By Tamara Kunanayakam

Economist and International Relations Expert, Former Ambassador/Permanent Representative of Sri Lanka to the United Nations at Geneva, Former Senior International Civil Servant at the United Nations, and Ex-Chairperson/Rapporteur of  Intergovernmental Working Group on the Right to Development


A fundamental principle of international law, incorporated in a wide range of international and regional instruments, is permanent sovereignty over the nation’s wealth and resources and all its economic activities as a basic constituent of the right of peoples to self-determination and its corollary, the duty of States to respect sovereign equality in their relations with other States. It is a recognition that there can be no political independence without economic, social and cultural independence, free from all forms of interference or pressure, direct or indirect, of whatever sort and under whatever pretext.” 1 For independence to be complete, any future attempt to restore foreign influence or domination must be prevented forever.2 This universal admission is the result of the historical struggle of colonised peoples for freedom, particularly of Africa and Asia, whose newly won independence had remained purely formal and fragile, threatened by the resolve of rich capitalist countries to standardise and rationalise the global economy to ensure their monopoly and control over foreign markets.

The ongoing neoliberal reconfiguration of the State to facilitate global expansion of capital by imposing a single model of development and transferring decision-making on all aspects of social relations to a handful of Western oligarchs is inimical to the sovereignty and independence of nation-States.

The agenda is supported by the neoconservative interests observed in modus operandi of the UN Human Rights Council (led by US neoconservatives) who promote direct, unilateral, preventive, and pre-emptive intervention, including military, in the internal affairs of sovereign States.

In examining the rapid progress of neoliberal reforms in Sri Lanka, it is essential to bear in mind this complementarity and commonality between neoliberals and neoconservatives, and their mutually reinforcing actions: their common goal is to maintain US global hegemony, and their common enemy is State sovereignty, the principle upon which the multilateral system is based;3 they both champion a shift of governance to corporate-controlled supranational institutions4 they claim are necessarily objective and apolitical, although beyond the reach of domestic accountability; they both foster elite cooperation globally through powerful, often secretive, groups;5 and, both make claims to a ‘moral universalism’ to justify external intervention, refining and propagating language best described as Orwellian doublespeak to promote their agenda.

The sovereignty of nations and peoples everywhere is at stake, and Sri Lanka is no exception. The present paper counters the neoliberal claim that the breaking down of nation-States and sovereignty is a natural phenomenon that is progressive and inevitable, and shows how its making and perpetuation is a continuing violation of national sovereignty and the inalienable rights of peoples and nations to determine their political, economic, social and cultural systems.

The paper begins by examining the making of the neoliberal global order by a conscious restructuring of the nation-State and the fostering of elite cooperation internationally to ensure its reproduction through, inter alia, think tanks. It will then examine some of neoliberalism’s basic claims and reality, and its impact on politics and society. Finally, it will examine the case of Sri Lanka and attempt to disentangle the complex web of relations that exist between and among think tanks, the ‘mother of all think tanks’ – the Mont Pelerin Society (MPS), global corporates, the US Administration, and Sri Lanka’s trans nationalised elite. The section will focus on some of the lesser known, but visible, vehicles for intervention – the Institute for Policy Studies (IPS), Advocate Institute, and Millennium Challenge Corporation (MCC). It will conclude with certain observations on fundamental principles of international law that provide a basis for alternatives to the hegemonic neoliberal model, for the restoration of sovereignty.


An insidious, radical and all-encompassing transformation or re-engineering of the nation-State is taking place based on a ‘market society’ and ‘market rules,’ involving the marketization of the entire scope of human relations through multiple political, economic, social and cultural processes.

It is not a natural, self-regulating, inevitable and benevolent process, but designed, implemented and reproduced, often through violent intervention, by global corporations in alliance with a section of the local elite, whose destiny and vision have become intertwined with theirs. Its name is neoliberalism, the global expression of capital dominated by finance. Its principal project is ‘globalisation’ – the integration of the world into new globalised circuits of accumulation for profit maximization by transnational capital dominated by finance through use of State power. It is associated with the US project to retain global hegemony, if necessary by unilateral military intervention. Unlike classical liberalism, it goes beyond the mere opening of markets. Its claim is global, a single model for all, imposing the ‘market logic’ to all forms of human interaction, economic as well as financial, social, political, cultural, ecological, and even psychological.

Neoliberalism cannot be separated from capitalism. Roberts describes it a new regimen of capitalism” as political response of capital to the growing militancy of the labour force,6 and Saad-Filho as ‘the mode of existence of contemporary capitalism’ 7 to curtail the power of labour. As such, it emerged in reaction to the first generalised systemic crisis of world capitalism in 1973-1974 resulting from a falling rate of profit expressed in a crisis of overproduction, a credit crisis in the US aggravated by escalating costs of its military interventions in Korea, Taiwan and Vietnam, the collapse of the Bretton Woods system, stagflation, and an impending debt crisis in the South.

Ever since, it has been imposed globally, often violently, through State intervention and patronage of US hegemony  The first neoliberal experiment, designed and implemented by Milton Friedman’s Chicago Boys, was carried out in Chile from 1973 to 1989 under the military dictatorship of General Pinochet, following the CIA-backed coup d’état and assassination of the democratically elected President Salvador Allende. It gained prominence only after the election of Margaret Thatcher in Britain and Ronald Reagan in the United States. In the Global South, it was imposed through external pressure ranging from IMF/World Bank conditionalities, unilateral threats and sanctions, financing of civil society organisations promoting neoliberal values, fomenting political unrest and regime change, foreign aggression, and military intervention.

Contrary to neoliberal claims, ‘markets’ are not places where goods and services are freely bought and sold by producers and consumers, but where large corporations dominate unhindered by regulation or countervailing social forces. They rely on a strong State to create favourable conditions for the operation of transnational capital. In fact, neoliberalism is based on the systematic use of State power to impose a hegemonic project of decomposition of the rule of capital;” 8 ‘non-intervention’ is only the ideological guise. As Gramsci understood, laissez faire too is a form of State ‘regulation’ introduced and maintained by coercive means. It is a deliberate policy, conscious of its own ends, and not the spontaneous automatic expression of economic facts.” 9 Instead of being rolled back or made to disappear, the State is reengineered to intervene on its own behalf. The State is expected to intervene heavily to deregulate (liberalise, depoliticise, privatise, outsource, flexibilise, and marketise everything) and implement fiscal and monetary austerity with a view to separating from the political realm all economic/financial and other potentially profitable activities, including social and cultural, so that vital sectors are brought under the control of transnational capital and its economic interests prioritised over the common good, insulating it from peoples’ choices, crippling trade unions, and depriving the State of capacity to act. Once deregulated, the State is expected to reregulate to protect the private property thus acquired by global corporates to shield it from popular resistance and trade union action. ‘Good Governance’ (and the associated ‘Rule of Law’) is the obscure term for a new system of law and government involving legal, political and institutional reform, putting in place instruments of social control – coercive and ideological – to maintain a stable social order’ required by global capital, thus limiting the ability of people and nation to make choices and State capacity to implement those choices and promote social justice, or even to fulfil its international human rights and labour obligations.

Implicit in the dogma of an autonomous free market as optimum for achieving human freedom and a collectivist State as a threat is the view that it is not society that determines the economic system, but the economic system that determines how society is organised,10 This notion of a mystic entity beyond human control removes decision making from the lives of ordinary people and renders them passive objects, not subjects of their own destiny. It thus permits the imposition of an alien model of society on peoples and nations usurping their inalienable right to freely determine the political, economic, social and cultural system they choose to live in.

Neoliberalism is essentially a political project designed to prevent the emergence of countervailing forces and permit transnational capital to override democratic processes, determine national economic and social priorities, and secure control over the value of what is produced by the nation, its wealth, natural resources, economic activities, workforce, and currency. On the part of the local allies, it implies abdication of State power and its duty to act on behalf of nation and people.


  1. UN Declaration on the Granting of Independence to Colonial Countries and Peoples, General Assembly resolution 1514 (XV) of 14 December 1960.
  2. For a more detailed examination of the relevant principles contained in United Nations documents since 1944, see Tamara Kunanayakam, Historical analysis of the principles contained in the Declaration on the Right to Development, UN document HR/RD/1990/CONF.1, Geneva, 1990; Tamara Kunanayakam, The Declaration on the Right to Development in the context of United Nations standard-setting, Realizing the right to development : essays in commemoration of 25 years of the United Nations Declaration on the Right to Development. United Nations, 2013; and, Quel development? Quelle cooperation Internationale? Third World Centre (CETIM), Geneva, 2007.
  3. Frequent attacks against sovereignty can be seen in the body of neoclassical economic theory and neoconservative philosophy that influenced the development of neoliberalism.
  4. Such as the already existing World Trade Organisation, IMF/World Bank, international free trade agreements, etc.
  5. For instance, the Bilderberg Group, the Trilateral Commission, the Council of Foreign Relations, and Project for the New American Century (PNAC).
  6. See Michael Roberts, The Great Recession, 2009.
  7. See Alfredo Saad-Filho, Crisis in neoliberalism or crisis of neoliberalism? Socialist Register, 2011. See also Ben Fine and Alfredo Saad-Filho, Thirteen Things You Need to Know About Neoliberalism, Critical Sociology, 43 (4-5), 2016 & Damien Cahill and Alfredo Saad-Filho, Introduction: Neoliberalism Since the Crisis, Critical Sociology Vol. 43 (4-5), 2017.
  8. See Alfredo Saad-Filho, Crisis in neoliberalism or crisis of neoliberalism?, op.cit.
  9. Antonio Gramsci, The Modern Prince” The Prison Notebooks
  10. Karl Polanyi described it as a system in which ‘Instead of economy being embedded in social relations, social relations are embedded in the economic system.’ See K. Polanyi, The Great Transformation: The Political and Economic Origins of Our Times. Boston: Beacon Press, 2001.

Source-SLJER Vol 6 No. 1.

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