Some sorta China day, Horton Place, September, 2010
The US voted to ban aid to Sri Lanka unless the government ‘shows accountability’ for the war. So, they effectively ban aid. I could get into how the US is hypocritical (HRW recently recommended that Bush and Cheney be investigate for war crimes) or unfair (aid to Afghanistan, Bahrain, etc) but besides the point. The point is that US aid to Sri Lanka is paltry and will be replaced by money from China. The net effect is bad for the interests the US professes, bad for the Sri Lankan people, and generally dumb.
This will make people that want vengeance or want to see Mahinda and family punished happy. Which is whatever, but it’s not good policy. Let’s say good policy is A) to give the US leverage and B) to use that leverage to promote human rights, democracy, etc.
The US has given 2.2 billion to Sri Lanka in aid since 1948. This sounds great till you divide it 63 years. The US has given an average of 35 million dollars a year, and I’m assuming this includes tsunami. USAID requested $13 million for 2010.
Banning this amount carries no serious implications, it’s just an insult to the government. Essentially, the US is speaking loudly and carrying a toothpick.
By contrast, China just gave 9 million USD to Mahinda as a personal grant. The Sunday Leader just ran something on ‘Chinese Economic Hitmen‘:
According to the External Resources Department by 2009, 54% of a total USD 2.2 billion that Sri Lanka received in the form of loans and credit came from China. In 2010, disbursement from China amounted to about 40%, its nearest rival were the Asian Development Bank and Japan at 15% each. In the same year, loan/credit commitments from China were even higher. Since November 2010, the Chinese loans (being discussed/finalized have increased by nearly USD 3.4 billion.
China’s investments have been mostly in the form of loans at an interest rate which is far higher than from other countries and multilateral agencies.
Hence, the affect of the US cutting Sri Lanka off is not Sri Lanka adapting to US demands (which I think are not the optimal ones) but Sri Lanka going somewhere else entirely. That is, if this ban’s goal is to push Sri Lanka towards accountability and democracy, its effect is to shove the country in the exact opposite direction.
So, what’s going on here? Basically, Mahinda gets political crack money while the Sri Lankan people are… uh, Mahinda gets short-term money which benefits him politically while the Sri Lankan people get a hefty delayed bill.
This is a lose-lose for everybody except China, and a classic piece of policy which mistakes making a statement with actually making a difference. This ban has no serious impact anywhere but in the media, but since the US Congress Continues Debate Over Whether Or Not Nation Should Be Economically Ruined I fear that reasoning may besides the point.