COLOMBO: The failure of the sixth SAARC summit to take place here must be viewed with

satisfaction by some western countries, especially the US because the formation of an economic grouping by the seven member states one of the main stated objectives  would have affected western economic interests, according to Times of India, which toes the official Indian govt line.

Such a grouping would have enabled the countries of the region to increase mutual trade instead of depending on western countries.

In Sri Lanka’s case, the US has always opposed its attempts at becoming self-reliant through bi Lateral trade with Asian counties.

A classic example was the establishment of its trade relations, with China in 1952 despite U.S opposition. The rubber for rice” act entered into in that year, assured a stable market for Sri Lanka’s rubber at above world prices and rice imports below world prices. By 1975 China had, emerged as Sri Lanka’s biggest trading partner. Attempts to force Sri Lanka to give up its trade with China, through sanctions and withholding aid, failed until 1977. When the protest United National Party (UNP) led by the former president, J.R Jayewardene, came to power, Sri Lanka was forced by the World Bank and the International Monetary Fund (IMF) to switch to multilateralism, thereby effectively scuttling the trade pact with China, Now Sri Lanka, once the world’s major rubber producers, has been reduced to importing even rubber erasers and other products from the west. It also has to import rice at world market price.

IMPORT POLICY: The liberalization of the import policy in 1977, again at the behest of the WB and IMF, has played havoc with Sri Lanka’s economy. Now the provocation of public sector undertakings, such as telecom munitions and the railways, and opening the door to western in investment are likely to aggravate the situation. The privatization has to be completed by the yearend if Sri Lanka is to be granted an IMF extended structural adjustment facility” of $445 million.

Sri Lanka is reeling under the impact of IMF conditional displacing all subsidies on food, fuel, fertilizer and health services. Despite its compliance, half of Siri Lanka’s population still below the poverty line, this is the main cause of political and socioeconomic tensions that plague the country.

Article extracted from this publication >> November 15, 1991