Topped off by a curious ‘coup’ attempt in Russia, June was a fascinating month with new geopolitical economic developments, twists and turns on many fronts: As US President Biden wooed, wined and dined India’s Prime Minister Modi (who was once refused a visa to America), France’s Macron sought an invite from South African President Ramaphosa to the BRICS summit to be held in August though France is hardly an ‘emerging economy’.
Perhaps Macron’s interest in BRICS was due to India’s Foreign Minister, Dr. Jaishankar’s recent comment that ’Europe has to grow out of the mindset that Europe’s problems are the world’s problems but the world’s problems are not Europe’s problems’. He had clearly tired of lectures about India’s purchase of Russian oil bucking Western sanctions.
‘Curiouser and curiousor’ cried Alice of the smiling cat in Wonderland as Joe Biden wooed the Indian defense establishment with a promise of technology transfer and Macron tried to stay relevant vis-à-vis the Global South in his complex pas de deux of corporation and competition with Biden.
Simultaneously, debt trapped Sri Lanka’s US “Force” backed President Ranil Rajapakse tangoed at the colonial Club de Paris while attending Macron’s June ‘Summit for a New Global Financing Pact’ which smelt like old wine in new bottles, albeit with a ‘climate resilience’ Greenwash label!
Bondscams and Financial Corruption off the Charts as Global Power Shifts
It has been clear for some decades that the Washington twins (World Bank and IMF), and OECD’s colonial Club de Paris dominated global financial architecture is no longer fit for purpose as evident in the current world inequality and poverty pandemic.
However, at Macron’s summit for a new Global Financial Pact the chief problem of systemic corruption in the global financial system was neatly side-stepped with the ‘climate catastrophe’ narrative to distract: There was no mention of global-local networks of financial corruption, shadowy off-shore bank accounts, bond scams or bond crimes like the killing of a primary witness in a court case on the 2015 Bondscam at the Central Bank of Sri Lanka (CBSL), in which the Sri Lankan President was a respondent. Macron’s hot air Summit for a “New global financing pact” was apparently staged to promote Green and Blue bonds as the new frontier to save the planet!
The Club de Paris represents predatory Eurobond hedge funds like BlackRock (which is Sri Lanka’s main private creditor), and their derivatives’ corruption racket with global-local networks of rating agencies, accounting companies, legal firms, consultants and neoliberal think tanks that are part of the IMF gravy train, or ‘bailout business” as the Transnational Institute in Amsterdam termed it. This gravy train games the (debt) data and crafts narratives to debt trap, pump, and dump vulnerable countries and their currencies against the ‘exorbitantly privileged and extravagantly printed US dollar, enabling the greatest transfer of wealth in human history to the global one percent.
Remarkably, the purportedly bankrupt Sri Lankan rupee started appreciating steeply against the US dollar, when the IMF started mission creep into Domestic debt restructuring (DDR), conflating and inflating the country’s quantum of debt.
French Spring in Colombo: Sri Lanka heads to Argentina
Meanwhile, June in Colombo saw a ‘French Spring’ culture and soft-power charm offensive unfolded for the local twitterrati on the lawn of the Sri Lanka Foundation, to the strains of Edith Piaf’s classic ‘quand il me prend dans ses bras’, as IMF mission creep to restructure Sri Lanka’s internal or Domestic debt (DDR), rather than the much hyped external debt that was the cause of the Default got going. This would among other things inflate a debt numbers, conflate internal and external and deepen the debt trap narrative. DDR was needed ironically to impress the colonial club’s predatory creditors regarding Sri Lanka’s bona fides!
Sri Lanka ’s first Eurobond Debt Default that enabled the Washington Twins (World Bank and IMF), takeover of the strategic island’s economic sovereignty and policy autonomy is located in the Global Transition and Power-Shift from West to East, North to South. Given the island’s geostrategic location at the Center of the Indian Ocean, it has become a hybrid economic proxy war site in many ways like Ukraine, Taiwan, and others, as the BRICS’ economic growth outstripped the traditional G-7 block, and Cold War 2 ramps up between the US-led ‘West’ and the ‘Rest’ led by China for a Multipolar world in the Asian 21st century/
However, it seems increasingly clear that the Euro-American jazz ensemble would be playing as another postcolony sinks in Eurobind networks of financial corruption and debt amid Parisian climate change summits with French fishing fleets extending their reach and catch into the Central Indian Ocean. This in the wake of the Credit Suisse Tuna Bondscam in Mosambique, as fish had become unaffordable in debt trapped Sri Lanka,![i]
Was Macron’s pivot to the BRICs also due to recent setbacks in Africa, Burkina Faso and Mali, where France was accused of neocolonial meddling? Hardly surprising then that Macron’s request for an invite to the BRICS Summit in South Africa in August elicited a rather cool reply from President Ramphosa who replied that he’d circle back to Macron.
However, Presidnet Ranil Rajapakse seemed oblivious of Macron’s pivot to the BRICS and persisted in promoting the myth that “there is no alternative” (TINA), to the IMF’s agenda of more Eurobond debt-trap borrowing from Colonial Club lenders to deepen the debt trap in the long term.
The President (who was once called “bondscam Ranil” due to his role in CBSL bondscams), that destroyed the reputation of the country’s heist financial institution back in 2015, has been deaf to local civil society and Opposition calls for a ban on borrowing from predatory Eurobond lenders, and the call to seek help from Global South bi-lateral lenders and join the BRICS New Development (NDB), bank to avoid Argentina’s fate.
Argentina has been pumped and dumped by predatory Eurobond hedge funds for decades with IMF help and advice and is now on it 9th Default and 22nd IMF, bailout and again rocked by protests. Thus, seeking alternatives to the IMF and Colonial Club, Argentina recently applied to join the NDB, but the Sri Lanka president, business community and related think tanks, corporate media, journalists and bond traders seems to have not heard of the BRICS, NDB or even the ‘Global South’!
Gotterdemmerung: Regime Change in Nuclear armed Moscow?
Meanwhile, in the Russian theater, an exuberant President Zelenskyy claimed that Wagner Group boss, Yevgeny Prigozhin’s short march to Moscow in June was the long awaited NATO-backed Ukrainian counter-offensive, only ‘just started’ against Russia. That news item and visuals soon disappeared with the ‘coup’ story fizzling out in less than 24 hours, along with the global corporate media frenzy of speculation about the demise of Mr. Putin and the dissolution of Russia.
The curious ‘coup’ to take down Russian President Vladimir Putin was apparently checkmated by President Lukashenko who appeared from nowhere to whisk off Prigozhin to exile in Belarus! The rest of the world heaved a sigh of relief that Russia’s nuclear arsenal remained in Mr. Putin’s experienced hands.
Prigozhin meanwhile sounded like a tragi-comic antihero in a Wagner Opera –Gotterdemmerung perhaps? He bewailed that the plan was never to unseat Mr. Putin who had helped his star to rise once. Nor was the plan to create civil war in beloved mother Russia, but to save his men. Putin’s approval ratings are after all pretty high among the Russian public despite the United States and its NATO allies take on him.
Of course there was no mention that the Wagner Group followed in the distinguished tradition of US and UK military contractors like Blackwater, storied in Scarhill’s (2008) book; “Blackwater: The Rise of the world’s most powerful mercenary army” well known for dark deeds in Iraq and Afghanistan, that fought shoulder to shoulder with the US military.[ii] Closer home, Phil Miller’s book ‘Keenie Meenie” the British Mercenaries who got away with war crimes in Sri Lanka based on de-classified documents also provided perspective on the external actors in Sri Lanka’s purportedly internal ethno-religious conflict.
Blackwater has since been renamed “Academi” of all things so that links to BlackRock and Blackstone hedge funds are illusive.
Meanwhile, in a script that read like a dystopian fairy tale, US President Biden who had been busy scenario mapping and modelling a post-Putin Russia and world order with Canadian Prime Minister Trudeau, and other NATO supporters of the War Machine, then proceeded to plausibly deny that western intelligence agencies had anything to do with the Wagner ‘coup’.
Cold War propaganda and disinformation was subsequently amplified by Kash Patel, former Deputy Director of National Intelligence, who suggested that Mr. Putin had staged the whole show — a new Wagner opera starring Prigozhin. Mr. Putin it seems had nothing better to do than stage own goals and black opera.
A New Wagner Opera as French Spring unfolds with IMF Mission Creep: The Real ‘Existential Risk’ is War, Not Climate Change
As the Wagner Opera staring Prigozhin unfolded in Russia there were growing concerns around the world about external attempts at ‘regime change’ and US-led NATO brinkmanship in Ukraine. This scenario poses a far great clear and present ‘existential threat’ to planet earth than exaggerated Anthropocene climate catastrophe hype routinely dramatized on global corporate media channels by putting at risk Russia’s extensive nuclear weapons arsenal, also given Russia’s clearly defined Redlines, which somehow NATO despite its AI augmented reality seems to miss.
The quick end of the Wagner opera saw the world heave a sigh of relief that Russia’s nuclear weapons were still under Kremlin control since regime change operations to divide and rule are messy, designed to cause chaos, unleash “cascades of violence’, and mask the external actors, behind apparently internal conflicts. This was evident in the playbook recently used to destabilize Sudan with the RSF paramilitary group fighting the Sudanese military, soon after the signing of a peace pact between Iran and Saudi Arabia to stabilize the region brokered by China.
Was the same Sudan playbook used in Russia to stage the Wagner opera? It is hardly a secret that the intelligence agencies and Special Forces of the ‘military business industrial complex’ as US President Dwight Eisenhower termed it, are past masters and experts at executing seamless Over the Horizon (OTH), Full Spectrum Dominance (FSD), regime change operations, with protest and ‘cascades of violence’ with a ‘mask of democracy’ as happened amid the Aragalaya in debt trapped Sri Lanka, caught in a hybrid economic war last year as Cold War ramped up in the Indian Ocean.
The Arab Spring style protests enabled staging the strategic island’s first ever Sovereign Default enabling the Washington Twins to erode economic sovereignty and policy autonomy while everyone was distracted with protests. So too, the installation of Donald Lu’s Force-backed President Ranil Rajapakse to market the narrative that Sri Lanka is ‘bankrupt’ and ‘there is no alternative to the IMF’ transpired. All this happened amid a propaganda operation blaming China for the Default which was actually staged by predatory Eurobond lenders like BlackRock, and the Hamilton Reserve Bank of St Kitts and Nevis taking out a Court case in New York.
Sovereignty of States and IMF Mission Creep
Upon his return from Macron’s Paris “Summit for a New Global Financing Pact” in the last week of June, Sri Lankan President Ranil Rajapakse following orders embarked swiftly on internal or domestic debt restructuring (DDR), euphemistically now called ‘domestic debt optimizing’ (DDO), by declaring an extended holiday and closing the country’s banks.
Although the Default occurred due to External dollar denominated debt and NOT due to the Internal or Domestic Lankan Rupee-denominated debt, the IMF was now suddenly in a rush to restructure Sri Lanka’s internal debt. Why? The IMF claims that DDR before restructuring external dollar denominated debt would send a positive message, ironically, to the predatory Eurobond creditors of Sri Lanka!
The IMF, however is mandated to deal with a country’s External dollar-denominated debt and NOT internal or domestic debt, which is an internal matter of a Sovereign States that may issue credit in the national currency.
The current IMF mandate and mission creep into Sri Lanka’s domestic affairs and domestic debt restructuring is fundamentally detrimental to a majority of the county’s citizens– the working classes as their retirement funds –Employment Provident Funds and Employment Trust funds are being targeted for debt repayment, while the banks are spared. Hence, the working class will see their pensions dramatically reduced to pay off predatory Eurobond creditors, like BlackRock and their anonymous bondholders,
Ironically, the IMF insists that all must share the pain of debt restructuring, while talking about the ‘parity of treatment” of all creditors, but what about transparency and disclosure of the identities of the bond holders?!
BlackRock versus the People of Sri Lanka? Statement by 182 Economists
Earlier this year a statement issued by 182 International economists and development experts including Jayati Ghosh, Thomas Piketty, Dani Rodrik, Ravi Kanbur, Yannis Varoufakis and Ha-Joon Chang – called for debt cancellation by all external creditors and measures to stem the illicit outflow of capital out of Sri Lanka.[iii]
In the statement the experts noted “Private creditors own almost 40% of Sri Lanka’s external debt stock, mostly in the form of International Sovereign Bonds, but higher interest rates mean that they receive over 50% of external debt payments. Such lenders charged a premium to lend to Sri Lanka to cover their risks, which accrued them massive profits and contributed to Sri Lanka’s first ever default in April 2022. Lenders who benefited from higher returns because of the “risk premium” must be willing to take the consequences of that risk.”
In short, private lenders like BlackRock that charged high interest rates citing risks in lending to countries like Sri Lanka and made big profits must now take the loss, instead of the Colonial Club de Paris and the IMF forcing the working classes to pay for corrupt bond trades between politicians and hedge fund managers using EPF and ETF funds.
The experts also alluded to the lack of transparency, as well as, the fundamental lack of justice in the current Global Financial Systems and debt its restructuring operations: Why should the working people of Sri Lanka bare the cost of corrupt bond trades between local politicians and international hedge funds?!
Is this not a travesty of justice? BlackRock, Sri Lanka’s largest private creditor today has funds in the trillions of dollars, having benefited from massive US Government Covid-19 Bailout Funds under the CARES Act to asset strip around the world kept lockdowns recommended by the World Health Organization and US Centers Disease Control in the past 2 years, ensuring among other things, supply chain hacking and global economic meltdown!
Moreover, while the US government debt is $32.4 Trillion and counting the IMF and related Rating Agencies have not called for Default given the exorbitantly privileged status of the US dollar, which is also why the Global South and BRICS are moving to De-dollarize.
Pumping and Dumping countries with Numbers Games: Debt trap Dependent Development
Meanwhile anticipating further mass impoverishment due to the IMF debt restructuring operations the World Bank is funding the Aswesuma poverty program of handouts ‘deemed Social benefits”.
This would be implemented with lots of fanfare to keep the same masses who the IMF’s DDR program is impoverishing happy! The game seems to be first beggar them and then provide handouts to keep them dependent on largess of the Washington Twins and its gravy train– a most ingenious form of “Dependent Development” or we may term it “Under-development” as world systems theorist Samir Amin did.
Indeed, given the wild swings in the rupee against the US dollar due to currency manipulation given information asymmetries, conflicts of interest and insider trading in a highly corrupt financial system, calculating the national poverty line and assessing the actual numbers of poor is akin to the story of Birbal counting crows in Emperor Akbar’s kingdom!
The debt data numbers game along with counting the poor increasingly appears to be yet another exercise in obfuscation in an era of numbers fetishism, AI and augmented virtual reality, designed to render opaque the big picture of a fundamentally broken and corrupt global financial system, riven with conflict of interest and designed to ensure the transfer of wealth to the Global 1 percent.
While Sri Lanka’s external debt was listed at $ 26 billion by the External Resources Department in April 2022, at the time of default it had suddenly and mysteriously ballooned with the IMF’s experts, and related accountants and massaging of figures to $86 in a country were debt data, veracity, authenticity and security is highly problematic!
A mystifying numbers game of debt with lots of jargon to confuse the people has transpired with the IMF gravy train of accountants, legal firms like Lazaard, Clifford and Chance and neoliberal think tanks like Advocata to obfuscate the BIG PICTURE and fundamental absence of justice, integrity or logic in the current debt restructuring operations.
But Macron’s Summit for a new Global Financing pact did not mention this elephant in the room– global local networks of corruption that keep bond market high. It is hence too that civil society groups have called to ban further borrowing from predatory private creditors that the IMF debt restructuring deal requires and to seek assistance from bilateral BRICS countries and the NDB. The IMF’s latest conditionality in the wake of Macron’s New Global Financing Pact appears set to increase Sri Lanka’s Debt Numbers Game and debt trap, and lays the ground for the IMF Fire sale of strategic national assets – lands, transport, energy and telecom sector infrastructure.
Remarkably, these same strategic assets and State Owned Enterprises (SOEs), were previously listed and targeted under the US Millennium Challenge Corporation Compact (MCC), that was rejected by the people of the strategic Indian Ocean island that is perpetually in the cross-hairs of big power rivalry.
The New Frontier in Bondscams: Green and Blue Bonds
With IMF mission and mandate creep into DDR, Green and Blue bonds have emerged as the new frontier in bondscams in Sri Lanka, which is a test case for another 50 Eurobond debt trapped countries in the wake of Covid-19.
Macron, has been linking and mixing the Global Debt crisis and environmental crises narratives into stew as opaque and un-transparent as bond derivatives, in order to roll out pulp fiction about green and blue bonds being a game changer to save the planet from Anthropocene climate catastrophe.
However, green and blue bonds are designed to ensure that the great global bondscam perpetrated by Eurobond traders that the Paris Club represents may continue, deepening debt, climate injustice and inequality! In fact, Blue and green bonds would kill two birds, or perhaps three, with one stone: Dispel the stink of corruption associated with Eurobond trading debt traps in Global South countries with lots of environmental Greenwash and Blue wash, and enable the privatization of national forests and fisheries grounds of bond-trapped countries under the guise of ‘environmental conservation” linked to debt restructuring. This would also meet the goal of re-making global and local food (in)security envisaged for the global green reset, with Sri Lanka’s fisheries resources looted by French and EU fleets.
Is it perhaps hence that President Ranil Rajapaksa has studiously ignored calls for a balanced Foreign Policy, and working together with China and India which are NOT members of the OECD’s Colonial Club de Paris, in order to leverage Global South help and NDB funds to avoid the fate of Argentina, seemingly caught in a permanently suspended IMF debt Default?.[iv]
In the context, Sri Lanka clearly needs begin to de-dollarize to de-colonize and regain its Economic Sovereignty and Policy autonomy from the Washington Twins and the colonial Club de Paris.
Dr. Darini Rajasingham-Senanayake is a social and medical anthropologist with research expertise in international development and political economic analysis. She was a member of the International Steering Group on “Southern Perspectives on Reform of the International Development Architecture”