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| Sunday, 19 December 2004 |
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Debt salesmen and economic holocaust in Sri Lanka - Part V : Raids by debt salesmen Solemn Thoughts by Wendell Solomons (Continued from last week) To kick off raids on social assets, a first target was chosen in Sri Lanka. The chosen object was a reservoir development scheme - the Mahaweli Project - designed a decade previously by a UN engineering team. By 1968 the UN Special Fund/FAO team had planned construction to be staged step-by-step during 25-years. That would reduce heavy direct costs and provide adequate time to moderate the side effects of environmental intrusion. In 1977, however, the time span for the project was shrunk to 9 years by government. That let Friedman's "Engine of Progress" run at full speed. Besides the astronomic increase of cost - a foreign debt to be repayed by the tax-payer - the rush provoked significant environmental damage. In this rush, free-booters put up shingles overnight to become 'dam constructors,' 'equipment suppliers,' 'transport' and other trades. The middlemen, who included principals as remote as a printing establishment operator, creamed off profit while overseas firms did the principal dam construction. If staged as the UNSF/FAO team recommended, the massive project might have helped not a printer but local, genuine engineering construction firms expand their skills, know-how and equipment base. During the decades from 1977, city-state Singapore (which sent in children for education in Colombo in the 1950s), achieved classification as a developed country. Meanwhile, Friedman's model was imposed on Sri Lanka, through which poisoning of the community well occurs. In August 1998, Milton Friedman had this to admit in a CNN interview about the agenda which his own students practice at their desks at the IMF: "We speak about the IMF bailing out ... Thailand; the IMF isn't bailing out Thailand. It isn't bailing out the poor people in Thailand now suffering from the recession they're in. It's bailing out the bankers in New York and in London, and Berlin who made loans to Thailand." With every crisis and every induced increase in the country's debt, Friedman's debt salesmen at the World Bank and IMF gain still more latitude to arm-twist Sri Lanka. From 4% interest in 1950, business firms had to pay above 20% in year 2000 for money from banks. It feels as if the pawnbroker, by the intention of Friedman's salesmen, broke through the roof to confound the growth of self-reliant business in Sri Lanka. A calm returned to the island after two decades of civil war. This war was preceded and accompanied throughout by the fanfare of economic-reform quackery. During the lull in civil war, from year 2002 the Chicago Boys in the World Bank and IMF went out again trumpeting the same music of Friedman's reforms in Colombo. In their scam, "privatisation" is a boomerang that rebounds on the private sector itself in higher payroll costs for medical and transport outlays, which cannot be feasibly financed through borrowing at the bank. Yet, most of all, morale in the individual firm is harmed by incitement to spit in the community and the company's own well. Friction and envy affect cooperation and productivity at work and therefore - customer service. As end result we find that for the past quarter century the Chicago School has been promoting through its macabre salesmanship, the dependency of the country - both public and private sectors - on borrowings from outsize foreign merchant banks. The formula makes small David depend on Goliath. Yet, there is more. Since the IMF serves as helpmate to outsize banks (in Friedman's own estimation) these banks gain every opportunity to access information in Washington DC inside the IMF on forthcoming interventions (Dr Mahathir Mohamed highlighted the wiles of money brokers.) Goliath gains an unfair opportunity to raid country currency markets and through insider trading, in Brazil money was once being siphoned overseas at the rate of $ 300 million a day. To take Japan and Singapore, to settle import bills the natural resource sparse countries pay their way through exporting goods and services. In Sri Lanka the privatisation scam serves one more purpose still. The incitement to poison the well dissipates the energy of business and government. It harms synergy. It removes the opportunity for focus by Sri Lanka's 19 million population on a group of goods or services that can be competitively exported by a population of its size. The limits of reinforcement of stupor are being reached. So as to renegotiate debts induced by 25 years of poison-the-well prescription, a heavily dosed Sri Lanka must awaken and stand sentient on both feet. Millennia of history must remind the island to safeguard its domain from more of the lethal calamities it has experienced. Concluded |
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