The dangers lurking between the lines of the US-Lanka MCC compact
Posted on June 29th, 2020

By P.K.Balachandran/DailyExpress Courtesy NewsIn.Asia

Expert panel on the US-sponsored Millennium Challenge Corporation Compact seeks amendment of intrusive” clauses

Colombo, June 28: The Sri Lankan cabinet-appointed expert committee on the Millennium Challenge Corporation Compact (MCC), which submitted its final report to President Gotabaya Rajapaksa earlier this week, has suggested that government should not sign the compact without amending the intrusive” clauses, according to Dr.Palitha Kohona, who has seen the report.

The report of the four-member panel headed by economist Prof.Lalithasiri Gunaruwan, has not been released to the public yet though a Sinhala version has appeared in one of the websites.

Dr. Kohona, a former Lankan Foreign Secretary and Lanka’s Permanent Representative to the UN, said that the objectionable intrusive” clauses were: the substitution of Sri Lankan law by international law and the special privileges and extensive immunities granted to US personnel under the MCC compact. Dr.Gunaruwan had himself said that some of the clauses violate the Lankan constitution.

Earlier, Kohona had told a panel discussion that when the MCC pulled out of Sri Lanka in 2008, the reasons were political. He charged that the MCC is not a totally altruistic organization, but a tool in the hands of the US government pursuing its political agenda in Sri Lanka and the region.

He also pointed out that the US Congress had never approved the total amounts requested by the MCC, thus raising the question as to whether the amount approved for a single country would be available at the end of the day. There are some 60 countries hoping to get something out of this cake, and Congress is there fidgeting around to decide the size of the cake,” Dr. Kohona told the audience.

Sri Lanka has been promised a grant of US$ 480 million, 70% of which will be for the improvement of transportation and the rest for preparing a land registry.

A problem Dr. Kohona stressed was the extensive impact on the domestic legal framework, through the granting of immunities to the US Government and its employees operating under the compact. Then there is internationalization. The problem with the MCC, which is a government to government treaty, is that it’s governed internationally and not domestically, Kohona said.

It impacts a whole range of domestic laws, regulations, and practices. It will be governed by international law. In the case of a dispute or disagreement, where do you go for a solution?” he wondered.

According to with the signing of the MCC Compact, the recipient government should set up an institution to administer the funds, called a Millennium Challenge Account (MCA), which operates autonomously, with its own Board of Directors, but under the oversight of a local designated ministry.

The Compact lasts typically for five years, with regular evaluations and strict targets that have to be met, each year or so, before new tranches of funding are released. Once the Compact is approved, the money starts to flow, although the tap can quickly be turned off if the government changes direction in a manner that does not suit Washington, the website said.

Touchy Issue Of Land

Udaya Gammanpila, leader of the Lankan nationalist Pivithiru Hela Urumaya (PHU), pointed out that one of the aims of the MCC is to increase availability of information on private land and under-utilized State land in order to increase land market activity.” According to the MCC website, the MCC aims to identify the root cause of problems in the land sector because of the difficulty in access to land for investment purposes.”

A monograph of the Colombo-based Institute of Policy Studies says that only 30 to 40% of the lands in Lanka’s rural areas have a clear title. In 1998, the government initiated a land title registration scheme called the Bim Saviya program. But it ran into financial and other problems and had to be abandoned. The MCC is expected to fund its completion.

But Lankan nationalists like Gammanpila would like this work to be done independently by Sri Lanka because he fears that the MCC will be used to grab land for foreign investments as it happened in Africa. According to land projects in Mali, Ghana, Mozambique and Benin make it clear that the MCC has played a key role in commodifying Africa’s farmlands and opening them up to US agribusiness.

On Madagascar an article in says that in December 2008, it became apparent that the government that was using MCC funds to allocate certificates to thousands of rural Malagasy under the National Land Program, was also selling off these lands to foreign investors.

The people of Madagascar were shocked to learn, via the international media, that their government had allocated a 1.3 million hectare land concession to the Korean company Daewoo Logistics, and that it was negotiating another agreement with the Indian company, Varun, covering several hundred thousand hectares, both for large-scale farming projects.”

In fact, the government had signed away, or was in the process of signing away, nearly 3 million hectares of agricultural land to foreign investors through a system of long-term leases (up to 99 years) that it established in 2008 as part of a new investment law supported by its donors,” the website said. Eventually, protests led to the cancellation of the Varun project.

US Denial

However, in Sri Lanka’s case, the US has officially denied that it has any plan to buy released land. It has also denied any plan to participate in a Colombo-Trincomalee Economic Corridor project.

Jenner Edelman, Resident Country Director for MCC in Sri Lanka, addressing a Foreign Policy Round Table, on September 24,2019, said that the grant projects will not be implemented by the MCC, but will be overseen by a Lankan Board of Directors, comprised of senior government officials as well as private sector and civil society representatives. It will be handled by a management unit of around 65 Lankan professionals.

But, during the five-year implementation period, MCC would expect the Lankan government to continue to demonstrate a commitment to good governance. Projects must also be implemented efficiently and in line with best practice.

The MCC land project does not include the purchase of land in Sri Lanka by the US government on any US agency, Edelman said. There is also no railway or transportation infrastructure of any kind from Colombo to Trincomalee in the MCC grant; nor is there any mention of this conceptual corridor in the grant agreement, she added. The so-called Colombo-Trincomalee Economic Corridor is a high-level conceptualization of the Government of Sri Lanka’s plans to create several proposed economic or development corridors by 2050, Edelman explained.

By necessity, some equipment and technical expertise required for the projects will come from abroad as it is not available in Sri Lanka. However, there is no requirement to ‘buy American,’ and there will be opportunities for local firms to win contracts. The MCC grant may not be available for much longer as the country recently graduated to upper-middle income status, it was pointed out.

The MCC Compact has to be approved again by the Sri Lankan cabinet and sanctioned by parliament. Prior to a cabinet decision, the expert committee’s report will be put before the public for their views, President Gotabaya said. The committee had itself consulted a wide cross of people and stakeholders in the six months it had taken to finalize its report.

One Response to “The dangers lurking between the lines of the US-Lanka MCC compact”

  1. dhane Says:

    Report to CID to question those Treasury Officials who signed the agreement in 2018 and find out where is the money given by USA. Very simple question to sort out this uncertain matter.

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