Sunday, May 17, 2009

USA Opposes IMF Loan to Sri Lanka: Why not negotiate a long term loan facility from China, Russia and other friendly countries?

By Raj Gonsalkorale

The West led by the USA has opposed an IMF standby facility to Sri Lanka at present. Although the IMF is outside her official jurisdiction as it is a subject under the US Treasury Secretary, Secretary of State Hillary Clinton has announced this after talks with David Milliband, the British Foreign Secretary. If the USA opposes the loan, then that will be the end of the matter, and Sri Lanka will not get the loan. Political double speak that Hillary Clinton and David Milliband has been engaging in, leaving the door half open for the loan to be given “when conditions are right" should not deceive Sri Lanka.

The West has driven Sri Lanka steadily into the fold of the emerging supper power, China and now Sri Lanka has no choice but to embrace China and other friends like Russia, Iran, Libya, and Jordon among others, and identify itself as a true friend of these countries. One school of thought is that there is no point fiddling around on the fringes anymore. For better of worse, Sri Lanka should state clearly who their friends are and make it known to the West that they can survive without the duplicity of the West.

There will be repercussions as a result of an open statement to this effect. The only way to avoid or minimize them would be to ask for China and Russia to help and standby Sri Lanka when India and even Pakistan, a staunch ally of Sri Lanka, but now beholden to the USA for the monetary support they are getting, may start undermining Sri Lanka at the behest of the USA. After all Pakistan got their $ 7.6 million IMF loan thanks to US urging.

As a start, Sri Lanka should meet the leadership of China, Russia, Iran and countries like Venezuela in South America to assist with a standby loan facility. True, the current economic crises would make the possibility of such a facility difficult as all these countries are suffering as a result of a crises caused by the USA, and interest rates will be much higher than borrowing from the IMF. But it is better to bow one’s heads to these countries rather than grovel to the West, as an IMF loan will have serious political conditions attached to it, some conditions that will be very unpalatable for Sri Lanka.

The other school of thought is that Sri Lanka too should divide and rule and engage closer with some Western countries, as well as Opposition political parties in some Western countries that are due for elections soon. In particular, in UK, where the Conservative party is set to win the next general election. One wonders whether Sri Lanka has had any dialogue with the Conservative Party as they have not made their views known about the Sri Lankan situation as yet. Countries like Australia; although not in the same league as the USA, have much to lose if they are too closely aligned with the USA, as that will not please China, a country that Australia is dependent on for their mineral exports. Australia has always been a friend of Sri Lanka and it would be strategically important for Sri Lanka to develop even a closer relationship with them.

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