Aftermath of a web of Deceit: A South Asian Perspective
by J Jayasundera on 30 May 2010 3 Comments

When the future of humanity is at the edge of an abyss, when 40% of the world is living below poverty lines with worsening disparity between the rich and the poor, worsening environmental damage and rapid depletion of resources, it is time to reflect. Independence from Britain heralded by the rousing speech from Prime Minister Nehru gave south Asians the hope to aspire for a better world after over hundred years of subjugation.


Post-war western economies had other ideas and heralded the new mechanics of exploitation and subjugation. This neo-colonial agenda has inflicted great harm to our world in the name of liberal democracy and capitalism. It is a web of deceit, corrupt and immoral. It is appropriate to quote the author of the bible of capitalism, Adam Smith, in his book Moral Sentiments, to realise how even his philosophy has been selectively used in this immoral system.


Smith wrote

“ This disposition to admire and almost to worship the rich and the powerful and to despise and at least to neglect persons of poor and mean condition, though necessary to establish, to maintain the distinction of ranks and order of society, is at the same time the great and the most universal cause of the corruption of our moral sentiments.”


Even 200 years ago he reckoned that it was in the nature of humanity to develop an economic system for the good of all mankind. Unfortunately, the present system has strayed away from it and privatised profit and socialised loss.


Present neo colonial economic system

Manipulation of the monetary system

The wealth of this world is zero sum. It is the distribution of this wealth that is the prime focus of this economic system. For the indulgence of a few, others pay the price, sometimes with their life. UNICEF estimates half a million children die every year because of the debt crisis. Following the end of the Second World War, after the Breton Woods conference, the IMF and World Bank were established to control the world monetary system. The dollar became the main international currency. Contrary to general belief, it is printed by the Federal Reserve and exchanged for Treasury Bills for which the government pays interest!


Until 1971, the dollar had to be backed by gold reserves. President Nixon took the dollar off the gold standard and floated the currency when he found that America did not have enough gold to back it, thus removing the yardstick of measurement of the value of the currency. But real power was achieved when the Saudis were influenced to price oil in dollars in 1974. There was a fourfold increase in oil prices and the accrued money was circulated through the western banking system. Thus every country had to have a reserve of dollars for its oil consumption. Instead of gold, the dollar was now backed by oil. Poor countries were forced to fix their currencies to the dollar or expose themselves to the vagaries of currency markets. Fixing currency to the dollar has exposed them to the economic management of the United States, the biggest debtor in the world. The poor are paying the price for the overindulgence of the rich.


Debt trap


The Third World was desperate to borrow dollars to finance oil imports. The newly acquired dollars of petroleum exporting countries were lent to the Third World through the western banking system. With a floating of the dollar its value was determined by the international currency casino. Banks increased the money in circulation by not only the multiplier effect, but by printing without any reserve to back it. Thus the world had been flooded with dollars which Obama calls “Monopoly Money.” Having created dependence on the dollar, in 1982 the interest rates for the dollar rose to over 20%, thus pushing the Third World into greater debt.


This was when the IMF and World Bank stepped in to serve the entrapped Third World to alleviate poverty. After 30 years, poverty in the Third World has worsened. They had a fixed agenda for assistance - public spending cuts for health, education, and welfare; devaluation of the currency; privatisation of government assets; Open Economy and encouragement of foreign investments with tax breaks, and easy transfer of profits.


Thus the gate was open for foreign firms to acquire the assets of the poor countries cheap, and in the name of industrialisation to use labour at slave wages. Strikes and workers rights were legally reduced. In Sri Lanka, workers who went on strike in the 1980’s were expelled, without legal recourse, in the name of efficiency and a better future. This has proven to be a trap into poverty and slavery for the poor, and a foreign debt that can never be repaid. Future prospects were bleak. The only option was migration; hence the Brain Drain - another free transfer of resources. It is said that Africa pays $13 in debt repayment and receives 1$ as aid. The exploitation has never stopped.


Federal Reserve Board

The Federal Reserve was created in 1913 by the Federal Reserve Act whilst Congress was busy preparing for the Christmas vacation. The Federal Reserve is a private institution owned by private banks with the President and Congress having some input. The Board works behind close doors, with no Congressional oversight or control. There is a lot of speculation as to who the power behind this organisation is. Those who control the dollar control the world. “The real truth is – the financial element in the large centres has owned the government since the days of Andrew Jackson” - President Franklyn Roosevelt 1933


Creation of money

Creation of the world currency, the dollar, is in the hands of the Federal Reserve. It prints whenever it wants out of thin air without any reserves to back it. In the recent banking crisis, it increased liquidity by trillions of dollars in what was called Quantitative Easing to save the banks. This did not affect the value of the currency from the perspective of the Third World; they are already fixed to the dollar. There is no effective method to control the value. The banks create the principal but not the interest. New loans are continually produced expanding money supply, inflating prices and robbing holders of the value of their money at the same time charging interest on the monopoly money. The irony is that the interest is paid in real earned money. The overgrowth of liquidity creates the boom and bust economies which has led to the present economic crisis in the west. At the end of the day the poor who are at the bottom of the ladder suffer.


Economic weapons of mass destruction


Capitalism is the acquisition of capital. Unfortunately, the world has been bribed into the belief that capital is assessed with the proxy of money, the Dollar. The increase in money supply by printing, monopoly money, bonds etc which has no foolproof method of assessment of its value, makes a mockery of the financial system. Matters became worse when all regulatory controls on banks were removed by President Clinton. This was the origin of the growth of the system of derivatives. Derivatives (Hedge Funds) are used to speculate on the market from currencies to commodities – it corrupted the supply demand basis of the market.


These are the new economic weapons of mass destruction. The result has been wide fluctuations in oil prices and other resources in this casino market. Profits are shared by the rich but the producer, usually the Third World, does not get a share of it. The run on the Asian markets in the past has been by betting against the currency which made Asian markets collapse.


The only country that stood up to the IMF was Malaysia under Mahathir Mohammed. He accused IMF of using the crisis to enable big corporations to take over Third World economies, and successfully brought Malaysia out of the financial crisis without the IMF. Asians should lament we have no leaders of the calibre of Mahathir Mohammed. Capitalism has no affiliation to nationalism or sovereignty. Derivatives have now been used in the west to undermine even the economies of the west. It will be interesting to see how governments that worked hand in glove with the moneylenders and their backers will respond.


Geopolitical wars

The present wars, in Congo or Iraq, are for resources. Congo is well endowed with minerals. It’s post-independence Prime Minister, Patrice Lumumba, who killed, allegedly by foreign agencies, and a pro-western dictator Mobutu appointed, who embezzled the mineral wealth with the help of foreign backers. Billions of dollars have been embezzled; the country is still at war with itself. The wars supposedly against terrorism are wars for resources. All wars from the Battle of Waterloo have been bank-rolled. The irony is that ordinary citizens are made to foot the bill. Socialising the cost and privatisation of profit is the motto.


World Bank and development


This is one of five organisations started after World War II. Its website says it has been established to alleviate poverty in the world. Its record after 70 years shows it has been a failure in this respect. But it has very successfully indebted countries. Development has been a Trojan horse for corruption, non-viable projects and successfully destroying rural economies. The environmental damage related to the massive projects undertaken with the help of the World Bank has caused much hardship to people.


In Sri Lanka, the accelerated Mahawei project is an example. The promise of producing all the electricity needs and self-sufficiency in food has yet to be achieved after 30 years. The environmental and climate change has made a mockery of the whole project from a financial perspective. A senior minister said the estimates were hyped and project-related corruption has made many rich. The corrupt money is deposited in the western banking system - London or Switzerland, and recycled back to poor countries. The poor bear the brunt of paying the loan. How World Bank expects to alleviate poverty is beyond imagination. The only achievement is subjugation by debt.

Fortunately for Sri Lanka, another World Bank project, “Regaining Sri Lanka,” never got off the ground. Its impact in terms of environmental damage and mass rural displacement would have been disastrous. A similar project in Andhra Pradesh, India, “Vision 2020”, is expected to displace 20 million rural people by 2020. Despite a change of government in 2004, the leaders had to take orders from WTO, World Bank and the corporations. Vandana Shiva states a growing number of projects are being pushed through the legislature that threaten to rob the poor of their seeds, their food, their health and their livelihood. The World Bank and IMF are geared to embezzle the wealth of nations and create debt as a means of subjugation.


Environment and development


Environmental protection has never been a World Bank concern, though it pretends otherwise. Climate change, pollution, which is affecting every aspect of human life are neglected by developmental programmes geared only to the sustenance of a system of subjugation and transfer of resources.


The latest oil spill in the Gulf of Mexico is a standing example. It was interesting to hear President Obama accuse the regulatory authorities of working in conjunction with BP to take unnecessary risks in oil exploration. He has now banned exploration in the Gulf. If the public services in the USA have been influenced by BP to take risks, it is unimaginable what risks they must be taking in vulnerable Third World nations. The multinational companies practice creative accounting. They take the profit but the pollution is left for others. That cost is never accounted.


The Empire


The USA and the West preside over an Empire controlled with the power of the dollar and when that fails, by the power of might. President John Adams once said there was two ways of conquering and enslaving nations - by the sword and by debt. Having conquered by debt, the Empire needs stability. Thus regional powers are selected who at the behest of the mighty keep smaller countries under control. Governments all over the world have been manipulated surreptitiously into a mould that is replicated all over the world in a hierarchical manner. It is one great family of clones, some big, some small.


The corruption and immorality that the IMF, World Bank and world economic order bring has created a predatory society geared to the embezzlement of wealth of nations. Commissions and bribes are the determining factor for any project. Public and Parliamentary debates are irrelevant in determining public and regulatory policies. Servile individuals and technocrats determine policies geared to empower themselves.


From Mobutu to Abacha, the estimated embezzled wealth to the western banking system goes into billions. Interestingly, President Marcos had wealth estimated to be $25 billion invested in the west; the Pilipino external debt was also $ 25 billion!!!


Confusion and instability in society is a must to prevent any uprising and confrontation of government policies. This is carried out by foreign sponsored NGO’s and Christianisation with a view to destroy the cohesion in society. The media is corrupted to reflect the interests of foreign powers.


Regional Powers


India is the regional power in South Asia. It is the natural ally of the West against the threat from China. Indian foreign policy lacks the ability to harmonise with her neighbours using the most potent soft power - common inheritance. The ruling classes lack the vision to think beyond themselves. The extravagance and blind faith in westernisation will one day alienate her own people.


Effects of the new economic order on society


The new economic order tends to concentrate capital in cities which attracts populations from rural areas for employment. This naturally increases the population, but governments and the World Bank do not take into account the cost of urbanisation in overall development. The demand for housing increases the price of houses. But utilities such as water, electricity and other infrastructure necessary for waste disposal, drainage of surface water have been completely neglected. As a result, flooding and landslides are common. Then there is the growth of shanties with inadequate sanitary facilities etc. The devastation in Haiti would have been less damaging but for reckless urbanisation.


With ever increasing population, health care is a major issue. Changes in the environment cause harmful vector expansion and new disease patterns; in Sri Lanka, dengue fever has become endemic. In addition, close living and the stresses and strains of urban habitation cause many social and mental issues that are hardly addressed by the governments.


Within urban societies, the sub-class of the most deprived is endemic with violence and drug abuse, a destabilisation obvious in the west. This underclass although financially supported by the government is dehumanised into a class associated with lack of aspirations, lack of family life. This is a path I am sure Asians would not aspire to.


The untold misery for the rural poor is complicated by big multinationals demanding displacement of the poor from their land for mining, agricultural development etc. Governments in south Asia have failed the people by accepting development projects geared to the sustenance of the ruling classes. This has created a situation that could one day be a financial disaster, when taking into account the expenses for health care, housing and natural disasters like flooding, landslides etc. Short term rapid development can only lead to a disaster from which you cannot extricate yourself. 




In Sri Lanka the economy has been driven to the ground by a costly war and corruption. The saving grace economically for the poor was employment in the Middle East. The price they paid is enormous. The death rate of migrant workers is higher, in addition to the abuse and even rape. The ruling classes are oblivious to this suffering; they are only interested in foreign currency returns. The social discord for families left behind is not even assessed.


Migration to more affluent countries as illicit immigrants and refugees is the other option. While lucrative in the short term, there are health issues that are never properly understood in the long term. Coronary artery disease and diabetes are common and increasing in Indian migrants to the UK.


A world in revolt


The present economic system has globalised the marginalisation of society. The gap between the rich and the poor has widened with in countries and between countries. The social stability that existed even in poverty has been disrupted by a false economy. Fortunately or unfortunately, fast developing communications and education have brought forward the revolt against marginalisation. Be it in Greece, Thailand, India, or China, the fight against the system has started.


Ruling predatory governments unfortunately will respond with violence. Drunk with the power of dollars, the governments will suppress legitimate grievances. In Sri Lanka, where the literacy rate was 96%, there have been three insurrections in the last 30 years; 200,000 youth have sacrificed their lives. Whatever the basis, the inability of the government to address legitimate aspirations of the young were the precipitating factor. The insurrections caused immense damage to the economy. The prime cause has been false development programmes, bribery and corruption and the web of deceit of a corrupt international monetary system and its effect on governance. The road ahead is grim unless there is internal dialogue and proper governance addressing the problems of the financial system. The West cannot be trusted to cure the inherent problems as the present system serves it well.


The author is a Sri Lankan citizen

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