Federalism: A framework for
economic exploitation
by Neville Ladduwahetty
Courtesy The Island 26-07-2007
A report in The Island of July 16, 2007 states that the Berghof Foundation
has been organizing study tours to India lasting three weeks in order
for public servants, academics and civil society activists to study
power sharing arrangements since 2005. The three week programme is conducted
by the University of Hamdard, New Delhi, and consists of a week dealing
with "introduction of the state, nation, human rights and federalism,
a week devoted to "India’s federal realities" and a final
week on "other international experiences of power sharing mechanisms".
If the Berghof Foundation is serious about fulfilling its mandate "to
enhance and support the capacities for constructive conflict transformation
in Sri Lanka", the best approach would be to expose the participants
to a variety of power sharing arrangements with advantages and disadvantages
of each, and for the participants to evolve an arrangement best suited
for Sri Lanka. Instead, the emphasis is on Federalism; the model preferred
by the International Community (IC).
Federalism however, goes far beyond the innocence of "self rule
and shared rule". The prime attraction of federalism for the IC
is that devolution of power to federal units offers opportunities to
gain political and economic access to the component units that would
normally be denied under a political arrangement where political power,
though democratic, is centralized. The federal units compete with each
other to attract foreign investments causing serious economic and social
imbalances among the federal units. Notwithstanding these dislocations,
federalism is pursued with vigor by the IC because of the advantages
offered to the corporate sector with global reach through access to
resources such as raw materials and labour within the federal units.
The process of transforming a democratic unitary state, such as Sri
Lanka, into one that is federal is the first step in the process. To
get there, the process starts with programmes such as that sponsored
by the Berghof Foundation to influence potential policy makers of the
benefits of federalism. This is followed by a campaign to discredit
the state on grounds of human rights violations, corruption or democracy
deficit. These shortcomings are attributed to the inability of the existing
political framework to deal with the problems facing the state, thus
qualifying the state to be restructured and modeled as a federal state,
without which the state would qualify to be labeled a "failed democracy",
a "failed state" or a "rogue state".
It is evident from developments in Sri Lanka that the stage is being
set to transform Sri Lanka into a federal state. The original plan was
to create a single federal unit by merging the Northern and Eastern
Provinces. Powers devolved to such a unit would enable the economic
potential of the region to be exploited by foreign public and private
investors and for its strategic advantages to be exploited by Governments
more readily, as has occurred in other federally constituted states,
than under the current unitary arrangement where the whole nation would
be involved in any arrangements negotiated. In a federal framework,
separation of any of the units would only be a matter of time as has
occurred with the Russian Federation, former Yugoslavia, Czechoslovakia
and a host of other countries. The separation of some of the federal
units of the Russian Federation resulted in the creation of 15 new countries
while the separation of the federal units of former Yugoslavia and Czechoslovakia
resulted in 5 and 2 new countries, respectively.
Membership of Poland and Czechoslovakia in the European Union has given
the opportunity for the United States to explore setting up early warning
devices in these two countries despite their internal concerns and that
of Russia. The future of Iraq, whether as a unified federal state or
as three separate entities would give the Oil Industry access to the
extensive oil reserves in the country; a prospect that would not have
been possible under a nationalized arrangement. The future of Kosovo
as a separate state would give access to "Europe’s largest
deposits of lignite coal" (Washington Post, January 26, 2007).
Clearly the lure of federalism lies not so much for its power sharing
capabilities but with gaining access to resources since federalism loosens
up the hold a unitary state would otherwise have.
THE STATUS OF KOSOVO
After being part of the Ottoman and the Austro-Hungarian Empires, Kosovo
was incorporated into Italian-ruled Greater Albania during World War
11. Since then Kosovo has been a province of Serbia; one of the federal
units of former Yugoslavia under Marshal Tito. The demographics of the
province has undergone considerable changes. Although Kosovo had a considerable
Serbian population under Tito’s Yugoslavia, today the province
is made up of nearly 90% Kosovo Albanians, following the intervention
by NATO in 1999.
The future of Kosovo has been the subject of much debate following
NATO intervention into the conflict between the Serbs and the Kosovo
Albanians. The ethnic cleansing of nearly 250,000 Albanians by Serbia
was cited as the reason for intervention, even though genocide of an
estimated 800,000 took place in Rwanda and the IC did nothing but looked
on. Following this intervention in 1999, Kosovo has been administered
by the UN and since then it has appointed the former Finnish President,
Martti Ahtisaari as a special Envoy to submit proposals for the future
of Kosovo. In the meantime the UN administered Kosovo government has
ignored Serbia’s concerns and sold off 120 of the province’s
540 "active companies".
Whatever the final outcome the "question of Northern Kosovo is
especially significant to the rich multinationals and to the Albanians
and Serbian Government. If Kosovo becomes independent, but the Serbian
north autonomous, the Albanians will most likely be deprived of the
cash windfall (or at least primary control of Trepca) deriving from
the area’s natural resources. The same would happen were Kosovo
to remain, as Belgrade demands, a part of Serbia. And if Kosovo becomes
independent with no autonomy for the north, the Serbs will lose out"(Christopher
Deliso, " Kosovo and Macedonia: Strategic Wars for Natural Resources",www.serbianna.com).
If Kosovo becomes independent with the support of the IC, it would
become the first instance of a region within a federal unit of a federally
constituted state that gains independence. Such an eventuality would
create a precedent, and the sovereignty and territorial integrity of
most of the states in the UN would be at stake. This precedent would
have a serious impact on Sri Lanka’s territorial integrity if Sri
Lanka is restructured as a federal state, because the precedent set
by Kosovo would entitle any part of the Northern and Eastern Provinces
of Sri Lanka to seek independence from the rest of Sri Lanka whether
constituted as separate federal units or a merged unit. In view of these
potential developments, Sri Lanka’s territorial integrity cannot
be assured under any federal arrangement that the IC is attempting to
impose.
THE FUTURE OF IRAQ
The war in Iraq was unilaterally initiated by the US and UK, ostensibly
because of the presence of weapons of mass destruction. To date no such
weapons have been found. It is now common knowledge that the primary
reason for the war was to oust Saddam Hussein and gain access to Iraq’s
oil resources that were nationalized in 1972. The war has made the future
structure of Iraq uncertain. What is certain, however, is that Iraq
would be a federal state divided on sectarian and ethnic lines, or three
independent states. Either way, the Oil Industry would gain access much
more easily to Iraq’s oil resources which are superior to other
sources because of its unique quality and much reduced cost of extraction.
In an article titled "Oil in Iraq: the Heart of the Crisis"
James A. Paul states: Iraq’s oil is generally of high quality because
it has attractive chemical properties, notably high carbon content,
lightness and low sulfur content, that make it especially suitable for
refining into the high-value products" (Global Policy Forum, December
2002). Aside from the fact that Iraq’s proven reserves are the
second highest in the world the fact that "more than a third of
Iraq’s current reserves lie just 600 meters below the earth’s
surface…Western oil companies estimate that they can produce a
barrel of Iraqi oil for less than $1.50" (Ibid) compared with $12
- 16 in the North Sea. In Texas and other US and Canadian fields, where
deep wells and smaller reservoirs make production especially expensive,
costs can run above $20 a barrel. When world market prices dip below
$20 a barrel, the North American fields yield no profit at all"
(Ibid).
In this background, the course taken by the IC to dismantle Iraq’s
centralized control of its oil was inevitable. The restructured state
would enable the IC to control the Iraqi government. According to Paul,
"Oil analysts believe that a US-controlled Iraqi government would
quickly make deals with the companies for privatized production. Such
deals, though possibly agreed-to in advance of the war, would be justified
by the new government on the basis that only the companies would be
able to quickly resume post-war production, in order to resume exports
and buy critical food, medicines, and other humanitarian goods. Furthermore,
Iraq’s huge needs to rebuild its post-war infrastructure would
lead towards high production"(Ibid).
CONCLUSION
The reasons for the IC’s interest to transform Sri Lanka into
a federal state are perhaps twofold. Firstly, to resolve the conflict
and bring peace and stability to Sri Lanka and the region and secondly,
would be dilute the influence of the center and permit federal units
to be individually accessed by foreign interests. Such interventions
in mature federal states such as the US and in new federal states such
as India have resulted in serious disparities among the federal units.
These disparities would be exacerbated when the resources within Sri
Lanka’s Economic zone that is 27 times the land mass of Sri Lanka
is exploited. Sri Lanka’s recent history demonstrates that such
imbalances would lead to instability and unrest.
Similarly, the intervention in Iraq would result in an imposed arrangement
where it would either be a single unified federal state or as three
separate states. Either way, opportunities would be created for the
Global Oil Industry to gain access to the oil resources that was denied
them under the nationalized arrangements. In order to gain access to
Europe’s largest coal deposits, if Kosovo becomes independent it
would set in place a dangerous precedent for any region within a sovereign
state, or a federal unit to seek independence and statehood.
Sri Lanka must, therefore, guard against every effort to transform
it into a federal state. If Sri Lanka is restructured as a federal state
under the pressure of the IC, whether with the Northern and Eastern
Provinces merged as one federal unit, or as separate federal units,
there is a strong possibility for these units to seek independence,
or for regions within them to seek independence inspired by global developments.
Therefore, if Sri Lanka’s territorial integrity is to stay intact,
a federal arrangement should be avoided because of its potential for
fragmentation, and because the political future of a state is determined
by its geography.
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