Recovery, Growth & Toxic Imports

By Ameer Ali –

The disaster that occurred on 26 March at Baltimore Bridge USA, when a Singapore cargo ship chartered by Maersk hit that bridge and made it collapse, has virtually disappeared from local news media after a brief appearance over a few days. But it was an accident that once again reminds the world particularly developing countries like Sri Lanka the ugly side of industrial capitalism that brings to light an undesirable route to restore Sri Lanka’s bankrupt economy with financial assistance and advice from IMF. This particular cargo vessel was reported to be carrying a total of 4644 containers of which 56 had been loaded with 764 tons of hazardous materials – mostly corrosives and inflammables – which were destined to be unloaded in Colombo. Who imported those materials and for what purpose and who exported them are unclear. However, according to Daily Mirror (9 April 2024), the US International Development Finance Corporation had promised to invest $553 million for the development of Adani’s West Container Terminal project in Colombo, which is to be jointly built by Sri Lanka Port Authority and John Keels. It is left to the readers to reach their own conclusion about who must have imported the hazardous materials, for what purpose and under what conditions. Is this the first of such imports or were there others previously? If Sri Lanka has a contract to import hazardous industrial waste either to bury it under her soil or reuse it as input for another manufacture product the expected economic recovery and growth would be achieved at the expense of the environment. But what is shocking about this episode is why was there such an orchestrated opposition when China sent organic fertilizer to Sri Lanka in 2021 while toxic waste imports from the West inspire no resistance?   

Only a few days ago on Tuesday April 2 2024 President Ranil Wickremesinghe called foreign investors to get ready to capitalize on the outbreak of a new wave of growth, which according to him is around the corner. May someone ask the president when was the last growth wave, what was achieved under it and who invested and profited? One wonders whether turning this blessed island, which is endowed with such an enviable natural beauty and environment into a dump for industrial waste, is part of RW’s strategy to convert the economy into an export driven high-tech industrial miracle by 2048.

Let me refresh the memory of Colombo Telegraph readers about a poisonous piece of research from the Word Bank about which I spent one hour of lecturing to my post-graduate students in Economics of Globalization. It was in 1991 the then Chief Economist of that bank, Lawrence Summers assisted by his scrivener Lant Pritchett authored what came to be known as the Summers Memo. In that memo they advocated transporting hazardous and polluting industries from the First World to the Third. Their argument was based on a cost-benefit analysis which concluded that it was cheaper to establish those industries on low wage countries where there is plenty of space to pollute and peoples’ life in that part of the world was dispensable in order to save the capitalist world. When that memo got leaked and Roberto Smeraldi of Friends of the Earth published it in the Journal do Brazil, Pritchett tried to save his master by claiming that the memo was authored by him, that Summers only signed it, and that it was written with an element of “sarcasm”. The only sarcasm hidden in that memo was about their disgraceful estimation about the value of life of people inhabiting the so-called Third World. However, that excuse only angered Brazil’s Environment Secretary Jose Lutzemberger who condemned “the arrogance of many conventional economists concerning the nature of the world we living in”. The question this episode raises at present is what value the importers of hazardous materials into Sri Lanka attach to the lives of people in this country? Summer’s diabolic economics and West’s racist arrogance are not dead even now.

Sri Lanka’s economic crisis represents the sum total of several crises including an emerging climatic and environmental catastrophe. Centuries of wanton damage to and destruction of nature’s gift to this fertile country has caused unpredictable changes causing climatic and environmental disasters. That crisis was worsened by unplanned and prestigious infrastructure development by successive governments to enhance the popularity of their leaders, not to mention the opportunities such development created for private opulence amidst public misery. Import of industrial waste adds one more element to the environmental crisis. Nature always handles its own waste best and maintains a delicate balance but it cannot be expected to take care of the unlimited waste heaped on it by greedy humans. Today’s climatic and environmental crises are in a sense natures revenge.        

The environmental crisis is global and came to be noticed by economists and policy makers only during the last quarter of 20^th century. The 1972 report by the Club of Rome titled Limits to Growth was an eyeopener. But even after almost fifty years the global financial system and its international guardians like IMF, WB, ADB and so on pay only lip service to environmental protection. There is a false confidence mixed with an element of intellectual arrogance that technology would solve the problem.  But technology is part of the problem and not its permanent solution. The concept of green (growth) accounting that takes into account the environmental cost of production and other social costs is the result of a global environment movement spearheaded by a new generation of youth calling for a halt to the narrow approach to economic development and growth. Green accounting will certainly provide a more modest picture of the hyped confidence about IMF’s growth magic. There is an absolute need for behavioural change on the part of all members of society and all sectors of the economy so that future generations could inherit a livable earth. Does importing hazardous materials represent behavioural change by money minded industrialists and entrepreneurs? Why then is the official silence on this matter?

Economic recovery to promote sustainable growth is not possible in the long run unless the system within which that economy operates is cleansed of other crises. Environmental crisis is one of them. Even Sri Lanka’s debt crisis for that matter like the global debt crisis is caused by a financial system whose mechanics ignores environmental values. IMF is part of this financial complex and its agenda for recovery to which RW claims full credit and which he wants to implement with the force of law if need arises, is absolutely class biased and system biased. The so-called safety net recommended by IMF and dished out through aswesuma by RW is pittance tantamount to the proverbial crumbs falling from the master’s table. In reality, the cost of recovery is disproportionately born by the poor and underprivileged and the success claimed so far have not benefited the poor and underprivileged. For instance, who is enjoying the benefits of low inflation and appreciated rupee? As long as the market fails to translate these positives into lower prices the poor would be shut out of the recovery. This is why the class that is benefiting from IMF’s economic prescription is vigorously campaigning to discredit a party like NPP, which is prepared to change the system totally and try homegrown alternatives without shutting the economy from the world outside. In that sense, the forthcoming battles for presidency and parliament, whether fought in tandem or sequentially, would virtually represent class struggle. The new generation of young voters should decide the victor.

In the meantime, RW has moved the country well and truly into the vortex of a growing oceanic US-China superpower struggle with India in between and determined to penetrate deeply into Sri Lanka’s economic architecture. India’s widening sphere of influence together with Israel’s closer relations with RW regime is music to White House. As reward for this US tilt Sri Lanka may win a temporary reprieve from debt servicing by postponement of settlement to 2028-2042 with reduced 2% interest. The hope is that Sri Lanka by then would have accumulated enough foreign reserves to settle the debt and fund sustainable growth. Perhaps, it is on that expectation RW is promising to “empower citizens with basic needs”. He has become a merchant of dreams. But, given the economic constraints created by the wars in Europe and Middle East that hope must be qualified with the economists escape route ceteris paribus. 

*Dr. Ameer Ali, Murdoch Business School, Murdoch University, W. Australia

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