Sri Lanka for sale: Wealth creation by dispossession

By Jude Fernando

Groundviews.org: “You are horrified at our intending to do away with private property. But in your existing society, private property is already done away with for nine-tenths of the population; its existence for the few is solely due to its non-existence in the hands of those nine-tenths” – Karl Marx.

No one knows how far the Government is planning to go to gain control over nation’s wealth and sell it to those who patronise its economic and political agenda.

The controversial Expropriation Bill that plans to grab 37 properties is likely to be followed by another proposal to amend the Town and Country Planning Ordinance to acquire lands for economic, social, historical, environmental and religious purposes within municipal and urban areas. It will also end taxes and restrictions on foreigners buying and developing land anywhere in the country.

The opposition’s parochial politics and ideological bankruptcy prevent constructive engagement with the procedural and substantive issues pertaining to these new property laws that are likely to create disastrous consequences for Sri Lanka’s economic and political sovereignty.

Expropriation or eminent domain

Expropriation or eminent domain — in which a government exercises its right to acquire private property for the common welfare — has a long history.

“Property being an inviolable and sacred right no one can be deprived of it, unless the public necessity plainly demands it, and upon condition of a just and previous indemnity,” states the French Declaration of the Rights of Man and of the Citizen.

A ‘just indemnity’ is the central issue here. In democracies, these appropriations are expected to follow substantive public deliberation and the advice of experts, to involve Supreme Court interventions, and result in payment of just compensation based on rigid criteria and transparency. In reality, though, the acquisition of property under the capitalist system has always been one of dispossession and alienation.

Sri Lanka

Here in Sri Lanka, an electoral majority achieved through ‘a variety of different means’ is being substituted for transparency, accountability, fairness and justice! Public anxiety about the motives and the consequences of these bills continues to grow. They are published in the English language and approved within 48 hours, leaving us little time for reflection. Conflicts of interest are inevitable because the country’s defence, economic development, and finance are under the control of small group of people.

“The Parliament has lost all its powers merely because the Government has obtained by dubious means a two-thirds majority. This House has been reduced to a mere rubber stamp,” argued Sumanthiran of the TNA.

The bill is deeply “flawed as it arrogates powers of the judiciary and executive and amounts to ad hominem legislation targeting a specific citizen… the bill tantamounts to the suspension and/or amendment of the Constitution of the country and could not be passed by simple majority of Parliament or otherwise. Simply put the bill misleads the public,” says Sri Amaresekera, a public litigation activist

New property acquisition bills are likely to be implemented under the surveillance of highly-centralised ‘defence-development industrial complex,’ which seems to be enjoying liberty to avoid standard practices of accountability and transparency, much more than the military industrial complex does in the United States.

Although both complexes follow the same capitalist logic and have been driving their respective nations into debt and deeper economic crises, the United States, relatively speaking, is less vulnerable because of its national economic and political bases are much stronger than Sri Lanka.

‘Culture of fear’

In the current ‘culture of fear,’ the “subject ministers” (political appointees now empowered by the new Bills to declare to acquire assets) are unlikely to heed to expert advice in assessing property value. The technocrats and civil authorities are as opportunistic and parochial as the politicians.

In response to Supreme Court Approval of the Bill, Sumanthiran noted that the Cabinet has abused its power in referring this matter as an Urgent Bill to the Supreme Court. “[How] can the Supreme Court rule on whether a particular enterprise is underperforming or not without examining the accounts of that enterprise – without examining other material? The reason for such Supreme Court Verdict is the 18th Amendment where “judges are no longer vetted by the Constitutional Council, there is no independent judiciary in this country”.

‘Nationalising property’                  

It’s nonsense to say that the State is ‘nationalising property’. When socialist or social welfare democracies nationalise property, they do it with the intent of maximising social good. But the neoliberal State perverts the term when it uses ‘nationalisation’ as a cover for mere privatisation. (President Premadasa cutely refers to this as ‘peoplisation’.)

The neoliberals’ intent is to create a global property market, transferring property to the highest bidder. They care only about the short term market value of property, and the transaction benefits only few who can pay. The most misleading aspect of the bills is their claim to benefit ‘national’ interests. Can these property laws that are undemocratically approved and predicated on inequality-breeding economic system safeguard inclusive national inclusive interests?

The progress of the capitalist system depends on the institution of private property and its continual acquisition (land, social safety nets, education, health, intellect, etc.). Historically this rapaciousness has taken many different forms: nothing is considered beyond commodification.

In capitalism, disposed and alienated labour creates private property, which is then used as a means to further alienate labour. It is the fundamental cause of inequities in material wealth and the power and privilege associated with it. But as capitalism matures the even capitalist class and the state could lose the control of the value of property.

At this point, national security is introduced to safeguard the interests of the property-owning class and suppress public complaints about the state’s failure to manage public property for the benefit of the people and the environment.

The gap between the property owning class and the wage earning class then widens even further. Global economic recovery is highly unlikely, and the poor will suffer a disproportionate share of the social and economic costs of bankrolling real estate development.

Unspecified criteria

Although the Government has not yet specified the criteria for declaring assets to be ‘underperforming and underutilised,’ we can be sure that its commitment to neoliberal policies will dictate their conformity to market values.

Social, economic and environmental costs and benefits will be treated as if synonymous with market value. But ‘market values’ alienate people from land and property, and make their benefits accessible only to the wealthy classes. Market values neither provide an accurate assessment of values to an eco-system, nor compensate for the loss the eco-system suffers due to realisation of market values.

Government also could undervalue the properties it intends to acquire in order to generate revenues by selling them cheap to bankroll its administrations expenses, real estate development, and to expand its political support base.

Similarly the State is also vulnerable to demand for easy access to country’s wealth by those geopolitical powers that help the country to withstand the internal pressures regarding international human abuses. Unlike the East Asian states, the Sri Lanka State is a rent-seeking state – a State that seeks short-term rents rather than economic efficiency of the enterprises, either public or private.

The Sri Lankan state is unlikely to reap even the capitalist efficiency. In a climate of nepotism, corruption, and surveillance, there is little reason for us to believe that the State can run the institutions more efficiently than the private sector.

Change of ownership does not automatically change work ethic and politics. Increasing inequality and erosion of popular legitimacy of the State will increase the possibility that the possibility that goals of nationalisation will be determined by political rationale than by economic rationale.

Masking the truth

The current economic global economic crisis has been caused, and is continued, by market values. Trillions in investments aren’t helping governments to restore their troubled economies. The drop in markets has cost governments and people alike their economic safety nets, and governments are increasingly forced to adopt drastic austerity measures and to suppress public dissent by military means.

When privatisation is couched in the language of national or public interests, the State can hide the fact that it is subsidising the private sector with public funds. It can also pretend that suppressing dissent against privatisation is legitimate. They can try to mask the truth, but they cannot erase it.

Transfer of property is not a simple matter of economic efficiency. It is a technique of social and political engineering. When the Government calls privatisation ‘nationalisation,’ it casts doubts upon its interest in and sincerity about power sharing with the minority communities.

Privatising via nationalisation will dis-empower minorities through dispossession, reduce their bargaining power, and make devolution meaningless. Nationalising property in the name of ‘recreation’, ‘beauty’ and ‘safety’ is a cynical tactic to displace politically troubling populations and increase state capacity to suppress protest against dispossession and inequality. One can then be arrested for exercising freedom of protest in public spaces, rather for trespassing or endangering private property.

Doubts over sincerity

In a situation of acute ethnic and class polarisation, and politics overpowered by exclusive nationalism, the Government’s rhetoric about acquiring property for ‘public’ or social purposes can easily obscure the specific interests and vulnerabilities of communities.

In the worst case, it can sow the seeds for another conflict, particularly when the land and property at stake is closely intertwined with the identity and economic and political securities of these communities. The acquisition of property could easily cast doubts about the Government’s sincerity of power sharing complicate peace process because political power is closely intertwined with economic power embedded in land.

Because Sri Lanka is fiscally bankrupt, the State may not even realise the economic value of property it acquires. In all likelihood, ‘nationalisation’ will simply transfer this property to private investors and use the increased rents to maintain the State machinery.

In a climate of nepotism, corruption and surveillance, there is little reason for us to believe that the State will run any institutions it appropriates more efficiently than their current owners. The greater the inequality and erosion of popular legitimacy of the State, the greater the possibility that nationalisation will be over-determined by a political rationale that prevails over any economic rationale.

The investors are already becoming anxious investing in Sri Lanka when the political expediency and rhetoric treat them ‘gullible voters.’

Drop in property values

The capital poured into property development is driven by highly volatile speculative financial markets, which in many ways shape the behaviour of the commodity markets. There is no reason to believe that markets will stabilise, and much reason to believe they will continue to fluctuate wildly.

Under the new system of ‘nationalisation,’ the consequences of a sudden drop in property values will transferred to the general public, while private investors will safeguarded with public funds. (We have seen this happen again and again in the enormous financial bail-outs of the super-powers.)

For example, the crisis of the US financial markets caused real estate values in the Middle East to plummet, leading to layoffs of migrant workers and reducing remittances in Egypt. This chain of events culminated in the overthrow of Mubarak.

No competent opposition analysis

None of the mainstream opposition parties have provided a competent analysis of the two bills. Nor have they conducted campaigns to create public awareness about them or organised protests against them. Instead, they appear comfortably complicit.

The left-wing allies of the Government support these bills in the same spirit that socialist China has become the vanguard of the market economy. The JVP too is unable to make a difference because it has failed to articulate an alternative approach to property rights, radically different from the one held by the UNP, JHU and the UPFA.

The UNP’s opposition to ‘nationalisation’ is motivated by political expediency. But if they cede control over wealth to the Government, they’ll be even more economically and politically bankrupt. Protecting property to serve the common interests of society is antithetical to the economic ideology of the UNP, which is now being perfected by the UPFA.

UNP is patronised by capitalists and fears losing access to their wealth. Thus, when UNP claims that the Government is trying to take over the properties of Sinhala businesses, it’s merely evidence of their opportunistic exploitation of ethnicity and their moral bankruptcy.

The UNP and UPFA debate over the Expropriation Bill represents competition between capitalist classes, rather than an effort to ensure the welfare of the non-proprietary classes. Where was the UNP (and JHU) when the Dole Banana Company took over more than 62,000 hectares of land including the land belong to Somawathi Chaithiya sanctuary, many temple lands and the Wildlife Department?

For nationalists like JHU, the issue of economic and political sovereignty is a concern only insofar as it relates to power sharing with minorities. They are apparently unconcerned when Sri Lankan sovereignty is undermined by the transnational capital (anything to the investors, not an inch to minorities!)

In the meantime, the Tamil political parties are also preoccupied with identity and power sharing issues, and their economic ideologies are as capitalist as their opponents.

Collaborations with the West

WikiLeaks continue to provide ample evidence of the contradictions between the anti-Western and anti-imperialistic rhetoric of the ruling class and its secret collaborations with Western countries, the IMF, and the World Bank.

Nationalism in contemporary Sri Lanka is not organic. Instead, it is designed to prepare the nation for exploitation by the global market and to punish those that protest against it.

Many of the civil society organisations, such as Transparency International, are either powerless or similarly rooted in capitalist ideology. Their donors will permit them to talk only about transparency and accountability of private property acquisition. Discussion of its capitalist underpinnings is forbidden. In truth, there are hardly any differences between the ‘good governance’ project of the NGOs, and the goals of the neoliberal state and corporations.

Rating downgrade

When Fitch Ratings and Moody’s Investors downgraded Sri Lanka’s investment rating, they weren’t in the least concerned with public welfare. They responded to the erosion of investor confidence: investors feared that the Government might fail to sell the properties to highest bidder and chose to punish the private sector when face with public dissent. This is evident in the threats of legal action against Sri Lankan Government by British and Indian companies. The UNP seems joined the international campaign to protest against the Acquisition Bill.

Neoliberal economists provide the ideological underpinnings for the institution of private property and when private property is threatened they call for ‘good governance’. Their prescriptions are based on abstract models, and their so-called objectivity depends on probabilities and uncertainties.

Without attachment to the reality on the ground or anchored by a realistic assessment of the nature of human behaviour and its effect on market outcomes, “economics is restricted by… socially restricted vision,” notes Richard Peet, a Geographer at the Clark University.

Fairytales

We must not buy into the oft-debunked myth that social benefits will ‘trickle down’ via ‘privatisation through nationalisation.’ Self-proclaimed prophets of capitalism like Fredric Von Mises like to promote the fantasy of ‘free markets’ navigated by ‘egoistic and self-interested’ individuals ‘imbued with freedom’.

They trumpet that markets harmonise selfish interests and make them socially and environmentally responsible because market outcomes the result of spontaneous and unplanned decisions made by rational, freedom-loving, self-interested individuals. It’s a pretty story, but it’s not a true story, and we can’t afford to believe in fairytales anymore.

Markets are constructions built and maintained by hierarchical social, economic and political institutions that deprive individuals and nations of equal opportunities to realise their full humanity. Political propaganda and advertising shapes public opinion, not free choice or rational self-interest.

Marx, in his critical remarks on elevating competitive self-interest in the markets into common interests, noted that ‘common interests’ proceed “behind the back of these self-reflected particular interests, behind the back of one individual interest in opposition to that of other.”

It is worth paying attention to Karl Polyani: “There is nothing natural about Laissez-faire. Laissez-Faire itself was produced by the state.” The violence and protests that we witness around the world today are evidence of the markets’ failure to harmonise human interests for the common good.

Emerging global solidarity

The ‘occupy movements’ and ‘citizens’ movements’ around world are expressions of frustration with the state, corporations, technocrats, and NGOs. These protestors, now indentify as “99%” of the society, may lack ideological or programmatic coherence, but they signal an emerging global solidarity against the consequences of loosing of their common wealth to 1% of the society.

Although these protest movements are fluid, assemblies of diverse interest groups, ranging from those fighting for sexual rights to proponents of universal health care, are signs of an emerging global solidarity that is likely to pose serious challenges to the hegemony the property owning class.