Baseless US reasoning for the denial of US$ 480 mn MCC grant to Lanka
Posted on December 21st, 2020

By Sugeeswara Senadhira/Ceylon Today

Colombo, December 21: In the final phase of the separatist war when the European Union threatened Sri Lanka with withdrawal of the GSP plus duty concessions, President Mahinda Rajapaksa called a meeting. Rajapaksa asked Minister G L Peiris how much the country would lose due to the withdrawal of GSP plus. The Minister said it would be roughly US$ 250 million. Rajapaksa’s instant reply was: Let them withdraw GSP plus we cannot sell the sovereignty and territorial integrity of our country for US$ 250 million”.

So GSP was withdrawn and the war continued until terrorism was eliminated and the country’s unity preserved.

The above incident was recalled to understand Sri Lanka’s current position with regard to the withdrawal of the US$ 480 million grant proposed by the Millennium Challenge Corporation (MCC), an aid agency set up by the US Congress.

Last week, the United States Embassy in  Colombo issued a statement saying that the MCC Board had decided to discontinue the proposed SL Rs. 89 billion development assistance grant ‘due to lack of partner country engagement’ without explaining it.

The truth is that it was not a question of ‘lack of engagement’. At every meeting between the Government and the MCC representatives including US Embassy officials, there were firm assertions from the Sri Lankan side about reservations over many clauses in the draft agreement. Sri Lankan officials pointed out that some of the clauses were contrary to the constitutional provisions and the Government could not sign such an agreement.

Proposal to renew 1995 SOFA

Furthermore, it was evident that although the US$ 480 million grant was meant for a transport project and an agricultural-land project, it came with a proposal to renew a 1995 Status of Forces Agreement (SOFA) with the US. The proposed draft included several unacceptable conditions including visa-free movement facility to US security and defense personnel to travel in and out of Sri Lanka.

The MCC Agreement was approved by the previous Government of Ranil Wickremesinghe in the last year of his tenure. But he was unable to get approval from Parliament. There was widespread resistance among people who believed it compromised the nation’s sovereignty and national security.

Last year when the MCC issue was debated, President Gotabaya Rajapaksa gave a firm assurance that the MCC agreement will not be signed under his Administration. The MCC agreement will not be signed even in my dreams,” the President said setting aside any doubts in any quarter. In a interview, Gotabaya said that it was Sri Lanka which  reminded the US on human rights recently. He reiterated the government’s policy of protecting the sovereignty of the country.

When the MCC proposal was discussed during the former government, the SLFP General Secretary Dayasiri Jayasekara, who was a Minister, pointed out the proposed Land Bill, which aimed at facilitating the MCC Agreement, had many questionable provisions, which eroded the previous safeguards to ensure that arable land was protected from commercialization.

Jayasekara questioned why the government had linked the State Land Bill to the MCC $480 million grant, which will provide funding to measure land to establish a Land Bank in Sri Lanka, and also set up the Colombo-Trincomalee economic corridor.

Why did the Government ask for funds from the MCC? Why are they working on this with a US entity? If the Government wants to have a central place where all land details are recorded, why ask it to be funded by a foreign organization? As an island, Sri Lanka has limited land resources and they need to be protected. A similar piece of legislation was presented by the UNP Government in 2003, and at the time the Supreme Court said a two-thirds majority in Parliament was needed, along with a referendum. That is how serious this is,” Jayasekara pointed out.

He argued that several recommendations made by then President Sirisena, i.e. to maintain existing inheritance laws, prevent the break-up of large tracts of land, and ensure that the Mahaweli project is exempt from being covered by the new regulations, were not included in the document moved in Parliament two years ago.

The law states that when changes are recommended, they have to be included in the proposed legislation, and presented to the cabinet a second time before being presented to Parliament. These regulations ensure transparency and protect public interest. They give the public time to go before the Supreme Court to check whether the legislation is against the Constitution. But that has not happened here,” Jayasekera said.

Bill on restriction of transfer of land

The proposed Bill on the restriction on transfer of land states: Notwithstanding any provision to the contrary in any other written law, the transfer of title of any land situated in Sri Lanka, shall be prohibited if such transfer is:

(a) To a foreigner.

(b) To a company incorporated in Sri Lanka under the Companies Act where any foreign shareholding in such company, either direct or indirect, is fifty per cent or above.

(c) To a foreign company, unless exempted as provided in section 3.

Section 3 states the exemption from the application of the provisions of section 2 as follows:

(1) The provisions of section 2 shall not apply to:

a) Any land the title of which is transferred to a Diplomatic Mission of another State within the meaning of the Diplomatic Privileges Act or to an International, Multilateral or Bilateral Organization recognized in terms of that Act.

b) A condominium parcel specified under the Apartment Ownership Law.

In October this year, the US Embassy wanted the MCC proposal to be included in the discussions with the US Secretary of State Mike Pompeo. However, Foreign Minister Dinesh Gunawardena gave the firm message that Sri Lanka is determined to keep a fine balance in its international affairs and used the visit of the US Secretary to give the same message in no uncertain terms that, for Sri Lanka ‘Independence and Sovereignty come first in Foreign Relations’. Finally Pompeo said in an interview that it was for Sri Lanka to decide on the MCC agreement.

There is ample evidence of adverse clauses in the MCC Agreement. Prof. Lalithasiri Gunaruwan, who headed the four-member committee appointed by President Gotabaya Rajapaksa to examine the MCC proposal, said the MCC agreement would have undermined Sri Lanka’s status as a sovereign country.

At every step, Sri Lanka firmly stated that sovereignty of Sri Lanka could not be bartered away to any country. When this policy was clearly told, one wonders what the US Embassy meant by ‘lack of partner country engagement,’ unless it is another way of saying, We failed to coerce Sri Lanka to agree to our terms”.

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