Tharoor Could Not Mention At Least One Benefit of CEPA While the List of Dangers Grows
Posted on June 7th, 2010

Dilrook Kannangara

During the IPL semi-finals match played in Dharmasala, the presence of his holiness Dalai Lama graced the occasion. For an ignorant observer it was just a coincidence. A number of Sri Lankan players and possibly a few others from other nations were told by their respective government bodies to avoid meeting the dignitary. Nevertheless, for a careful India watcher, it was a well planned political manoeuvre to unnecessarily discredit China and unease a number of foreign players contracted to play in IPL. China prefers, to say the very least, state representatives from around the world not to meet Dalai Lama. This is how the popularity of the IPL was used to achieve Indian political goals no matter how much it inconvenienced others. Glamour of IIFA has touched many a Lankan heart. However, CEPA and Indian political prescriptions had a different reception. CEPA and IIFA may be a packaged deal from the point of view of India but it is not so from the Sri Lankan point of view. Lankans accept the glamorous IIFA but reject the calamitous CEPA.

Speaking to media in Kandy Shashi Tharoor said the proposed CEPA agreement would benefit both India and Sri Lanka. First part of is certainly true. Otherwise, India and Indians will not push it so hard. However, the second part is not true. Sri Lanka will certainly not benefit from it given the discriminatory trade practices of Indian bureaucracy and severe structural disparities between the countries. Tharoor emphasised that there will be benefits to Sri Lanka but failed to mention at least one specific benefit! When asked for specific benefits, he evaded the question by saying that once the draft is in the public domain, every concerned party will see it’s benefits. Isn’t it too obvious that he is unable to produce at least one benefit of CEPA to Sri Lanka, which is increasingly known as the Catastrophic Economic Partisan Agreement among Lankans?

One argument he brings up is that following ILFTA (India-Lanka Free Trade Agreement), trade between the two neighbours grew rapidly. It is not true. Trade obviously grew but it was not due to ILFTA. Mainly Sri Lankan garment exports to India increased but that would have happened anyway given the longstanding competency Sri Lanka has in the industry. However, industrialists who dreamt of benefiting from the FTA were in for a nasty surprise. Although Indian goods found their way to Lanka, goods manufactured in Lanka were held indefinitely in Indian ports. This is an old and popular trick played by most countries to protect their local industries. India is too well known for it’s protectionist policy of local industries!

Real reasons for CEPA are the following according to Indian newspapers, policy analysts and defence analysts.

  1. Pre-empt China from entering into further economic, political and military agreements with Sri Lanka. This means Sri Lankans are going to lose their best long-term friend, largest investor and biggest donor! This is part of India’s response to the “ƒ”¹…”String of Pearls’ strategy which China allegedly follows in the South Asian region. Similar to the Chinese approach of economic cum defence installations, India goes with a whole package of economic, political and military prescriptions. However, China never came to Lanka with prescriptions, and most Lankans adore China whereas they are sceptical of India. India’s past conduct in relation to Sri Lanka is appalling and it is unlikely it has changed now. 
  2. Benefit from large Chinese investments and donations that are already at work. Following the end of the war, as expected, the Sri Lankan economy is improving. However, during bad times China was more with Sri Lanka than India. India was forced to chip in when huge Chinese investments and various military equipment found their way to the island nation.
  3. Exploit Sri Lankan resources to compete with China economically while using Sri Lankan land to ease India’s population density and associated problems. Although Sri Lanka has a higher population density than India, Indian focus is on the North-East where it is very low. It perfectly matches with South India where population density is extremely high. Cultural and linguistic infrastructure is already in place. If not, India is in the process of further developing it in these areas. This explains why India makes no real effort to stop illegal South Indian migration to Sri Lanka that has recommenced following the war.
  4. Destroy Lankan industries and replace them with Indian industries. To make matters worse, most produce of Indian and Lankan midget industries are homogeneous. India plans to make Sri Lanka a permanent dependant suckling of India and thereby ensure that India will always have Sri Lanka on it’s side. Today, Sri Lanka is the only neighbour of India with consistently close friendship as all other regional countries have learnt their lessons.   
  5. Selectively carryout development work solely in Tamil-only areas. Tamil Nadu has a strong appeal in these work and plans to forge closer ties with Tamils in Lanka through these projects. As Karunanidhi’s bad joke goes, his dreamland, Dravidistan, includes Sri Lanka’s North as well. He claims his signature resembles Dravidistan! Development work in other areas has no political benefit to Indian rulers and hence ignored.
  6. Use lax import regulations in Lanka to make imports; then export to Indian parent companies using a transfer price that is below cost. Who bears the trade deficit created by these transactions? Sri Lanka. India benefits by not having to suffer trade deficits and having large Sri Lankan rupee earnings in Sri Lanka that can be used to pay for imports into Sri Lanka and to cover the loss created by the difference between buying price and transfer price. Sri Lanka’s higher inflation rate is an enabler of this type of trade. Similar arrangements were made by businesses operating in the South East Asian region during and around the Asian Financial Crisis in the late 1990s. 

Exploiting resources of it’s southern neighbour is certainly one big plan of India. Investments, professionals, workers, projects and machines are not the only things that will arrive in Lanka. Indian eastern states rich in natural resources especially minerals have attracted Maoist and Naxalite rebels. They too will find their way to Lanka. If not their local organisations will be created. It doesn’t matter who arms them, finances them and teaches them their ideology; what matters is the likelihood of their presence. Indian investments will also attract Islamic rebel groups. It will be easier to hurt Indian concerns in Lanka than in India. Bali, Munich, Afghanistan, USS Cole, Lahore attack on Sri Lankan cricketers, Mumbai attack on foreigners and the attack on a Pakistani mission in Colombo are examples of how terror groups find easier locations to attack enemy interests.

President Rajapaksha and his advisors must untangle this package and analyse each phenomenon separately. If India is too pushy on a particular thing, it means it is not good for Sri Lanka. The secret Indo-Lanka Pact which was then hailed by some as worthy of the Nobel Peace Prize, ended up a disaster. Sri Lanka should reject CEPA (Comprehensive Economic Partnership Agreement with India and approach China for it’s version of CEPA (Closer Economic Partnership Agreement). China didn’t force or hoodwink Hong Kong and Macau to sign CEPA agreements despite they being it’s own territories. Then why does India use tricks and cock and bull theories to justify it’s version of CEPA?    

One Response to “Tharoor Could Not Mention At Least One Benefit of CEPA While the List of Dangers Grows”

  1. mjaya Says:

    Well said Dilrook! Opposition to CEPA is gaining momentum, remember always it must be the economic facts and the obvious signs. Its really sad to see that there are plenty of SL intellectuals who are either naive to believe that India is a benign country or available for hire and praise the CEPA.

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