IMF Bailout of BlackRock amid Adani Greenwash. Indian Ocean Region Economic Nightmare after Argentina one
Where does the Gravy Train End?
by Darini Rajaisngham-Senanayake
Dr. Darini Rajasingham-Senanayake, is a Social and Medical Anthropologist, based in Colombo, Sri Lanka. All links to Gospa News articles have been added aftermath.
Buenos Aires was rocked again last week by massive protests against austerity measures imposed by the International Monetary Fund (IMF). Structural reforms with austerity have resulted in soaring inflation, currency depreciation, poverty and inequality that is eroding Argentine society and economy, while enabling bail out of private lenders and vulture funds like BlackRock.
Argentina is now on its 21st IMF agreement and eighth Default! Sri Lanka negotiating a 17th IMF agreement having defaulted for the first time in April this year may be doing marginally bit better than Argentina, which is South American’s 3rd largest economy. However, the strategic Indian Ocean island perpetually in the cross-hairs of big power rivalry appears to be in the midst of asset stripping ex-ante IMF negotiations with International Sovereign Bond (ISB) debt holders, who caused the country to default for the first time in its history in April this year.
As a staff level agreement with the IMF is under discussion, Minister of Power and Energy, Kanchana Wijeratne gave BlackRock’s partner, Adani, provisional approvals and strategic lands for two wind power projects in sensitive ecosystems in Northern Sri Lanka, Mannar and Pooneryn, without Environmental Impact assessments being complete last week.
Wijesekera had decided to award the projects and lands to Adani following a meeting with officials of Ceylon Electricity Board and Sustainable Development Authority last Tuesday.[i] The Minister added that Public private partnership agreements would be signed pertaining to 21 of the 46 projects that were delayed due to the CEB Act amendments. 26 Renewable proposals from expression of interests that was given Provisional Approvals would be also expedited with grid clearance and transmission plans, with other proposals evaluated within 30 days. [ii]
As the Central Bank of Sri Lanka (CBSL), engages in talks for a Staff Level Agreement with the lender of last resorts, Sri Lankan citizens may need to learn some lessons from Argentina, fast! Back in 2020, BlackRock had opposed a debt settlement deal with Argentina and lobbied other debt holders as the country grappled with soaring poverty and the Covid-19 pandemic.
The International Monetary Fund said it will need “adequate assurances” from Sri Lanka’s creditors for a new program as it prepares a visit to Colombo later this month.The goal of the visit is to make progress on a staff-level agreement for an aid package “in the near term,” to help the island nation weather a severe economic crisis, the IMF said on Friday. Staff from the global lender will be in Colombo from August 24 to 31.
Since the IMF has assessed Sri Lanka’s public debt “as unsustainable”, approval by its Executive Board of the Extended Fund Facility program would require adequate assurances by Sri Lanka’s creditors that debt sustainability will be restored,” the IMF said.
Last week a global campaign by women’s groups asked UN Women to rescind an MOU with BlackRock for gender-lens funding due to its poor corporate responsibility track record.
IMF, BlackRock and Lazard in Sri Lanka’s Default: Ex-Ante Asset Striping
BlackRock, the world’s largest asset and investment management company with over $10 trillion is the largest holder of Sri Lanka’s opaque ISB debt that caused the country’s Staged Default in April this year. ISBs amounts to almost fifty percent of Sri Lanka’s external debt.
In comparison to BlackRock’s trillions Sri Lanka’s external debt is a mere $ 26 billion. Black Rock also got huge Covid Bailout funds from the US government to asset strip around the world during economically devastating global lockdowns in 2020, and is an investor in India’s Adani Group.
Ironically, the IMF which does not distinguish between illiquidity and insolvency has assessed Sri Lanka’s $26 billion external debt as unsustainable although the island is oil, gas and mineral rich and located at the Center of the Indian Ocean on the world’s busiest trade and undersea data cables, which if properly taxed would render the island super-rich!
An economic meltdown ex-ante and ex-post the Staged Default in April this year due to a purported lack of US dollars amid Corporate media narratives of famine and fear as part of a Psychological Operation along with people’s protest enabled the entry of the Washington Consensus (IMF and WB), into the strategic island that is perpetually in the cross-hairs of big power rivalry and Over the Horizon Operations (OTH), the more so as Cold War heats up in the Indian Ocean region.
While the IMF does not distinguish between a country’s illiquidity and insolvency, the valuation of strategic assets by Lazard et al. hired by the US-backed Ranil Rajapakse regime in Colombo may also raise troubling questions. Lazard, the US-based financial advisory and asset management firm, had visited Sri Lanka in back in February 2018 to discuss divestment.
As a privatization advisor, Lazard involves both an advisory services branch and asset management branch. On numerous occasions, Lazard has undervalued the price of a company, enabling the latter to purchase the stock at low prices and sell it for a considerable profit according to a report of the Amsterdam based Transnational Institute that notes:.[iii]
As with the Royal Mail, Lazard, Europe’s favourite privatisation advisor, played a key role in AENA’s under-evaluation before its IPO as it helped determine the IPO price. And comparable to what happened during the privatisation of UK’s Royal Mail, one of Lazard’s asset management branches, Lazard World Dividend & Income Fund, acquired AENA (Spain’s Airports company) shares at the IPO and sold them roughly a month later netting a 60% profit.58 By buying up and selling the AENA shares within such a short period of time, Lazard’s World Dividend & Income Fund deviated from its usual strategy.
As the name suggests, the company usually focuses on long-term investments and profit generated by dividends.59 In the case of AENA however, Lazard‘s World Dividend & Income Fund were only too happy to drop their customary strategy when it yielded a 60% increase of their investment in just four weeks. Once again, Lazard took full advantage of its privileged position on both sides of the fence, as seller and buyer making a huge profit in the process.
The I.M.F. had long been accused of wielding a single blunt instrument— austerity in crises and forcing the poor to the bear, the costs of opaque and Odious debt accumulated by corrupt and incompetent leaders in developing countries, and passing it on to impoverished citizens, while ‘bailing out’ vulture funds, prominent among them BlackRock and the global 1 percent.
It would appear that Adani and BlackRock are targeting the strategic Indian Ocean island’s coastal lands, energy and telecom infrastructure at this time of IMF discussions on Sri Lanka’s debt and Staged Default and stand to benefit from the debt restructuring process– ex ante! Where does the corruption end?!
Adani and BlackRock Greenwash
Adani which partners with BlackRock, stands to benefit ex-ante IMF-CBSL-ISB talks from the Mannar and Poonaryn land deals for Green Wind Energy. But questions arise: Why the rush to costly green energy, without a proper energy transition plan in Sri Lanka, which has a minute carbon foot print at this time of global fuel price increases, and as a result of unplanned green energy policies (like the organic fertilizer disaster), is a question that many are asking? Is this a sweetheart deal ex-ante IMF negotiations with ISB holders for BlackRock to tow the line?
These questions arise also given the poor environmental track record of both Adani and BlackRock, which elicited global protest campaigns against the latter’s funding of UNWOMEN. Adani and BlackRock were also the subject of a global protest campaign given the environmental impacts of the Carmichael Coal mine project in Australia on the Great Barrier Reef last year.
An IMF Firesale of assets in the strategic island would benefit opaque ISB holders of Sri Lanka’s Odious debt, with Sri Lankan Airline set to be privatized soon. The state-owned Yugadanavi Power plant was sold to a US company, New Fortress, last year. The Ceylon Electricity board is being fragmented and plans are afoot for sell off in parts, jeopardizing national energy security and so too the Petroleum Corporation.
However, rather than privatize energy assets, globally re-nationalization of energy infrastructure given soaring energy prices and commodities futures speculation is the trend globally, with France set to Nationalize its largest electric company, and the Singapore Parliament passing legislation last year conferring on the Energy Market Authority (EMA) more powers to secure Singapore’s electricity supply,
Adani had also sought to take over India’s Agriculture sector during the Covid panicdemic exercise, but two years of brave and sustained protests by India’s farmers (unlike Sri Lanka’s Aragalaya which fizzled out after a couple of months of protests that enabled a US backed Ranil Rajapakse Presidency), prevented the global corporate takeover of India’s farming and agriculture.
IMF in Argentina: lessons unlearned
Did the ‘lender of last resorts’ learn lessons in Argentina? The IMF’s “rescue package’ in Argentina two decades ago imposed crippling cuts to government programs, sowing enduring bitterness. Ms. Georgieva, the fund’s managing director, claims that the “lender of last resorts” learned lessons and has sharpened a focus on protecting countries from impossible debt burdens.
However, BlackRock, opposed a debt settlement deal with Argentina as the country grappled with soaring poverty and the pandemic in 2020 although.[iv] BlackRock CEO, Laurence D. Fink presents himself as the vanguard of a progressive form of capitalism in which profits are not everything and has been rebranding the corporate with while cultivating environmental and social protection causes.
But when Argentina defaulted in May 2020 on $66 billion worth of bonds, Mr. Fink’s faith in “stakeholder capitalism” collided with traditional bottom line imperatives. Though poverty soared in Argentina as the pandemic worsened a punishing economic downturn, BlackRock opposed a settlement proposed by the government and rallied other creditors to reject it, while holding out for a marginally improved deal.
Meanwhile in another continent, following massive protests in Australia and globally the Adani and BlackRock seem to be busy Greenwashing themselves and presenting a Green Energy face in Sri Lanka. Thus Adani has been given provisional approvals for two wind power projects in strategic and sensitive ecosystems in Mannar and Pooneryn, without Environmental Impact assessments completed, by a Minister who should have resigned given the incompetence and corruption in the sector that brought the country to a standstill in June –July ex-ante and ex-post the Staged Default, ensuring a crisis that legitimated the IMF’s eroding Sri Lanka’s economic policy autonomy and sovereignty against its citizen’s interests.
UN WOMEN campaign: From Greenwash to Pinkwash
Adani and BlackRock are accused of environmental pollution globally, and BlackRock was recently called out in a global feminist campaign that focused on UNWOMEN’s MOU for partnership with BlackRock and taking funding form the investment giant.The campaign focused on the “fad of Climate “impact investment”, stating that: Civil society watchdog groups consistently identify BlackRock as among the worst performers on corporate accountability.
Its climate and socially-destructive investments — particularly significant in impact because of the massive component they represent of BlackRock’s portfolio — have been called out by activists, including Indigenous leaders. Aware of the optics, BlackRock has attempted to ‘greenwash’ itself by acknowledging the seriousness of climate change – in a move that the New York Times has condemned as ‘climate hypocrisy’ that is intentionally misleading; worse than climate denial.
The recently-announced partnership with UN Women suggests that UN Women has been recruited to BlackRock’s image-cleansing efforts – this time it is seeking to ‘pinkwash’ itself read a letter addressed to the head of UNWOMEN and signed by Hundreds of women’s organizations and individuals around the world. Thus they wrote:
BlackRock funding UN Women gives it a veneer of feminist approval that it clearly does not merit. Given BlackRock’s phenomenal size and influence (reportedly managing ten trillion USD) in assets, it is not unreasonable to assert that this UN Women partnership also gives a feminist imprimateur to the version of neoliberal global capitalism that is condemned by the Secretary Generatl. This crisis-prone speculation-based capitalism, spawning grotesque income inequalities, has also been linked to misogynistic neo-populism and entrenched poverty for many women, particularly those from ethnic or racial minorities, marginalized sexualities, and female-headed household.
Importantly the Women’s organizations, academics and activists who signed the letter also noted: UN Women needs to rescind the partnership with BlackRock and set standards for its private sector partnerships. The same critique may be make of other UN agencies like the World Health Organization funded by Big Pharma and the Gates Foundations and UNDP funded by big oil companies like Shell to promote Debt for Nature Swaps (DFNS), need revised standards for private sectors partnerships.
The Privatization Industry: National Security Jeopardized?
The UN Secretary-General Antonio Guterres called out profiteering by private oil giants earlier this month and said was “immoral” that the largest energy companies in the first quarter of the year made combined profits of close to $100 billion. He urged all governments to tax these excessive profits “and use the funds to support the most vulnerable people through these difficult times.
The worst time to privatize strategic assets is in a global emergency and jeopardize national energy security as Cold War looms amid soaring oil and gas prices. Privatization is no panacea for cultivated state-sector corruption to under-mine government institutions as a pretext to privatization a la the Privatization Playbook.
A trend away from privatization towards re-nationalization of energy infrastructure is visible globally at this time as energy security of countries becomes paramount. Last November the Singapore Parliament passed a Bill to safeguard Singapore’s energy security and reliability in the long term.[v] The Bill provides the Energy Market Authority (EMA) with more powers to secure Singapore’s electricity supply, as the country transits to cleaner sources of energy to acquire, build, own and operate critical infrastructure, which reverses privatization.
The French government likewise said Wednesday that it plans to fully take over its largest electricity provider Electricity de France (EDF). The nationalization of EDF comes as the European Union feels the effects of its partial bans on Russian energy. Russia is the largest supplier of energy products to the EU, accounting for 62% of crude oil imports and 25% of natural gas imports to the bloc in 2021.[vi] Soft Re-nationalisation is also ongoing in Hungary.
However, Sri Lanka is self-destructing its energy security by “unbundling energy infrastructure’ ex-ante IMF-ISB talks, despite evidence that privatization is not a solution for citizens, as private global energy companies have made massive profits while inflation soars and people starve due to high oil and gas prices.
The IMF does not recognize the difference between ‘illiquidity’ and ‘insolvency’, or the fact that “location, location, location” matters in valuing assets, or the fact the island’s mineral-rich sea bed has UDC data cables that keep the global financial and economic system going, and if taxed would render the country super rich!
Thus, Adani which is backed by BlackRock is poised to take over sensitive lands on Greenwash project in Sri Lanka while the IMF operation to divest the island of valuable lands, energy, telecom and transport infrastructure assets is on-going as part of a bailout of predatory vulture funds that prey on the citizens of the global south in collaboration with the Ranil-Rajapaksa regime in Colombo.
The current President was also responsible for the biggest financial fraud in the country– the Bondscam of 2015 at the CBSL. The largest share of the SL’s ISB debt – nearly 70 percent – was accumulated during the 2015-2019 when Ranil Wickramasinghe was in power. He was brought back to power in a regime change operation less than three months ago to steer IMF negotiations and enable asset stripping.
Indeed, as Sri Lanka negotiates a “Staff-level Agreement” with the IMF, it seems to be fully remote controlled from Washington DC with New Delhi as a junior partner. The country is already in structural adjustment mode and being readied for an IMF Firesale and asset stripping as part of a “bailout” of US and EU-based International Sovereign Bond (ISB) holders.
However, given the Odious nature of the debt accumulated in deals between corrupt politicians and predatory ISB holders, academics and activists in Sri Lanka have called for outright Cancellation of ISB debt, and restructuring of only bi-lateral and multi-lateral debts. While it is claimed that investors holding emerging market bonds run the gamut from specialized funds with high tolerance for risk to conservative pension funds, the Funds should do due diligence and ensure that they are not party to Odious debt accumulation in poor countries in the Global South!
Adani List of the Carmichael Project
The Adani List page reveals BlackRocks massive financial interest in Adani and the companies involved in the Carmichael coal export project in Australia that resulted in massive environmental protests. BlackRock has a huge stake in many of the companies that comprise the Adani List, which consists of the insurance, construction, engineering and infrastructure providers to the Adani Carmichael mine and rail project. Companies on the Adani List shows BlackRock holds a total of US$26.8 billion in companies that are providing services to the Carmichael project, including some very influential stakes in some companies.
BlackRock holds the following stakes in Adani List companies: [vii]
- 7.25% of Aurizon, one of two companies that could potentially provide coal haulage services to Adani to get the coal from mine to port.
- 7.74% of AIG, which was insuring Adani as recently as September 2019 and has not declared themselves out of the project.
- 7.94% of Decmil, a construction company which has a $40m contract to design and construct three temporary camps along the Carmichael rail corridor.
- 8.31% of Marsh, which is Adani’s broker and attempting to secure insurance for the Carmichael coal mine and rail project.
- 4.93% of Oracle Corp, a software company providing the Aconex project management software for use on the Adani Carmichael coal project.
- 8.22% of Siemens, which has agreed to provide essential signalling services for the Carmichael rail line.
- 0.66% of the State Bank of India, which is still bankrolling Adani’s Australian activities, most notably the debt funded acquisition of the Abbot Point Coal Export Terminal, through which the Carmichael coal would be exported.
- 0.9% of Telstra, a telecommunications company believed to be providing communications links for the Carmichael project.
BlackRock also owns 7.45% of SAP, which is also understood to be providing specialist communications services to the Adani Group but is not yet on the Adani List.
Dr. Darini Rajasingham-Senanayake, is a Social and Medical Anthropologist, based in Colombo, Sri Lanka. All links to Gospa News articles have been added aftermath.
Notes of the inquiry below the related posts.
[iii] Sol Tambo Vila and Peters, M, the Privatization industry in Europe https://www.tni.org/files/publication-downloads/tni_privatising_industry_in_europe.pdf
[iv] In Argentina’s Debt Negotiations, a Kinder, Gentler Capitalism Faces a Test https://www.nytimes.com/2020/07/31/business/argentina-debt.html