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‘Before you study the economics, study the economists!’

e-Con e-News 05-11 January 2025

As the northeast winds and rains bend, our President alights on China. As we enter the 2^nd quarter of the 21^st century, much of the world around us is still colonized. Most times in all but name. Our economy continues to be held hostage, bound hand and foot, to the US Treasury – fronting for Wall Street and London & Euro bondholders wrapped in Rating-Agency flags – determining who and how our coin – our labor, really – is to be valued and invested.

     If we are honest, we will admit: We may be trainers and exporters of accountants, numerary and literary clerks, around the world. But we ourselves are immaculately illiterate and innumerate about our true priorities, let alone ignorant of our true history, our best interests. There is no end to the lessons we could learn from China, on how to organize and rule an independent modern industrial country. However, we have to navigate and manoeuvre the still-active colonial timebombs on land and sea, as we fill in the curious blanks of history – bomb craters, really – of 500 years and more, to build a better country… to share in a better world.

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Was it Sinhala monks as envoys who informed the Roman Empire about China? China (Zhongguo, the Middle Kingdom) has historically called Sri Lanka – Shiziguo – the Kingdom of the Lion. And they once called India – Tian Xi (Western Heaven). And what is in those scriptures of ours, that made the Chinese trek over the Himalayas to study at our early University-Monasteries? The largest foreign ships in China were also once from Lanka. So much to remember… (see ee Focus)

     The 500 years and more of China’s abstention from the Lakdiva Sea is yet to be fully rectified, the ocean made finally and truly ‘post-colonial’. That post-colonial branding turns out to be have been a heavily funded now-defunded tenure posting. For, yes, so-called World War 2 never ended. Simply, frozen, we’re told… 260 US military bases still adorn colonized Japan and Korea, alone, and hundreds of bases more litter other isles and seas. All offering lessons on ‘democracy’.

     Anglo-Yankee nervousness about Sri Lanka’s relationship with China, though expected, is to be pitied, if not cause for a titter or two. It is understandable. The US and their agents in the Central Bank of Ceylon opposed Sri Lanka’s most enduring treaty, the Rubber-Rice Pact. And as for our even more ancient and abundant cultural and economic ties, little is divulged in English. And even then it is via the nosey BBC. The tsunami of fake news and mudslinging is relentless. Thus, the Anglo-US alliance seeks to militarily and economically stunt Sri Lanka’s view of itself in the real world, and its possibilities and futures…

     This widespread nervousness is exhibited in the continuing attempt to sow discord between Sri Lanka & Myanmar, with the orchestrated arrivals of ‘refugees’ from those shores, where hot war is being waged. The annual wintry season’s usual flus are relentlessly headlined and spread in scaremongering social media as somehow heralding mysterious new pandemics in the land of the panda.  There is even talk broadcast in India of coups, crafted by the CIA and ‘disgruntled’ Sinhala Buddhist nationalist elements, while AKD is at Tiananmen. They wish! Other ‘liberal’ media join in chorus: ‘Setback in Sino-Indian relations due to fresh territorial and water disputes.’ Well, what else is new? Then you have the Bajaj and Ashok Leyland lenders growing restless… All this to stop the time….

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‘Note the pent-up demand for motor vehicles & the pressure it has

created from that lobby for the removal of all restrictions on vehicle

import restrictions. That a sizeable urban group of Sri Lankans are willing

to pay 200-300% mark-ups through taxation on a depreciating asset, is an

undeniable sign of inverted incentives & imbalances in an economy.’

– Kusum Wijetilleke (see ee Economists, Austerity & Oligarchy)

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The Island’s editors shed kimbula tears that even ‘the non-parliamentary oppositional groups’ have no alternative to the IMF’s final solutions: ‘The Frontline Socialist Party has sought to belittle the increase in Sri Lanka’s foreign currency reserves… It is also demanding an immediate end to the IMF program.’ But our supine media does not even dare explore alternatives, let alone provide space, oxygen to air for such views. This ee reproduces an Island interview with the FSP’s Education Secretary Pubudu Jagoda. Jagoda warns that the inability of the JVP to resolve the country’s economic challenges may result in ‘sudden collapse’ and give rise to ‘authoritarian’ rule.

     ‘The government is a patchwork of ideological contradictions’, and this ‘diversity’ prevents ‘a cohesive strategy… to formulate practical solutions for the people’s problems.’ Relying heavily on ‘rhetoric around anti-corruption initiatives’ – ‘There are limits to how far you can go with slogans about changing the political culture. These initiatives cannot put food on people’s tables.’

     So, does the FSP offer more practical solutions to the country’s disorders? They speak of ‘public welfare’, of child malnutrition, and their proposals for the budget (see last ee), but again they fail to clearly spell out a positive program to achieve a modern industrial society, which alone can carry the weight of their often-romantic ‘welfare’ dreams. Why the shyness? Is it studied indifference or plain ignorance?

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• Privatized companies perform worse than when they were public. But that’s supposed to be a secret, and Sri Lanka’s merchant media is not allowed to shed any such ‘sunlight’. Sunlight is a brand, after all, and a Unilever IPR-protected brand, perhaps why such sunlight can never set. Only dissolve and pollute the drains. At least until their patent runs out. Privatization is a big racket, indispensable to such luminaries as the big 4 ‘accountancy’ firms operating in Colombo: Deloitte, PWC (PriceWaterhouseCoopers), KPMG, and EY (Ernst & Young). Now what is the main role of these tax magicians? – To avoid taxes, misreport profits, fix the books, etc, for the multinational corporations (MNCs). Their major consultancy expertise involves the business of transfer pricing, one of the main means by which MNCs like Unilever, Exxon, CTC, etc, avoid paying their due to the country, while pointing fingers at local individuals and families.

     If we stamped the label ‘importer’ in front of every company listed on the stock exchange or in the media, we will learn how a long ‘value’ chain of ye olde mercantile agency houses strangle the economy.

     So imagine our surprise, sorry, sheer delight, when US tax magicians Ernst & Young (EY) announces this week, their appointment of Talal Rafi as ‘Director, Business Consulting’. Rafi may deny he possesses astrological powers, yet he promises ‘future-ready solutions to clients in a rapidly changing world’. Our radar picked up Rafi’s drone rising in the Arabian Sea when his name started to author several boring columns in the Wijeya Group’s Financial Times.

     Then in June 2024, SJB party leader Sajith Premadasa appointed Rafi as his policy advisor. So what does it matter? Rafi admits the IMF & World Bank & International Sovereign Bond (ISB) owners are all creatures of the USA. He says Premadasa has only known him for a couple of years. Besides, Premadasa has more economically sharp advisors from the casinos. But what makes a boring story more compelling is when we find out he is being welcomed to Ernst & Young by their Sri Lanka & Maldives Country Managing Partner Duminda Hulangamuwa, who is ‘excited to welcome Talal…’

     Ceylon Chamber of Commerce Chairman Duminda Hulangamuwa is also senior advisor to the incumbent President of the country. Rafi & Hulang however are no strangers to the global glug-glug. This perhaps is how Rafi plans to fathom the shifting ‘future’ to offer ‘ready’ solutions.

     Rafi was first coyly named as ‘an economic policy consultant to [an unnamed] multilateral development bank’. Also, as a ‘regular contributor for the International Monetary Fund’s Expert Forum on Public Finance’ and ‘a member of the expert network of the World Economic Forum’ and ‘of the Deloitte Global Economist Network’. Wait! Deloitte was named as a ‘transaction advisor’ for privatizing several strategic national enterprises like SriLankan Airlines, SLTelecom, Litro & SL Insurance, etc. And, Rafi is no stranger to this world’s most rapacious milieu… EY… Deloitte… shapeshifters…

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‘CBSL Governor & Deloitte’s Talal Rafi to speak at Oxford Global Society Panel’, reported one headline in late 2023. They were joined by ‘Member of SL Presidential Advisory Group & former IMF Director Sharmini Coorey’. Rafi’s credentials included ‘visiting lecturer at the Centre for Banking Studies, Central Bank of Sri Lanka’, having toiled on ‘projects by the World Bank, Asian Development Bank & USAID’ and been recognized as a fellow predator by the NASDAQ Centre, S&P Global, the World Bank, IMF, ADB, World Economic Forum, Chatham House London, London School of Economics, & Forbes.  He was even on the board of the hijacked Lakshman Kadirgamar Institute, ‘Sri Lanka’s state foreign policy thinktank’, and on the board of ‘Almas Holdings, one of Sri Lanka’s largest asset management firms,’ owned by Imtiaz Buhardeen and linked to importer Sierra Cables and LOLC Browns, etc. Rafi also co-chairs another Rockefeller Exxon front – the Global Plastic Innovation Network Action Group of the World Economic Forum!

     Transfer pricing involves rules and methods for pricing transactions within and between MNCs under common ownership or control. Cross-border controlled transactions can distort taxable income, through under- and over- invoicing etc. Ernst & Young has been sued by former partner Sayantani Ghose – an expert in transfer pricing who worked at EY for 16 years – who says she was forced out of her job for refusing to sign off on client transactions that violated tax and securities laws.  EY has already paid tens of millions of dollars in fines and settlements over its auditors’ alleged misconduct in recent years. New York-based EY has faced numerous claims over the past decade that it encouraged or tolerated misconduct by auditors, including approving unlawful accounting practices in order to win or keep clients…

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On 11 January 2025, Ernst & Young Director Talal Rafi and University of Buckingham Lecturer in Accounting Business & Finance Cathrine Weerakkody moderate a webinar on ‘IMF Agenda: Opportunities & Challenges for SL post 2025’, sponsored by Daily FT, ACCA and the International Chamber of Commerce SL together with WIM, Cornucopia, CIMA, AGXA, and Global Greenwich Colombo. ‘Sri Lankan experts’ such as ‘Advocata Institute Chairman Murtaza Jafferjee and Georgetown University’s Edmund A Walsh School of Foreign Service Professor of the Practice of International Development Shantayanan Devaraja will strike the keynotes, while a choir of well-credentialed wailers feature Department of Economics Senior Prof Sirimal Abeyratne, OPA Vice President; Sri Lanka Economic Association VP & Ministry of Plan Implementation Former Secretary Chandrasena Maliyadde, Senior Economic Advisor to the Former President RHS Samaratunga, ETIS Lanka COO Bram Nicholas, Deloitte Director & Lead Economist Rumki Majumdar, BRI Sinologist, Visiting Faculty Peace & Conflict Samitha Hettige, and Former Joint Secretary Government of India Jitendra Kumar.

     Wijeya Group’s FT columnist Abeyratne by the way was appointed Executive Director this week of the German-funded Centre for Poverty Analysis (CEPA). SBD de Silva often wondered why there was no Centre for Wealth Analysis? He wished the so-generous Germans and others would tell us how they got ‘wealthy’, or at least tell us how their agents in Sri Lanka got wealthy by importing and retailing those 300 branded industrial German goods, which they prevent us from making here. Mein gott! (see ee Random Notes)

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• When Singh Sang a Southern Song – This ee Focus reproduces Usvatte-aratchi (Ua)’s name-dropping recall of Manmohan Singh & Amiya Bagchi and the rest of an Indian shoal of eminent economists. The US embassy must have given permission to these columnists to only praise Manmohan Singh’s supposed repudiation of India’s Nehruvian and supposedly ‘socialist’ ways! We disagree with much of Ua’s understanding of India’s and China’s economy. But Ua’s obeisance is not complete. Ua at least remembers Bagchi, who Ua invited to speak at the Central Bank school, uneasy though his reception there was. We of course also recall Singh’s running of the South Commission under Tanzania’s Julius Nyerere in the 1980s. Singh apparently began to understand the grip that the colonial system still had over countries, and tried to examine how in adverse conditions, the South could break from this stranglehold.

     The South Commission was established in 1987 by Non-Aligned countries in Harare, Zimbabwe. Chaired by Julius Nyerere, with Manmohan Singh as Secretary General, the Commission analyzed the economies of the South. In 1990 it produced ‘The Challenge to the South’, responding in part to the failure of the 1983 Willie Brandt Commission report on ‘international development issues’. The Commission led to the establishment of the South Centre – an international thinktank headquartered in Geneva – in 1995.

     Singh, we’re told, was very proud of his work in but apparently refused to answer a journalist’s query on how he moved from the strong arguments of the South Commission in August 1990 to oversee India’s abject surrender to IMF dictat in Bangkok in July 1991. India’s deal was poorly executed, there was no mandatory technology & science transfer for liberalization, perhaps due to the strategic withdrawal of the USSR at that time… And so it turns out that the ‘thoroughly secular’ Singh was also ‘largely responsible for introducing the neoliberal ‘reforms’ in the country’. (see ee Economists, Patnaik, GDP-Nationalism)

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This ee Focus, midst the President’s voyage to the People’s Republic of China, also attempts to depict Sri Lanka’s long and ‘enchanting’ historical engagements with China. In China to this day, Sri Lankans are treated as ‘lao pengyou’ (old friends), unlike Indians who the English have used as troops & auxiliaries, then as now, to undermine and invade that country. Sri Lanka, earlier known in China as Shilan (Ceylon), is now Si-li Lanka. We resurrect such sources as RALH Gunawardena’s work on navigational history,which are placed within Senake Bandaranayake’s useful and concise (tho problematic) periodization of Sri Lanka’s history into 12 parts, beginning with: ‘Sri Lanka – Period 1, Prehistoric Period, ~120,000 BC onwards to M19^thC. (1815/1848 AD) onwards: Modern Transitional Era. Total Colonial Occupation. Underdevelopment.

     For our purposes, we begin with Sri Lanka’s Period 5…which provides ample evidence of early contact, recalling Early Anuradhapura Period and Unified All-Country Kingdom… Urbanization. Continuing Trade Phase 2. Major Irrigation & Architectural Complexes. Colossal stupas. Centrifugal tendencies dominant. These long-distance relationships were enabled by the surpluses accumulated through advanced ancient irrigation systems, as were not to be found in ‘ancient Mesopotamia, Tigris, Euphrates or Indian river valleys’: but came to be only ‘seen in Ceylon’ where ‘the fusion of Egyptian and Babylonian patterns achieved the most complete and subtlest forms’ (Needham). At this moment, where all manner of panaceas are being offered to bring down the price of rice, few mention the need for replenishing the irrigation and industrializing the countryside.

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• Mental Wards & Awards – We would scratch ours heads if we still had our heads on. We have already scratched our heads into bald stumps of nothingness. So, we have taken our heads off for a moment. So many absurdities. So much magic. Not a day passes, or should we say not a chandeliered hotel afternoon dissolves into perfumed darkness, nor glittering evenings shut down in silence, without the import merchants of Colombo, agents of multinationals, not giving themselves even more awards! Sporting suits & saris & what not in AC-ed rooms. Giving & receiving awards for all kinds of things. Awards for this & that. And eerily, telling us about it. Then there’s the de-rigueur photo op with the US Envoy. Tap open any media ‘Business’ section. Awards. Awards. Awards. Is this a carryover from the old-boy/ old-girl culture derived from the English private schools, where prize giving is a major blazered business? Awards for being more ‘equalizing’ or virtuous than the darker ‘natives’. Click. Justice. Rule of Law. Click. We keep scratching…

     This week saw the media give themselves awards, instead of the usual reporting on others giving themselves and each other awards. Does the Sri Lanka Press Institute (SLPI) still hand out awards to students who never attended their classes but were still able to deliver the valedictorian?

     Does this award-giving&taking exhibit a decadent narcissistic streaking? To make them believe otherwise. That their apocalyptic me-first (& why not!) impetuosity, devil-may-care fatuity, enabled by the capitalist anarchy, only revives itself, again for another maimed generation at least, only through it seems greater & greater destruction…

     We notice that many of these awards are for certain categories under their ‘diversity, inclusivity, equality’ nameboards – or for saving some rare animal, they declare is on the edge of extinction, or equality. Each virtue they signal has an airy tax shelter attached like air-conditioned outdoor plumbing. But here’s the exhaust. What they are awarding themselves for is their continued prevention of a modern industrial society, their blocking of investment of money into industrial capital. If there is a thing called corruption, then this is it. But it’s more like, plain robbery.

     Enter then the accountants & associated number crunchers, who have us by the nuts & bolts… We are trainers & exporters of accountants. Yet none of them appear to be able to count on our behalf. None dare stand up and declare, it is they who owe us and here is how & why! If proofs are needed. And chartered, indeed, but with a compass oriented in which direction?! None can say, it is modern industry that counts.

     It is no ironic historical farce we are having 2 English literary festivals, one sponsored by the tourist rentiers fattening upon that ‘boutique’ Fort in Galle, where locals are being systematically chased out, and another funded by ye olde English opium dealer HSBC – Hongkong & Shanghai Bank – who hath occupied the iconic Colombo Public Library…

     Would they ever feature such a novelist as Amitav Ghosh who has mined deep the archives in India, England and China, starring so bright in his 2023 opus Smoke and Ashes on his research into his trilogy Sea of Poppies about the role India’s merchant and moneylending minorities, so dominant in Sri Lanka too, have played in the monstrous and ignored English opium wars on China…. wars that continue in other ways to this day…

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Contents:

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Did Sinhala Monks Enlighten Rome about China?