{"id":142372,"date":"2024-06-09T14:42:03","date_gmt":"2024-06-09T21:42:03","guid":{"rendered":"https:\/\/www.lankaweb.com\/news\/items\/?p=142372"},"modified":"2024-06-09T14:42:03","modified_gmt":"2024-06-09T21:42:03","slug":"robbing-the-state-banks-destroying-the-co-op-movement-in-sri-lanka","status":"publish","type":"post","link":"https:\/\/www.lankaweb.com\/news\/items\/2024\/06\/09\/robbing-the-state-banks-destroying-the-co-op-movement-in-sri-lanka\/","title":{"rendered":"Robbing the State Banks & Destroying the Co-op Movement in Sri\u00a0Lanka"},"content":{"rendered":"

e-Con e-News<\/a><\/em><\/span><\/h2>\n\n\n
\"\"\/<\/figure>\n\n\n\n

blog: eesrilanka.wordpress.com<\/p>\n\n\n\n

\u2018Before you study the economics, study the economists!<\/em>\u2019<\/p>\n\n\n\n

e-Con e-News 02-08 June 2024<\/strong><\/p>\n\n\n\n

Next year will be the 100th<\/sup> anniversary of the so-called \u2018Chetty Crisis\u2019 of 1925<\/strong>, when a Chettiar moneylending firm collapsed in Lanka, and English banks stopped all loans to Chettiars. They, in turn, foreclosed on Sinhala borrowers. \u2018Many local landowners lost property to Chettiars, with many a Ceylonese debtor jailed.\u2019 So the story goes\u2026 It was a harbinger of the 1929 US Wall Street collapse and depression \u2013 capitalism would have to be resurrected again by another \u2018World War\u2019.<\/p>\n\n\n\n

     Meanwhile, the colonial import-export plantation oligarchy<\/strong>, and the international capitalist infrastructure like the World Bank & IMF<\/strong> which would go on after 1945 to uphold such a wasteful archaic and crisis-ridden system, continues to this day<\/strong>.<\/p>\n\n\n\n

*<\/p>\n\n\n\n

England\u2019s King Charles this week especially thanked \u2018Sikh, Muslim & Hindu soldiers\u2019 (in that order) who had been killed defending London during WW2. This \u2018multicultural message\u2019 was especially transmitted by their \u2018ethnic media\u2019 outlets across the planet. He understandably forgot to mention his Hanoverian relatives who were collaborating with Nazi Germany at the same time. But he also forgot to add Buddhists and the rest of the 10,000s Sri Lankans also recruited as workers & soldiers. Of course, he couldn\u2019t very well recall Gratien Fernando, who was among the only soldiers officially executed for mutiny against English colonialism during that English war in Asia.<\/p>\n\n\n\n

     It is yet another English war to be remembered<\/strong> if only because, despite their rhetoric on free trade every now and again, they happily restricted imports & exports, wages & prices<\/strong> (including guaranteed fertilizer & minimum prices to cultivators), guaranteeing food rations, etc. A war where the English & their allies are trying hard to forget how they in reality were rescued by the Red Armies of the USSR & China. <\/p>\n\n\n\n

*<\/p>\n\n\n\n

ee<\/em><\/strong> recalls the 1925 Chettiar Crisis because great silences deafen and reverberate as great changes are being pronounced<\/strong> & sparked, and it\u2019s not just electrical charges, and selling off national lands & seas. The government is going to sell 20% of the shares of such State banks<\/strong> as the Bank of Ceylon (BoC<\/strong>) and People\u2019s Bank (PB<\/strong>). This should further close off rural people\u2019s access to affordable credit, alongside hikes in interest rates. This should throw (mainly female) borrowers deeper into the armpits of private loansharks. We shall however expect more glossy advertising promising gender equality, columns deploring abuse and lack of diversity, and headlined random news about crime rates, which like prices, are always rising.<\/p>\n\n\n\n

     The People\u2019s Bank<\/strong> (PB<\/strong>) was primarily set up to serve the cooperative sector & rural agricultural communities. Multipurpose Cooperative Societies (MPCS) <\/strong>are today facing bankruptcy due to the programmed failure of the PB, whose job it has been to closely supervise and control the rural banking system, recalls Tennakoon Rusiripala (see ee Focus<\/em><\/strong>). <\/p>\n\n\n\n

*<\/p>\n\n\n\n

\u2018For those who have grown up in a village,<\/p>\n\n\n\n

going to the village Multipurpose Cooperative Society (MPCS) was<\/p>\n\n\n\n

part & parcel of life. Apart from the temple, it was the other focal point<\/p>\n\n\n\n

of the village, where the entire village came together\u2026<\/p>\n\n\n\n

Cooperatives can also be called the most localized administrative<\/p>\n\n\n\n

structure, and representatives are elected by ballot\u2026<\/p>\n\n\n\n

There should be more MPCS-owned filling stations,<\/p>\n\n\n\n

so the local community itself can monitor the distribution of fuel\u2026.\u2019<\/p>\n\n\n\n

\u2013 Pramod de Silva, Sunday Observer<\/em>, 3 July 2022,<\/p>\n\n\n\n

Enhancing the Co-operative Movement<\/em> (see ee Agriculture<\/em><\/strong>)<\/p>\n\n\n\n

*<\/p>\n\n\n\n

The current hijacking of the State banks to prevent \u2018lending to the productive sectors of the economy<\/strong>\u2019 is therefore not just any story \u2013 but the<\/em><\/strong> story. It is perhaps not new, or news, but harks back to the colonial policy<\/strong> of preventing investment in modern industry, and then to keep undermining any ensuing attempts to enable productive investment.<\/p>\n\n\n\n

*<\/p>\n\n\n\n

The credit structure<\/strong> in Sri Lanka remained monopolized by \u2018European institutions\u2019 (plantations!) and was operated to aid European investors in the export structure<\/strong>. The \u2018indigenous capitalist class\u2019 had to rely on European commercial banks or moneylending Chettiars. A Ceylon Banking Commission report followed the 1925 \u2018Chettiar crash\u2019, and a colonial state-sponsored Bank of Ceylon was set up in 1938. The Chettiar bankers responded to their diminished role by capturing political power among the local Tamils and Indians, by sponsoring visits by Mahatma Gandhi and Jawaharlal Nehru, etc.<\/p>\n\n\n\n

     But as Philip Gunawardena, Minister of Agriculture & Food (1956-59) came to note early on: The Bank of Ceylon was strangled by the colonial office at its birth, to be \u2018controlled by prosperous lawyers and other sharks\u2019. \u2018The People\u2019s Bank, the so-called successor to the Cooperative Development Bank, established in 1961, became more or less a commercial bank.\u2019 The Agricultural & Industrial Corporation kept fragmenting important land and capital assets, by selling to speculators, aided by the-then Minister of Finance. The Cabinet was also unwilling to hand over the monopoly of importing fertilizer to the Cooperative Wholesale Establishment (CWE). 5 big firms monopolized fertilizer pricing as well as the lowering of quality: Colombo Commercial Co, Baur & Co, Shaw Wallace & Co, Moosajee, etc. And yes, they\u2019re all still around!<\/p>\n\n\n\n

*<\/p>\n\n\n\n

\u2018Institutions catering for long-term credit require more funds<\/p>\n\n\n\n

as their loans are not recovered within a year\u2026<\/p>\n\n\n\n

the main source of finance in the rural sector<\/p>\n\n\n\n

are the private loan agencies, individual moneylenders,<\/p>\n\n\n\n

landlords & merchants. In Ceylon, the debts from private sources\u2026<\/p>\n\n\n\n

could be traced to \u2018undesirable sources\u2019 where the rates of interest<\/p>\n\n\n\n

charged are usurious! The tenant, without an effective cultivation committee,<\/p>\n\n\n\n

and without a multipurpose cooperative that could provide credit,<\/p>\n\n\n\n

was helpless, and had to fall back on the landlords.\u2019<\/p>\n\n\n\n

(ee<\/em><\/strong>, 8 Augst 2020)<\/p>\n\n\n\n

Which is why Multi-Purpose Cooperative Societies bloomed under Philip Gunawardena, and why he was made to resign after insisting on a rural development bank as Minister of Agriculture & Food in 1959, just before SWRD Bandaranaike was assassinated. Which brings us to the latest machinations to preempt a representative government:<\/p>\n\n\n\n

*<\/p>\n\n\n\n

\u2018President Wickremesinghe deployed the military & the police,<\/p>\n\n\n\n

including the Special Task Force (STF), on July 22, 2022,<\/p>\n\n\n\n

to clear the Presidential Secretariat of protesters. And all those<\/p>\n\n\n\n

who were threatening to die for the \u2018system change\u2019,<\/p>\n\n\n\n

they were ostensibly clamouring for, simply vanished into thin air.<\/p>\n\n\n\n

How convenient! And how conveniently US Envoy<\/p>\n\n\n\n

Julie Chung\u2019s trap, too, shut on behalf of Aragalaya?\u2019<\/p>\n\n\n\n

\u2013 Shamindra Ferdinando, ee Quotes<\/em><\/strong><\/p>\n\n\n\n

*<\/p>\n\n\n\n

2022 is another number and name for the return of the IMF, and with a vengeance! Though they have never really left. All these moves to further weaken such institutions as the State banks may explain: the \u2018sudden provocation\u2019 by an unnamed external authority to \u2018reform\u2019 <\/strong>these <\/strong>State-owned Banks (SoBs<\/strong>). Such critics of the SoBs highlight the non-performing loans (NPLs) made to State-owned Enterprises (SoEs).  None of these supposed SoB defects are new. It is also not clear if many of these SoEs are really money losers at all. And it turns out this \u2018sudden provocation\u2019 may be due to the \u2018IMF\/World Bank<\/strong> \/Hired Advisory Firms and\/or some such agency\u2019.<\/p>\n\n\n\n

     Of course, they would rather ignore all those bad loans made to private corporations<\/strong>: Many banks & finance companies are involved in the import of foreign machines & parts. Hence, the unrelenting media clamor, that foreign exchange be spent on importing cars \u2013 some even invoking the tenets of \u2018free trade\u2019. This is not just grim satire, but a komedy of kanatte (as indeed Sri Lanka is a famed graveyard for old Japanese engines).<\/p>\n\n\n\n

     And where are t<\/strong>hese banks\u2019<\/strong> gains invested?<\/strong> The People\u2019s Bank, despite objections by staff, invested in finance company LOLC\u2019s Browns Investments growing sugarcane in Sierra Leone! (Browns at that time recalled how they generate more than 2\/3rds of their profits from their overseas ventures, and \u2018the group has always been fortunate to have the banks in Sri Lanka backing them\u2019 (see ee Agriculture<\/em>, Browns\u2019 Sunbird leads African entry). LOLC is backed by all the so-called US and Euro \u2018development banks\u2019. It is no surprise therefore that the grower Browns has indeed grown, recently declaring itself the world\u2019s largest tea producer after taking over a Unilever Lipton\u2019s operation in Kenya. Meanwhile, Sri Lanka is supposedly encoiled in Geneva and entrapped on Wall Street.<\/p>\n\n\n\n

*<\/p>\n\n\n\n

\u2018Debt restructuring is fraught with difficulties<\/p>\n\n\n\n

given the different interests of the multilateral agencies,<\/p>\n\n\n\n

bilateral donors & commercial lenders. Multilateral agencies<\/p>\n\n\n\n

are exempted from debt restructuring on the basis<\/p>\n\n\n\n

of their claimed preferred creditor status, which is<\/p>\n\n\n\n

being challenged by Sri Lanka\u2019s major bilateral donor, China.\u2019<\/p>\n\n\n\n

\u2013 Ahilan Kadirgamar (ee Economists<\/em><\/strong>, Austerity, Dispossession<\/p>\n\n\n\n

& Injustice: Facets of the Debt Crisis)<\/p>\n\n\n\n

*<\/p>\n\n\n\n

\u2018Without external debt restructuring, you can\u2019t get the next tranche.<\/p>\n\n\n\n

China has to sign a document, the Paris Club has to sign a document,<\/p>\n\n\n\n

& India has to sign a document. But that has not happened: They want<\/p>\n\n\n\n

to see what the deal is with the ISB holders. In my view, the proposals made<\/p>\n\n\n\n

by the ISB holders don\u2019t look at all beneficial to the public of Sri Lanka.\u2019<\/p>\n\n\n\n

\u2013 CTC MP Harsha de Silva, ee Economists<\/em><\/strong>, Middle Class Disappearing<\/p>\n\n\n\n

*<\/p>\n\n\n\n

As if with eyelids splayed out and cut, the country is being forced to gape at a long drama being dragged out in the drag of ironed suits and skirts and uniforms embarking and disembarking at airports and ports to headlines dancing, Will s\/he? Won\u2019t s\/he?<\/em> There\u2019s the question of the constantly dangled IMF\u2019s continuously withheld largesse. There\u2019s the delightful possibility of merchant-dominated elections (the country\u2019s most popular national sport!). It\u2019s all a murder-romance comedy-mystery epic & soap opera (scripted & sponsored by the usual soap importers).<\/p>\n\n\n\n

     17th<\/sup> Coming of the Savior<\/strong> \u2013 The IMF<\/strong> is, after all, a US-dominated institution<\/strong>, and this is our 17th<\/sup> dalliance with the number crunchers of revolving-door Washington & Wall Street. China is asking, why everyone who is involved in this game cannot be treated the same? \u2018China controls just 6% of IMF voting<\/strong> shares despite contributing to 18% of global GDP.\u2019 So what\u2019s the big deal? Apparently, all this has to be examined midst the US & their imperialist cohorts seeking to maintain colonial dominance in the Indian & Pacific Oceans.<\/p>\n\n\n\n

     The capitalist Anglo-Saxon mass media responds to criticisms by turning any & all accusations around on the victim. A prerogative of victory. Savages & Cannibals? That became us. Slavers? In the end, we became slavers too. Drug dealers? We that too. So we can be anything they want us to be?<\/p>\n\n\n\n

     \u2018Debt Trap\u2019<\/em><\/strong> was popularized as an English term, especially by Cheryl Payer\u2019s 1974 book The Debt Trap: The IMF & the 3rd<\/sup> World<\/em>, to illustrate an IMF process to entrap countries, and profit US multinationals. Come the 21st<\/sup> century, the multibarrel English media saturated the term, along with \u2018colonial\u2019 & \u2018imperialist\u2019 to stick it onto China.<\/p>\n\n\n\n

     \u2018Overcapacity\u2019<\/em><\/strong> has taken over from \u2018Debt Trap\u2019 as the latest ideological weapon in the USA<\/strong>\u2019s Biden-Trump trade war against China. They wish to blame China\u2019s industrial subsidies and production capacity for the US\u2019 trade deficit and their supposed inability to reindustrialize their own economy. In this week\u2019s ee Focus<\/em><\/strong> Shiran Illanperuma observes, \u2018Western imperialism is in crisis and can no longer sustain the position of its old labour aristocracy.\u2019 The charge of \u2018Chinese overcapacity\u2019 serves a dual purpose. The Western ruling class uses this to deflect criticism of its own capitalist policies in order to scapegoat China for the supposed destruction of its industrial base. It also allows that same ruling class to resort to protectionism & subsidies<\/strong> on behalf of monopoly capitalists.<\/p>\n\n\n\n

     Illanperuma concludes: \u2018For its part, China is developing technologies that are crucial for the future of humankind<\/strong>. It has done so while the ruling elite in the West gamble away wealth<\/strong> produced by workers<\/strong> through stock buybacks & real estate speculation. It is up to the Western Left to organize workers against imperialism and anti-China chauvinism, and to fight to liberate the productive forces necessary to address the socioeconomic & ecological challenges of this century.\u2019 (see ee Focus<\/em><\/strong>)<\/p>\n\n\n\n

*<\/p>\n\n\n\n

________<\/strong><\/p>\n\n\n\n

Contents:<\/strong><\/p>\n\n\n\n

\n
Robbing the State Banks & Destroying the Co-op Movement in Sri Lanka<\/a><\/blockquote>