• Imperialist diplomacy portends grave dangers for the peoples of Sri Lanka: Hands off Sri Lanka!

• Lok Raj Sangathan organises public meeting in New Delhi: The Challenges Facing theToiling Masses

• New competition law to facilitate further monopolisation and mergers

• Global trends in M&A

• Mergers & Acquisitions in Japan

Imperialist diplomacy portends grave dangers for the peoples of Sri Lanka:

Hands off Sri Lanka!

As the civil war in Sri Lanka continues to rage, hectic military as well as diplomatic moves are taking place involving India, the US, Norway as well as other powers.

On the military front, the Indian Navy has been put on high alert in the seas around Sri Lanka. The Chief of the Air Force, Air Chief Marshal AY Tipnis visited Colombo and had discussions with the military and political leaders of Sri Lanka. The notorious KPS Gill has gone to Colombo at the invitation of the Sri Lankan government to assist that government in chalking out a plan for unleashing state terror. The Southern Air Command has been put in complete readiness for air intervention. The Indian Air Force and the Indian Navy have worked out a contingency plan for the military occupation of the Jaffna Peninsula. Meanwhile reports indicate that elements of the US Navy located in the Persian Gulf have started moving towards the South Arabian Sea in the direction of Sri Lanka.

Simultaneously hectic behind the scenes diplomatic maneuverings involving the Indian and US governments, the Norwegian government, as well as other powers are afoot.

US Under Secretary of State Thomas Pickering and the Norwegian Special Envoy Erik Solhiem have had a number of rounds of talks with the Indian Foreign Secretary Lalit Mansingh as well as Defence Minister George Fernandes. After the talks, Mr. Mansingh said, "Our position remains the same. We are ready to offer humanitarian assistance. But no such request has been made. Fighting is still going on. The military situation is still on. We are waiting for fresh development in the fighting to take place." (Hindustan Times, May 25, 2000). Pickering emphasized that "Everything must be done to avert a humanitarian catastrophe". He further added that "Washington was all for any constructive role by India in Sri Lanka and was supporting the Norwegian initiative to broker peace. Both the Indian and US governments have publicly declared their opposition to the creation of Eelam and their support for the "unity and integrity of Sri Lanka".

Meanwhile, the Sri Lankan ruling classes have been eagerly requesting the US imperialists and the Indian state, as well as other powers to intervene in the Sri Lankan crisis, greatly endangering peace in the region. Over the years, they have refused to address the concerns of the Tamil people of Sri Lanka.

What do the ongoing diplomatic games reveal?

Firstly these diplomatic games reveal, that India and the US are openly coordinating their strategy for Sri Lanka and South Asia, and the Indian state has been assigned the "constructive" role it has been yearning for over five decades. Following the visit of Bill Clinton and the joint Vision Statement signed by Clinton and Vajpayee, Sri Lanka has become the test case for Indo-US diplomatic and military coordination to achieve common imperialist aims. The Indian bourgeoisie has always felt that as the predominant power in South Asia, it has the right to excersie its overlordship over other countries of the region and dictate to them. It appears that Washington has now recognized India as its junior partner and the policeman for all of South Asia. It is demanding that India on its part play the role of policeman to the hilt in accordance with the US strategy for the region. This is the meaning of Pickering’s statement that "Washington is all for any constructive role of India in Sri Lanka".

Secondly, both India and US are working overtime to intervene in Sri Lanka militarily and diplomatically, to establish India as the unbridled master of Sri Lanka and all the other South Asian countries. This intervention is going to be carried out in the name of "humanitarian assistance". Such intervention in the name of "humanitarian assistance" and "peacekeeping" has already been seen in Kosova, Somalia, Sierra Leone and other regions of the world. In the name of this "humanitarian assistance", the sovereignty of countries and peoples have been trampled upon, animosities between different peoples deliberately incited and excacerbated, and massacres organised. The ground is being prepared for the same "humanitarian assistance" to Sri Lanka. This is what lies behind Pickering’s call that "everything must be done to avert a humanitarian catastrophe".

US and Indian aims

What are the aims of India, the US and other big powers in Sri Lanka? Are they interested in assisting the peoples of Sri Lanka in arriving at a just solution that will accord with the aspirations of all the peoples of Sri Lanka? Only a naive fool would believe that the reactionary Indian State or the US imperialist state could have any such interests. US imperialism denies the rights of peoples and nations to their sovereignty. It has brutally interfered all over the world, including in Asia against the forces fighting for freedom and sovereignty, for social and national emancipation, for socialism and communism. The Indian State is no different. It has deprived through force the different nations, nationalities and tribes constituting the Indian Union of their sovereignty. It has used armed forces and brutal state repression against the peoples in the North East, Kashmir, Punjab, Telengana, Tamilnadu and many other parts of the country. Its approach to the land and resources of the peoples who constitute India has been imperialist, and it has justified its imperialist reactionary stance of depriving the peoples of sovereignty under the signboard of "defending the national unity and territorial integrity of India". It has always striven to establish its imperialist domination over Sri Lanka and all other countries of the region.

India’s big bourgeoisie is now having bigger dreams, in coordination with the US. The Sri Lanka policy of the Indian and US governments is directed at furthering Indian domination over Sri Lanka and the whole of South Asia under the patronage of the US. It is a policy directed against not only all the people of Sri Lanka, but also all the toiling masses of India. It is a policy directed against the threat of revolution in any part of South Asia.

The IPKF debacle

There is a groundswell of opinion, not only in Tamilnadu, but amongst the working masses all over India, against the oppression and humiliation of Tamils in Sri Lanka under successive bourgeois governments in that country. In the past, the Indian State used this sentiment to intervene militarily in Sri Lanka in the name of being a "peace maker". The Indian State also justified its intervention at that time on the grounds that otherwise the port of Tricomalee might fall into the hands of the US agencies. There were many in India, including the CPI and CPIM, who supported Indian intervention at that time on the ground that it was "anti-imperialist". Today these forces must answer how India’s coordination with US imperialism can be justified.

Looking back, the IPKF suffered a humiliating defeat and had to flee Sri Lanka after three years of bloody conflict. The reactionary role of the IPKF caused tremendous hardships to the people of Sri Lanka, as well as the people of India. The IPKF went in the name of "peace-keeping", and protecting the Tamils. In sharp contrast to this declaration, not only thousands of Indian soldiers and officers lost their lives in that reactionary war, thousands of Sri Lankan Tamils were raped, tortured and slaughtered by the IPKF. The IPKF went in in the name of "defending the unity and territorial integrity of Sri Lanka". However, the people of Sri Lanka soon recognised that this marauding army was a threat to their sovereignty. Entire Sri Lanka, the Tamils as well as the Sinhalese as well as others rose up against the IPKF and forced its withdrawal from their country. In Tamilnadu, the IPKF action, which went under the name of "humanitarian assistance" to the Tamils, resulted in a massive influx of refugees who have been kept in humilating conditions in refugee camps. State terrorism was raised to a fever pitch in Tamilnadu.

Mounting opposition to Indian intervention

As a result of this tragic history, not only the people of Sri Lanka, but also the people of India, and particularly the people of Tamil Nadu, are opposed to any new military intervention by India in Sri Lanka. This is a positive position and should be strengthened. It is significant that General Kalkat, who was commander of the IPKF forces in Sri Lanka, as well as other senior officers who participated in that campaign, have openly come out against any new military intervention in Sri Lanka.

Demand of the Indian working class

The Indian working class and people should boldly hoist the demand that the Indian government, this government of the capitalists of our country, keep its hands off Sri Lanka! Under no pretext must India intervene in Sri Lanka, least of all in the name of "humanitarian assistance" or "peace keeping" or "defending the unity and integrity of Sri Lanka" or "defending the Tamils". Let the people of Sri Lanka resolve their internal problems in a just manner so that the concerns of the toiling masses of Sri Lanka, whether they be Sinhalese, or Tamil, or any other, be fully safeguarded.

History has shown that as long as the ruling class of Sri Lanka carries on with its chauvinist policy towards the Tamils, and as long as it allows foreign imperialist powers the freedom to intervene in its internal affairs, there can be no peaceful solution to the Sri Lankan problem. By demanding that India and the US and all outside imperialist powers keep their hands off Sri Lanka, the working class of India will contribute to the creation of favorable circumstances for the people of Sri Lanka to resolve their own problems and for ensuring peace in the region.

The Indian working class and all those concerned about peace, freedom, sovereignty, and well being of the peoples of South Asia, angrily condemn the Indian State for collaborating with the US imperialists against the peoples. This alliance is a dagger pointed at the aspirations for freedom, for sovereignty, for national and social emancipation, for communism, in all the peoples of South Asia. American imperialism has never liberated any peoples, and it is not going to do so in this day and age. The history of all the reactionary states in Asia who linked their futures with US imperialism is a history of tragedies. Right now, Pakistan, which had linked itself with US imperialism during the entire period of the Cold War, is facing the consequences of the US abandoning it. This is not the exception, but the rule. Therefore, those in the corridors of power in New Delhi, who are at the moment heady and dizzy with the thought of being part of a strategic alliance with the US, better watch out! Your fate will be no different from the fate of the Pakistani rulers.

Down with the collaboration between the US and India!

Hands off Sri Lanka!

Back to Table of Contents

Lok Raj Sangathan organises public meeting in New Delhi

The Challenges Facing the Toiling Masses

Can the people of this country, workers, peasants and other toilers, defeat the anti-people policies of the ruling class of our country, which are designed only to serve the biggest of the capitalist monopolies? Can we bring such changes in the society, in the political and economic order of the country that can guarantee the basic needs of livelihood, health, education, food, nutrition, sanitation, drinking water, etc., to all. What do we need to do to achieve these? These important issues were discussed in the public meeting organised by the Delhi branch of Lok Raj Sangathan on 21st May. Activists working in various parts expressed their views on the challenges facing the people and on the role of Lok Raj Sangathan in preparing a strong and united mass movement to fight for a pro-people program in place of the current anti-people policies. Many of the participants in this meeting were youth, who intervened in the discussion with great enthusiasm and seriousness.

Several speakers raised the issue of resisting the attacks of the rulers on the livelihood of the toiling people. The effect of privatisation and liberalisation on people’s lives was analysed. In the context of the recent privatisation of the most prominent public sector bread-making concern, Modern Food Industries, in favour of the multinational, Hindustan Lever, a representative of the employees union talked of the brave struggle they have been waging. He opposed the Government policy of dis-investment and its decision to go ahead with this sale. A senior trade union leader from Mumbai talked about the struggles of the workers there and appealed to all toiling people to intensify their struggle to win the right to a decent livelihood. Several other speakers emphasised that the current system works to protect the profits of a handful of exploiters while the problems of the majority of the working people are never solved. For example, when there is a severe drought affecting crores of people, the exploiters are using the situation to make more profit rather than solving the problem of drought.

What was very evident from the interventions was that the exploitation of our people goes on unchecked because the political power is not in the hands of the people. The political power vests in the hands of the capitalists and it is not surprising that the policies are directed to increase capitalist profits and the interests of the working people is ignored. These days the rulers have started a controversy over whether or not the constitution should be revised. Behind this issue is the concern of the rulers to protect this rotten, bankrupt and discredited system from the wrath of the people. The concern of the working people, on the other hand, is to take over the reins of power. Only by the working people taking hold of the reins of power will they be able to use the system and all the resources of the country to ensure prosperity for the masses and open the door for fundamental changes and real progress. It is for this reason that Lok Raj Sangathan has taken up the main program for people’s empowerment, on the basis of which, it aims to build a broad fighting united front of the working people, which can resist the offensive of the capitalists. This was also the message of this public meeting.

There were several other important issues raised in the meeting. There was a widespread condemnation of the Indian State for its war preparation, for fuelling war hysteria, for collaboration of the Indian rulers with American imperialism and for its policy of interference in the neighbouring countries. People of India, Pakistan and other countries of South Asia want to live in peace and do not want a war. With this in view there was strong condemnation of the preparations of the Indian ruling class in collaboration with the American imperialist for intervening in Sri Lanka and for establishing hegemony over neighbouring countries.

The use of state terror to crush peoples’ movements was also condemned. Similarly, the crushing by force of the national aspirations of peoples of Kashmir, the North-east, Andhra Pradesh and other areas on the grounds of national unity and territorial integrity was firmly opposed.

The public meeting reaffirmed the decision of the Central Executive Committee to expand the work of Lok Raj Sangathan through out the country. The meeting ended with a street play by youth entitled "Death of a man" which dramatically depicted the problems in our society. It was greatly appreciated by the audience.

People’s Voice hails the organisation of this meeting highlighting the issues facing the working people and showing the path forward for solving these in favour of the people

Back to Table of Contents

On 22 May, an expert committee on competition policy has recommended the repeal of the Monopolies and Restrictive Trade Practices Act (MRTP) of 1969 and its replacement with a new Indian competition act that can spur further monopolisation and mergers. A new authority called the Competition Commission of India will be set up to regulate the mergers and monopolies. The act will require a group to notify the Commission of a merger only when the combined assets of the merged group will exceed Rs. 2000 crores.

The expert committee recommendation is one of a series of steps that the big bourgeoisie has taken in recent times to facilitate the growth of monopolies through mergers and acquisitions, so that Indian monopolies can expand into world-scale enterprises capable of capturing world markets and striking deals with the biggest imperialist powers. The Indian ruling class feels that the MRTP Act has served its purpose of keeping a rein on foreign monopolies from growing too fast in India and allowing Indian big capitalists to consolidate their empires. The time has now come to repeal it and replace it with a law more in tune with today’s realities.

When do mergers & acquisitions take place?

Particularly in a period of crisis, when many small, medium-sized and even big enterprises become bankrupt, mergers and takeovers become greater both in numbers and size. Recent mergers and acquisitions in south east Asia and Japan point to this. Also, when economies show comparatively stronger capitalist growth such as in the US and India in recent years, merger activity increases, because more investments are diverted for mergers and acquisitions.

Mergers and acquisitions (M&A) are necessary phenomena ofthe capitalist system where monopolies constantly strive to gobble up the competition to strengthen their monopoly while at the same time achieve greater economies of scale, meaning increase the scale of exploitation of raw materials and productive resources. But, in a period of slowdown or a period of "jobless growth", mergers and acquisitions are used to restructure a capitalist enterprise, achieving synergies that can further maximise profits by retaining profitable sectors of the enterprise and dismantling the less profitable ones.

In India, for example, there have been many recent proposals for mergers & acquisitions of very large monopolies such as the acquisition of a sizeable share of the cement giant ACC by another giant, Gujarat Ambuja Cements. Sois the case of the proposal for the takeover of the public sector petrochemical monopoly, IPCL by the private sector giant, Reliance Petrochemicals. These acquisitions will turn these Indian monopolies into world-scale monopolies capable of capturing external markets and dictating terms.

Consequences of M&A

What are the consequences of mergers and acquisitions for the working people of India? The consequences are grave. Mergers and acquisitions lead to further concentration of capital and exacerbation of the inherent contradiction in the capitalist system, the contradiction between labour and capital, the contradiction between the social nature of production and the private appropriation of profits. M&A give a free hand to big capitalists and multinationalsto downsize the workforce and increase the rate of exploitation per worker. They also create immense possibilities for foreign multinationals to penetrate the Indian economy further and strengthen their stranglehold on several sectors of the Indian economy. M&A enables monopolies to corner greater market shares and fix prices of commodities at will, causing hardships for the common people.

Growing M&A in India and the world

M&A activity has been on the rise in the Indian economy over the last couple of years. A study by the Economic Times Bureau points to an astounding growth in the Indian market, while at the same time India is way behind international levels. The value of completed M&A deals in 1999 in India was Rs.12,450 crores, 190 per cent higher compared to 1998. The valueof transactions as a percentage of Gross Domestic Product (GDP) has increased from 0.4 per cent in 1998 to 1.1 per cent of GDP in 1999.

The last calendar year also saw a sharp rise in M&A activity worldwide. 1999 saw $3,200 billion in mergers worldwide, compared to $2,400 billion in 1998. The year 2000 is expected to show higher figures in merger volumes. In each of last two years, M&A activity has averaged about 10% or more of world GDP. While size of M&A activity has fluctuated to some extent, global activity clearly shows a rising trend since the 1980s. The difference between Indian levels and global averages, as measured by a ratio to the GDP, is huge. One obvious conclusion of this for big monopolies is the huge opportunity for M&A activity in the Indian economy.

Sectoral trends in India for M&A follow the international pattern of more activity in high capitalist growth sectors and low entry barrier businesses. The Infotech sector has the largest share of deals aggregating Rs.3,000 crore. Infotech has overtaken cement, which also registered growth to show a deal size of Rs.1,520 crore.

Global M&As have been concentrated in such service industries as commercial and investment banking, finance, insurance, retail, broadcasting and healthcare areas. One of the major reasons for the increase in mergers was the increasing share of these industries in the capitalist economy in the "new economy" age and the deregulation of these industries.

Foreign direct investment (FDI) and M&A also appear to go together. Global (FDI) grew by 25 per cent in 1999 to US$827 billion in inward investment compared to US$660 bn, according to preliminary estimates released by UNCTAD, a large part going to cross border M&A.

According to UNCTAD, the reasons for enhanced role of M&As are in part specifically commercial (e.g. over-capacity and low demand in certain industries), in part strategic (e.g. sharing high investment costs in information technology and high research and development expenditures) and in part related to policy environment (e.g. the widespread adoption of deregulation and liberalisation measures).

The IT sector (software and the Internet) is where the Indian ruling class expects a lot of continuous activity in thissphere. In the Internet, there are low entry barriers and upwardly mobile entrepreneurs continually start up new companies that are later sold. In software, the Indian industry is maturing to a stage where M&A activity makes a lot of capitalist sense - both for buyers of Indian companies as well as Indian companies acquiring software companies overseas. The other intellectual capital sector where the ruling class expects a lot of M&A is in media. Other sectors with good M&A prospects according to the economic advisors of the Indian capitalists include Cellular telecoms, Power and Cement where consolidation should continue. For the other sectors such as pharma, petrochemicals and oil and gas (exploration and retail), big capitalists are exerting pressure that government regulations are eased.

According to the Editor of Acquisitions Monthly, while the Indian M&A market is yet to become top priority for global investment banks, it has reinforced its status as an emergent centre.

Internationally, investment bankers now categorise mergers in the $1bn to $5bn class as "mid-market". Massive deals in telecommunication and pharmaceutical sectors world-wide were the highlights of 1999. In fact, two recent telecom deals top the massive figure of $100bn level for the first time in history.

In summary, M&A means further monopolisation with severe consequences for the livelihood of the working people, and for national sovereignty. The Indian working class should vigorously oppose all the schemes of the big bourgeoisie, such as the new Competition Law, to maximise their interests at the expense of the working class and people

Back to Table of Contents

Global trends in M&A

Global M&As have been concentrated in such service industries as commercial and investment banking, finance, insurance, retail, broadcasting and healthcare areas. One of the major reasons for the increase in mergers in these sectors is the increasing share of these industries in the capitalist economy in the "new economy" age and the deregulation of these industries.

Foreign direct investment (FDI) and M&A also appear to go together. Global (FDI) grew by 25 per cent in 1999 to US$827 billion in inward investment compared to US$660 bn, according to preliminary estimates released by UNCTAD, a large part going to cross border M&A.

According to UNCTAD, the reasons for enhanced roleof M&As are in part specifically commercial (e.g. over-capacity and low demand in certain industries), in part strategic (e.g. sharing high investment costs in information technology and high research and development expenditures) and in part related to policy environment (e.g. the widespread adoption of deregulation and liberalisation measures).

Back to Table of Contents

An example of increased M&A when a capitalist economy is in recession or slowdown is the takeovers taking place in south east Asian countries and Japan. Foreign investors are cracking open "hard-shelled" corporate Japan as restructuring, deregulation, and the break-up of traditional business ties shake out capitalists in what was formerly believed to be a tightly closed market. A few days back a 225-bn-yen ($2.1-bn) equity alliance between Mitsubishi Motors and Daimler Chrysler AG was signed.

Many of the merger deals are being spurred by the break-up of the traditional `keiretsu' system that protected Japanese capitalist enterprises when they built their empires postwar.

Like the Mitsubishi-Daimler Chrysler deal, foreign firms are targeting Japanese companies as a way finally to gain a foothold in the highly-protected Japanese markets. At the same time, companies such as Nestle and Danon are increasing their stakes in various parts of the Japanese food & beverage businesses.

Foreign companies have made significant inroads into Japan's pharmaceuticals industry.

The flood of money coming into Japan more than tripled in ’99, to 1.4 trillion yen ($13.1bn), spurred on by high-profile deals such as French automaker Renault SA's gaining a controlling stake in Nissan Motor Co.

Japan has among the lowest FDI ratio to GDP. A strategist at Goldman Sachs, sees foreign investment rising in Japan, citing data showing that foreign direct investment in Japan is estimated to be near one percent, while that ratio is closer to 10 percent for countries such as Germany and the United States. This level of foreign direct investment is considered extraordinarily low for a "developed" economy.

Thomson Financial Securities Data calculates the value of mergers and acquisitions in Japan in ’99 at just over 16 trillion yen ($150bn), which includes deals within Japan as well as Japanese acquisitions overseas. The main players in the increasingly lucrative mergers and acquisition business are foreign investment banks. For example, Goldman Sachswas at the top of the list, organising a $24.7-bn telecom merger between DDI Corp, KDD Corp and IDO Corp last year. Within the banking industry, both Goldman and Merrill Lynch were involved in the three-way merger of Fuji Bank, Industrial Bank of Japan, and Dai-Ichi Kangyo Bank that will create the world's biggest bank.

Fuji Bank, Dai-Ichi Kangyo Bank and Industrial Bank of Japan are to set up Mizuho Financial Group next October, creating the world's largest bank ranked by assets. Sanwa Bank, Tokai Bank and Asahi Bank will become the world's number two when they set up a holding company sometime before next April. Tokyo-Mitsubishi Bank and Mitsubishi Trust joined in the merger wave last month, announcing that they will create a joint holding company in April ’01, the world's fifth-largest banking group by assets

Back to Table of Contents