Western media loves to spread the story that Sri Lanka is caught in a Chinese debt trap, because roughly 10% of our debt is to China. Why don’t we talk about the rest of it? “Sri Lanka owes 81% of its external debt to US and European financial institutions and Western allies Japan and India.”
As Multipolarista documents:
The top holders of the Sri Lankan government’s debt, in the form of international sovereign bonds (ISBs), are the following firms:- BlackRock (US)
- Ashmore Group (Britain)
- Allianz (Germany)
- UBS (Switzerland)
- HSBC (Britain)
- JPMorgan Chase (US)
- Prudential (US)
It’s the imperial banks, recipients of free imperial coin, heading out to the colonies like the VoC before. Then the IMF comes in to sell off organs and gets us back into ‘debt-sustainability’, propping us up to bleed us some more. And they blame China lol. Keep your eye on the ball.
Sri Lanka’s story is plugged into every pre-conceived narrative—Tucker Carlson saying it was caused by the Green New Deal, imperial economists saying it was caused by MMT, everyone blaming China. All of the enemies of Empire are conveniently at fault, but never Empire itself. But that’s what’s going on. Sri Lanka is but an island cast in the seas of history, colonized for 400 years, a dominion till 1948, only becoming a Republic in 1972.
After the oil crash of the late 1970s Sri Lanka neoliberalized, donning the twin boots of militarization and capitalism, brutally crushing youth rebellions and floating it all on imperial debt. We imported fuel, cars, and finished goods and exported natural resources and human labor, like a good colony was supposed to. Economists try to reduce Sri Lanka’s problems to monetary policy, but Sri Lanka never had real control of our monetary policy, tied as we were to the petrodollar.
Now that global empire—standing athwart history yelling ‘stop!’—is collapsing, its two legs of capitalism and democracy are both crumbling. In Sri Lanka you can see them fall. But don’t take my word for it. Read (non-vulgar) economist Michael Hudson’s article, The End of Western Civilization. It tells you a lot about where we are.
He goes into the deeper history of Empire delving, as David Graeber did, into debt, and its non-forgiveness. Prior empires periodically forgave debt to stave off collapse, but since the Roman era empires didn’t, lead to their constant rise and fall.
What distinguishes Western economies from earlier Near Eastern and most Asian societies is the absence of debt relief to restore economy-wide balance. Every Western nation has inherited from Rome the pro-creditor sanctity of debt principles that prioritize the claims of creditors and legitimize the permanent transfer to creditors of the property of defaulting debtors. From ancient Rome to Habsburg Spain, imperial Britain and the United States, Western oligarchies have appropriated the income and land of debtors, while shifting taxes off themselves onto labor and industry. This has caused domestic austerity and led oligarchies to seek prosperity through foreign conquest, to gain from foreigners what is not being produced by domestic economies driven into debt and subject to pro-creditor legal principles transferring land and other property to a rentier class.
As you can see today, the same thing has happened to Sri Lanka and poor countries everywhere that didn’t take control of their economies but instead brought into ‘free market’ bullshit and divided themselves with dithering ‘liberal’ democracy. Western oligarchs getting low interest rates at home went out to the colonies to loan to any corrupt ruler they could find.
As David Graeber said, “Imagine there was some law that said they were guaranteed to get their money back no matter what happens, even if that meant, I don’t know, selling my daughter into slavery or harvesting my organs or something. Well, in that case, why not? Why bother waiting for someone to walk in who has a viable plan to set up a laundromat or some such? Basically, that’s the situation the IMF created on a global level — which is how you could have all those banks willing to fork over billions of dollars to a bunch of obvious crooks in the first place.”
Sri Lanka has been to the IMF 16 times. This is portrayed as our fault all the time, but there is no concept of debt-forgiveness to ever let colonized countries off the ground. They just keep bleeding us, giving us another shot of debt, and then bleeding us some more. They say it’s our fault but we can’t even determine our economic policies. The IMF comes in and determines them for us. 16 fucking times. They don’t fucking work, except for the ancient task of empire, which is looting the colonies and propping up their financial rentier class, as Hudson talks about.
Bringing it to the modern era, Hudson said:
This U.S. and NATO-based imperial system seeks to indebt weaker countries and force them to turn control over their policies to the International Monetary Fund and World Bank. Obeying the neoliberal anti-labor “advice” of these institutions leads to a debt crisis that forces the debtor country’s foreign-exchange rate to depreciate. The IMF then “rescues” them from insolvency on the “conditionality” that they sell off the public domain and shift taxes off the wealthy (especially foreign investors) onto labor.
As I’ve written, this is already happening in Sri Lanka where the poor are forced to suffer grievously, while the rich continue getting imported cheeses and paying $900 to fill up their Prados on the black market. Sri Lanka has undertaken IMF adjustments even without getting any IMF money, that’s how fallen and supine our elites are.
Sri Lanka is subject to financial colonization, which is somewhat redundant as we were largely colonized by private companies before also. It’s the same shit different day, to be honest. Instead of giving the Empire jars of earth and water to show our submission, countries all over the world have to hold dollars, often in western banks where they can just seize them, because of the gun-hold they have over the Middle East and the resultant petrodollar. As Hudson says:
The United States has followed a similar trajectory of imperial overreaching at the cost of its domestic economy. Its overseas military spending from 1950 onwards forced the dollar off gold in 1971. That shift had the unanticipated benefit of ushering in a “dollar standard” that has enabled the U.S. economy and its military diplomacy to get a free ride from the rest of the world, by running up dollar debt to other nation’s central banks without any practical constraint.
The financial colonization of the post-Soviet Union in the 1990s by the “shock therapy” of privatization giveaways, followed by China’s admission to the World Trade Organization in 2001 — with the expectation that China would, like Yeltsin’s Russia, become a U.S. financial colony — led America’s economy to deindustrialize by shifting employment to Asia. Trying to force submission to U.S. control by inaugurating today’s New Cold War has led Russia, China and other countries to break away from the dollarized trade and investment system, leaving the United States and NATO Europe to suffer austerity and deepening wealth inequality as debt ratios are soaring for individuals, corporations and government bodies.
Weak countries that took no control of their economies ended up colonized outright, but countries that actually industrialized (something the IMF never funds) were able to gain some independence. And it is this economic independence that White Empire pejoratively calls autocracy, like dividing the world into Christendom and savages, using the secular religion of Democracy™ (which is a lie). As Hudson says:
President Biden and his State Department neoliberals accuse China and any other country seeking to maintain its economic independence and self-reliance of being “autocratic.” Their rhetorical sleight of hand juxtaposes democracy to autocracy. What they call “autocracy” is a government strong enough to prevent a Western-oriented financial oligarchy from indebting the population to itself — and then prying away its land and other property into its own hands and those of its American and other foreign backers.
The Orwellian Doublethink of calling oligarchies “democracies” is followed by defining a free market as one that is free for financial rent-seeking. U.S.-backed diplomacy has indebted countries, forcing them to sell control of their public infrastructure and turn their economy’s “commanding heights” into opportunities to extract monopoly rent.
And this gets back to them accusing China of pulling Sri Lanka and other developing countries into a ‘debt trap’. And their media repeats the lie on a loop. Only around 10% of Sri Lanka’s debt is to China, and that’s for infrastructure. Even the boondoggle port in Hambantota was refinanced by China and we used that money to pay off interest on western loans. In Goebbels style, White Empire accuses their enemy of what they’re doing, and people fall for it. A lie repeated long enough becomes the truth.
And so here Sri Lanka is, drowning in a Western debt trap, while Western Civilization itself falls apart. Our colonial comprador elites keep trying to clamber up the butthole of Empire, but the thing is a zombie, vomiting out dollars and about to implode. There’s nothing there for us, but up we go. As Margaret Thatcher said ‘there is no alternative’. Of course, there is an alternative, but the western-backed slaughter of all the youth revolutionary parties and communists in both the South and North has left a lasting impression on the middle classes, who clutch their pearls whenever Socialism is brought up.
Yet Sri Lanka changed its name to the Democratic Socialist Republic of Sri Lanka in 1972 for a reason. That was supposed to be our independence, our economic independence. And we never got it. After the 1980s we got caught in a western debt trap and we never got out. Now socialism is a bad word. Now we have a completely unelected Prime Minister supposedly defending ‘democracy’ and a collapsed capitalism that is somehow socialism’s fault. It’s all exposed as the farce it was all along.
The two legs of White Empire are broken and Western Civilization is falling. It’d say good riddance, except the rubble is crushing us first. It’s falling on the poorest among us too, the ones who least deserve it. It’s the fall of Western Civilization, and eastern peasants have to take it worst. Historically all civilizations built on debt have collapsed into famine, rebellion, and ruin like this. We’re only at the “end of history” in the sense the climate debt is causing the end of the Earth as we know it. Besides that, it’s just a little bit of history repeating. Take that lesson from Sri Lanka, and that warning. This is the end of Western Civilization. You saw it here first.
For further reading, read Michael Hudson’s speech, it’s a good one. For more on Sri Lanka’s current economic situation, this interview with Fadhel Kaboub is good, and for a Sri Lankan economist, check out Ahilan Kadirgamar.