Features
Petrodollar and US hegemony Putin-NATO-Zelenskyy Catastrophe
by Kumar David
This essay surveys two topics which have come into blinding spotlight in recent weeks; the petrodollar, its likely eviction from the cosmos and hence demise of US global hegemony, and second the pluperfect cock-up by Putin and NATO-West, and the humiliation of, not as pokerfaced as Putin, nor as dour as never-smile Xi, perpetual clown Vladimir Zelenskyy (VZ), but more profoundly the misery of the Ukrainian people.
The rise of the almighty petrodollar and the end of its supremacy
The first part of this essay does not discuss the folly of the invasion (I have done that previously many times) but focuses on a collateral issue. The transition from a British Empire on which the sun was loath to set to the American Century commenced before the 1914-18 Great War for the division of the colonial world between European powers and to a degree America. However, WW1 signposts the sunset. Thereafter the upsurge of American hegemony was inexorable. The Great Depression of the 1930s was a setback but the New Deal, and more important WW2 released the full force of capitalism and US Imperialism.
Capitalism displays its greatest surges after war and devastation lay waste to nations and continents and subsequently investment opportunities flourish. American glory was unchecked from the end of WW2 in a 30-year boom – give or take usual cyclical recessions – till an external factor (in economist-speak) screwed the carnival. The blasted Arabs decided they were going to grab and retain a great portion of the profits of oil – extending even to an embargo in October 1973 – and so began what Americans, the West and economists call the second oil-price crisis.
The United States suffered its longest and most severe post-war recession in 1973. Measures to overcome this led to stagflation – simultaneous stagnation and inflation, which mantras in the then prevailing text-books of capitalist economic theory said was impossible: an oxymoron. But that was after the point of intervention of today’s topic. Ever resourceful American power sorted out the post-1973 oil-price crisis (I won’t go through intermediate stages) by establishing the petrodollar in March 1974. The master stroke was that America and Saudi Arabia agreed to price oil only in US dollars in exchange for which the US would guarantee the Saudi State against all comers internationally and secure its stability against internal dissent. The Americans strong-armed European buyers and oil producers the world over to follow this pricing rule. So, when Venezuela sells oil to Timbuktu the contract is priced in dollars, the transaction cleared through banks which deal in US dollars and cleared through agencies or networks based mainly in New York or London. Thus, was born the petrodollar.
Soon it was not only oil; all commodities and trades were dominantly or indirectly included. The dollar and US securities now underpin 80% of global trade, are the stuff of government reserves worldwide, and the essential intermediary in big investments. When Basil grovels in Delhi begging bowl in hand Modi gives him dollars, when the IMF throws Gota a lifeline it is in dollars and Russia is stuck because most of its $650 billion reserves are in Western banks that exist in fealty to America.
The power of US financial hegemony is apparent when Europe kowtows on sanctions against Russia. Whether Russia deserves punishment is tangential; the surprise is that Europe obediently falls in line without a murmer; “independent” Swiss bankers who wash laundry-loads of dirty money are obedient. I do not believe all Europe obeyed out of fear of America or for protection of its nuclear umbrella only. The reason for docility is that Washington can crack the whip of financial dominion and impose secondary sanctions on any who disobey. Antony Blinken, hawkish US Secretary of State, openly threatened China and surprisingly the Lords of the Middle Kingdom who usually bristle did not even say “It’s unhelpful”. Dollar hegemony is the sword in America’s armoury that keeps friend and foe in place.
China saw it years ago and slowly, now clearly far too slowly, started building an alternative global payments system and pushed the digital Yuan. Russia has been brought to its knees by the might of the glorious dollar, not by any other sanction. Sanctions on energy are hurting Europe and Asia badly and will get worse unless the fight ends. Restrictions on nickel, palladium and metals where Russia is the main or one of the biggest suppliers have industries the world over scrambling and a recession is looming; supply chains are snapping. Shortfall of wheat, barley and corn shipments from breadbaskets Russia and Ukraine and discontinuing potash and fertiliser making inputs have frightening consequences. Even the ultra-reactionary Economist shudders and predicts food riots in the Maghreb, Sub-Saharan Africa and South and Central America as grain prices triple by years end unless supplies resume. Recession seems inevitable and social instability a knock-on. Fertile ground to sow Yuan-Rial, Yuan-Ruble and Ruble-Indian Rupee trade and non-dollar petroleum transactions. If petrodollar supremacy erodes it will take US hegemony down with it.
Almighty chaos
The US-NATO-West incited and cheered-on affable VZ as the poster boy of global democracy and brave champion of freedom’ They lauded the Ukrainian people as civilisations standard bearers of liberty. Then what happened? When the enraged bull showed no signs of backing off, when it became an eyeball to eyeball standoff, they hung poor VZ and Ukraine out to dry and found rational arguments why their comfortable lives, orderly cities, bank accounts and warm conjugal embraces should not be disrupted by atom bombs. Love, liberty, freedom and a warm liberal lifestyle hit a wall.
“We will give you refuge and succour (and that’s wonderful; by no means should one sneer) says Europe, but militarily NATO is posturing at a safe distance from the snorting, god-knows-what-he-will-do-next, bull. Desperate, VZ screams WW3 will come if you don’t intervene; but poor lost soul, NATO is deaf. He and his country are expendable real-estate. Frankly I no longer take NATO’s “An attack on one is an attack on all” credo seriously. Do you think if some sliver of remote Baltic coast, thousands of miles from the US-European heartland is overrun by bears, NATO will come roaring, atoms in hand, stealth bombers in the sky? Bollocks, new NATO members please learn this lesson in realpolitik. After the USSR went up in smoke NATO bloated into a flatulent, militarily bulbous globule. It refuses suffer nuclear Armageddon for lumps of excess fat.
The second lesson that hardnosed analysts can take away from these events is that Putin is a world class cock-up champion. True human-rights violations, devastation and civilian deaths in Iraq post-2003 thanks to Moron Bush and Poodle Blair were much worse than Russian war-crimes in Ukraine to date. Civilians slain by the US and UK exceed 10,000, cities were devastated and Iraq reduced to rubble and penury from which who knows when it will recover. When the Americans departed, it left behind a fractured country of Shias and Sunnis at each other’s throats with no prospect of national unification. However, comparatively less carnage apart, in the end what will Putin have to show for his onslaught; not military victory which now seems assured but a criminal assault on civilians.
Less than nothing! And an interminable unwinnable civil war. Moscow has not learnt from Afghanistan (1979-85) nor others indicted in parenthesis from Korea (US and allies), Algeria (France), Vietnam (France and US), IPKF (India), Iraq (US and UK), Libya (US), Yemen (Saudi) and Afghanistan (dear god the US again). Let’s recapitulate lesson two: It’s not easy in modern times to militarily occupy and tame even a small foreign country unless powerful internal partners are in situ and a big portion of the population buys in. Examples of this counter-case are CIA engineered military-gorilla coups in Central and South America where powerful military and business-class interests were on-side, of course Bangladesh and some recent French peace-keeping interventions in the Sahel.
The third matter I must touch on is an extension of part one of this essay but of stand-alone significance. We have reached a turning point in the global financial order. Russia’s Central Bank Reserves have been frozen by the West and it has nowhere to turn but to Yuan facilities and bilateral Yuan denominated trade. Let that sink in, savour its significance! Central Bank holdings of about 10 countries are frozen by the US; international brigandage possible because of dollar domination as reserve, trading and investment vehicle. About 25 countries are sanctioned by the US as political opponents and the West kowtows. Among them Cuba, Syria, Iran, North Korea, Afghanistan, Belarus, Central African Republic, DRC, Ethiopia, Hong Kong, Lebanon, Libya, Mali, Nicaragua, Somalia, Sudan, South Sudan, Venezuela, Zimbabwe, and now Russia. But China is the largest trading partner of more countries than any other! Why on earth should it trade in a third-party money? The not yet finalised China-Saudi oil deal has been in the works for years. Pressure for restructuring the global financial system is inexorable. The dollar is not going away anywhere soon, nor did Rome fall in a day, but transition to a multi-currency world is unstoppable.
For the Yuan to be global China’s capital markets will have to open and banking become transparent. Government control and regulation must diminish and state protection of provincial banking decline. These changes may drive China towards more liberalism and greater use of market mechanisms than all that Jack & Jill Mas, property tycoons and stock markets will ever be able to do. Wonder what Marx would have made of unification of world finances on a rational platform? Written a Volume IV? The Dragon Emperor Quin Shi Huang (Terracotta Army chap) of the Qin Dynasty abolished primitive proto-feudalism in about 230 BC (feudalism proper never took root in China) and created a centralised state with 36 administrative units directly controlled from the Centre by powerful Mandarin officials – a bureaucracy. A fabulous 150-foot-long Song Dynasty (960-1270) mural depicts a bustling market-place, commerce, thriving trade and a fluid political-economy – marvellous! I have seen it.
by Dr Gotabhya Ranasinghe
Senior Consultant Cardiologist
National Hospital Sri Lanka
When we sought a meeting with Hon Dr. Ramesh Pathirana, Minister of Health, he graciously cleared his busy schedule to accommodate us. Renowned for his attentive listening and deep understanding, Minister Pathirana is dedicated to advancing the health sector. His openness and transparency exemplify the qualities of an exemplary politician and minister.
Dr. Palitha Mahipala, the current Health Secretary, demonstrates both commendable enthusiasm and unwavering support. This combination of attributes makes him a highly compatible colleague for the esteemed Minister of Health.
Our discussion centered on a project that has been in the works for the past 30 years, one that no other minister had managed to advance.
Minister Pathirana, however, recognized the project’s significance and its potential to revolutionize care for heart patients.
The project involves the construction of a state-of-the-art facility at the premises of the National Hospital Colombo. The project’s location within the premises of the National Hospital underscores its importance and relevance to the healthcare infrastructure of the nation.
This facility will include a cardiology building and a tertiary care center, equipped with the latest technology to handle and treat all types of heart-related conditions and surgeries.
Securing funding was a major milestone for this initiative. Minister Pathirana successfully obtained approval for a $40 billion loan from the Asian Development Bank. With the funding in place, the foundation stone is scheduled to be laid in September this year, and construction will begin in January 2025.
This project guarantees a consistent and uninterrupted supply of stents and related medications for heart patients. As a result, patients will have timely access to essential medical supplies during their treatment and recovery. By securing these critical resources, the project aims to enhance patient outcomes, minimize treatment delays, and maintain the highest standards of cardiac care.
Upon its fruition, this monumental building will serve as a beacon of hope and healing, symbolizing the unwavering dedication to improving patient outcomes and fostering a healthier society.We anticipate a future marked by significant progress and positive outcomes in Sri Lanka’s cardiovascular treatment landscape within the foreseeable timeframe.
by Fr. Emmanuel Fernando, OMI
Jesuit Fr. Aloysius Pieris (affectionately called Fr. Aloy) celebrated his 90th birthday on April 9, 2024 and I, as the editor of our Oblate Journal, THE MISSIONARY OBLATE had gone to press by that time. Immediately I decided to publish an article, appreciating the untiring selfless services he continues to offer for inter-Faith dialogue, the renewal of the Catholic Church, his concern for the poor and the suffering Sri Lankan masses and to me, the present writer.
It was in 1988, when I was appointed Director of the Oblate Scholastics at Ampitiya by the then Oblate Provincial Fr. Anselm Silva, that I came to know Fr. Aloy more closely. Knowing well his expertise in matters spiritual, theological, Indological and pastoral, and with the collaborative spirit of my companion-formators, our Oblate Scholastics were sent to Tulana, the Research and Encounter Centre, Kelaniya, of which he is the Founder-Director, for ‘exposure-programmes’ on matters spiritual, biblical, theological and pastoral. Some of these dimensions according to my view and that of my companion-formators, were not available at the National Seminary, Ampitiya.
Ever since that time, our Oblate formators/ accompaniers at the Oblate Scholasticate, Ampitiya , have continued to send our Oblate Scholastics to Tulana Centre for deepening their insights and convictions regarding matters needed to serve the people in today’s context. Fr. Aloy also had tried very enthusiastically with the Oblate team headed by Frs. Oswald Firth and Clement Waidyasekara to begin a Theologate, directed by the Religious Congregations in Sri Lanka, for the contextual formation/ accompaniment of their members. It should very well be a desired goal of the Leaders / Provincials of the Religious Congregations.
Besides being a formator/accompanier at the Oblate Scholasticate, I was entrusted also with the task of editing and publishing our Oblate journal, ‘The Missionary Oblate’. To maintain the quality of the journal I continue to depend on Fr. Aloy for his thought-provoking and stimulating articles on Biblical Spirituality, Biblical Theology and Ecclesiology. I am very grateful to him for his generous assistance. Of late, his writings on renewal of the Church, initiated by Pope St. John XX111 and continued by Pope Francis through the Synodal path, published in our Oblate journal, enable our readers to focus their attention also on the needed renewal in the Catholic Church in Sri Lanka. Fr. Aloy appreciated very much the Synodal path adopted by the Jesuit Pope Francis for the renewal of the Church, rooted very much on prayerful discernment. In my Religious and presbyteral life, Fr.Aloy continues to be my spiritual animator / guide and ongoing formator / acccompanier.
Fr. Aloysius Pieris, BA Hons (Lond), LPh (SHC, India), STL (PFT, Naples), PhD (SLU/VC), ThD (Tilburg), D.Ltt (KU), has been one of the eminent Asian theologians well recognized internationally and one who has lectured and held visiting chairs in many universities both in the West and in the East. Many members of Religious Congregations from Asian countries have benefited from his lectures and guidance in the East Asian Pastoral Institute (EAPI) in Manila, Philippines. He had been a Theologian consulted by the Federation of Asian Bishops’ Conferences for many years. During his professorship at the Gregorian University in Rome, he was called to be a member of a special group of advisers on other religions consulted by Pope Paul VI.
Fr. Aloy is the author of more than 30 books and well over 500 Research Papers. Some of his books and articles have been translated and published in several countries. Among those books, one can find the following: 1) The Genesis of an Asian Theology of Liberation (An Autobiographical Excursus on the Art of Theologising in Asia, 2) An Asian Theology of Liberation, 3) Providential Timeliness of Vatican 11 (a long-overdue halt to a scandalous millennium, 4) Give Vatican 11 a chance, 5) Leadership in the Church, 6) Relishing our faith in working for justice (Themes for study and discussion), 7) A Message meant mainly, not exclusively for Jesuits (Background information necessary for helping Francis renew the Church), 8) Lent in Lanka (Reflections and Resolutions, 9) Love meets wisdom (A Christian Experience of Buddhism, 10) Fire and Water 11) God’s Reign for God’s poor, 12) Our Unhiddden Agenda (How we Jesuits work, pray and form our men). He is also the Editor of two journals, Vagdevi, Journal of Religious Reflection and Dialogue, New Series.
Fr. Aloy has a BA in Pali and Sanskrit from the University of London and a Ph.D in Buddhist Philosophy from the University of Sri Lankan, Vidyodaya Campus. On Nov. 23, 2019, he was awarded the prestigious honorary Doctorate of Literature (D.Litt) by the Chancellor of the University of Kelaniya, the Most Venerable Welamitiyawe Dharmakirthi Sri Kusala Dhamma Thera.
Fr. Aloy continues to be a promoter of Gospel values and virtues. Justice as a constitutive dimension of love and social concern for the downtrodden masses are very much noted in his life and work. He had very much appreciated the commitment of the late Fr. Joseph (Joe) Fernando, the National Director of the Social and Economic Centre (SEDEC) for the poor.
In Sri Lanka, a few religious Congregations – the Good Shepherd Sisters, the Christian Brothers, the Marist Brothers and the Oblates – have invited him to animate their members especially during their Provincial Congresses, Chapters and International Conferences. The mainline Christian Churches also have sought his advice and followed his seminars. I, for one, regret very much, that the Sri Lankan authorities of the Catholic Church –today’s Hierarchy—- have not sought Fr.
Aloy’s expertise for the renewal of the Catholic Church in Sri Lanka and thus have not benefited from the immense store of wisdom and insight that he can offer to our local Church while the Sri Lankan bishops who governed the Catholic church in the immediate aftermath of the Second Vatican Council (Edmund Fernando OMI, Anthony de Saram, Leo Nanayakkara OSB, Frank Marcus Fernando, Paul Perera,) visited him and consulted him on many matters. Among the Tamil Bishops, Bishop Rayappu Joseph was keeping close contact with him and Bishop J. Deogupillai hosted him and his team visiting him after the horrible Black July massacre of Tamils.
Sri Lanka-Singapore Free Trade Agreement
By Gomi Senadhira
senadhiragomi@gmail.com
“You might tell fairy tales, but the progress of a country cannot be achieved through such narratives. A country cannot be developed by making false promises. The country moved backward because of the electoral promises made by political parties throughout time. We have witnessed that the ultimate result of this is the country becoming bankrupt. Unfortunately, many segments of the population have not come to realize this yet.” – President Ranil Wickremesinghe, 2024 Budget speech
Any Sri Lankan would agree with the above words of President Wickremesinghe on the false promises our politicians and officials make and the fairy tales they narrate which bankrupted this country. So, to understand this, let’s look at one such fairy tale with lots of false promises; Ranil Wickremesinghe’s greatest achievement in the area of international trade and investment promotion during the Yahapalana period, Sri Lanka-Singapore Free Trade Agreement (SLSFTA).
It is appropriate and timely to do it now as Finance Minister Wickremesinghe has just presented to parliament a bill on the National Policy on Economic Transformation which includes the establishment of an Office for International Trade and the Sri Lanka Institute of Economics and International Trade.
Was SLSFTA a “Cleverly negotiated Free Trade Agreement” as stated by the (former) Minister of Development Strategies and International Trade Malik Samarawickrama during the Parliamentary Debate on the SLSFTA in July 2018, or a colossal blunder covered up with lies, false promises, and fairy tales? After SLSFTA was signed there were a number of fairy tales published on this agreement by the Ministry of Development Strategies and International, Institute of Policy Studies, and others.
However, for this article, I would like to limit my comments to the speech by Minister Samarawickrama during the Parliamentary Debate, and the two most important areas in the agreement which were covered up with lies, fairy tales, and false promises, namely: revenue loss for Sri Lanka and Investment from Singapore. On the other important area, “Waste products dumping” I do not want to comment here as I have written extensively on the issue.
1. The revenue loss
During the Parliamentary Debate in July 2018, Minister Samarawickrama stated “…. let me reiterate that this FTA with Singapore has been very cleverly negotiated by us…. The liberalisation programme under this FTA has been carefully designed to have the least impact on domestic industry and revenue collection. We have included all revenue sensitive items in the negative list of items which will not be subject to removal of tariff. Therefore, 97.8% revenue from Customs duty is protected. Our tariff liberalisation will take place over a period of 12-15 years! In fact, the revenue earned through tariffs on goods imported from Singapore last year was Rs. 35 billion.
The revenue loss for over the next 15 years due to the FTA is only Rs. 733 million– which when annualised, on average, is just Rs. 51 million. That is just 0.14% per year! So anyone who claims the Singapore FTA causes revenue loss to the Government cannot do basic arithmetic! Mr. Speaker, in conclusion, I call on my fellow members of this House – don’t mislead the public with baseless criticism that is not grounded in facts. Don’t look at petty politics and use these issues for your own political survival.”
I was surprised to read the minister’s speech because an article published in January 2018 in “The Straits Times“, based on information released by the Singaporean Negotiators stated, “…. With the FTA, tariff savings for Singapore exports are estimated to hit $10 million annually“.
As the annual tariff savings (that is the revenue loss for Sri Lanka) calculated by the Singaporean Negotiators, Singaporean $ 10 million (Sri Lankan rupees 1,200 million in 2018) was way above the rupees’ 733 million revenue loss for 15 years estimated by the Sri Lankan negotiators, it was clear to any observer that one of the parties to the agreement had not done the basic arithmetic!
Six years later, according to a report published by “The Morning” newspaper, speaking at the Committee on Public Finance (COPF) on 7th May 2024, Mr Samarawickrama’s chief trade negotiator K.J. Weerasinghehad had admitted “…. that forecasted revenue loss for the Government of Sri Lanka through the Singapore FTA is Rs. 450 million in 2023 and Rs. 1.3 billion in 2024.”
If these numbers are correct, as tariff liberalisation under the SLSFTA has just started, we will pass Rs 2 billion very soon. Then, the question is how Sri Lanka’s trade negotiators made such a colossal blunder. Didn’t they do their basic arithmetic? If they didn’t know how to do basic arithmetic they should have at least done their basic readings. For example, the headline of the article published in The Straits Times in January 2018 was “Singapore, Sri Lanka sign FTA, annual savings of $10m expected”.
Anyway, as Sri Lanka’s chief negotiator reiterated at the COPF meeting that “…. since 99% of the tariffs in Singapore have zero rates of duty, Sri Lanka has agreed on 80% tariff liberalisation over a period of 15 years while expecting Singapore investments to address the imbalance in trade,” let’s turn towards investment.
Investment from Singapore
In July 2018, speaking during the Parliamentary Debate on the FTA this is what Minister Malik Samarawickrama stated on investment from Singapore, “Already, thanks to this FTA, in just the past two-and-a-half months since the agreement came into effect we have received a proposal from Singapore for investment amounting to $ 14.8 billion in an oil refinery for export of petroleum products. In addition, we have proposals for a steel manufacturing plant for exports ($ 1 billion investment), flour milling plant ($ 50 million), sugar refinery ($ 200 million). This adds up to more than $ 16.05 billion in the pipeline on these projects alone.
And all of these projects will create thousands of more jobs for our people. In principle approval has already been granted by the BOI and the investors are awaiting the release of land the environmental approvals to commence the project.
I request the Opposition and those with vested interests to change their narrow-minded thinking and join us to develop our country. We must always look at what is best for the whole community, not just the few who may oppose. We owe it to our people to courageously take decisions that will change their lives for the better.”
According to the media report I quoted earlier, speaking at the Committee on Public Finance (COPF) Chief Negotiator Weerasinghe has admitted that Sri Lanka was not happy with overall Singapore investments that have come in the past few years in return for the trade liberalisation under the Singapore-Sri Lanka Free Trade Agreement. He has added that between 2021 and 2023 the total investment from Singapore had been around $162 million!
What happened to those projects worth $16 billion negotiated, thanks to the SLSFTA, in just the two-and-a-half months after the agreement came into effect and approved by the BOI? I do not know about the steel manufacturing plant for exports ($ 1 billion investment), flour milling plant ($ 50 million) and sugar refinery ($ 200 million).
However, story of the multibillion-dollar investment in the Petroleum Refinery unfolded in a manner that would qualify it as the best fairy tale with false promises presented by our politicians and the officials, prior to 2019 elections.
Though many Sri Lankans got to know, through the media which repeatedly highlighted a plethora of issues surrounding the project and the questionable credentials of the Singaporean investor, the construction work on the Mirrijiwela Oil Refinery along with the cement factory began on the24th of March 2019 with a bang and Minister Ranil Wickremesinghe and his ministers along with the foreign and local dignitaries laid the foundation stones.
That was few months before the 2019 Presidential elections. Inaugurating the construction work Prime Minister Ranil Wickremesinghe said the projects will create thousands of job opportunities in the area and surrounding districts.
The oil refinery, which was to be built over 200 acres of land, with the capacity to refine 200,000 barrels of crude oil per day, was to generate US$7 billion of exports and create 1,500 direct and 3,000 indirect jobs. The construction of the refinery was to be completed in 44 months. Four years later, in August 2023 the Cabinet of Ministers approved the proposal presented by President Ranil Wickremesinghe to cancel the agreement with the investors of the refinery as the project has not been implemented! Can they explain to the country how much money was wasted to produce that fairy tale?
It is obvious that the President, ministers, and officials had made huge blunders and had deliberately misled the public and the parliament on the revenue loss and potential investment from SLSFTA with fairy tales and false promises.
As the president himself said, a country cannot be developed by making false promises or with fairy tales and these false promises and fairy tales had bankrupted the country. “Unfortunately, many segments of the population have not come to realize this yet”.
(The writer, a specialist and an activist on trade and development issues . )
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