Arjuna’s role in the Hambantota deal
Posted on January 7th, 2017

Courtesy The Island

As we write this on Saturday, the Hambantota town has become a battleground with thousands of policemen on the streets with barricades and riot gear. Reports are coming in of confrontations between the police and protestors with tear gas and water cannon being used.  The signing of the final agreement for the privatisation of the Hambantota Port was to take place yesterday in Hambantota but it was cancelled by Minister Malik Samarawickrema who said last Thursday that the final agreement on the Hambantota Port would not be signed on January 8 because there are some issues that had to be ironed out and he hoped to be able to sign the agreement before the end of January. What took place in Hambantota yesterday was the laying the foundation stone for a ‘Hambantota development zone’.

A letter written by the Ports and Shipping Minister Arjuna Ranatunga to the Committee of Ministry Secretaries appointed to handle the Hambantota port matter dated 27 December 2016 – i.e. ten days before the day on which the final agreement was to be signed, holds the answer to what has happened. The media had portrayed this letter mainly as a missive complaining that Arjuna had not been consulted with regard to what was being done to the Hambantota port – which would make it look like a turf war. But there was much more to it than that.    Arjuna had copied this letter to the President and Prime Minsiter, Ministers Malik Samarawickrema and Sarath Amunugama, to R.Paskaralingam,  the Secretary to the President, the Secretary to the Prime Minister the Secretary to the Treasury and three other ministry secretaries and had no less than 17 attachments.

What Arjuna had said in a nutshell was that two Chinese companies China Harbour Engineering and China Merchant Co had sent in proposals to lease the Hambantota harbour with the share division between the Ports Authority and the private Company being 35:65 in the case of China Harbour Co and 20:80 in the case of China Merchant Co respectively. The income that would accrue to the Ports Authority differed. No criteria had been provided as to how the proposals should be assessed. A committee of Ministry Secretaries had been formed on 14 September 2016 to make recommendations to the cabinet subcommittee on economic affairs on which proposal to accept. On 30 September 2016, two officials from the Ports Authority had attended the meeting of the Committee of Ministry Secretaries and Arjuna says the two officials had complained that the final report of the committee had misrepresented their views and they had not been notified of the selection of the party to whom the award would be made either.

The Committee of Ministry Secretaries had decided to accept the China Merchant bid with 20:80 share division as they were to pay 1.08 billion USD up front. However neither the Minister of Ports and Shipping nor the Ports Authority which had official control over the Hambantota harbour were consulted in arriving at this decision. The decision of the Committee of Ministry Secretaries was notified to the Ports Authority by the Secretary to the Ministry of Ports and Shipping. The Ports Authority had appointed a committee to study the project proposal and an assessment had been done of the net present value and the loss of income due to the Ports Authority due to the choice made by the Committee of Ministry Secretaries.

Invisible hand at work

While this was going on, the External Resources Department had forwarded a copy of the ‘framework agreement’ pertaining to this transaction to the Ports Authority and the latter having studied the document had informed Arjuna Ranatunga of its gravity. Thereafter the Ports Authority held discussions with the company concerned and obtained several concessions, including an increase in the up front payment from 1.08 billion to 1.12 billion USD. The lease on land would be reviewed after 15 years and once every five years thereafter. The original agreement was for 99 years followed by another 99 years but this was reduced to just 99 years and several other changes had also been successfully negotiated by the Ports Authority.

The cabinet subcommittee on economic affairs at its next meeting decided that this framework agreement should be signed by the Ports Authority and the amendments to the framework agreement which had been negotiated by the Ports Authority had been discussed in the cabinet subcommittee on economic affairs. Yet the framework agreement presented to the cabinet by Ministers Malik Samarawickrema and Sarath Amunugama was a different framework agreement to the one that had been negotiated and amended by the Ports Authority. Upon cabinet approving this framework agreement presented by Samarawickrema and Amunugama, it was signed by the Committee of Ministry Secretaries on December 8, 2016. Even though the cabinet subcommittee on economic affairs decided that Arjuna, as the line minister, should be consulted before signing the framework agreement, it was signed without any such consultation.

Arjuna had once again tried to bring this matter onto the correct track and at a meeting chaired by the Prime Minister on December 20, 2016 where it was decided that the Committee of Ministry Secretaries would hold discussions with both the Ports Authority and the Chinese company together to resolve the outstanding issues. However the Committee of Ministry Secretaries had violated this instruction and held separate discussions. Though the final agreement with the Chinese Company was to be handed over to the Ports Authority, the Committee of Ministry Secretaries had instead sent the original framework agreement to the Ports Authority. There is much more to Arjuna’s letter than just a turf war with Minister Malik Samarawickrema.

Firstly, if there is a turf war it is perfectly justified because the Hambantota Port belongs to the Ports Authority. It was the Ports Authority that had even paid the ‘local component’ of the funding arrangements to build the Hambantota port. Secondly, because of the institutional interest factor, the Ports Authority and the relevant minister is likelier to negotiate a better deal than anyone else and why the Ports Authority was not handling the negotiation is a moot point. Thirdly, that mysterious unseen hand that seems to move many thing in this government seems to be at play here with the Committee of Ministry Secretaries and Ministers Malik Samarawickrema and Sarath Amunugama acting contrary to the decisions arrived at by the cabinet subcommittee on economic affairs. It was just as well that this transaction was put on hold. The way this was handled provides an insight into the manner in which this government may be negotiating ETCA as well.

GL draws the red line

As the last year drew to a close it seemed almost as if the SLFP members of the government would resign to contest against the UNP at the upcoming local government election. Rumours were floating around that the SLFP was trying to negotaiate a deal with the Joint Opposition so that they would fight the local government election together. These were not really rumours either because every possible form of partnership between the Joint Opposition and their colleagues serving in the government have been discussed and continue to be discussed on the corridors of parliament, in private residences, over the telephone and through intermediaries on a daily basis. All it takes is for a member of the SLFP group in government and a member of the JO to come face to face for a conversation on this topic to ensue. A leader fo the Joint Opposition confirmed to this writer that the SLFP (Sirisena faction) had even mooted a no-contest pact so as to be able to face the UNP together.

However the interim leader of the Sri Lanka People’s Front stated categorically last week that the Joint Opposition would not contest together with the SLFP rump serving in the government under any circumstances, given the unsavoury experiences of the last parliamentary elections. This basically made the anti-government posturing of the SLFP group serving in the government redundant. If all that posturing and criticism of the UNP was with the intention of winning the hearts and minds of the opposition voter and somehow persuading the latter to believe that the SLFP group in the government was actually a part of the opposition, that fell by the wayside following GLP’s statement. Even if the SLFP (Sirisena faction) now contests the local government election separately and against the UNP, the Joint Opposition would still be fielding a separate list.

Last week, there was a palpable reduction in hostilities between the UNP and the SLFP (Sirisena faction) as the two sides seemed to come to the realization that their destinies are bound together inextricably.  Last week, we saw SLFP ministers including Mahinda Amaraweera, Nimal Siripala de Silva and Nishantha Mutuhettigama making categorical  statements to the effect that this unity government would last till 2020. Only Isura Devapriya, the Western Province chief minister, was heard saying and hesitantly at that, that this government may not continue for very long. This has basically ended any hopes that some members of the SLFP (Sirisena faction) may have had of safeguarding their political futures by appearing before the public in opposition clothing while remaining in the government.

All the efforts made by Dilan Perera to maintain the separate identity of the SLFP group in the government has thereby come to naught and in fact Priyankara Jayaratne’s early resignation from the government now seems justified because he obviously wanted a future in politics. The members of the SLFP serving in the government will now find it impossible to convince their constituents that the SLFP will soon form a government without the UNP. Every one of the SLFP members in parliament today was elected on an anti-UNP and anti-yahapalana platform which was why anti-UNP posturing and rhetoric was so important to these MPs. Now with it being said that this government will continue till 2020, all the SLFP members in the government will have to think of their plans for the future. The SLFP constituency that elected them to parliament this time will obviously be in no mood to vote for them again after three and a half years more of what we have at present.

There were three SLFP members who managed to get elected to parliament last time despite their identification with Sirisena – Mahinda Amaraweera, Duminda Dissanayake and Ranjith Siyambalapitiya. The next time, it is doubtful whether even these individuals will have an SLFP constituency that will vote for them especially in the context where the Joint Opposition will be fielding a separate list. So it appears that this will be a period of political realignment. Those who think they will need the opposition vote to get reelected next time will seek to align themselves with the Joint Opposition. Others who think they will be able to survive on the pro-government vote, will most probably seek an alliance with the UNP. These developments also increase the possibility of more defections by SLFP back benchers, and State and Deputy Ministers in the government because their present status is not comfortable enough for them to be able to wind up their political careers after this term in office.

Inauspicious beginning for 2017

The government got off to a very bad start in 2017. Probably for the first time in living memory, we began the year with a strike – that of sweep ticket sellers who claimed that their commission has not been increased despite the increase in the price of a sweep ticket. Their cry was that the increase in the price will reduce ticket sales and that if the prices were being increased, their commissions also had to increase proportionately in order to compensate for the diminished income due to the reduction in sales. The income coming in from sweep ticket sales is important for the government. P.G. Wilson, who was for many years the private secretary to former President D.B.Wijetunga has told this writer how in the late 1980s at the height of the JVP insurrection, the day to day cash requirements of the various government departments was met partly out of the daily collection of the development lottery.

This is an important cash cow for the government and it stands to reason that the government would want to increase their cash flow by increasing the price of sweep tickets. The sweep ticket seller’s strike ended with President Sirisena’s intervention. In any event that was a bad start to the year. Following upon this was the fiasco involving Minister Faizer Mustapha’s refusal to accept the local government delimitation report from the chairman of the committee Asoka Peiris on the grounds that two members of the five member committee had not signed the report. Of the two members who had refused to sign it, the SLFP representative had signed the report but the UNP representative had not yet signed at the time of going to press.

The much touted Volkswagen factory in Kuliyapitiya blew up in the government’s faces. It would have been better for the government to have simply left things as minister Eran Wickremaratne said – that the Volkswagen factory was not coming to Sri Lanka because the company had run into problems internationally and was not in a position to expand. The government however, had turned this Volkswagen factory into one of their main campaign slogans and probably felt compelled to deliver something. Thus on January 3, a bemused public saw the President and Prime Minister laying the foundation stones for a factory which was supposed to be an automobile assembly plant for a company called ‘Western Automobiles’ and there were banners emblazoned with the letter ‘W’ in what appeared to be an attempt to imitate the Volkswagen symbol.

Yet in no time, the social media was flashing the news around that the whole thing was an elaborate hoax and that there was no Volkswagen factory or even a factory belonging to Senok the local agents for Volkswagen but some hitherto unknown company called Western Automobiles. Sirasa TV had in fact contacted Volkswagen headquarters and ascertained that VW had no involvement in any project in Sri Lanka. When asked at a press conference about this, one UNP minister said that this factory would assemble European cars. When asked who was investing money in this project, he declined to answer. All in all, this was a painfully embarrassing fiasco for the government.

Obviously stung by the expose broadcast by Sirasa TV, the Prime Minister then took a U turn and admitted as Eran Wickremeratne had done earlier, that Volkswagen was not coming to Sri Lanka. The government’s Volkswagen fiasco brings to mind the Roman Emperor Caligula Caesar’s invasion of Britain. Because Britain was a long sought after prize, Caligula sought to win the hearts and minds of the Roman public by staging an ‘invasion’ to subjugate Britain in the following manner as recounted by some ancient historians including Suetonius Tranquillus.

“He (Caligula) drew his soldiers up in battle array upon the shore. Then he himself went into his galley and told his sailors to row him out to sea. After they had rowed him a short way he told them to return. When he had landed again he climbed into a high seat like a pulpit, which he had built on the sands. Then he sounded a trumpet and ordered his soldiers to advance as if to battle. In front of the soldiers there was nothing but the blue sea and the sandy shore covered with shells. The Britons, whom they had come to fight, were far away on the other side of the water and quite out of reach.

“So the soldiers stood and wondered what to do. Then Caligula ordered them to kneel down upon the sand and gather as many shells as they could. So now the soldiers did as their general commanded and gathered the cockle shells which lay around in hundreds. When they had gathered a great quantity, Caligula made a speech. He thanked the soldiers as if they had done him some great service. He told them that now he had conquered the ocean and the islands in it, and that these shells were the spoils of war. He praised the soldiers for their bravery, and said that the shells should be placed in the temples of Rome in remembrance of it. Then he rewarded them richly and they marched home again.”

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