Sometime
in the year 1992, an Economics student at the University of Peradeniya
confessed confusion over a comment by Dr S B De Silva regarding
multinational corporations. Apparently he didn’t have an issue with MNCs
and the student had been shocked. Elaboration cleared it all up. What
he had meant was that it doesn’t really matter, strictly in an economic
sense, who rakes up the profits from a capitalist system; surplus value
is anyway extracted and the worker is exploited. Whether the profiteer
is white or black, an MNC or a local, is therefore irrelevant.
What’s
the relevance of all this, though? Relevant in the context of Sri
Lanka’s current economic crisis, nay meltdown, and the search for
succour, with experts and politicians out-screaming one another with the
acronymic mantra, ‘IMF, IMF, IMF!’ Envoys of all hue are being sent, it
is reported, to various countries. Foreign delegates are a-visiting,
pledging friendship and support.
The bucks aren’t really flowing
though, at least not in volumes that can ease burdens or relieve
anxiety, never mind rebooting the system and setting the country back on
its proverbial feet. Through it all there is a discernible hope-slant
towards the USA-led sections of the international community and of
course the US-controlled multilateral (sic) institutions, the UN system
and the Bretton Woods Institutions. Relevant happy-pills, so to speak,
are being talked of, predictably predicated with misbegotten economic
theories and uttered with appropriate tones of humbleness. It’s a
‘dollar crisis’ after all, or rather the absence of dollars.
Leaders
cannot be faulted or rather their dollar-fixation is understandable.
After all, that's all they’ve known when it comes to external
assistance. Dollars, pounds and of late euros. After all, leaders as
well as their advisors have for decades worshipped politically-motivated
and ideology-laden neoliberal economic theories that are less outdated
than intellectually untenable. For years. No, decades. Many of them, no
doubt, have personal ties with North America. It's almost as though
they’ve internalised northamericanism to the point that they, like the
vast majority of North American kids, are pretty much ignorant of the
world outside that continent. China and Russia for example exist only in
terms of a black-balled list.
The world is not flat though.
Neither is it static. The truth rises regardless. The long twentieth
century of American domination is ending or, according to some, has
ended. Prime Minister Ranil Wickremesinghe himself admitted a few years
ago that Sri Lanka would have to look towards the East.
And yet,
even those who talk of system-change still bank on the IMF, which is
essentially a prescription for kicking the can down the road. The centre
of global gravity has shifted and those who are in denial are the last
that anyone should go to for help. If not anything else, the very fact
that US belligerence succeeded in driving a knife into its own economic
heart by imposing sanctions on Russia following the invasion of Ukraine.
Shiran Illanperuma in an article in newswire.lk
titled ‘Eurasian integration is a prerequisite for de-dollarizing Sri
Lanka,’ has detailed the relevant history pertaining to the rise of
petrodollars and the steady decline in dollar-hegemony. The world is
fast diversifying away from dollar-dominated assets, he argues, in order
to manage economic and geopolitical risks. It’s worth quoting:
‘In
2019, Russia halved the dollar-denominated share of their forex
reserves, opting to expand Euro, Yuan and gold holdings, which now
comprise around 90% of Russia’s reserves. Meanwhile, China has been its
US treasury holdings since 2015, opting instead to lend to developing
countries through the Belt and Road Initiative (BRI) and accelerate
Eurasian economic integration. By 2021, IMF data showed that the US
Dollar share of global reserves had dropped to its lowest levels since
1995. According to a 2021 survey by London-based think tank OMFIF, 30%
of central banks planned to increase their holding of Yuan, while 20%
planned to reduce their holdings of the US dollar.’
Shiran
argues that Sri Lanka can’t really de-dollarize despite strong ties with
the de-dollarizing bloc, Russia and China, because the export address
is essentially ‘West.’ Fair enough. One reason is that Sri Lanka has
never explored other markets, because just like leaders, industrialists
are geographically challenged. They just don’t see Russia or China. Or
India, one might add. At the same time, given the current crisis, we are
in a situation where production is grinding to a halt. If there’s
nothing much to export, then fixations or lack thereof regarding export
addresses cease to matter.
Of course the US, EU and the UK will
have none of it. Our leaders or rather their advisors would be wary of
venturing along untrodden paths. India, in a way, might be less bullish
about policy preferences since India has committed herself to a policy
regime that de-dollarizes without uttering the term. If India so loves
Sri Lanka, as Indian leaders, diplomats and visiting dignitaries are
fond of saying, then India would be honor-bound to protect Sri Lanka if
the US, EU and UK try to arm-twist policy-makers into continued
dollar-submission.
But forget India. Who has the money? The UK,
US and EU? No. Who has oil and gas? The US, UK and EU? No. Who is
willing to help at this point? The UK, US and EU? No. Who has helped
(and not incapacitated Sri Lanka’s efforts to wean herself from
dependency)? The US, EU and UK? No.
So, why not China and
Russia? The bad boys? Is that the objection? Well, what’s the
difference, S B De Silva would have certainly asked. As Shiran points
out these countries have had long histories of friendship with Sri
Lanka. They’ve not arm-twisted or sought to mangle us in international
forums. Anyway, they call the shots now, whether we like it or not.
How
about existing debt, did someone squeak? Yes, there is existing debt.
Compensation for the loot is yet to be paid. The loan-sharks can be
directed to the British, Portuguese and Dutch. How about the fact that
we are exchanging one system of dependence to what would be a different
system of dependence? As mentioned, one can respond thus: ‘what’s the
difference except the first set is broke and the other set is not; the
first will play hard ball and the latter have not and may not; the first
is struggling and the other has the resources.’
But why be
dependent at all? Well, look around you. We need not have come to this,
but we have. We opted to party on borrowed bucks for decades. We didn’t
develop our industries, we opted for an agricultural policy that
enslaved us. We embraced an import mafia. We can turn all that back, but
that will take us a lot of time. Should make the effort, but there’s an
‘in the meantime’ that we have to contend with.
The aragalists and would-be champions of the aragalaya aren’t saying #dedolarizenow though. Makes one wonder, does it not?
malindadocs@gmail.com
[Malinda
Seneviratne is the Director/CEO of the Hector Kobbekaduwa Agrarian
Research and Training Institute. These are his personal views.]
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