City on Blood Bonds, but HSBC wouldn’t mind Sri Lanka

UNITED NATIONS, June 22 — As human rights groups call for investigations of the killing of tens of thousands of civilians by the Sri Lankan government as well as Tamil Tigers, and for the government to release the hundreds of thousands of Tamils including UN staff whom it has in detention, some banks and investors see only the chance to profit while there’s blood in the streets. Citigroup and Deutsche Bank are reportedly upbeat on “bloodbath bonds.”

Now, Roman Scott of the Singapore-based Calamander Group brags that the geopolitical risk is “not as bad as the West thinks” — in essence, monetizing the votes and posturing at the UN Human Rights Counci in Geneva and Security Council in New York. “Scott says even though Sri Lanka makes high-end apparel including Victoria’s Secret lingerie, he doesn’t like the structure of the business because it’s ‘far too prone to big single orders.’ Tea plantations have ‘horrible unionized labor,'” he is quoted.

The rebound will be spectacular,” said HSBC Private Bank’s chief investment strategist for Asia Arjuna Mahendran, hyping the possibility of Sri Lanka becoming the “Hong Kong of India” and “wealth Indians” investing there.HSBC

Another HSBC report by Prakriti Sofat is being used to urge countries to drop restrictions on and travel advisories about Sri Lanka: “a report released by  HSBC Global Research on 25 May 2009 had forecast… business process outsourcing (BPO), and manufacturing were key sectors ripe for Foreign Direct Investment.”

But while continuance of the EU’s GPS Plus favorable tariff treatment of Sri Lankan textiles, proffered after the tsunami, requires a human rights review, the Rajapakse administration has blocked investigators’ access. Click here for Inner City Press on the tariff.

The focus seems to be on Sri Lanka’s ports, which are to be trebled in size. Getting many of the contracts, some have noted, are South Korean firms.

But even the International Monetary Fund, which a month ago on May 21 said that the Rajapakse administration’s application for a $1.9 billion loan would be approved “within weeks“(click here for the Inner City Press story) now says the proposal is not yet certain, is not agreed to.

The government’s use of funds for what many call ethnic cleansing is increasingly questionable. This does not dissuade HSBC, or reportedly Citigroup and Deutsche Bank, under fire for standardless banking for strongmen in Gabon and Turkmenistan, respectively.

HSBC has a global record of ignoring human rights. It was implicated in money laundering with Riggs Banks, for Agusto Pinochet of Chile and other dictators. It has raised funds for controversial Canadian oil company Talisman, and has been sued for lending discrimination. Many now question its blithe gushing at this time about Sri Lanka. Watch this site.

Byline: Matthew Russell Lee of Inner City Press at the UN: News Analysis

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