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Sri Lanka and IMF: Delusional Partners

As Sri Lanka enters its 17th IMF program, it's time to ask for a different solution to the country's problems.

by Steve H. Hanke and Caleb Hofmann

Here we go again. The International Monetary Fund (IMF) is in command of Sri Lanka’s economy, barking orders and making demands in an effort to restore macroeconomic stability. The pattern is a familiar one. Back in April 2022, Sri Lanka’s currency collapsed, having depreciated by 44 percent against the U.S. dollar since President Gotabaya Rajapaksa took office in 2019, and, according to our measure, inflation reached a stunning 74.5 percent per year. Sri Lanka even suspended payments on its external debt. Then the IMF fire brigade arrived.

Sri Lanka money Rupee, banknotes and coins. [ File Photo ]

On September 1, 2022, the IMF reached a staff-level agreement to support Sri Lanka’s economy with a 48-month lending arrangement of roughly $2.9 billion. Now, the IMF is withholding the cash until Sri Lanka raises corporate-income and value-added taxes, cuts government spending, and reaches a debt-restructuring agreement with two of its largest creditors, China and India. The IMF is confident that these measures, among others, will stabilize Sri Lanka’s economy.

There’s just one little problem. This is Sri Lanka’s 17th IMF program. In fact, Sri Lanka has been on IMF life support nearly continuously since 1965. None of the previous IMF programs have permanently stabilized Sri Lanka’s economy. Why should the 17th? As the famous, often-misattributed, quote goes: “Insanity is doing the same thing over and over again and expecting different results.” By this standard, both Sri Lanka and the IMF crossed the threshold of insanity long, long ago.

There’s little empirical evidence to suggest that Sri Lanka’s shiny new IMF program will be any more successful than the past ones. A recent working paper by researchers at the Johns Hopkins Institute for Applied Economics, Global Health, and the Study of Business Enterprise analyzed the effect of IMF loan programs, in the three years following the adoption of a program, on macroeconomic indicators from 2000 to 2010. The authors found that IMF lending arrangements resulted, on average, in a 5.8 percent increase in the unemployment rate, while control-group countries — countries that faced similar economic circumstances but did not implement IMF programs — experienced an average 7 percent decline in unemployment.

Other indicators tell a similar story. Countries with IMF programs fared worse than control-group countries in terms of real GDP growth, real export-value growth, and in the reduction of government debt. This research suggests that many countries would have been better off without any IMF assistance at all.

Sri Lanka’s economy is still in bad shape. Since Gotabaya Rajapaksa was elected in November 2019, the Sri Lankan rupee has shed 52 percent of its value against the U.S. dollar. Using purchasing power parity, one of us (Hanke) accurately measures inflation in Sri Lanka at a roaring 106 percent per year as of January 12. Since May 2022, foreign reserves have officially hovered around $1.8 billion, but a reported $1.4 billion of those reserves are locked away in a swap with the People’s Bank of China. So, if Sri Lanka’s economy needs stabilizing and a positive confidence shock, and another IMF program is not the answer, what is?

It’s time for Sri Lanka to mothball its central bank and replace it with a currency board. A currency board issues notes and coins convertible on demand into a foreign anchor currency at a fixed rate of exchange. It is required to hold anchor-currency reserves equal to 100 percent of its monetary liabilities.

A currency board, unlike the Central Bank of Sri Lanka, has no discretionary monetary powers and cannot issue credit. It therefore imposes a hard budget constraint on the fiscal authorities. Its sole function is to exchange the domestic currency it issues for an anchor currency at a fixed rate.

Currency boards require no preconditions and can be installed rapidly. They have existed in some 70 countries. None have failed, including the one that one of us (Hanke), designed and installed in Bulgaria in 1997. It immediately smashed a hyperinflation, caused interest rates to plunge, forced the fiscal authorities to balance the budget, and, with its positive confidence shock, spurred economic growth.

Today, thanks to its currency board, Bulgaria has the second-lowest debt-to-GDP ratio of any country in the European Union. Even the IMF heaped praise on currency boards a year after the installation of Bulgaria’s. A 1998 IMF publication noted that “currency boards in many countries have achieved impressive economic results, both in achieving lower inflation than other exchange rate regimes and in stabilizing expectations after prolonged hyperinflation.”

As it turns out, Sri Lanka (formerly Ceylon) had a currency board from 1884 to 1950. In 1884, the largest financial institution in Ceylon, the Oriental Bank Corporation, experienced an acute liquidity shortage due to bad loans to coffee plantations and subsequently failed. This sparked a run on two other banks, the Chartered Mercantile Bank and the Bank of Madras. With the crisis escalating, the colonial government quickly established a currency board, issuing fully backed, convertible-on-demand government notes — paper money. With that, the crisis was history.

It’s time for Sri Lanka to do the one and only thing that will permanently remove it from the IMF’s intensive-care ward. It should revert to a currency-board system, like the one it had for 66 years.

Courtesy: National Review. Click here to read the original version of this article

Sri Lanka: Is recolonisation the final solution?- II

Since a millennium before that time, the interactions between the island and the southern and eastern regions of the subcontinent were almost exclusively at the trade and cultural or religious levels, and the island's sovereignty was not challenged.

by Rohana R. Wasala

This is the second part of this series. Click here to read the part one

To assert, as Mr Sirimanne does, that “From ancient times the Northern region in the island was a kingdom occupied by Tamils due to its closeness to South India…….. during the reign of King Elara, a Tamil, there was a war between the Sinhalese and Tamil kingdoms…..” is completely wrong. It is a very irresponsible statement. The factual situation is that the young prince Dutugemunu of Magama in the south, after a long military campaign involving a series of hardwon battles, defeated usurper king Elara who had come from India as an invader. There had been no Tamil kingdom in the north or a permanent Tamil population in the north before the 13th century CE, as Professor Kingsley de Silva argues with evidence in his ‘A History of Sri Lanka’ (Penguin Books, London, 2005). Magha of Kalinga’s cataclysmic invasion with a massive army of twenty thousand Kerala and Tamil mercenaries and his ruinous occupation of Lanka for twenty-one years (‘moved thereto by the lust of wealth and power’ as the Mahavansa puts it), laid waste to the kingdom and the religion, and put an end to the achievements of the dry zone- based hydraulic civilization that the Sinhalese kings had built over the centuries. But during Magha’s reign ‘… there dwelt, scattered in the beautiful cities and hamlets that they had built for themselves in the great strongholds and mountainous parts of the country, some great and good men who defended the people and the religion from the disturber’ (Chapter 81 of the Mahavansa). This means that the Magha invasion caused the disintegration of the Lankan kingdom into a number of regional strongholds from which ‘great and good men’ (such as Subha Senadhipathi of Yapahuwa, a general, Sankha of Gangadoni, another military chief, and Bhuvaneka Bahu on the top of the Govinda rock) defended the rest of the country, until king Vijayabahu III of Dambabeniya’s son and successor, Parakrabahu II, was finally able to drive away the despoilers. In earlier times, South Indian invaders, when defeated and driven away, sailed back to India, but this time, Magha with his retreating army made a permanent Tamil settlement in the north.

A representational image: Christopher Columbus Arrives in America in 1492, by Gergio Deluci, 1893 [Credit: WikiCommons]

Since a millennium before that time, the interactions between the island and the southern and eastern regions of the subcontinent were almost exclusively at the trade and cultural or religious levels, and the island’s sovereignty was not challenged. But occasionally, right from the earliest times, traders became invaders. Thus, as the Mahavansa (Ch.11 ) records, ‘Two damila (malabar) youths powerful in cavalry and navy, named Sena and Guttika’ (Sena and Guttika were horse traders with a fleet of ships.), after killing the reigning monarch Suratissa, who must have been very old by that time, ‘righteously reigned for twenty-two years’ from 237 to 215 BCE. But Suratissa’s youngest brother (most probably nephew) Asela defeated and put to death the usurpers, and restored Sinhalese sovereignty, and ruled at Anuradhapura for ten years. Then, another powerful trader (as recently concluded by historians) from South India named Elara killed king Asela, and ruled the country for forty-four years. But see how the Mahavansa (Ch. 11) records this event: ‘A damila named Elara of the illustrious “Uju” tribe, invading this island from the Cola country, for the purpose of usurping the sovereignty, and putting to death the reigning king Asela, ruled the kingdom for forty-four years, – administering justice with impartiality to friends and to foe.’

Following is how king Dutugemunu treated his fallen enemy king Elara, fully recognizing the latter’s noble reputation as a righteous ruler, though a usurper, as recorded in the Mahavansa Ch. 25: (Mr Sirimanne alludes to this episode in a rather offhand manner.)

‘Summoning within the town the inhabitants of the neighbourhood, within the distance of a yojana, he held a festival in honour of king Elara. Consuming the corpse in a funeral pile on the spot where he fell, he built a tomb there; and ordained that it should receive honours (like unto those conferred on a Cakkavatti). Even unto this day, the monarchs who have succeeded to the kingdom of Lanka, on reaching that quarter of the city, whatever the procession may be, they silence their musical band.’

(This royal decree is honoured by the Sinhalese Buddhists even today, after over two thousand years.)

Isn’t this something hard to come by in the history of war in the world, war being an ever present necessary evil, as it were, in human affairs? King Dutugemunu’s magnanimity in victory came from his Buddhist upbringing. At the beginning of his campaign against Elara, prince Dutugemunu declared: ‘This enterprise of mine is not for the purpose of acquiring the pomp and advantages of royalty. This undertaking has always had for its object the re-establishment of the religion of the Supreme Buddha…..’. (The country’s ancient Buddhist culture is a world heritage that must be protected.) The same compassionate and generous spirit was alive in the hearts of the young soldiers and their commanders who took part in the humanitarian operation in the north that put an end to the armed separatist terrorism in 2009. They could have brought the war to a quicker end and suffered a lot fewer casualties among themselves than they did, had they chosen to defy what was inherent in their cultural DNA. Unfortunately, the geo-poiltics driven superpowers have not recognized this fact, and have visited punitive afflictions on Sri Lanka for alleged violation of human rights that make life miserable for all Sri Lankans.

To return to my subject, geographical proximity no doubt was a factor in the stimulation of interactions between the two countries, but mass movements of population to and fro were not so easy as to be a usual occurrence. The fact that Sinhala kings sometimes brought queen consorts from South India (due to complicated succession problems that had nothing to do with the then existing demography of the country) is not something unique to them. Just look at the Wikipedia: The recently deceased queen Elizabeth II’s family tree has ancient roots in Germany, Denmark, Russia, etc.; but citizens of those countries do not seem to think of claiming that she was of their ethnicity or of assuming that the fact had any political significance.

Of course, as a result of these interactions, the Sinhalese acquired a great deal of Indian culture. But the important thing to remember while appreciating that fact is that over the past twenty-three centuries the Sinhalese have cherished their own language, their own distinct spiritual doctrine (Buddhism), and their island home with its rich abundance of recorded and unrecorded evidence of their prehistoric insular ancestry and their ancient Buddhist heritage. When it comes to sharing the natural resources of the land with minorities with different religious cultures, languages, ethnicities, etc. that joined them later in different contexts, there is no other race of people who are more humanely accommodating than the Sinhalese Buddhists in spite of the fact that they were the most persecuted community during the past half a millennium under the jackboot of three European colonial powers. Why were they singled out for such suppressive treatment? It was because the colonialists correctly identified the Sinhalese (under the benign sway of their spiritual masters, the Buddhist monks) as their only implacable enemy.

Traditionally, whenever the country and the Buddha Sasanaya were in jeopardy, the monks have come forward as defenders, on rare occasions even as armed soldiers. Warrior king Dhatusena who ruled at Anuradhapura from 455 to 473 CE, having defeated six Dravidian usurpers, was a Buddhist monk in his youth. King Senerath of Kandy (who reigned from 1604 to 1635 CE) was originally a monk. He disrobed to become king in order to try to rid the country of invading foreign powers. He fought against the occupying Portuguese and expanded the territory of his kingdom. The Sinhalese only thought of the country, the Buddha Sasanaya, and the commonality of people, not so much about their race. In modern times, sometimes Buddhist monks have cause to feel threatened by non-Buddhist extremists who forcibly enter the Buddhists’ religious space or when they vandalize or lay claim to ancient Buddhist archaeological sites (even violating the antiquities ordinances established in British times). It is natural that they try to raise awareness among the citizens about these things and to get the political authorities to set things right according to the law. People who have political or sectarian or religious axes to grind have no qualms about excoriating the monks and lay Buddhists for alleged racism, chauvinism, extremism, xenophobia, and so on, simply because they raise their voice against the covert and overt excesses of extremists that go undetected or unrecognized by local political authorities and the hostile foreign NGO brigade. Of course, it must be remembered that Tamil Hindus face the same threats from religious fundamentalists. Actually, Tamil Hindu and Sinhala Buddhist solidarity is indispensable for mutual protection from the proselytizing zealotry of mindless fundamentalists. Certain foreign funded NGOs and their local allies do everything possible to prevent the Sinhalese Buddhists and Tamil Hindus from uniting for making common cause against unethical conversion projects.

Mr Sirimanne seems to imply that colonizing of Sri Lanka by three European nations happened as a matter of course, apparently unopposed by the native Sinhalese and Tamils, and that they somehow benefited from the experience. The truth is otherwise. Our people were massacred, our places of worship were vandalized, desecrated, burned down, or alienated to strangers or converts, while the country’s natural resources were plundered, and the sons of the soil were oppressed, downtrodden, and exploited. Because of this historical reality, for all the missionaries’ efforts of four and a half centuries, only about six percent of the local population had embraced Christianity/Catholicism by 1947, and the rest 94% had willingly forfeited all claims to possible material rewards by refusing to abandon their no less humanizing hereditary faiths.

At first, under the Portuguese, Sinhalese Buddhists in coastal areas embraced Christianity under duress, but later, as Mr Sirimanne says ‘Many Sinhalese in towns and cities for favors changed their religion and acquired Portuguese names’. Serving or saving the Sinhalese was not the real concern of the Portuguese. They thought of their own people back home, just as the foreign powers involved in our internal affairs currently do. Portugal at that time was not as resource-rich as Sri Lanka, its people were enjoying a far lower standard of living than the contemporary Sinhalese. Provocation for plunder was high. And it didn’t go unheeded. (See Dr Susantha Goonatilake’s ‘A 16th Century Clash of Civilisations: Portuguese Presence in Sri Lanka’, Vijitha Yapa, 2010) The Dutch who followed them introduced a network of canals for transport of local products for export for their own revenue, and introduced Roman Dutch Law for ease of administering the provinces they were occupying. It is true that in the course of time, these innovations became useful to the descendants of the people that they had indifferently robbed.

On February 4, 1948, Sri Lanka was granted dominion status (within the British Commonwealth) which was short of full independence. It was not something remarkable or memorable by any means. India was given the same status on August 15, 1947. But the wiser and more dignified Indian leaders implicitly eschewed the ‘benefits’ of membership of that body, and officially quit it on January 26, 1950, and asserted their country’s full independence, worthy of their many millennia of glorious civilization, which produced the great Buddhist emperor Ashoka, who introduced Buddhism to our country, and about whom H.G. Wells said: “……..amid tens of thousands of names of monarchs, “Ashoka shines, shines almost alone, a star” .

The patriotic progressive people of Sri Lanka under the leadership of Mrs Sirimavo Bandaranaike declared Sri Lanka a republic on May 22, 1972. Now that was a momentous occasion for the whole nation to celebrate. But it was less than an ideal choice to remain a member of the Commonwealth. Probably the choice was made for us by the powers that be. Has any special benefit accrued to Sri Lanka as a result? Has it done anything to relieve the suffering inflicted on the peaceful citizens for having defeated terrorism and saved democracy? Has it ever intervened on our behalf in such situations?

Mr D.L. Sirimanne ends his interesting article “Celebrating 75th Anniversary of Independence” (The Island/Opinion/January 18, 2023) with the following paragraph, which prompted this response:

‘It is almost 75 years since Sri Lanka obtained Independence from Britain and unfortunately the country was misruled and ruined by ignorant avaricious unpatriotic Sinhalese leaders fighting for power. It is now a bankrupt nation and 80% of the population is starving without food, fuel and medicine. It a disgrace to plan celebrating 75 years of ‘misrule’ as ’75 years of Independence.’ The 4th February 2023 should be a day of repentance and religious prayers to God, Allah and all the Devas to make Sri Lanka a prosperous and happy nation, with freedom and equality to all its multinational and multireligious citizens in the very near future.’

That within the last seventy-five years since the end of British occupation there have been some ‘ignorant avaricious unpatriotic Sinhalese leaders fighting for power’ is undeniable. We have living examples in the highest places even today. But to say that the country has been misruled and ruined solely by these unpatriotic Sinhalese leaders is a crass generalization that arbitrarily transfers all blame to the leaders of the Sinhala majority, while exonerating the few communalists among the minority politicians, who are actually even more responsible for retarding the forward march of post-independence Sri Lanka by adopting hostile attitudes to nationally beneficial changes proposed by Sinhalese leaders.

The Sinhalese voters, whenever they have the chance to do so, democratically elect their parliamentary representatives, hoping or requiring that they make laws for governing the country for the good of all its citizens regardless of multifarious differences among them. On every occasion that they felt persuaded that the leader who would be able to bring in necessary changes to transform the country so that this goal could be fully realized, they elected him or her with tremendous majorities, which were augmented by at least some votes from the minorities as well, such as when they elected Mr Bandaranaike in 1956, Mrs Bandaranaike in 1970, Mr Jayawardane in 1977, Mrs Chandrika Bandaranaik Kumaratungae in 1994, Mahinda Rajapaksa in 2010, and Mr Gotabaya Rajapaksa in 2019. In all these cases, they were elected on a nationalist platform, not on a communalist basis. Although ordinary Tamil and Muslim voters are as fair-minded and as democratic as the ordinary Sinhalese voters, the ruling elite of each minority community rouse communal feelings among its polity against the majority for their own advantage, rather than for that of the community they claim to represent. The evil practice of political horse-trading between majority and minority politicians seems to have come to stay. Global and regional superpowers exploit this situation to push their geopolitical agendas at the expense of Sri Lanka.

Mr Sirimanne’s wish for ‘a prosperous and happy nation, with freedom and equality to all its multinational and multireligious citizens’ is what all right-minded Sri Lankans have shared and have been slowly but surely moving towards since 1948. The British adopted the infamous divide and rule imperial policy, which is still being used against us. The term ‘multinational’ is problematic for our small country in that it denotes a number of nations, which means it promotes division. To say that we are a multiethnic or multiracial and multicultural nation is better for establishing ‘freedom and equality’ for all Sri Lankans. They already enjoy these. If there are any lapses, they are common to all communities.

The solution is not to try to return to the alleged Utopia that the British are believed by some to have bequeathed to us at independence (for such wasn’t the reality), or to overlook the 1972 change as insignificant, but to make way for the young of the country today to make a correct assessment of what has been achieved and what has not been achieved by the previous generations since independence (who were no less patriotic, no less proactive than them) and forge ahead with new insights, new visions, and appropriate course corrections as our ancestors did during crises to ensure our survival for so long as one people in spite of manifold differences among us.

Concluded

Remembering The Holocaust – When Abuse of Power And Hatred Met

 Truth and justice are unhappily mutually exclusive.

by Ruwantissa Abeyratne

“Of course, it was, under the law of all civilized peoples, a crime for a man with his bare knuckles to assault another. How did it come that multiplying this crime by a million, and adding firearms to bare knuckles, made it a legally innocent act?” Justice Robert Jackson at the Nuremberg Military Tribunal (1945)

International Holocaust Remembrance Day fell on 27th January, as it does every year, in commemoration of the day in 1945 when  the Auschwitz-Birkenau concentration camp – where in excess of  one million people were sent to gas chambers  to meet their agonizing deaths during the Holocaust – was liberated. One commentary says: “The Holocaust was the state-sponsored persecution and mass murder of millions of European Jews, Romani people, the intellectually disabled, political dissidents and homosexuals by the German Nazi regime between 1933 and 1945. The word “holocaust,” from the Greek words “holos” (whole) and “kaustos” (burned), was historically used to describe a sacrificial offering burned on an altar”.

This February/March 1945, file photo shows the entry to the concentration camp Auschwitz-Birkenau in Poland, with snow covered rail tracks leading to the camp. (AP Photo/Stanislaw Mucha, File)

One could not be blamed for thinking that the categories that the victims fell into –  as decided for extermination by the Nazis  – could have been described by the Nazi regime as “useless vermin” (particularly in the context of how they were disposed of)  although 78 years after the liberation of the camp we overwhelmingly recognize them as valuable and innocent human lives. The victims were persecuted, tortured, and killed based on their ethnicity, religion, political beliefs, or sexual orientation.  The Nazis  had been involved in annihilating, in the cruellest possible manner, not only Jews, but also Russians, Belarusians, Poles, Ukrainians and Serbs, Romanis (gypsies), LGBT people (lesbian, gay, bisexual, transgender), the mentally or physically disabled, mentally ill; Soviet POWs, Roman Catholics, Protestants, Jehovah’s Witnesses, people of the Baháʼí Faith, among others.

It is arguable that the two pivotal words that impelled the unspeakably egregious and evil acts perpetrated in the Holocaust are “power” and hatred”. Recent results of test conducted have revealed that when people are given power they wield it in accordance with their mor a al and ethical values.  The question is, do good people perpetrate bad deeds when they have power over others, or is it only the bad and the evil who are guilty?  Smithsonian Magazine reports: ”  a study recently published in the Journal of Applied Psychology, found that… people’s sense of “moral identity”—the degree to which they thought it was important to their sense of self to be “caring,” “compassionate,” “fair,” “generous” and so on—shaped their responses to feelings of power”.

In other words, Lord Acton’s famous words “power corrupts, and absolute power corrupts absolutely” may no longer ring true in all instances.  Good persons may exercise powers equitably, with empathy and  goodness while the evil may exercise their power iniquitously with egregious intent.  The bottom line seems to settle at Abraham Lincoln’s statement that   “nearly all men can stand adversity, but if you want to test a man’s character, give him power.” The most evil use of power is fueled by hatred, which has been described as “the most destructive affective phenomenon in the history of human nature”.   The inevitable corollary to hatred  is hate propaganda which often ingrains itself in a social system where the social degradation of the subject occupies the forefront of political discourse. Hate propaganda, spawned by hate speech, dehumanizes and depersonalizes the subject, degrading him to an imaginary persona and relegating him to the lowest depths usually assigned to a sub human species.

The immediate reaction of a society to this phenomenon is the recognition of hate crimes which emerge from hate speech and propaganda as any other crime, thus obfuscating the hatred that inspired such crimes and trivializing their qualitatively different nature. The ultimate result is of course the social acceptability of hate crimes and their desirability. This odious conclusion to a parasitic process is almost ephemeral and pervades the intellectual consciousness of a society to its ultimate destruction.

The mission of our institutions should be defined by a new, more profound, awareness of the sanctity and dignity of every human life, regardless of race, religion, language or wealth of persons. This will require us to look beyond the framework of cultural nuances. States and their educational authorities must focus, as never before, on improving the conditions of the individual men and women who give the state or nation its richness and character. As former Secretary General of the United Nations Kofi Annan said, a genocide begins with the killing of one man – not for what he has done, but because of who he is. A campaign of ‘ethnic cleansing’ begins with one neighbour turning on another. Poverty begins when even one person is denied his or her fundamental right to education. What begins with the failure to uphold the dignity of one life, all too often ends with a calamity.

We must therefore start from the understanding that peace belongs not only to states or peoples, but to each and every member of those communities. The power of seniority of status or particular immunity must no longer be used as a shield for gross violations of human rights, nor must the authorities concerned turn a blind eye to atrocities that may likely be committed on the young and the innocent. Peace must be made real and tangible in the daily existence of every individual in need. Peace must be sought, above all, because it is the condition for every member of the human family to live a life of dignity and security.

Truth and justice are unhappily mutually exclusive. While in legal terms, legislative parameters will define acts and qualitize their reprehensibility, in truth, speech and conduct that ingratiate themselves to a society have to be addressed politically. This is the dilemma that legislators will face in dealing with racial hatred. Hate speech and hate propaganda primarily erode ethical boundaries and convey an unequivocal message of contempt and degradation. The operative question then becomes ethical, as to whether societal mores would abnegate their vigil and tolerate some members of society inciting their fellow citizens to degrade, demean and cause indignity to other members of the very same society, with the ultimate aim of harming them? Conversely, is there any obligation on a society to actively protect all its members from indignity and physical harm caused by hatred?

The answer to both these questions lies in the fundamental issue of restrictions on racist speech, and the indignity that one would suffer in living in a society that might tolerate racist speech. Obviously, a society committed to protecting principles of social and political equality cannot look by and passively endorse such atrocities, and much would depend on the efficacy of a State’s coercive mechanisms. These mechanisms must not only be punitive, but should also be sufficiently compelling to ensure that members of a society not only respect a particular law but also internalize the effects of their proscribed acts.

Dr. Abeyratne teaches aerospace law at McGill University. Among the numerous books he has published are Air Navigation Law (2012) and Aviation Safety Law and Regulation (to be published in 2023). He is a former Senior Legal Counsel at the International Civil Aviation Organization.

A Vicious and Motivated Campaign to Malign Adani Group

While financial institutions and other agencies have extended loans or the public who have bought equity, there are no complaints from them. This obviously means that they are satisfied with the overall performance of Adani Group and all is well.

by N.S. Venkataraman

When an industrial group achieves spectacular growth, it is seen that those who cannot match the performance of the fast-growing group view such performance with surprise and disbelief.  In such circumstances, the armchair critics and the research and investigative organisations would try to   “invent and discover” some reasons for the rapid growth of the industrial group and in the process, the research organization would get media attention and come to the limelight.  There have also been cases and instances, where the competitors would try to indirectly launch campaigns against the fast-growing group and support negative campaigns so that the interest of the competitors would be protected.  There have also been cases where motivated environmental groups have scuttled projects by carrying out hate campaigns and stating unproven environmental violations against particular companies.

Gautam Shantilal Adani is an Indian billionaire industrialist. He is the chairman and founder of the Adani Group, [ Photo: Special Arrangement]

There have been many instances to show such motivated campaigns across the world for whatever reasons.

Two instances can be readily pointed out:

One is the Koodankulam nuclear project in Tamil Nadu in India, where a very vicious campaign was made against the project by so-called environmentalists and vested interests, which delayed the project by more than ten years. Now, the Koodankulam nuclear power project is operating quite well after commissioning, which clearly highlights the fact that all the allegations made against the Koodankulam nuclear power project were false and motivated.

Another immediate example is the Sterlite Copper project in Tuticorin region in Tamil Nadu, which is a large copper complex, which has been forced to be closed down by violent agitators, alleging   environmental violation. Sterlite Copper management denied all the allegations but the state government decided to close the unit permanently, fearing agitators.   The so-called environmentalists said that the Sterlite Copper was causing cancer in the local region and emitting noxious fumes, which was not true. Now, that the Sterlite Copper plant remain closed for around three years, it is clearly seen that there is no change for better in the atmospheric, soil or health conditions in Tuticorin region. This obviously proves that Sterlite Copper was sinned against rather than sinning.

Allegations against Adani group:

The present case of Adani group being accused of financial malpractices etc. by a US based research organization clearly falls on the same pattern as described above.

Many vague allegations have been made against Adani group such as family members occupying crucial posts, some unproven violations and preliminary notices issued against the group by government agencies which were suitably answered, artificially boosting share value in the market and so on.

Multiple activities in vital sector:

Adani group is involved in several field of activities including renewable energy, coal mines, seaport (Adani port), power transmission, telecommunication, airport management etc.  All these are well-planned profitable ventures if one can manage the business competently.

Adani group is a significant contributor to the industrial, infrastructure and economic growth of India and it is promoting technology and industrial growth, employment generation and conferring so many other benefits on the country as a whole.

The fact is that all these projects are managed with a reasonable level of competence by the Adani Group. The proof of the pudding is in the eating.

Not a loan defaulter:

While Adani group has taken large loan to finance the projects from financial institutions, there is nothing wrong in this, as these are legitimate methods to start and run any business activity. As the debt is serviced properly as per the terms of the agreement with financial institutions by Adani Group, this clearly show that the business is managed well.

Some sworn critics say that Adani group is debt-ridden. This is not true.  As a matter of fact, the total debt of Adani group is much less than several other groups as indicated below

A few companies with high debt  (  In Rs. '000 crores )

While financial institutions and other agencies have extended loans or the public who have bought equity, there are no complaints from them. This obviously means that they are satisfied with the overall performance of Adani Group and all is well.

There are many ways of raising finances for operating business and so long as they are done as per the law, there should be no complaints.

 The allegation that Adani group has artificially boosted the share value in the market is totally baseless, as the market evaluates and reacts to the ground realities relating to the company and participates in the financial scheme of things promoted by the company, as per their judgement.

Is it motivated allegation?

One thing that cannot but be noted is that such allegations have been made by the US based research company against Adani group at a time when the group is launching FPO (follow on public offering).  Obviously, one may suspect that the US organization has the intention of sabotaging the efforts of Adani group.

The financing institutions around the world will certainly scrutinize the FPO launched by Adani group carefully and properly and would not be influenced by the findings of some armchair critics, who call themselves as researchers.

Gullible public being misled:

The fact is that when such vague allegations are made and somehow get adequate publicity in the media, gullible people get confused and become suspicious even without understanding the actual facts.

For example, it is ridiculous to see media reports that Adani group’s public offer price is around Rs.3112/- while the face value of the share is Re.1 /-  The absurdity of the view can be explained as follows.

"Suppose an organization was founded by the promoters with the face value of the share Re.1/- and when the company would develop and progress very well, then the market share value of this Re.1 /- face value could be much higher.  In some cases, it could be even as high as INR 2000 /- and more per share.  In such circumstances, when the public offering is done with a share price of around INR 3112/- , it  should not be interpreted as that Re.1 face value is being priced as INR 3112 /-

Let not Adani group waste time:

Adani group has said that it was considering legal action against the U S based research company and the research company has replied that it would face legal action.

The fact is that the armchair critical team in USA has really nothing much to lose by legal action and they would get huge publicity due to the protracted legal proceedings that may promote their business contacts. 

 Whereas Adani group, which has many projects which are under operation oi implementation and have many more future projects in view,  would find it difficult to divert its attention and time to fight a legal case in court.

 Adani group should ignore such detractors and save its valuable time and energy to move on with the process of contributing to the industrial and economic growth of the country.

Views expressed are the author’s own

India’s Adani: Beginning of the End?

 India's Adani slammed by $48 billion stock rout, clouding record share sale

Shares of India’s Adani Enterprises (ADEL.NS) sank 20% on Friday as a scathing report by a U.S. short seller triggered a rout in the conglomerate’s listed firms, casting doubts on how investors will respond to the company’s record $2.45 billion secondary offer.

Seven listed companies of the Adani conglomerate – controlled by one of the world’s richest men Gautam Adani – have lost a combined $48 billion in market capitalisation since Wednesday, with U.S. bonds of Adani firms also falling after Hindenburg Research flagged concerns in a Jan. 24 report about debt levels and the use of tax havens.

With a net worth of $97.6 billion, billionaire Gautam Adani is now the world's seventh richest man, according to Forbes, slipping from the third position he held before the Hindenburg report. [Photo Credit: Businesstoday.in ]

The rout took shares of Adani Enterprises, the group’s flagship company, well below the offer price of its secondary sale, which had initially been offered at a discount.

The Adani Group is concerned about the fall in share prices but continues to be in wait and see mode as the share sale continues until Jan. 31, said two people with direct knowledge of the discussions.

India’s capital markets regulator is studying the Hindenburg report and may use it to aid its own ongoing probe into offshore fund holdings of Adani Group, two other sources said. Spokepersons for the regulator and Adani had no immediate comment.

Adani Group has dismissed the Hindenburg report as baseless and said it is considering whether to take legal action against the New York-based firm. It did not immediately respond to a request for comment on the regulator’s move.

With a net worth of $97.6 billion, billionaire Gautam Adani is now the world’s seventh richest man, according to Forbes, slipping from the third position he held before the Hindenburg report.

Adani met the county’s power minister R.K. Singh on Friday in New Delhi, according to a source familiar with the matter. The agenda of the meeting was not immediately known.

The billionaire hails from the western state of Gujarat, the home state of Prime Minister Narendra Modi. India’s main opposition Congress party has often accused Adani and other billionaires of getting favourable policy treatment from Modi’s federal administration, allegations the billionaire denies.

The stunning market selloff has cast a shadow over Adani Enterprises’ secondary share sale that started on Friday. The anchor portion of the sale saw participation from investors including the Abu Dhabi Investment Authority on Wednesday.

“The sell-off is seriously extreme … it has clearly dented the overall investor sentiment in the market,” said Saurabh Jain, assistant vice-president of research at SMC Global Securities.

Market worries extended to Indian banks with exposure to Adani Group’s debt. The Nifty Bank index (.NSEBANK) fell over 3%, while the broader 50-share Nifty index (.NSEI) was down 1.5%.

CLSA estimates that Indian banks were exposed to about 40% of the 2 trillion rupees ($24.53 billion) of Adani Group debt in the fiscal year to March 2022.

Source: The Reuters. Click here to read the complete report

Palestine Mission in Colombo Requests Public to Stand against Israel Brutality

This volatile escalation will fracture the stability not just in Palestine but also in the region and around the world.

Palestine Embassy in Colombo appeals to all believers of Justice and Humanity to raise your voice in support of Palestinians who are presently under a bloody Israeli attack

The Embassy of the State of Palestine presents its compliments to the Members of  Parliament from all Political parties in Sri Lanka, Human and Civil rights organizations, the Print and Electronic Media and Friends of Palestine and has the honour to urgently inform, that Israeli apartheid forces in a criminal and bloody operation which is still ongoing from the early hours of this morning, have killed at least nine Palestinians including an elderly woman and wounded over a dozen others in an outright massacre in Jenin refugee camp in the northern occupied West Bank.

Unarmed Palestinians take shelter from Israeli gunfire and tear-gas canisters during Thursday’s attack on the Jenin refugee camp in the occupied West Bank. [ Photo Credit: AP]

The Palestinian leadership has warned the world that this extreme and racist new Israeli government had a clear will and intention to commit such crimes against Palestinians. This government from day one highlighted its racist agenda and apartheid policies in all spheres to make the lives difficult for Palestinians, ranging from political, economic, invading holy places, confiscating lands, building settlements and increasing the arrests of innocent Palestinians.

This volatile escalation will fracture the stability not just in Palestine but also in the region and around the world.

Therefore, we appeal to all responsible governments, States and supporters of justice and humanity in the world to not just only condemn the Israeli apartheid regime and its ruthless crimes of violence against Palestinians but also to take the much-needed steps to protect the lives of Palestinians and end the apartheid regimes acts of brutality. The international community’s deafening silence makes Israel feel that it is above the law and can commit its violations without being held accountable and do as they please. Israel should abide by international law and international humanitarian law and be held accountable in all its crimes against humanity.

The Embassy of the State of Palestine avails itself of this opportunity to renew to the Members of the Parliamentary of all Political parties in Sri Lanka, Human and Civil rights organizations, the Print and Electronic Media and Friends of Palestine, the assurances of its highest consideration.

Statement issued by the Palestine Embassy in Colombo