Unite to defeat not just LTTE terror but also economic manipulation

by B. N. Premaratne

As the Sri Lankan armed forces steadily advance towards LTTE strongholds, another battle - probably more sinister than the war to liberate the country from the clutches of Tiger terror - is being fought. In contrast to Eelam War IV, however, this is a contest that is much more discreet.

It is being waged on the economic front, and should be of concern to all patriotic and peace-loving citizens for it relates to the question of Sri Lanka’s sovereignty, and our ability to determine our collective future as an independent nation-State.

Ever since President Mahinda Rajapaksa assumed office as the Executive President, Sri Lanka has chosen to re-adopt a foreign policy of non-alignment, with friendship towards all and malice towards none. This was a wise decision taken to safeguard the interests of the country at large and was a clear shift from the decidedly pro-Western foreign policies that have been traditionally followed by United National Party governments. As a result of this, Sri Lanka was able to re-invigorate ties with a much broader spectrum of States, and her economic base was also diversified.

Mavil Aru anicut

And this decision has paid off. When the LTTE was calculating on Sri Lanka’s economic break-down, having impelled the President into waging war by capturing the Mavil Aru anicut in 2006, it was countries such as Iran, China and Pakistan which came to the rescue. Unlike the West which uses a carrot and stick approach to ensure developing countries like ours remain dependent on their aid for generations to come and prevent us from autonomously deciding how development assistance should be utilised, these countries had no such vested interests.

Iranian assistance

As the West slowed down aid and even suspended the GSP Plus facility, thereby threatening to cripple the economy (because of our ‘disobedience’), it was Iran which generously granted a four-month interest free credit to purchase crude oil to the tune of US$ 700 million.

This is equivalent to an interest free outright grant of US$ 700 million to Sri Lanka and was a much-needed boost to the country’s treasury which was already encumbered by the weight of a heavy defence budget.

The battle for economic control is being waged between those who are keen to see Sri Lanka retain her economic sovereignty and those who want her to continue being subservient to the West and their economic hit men. What is particularly tragic is that, among us Sri Lankans are those who are probably in the payroll of certain Western countries and are working against the larger interests of our nation.

Though these agents pretend to be profoundly concerned about the economic welfare of our State, they are in fact determined to promote destructive economic policies, and to deceive the public by spreading misinformation about the country’s economic decisions.

A recent article in a Sunday weekend newspaper is a classic example of this. It has alleged that borrowing from Iran to develop the Sapugaskanda Oil Refinery would push the country into a spiral of debt. What they have deliberately overlooked is the fact that a five-year grace period and 14 years to pay back are major advantages, considering the perpetual inflation and the continuous fall of the purchasing power of all currencies!

Refinery upgrading

The Iranian refinery upgrading and expansion project is not an interest free grant, but a loan at a special interest rate. The market rates of interest vary from LIBOR + 5 per cent and above and no bank in any part of the world would offer at anything less! Iran’s rate is LIBOR + point 5 per cent, which excluding the LIBOR is only 10 per cent of the prevailing market rate. The deal would therefore raise only pro-Western and Western eye-brows!

The article has also criticised the CPC’s decision to expand the refinery up to ‘just’ 100,000 bpd. Calculating on past increases in the annual consumption of refined oil, the article states that Sri Lanka will be consuming 100,000 bpd just three years from now, “barely a year after the refinery is slated to be completed”. The criticism on this point, ignores the increasing role of cheaper alternative energy, such as natural gas.

The forecasts of the CPC’s engineering experts are correct, for the reason that the expanding role of CNG, LNG and LPG in the future has been taken into account.

With the growing importance of natural gas in the industrial sector, and the expanding dual fuel usage in motor vehicles all over the world, the Government has successfully secured Japanese assistance to construct a gas terminal expected to be completed by 2011.

The article has moreover, censured the Iranian Government-to-Government funded project, as being at an “exorbitant cost” and “over-priced”. To justify this argument, comparison had been made with an unsolicited proposal by the US based Global Energy made five years ago.

Today, such a project for a 100,000 bpd refinery cannot be done for anything less than US$ 1,600 million. Going even by the indexes of the Information Handling Group of the Jane’s Defence and Intelligence Group, quoted by the same newspaper with an average increase of the cost of refinery construction being 15 per cent per year, the five year increase would jump over to US $ 1,600 million!

Yet another Sunday paper has referred to the four-month interest free credit for crude oil purchases from Iran as being negated by a USD 1 to 2 additional charge on the international market price. This claim is totally incorrect.

The contractual price for Iranian crude purchases has always been the Asian Standard Price Formula (ASPF), which is the monthly average of the Oman crude oil price as published in the PLATT’s crude oil market.

Accepted practice

But for opening the Letter of Credit, the provisional price includes plus one USD, which is set-off against the actual price as quoted by PLATT. This is an accepted commercial practice designed to avoid amending the Letter of Credit incurring delays and additional cost. It would be clear that market price alone decides the contractual price between CPC and Iran for every barrel of crude oil.

The Iranian credit has made available to Sri Lanka, an additional USD 700 million in virtually non-refundable funds at Sri Lanka’s disposal, at this critical time and which can be utilised for the refinery project as Sri Lanka’s 30 per cent component of nearly US $ 500 million during the next three years.

Thus, misleading reports such as the ones referred to in this article are not merely anti-government, but are more appropriately termed anti-state.

These anti-state agents are working tirelessly to further the agenda of certain countries but the Government must not permit them to take the public for a big ride.

The very same agents also tried to paint President Rajapaksa’s visit to Iran in a controversial light. Their message was clear - the President was making a mistake by visiting a country that belonged to some imagined “axis of evil” and “posed a grave threat to the preservation of international peace and security”. One need not be an expert in international affairs to know which country in actual fact poses the biggest threat to world peace, and which country is the only one in human history to have used WMD on innocent, unarmed civilians.

More importantly however, many Western states, including the US are on a definite decline, and the current financial meltdown is just the tip of the iceberg. Why then should Sri Lanka be prevented from adopting a futuristic approach and fostering closer ties with emerging regional and non-regional powers? Should we take advice from countries which don’t practise what they preach, or fall prey to their scare tactics?

This is not to say that Sri Lanka does not require the help of the West - indeed, we do! But they must stop meddling in our domestic affairs and stop treating us as if we were still a kindergarten kid! Sri Lanka is well and truly capable of making decisions for herself, and in the battle to safeguard our economic sovereignty, we will surely emerge victorious.

All patriots must therefore unite to defeat not just LTTE terrorism but also economic manipulation and remain vigilant against attempts at deception by agents of the West.