KAMALIKA PIERIS

The MCC grant represents the largest grant Sri Lanka has ever received from a single source, said Advocata. The grant is a huge one, USD 480 million. The failure to utilize the MCC grant would be an economic loss to the country. It is about improving the country’s transport system and land registration system, explained Jehan Perera.

USA embassy has provided some basic information on the MCC Compact at  Htps://lk.usembassy.gov/wp- content/uploads/sites/149/MCC-Land-Project-with-GOSL.pdf.

The stated aim of the MCC  is to    reduce poverty and stimulate economic growth, said MCC.  In Sri Lanka we have identified transport infrastructure and weak land administration   practices as the binding constraint on economic growth in Sri Lanka.This is   nonsense. Sri Lanka’s ‘constraints to economic growth’ cannot be   removed by tackling traffic jams and listing  land parcels. Sri Lanka’S economic problems lie elsewhere.

The transport project will improve connectivity between the economically backward central region  with ports and markets in the western provinces, continued MCC. Getting transport right is the key to mark Colombo as a regional hub for finance, trade and investment.

That is doubtful. The Compact does not address the primary transport  need in Sri Lanka today, the need for mass transit, by bus and train, for both persons and goods. The Compact  remedy  instead,   is to introduce ICT controls  for  private transport.  The  MCC Transport project  was described in  detail by an official of the Road Development Authority, at a seminar I attended. The audience gave a hearty laugh at the end of the talk.

Here is the transport project . It is in three parts. Part one is an Advanced Traffic Management System (ATMS) for the Colombo Metropolitan Region, covering approximately 205 kilometers of existing road networks , concentrating on the  eight heavily traveled corridors that link central Colombo with its suburbs   and  including  improvement of  132 junctions in Greater Colombo.

The ATMS will be controlled by a huge Traffic Managment Center with real time analysis of traffic flow data,  interconnected traffic signal system and vehicle detection using modern technology. The project will also create more pedestrian crossings, improve sidewalks and introduce ‘road safety measures’.

The Advanced Traffic Management System had been discussed with other donors. The discussions had stalled because the other donors  had refused to pay certain extra costs relating mainly to land. But  MCC readily  agreed to pay   that too, said RDA gratefully.

Part two is bus service modernization in greater Colombo. This will consist of automated fare collection with smart cards, centralized control of bus schedules and GPS bus tracking to see whether buses are operating according to schedule. These measures would also improve the safety of women, senior citizens and disabled persons. Funds will be also provided for the purchase of new state-of- art buses.

Part three  is the  upgrade of  approximately 131 kilometers of roads in Sabaragamuwa, Uva and Cenral Province which are in between the more developed roads. This would include the road from Ratnapura to Beragala and Dambulla to Naulla. The Compact is offering a  super asphalt mix which will provide a better  road surface.

The   land part of the  Compact seems to have  undergone drastic  change. There is no mention now  of giving deeds to  those occupying state lands so that they can sell the land and become  destitute. The focus now is on creating a cadastral map of land parcels and creating a complete digital inventory of state land.

Surveyors are not impressed.  This is exactly what the American firm, Trimble was going to do, at the start of Yahapalana rule, surveyors said. They also said that this mapping  which the Compact is talking about  could be done by the Land use Planning Department. The Land use Planning Department has already mapped out all sorts of land, they said.   They have mapped out protected areas, unutilized lands,    underutilized lands, abandoned paddy lands, river basins, water sheds. The data will   be fed into ICTA’s National Spatial Data Infrastructure.

The Compact is now focusing on under-utilized state land”   held by government Departments, such as the Government Railway. The Compact is eyeing these lands, which it says can generate better revenue in the hands ofindustrial investors.  Sri Lanka will have a place in these industrial ventures. The MCC compact will provide opportunities for Sri Lankan companies to compete and win multi- million dollar projects,” the US embassy said. We want private sector expertise and we pay really well.”

The MCC Compact has come in for considerable discussion in the last few months. Several organizations have held seminars on the subject and the US embassy has attended and contributed information.

The project negotiations for the Compact commenced in 2004 during the Kumaratunga-Wickremesinghe tenure and continued during the Rajapaksa government until the project was terminated by MCC in 2008, said Pathfinder Foundation.

 During this period, the local Compact team and MCC specialists had extensive discussions with the departments responsible for transport and land administration. They also had discussions with the private sector,   think tanks, and civil society organizations. The present Compact is based on a full-fledged proposal submitted by the government in November 2017, said Pathfinder Foundation.

Sri Lanka completed negotiations with MCC in October 2018. The government team was led by the Secretary to the Ministry of Finance. The team included senior officials from the External Resources Department, Attorney General’s Department, Policy Development Office in the Prime Minister’s Office, Ministry of Highways and Road Development, Ministry of Lands and Parliamentary Affairs, Ministry of Megapolis and Western Province Development, Ministry of Transport and Civil Aviation, and Sri Lanka Survey Department.

The agreement was to be signed in December 2018 but was delayed due to the political events of the time. However, MCC’s Board of Directors approved the Compact again at its Board meeting in April 2019. The Compact now awaits approval by the Cabinet and signing of the agreement by the government, said Pathfinder. But there is hesitation on the part of the government and a reluctance to sign.

Sri Lanka is now at risk of losing the grant, if it does not receive Cabinet approval and fails to sign the agreement prior to the September 18th MCC Board meeting, said Advocata institute, because Sri Lanka has now  graduated to upper-middle-income status and MCC  only helps low and lower-middle-income countries.

MCC’s Board of Directors is due to meet in mid-September 2019. And may decide to disqualify Sri Lanka, if the country doesn’t appear to want or need the $480 million grant, said Pathfinder Foundation.

But the US embassy said that   instead of disqualifying Sri Lanka, MCC directors may decide to extend the US$ 480 million grant term if Cabinet approval is further delayed. Because the US is very keen that this Compact is signed and is keeping it fingers crossed.

 The United States has expressed hope that Sri Lanka will eventually approve the $ 480 million Millennium Challenge Corporation (MCC) grant, said the embassy. Measures will be taken to create awareness on the MCC programme among the people,  the embassy said.

It is most unusual to have a donor running behind a recipient like this. It is usually the other way round. While the donor (USA) is keen on the compact, the recipient, (Sri Lanka) however, is suspicious and reluctant. Sri Lanka is wondering why USA is so anxious to push this through. Is this simply a grant to   avoid traffic jams and prepare   maps or is it something more. What is behind it all, they ask.

 The MCC is not the independent, altruistic  US foreign assistance agency it claims to be.  The Millennium Challenge Corporation Board is chaired by the Secretary of State. The  Board members are a) Secretary of the Treasury, b) USAID administration ,c) US trade representative, and d) four private sector representatives. This Board  therefore represents  the  political interests and trade interests of the USA. Advocata  Institute   however, says, although heads of the U.S. State Department and U.S. Treasury sits on its board, the MCC operates independently as a separate entity.

The Compact program was proposed by Sri Lankans, developed by Sri Lankans and will be managed and supervised by Sri Lankans, said the US embassy. Not quite. The project proposal was neither proposed nor developed by Sri Lanka. It is unlikely that Sri Lankan economists will produce such a  lopsided proposal.

 The  Compact issues  were first examined  by Harvard University’s Centre for International Development in a year long study in 2016. This was followed  by studies from World Bank, Asia Foundation,  Trimble and Center for Policy Alternatives, Colombo. These are  organizations which have a strong link with USA.

The MCC has no intension to impose any condition forcibly in implementing MCC compact, said the US embassy, adding that they are flexible to accommodate any suggestions of the government before signing it. We will accommodate your needs,  we  can modify the Compact as government wishes, said  USA embassy . At least two years  is needed after signing the Compact to work out the details.

Certain changes have already been made. Attorney General’s Department raised objections to the clause in the original draft which brought the Compact under International law. MCC was asked to remove any sentence which excluded domestic law and the MCC agreed, reported the media.

This is your project. We are not forcing it on Sri Lanka, said MCC. Implementation will be supervised by a local body staffed by Sri Lankans. This body will be accountable to a Sri Lankan Board of Directors comprised of eight government officials and three representatives from the private sector and civil society.

Money will be reflected in the national accounts and national budget and spent by line ministries and supervised by COPE, COPA and Parliament. Grant funds are usually not channeled through the Treasury, but contractors and vendors are directly paid by the donor. Budgetary provisions will be made in the national budget to account for this expenditure. Therefore, it is clearly not outside Government,” said the embassy.

Unfortunately, this Millennium Challenge Corporation grant has been seen as part of a threefold US package of MCC, ACSA and SOFA.  ACSA and SOFA are military agreements; MCC grant is about economic interests,  said MCC supporters.  But they look like a package, replied said critics. All three were to be signed in  2018, one after the other.

Pathfinder Foundation concluded its statement on the Compact, saying that a sovereign nation has every right [and] obligation to turn down foreign assistance, if there is reasonable suspicion that this support is not in the interest of the country. ( Continued)