Monday, June 24, 2024

Refusal of Russian MIR through eyes of transformation

by D Rajaratnam

News of Central Bank’s decision on refusal to link up with MIR payment system was broadcasted in Lankan media in subdued tone and mediocre coverage. Restraint largely owing to a decade of hard work by United States to build partnership with local media than lack of importance. Nor that we hear substantial political voice raising concern. There are no Think Tanks like Advocata or Verite to argue a case for MIR system analogous to IMF. The decision has a direct bearing on our national interest and security as the nation in concern has been an unequivocal ally and security guarantor of Sri Lanka in the international stage.

Payment systems are the veins and arteries of financial system as the cross boarder trading grew west developed a secure massaging system to communicate between financial institutions that came to be known as SWIFT replacing manual Telex massaging. Like any other organ in western structure SWIFT was strategically promoted around the world realizing the leverage it would hold one day. Sri Lanka adopted SWIFT between Lankan banks around 2003 though we used them before for international transactions (CB Report 2003). Through time like the Dollar it morphed into a potent weapon at the hands of Washington.

China & Russia has been challenging this financial edifice by developing a parallel structure. Union Pay built by China is now largest payment system yet lacks outreach to match juggernauts Visa and MasterCard. Interbank payment systems CIPS (China) and MIR/SPFS compete with SWIFT and US Dollar clearing CHIPS. MIR/SPSF/BRPS and CIPS offer complete suite of clearing and settlement service not only massaging. It cuts middlemen and directly converts Rouble or Yuan to local currency enabling trade and commerce between the nations. System hence foster bilateral relationship. SWIFT on the other hand headquartered in ‘neutral’ Switzerland. It complements well with other products and services that western world dominates such as currency, markets, payment cards and Investment Banks. Severing MIR system therefore has flow on effect on decoupling Lanka’s economic reliance on Russia while enhancing dependency on western bloc.

Nature of the imperialism that we see today is complex to understand. It is more about dependency and leverage than direct control, based on a development of purported common value system that is often defined by hegemon. Where support and subversion lines are blurred. To this end Washington and its allies have built a loyal fraternity comprise of Think Tanks, professional bodies like Ceylon Chamber of Commerce, Chartered Institute, legal fraternity based on reciprocal sustenance. Most importantly been giving advice to Central Bank through multilateral organisations in the likes of IMF. Many top management administrators in Central Bank possess US Doctoral degrees with scholarships awarded. Playbook of Lanka’s economic pathway bear stamp of Washington Consensus. An ‘independent’ CB may become ‘dependant’ CB on Washington Consensus. Pertinent point West transforms institutions not individuals and then relies on institutions to self-sustain the ideology.


Lately through USAID and IREX has been encroaching media space. Training journalist under MEND program (17 entities so far according website) and befriending media moguls are all part of craftily building influence which her opponents lack. Bulwark in the MIR (or any Chinese project) mostly comes from aforesaid fraternity augmented by ethno-religious divisions. Not long ago Aeroflot dispute created headlines how a law firm went out of its way to detain a plane. A convoluted equilibrium where local disharmony meets US geopolitical interest. In short when China was busy transforming the landscape of Colombo US focused on transforming the society. Lately published strategy paper “Integrated Country Strategy” is unambiguous in naming the obstacles. Sinhalese-nationalism long played a role in resenting western influence over non-alliance which it sees as an impediment. As a counterweight Lanka’s ethnic issue found refuge in Western polity (analogous to Uygur Muslim for China or Rohingya in Burma). The Idea of ‘home grown’ economic model does not concur with neo-liberalism. If continued nation would get completely absorbed into western orbit away from any emerging power bloc. In modern world such obstacles can only be overcome by transforming a society who would see the World in a given prism, by observation what is happening in Lanka!!

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