Privatizations meet mounting resistance
CHINA / SRI LANKA frightens everybody both inside and outside China.
The outside world important
1S an issue in itself. Li
Peng has made increasing efforts to
LIKE many other third world countries, Sri Lanka is under get the country out of its international intense pressure to privatize state-owned sectors of the isolation, first with some small suceconomy and end social support for the poor in order to cesses and latterly with some bigger obtain desperately needed financing from the international ones, such as his foreign tour, although even here some of his hosts felt obliged to mention the serious
International Viewpoint spoke to Vasudeva Nanayakkara, human rights problems in China.
a leading member of the Sri Lankan NSSP (Nava Sama
But the essential fact is that a China
Samaja Party — Sri Lankan section of the Fourth
Which is economically open to the
International), a member of parliament and president of the world cannot remain too long outside the international political game, at
United Federation of Labour, who has been in the forefront least in Asia.
of campaigning against the sell-off of his country's wealth.
This is all the more true in that, with
The interview took place in Amsterdam in May.
the break-up of the USSR, China counts for less than it did on the global scene, being no longer indispensable to the USA in its system of anti-Soviet
Furthermore, China is surrounded by countries whose power is increasing, including Taiwan, whose independence movement, although supported by only a minority at the moment, is increasingly feared by China.
Beijing must re-enter the concert of nations to defend its interests and in particular find an answer to the new situation arising from the collapse of the USSR - a situation rich in both possibilities (the disappearance of a powerful enemy) and dangers (with the impact on inner China of developments in the Islamic republics of the former USSR).
Thus, China cannot retire into splendid isolation. It must and will pay its price for reentry into the world arena.
And this does not work in favour of Li
Peng, the symbol of the 1989 repression, the most hated man in the country, whose elimination would have symbolic weight, and would be a more credible sign of change than the recent successes of Deng, rendered uncertain by the latter's fragile state of health.
The regime has proved both more resistant and more flexible than expec ted - it has been pragmatic and shown a determination to get to grips with the processes of change.
Whether it will succeed remains an open question, but Chinese-style really existing socialism" is in its death agony, even if the clinical moment of death is being postponed by fear of chaos, by bureaucratic manoeuvres and by the astonishing longevity of
8 some historic figures. *
International Viewpoint # 230• June 8, 1992 banks and institutions.
W HAT was the situation
privatizations? Was there a very big state sector?
From colonial times services such as railways, health and education and posts and telecommunications were government departments. After independence these were continued and expanded to provide an infrastructure for the economy. Then in the 1950s and early 1970s, when populist governments came to power, a series of manufacturing industries such as steel and textiles were set up by the government or with government cooperation.
This generated employment and led to greater economic activity and cohesion. Areas of the economy were developed that would never have been under private investment — with long gestation periods and low returns during the initial years.
There was much corruption, as in all Third World countries. The government in power used the state sector as a propaganda tool and put in position their supporters and main backers. We can say that the state sector was politically infested and bureaucratically jammed. • So what has changed? Why has the government decided to privatize?
If you look at the private sector you will see systematic plunder and exploitation of the people on the one hand and on the other the transfer of resources out of the country by those for whom the local currency no longer matters. Then there is a big black economy which has developed alongside, and which also bleeds the country. Thus, when we criticize the state sector, we should not overlook the nature of the private sector, which is even more unpatriotic and damaging to the country.
Political patronage is always linked up with the state sector. It is no secret that the state sector developed under populism was an exercise in state capitalism. The state sector kept on feeding the priVate sector. Very often foreign and local suppliers make huge gains out of it by giving low quality and charging high prices. In 1977, a new government took power which had a new strategy of linking up with the IMF and World Bank and liberalizing. Import controls were lifted, foreign investments allowed in freely, privatization developed and so
Privatization is unpopular in the country. Despite all the corruption and inefficiency the people got the minimum services from the government sector while the manufacturing sector provided employment and skills.
In this situation the government had to use a variety of gimmicks and incentives to placate the public. The privatization was called "peoplization". They said, before you have been managed by bureaucrats, but now we are going to let the people buy shares.
However, workers were not impressed, recognizing the threat to jobs. In many cases the government issued shares to the workers - in the case of road transport 50% of the shares. They were encouraged to retire, take a golden handshake; but after a year the rate of inflation had eaten away the golden handshake, and many people were in
difficulties.
Resistance began, and reached a height over the attempted privatization of two state banks which controlled 60 to 70% of the country's financial activities. These state banks were doing very well even in the face of foreign competition, particularly after the collapse of the Bank of Commerce and Credit International (BCCI). This was a disaster in Sri Lanka; particularly Sri Lankan workers in the Middle East had put their money in BCCI. The state banks agreed to com-
As usual it was explained how privatization would bring greater efficiency, but popular experience has been that it usually means that services are lost and prices go up along with unemployment. This time the bank employees resisted along with a campaign of pickets and
Finally the prime minister and the finance minister got up in parliament and said: "we are very sorry but we have to announce that the state banks are bankrupt; we have to tell you the truth", hoping in this way to provoke a run on the banks, so that they would have to seek foreign assistance. But everyone understood that this was part of a conspiracy by the government and foreign bankers. Then there was a vote of no confidence in the ministers. This privatization effort failed.
Nationalized tea plantations
Then there are the tea plantations which are all nationalized. The idea is to give them over to the foreign companies. Increases in profitability here, at a time of declining prices, can only be achieved through rising unemployment, and harder work for no more wages.
First, the government was forced to rule out ownership by foreign companies in favour of local companies; then they retreated on that as well, saying that the workers would continue to be government employees, but independent management would be brought in. Even this plan has not been carried out.
The administrative workers' unions have launched a big campaign to refuse to handle any work related to denationalization. When the foreign companies' representatives come to look around there is sabotage and they have to go
However, the workers have not yet moved- they have not yet been directly affected; they are under the influence of a leader of the plantation workers' union who is also a government minister, but resistance is growing.
Recently there was a march of 180 miles to protest against privatization, unemployment, the cost of living and the anti-Tamil war in the North. Altogether some 100,000 people took part in the initial stages and then for the last stretch another 100,000 joined. People know that the background to the government's schemes is the World Bank and IMF's plan for squeezing the Sri Lankan masses in the interests of foreign inves-
All the opposition parties have been involved in the anti-privatization movement, including dissidents from the ruling United National Party. The NSSP has been in the forefront in educating the people on this question and exposing the World Bank plan. We have led our trade unions along with others in pickets and played an important role in organizing the march. Our General Secretary is also coordinating chairman of the committee resisting the privatization of the plantations and we have an influence in the bank workers movement.
On May 25 there is to be a strike in the plantations and throughout the adminis-
We need resolutions of support from the international labour movement, but also information about the multinationals operating in the country such as Nestlé, Levers, Bata and others - they pretend to be benefactors.
We will also benefit from having what we are doing publicized. We have had some successes, as is true also in India, where an anti-privatization movement is growing. It is not like in the former Soviet Union and Eastern Europe. There there was so much oppression and economic stagnation that people welcome any change and only a very few will be inclined to resist at first. *
SRI LANKA / IRELAND