform Commission with special mention of “prime real estate blocks” in major cities like Colombo occupied by schools, government ministries, and other facilities, which “greatly outweigh their economic value.” Foreign takeover would include fixed assets occupied by the military through downsizing.
‘Reactivation’ would involve obtaining the value of Dead Capital through accounting property rents at market value and establishing a Land Asset Sales Programme “to dispose of surplus or underutilised land” to be run by “an independent body free of political influence to minimise corruption.” Vision 2025 outlines a programme of legal reform on the lines proposed by Soto.
To accelerate the process, Advocata organized a forum in October 2017 to coincide with the release of the annual Economic Freedom of the World Report by Canada’s Fraser Institute, in which Sri Lanka was given a low ranking, primarily because of “weaknesses in the legal system and property rights.” Atlas and Fraser, both think tanks founded by MPS member Antony Fisher, partnered the event. A month later, the Central Bank Governor announced legislation to establish a land bank, consideration of land titling, removal of “archaic” laws, and a comprehensive review of land use/crop mix.1
In February 2018, a delegation from the US-based financial advisory and asset management firm Lazard visited Sri Lanka to discuss divestment to foreigners. As privatization advisor, Lazard involves both its advisory services branch and asset management branch. On numerous occasions, Lazard has undervalued the price of a company, enabling the latter to purchase the stock at low prices and sell it for a considerable profit, as it did with UK’s Royal Mail and Spain’s Airports and Air Traffic Management.
A few weeks ago, on 16 May, Advocata – not IPS – invited
Harvard Centre Director Prof. Hausmann to speak on Accessing knowhow for development, joined by McKinsey & Company hired earlier by the Prime Minister. Hausmann was on a civilizing mission: “Sri Lanka may have the talent and the people for the current economy, but does it have the talent and the people for the economy it wants to have?” he queried. In the arrogance characteristic of the Western colonizer, his argument for reforming Sri Lanka’s immigration laws was, “it is often easier to move brains to new countries than to move new know-how into brains.”1
Hausmann’s success stories to underpin the argument were the Big Three US automakers – Ford, GM and Chrysler, and Silicon Valley. He didn’t say that the US government had to bailout out the Big Three for US$
80.7 billion during the 2008 -2010 economic crisis, effectively nationalising GM and Chrysler, that car sales are down again and that President Trump is pushing for 25% tariffs on car imports! Nor did he say that the 1992-2002 Silicon Valley dot.com bubble led to the stock market crash and that the tech bubble today is larger than in March 2000 with venture capital-funded start-ups in some cases overvalued by as much as 50%.
Advocata’s connections to the US Administration and MPS are direct and indirect. Number One on its Board is Franklin Lavin, who served as Reagan’s Political Director and Deputy Executive Secretary on his National Security Council Staff under National Security Advisers Carlucci, a former Deputy Director of the CIA, and Colin Powell.
An influential Board member is Prof Suri Ratnapala, who was on the MPS Board of Directors from 2008 to 2010. He is on the panel of intellectuals appointed by the Prime Minister advising the Steering Committee on the new Constitution. Another link to MPS is Fredrik Erixon who, with IPS Chairman Sally, co-founded and co-directs the European Centre for International Political Economy. Yet another is senior Visiting Professor of Economics Chris Lingle.
Advocata belongs to the Washington-based Atlas Network of nearly 500 organizations in 93 countries founded by MPS member Antony Fisher with the support of Milton Friedman and Margaret Thatcher. Corporates are an important source of funding and think tanks associated with it are discretely funded by the US State Department and National Endowment for Democracy (NED) chaired by Judy Shelton, a senior fellow at Atlas and adviser to Trump’s Presidential campaign.
The Network functions as an extension of US foreign policy and has been involved in regime change and destabilisation in Latin America, and elsewhere. In Honduras, it played an important role in the military coup against Manuel Zelaya; in Argentina, it helped topple Cristina Kirchner; in Venezuela, it supported the 2002 military coup against President Chavez and protests against his successor, Nicholás Maduro; in Brazil, it diverted public anger away from a bribery scandal involving all major political parties to focus on President Dilma Roussef, leading to her impeachment in 2016.
Millenium Challenge Corporation: US Government in PM’s Office
Another vehicle for intervention in Sri Lanka is the Millennium Challenge Corporation (MCC), which has a Project Unit physically located inside the Prime Minister’s Office within the strategic Policy Development Unit.1 It claims to be “independent,” but is a US government body chaired by the Secretary of State with, on its Board of Directors, the Treasury Secretary, USAID Administrator, and US Trade Representative.
MCC manages the Millenium Challenge Account, which is primarily a policy initiative to influence the regulatory environment and rule of law in the South.
Given its strategic location in the PM’s Office, the question is posed whether and to what extent it is involved in shaping the country’s economic and trade policy and drafting Vision 2025, unveiled only a few months after Cabinet approved establishment of the unit.
MCC’s so-called partnerships are based on coercion and prior implementation of political conditionality unlike traditional foreign aid conditionality, which is based on actual “good governance” results. Also unlike traditional aid, MCC assistance involves an annual re-selection process that permits coercion on a permanent basis, depriving the State of space for sovereign decisions.
The indicators used to measure performance are themselves highly political. For instance, the Heritage Foundation, one of the most influential US think tanks co-founded by Mont Pelerinist Ed Feulner, who was among the first to be appointed on Donald Trump’s transition team, provides data on trade policy
. Freedom House, which receives 80% of its income from the US Government and has carried out destabilization missions under the CIA against legitimately elected governments, evaluates “ruling justly.” Other institutions used by MCC include the World Bank and the top neoconservative think tank Brookings Institution.
An alternative – possible and necessary
Neoliberals think only in terms of neoliberal dogma, as do religious fundamentalists, they have no critical thought. In the words of French philosopher Paul Nizan, “The bourgeoisie working for itself alone, exploiting for itself alone, slaughtering for itself, must believe it works, that it exploits, that it massacres for the final good of humanity. It must make believe it is right, and must also believe it.”
The scale of the crisis of legitimacy and effectiveness of their recipe in Europe and the US must compel us to reflect on alternatives, to recognise that human beings not profit matter, that only a return to principles upon which our sovereignty and independence are founded will enable us to determine our destiny. International law and policy widely recognise that political independence can be only assured through economic independence, possible only if people can exercise their inalienable right to own, control and develop – on a permanent basis – all their wealth, natural resources, and economic activities in the national interest and for their own development and wellbeing. All States are duty bound to respect the right and remove all obstacles to its realization.
Already in the 1986 UN Declaration on the Right to Development, the international community recognised the widespread failure of the Western, free-market, export-led, growth-centred model, based on foreign debt, to achieve social progress and wellbeing for all. It rejects the notion that Western civilization defines progress and development and calls for a development strategy in which the human person and people are central subjects not objects, not just workers and consumers, but architects of their destiny. There is no single model; it cannot be imposed from the outside. Social progress can be achieved only through solidarity and cooperation – not competition, and must be based on social justice and equality, not profit and growth.
There is an undeclared, covert war against Sri Lanka, conducted by a Holy Alliance between Yahapalana, the US Administration, and the corporate world. The result will be more deadly than the almost 30-year-war against LTTE terror and separatism. Failure to resist will result in us losing total control over our territory, wealth, natural resources and economic activity. Our national identity and culture will be dismantled, our ability to determine domestic policy and foreign policy will be lost, and along with it, our independence and sovereignty.
Many things can be negotiated, but principles, never. Sovereignty, independence, and territorial integrity are non-negotiable!
In such Article, I detailed how certain dubious and ad hoc adjustments had been made to the Nominal GDP and GDP Deflator figures of several years in order to change the Nominal and Real GDP Growth rates in general,and to increase the Real GDP Growth Rate for 2016 from 2.2% to 4.4%, in particular.
Over the past three years, under the so-called “Good Governance” regime, the GDP Deflator has become a widely fluctuating macro-fundamental, and Tables 1 to 6 clearly reveal that the GDP Deflator and the Nominal GDP figures have been liberally adjusted (nay, manipulated), to change the GDP Growth figures for 2014, 2015, 2016 and 2017,with gay abandon.
As could be seen from Tables 1 and 2, the Nominal GDP Growth and GDP Deflator for 2014 have been changed by wide margins, four times in three years!
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