03/15/2010, 00.00
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Chinese investments in Sri Lanka bring poverty and injustice

by Melani Manel Perera
China is competing against India, Sri Lanka’s traditional partner, for its support. Meanwhile, foreign investments are making matters worse for the country’s poor, reduced to the status of cheap labour. Both democracy and the trade unions movement are at risk.
Colombo (AsiaNews) – Construction is underway to build Sri Lanka’s second international airport, which will rise near a new seaport, also under construction, in Hambantota District. China is lending Sri Lanka US$ 200 million for this project through it Export-Import Bank, which is already involved in other  projects across the island nation, including a US$ 100 million loan to the Sri Lanka Railways.

China is becoming India’s greatest rival for Sri Lanka’s favours, but its new role is not helping solve the country’s chronic problems, like the widespread poverty in its rural areas, its declining agricultural sector and lower food production, its rising foreign debt and inflation. What is more, many fear that Chinese money is contributing to the centralisation of power in the office of the Sri Lanka presidency and in the hands of one man. At the same time, it is undermining the autonomy of local trade unions.

Mr. Sarath Fernando, the moderator of the Movement for National Land and Agriculture reform, spoke to AsiaNews about the issue.  He said the government favours foreign investments because they lead to faster economic growth and this, the authorities believe, will reduce poverty.  

“The government wants foreign investments because they bring foreign capital and technologies, as well as access to foreign markets,” Fernando said. “Since 1977, every government has pursued an export-oriented strategy. A strong presidential system with power vested in one person is seen as the basis for political stability, which is seen as a necessary condition to attract foreign investments. Similarly, organised trade unions must be suppressed because foreign investors want weak or no unions in order to benefit from cheap labour.”

“Since 1977, successive governments have been offering investors, land, natural resources and cheap labour. Developing the country’s infrastructure is part of this strategy; one example is the ‘Greater Colombo Development Project’, which includes the construction of an airport, rapid rail transport, thermal power stations and much more.”

For the activist, the development model adopted by the government is flawed. “Any analysis of the application of this policy package can easily show that it has lead to increased rural poverty, a breakdown in domestic agriculture and food production, greater income disparities, a large foreign debt, a higher cost of living, political conflicts, suppression and violence. This was done against the interests of the poorer sections of society; therefore, their protests had to be suppressed.” This explains why “freedoms, democratic and human rights” are being smothered.

“These policies have been applied consistently since 1977 up to 1994 when the United National Party was in power.  Before she was elected, President Chandrika Kumaratunga made some promises against the market-led growth model, but once in power she had to go back to the same policies in order to win the support and collaboration of international and local capital. When Ranil Wickremasinghe became prime minister, he actually reiterated this approach in his ‘Regaining Sri Lanka’ programme.  There was much greater emphasis on infrastructure development projects such as the express highways, airports, harbours, thermal power stations, etc.  The effort was to accelerate the process,” Fernando said.

“In order to facilitate this strategy, it was also recommended that other changes be made,” including the creation of a free land market” through the removal of restrictions on the sale of land granted to landless people under the Land Development Ordinance. It was expected that when a free land market was created, many small-scale rural farmers would sell their land and move t urban areas, where they would increase the reserve of cheap labour. 

“It would be a mistake to look at such massive infrastructure development projects as part of a necessary development process. It would be too simplistic to imagine them as simply improving the country and make it richer. They are ways of making the richer sections of society make more money.”

For Fernando, “Whether loans are given by China, India or any other country or international lending institution, they are only loans and have to be repaid.” At the same time, “they are being used to benefit rich foreign investors who will take advantage of the facilities” built with foreign loans “to exploit the resources of the country and the potential of the people for their own benefit.”

“Since these investments include many years of 100 per cent tax holiday, foreign investors will enjoy these facilities without paying any taxes.” This amounts to a process “of compelling the poor to subsidise the rich”.

Ultimately, “Sino-Indian competition for control of Sri Lanka’s economy will not bring any benefit to the country’s poor. Only its rich sections will benefit.” What we must do instead is “help the poor better utilise the potential of nature” to achieve “sustainable development.”

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