Features
Tariff Turmoil: Overreliance on distribution instead of growth
The unilateral declaration of reciprocal tariff by President Donald Trump on trading partner countries has unfolded myriad uncertainties heightening the geopolitical and economic tensions. Immediate reactions were reflected in the global stock markets trading on negative levels. The full repercussions will be known in a couple of years. The IMF has forecast a downward economic growth for the USA.
Prof. Jeffrey Sachs, Economist and Professor at Columbia University, who is critical of President Trump’s decision, argues that even in this turmoil few billionaires who are close to the Trump administration would have made a killing. The erratic market fluctuations are real opportunities for those who aspire for state and regulatory capture in the current context. They cash on pains and losses of millions and gain handsomely. That is their business. Quickly recouping the money spent on election campaigns with the help of information asymmetry.
The mythical beliefs of ownership society benefitting out from trickle down effects remains pie in the sky. Blind faith in the neo-liberal order has not ushered any worthwhile progress to billions of people struggling to meet their ends, fighting for a dignified upward social mobility in search of better quality of life. Instead, the neo-liberal doctrine aligned with market fundamentals practiced for decades have widened inequality in income, wealth, education and healthcare in strong economies and in the developing countries.
Thus, in many democracies the hopeless and helpless citizens are electing extreme right- or left-wing populist governments into power for alternative policy options in the absence of any other choice. As for many, hope is the antidote for fear. It appears that many who secure electoral gains lack original thinking for better alternative policy options to stimulate growth in the sagging economies pickled with debt, including the USA. Instead of sticking to the same old failed economic policy options for survival.
In these uncertainties, elections are won by effectively managing misinformation. Social media giants are providing the templates to navigate hope, deceive the public mainstreaming populism, dividing the society blaming the elites, and someone else for the miseries they undergo resulting from ill-conceived policy directives of the past. Though the politicians cashing on this uncertainty with electoral gains, holding onto the electoral mandate secured and delivering the promises to the citizens remains a challenge.
Trade Deficits Caused by Weakened Productivity in the Real Economy
Taxes and tariffs are the main revenue streams for governments to manage the economy. Over decades, there has been a mismatch between state revenues and expenditures. Instead of stimulating growth through increased productivity, consumption was encouraged through higher debt levels, which have grown disproportionately in both developed and developing countries.
This trend has widened inequality and injected cheap money into high-risk corporate ventures, earning quick returns through speculation, now popularly known as Casino Capitalism. Government revenues have become heavily linked to consumption taxes. Over the years, under the neo-liberal dogma, huge tax concessions were given to corporations, and tax havens were set up to hide wealth created in formal economies.
The major source of income for governments came from consumption taxes and tariff revenues, worsening the cost of living for the average citizen. High-net-worth corporations and political activists still anticipate tax concessions to thrive in their wealth accumulation. However, it is challenging to stimulate growth with high debt burdens while earning profits and returns to reduce debt levels in sagging economies. Balancing between these two interest groups remains a real challenge.
Fareed Zakaria, in his popular CNN programme “The War on Government” (25/05/2025), reveals that under Presidents George W. Bush and Donald Trump, tax concessions bestowed to high-net-worth individuals amounted to US$10 trillion, equivalent to 57% of US debt to GDP levels. In Sri Lanka, under President Gotabaya Rajapaksa, LKR 600 million was given away as tax concessions, moving from casino to crony capitalism, worsening the debt situation in the country on top of the infamous 30 billion bond issue under the Yahapalana regime.
The full global market portfolio of tradable financial assets sums up to US$271 trillion. Fixed income securities, mostly debt instruments, account for US$116 trillion, nearly 54%. According to the analysis of ian.com, private assets grew three times as fast as public assets over the past 15 years. This underlying causal factor for widening inequality in economies drives billions of marginalised individuals into hopelessness and helplessness, creating opportunities for populist politics. The facts reveal that resources are abused by a few to gain through distributions across capital markets, rather than driving growth in the real economy for shared prosperity for all.
The Three “D” Threats and Dangerous Trends
Deplorable Debt, Degraded Environment, and Depleted Natural Resources are the three “D” problems threatening the sustainability and habitable coexistence of humankind. The fake prosperity of the past few decades was only possible through exploitation within an unsustainable linear economic model, leading to these highlighted 3D problems. Among them, Deplorable Debt is particularly troubling for the US economy. President Trump’s economic policy tools, including tariff hikes, aim to curb the demand for US dollars, assuming that a lower-valued currency will ease debt burdens.
The dominance of the US dollar as a world reserve currency has increased its demand at a higher value. Those holding US dollar-denominated assets booked fictitious profits by applying market revaluation principles. Additionally, oligopolistic American credit card companies have cloned debt levels, increasing consumption and drying up sufficient credit to stimulate growth in production in the real economy across all regions.
Global credit card giants clone debt with ease and thrive on the cash flows generated, leaving central banks and monetary authorities to control inflation at negative or near-zero interest rates. Some credit cards levy 28% as a penal rate of interest. In this unhealthy policy divergence, private debt often accumulates as public debt, ultimately adding up to unmanageable sovereign debt. Consequently, many multinational corporations have earned unrealistic rewards through intervention in the resource distribution process instead of investing to trigger growth in the economy. Excessive financialisation through debt now threatens the entire financial architecture established since the end of WWII.
“The dollar is our currency, but it’s your problem” John Connally – 1971
There are two historic events when the US dollar became uncompetitive and the American Presidents had to take decisions to bring the value down. In 1971 President Richard Nixon signed the Smithsonian Agreement proclaiming it as the most significant monetary agreement in the history of the world. The second, Plaza Accord under President Ronald Reagan in September 1985. Neither the Smithsonian Agreement nor the Plaza Accord lasted very long, writes Prof. Harold James, Professor of History and International Affairs at Princeton University.
He cites a quotation from President Nixon’s Treasury Secretary John Connally telling Europeans “The dollar is our currency, but it’s your problem”. Even after fifty years the dollar has been their problem too. In both cases, a US president believed that the dollar was overvalued, that American exporters and workers were disadvantaged, and that US economic policy had been blocked by foreign obstruction. President Donald Trump too faces the same situation and unravelled the reciprocal tariff measures under the new Mar-a- Lago Accord in the making.
The Untested “Bitcoin Reserve”
The media reports that Trump Media and Technology Group, the parent company of Truth Social, is raising US$ 2.5 billion through a stock and bond sale aiming to build a corporate bitcoin reserve, mirroring President Donald Trump’s pro-crypto agenda to fund a bitcoin reserve.
by Jayasri Priyalal ✍️
Features
‘Lord Edgware Dies’
It has been some time since I read an Agatha Christie, the plot of which I cannot remember. So, I was delighted to find on the shelves of a friend Lord Edgware Dies, which I had a vague memory of, but no certainty about who had done it.
When I read it, I found that my memory of who was probably the killer was correct, but I could not be certain and the red herrings Christie threw in were so diverting that until almost the very end I wondered if I had been wrong.
The plot is very simple. Jane Wilkinson, who is married to Lord Edgware, tells him that she is desperate for a divorce since she is in love with a very proper Anglo-Catholic peer, Lord Melton, but Edgware refuses to divorce her. She asks Poirot to talk to him, which he does, and is surprised to find that Edgware has told Jane he is prepared to give her a divorce. This was, after he had categorically refused, through a letter, which Jane said she had not received.
That night Edgware is murdered, after Jane had been to see him, or so the butler said, and also Edgware’s secretary. But Jane had been that evening at a grand dinner many miles away, where a dozen fellow guests could swear to her presence.
There was a solution however to the mystery of two Jane Wilkinsons, namely a skilful impersonator called Carlotta Adams who, in the opening chapter had impersonated Jane Wilkinson, who had also been at the performance. But when Poirot goes to see her, he finds that she had been found dead on the morning after Edgware had been killed, of an overdose. And in her bag was a gold case, with a strange inscription, that contained the drug, along with a pair of pince-nez.
Her maid said she had written a letter to her sister in America and posted it the previous night. Poirot asks Inspector Japp to get the letter, and a transcript is received from America, and in it the name of Edgware’s nephew Ronald Marsh is mentioned; he had taken Carlotta to dinner after her performance, with which the book opens, and had then set her a challenge. Japp arrests Marsh, but Poirot is not happy and asks for the original of the letter, which the sister sends him. That shows that a page is missing, and the tear is obvious, though that raises the question as to why it had not simply been cut.
Matters are further complicated by the fact that Marsh had gone in a taxi to the Edgware house, along with Edgware’s daughter Geraldine, in the interval of an opera which had previously seemed to provide them with cast iron alibis. Geraldine had gone in to fetch her pearls so that Marsh could raise money he needed, and thus had an opportunity to kill Edgware, as did Marsh, for the driver said he had got out of the taxi while waiting and gone into the house.
Marsh explained why he had gone to the house on the night of the murder as having followed Bryan Martin, an American actor, who had been in love with Jane, whom he saw go into the house with a key. But there was no one visible when he entered, and Geraldine almost immediately came down and they left together. And Martin too has become an object of suspicion to Poirot, for he had been to see him before the murders were discovered with a story of being followed by a man with a gold tooth – a story Poirot immediately realized was false when he was asked how old the man was, and was told he was young, for young people did not have gold teeth.
A heap of French money Edgware had got for a trip to Paris was missing, but since Marsh had no need for it after his cousin’s offer of help, Poirot deduces that it must have been taken by the butler, who has disappeared. Christie has stressed that he is astonishingly handsome, unusual in a butler, and Poirot notes a resemblance to Martin, so he thinks the mysterious man going into the house must have been him.
Incidentally, later Poirot assumes that Edgware’s change of mind was because he was involved in some scandal, and I believe Christie intends us to see the cause of this in his handsome butler, though this is not specified.
Meanwhile, Poirot has asked Japp to find out the provenance of the case found in Carlotta’s handbag, and it turns out to have been made in Paris, specially commissioned, and collected by a woman with pince-nez.
But then another murder occurs—that of another guest at the grand dinner, which provided Jane with her alibi. The victim is an actor who had been bemused when Jane, at a lunch, thought the Judgment of Paris referred to the city. He told Hastings he wanted to see Poirot, but was killed before he could get to the appointment. Poirot had rushed there when told about his request, but it was too late.
Meanwhile, Poirot has tried out the pince-nez on Edgware’s secretary, but she could not see through these. It was only a chance remark heard outside the theatre that led him to try them out on Wilkinson’s maid Ellis, a spare pair that had been appropriated for the night of the murders.
Poirot then lays things out, having summoned Martin and told him that he probably suppressed Edgware’s letter, as he had been dropped by then and he did not want Jane to marry another. But after teasing Martin, Poirot says that Jane was in fact the murderer, and she got Carlotta to impersonate her at the dinner while she went to the house and killed her husband. After meeting Carlotta later and checking with her through a call that she had
not been rumbled, Jane had gone ahead with the murder – she put veronal into her drink and the case with veronal into the handbag. She forgot to take out the pince-nez she had used earlier to imitate an American. Carlotta had registered as the American in a hotel and Jane had gone to see her, and there they exchanged identities. After seen the letter, she made use of it by tearing off the page that referred to her, and the S of She, so that the person who had challenged Carlotta to impersonate her seemed to be a man.
There is a coda in which Jane, condemned to death, writes to Hastings, still full of pride at her ingenuity hoping she will be remembered.
Features
Desilt reservoirs, learn from our ancient irrigation systems
by Prof. O. A. Ileperuma
Silting of reservoirs is a major problem today affecting our hydropower production and irrigation systems. The main Mahaweli reservoirs are silted to a considerable extent reducing the water holding capacity of them. Due to poor soil management practices, floodwaters deposit large amounts of silt in these reservoirs. When the Polgolla reservoir was fully drained about two years back, one could see mountains of silt in the lower reaches of the reservoir. A rough estimate is that 50% of the total capacity of these reservoirs has been lost to siltation. This is a serious issue which affects not only power and agriculture but also flood control.
Our ancient irrigation systems ensured that desilting of reservoirs took place under royal decree where all users of the reservoirs were ordered to carry out desilting of reservoirs during the dry season. The clay thus collected was used in making bricks for the construction of great stupas which dot the landscape of our ancient kingdoms. This ensured that the reservoirs had their full capacity filled with water for the next cultivating season. Our ancient kings were clever enough not to construct reservoirs by blocking main rivers such as the Mahaweli. A classic example is the Minipe left canal where they tapped only the surface water of Mahaweli. Even the bigger tanks such as Nuwara Wewa and Parakrama Samudraya were fed with minor rivulets. There were also other ingenious features in the cascade irrigation systems built by the ancient kings, such as mud sluice canals and forest reservations between the reservoirs in the cascade system. These reservations helped trap silt and remove excess nutrients, which could otherwise contribute to increasing salinity as water flowed from one reservoir to another.
- Parakrama Samudraya
- Kalawewa
- Kotmale
A classic engineering marvel is the former Yoda Ela, which carries water from Kalawewa to Nuwara Wewa and Tissa Wewa. It is 87 km long although the straight distance between these points is only about 40 km. The gradient of this canal is about 10 cm per km or 6 inches per mile. Yodha Ela functions as a moving reservoir and feeds about 4,600 hectares of paddy lands. It is a winding canal with about 120 smaller reservoirs on its way. It was constructed during the reign of King Dhatusena around 459 AD and later expanded by King Parakramabahu by connecting more reservoirs to the network. Unfortunately, during the Mahaweli project our modern-day engineers constructed a concrete canal replacing the winding path of this Yoda Ela also called Jaya Ganga. This effectively removed the ability of the old Yoda Ela to remove silt and nutrients. The bank of this Ela has wet zone trees such as jak and areca nut growing well. They take up the nutrients from the flowing stream making the water suitable for irrigation later.
Ancient Mesopotamian civilisations depended on dams constructed along the two main rivers, Euphrates and Tigris. After continuous irrigation of their fields over several thousand years, salinity of the irrigated lands increased making them unsuitable for agriculture. People died due to famine and this clearly illustrates the danger of blocking main rivers for agriculture. There is scientific evidence that the salinity of paddy soils in the Mahaweli C area is increasing.
We saw the devastation caused by Cyclone Ditwah. The sluice gates of the Kotmale Reservoir were opened, and Kandy and Peradeniya were flooded. If the reservoir had had greater storage capacity, couldn’t the opening of the gates have been delayed? This may not be an argument that modern-day engineers would readily accept, and I am not an irrigation expert. These ideas may well be naïve. But most of us tend to think of reservoirs mainly in terms of hydropower generation and irrigation, while their role in flood control receives much less attention. The question therefore deserves serious consideration. Could restoring lost reservoir capacity through desilting help improve our ability to manage extreme rainfall and reduce flood risks?
Desilting our reservoirs should be considered a national priority.
Features
Losing out to Ethiopia
Export diversification – Missing the wood for the trees – Part III
by Gomi Senadhira
In Sri Lanka, the word “Ethiopia” is often used as disparaging slang to describe individuals or areas experiencing extreme poverty, starvation, or severe economic hardship. This linguistic habit originated in the 1980s with the Western media coverage of the devastating Ethiopian famine of 1983-85. That media coverage shocked the world but also left an outdated and offensive global stereotype that the country is permanently starving. Much has changed since then. By now, with an annual growth rate of around 9%, it is the fastest-growing economy in sub-Saharan Africa. Ethiopia has also emerged as a highly competitive exporter and is challenging not only its competitors in the region but also countries like Sri Lanka. This article is on how Sri Lanka has lost ground to Ethiopia (and a few other countries) in the GCC markets for agricultural and floricultural products.
Sri Lanka – A Pioneer in the Agriculture and Floricultural Market in the GCC
As discussed in Part II of this article, by the mid-1980s Sri Lanka had established a strong foothold in the GCC’s fruit, vegetable, and floricultural market. Geographical proximity and well-established shipping and air links gave Sri Lanka a strong comparative advantage over Southeast Asian and African nations. Thailand, Vietnam, and Kenya were not even in the market. At that time, Ethiopia was experiencing (as BBC news reports described) “a biblical famine”.
The market was not very large, but it was lucrative and growing. Trade Minister Lalith Athulathmudali as well as the Chairman of the Export Development Board, Victor Santiapillai, who visited Kuwait (and the GCC countries), recognised the market potential for these products and encouraged us to continue with our work. The minister was particularly keen to further develop links between the market for these products, exporters, and his Export Production Villages (EPVs). So, it was becoming a successful case not only for export diversification but also for transferring gains from exports directly to rural households.
From Trailblazer to Tailender
As a result, even by the beginning of this century Sri Lanka had a larger market share than most of its competitors from Asia or Africa. But since then, our competitiveness has weakened significantly. The tables below provide a comparative snapshot of Sri Lanka’s performance vis-à-vis Thailand, Vietnam, Kenya and Ethiopia in the GCC market for vegetables, fruits and floricultural products. As illustrated therein, in 2001 Sri Lanka was ahead of Thailand, Kenya and Ethiopia in this small but rapidly growing market. Since then, we have fallen behind Thailand, Kenya and many other countries in that lucrative market. If this trend continues, Sri Lanka will fall behind Ethiopia within the next few years. (See Table 1)
In the GCC market for vegetables (covered in HS chapter 07), Sri Lanka was ahead of most other competitors in 2001. As illustrated in Table 1 , Sri Lanka had failed to develop this market, while Thailand, Kenya, and even Ethiopia had very efficiently increased their market shares. The GCC is a market to which Sri Lanka can supply some vegetables, like cabbages, by sea. It appears Sri Lanka had also failed to exploit this mode of supply.
We can see a similar trend in the market for fruits. Vietnam, Kenya, and Thailand have emerged as major players, while exports from Sri Lanka have staggered on slowly. In this segment, Vietnam has emerged as a leading player during the last twenty years and the GCC imports from Viet Nam have shot up from US$44 thousand in 2001 to US$346 million by 2024. In part one of these articles, I discussed the remarkable increase of jackfruit exports from Vietnam “…just $3 million in 2015 to an impressive $236.8 million in 2023” while most of our jackfruit production rots under the trees. This explains how countries develop their markets, geographically and product-wise. (See Table 2)
Sri Lanka’s performance has been weakest in the market for floricultural products (HS Chapter 06), which groups live trees, cut flowers, and ornamental foliage. When we first entered the market in the 1980s, the market was dominated by the Netherlands, and Kenya and Ethiopia were not even in the market. At that time, we identified the Gulf states as a market where Sri Lanka could have a dominant presence due to geographical proximity. Even in 2001, Sri Lanka was ahead of Kenya, Ethiopia, and Thailand. But by now, Kenya has emerged as the dominant supplier. Ethiopia is also expanding its market share and is the third-largest exporter. (See Table 3)
Missing the Wood for the Trees
In the mid-1980s, Sri Lanka first established its foothold in the GCC market. Since then, Thailand, Vietnam, Kenya, and even Ethiopia have moved well ahead of us and have become leading players. Why did we lag behind in our export diversification efforts in general and, more particularly, in the GCC market?
The reasons are very clear. After the initial attempts in the 1980s and early 1990s, Sri Lanka has not been proactively involved in identifying, developing, and promoting new products and markets, or protecting and further developing new markets already established. The focus has simply been on traditional exports: tea, coconut, cinnamon, and garments, while other products were almost ignored. In essence, we have been and continue to focus intensely on a narrow group of products and markets, and we have lost sight of the bigger picture.
(The writer can be reached at senadhiragomi@gmail.com)
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