Features
Uncertain Sino-US relations in the Biden Era
by Kumar David
A US State Department release said on 12 May 2021: “Strategic competition is the frame through which we view our relationship with the PRC. We will address it from a position of strength in which we work with our allies to defend our interests and values. We will advance our economic interests, counter Beijing’s aggressive and coercive actions, sustain key military advantages and vital security partnerships, re-engage robustly in the UN system, and stand up when China violates human and fundamental freedoms. When it is in our interest, we will conduct results-oriented diplomacy with China on shared challenges such as climate change and global public health”; (abbreviated).
So, America will strengthen its economic and strategic position and place emphasis on human rights but also collaborate on common interests such as climate change. It’s different from the Trump Era more in posture and signals than in words. Trade sanctions are off the table or will be used infrequently, belligerence is no longer in vogue and there is a well-articulated shift to concern with human-rights, a term Trump treated with derision. You will hear more about Xinjiang than trade deficits in the Bidden years.
Donald Trump was an aberration, a malignant abnormality and a dangerous one. Dangerous because political conditions in the US are scary, to say the least because the ultra-right, white-supremacists and primeval cultures, in a word the zeitgeist of potentially fascist-like threats consume the country. The information released last month by the Defence and Justice Departments that Trump was on the verge of attempting a coup after his election defeat shows how close America came to civil war. To give readers a rough measure I would stick my neck out and say that a quarter to a third of all Americans are Neanderthal in outlook; but it’s very uneven across states. To best see primitives look in states with the most anti-vaccination populace. The seven Jim Crow states are the pits – Mississippi, Louisiana, Alabama, Arkansas, Tennessee, West Virginia and South Carolina. I needed to sound this warning about America’s rumbustious unevenness as opposed China’s dull uniformity and superficial linearity before moving on.
The remainder of this article will focus on a five-game match; (1) BRI (Belt and Road Initiative) vs B3W (Build Back Better World G7 initiative), (2) Digital Yuan or DY, (3) competing corporate governance models, (4) cyber-espionage and (5) human rights. The BRI vs B3W battle will be a walkover for China. BRI has had a head start of over a decade, has commitments in hard cash and is a state-to-state undertaking between China and about 50 countries. The Americans and G7 partners hope the private sector will join as a big stakeholder to catalyse hundreds of billions of dollars in infrastructure investment in low- and middle-income countries. A senior official gambled: “We believe we will beat the BRI by offering a higher-quality choice and we’ll offer that choice with self-confidence about our model that reflects our shared values.” The shared values the West envisions are free-markets, commitment to democracy and respect for human rights. Wake up Joe from visions of honeymooning with dictators and goons! The Chinese have a better cruder measure of the likes of the (Raja)Paksas; they will win the first-set of the BRI vs B3W match 6-0.
The second set will be harder fought. Beijing makes BRI investments and grants loans to countries that cautious investors will not touch with a bargepole. It is hard to quantify the BRI investment quantum since a part is Central Government loans, much investment by Chinese SOEs and maybe a fifth of the total costs are carried in cash or kind (land, labour) by recipient countries. In the final analysis total BRI investment from all sources may be in the $3 trillion to $4 trillion range. Handouts to bankrupt or brain-dead regimes (Lanka exemplifies both disorders) are used to gain political mileage or acquire assets when non-creditworthy projects go belly-up as with no-ships Hambantota Harbour, no-fly Mattala and no-games Hambantota stadium. I do not need to amplify that many recipient countries are sinking ever deeper into the mire of debt (for no fault of Beijing you may say if you are tough), and crucially, will never escape from debt. They will pawn or give away national assets for 99-years. The criticism of perpetual indebtedness to China is gaining ground, nevertheless China will still win the second-set of the BRI vs. B3W game largely because many third world political leaders are scoundrels.
The internationalisation of the DY, game (2), is unstoppable and desirable. It is important to distinguish between China’s Digital Yuan and bitcoin and other crypto-currencies. China is expanding domestic and international digital transactions through the central bank (People’s Bank of China); DY is supported by block-chain technology making it tamper-proof and it is issued by a central bank as a national currency. As it gains acceptance it will become an international alongside the Dollar, Euro and Yen but with technical differences. The motives for internationalising the Yuan are countering US dollar dominance of global finance and curbing the clout of China’s own “fintech” giants like Ant Group and Tencent. The hegemony of the US dollar is anchored in the petrodollar. In 1971 when stagflation prompted a run on the dollar and it plummeted; other countries wanted to redeem their dollars for gold, but to protect US gold reserves Nixon removed it from the gold standard where it was convertible to gold at a fixed rate of $35 per ounce. Currently the gold price is about $1800 per ounce.
In 1973 when the US provided military aid to Israel for the Yom Kippur War OPEC was outraged and raised oil prices. But in 1979 the US and Saudi Arabia agreed to use dollars for oil contracts and recycle dollars back to America through contracts with US companies. The petrodollar, an arrangement by which oil is globally priced in dollars was born. Everybody including Iran, Russia and China are caught in this trap. The petrodollar is the mechanism by which the US dominates global finance and enforces its foreign policy. Sometime this decade the US economy will fall behind China’s in size. It is not possible for the currency of Number Two to indefinitely remain the global monetary hegemon. It is going to be a complicated and drawn out process and there is no sign of an immediate collapse of dollar global hegemony though DY will join the select club of global currencies.
China is the place with entrepreneurs and computer wizards were “mining” 65% of the world’s new digital currencies (bitcoins for short). The authorities have suddenly imposed a harsh crackdown allegedly for a vast overconsumption of electricity but more likely for two other reasons as well; to impose tighter control on a part of the economy that was running out of view of the central authorities and second to protect the launch of DY by providing it with a more monopoly-like status in the Chinese digital currency domain.
The distinction between the state-directed or guided capitalist sector and free-market capitalism needs no elaboration. Experience supports the view that in developing countries the former has invariably been more successful in encouraging growth and improving mass standards of living. My comment here is about something quite recent – the state is muscling in on private companies. E-marketing and ‘fintech’ (finance-technology) giants like Alibaba, Ant-Group and ride-hailing (Uber like) companies like Didi are being tethered and put under much tighter control. Listing in foreign markets (New York and Hong Kong), tighter scrutiny of corporate data, are desired and illegal collection and use of personal data has been alleged. The truth in my view is that it is a two pronged strategy; the regime’s obsession with political monopoly-control and an enhanced anti-trust policy intervention. At this time when anti-trust policies are falling by the wayside in America the latter this is a good forward step.
Item (4) is a long and ongoing controversy. The US accuses China of state-sponsored cyber hacking led or encouraged by the Ministry of State Security. Direct state espionage is allegedly for military and research secrets and stealing economic know-how. Allegations of encouraging felons to engage in ransomware attacks seems far fetched and military espionage obviously is a thriving two-way game. The world of espionage and counter-espionage is more spooky than an elaborate spy novel. It is shrouded in darkness but gathers everything, spies on everyone, violates every norm of privacy and decency. We can safely assume that the network of agencies that proliferate in both sides are into it to the hilt of their technical abilities.
The game China will lose hands down is game (5), human rights; alleged forced labour and political oppression of the Uyghurs of Xinjiang Province. Humanitarian groups assert that Beijing has transferred Uyghurs elsewhere and forced them to work under harsh conditions in factories across the country. I have travelled a bit in China and believe that Islam is repressed and it is apparent Uyghurs are sullen and angry but I have not seen evidence that they are transported to “labour camps” in other provinces. The Chinese CP is ideologically totalitarian: “Total” in the sense that it will not share space and air with other ideologies (Falun Gong, the Christian Churches, competing political views or ‘heretical’ Marxist interpretations). This is because it is insecure and alarmed by competition in “belief space”. My Hong Kong friends hedge their bets on whether the Uyghurs are more sullen about oppression or more pleased by improving economic conditions.
A more interesting rationale for Western criticism may lie elsewhere. These factories are in the supply chains of many global brands. “We believe these practices are an affront to human dignity and an egregious example of China’s unfair, economic competition” Western critics say. A Uyghur Forced Labour Prevention bill is pending in the U.S. House of Representatives. The legislation requires disclosures from businesses about engagement with Chinese companies engaged in human rights abuses in Xinjiang. The meat of the matter may be more to do with commercial competition than love of human rights. Nevertheless the first few decades of the Twenty-first Century are panning out as the decades of human-rights and the Chinese are engaging in a match that they will eventually lose 0-6.
Tracking the evolution of Sino-American developments is best done along the five dimensions I have selected for this essay plus a few others. However, the context in which medium-term Sino-American can be better appreciated is Biden’s economic strategy which Republicans are attempting to scuttle at any cost because its success on even a modest scale will bury Trump and the GOP for a generation. Biden’s methodology is to repeat FDR’s New Deal strategy mutatis mutandis. Infrastructure building on a multi-trillion dollar scale, large universal cash handouts, enhanced unemployment support and an eviction moratorium for delays in rent payment are intended to ease conditions for the poorer half of society and at the same time create demand to spur the economy. The jury is still out on effectiveness but time is on Biden’s side.
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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