Since LTTE was not a lawful army, the weapons had to be smuggled in by sea. LTTE smuggled in weapons, including heavy items, and other equipment such as power generators, by carrying out mid sea transfers, 200 nautical miles off Sri Lanka. They used special semi submersible submarines, capable of carrying 10 tons of equipment. The goods were then transferred to small ships and subsequently into small fast boats.
In this manner, 130 mm and 152 mm artillery guns were transported to Sri Lanka by ship and were unloaded mid sea onto barges and brought ashore. The Defence Ministry refused to believe this saying it was impossible; the items were too heavy, reported Kamal Gunaratne.
An Indian fishing trawler, Sri Krishna, was moving a sizeable consignment of 120 mm heavy mortars, from a ship anchored on the high seas when .it was intercepted by Maldives coastguard and sunk in a confrontation in 2007. An embassy in Colombo is believed to have tried to help the vessel to escape.
The LTTE used Tamilnadu fishing boat fleets, both as cover and a means to smuggle in weapons to Sri Lanka. They were used as a human shield as well. At one point there was a significant increase in the number of poaching Indian vessels. To prevent the navy from obstructing the operation India persistently alleged that the Sri Lanka navy was targeting Tamilnadu fish poachers.
In November 2007a large cluster of Indian trawlers moved almost 10 nautical miles close to LTTE held territory at Vettilaikerni. The navy detained 17 trawlers. President Rajapakse ordered them released after New Delhi intervened.
In 2009, when the war was drawing to a close, the authorities observed that new shipments of military hardware were continuing to reach the LTTE. LTTE had used surface to air missiles against army helicopters. These are new acquisitions, observed the military. A raid inVavuniya in 2009 yielded a stock of brand new grenades, which seemed to have come from a recent shipment.
The LTTE also resorted to trickery to obtain weapons. LTTE had acquired 32400 rounds of mortar bombs from Zimbabwe Defense Industries in 1997 by tricking the ZDI to loading the consignment to one of its vessels, pretending they represented the Sri Lanka government.
LTTE fighting power lay not in military strategy but in its artillery and explosives. LTTE had at least 30 pieces of heavy artillery including 152 mm, 130mm 122 mm 85 mm and one 120mm mortar. They also had a range of anti aircraft weapons, such as surface to air missiles and mobile antiaircraft guns (peddle guns).
The army found nine mortar launchers of different calibres and improvised multi barrel rocket launchers. LTTE also had battle tanks, armored personnel carriers. LTTE had assault rifles, self loading rifles, light machine guns, sub- machine guns and rocket propelled grenades.
Raja Gooneratne had pointed out in a paper presented to the Board of the Open University that the LTTE had got water scooters, and he got a text message on his mobile threatening him. .some academics had objected to his giving the talk at all.
Troops have unearthed huge caches of buried arms. A separate LTTE group was appointed to hide things, while another lot did the fighting. Large hauls of arms was recovered from Mullaitivu, Vakarai, Vishvamadu, Wellamulliwaikal beach, Panichchankerni jungle and Alanchipotha. Forces also recovered over 11,000 T56 assault rifles, 25 artillery guns, main battle tanks and other sophisticated weaponry of the LTTE.
Arms cache was found in Alanchipotha, Welikanda. It was buried by fleeing LTTE cadres inside a sanctuary located 15 km away from Mahaweli River. Assault rifles, T 56, mortar bombs, mortar weapons, RPG bombs, pressure mines, drums, walkie talkies chargers , walkie talkie parts, remote control device, anti aircraft ammunition, claymore mine and more.
Army recovered an arms cache in Kumana national park, detonators, outboard motor, oil cans, and outboard motor RPG rounds. Also found arms and weapons in Adampan, Alampil, Vishvamadu and Oddusudan areas.
A massive arms cache of sophisticated military hardware was found at Puthumathalan. It contained an improvised armour plated six wheel truck, earth moving backhoe, water scooter and anti aircraft guns. Two of the guns were mounted on jeeps. One gun was booby trapped with a detonating cord connected to a several feet deep bunker laden with explosives.
SLAF recovered t w caches of arms from Pudukuduirippu with the assistance of LTTE cadres, they included ammunition, mortar bombs, mortar smoke bombs, air craft bombs, RPG bombs, hand grenades, fuses, mortars, pressure witches, pressure releases, instantiation fuses, explosives, claymore mines, anti tank mines, smoke bombs, rocket bombs, gunpowder.
Ammunition was found in three kovils in Kayts and Kokkkadicholai. 175 artillery rounds were found buried at Kanagarayankulam.
These unending recoveries by the military indicate the magnitude of the LTTE operation. Each and every square km in Kilinochchi and Mullaitivu district had been turned into armouries. The total amount of weapons is unbelievable. Much still remains to be recovered. These could not have been only for Sri Lanka.
LTTE also depended heavily on explosives, including improvised ones. STF unearthed large quantity of explosive in Iranamadu. Claymore mines and 87 other varieties of bombs and ammo. Caches of antipersonnel mines were also found. One contained 18,000–20,000 mines.. A cache of 1093 mines was found at Govipal Aru area in Ampara. Troops found six boats laden with 996 kilos of explosives at Puthukkudiyiruppu, 1004 kilograms of C4 plastic explosives at Mollikulam, over 80 varieties of bombs at Iranamadu and two other stocks of explosives, elsewhere, weighing 2500 kilos and 3900 kilos.
LTTE also manufactured ammunition. They had set up factories to produce a range of these, including 60 mm, 81 mm, 120 mm and an indigenous Samadanam 2005 rocket. LTTE also manufactured mines, such as claymore mines creating their own variations. Troops found two LTTEmine manufacturing factories in Mullativu. A bomb factory, as well as an explosives manufacturing and storage facility in Puthumathalan. There were hundreds of lathe machines and many fuel dumps. If this manufacturing activity had continued longer, LTTE would have been able to obtain most of its ammunition locally. Pathmanathan had established a state-of-the-art boatyard in Thailand, which manufactured over a dozen different boats, including mini-submarines and suicide boats, said Wikipedia. (Continued)
In the Eelam war, Sri Lanka faced a brutal, well funded terrorist organizations with a vast range of sophisticated weapons . These powerful weapons gave the LTTE the appearance of great military strength. A sophisticated, extremely secretive, weapons procurement system had been set up abroad and the LTTE had a continuous supply of powerful weapons.
Weapons procurement was in the hand of K Pathmanathan. KP set up base in Thailand in the 1980s. Thailand provided easy access to the former war zones of Cambodia and Burma with their surplus weaponry. He procured modern hardware and paid for them through secret bank accounts.
Pathmanathan was solely responsible for the elaborate arms procurement operations for the LTTE and payments of large sums of money for the weapons (ordnance). The LTTE was able to sustain a military campaign for so long only because Pathmanathan was able to procure its military requirements, observed analysts.
LTTE are able to navigate the arms bazaars of the world, observed analysts. Pathmanathan had a large network of contacts and links to the international illegal arms trade. He had an extensive list of illicit arms dealers, Afghanistan, Soviet bloc, Yugoslavia, also Middle-East, Africa, and East-Asia including Singapore, Thailand, Malaysia. In May, 2009 according to reports, he travelled to Kabul via Karachi to meet the Taliban government. There were many markets all over the world to buy weapons, KP said years later in interview.
KP had established a front company in Ukraine around 1994 and another in Dubai named Otherad cargo’ around 1998 for sending weapons shipments to the LTTE.The LTTE used Eritrean and North Korea end user certificates with both countries denying that they gave them. Also an end user certificate from a weapons manufacturer in China.
KP’s arms procurement operations were extremely secretive. Despite secrecy, some information has emerged on weapons purchasing.
MV Swene carrying 60 tons of C4 explosives consigned to M/S Carlton Trading Co. Ltd., 60/61, Delugh Commercial Area, Dhaka, Bangladesh and a consignment of detonators consigned to E G C T International Ltd., Rangoon, Burma had left port of Nikolaev on 19/8/94 and sighted past Istanbul on 25/08/94. There had been no record of her voyage till she was reported leaving the Port of Lagos for the Port of Banjul in Gambia and intelligence indicated that in the intervening period of this north bound voyage she had off loaded the cargo to LTTE having entered the Indian Ocean.
The explosives had been purchased from Rubezhnoe Chemicals Plant “ZARYA” in Lugansk Region, Ukraine using end user certificate No: DP 816955 in the name of H.D. Hashin Noor Rahman. KP transferred US $ 50,000 from City bank account in Singapore in June 1994 to the Chemical Plant. ( Source: Aide memoire from Sri Lanka Foreign Ministry, June 2009)
Rohan Gunaratne said that LTTE have been procuring arms, aircraft explosives and other items from Australia for more than a decade. They were buying light aircraft from local manufacturers in Australia in the mid 1990s and in 2006 bought remote control device to detonate bombs in Sri Lanka .
The weapons bought by LTTE were shipped to Jaffna using a merchant shipping network known as the “Sea Pigeons”, operated by KP from Thailand. The LTTE shipping fleet was started by KP and Captain David, a merchant Navy officer from Jaffna in 1984. ‘Arasu Maritime Private Ltd’ was one of their first ventures. Several firms were floated to make enquiries about military wares. ‘Captain David and Associates’ was one such firm.
It was not difficult to acquire ships at the time, KP said years later in an interview. Anyone can open a shipping company. Anyone can operate ships. It is a normal operation. The companies were mainly based in Singapore and Malaysia. The support of Singapore-based Tamils was enlisted for this purpose. Dummy companies with offices in Bangladesh, Thailand, Malaysia, Singapore and Hong Kong were also set up. The ships were supposed to carry timber and grain.
An old Chinese vessel, ‘Sun-Hing,’ was purchased from a Mumbai based shipping magnate, name changed to ‘MV Cholan ’and registered in Panama in October 1984. ‘MV Cholan’ started off in 1985 with general cargo from Southeast Asia to Vishakhapatnam in India. It also carried powerful boat engines, communication equipment, machine guns, tinned food, packet food, camouflage uniform items, tents and raincoats.”
LTTE got permission in the 1980s, from Burma to establish a modest shipping concern based in the island of Twante located off the Irrawaddy delta. In 1990 they had a niche in Phuket in Thailand, as well.
KP had also built a fleet of commercial boats, the only separatist group to be so equipped. In June 2000 Thai police had stumbled on a half built submersible in a Phuket shipyard. The ship yard was owned by C.R. Lawrence a Jaffna born Tamil with a Norwegian passport. He had been arrested in an operation against oil smugglers. The authorities found instead of oil, sophisticated equipment meant for LTTE, such as radar and sonar. They searched his shipyard and found the boat. An American and a Thai had been co-owners of this yard.
The tourist operation of Lawrence was a cover up for smuggling arms via the Andaman Islands to the LTTE. He was convicted by Thai authorities but mysteriously disappeared from Thailand after an intervention by a woman posing as a representative of Amnesty International who had apparently got the Thai authorities to deport him to Norway.
By 2000, there were 11 well equipped ships, capable of transoceanic long distance sailing, for smuggling, said GH Peries. LTTE owned 50 ships, managing a fleet of two dozen ships at any given times said Rohan Gunaratne in 2009. They were expensive craft, said analysts. They were used by the LTTE not only for transportation of arms and ammunition but also for human smuggling.
Rohan Gunaratne said that the LTTE shipping and procurement staffers were highly skilled. They are masters in clandestine and compartmentalized operations. Merchant navy officers, sailors and engineers from Valvettiturai and elsewhere in the north east of Sri Lanka, were available to the LTTE .Some of them had done training at the Lal Bahadur Shastri Nautical Engineering College in Mumbai.
The government of Sri Lanka succeeded in sinking most if not all of the LTTE ships, both hired and owned by LTTE. Princess Christina had been taken over in foreign waters, in Dec 2009. It was seized by the Navy during a clandestine operation.
In spite of losing its eight floating arsenals, the LTTE still retained the capacity to acquire arms ammunition and equipment and move then across the Gulf of Mannar to its bases north of Mannar, noted Shamindra Ferdinando. India was used as the primary transition point. A chance detection made by Tamilnadu authorities in Oct 2007 exposed a secret Norwegian supply route from Norway to Vanni via Tamilnadu. (Continued)
Amid a barrage of western sanctions against Russia after it invaded Ukraine, India is in the process of setting up an alternative payments system by identifying a potential bank to keep its trade relations with Russia intact. A top interministerial committee examining the issue has said the government should prioritize edible oil and fertilizer imports from Russia, and the payments it owes to India, Hindustan Times reported.
l. The country also imports around 11-11.5 per cent of edible oil imports from the Russia-Ukraine region.
This inter-ministerial panel is examining the potential impact of the western sections against Russia, on India. Economic affairs secretary Ajay Seth is heading the committee that includes members of different ministries including consumer affairs, fertilizers, commerce, external affairs and petroleum.
The western sections against Russia are impacting the global economy; currencies of many nations, including India, have been de-valued. Rising oil prices, supply chain issues and increasing inflation have impacted the economy.
The government is of the view that a supply shortage of edible oil and fertilizers could give rise to food inflation and disrupt the farm sector in the country.
With regard to the bank partner, as per the news daily, talks are on with the State Bank of India and UCO Bank. With the shrinking oil market for Russia amid sanctions, India may also be in a better position to negotiate the prices of its share of Russian oil.
The government may likely initiate similar payment measures as were taken during the sanctioning of Iran by the US. At that time, the Kolkata-based UCO Bank had anchored a so-called Vostro account”.
Once finalised, Russia will deposit rubles in it, while India will deposit rupees. Then the national exchange rate will be determined pegging it to an international currency.
How the arrangement will work?
Though India does not buy anything outside the country with the rupee, and it’s the same with Russia’s ruble, the alternative payment system will help set up a bilateral system. After setting up a payment bank, Russia will buy goods from India with rupees and India will use the rubles it’ll get from Russia to pay for imports.
In 2007 Janes Intelligence Review issued a report on the LTTE, saying that the LTTE had created one of the most sophisticate insurgencies in the world, largely due to a complex global network of financial resources and weapons. It has a financial and procurement structure well organized and strategically positioned around the globe and a profit margin that would be the envy of any multinational corporation, Some USD 200 to 300 million a year. Critics observed that the Tamil Separatist Movement could not have generated such a complex venture on its own.
Al Jazeera said in 2008 LTTE’s financial infrastructure is among the most complex and most secret of any terrorist group. It has investments in stocks and money markets, real estate, restaurants and a large number of Asian grocery stores throughout the world. Its shipping operations carry legitimate goods and also engage in the smuggling of drugs, arms, gold, and has been charged with human trafficking to UK and parts of Europe, as well.
The LTTE is known to own and operate business enterprises in Europe, Canada and South East Asia, said Shanaka Jayasekera. Some businesses were legal, others were not. Legal business ventures include real estate, supermarkets and petrol filling stations. Thamilini Restaurant in Zurich, Makkal Kadai Supermarket in Paris, Ashley Cash & Carry in Harrow, and Thamilini Cash &Carry in Southall are considered to be LTTE businesses. Funds also came in from LTTE fronts, which included charitable organizations.
It is well known that the main source of LTTE funds come from illegal means such as human trafficking, credit card scams, illegal passports, forged currency and robbery, said analysts. These are criminal activities. Thompson observed that this criminal network was for Eelam, there was no indication that LTTE was in business for itself.
The speed with which Tamil organized crime network became established internationally in the 1980s and early 1990s was remarkable, said Thompson. This indicates once again that the Tamil Separatist Movement was assisted by the west, said critics.
‘Organized criminal activity in any western country requires a degree of cooperation with various other criminal societies. Criminal enterprises have always worked closely together. LTTE criminal enterprises have cooperated with Bikers, Chinese Triads, Russian and Italian Mafias and a variety of other groups, said Thompson.
The ability of the LTTE international network to evade detection and maintain flow of funds reflects the sophistication and robust nature of the operation, commented Shanaka Jayasekera. LTTE had developed its own intelligence to get tipped off when a crackdown was planned by the authorities.
The LTTE used legitimate channels for donations from NGOs and INGOs. Non formal channels were used for other transactions. Funds were stored in secret bank accounts in Netherlands and UK which were controlled by the Castro network, said Shanaka Jayasekera in 2009.
The LTTE has developed the most sophisticated infrastructure for fundraising and money transfer operations in comparison to any other terrorist group said Shanaka in 2007The intent of the LTTE is to progress towards activities that can generate a stable income.
According to Shanaka, the main conduit for money transfer was the Sana Group. It had a Principal Controller and 08 trust-managers located in Europe, North America and South East Asia.No funds are held by the Controller. Funds were held by the trust managers. The Controller maintained records received from each trust-manager on the current availability of financial resources and the state of its assets.
The funds allocated for procurement were sent to designated trust-managers and held in safe locations. These transfers were done in several ways, bank transfers, human couriers and over invoicing import-export transactions. The trust-managers place the funds in multiple forms of investment to avoid detection by regulatory authorities.
When the LTTE procurement needed money, the Controller tells one of the managers to transfer money. The money was transferred to multiple locations in non-detectable blocks. The persons dealing with procurement gather it all together, most often in a south East Asian country.
The best example of this process is the evidence emerging out of the FBI sting operation in Guam, said Shanaka. The LTTE sent a three-man team to Guam Island on 26 September 2006. After inspecting a consignment of weapons presented by undercover FBI agents, the team made an advance payment in Malaysia and transferred US $ 452,000 to a Baltimore bank account.
The LTTE also had another informal system. LTTE developed a robust informal remittance system referred to as the Undi” system (Hawala), said Shanaka. The Tamil Diaspora used this to transfer money to relatives in Sri Lanka living in areas without banks.
The Undi system is controlled by a small cartel of Tamil Jewellery shop owners in Switzerland and Canada. They use the money to facilitate the falsely-declared import of gold jewellery into Europe from the Gold Market in Singapore. Jewellery shops owners in Switzerland provide a combined pool of funds to the LTTE for the purchase of gold jewellery from Singapore.
The LTTE Finance unit in Switzerland facilitates the money transfer using human couriers from Switzerland to Singapore. These couriers also carry money to LTTE holding accounts in South East Asia. The couriers return to Switzerland with receipts that have significantly overvalued the gold jewelry purchased in Singapore. In some cases craftsmanship value-addition has been five times the value of the gold component.
But the LTTE sometimes got caught in their criminal activities. Cambodian government sought the assistance of Interpol to track the head of LTTE procurement operation in Cambodia, Renni Lerin on charges of human smuggling.
Tamil Rehabilitation Organization was globally known as a LTTE organization. UNICEF had given it around US$ 800,000, before it stopped following adverse reports. German Technical Cooperation, GTZ also had an agreement with TRO which ended in 2006 after they received adverse reports about the organization.
In Switzerland, the Office of the Attorney General launched a vast sting operation in several Swiss cantons. Thirteen financiers accused of funneling more than 15 million Swiss francs, ($15.3 million) to LTTE were arrested in Switzerland in 2018. The accused were from Switzerland, Germany and Sri Lanka. They included the founder of World Tamil Coordinating Committee (WTCC), his deputy and the person in charge of finances.
LTTE had, it is suspected collected the money by means of threats and by creating a regime of fear to induce them to make the payments. Around 80% of Tamils living in Switzerland had made payments. The Swiss funds were transported in cash by couriers to Singapore and Dubai.
Further, between 1999 and 2009, the WTCC, presumably, had created a complex fundraising structure which involved coaxing Tamil Diaspora to obtain loans from banks. WTCC had also created fictitious companies in the name of borrowers and issued fake certificates. (Continued)
The good news for both Myanmar and Bangladesh is that Myanmar-Bangladesh’s trade ties are going to be normalized and strengthened day by day. For example, Myanmar has decided to import 3,000 tons of cement to Rakhine from Bangladesh after the State chamber of commerce and industry urged the center to grant permission for importing cement from the neighbouring country.
Basically, Bangladesh-Myanmar improved ties can ensure some common regional advantages for the whole region. Geographically, Myanmar is located in the eastern part of Bangladesh with a 271 km border. To its southeast, it is at least 150 km wide, due to its hilly terrain and dense forest cover. Strategically, Myanmar enjoys a distinct position between the two Asian giants, China and India. The same position applies to Bangladesh. Naturally, both Bangladesh and Myanmar enjoy important strategic positions in South Asia and Southeast Asia. Basically, Myanmar and Bangladesh both can be used as a gateway between South Asia and Southeast Asia.
Myanmar can use Bangladesh as a transportation route to reach the markets of Bhutan, Nepal, North East India easily. Bangladesh and Myanmar share some regional common platforms such as the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Co-operation (BIMSTEC), an organization made up of Bangladesh, Bhutan, India, Myanmar, Nepal, Sri Lanka, and Thailand which seeks strategic and economic development. If Bangladesh and Myanmar improve their relations with each other, their dependence on China and India could be reduced and could increase trade with other countries in Southeast Asia and South Asia.
Bangladesh can be used as an important hub to connect ASEAN and SAARC. Myanmar too, as an ASEAN member, can access the SAARC free-trade bloc through Bangladesh if the Myanmar-Bangladesh ties can be improved.
In the case of bilateral relations, there were two issues that caused some annoyance between them. The first was the demarcation of the sea-boundary between them. It is a matter of satisfaction that the matter was settled peacefully by the 1982 International Tribunal of the Sea Convention in March 2012. As Myanmar and Bangladesh, both share the Bay of Bengal area and 271km long border, Myanmar and Bangladesh both can take part in tackling nontraditional security threats in the Bay of Bengal such as tackling piracy, illegal drug dealing, human trafficking, environmental degradation, countering terrorists in the region.
The second is on the Rohingya refugee issue. Between August and November 2017, it was reported that a military operation in Myanmar had forced more than 700,000 Rohingya to cross the border into neighboring Bangladesh. 2017 Rohingya crisis needs a fruitful sustainable solution between Myanmar and Bangladesh to bolster the trade ties. Definitely, Bangladesh and Myanmar should find a durable Closer Bangladesh-Myanmar ties have great economic potential – but the Rohingya issue must be resolved. Enhanced bilateral ties between Bangladesh and Myanmar could contribute to the growth of trade and investment relations with ASEAN and BIMSTEC countries.
There are other routes to bilateral cooperation. Myanmar is rich in natural resources such as tin, zinc, copper, tungsten, coal, marble, limestone, natural gas, hydropower, etc. Myanmar could thus be a major source of energy for Bangladesh to ensure its energy security.
Myanmar is also a major supplier of natural wood to the world. While it has traditionally eyed foreign investment in the oil and gas sector, the country has recently shifted its focus to attracting production-based investment. The country is well ahead in power generation following a good investment in hydropower generation. The tourism industry is also a promising sector of the country. Religious tourism can be a source of potential. There are many Buddhists Biharis in Bangladesh.
A number of important Buddhist archeological sites have already been uncovered in different parts of Bangladesh. Bangladesh is believed to be a rich repository of South Asian Buddhist heritage. In order to draw the world’s attention to the rich Buddhist heritage in Bangladesh, the Government organized an international event in collaboration with World Tourism Organization in October 2015.
There are a number of magnificent modern-era Buddhist temples in Bangladesh. The Golden Temple at a hilltop in the Bandarban district is probably the most charming Buddhist temple in Bangladesh. Gigantic Buddha status in Dhaka, Chittagong, and other parts of Bangladesh are special attractions for devotees and tourists. There are also a number of Buddhist learning centers and pilgrimage spots in Bangladesh.
This area of archaeological sites refers to Paharpur in Naogaon, Mahasthangarh in Bagura, Mainamati in Comilla, and Bikrampur in Dhaka district. Each of these sites has unique qualities as part of history. Some archaeological sites are important for both Hindu and Buddhist investigation because religious sculptures of each can be found. Thus, Myanmar and Bangladesh can exchange religious tourism.
Through the import of gas and electricity, Bangladesh can obtain its future energy security. The two countries can jointly explore oil and gas fields in the Bay of Bengal. Bangladesh can also contribute to the development of Myanmar’s infrastructure.
Despite huge trade potentials, Myanmar is not a large trading partner of Bangladesh. Total imports from Bangladesh to Myanmar in the fiscal year (FY) 2018-2019 amounted to US$90.91mn, while the export was US$25.11mn. Myanmar exports goods to Bangladesh through both maritime and land routes. Bilateral border trade is mainly conducted through the Sittwe and Maungdaw points of entry. Both countries can benefit from setting-up more border huts as Bangladesh-India benefits from those types of border huts.
The products traded between the two countries include bamboo, ginger, peanut, saltwater prawns and fish, dried plums, garlic, rice, mung beans, blankets, candy, plum jams, footwear, frozen foods, chemicals, leather, jute products, tobacco, plastics, wood, knitwear, and beverages.
The proposed construction of the Asian Highway, funded by the Asian Development Bank, can increase land connectivity between the two countries and increase trade in products such as fertilizers, plastics, cement, furniture, etc. Bangladesh is on the way to the completion of its railway project Dohazari-Cox’s Bazar railway line. The line will run from Dohazari in Chattogram to Cox’s Bazar (one of the most popular tourist destinations in the country). This line can be extended to North East India, Nepal, and Bhutan. If this line can be extended to China-South East Asia via Bangladesh’s Ghundhum- Myanmar as part of the proposed Trans Asian Railway Network Asian Highway Network, the whole region can definitely benefit. Myanmar should take such an initiative to join the Trans Asian Railroad.
Myanmar, which at present does have sophisticated manufacturing, can import electronics and pharmaceutical products that are readily produced from Bangladesh and benefit from the technology transfer.
However, the two countries can also increase agricultural production through joint ventures. Apart from adopting joint investment projects, Bangladesh can increase imports of various agricultural products including pulses, spices, fish, and rice. Enhanced bilateral ties between Bangladesh and Myanmar could contribute to the growth of trade and investment relations with ASEAN and BIMSTEC countries. This will create an opening to solve the Rohingya problem and stop militant activities.
Basically, the Rakhine region of Myanmar can be used as a trade hub between Bangladesh and Myanmar. The agro-products in Rakhine need a viable market. Bangladesh can be a big market for the goods that are produced in Rakhine. On the other hand, Bangladesh has vast and tremendous experience in garments and production of agricultural sectors. Myanmar can exchange Bangladeshi expertise to benefit. Myanmar’s products (Known as Burmese products are very popular in Bangladesh), Myanmar and Bangladesh can set up some border hats (border market) between Bangladesh and Myanmar to boost up the trade. India and Bangladesh are benefitting from such kinds of border hats at the border. Thus, strengthening people-to-people contact, bolstering public diplomacy between the two sides can mend the strained ties between two neighbors.
The LTTE evolved from a militant Tamil youth group, in the 1970s, to become ‘one of the most powerful terrorist groups in the world’. It challenged the territorial integrity and sovereignty of the Sri Lanka state, said admiring supporters of LTTE.
We are asked to believe that a bunch of village lads from Valvettiturai, who had never left Jaffna, did not know English, were not highly educated and had no military training, were able to launch a military campaign against the government of Sri Lanka and hang on to it for thirty years.
How was the LTTE able to survive as a fighting force for nearly 30 years, asked sceptics. How was LTTE able to carry out a war against Sri Lanka for such a long period? How was it able to survive as a fighting force for so long?
In an Interview on Thulawa, in May 2009, the Army Commander was asked, how did the LTTE acquire the knowledge to run this war? Did foreign countries help? The answer was, yes. This question came up regularly in television interviews.
The Eelam War was initiated by the west and funded by the west. LTTE was merely the front. It is generally thought that the western country responsible was the United States of America. The west was interested in Sri Lanka due to its strategic position in the Indian Ocean and the deep water Trincomalee harbor with its command of the Bay of Bengal. The west saw Sri Lanka as a soft target.
The west had to hide the fact that it had initiated, nurtured and was funding the Eelam separatist war. LTTE was therefore presented as a powerful entity which, during the time of the war, also developed into an international business power with tentacles worldwide. This mind boggling development was of course, a cover for western activity.
LTTE had to show the public that it had its own sources of income to finance the war. The two enterprises presented to the public were Narcotics and Diaspora, two unlikely sources which did not have the capacity to generate the huge funds needed for the protracted Eelam war.
There was a well developed narcotics trade in Jaffna long before the LTTE. It was initially, a small enterprise limited to Jaffna and Tamilnadu, handled by Valvettiturai. Narcotics traffickers were among the very first Sri Lanka Tamil Diaspora to appear in Canada, said Thompson.
Once LTTE took over, a network of heroin traffickers appeared in Italy, Swaziland and elsewhere. There were about 200 Tamils in a Rome based narcotic distribution network spread over several Italian cities such as Milan and Naples, by 1984.
By 1990s Burma had became the world’s largest source of opium and heroin in the Golden triangle .LTTE got permission from Burma to establish a modest shipping concern based in the island of Twante located off the Irrawaddy delta. LTTE also had a niche in Phuket in Thailand by 1990.
LTTE provided bulk delivery of heroin and cannabis from Asia to user countries. LTTE transferred major shipments of heroin and opium from India, Myanmar, Pakistan, and Thailand. LTTE smuggled Mandrax from Gujarat and Maharashtra to South Africa. LTTE was linked to heroin distribution in Canada, France, Italy, Poland and Switzerland.
The LTTE drug trade is many faceted and well organized, said the media. The LTTE has control of all levels in the business. The LTTE supporters provide the ‘mules’, the peddlers who distributed to the ‘street’. LTTE also had the capacity to launder the drug money.
LTTE was one of the very few drug smuggling syndicates that had its own fleet of ships. It was also the only separatist group to be so equipped.
John Thompson observed that the LTTE did not initially have a Diaspora for support. They created one. The LTTE infiltrated immigrants groups through patronage and directed them towards LTTE objectives.
The LTTE is known to have a presence in over 44 countries. Of these, the LTTE has established a structured presence in 12 countries which are considered to be the top-level contributing countries (TLCs) to the LTTE. These 12 countries have a country representative, who receives instruction from Kilinochchi. Each country had four units, Political, Finance, Procurement and Intelligence, each with its own head. The Finance unit is responsible for achieving the collection targets set by Kilinochchi for each country, said Shanaka Jayasekera.
Tamil immigrants were supported by LTTE when they arrived in Europe, Australia, North America, and particularly in Ontario in Canada. Immigrants were provided with services, job training, even babysitting services were provided by fronts controlled by LTTE. Their lives were thereafter controlled by the LTTE. They were exposed to Tamil newspapers, radio shows, and cultural events. Tamil learned to stay quiet and not make any fuss, said Thompson. Diaspora organizations that opposed LTTE were squashed.
LTTE milked the Tamil Diaspora as much as it could. LTTE used everything from collection jars to sophisticated payment schemes to raise money from Tamils. This extortion was carried out by a net work of professional managers spread across a string of countries.
The Diaspora was asked to make a monthly contribution to the LTTE. Some were forced to contribute, others did so willingly. Some Tamils abroad have a romantic notion of LTTE and Eelam, observed Rohan Gunaratne.
Towards the end of the Eelam war the LTTE carried this further. Tamil families in Europe were registered and assigned a unique PIN number referred to as the Tamil Eelam identity number.In Switzerland, each Tamil family has been issued with a three-page form carrying the heading LTTE in Switzerland”. The form had 30 questions relating to personal information including details of blood-relatives in Sri Lanka, income status, subscription to LTTE satellite television and contribution to homeland funds.
This data was to be kept in a data base in a Scandinavian country, to be sent on to Kilinochchi. LTTE intended to use this information to make assessments on contributions levels based income and lifestyle factors. The base rate under this system seems to be one unit of currency (one Euro in Europe) per person for each day out of Sri Lanka. Additional surcharge is applied depending on income levels, size of family and contributions towards periodic appeals.
In an article published in the French newspaper Le Figaro, on 2 December 2005, a French citizen of Tamil origin describes how the LTTE accessed all his personal details at the LTTE check point in Sri Lanka with his PIN number and confiscated his French passport until his family agreed to pay the outstanding contributions owed in France.
LTTE had community based Tamil radio stations and subscription satellite TV such as National Television of Tamil Eelam (NTT) and Tamil Television Network (TTN). It is estimated that TTN had 22,000 subscribers in Europe. Subscription satellite TV was a valuable medium for propaganda. It also provided Tamil entertainment with LTTE undertones.
Subscription satellite TV also generated substantial income in terms of subscription and advertising. In Europe, Tamil businessmen were required to maintain a specified advertising commitment with these channels. The channels sent out monthly statements indicating the specified advertising commitment. Excessive premiums were charged for such advertisements.
One of the most profitable business ventures associated with LTTE fundraising was the retailing of Pre-paid Phone Cards. LTTE generate substantial volumes of funds from retailing phone cards to the Tamil Diaspora.
The LTTE provided seed capital to set up several front companies registered as telecom retailers in Europe. The telecom retailers purchase bulk call-time to Asian destinations from gateway operators in Europe and retail the call-time using phone cards under multiple brand names. The Tamil spice shops and grocery shops are flooded with these phone cards eliminating all other cards, stated Shanaka.
LTTE was closely associated with the global distribution of Tamil movie DVDs in Europe and Canada. Tamil DVDs were distributed through Tamil grocery shops throughout Europe and Canada, through selected distributors. The main Tamil DVD distribution company Aynagaran International, is owned by K. Karunamoorthy, formerly of Inuvil in Jaffna, reported Shanaka in 2007.
LTTE raised money through events. Tamil Youth Organization (TYO) played a lead role in event based fundraising and mobilizing Tamil youth for LTTE work. It had branches in 9 countries.The most lucrative event based fundraising was marathon radio shows
Money was also raised through cultural shows, sports events, food festivals, guest speaker events and commemoration of LTTE war victories. When the LTTE peace delegations toured Europe, guest speaker events were held in many European cities. On 26 February 2006, the LTTE in Switzerland organized a dinner for the Tamil business community to meet LTTE leaders at Thamilini Restaurant in Zurich. Donations ranging up to SFR 20,000 were demanded from each businessman.
Hindu temples are owned and managed by private entrepreneurs. LTTE saw that temple management was lucrative, and got hold of the Hindu temples used by the Diaspora. There are several cases recorded in the UK, Canada and Australian where strong-arm tactics were used to gain control of temple management.
Human Right Watch report on LTTE fundraising in March 2006, describes the role of the LTTE in the management of Hindu temples. The report refers to cases in Canada and Australia (Perth) in which the LTTE used violent methods to intimidate temple owners.
There was also the case of Rajasingham Jayadevan and Arumugam Kandiah Vivekananthan held captive by the LTTE in Kilinochchi and forced to hand over control of Eelapatheeswaran Aalayam Temple in London. The temple owners were released by the LTTE after the intervention of the UK government.
LTTE also made use of the Tamil gangs that developed in the immigration enclaves. Shanaka Jayasekera reported that Tamil gang violence in London escalated to alarming levels during the period 2001 to 2004. In a short period of two years 13 Tamil gang members were killed in violent and brutal attacks. The first attack took place in Roe Green Park, Kingsbury and followed by reprisal attacks in Lynton Park, Wembley. Thereafter attacks took place in Ilford, East Ham, Tooting and Harrow. As recent as 2004, the Ari Ala gang attacked Tamil youth in Wembley.
The LTTE uses these gangs. It gives cross-border contract assignments in which gang members from one country are tasked assignments in another country thereby maintaining anonymity and avoid implicating local gangs, reported Shanaka.
Nalin de Silva pointed out that if anybody thinks that the LTTE buys all these arms from their kappan money then he/she does not know the funds involved in arms dealings. These financial resources cannot in anyway meet the expensive business of running an outfit of that strength created with sophisticated weapons, agreed another analyst. LTTE ‘s 2006 purchase of Russia made SA-18 missiles to be use against the Sri Lanka air force jets was reported to be a staggering USD 900,000 – 937,000.
But the LTTE thought otherwise. Daily News reported in 2009, that according to a letter taken into custody from the World Tamil Movement, Canada, the LTTE had requested the Diaspora in Canada to raise 4.5 million Canadian dollars to buy anti aircraft missiles, cannon, artillery, speedboats and aircraft for the protracted insurgency in Sri Lanka. The letter had given the following figures, anti aircraft missiles one crore Rupees, speedboats five crore Rupees, aircraft 20 crore Rupees, helicopter 30 crore Rupees, so please speed up the fundraising. (Continued)
Colombo, March 21 (EconomyNext): China is considering 2.5 billion US dollars in a loan and buyers credit to Sri Lanka Beijing’s Ambassador to Colombo Qi Zhenhong as the country is trying hard to repay foreign debt amid a forex crisis triggered by money printed to enforce low interest rates on top of tax cuts.
We are considering 2.5 billion – 1 billion dollar loan, 1.5 billion dollars buyers credit,” Ambassador Qi told reporters in Colombo.
A buyer’s credit is usually a loan given by Exim Bank of China to purchase goods and services from the People’s Republic and has been used to finance infrastructure in the island in the past.
Sri Lanka President Gotabaya Rajapaksa last year requested debt re-structuring from China as the country was downgraded by credit ratings agencies to CC and foreign reserves ran low as money was printed.
Sri Lanka and China have started close negotiations on bilateral relations,” Ambassador Qi told reporters responding to question on the request by President Rajapaksa to re-structure debt.
As a true friend we will support Sri Lanka. Sri Lanka has a reputation of paying its debts.”
China from around 2018 has given budget support loans to Sri Lanka to more than repay installments falling due.
China is also pushing Sri Lanka to resume talks on a free trade deal which is required to make investments work.
Sri Lanka has said it is expecting a new loan from China to repay debts falling due following President Rajapaksa’s request to re-schedule debt.
Ambassador Qi said Sri Lanka had requested 1.5 billion US dollar facility from China. China has also given a 1.5 billion US dollar equivalent Renminbi loan to the central bank which was drawn down to boost reserves.
Sri Lanka is also getting 500 million US dollar oil credit from India and another 1 billion US dollar loan was signed with India for food and medicine imports.
Multilateral lenders including the Asian Development Bank and World Bank halted budget support loans several years ago over the reluctance of the country to do growth generating reforms and only gives project loans.
The IMF has said Sri Lanka’s debt is unsustainable amid a forex crisis triggered by money printed to keep interest rates down. Sri Lanka has also sought International Monetary Fund support and has floated the rupee but economists have called for a rate hike to make the float work, end money printing and slow domestic credit.
President Gotabaya Rajapaksa’s special address to the Nation on 16 March lacked luster, character and much needed answers. This is a curiosity in itself as he is an articulate man with the unique knack of explaining complex issues in simple terms that makes logical sense to the intellectual, the not so educated and all in-between. Both President and his advisors must make note of this speech that could not uphold the President’s image. Instead, this directly fed into the narrative propagated by the Vasu-Udaya-Wimal led rebel team that President is now a hostage of an ugly American.
President’s speech writers would have had at least three days to work on this speech. It was a crucial speech, considering the country’s prevailing situation. Without understanding this responsibility, the speech was a sloppy piece with the extracts of previous speeches cut and pasted onto it.
Who is responsible for our economic crisis?
In previous speeches, too, President had noted that the country’s economic crisis was not of his creation. At that time, all could agree with this assertion. No one can ignore the deliberate attempts of economic sabotage by the Yahapalana Government.
It was during the Yahapalana Government’s tenure that the Central Bank bond scams took place. This immediately shot up the interest rates from single digits to double digits. By politicising foreign direct investments, especially the Chinese projects, we failed to attract any significant investment into the country. This directly affected the construction industry.
Instead of turning strategic assets into profitable ventures, the Yahapalana Government sought to privatise it to foreign agents in the guise of debt to equity swap. This is how we lost the control of the Hambantota Port.
When it became obvious the Yahapalana Government’s days were numbered, a binge on foreign loans took place. In the five years the Yahapalana Government was in power international sovereign bonds to the value of USD 12 billion were released. When the Yahapalana Government left office, nearly half a million lost their livelihoods and the growth rate fell from a robust 7.4 per cent to 2.1 per cent.
However, after nearly two and half years of governing the country, this statement that this crisis was not created by President Gotabaya is neither relevant nor acceptable. A year ago, almost all of our few revenue avenues for FOREX were at a standstill. The country was virtually without an income. Our expenses to face the pandemic in the form of quarantine centres, medicines, testing kits, vaccines, relief packages and etcetera increased. Still, this Government faced this challenge with fortitude and success. Today, however, our traditional forex revenues are slowly but surely reviving. That credit of normalising life amidst a pandemic that had other countries locked up must go to the Gotabaya Administration.
Yet, the burning question is not the amount of dollars we are earning or spending. Throughout the pandemic, despite the loss of our income but increase in expenses to face the pandemics, we continued to enjoy imported luxuries as the full range of food products and an endless list of other items. A number of new enterprises also popped up with only imported chocolates and confectioneries.
Exporters exploitation
At the same time, however, we were struggling to raise funds for essential items as gas and fuel. Even secondary school term exams are currently affected for want of paper to print question papers. The real problem is not with the US dollars (USD) coming into the country, but lack of circulation charges the business community. It has been alleged that when the Government was fiercely protecting the Sri Lankan rupee (LKR), without letting it exceed beyond Rs 200-203 per USD, certain exporters began to hoard the USD.
The usual practice of these exporters was to bring their earnings directly into the country. They would retain only the USD portion needed to import raw materials and convert the balance into LKR, which would be used to pay their salaries and other expenses. When the country entered this crisis of losing its income due to the pandemic, the present Government was faced with the enormous challenge of maintaining cost of living at reasonable levels whilst still serving the foreign debts that were maturing in quick succession. This compelled the administration to stabilise the LKR artificially.
It appears that some of our exporters chose to shamelessly exploit this situation. Hence, instead of bringing in their income as they did, they began to do so at staggered stages with just enough to open Letters of Credit (LoC) for imports. Consequently, banks began to run out of their USD reserves. This severely affected all manufacturers who rely on imported raw materials. The banks did not have sufficient funds to open LoC for them.
To sustain production lines, these entrepreneurs were forced to turn to those opportunistic exporters. They began to open LoCs for these hapless factory owners, but at exorbitant exchange rates, which sometimes exceeded Rs 270/USD, states the business community. This is of course paid in LKR. Even after paying their salaries and other expenses that are met in LKR, these selfish entrepreneurs thereby earn huge profit margins.
According to the subject experts, this blooming black market could be easily stopped with two simple regulations.
1. A company should be restricted to opening LoC that meets the objectives in their company Memorandum of Articles.
2. All exporters should be compelled to show records of their earnings against the LoCs opened on behalf of them during the past 12 months.
This would force those exploiters to bring in their earnings into the system as they always did, which then would circulate within the country. Then, the Government would have enough USD to prioritise imports into the country.
Without these two regulations, the affected business community is not confident that just floating the LKR to the mercy of market currents alone would resolve the current crisis. They fear that by allowing the black market to thrive unabated, the USD still would not come into circulation within the country. Instead they worry that the USD rate they are now forced to pay off the grid in the black market would increase exponentially.
Go-between bankers
Corruption is breeding corruption observes the business community. Certain bank managers in both the private and State sector are now acting as go-betweens, finding the best prices the dollars are trading offline and offering it to desperate entrepreneurs at a fee of around Rs 3/USD. For them, this is fast becoming a very lucrative side income, allege the victimised business community.
The recent report that the Government is unable to find USD 42 million to release a vessel docked in Colombo Port for the past six days justifies this claim by the business community. It carries 20,000 metric tons of diesel and jet fuel respectively. For each day, we delay releasing the vessel we must pay USD 19,000 as demurrage. Even though the Central Bank instructed the Ministry of Energy to obtain the necessary money from private banks, the banks too are without sufficient funds to give the Ministry. This further justified the business community’s assertion that floating the LKR alone would not resolve the issue.
They are truly stumped as to the reluctance on the part of the Government to bring in these two regulations. Many suspect that some of the highest officials in the finance ministry must be also benefitting from this under the table transactions – just as those bank managers, alleged for taking a cut” for their ‘services’.
Those with a political eye may interpret this reluctance as a deliberate attempt to sabotage the economy. After all, this phenomenon does nicely fit into the Vasu-Udaya-Wimal led rebel team’s accusations against the incumbent Finance Minister Basil Rajapaksa.
The fact is that the Government is unable to raise this USD 42 million even after the LKR was allowed to float on its own accord. This move to allow the LKR to float is also highly questionable. Just two days before at a press conference held at the Central Bank, it was communicated to the media that the Central Bank’s view was that the LKR would continue to be protected. President Gotabaya, in his speech, should have explained the reasons that compelled the Government to change the Central Bank’s stance within just two days.
False report
Failing to do so had already led to some unsavory speculations. This included the absolute false report the Central Bank Governor had been asked to step down. Finally, the Presidential Secretariat issued a statement denying such a pronouncement.
This alone is insufficient when there is a graver charge that the Finance Minister is acting willfully against the interest of the country. According to an interview given by former Cabinet Minister Wimal Weerawansa, Governor Cabraal is in Basil Rajapaksa’s ‘negative’ list, meaning the Governor Cabraal is not working in the same ‘ugly American” agenda that is allegedly spearheaded by the Finance Minister.
The manner and timing of the LKR’s floating too has been subjected to much criticism. As soon as the controls were taken off, the LKR almost spiraled out of control. It is currently at Rs 277/USD, but is feared to fall much more. It is speculated that the fall of the LKR might exceed even Rs 300/USD.
One financial analyst equated the sudden release of the LKR to a rubber ball that has been forcefully held underwater. When the ball is released, it would shoot straight up, noted the analyst. That is exactly what is happening right now, he observes. Instead, he feels the Government should have allowed the LKR to float much earlier, but in a more controlled fashion.
Former Central Bank deputy Governor Dr WA Wijewardena too alleged that the timing of the LKR was unnecessarily delayed. He of course advocates that we seek the IMF’s assistance immediately. This was not Governor Cabraal’s stance.
Speaking of the USD crisis in July 2021, Governor Cabraal (who was the then State Minister of Finance, Capital Markets and State Reforms) stated his reservations regarding the IMF assistance. We will find other alternatives rather than going to the IMF because the IMF requires us to follow conditions that are more related to our sovereignty than the economic conditions of the country.”
The whole objective of the President’s speech was to announce to the country his decision to work with the IMF. Again, the lack of explanations as to the change in stance feeds the Vasu-Udaya-Wimal led rebel team’s narration.
Either way, the current economic woes can no longer be put only into the account of the Yahapalana Government or its predecessors. It is a moot point at this stage as to who created this mess. The more pressing question is how is this being managed. The present administration’s management is under fire. President’s failure to explain the real situation, including the 360 degree turn on decisions taken almost overnight, was a huge lacuna in his speech.
Skirting around issues is not the President’s style. Therefore, it is a matter of intense curiosity that a man as meticulous and particular as President Gotabaya should have consented to deliver this speech that does not reflect his character. Without addressing these key issues that has directly led to the public’s harassment in the form of shortages of essentials, long queues and uncontrolled rising cost of living, simply noting that the President is aware and sensitive to the people’s suffering comes across as mere perfunctory statements.
Malwathu and Asgiri Mahanayake Theras have presented a letter to President Gotabaya Rajapaksa highlighting the importance of convening an all-party conference of local and foreign scholars to formulate a plan for sustainable development, and 13 other issues.
The letter sent to the President was signed by Malwathu Mahanayake Most Ven. Thibbatuwawe Sri Sumangala Thera and Asgiri Mahanayake Most Ven. Warakagoda Gnanaratana Thera.
In the letter, the Mahanayake Theras pointed out the need to formulate a national policy to provide relief to the people affected by the economic crisis, the PMD reported.
The implementation of development projects based on a list of priorities identified to alleviate the foreign exchange crisis, the reduction of the cost of living and the creation of a local economic model are also among the proposals.
The Mahanayake Theras also emphasized the importance of providing relief to the production of essential food items, agriculture and the farming community, and enforcing the law against fraudulent traders who artificially create shortages of essential commodities.
The letter also proposes to increase foreign remittances through a transparent economic plan and the need to establish an exports-based economy.
The Mahanayake Theras also emphasized the importance of encouraging new investments, restructuring of public debt, providing relief to low-income earners, and formulating a sustainable plan to prevent waste, corruption and misuse of resources.
The Mahanayake Theras said President Gotabaya Rajapaksa receives the commendation of the citizens for his visionary work to ensure the security and sovereignty of the country, the PMD reports further.
The Mahanayake Theras emphasized the need for the full contribution and commitment of all Members of Parliament to develop the country economically in the face of adversity by putting the people first, regardless of party affiliation.
The Advisory Committee appointed to assist the National Economic Council has presented five proposals that need to be implemented expeditiously, the President’s Media Division said.
The members of the Advisory Committee met President Gotabaya Rajapaksa and members of the National Economic Council for the first time this morning (21) and presented the set of proposals.
The President appointed a 16-member Advisory Committee on March 15 to assist the National Economic Council in finding solutions to the prevailing economic issues.
The proposals submitted by the committee are as follows:
1. Immediate appointment of a Technical Team consisting of officials representing the Central Bank and the Treasury to formulate programmes proposing international financial assistance.
2. Appointment of a financial advisor immediately and a legal advisor.
3. The Technical Team should immediately come up with a reform programme to propose international financial assistance.
4. Identify an expert team to assist the Finance Minister.
5. Focus on confidence-building measures after solving supply related issues.
The Advisory Committee further recommends that immediate and long-term measures be taken to stabilize and strengthen the economy.
Sri Lanka has to face the repercussions of the adverse impact on the economies of many countries around the world. The foreign exchange crisis is the main reason for this situation, it said.
The Advisory Committee expressed confidence that the economic crisis can be solved in the short term by properly managing the challenges.
Prime Minister Mahinda Rajapaksa, Ministers Basil Rajapaksa, Bandula Gunawardana, Mahindananda Aluthgamage, Central Bank Governor Ajith Nivard Cabraal, Secretary to the President Gamini Senarath and members of the Advisory Committee were also present.
The Sri Lankan government has requested for a USD 1 billion loan and a USD 1.5 billion credit line from China, says the Chinese Ambassador in Colombo, Qi Zhenhong.
He added that the request is being considered by China.
The ambassador, Qi Zhenhong, told reporters in Colombo on Monday that China is considering a $1 billion loan and a $1.5 billion credit line to purchase goods from China, both of which would be new lines of financing.
He had said earlier in the same briefing that Sri Lanka was seeking a $1.5 billion credit facility. He provided no details on when an agreement would be finalized and in what form.
meanwhile Sri Lanka’s Minister of Foreign Affairs, Prof. G.L Peiris had held discussions with the Ambassador of China in Sri Lanka, Mr. Zhenhong at the Ministry on 18 March.
During the meeting, a first day cover issued by the Chinese authorities to commemorate the 65th anniversary of the establishment of diplomatic relations between China and Sri Lanka and the 70th anniversary of the signing of the Rubber-Rice Pact between the two countries in 1952, was handed over to the Foreign Minister by the Chinese Ambassador.
Foreign Minister Peiris commended the support extended by the Government of China during the recently held 49th Human Rights Council. Minister Peiris also recalled the support extended by China during previous Human Rights Councils and expressed confidence and hope that China would extend support when required in the future as well.
The foreign ministry said the discussions were also focused on the ongoing negotiations of the Sri Lanka- China Free Trade Agreement (FTA). Minister Peiris highlighted that the 7th round of FTA negotiations will soon commence with the support of the respective line agencies in Sri Lanka.
The Foreign Minister also stated that the President has appointed three committees to resolve the ongoing food, medicine and cement shortages.
Ambassador Qi while stating that China had signed over 26 FTAs, expressed that finalising the proposed FTA between Sri Lanka and China would immensely benefit the Sri Lankan local market and products. He also urged the Sri Lankan authorities to resume the 7th round of FTA negotiations at the earliest.
The Chinese Ambassador also thanked the Foreign Minister and expressed utmost satisfaction in the organising of a successful official visit for the State Councillor and Foreign Minister, Wang Yi, to Sri Lanka in late December 2021. He also thanked the Government of Sri Lanka for issuing a commemorative coin on the occasion of the 100th anniversary of the founding of the Chinese Community Party.
Further, the Chinese Ambassador briefed the Foreign Minister on several welfare activities organised by the Embassy of China in Colombo for Buddhist Monks and Temples as well as providing 150 food parcels for needy people.
Both parties expressed great satisfaction over strong bilateral relations, including government to government contacts, people to people contacts as well as Party to Party contacts between the Chinese Communist Party and the Sri Lanka Podujana Peramuna.
State Minister for Regional Cooperation Tharaka Balasooriya, officials from the Ministry of Foreign Affairs and the Chinese Embassy, were also present during the meeting, the ministry said in a statement.
A special meeting of the ruling party is scheduled to be held tomorrow (22) under the patronage of President Gotabaya Rajapaksa.
The meeting is to be held at Temple Trees at around 6.00 pm tomorrow, government sources told Ada Derana.
All members of parliament (MPs) from the ruling party have reportedly been informed to attend the mandatory meeting.
It is reported that the discussion will focus on economic issues, including the dollar crisis in the country.
Prior to the special meeting to be held in the evening, the ruling party’s parliamentary group is scheduled to meet tomorrow morning under the leadership of Prime Minister Mahinda Rajapaksa.
The meeting will be held at the Parliament complex, according to government sources.
The Health Ministry says that another 238 persons have tested positive for Covid-19 today, as the daily count of new cases continues to rise in the country.
This brings the tally of Covid-19 cases registered in the country thus far to 657,791.
According to official figures, 624,592 positive cases have recovered.
Following the new development, the number of virus-infected people who are undergoing treatment moved to 16,943.
Meanwhile, the Director-General of Health Services confirmed 04 new coronavirus-related deaths for March 18, pushing the country’s death toll from the pandemic to 16,426.
According to the figures released by the Department of Govt. Information, all the victims confirmed today are females who are in the age group of 60 years and above.
Twice-postponed Finance Minister Basil Rajapaksa’s visit to New Delhi took place finally to secure a US $ 1 billion credit line to purchase essentials – food items and pharmaceuticals for dollar-starved Sri Lanka.
India offered such assistance for Sri Lanka to stave off food and fuel shortages. The latest engagements herald the elevation of Indo-Lanka bilateral economic ties to new heights. The US $ 1 billion credit line for essentials and another US $ 500 million credit arrangement for fuel purchases serve as a lifeline to the ailing Sri Lankan economy with people idling for hours on end for buying petroleum products and domestic gas cylinders. With the freeing up of exchange rate, the rupee value has drastically dropped against the US dollar resulting in the spikes of imported items. Supermarket shelves have been stripped bare of milk powder.
Any credit facility from a friendly country matters a lot at a crisis time of this nature. Be that as it may, there is nothing called ‘free lunch’ in international affairs. It is nothing but the pursuit of each other’s interests. In diplomatic parlance, it may be called ‘win-win’ cooperation.
Sri Lanka had to reciprocate to benefit from the Indian offer. As such, ahead of the Finance Minister’s visit, the two countries rushed to sign agreements that will give a vital stake for India in the power and energy sector of Sri Lanka. Those Indian interests in Sri Lanka have remained for a long time, and can even be traced back to the Memorandum of Understanding (MoU) signed in 2017 under the previous Yahapalana government. When Prime Minister Narendra Modi visited Sri Lanka in 2015, he spoke of a petroleum hub in Trincomalee.
One of the agreements signed ahead of the Finance Minister’s is a Joint Venture and Shareholders’ Agreement (JVSHA) for the Trincomalee Power Company Ltd (TPCL). The National Thermal Power Corporation (NTPC) Ltd from India and the Ceylon Electricity Board (CEB) will develop a 100MW solar power plant at Sampur in Trincomalee. It is a strategically important project for India envisaged in the 2017 MoU. It never took off the ground, though.
Any credit facility from a friendly country matters a lot at a crisis time of this nature. Be that as it may, there is nothing called’ free lunch’ in international affairs. It is nothing but the pursuit of each other’s interests. In diplomatic parlance, it may be called ‘win-win’ cooperation
Another agreement is to develop a 500 MW wind power project in Mannar by Adani Group, a leading company that enjoys the full backing of the Indian government. The company, in partnership with John Keells Holdings and Sri Lanka Ports Authority, has secured the contract to develop the West Container Terminal of the Colombo Port. Now, the Indian company will increase its reach to the northern region of Sri Lanka. The north and the east are the areas where India has strategic interests which it will never compromise no matter what.
Ahead of the 2019 presidential elections, with the sign of President Gotabaya Rajapaksa winning, analysts of international affairs believed that the incoming regime would get closer to China, much to the consternation of the western world and India. Even India would have been worried about such a predicament of Sri Lanka getting drawn into the sphere of Beijing’s influence. But, things turned out to be otherwise.
But, right at the beginning, the key interlocutors of the Gotabaya Rajapaksa government’s foreign policy, empathized that it would have an India- first security policy. The new government handpicked Milinda Moragoda to serve as Sri Lankan High Commissioner to New Delhi. He even presented a roadmap for the development of ties with India. The energy sector development and grid connectivity are two of the points highlighted in the report. Now, mutual trust that suffered after Sri Lanka’s unilateral abrogation of the agreement to develop the East Container Terminal of the Colombo Port has been restored with the recent initiatives.
Today, in the government, it is the writ of the Finance Minister applied across the board. He is calling the shots in a big way. He was instrumental in removing MPs Wimal Weerawansa and Udaya Gammanpila from their posts. He has his say in the conduct of economic affairs with other countries.
He played his part in bringing New Fortress Energy of the United States to invest in LNG (Liquefied Natural Gas) in Sri Lanka. Now, he has done his part giving wide scope for India in the economic activities of Sri Lanka in terms of bilateral investments in a move to blunt allegations that there is only Chinese presence in Sri Lanka as far as Foreign Direct Investments (FDI) are concerned.
In recent times, there is lackluster performance on the part of the government in wooing investments from China. In fact, Sri Lanka was entangled in a commercial dispute with China over the rejection of the fertilizer stock supplied by Chinese company Qingdao Seawin Biotech Company.
Daily Mirror reliably learns that some investment proposals submitted by key Chinese companies with international acclaim have not been considered by the government. The question that arises in the minds of many: is the finance minister trying to reset Sri Lanka’s international relations with a more focus on India and the western world?
The answer is obvious given the minister’s political ideology. He is ambitious to be the next leader. He believes India is a country that understands Sri Lankan politics and has influence over it more than any other country in the world. As such, it may be his belief that the accommodation of India on board will help realize his political ambitions. Also, he may be contemplating on keeping pressure from the western world at bay by trying to project Sri Lanka as a country open for them, but not solely for China. Nevertheless, it is impossible for Sri Lanka to attract substantial foreign exchange in items of FDIs without China. So, the country has to walk a tight diplomatic rope without compromising its relations with any country, be it India, US, or China.
Colombo Port City in Sri Lanka, December 21, 2021. /Xinhua
Sri Lanka is mired in a financial crisis as the COVID-19 pandemic hammered the country’s tourism sector and led to a foreign currency shortage. Some Indian media have taken the chance to revive an old accusation of a “China debt trap” to slander China-Sri Lanka economic cooperation while ignoring plain facts.
“Although the proportion of loans from China increased from two percent in 2008 to nine percent in 2017, it accounted for about 10 percent of Sri Lanka’s foreign debt,” Fu Xiaoqiang, vice president at China Institutes of Contemporary International Relations, wrote in a commentary on China Daily.
International sovereign bonds made up the lion’s share, 36.4 percent, of Sri Lanka’s external debt then. China ranked the fourth largest debt holder behind the Asian Development Bank and Japan. International agencies like the World Bank and countries, including India, owned the rest of the debt.
Fu said that Sri Lanka encountered a considerable foreign currency shortage as 60 percent of its debt requires payment in dollars.
“A drop in foreign reserves is an important factor in exacerbating the debt payment pressure of the country,” Fu explained.
“China has been providing assistance for Sri Lanka’s socio-economic development as its capability allows, and will continue to do so going forward,” Chinese Foreign Ministry spokesperson Zhao Lijian said earlier this month.
With the efforts and solidarity of the Sri Lankan government and people, the country is likely to overcome the temporary difficulties soon and embrace even greater development, Zhao added.
India’s suspicion about China’s and Sri Lanka’s economic cooperation results from a zero-sum game mentality, Liu Ying, director of the cooperative research department of the Chongyang Institute for Financial Studies at Renmin University of China, told CGTN.
In fact, the economic development of Sri Lanka will only make the Indian market more attractive as global supply chains become more regionalized and digitalized during the pandemic, said Liu.
Colombo Port City is among the Belt and Road Initiative projects with Chinese investment in Sri Lanka. PwC, a consultancy, estimates the project will create $12 billion worth of value addition annually during the operational stage.
“Cooperation will create win-win results, especially during the digital economy era,” Liu said.
Poor infrastructure in developing countries is an obstacle for development as it makes trade with the overseas markets more difficult, she said.
Fu said the “Belt and Road” project provides opportunities rather than a trap for countries along the route.
If the loans they borrow can help them build infrastructure, improve the investment environment and create jobs, that’s good lending, he said.
Such loans can vitalize their economies and help pay back debts when they prosper, he added.
SJB slams Rajapaksa govt. for pampering PM Modi’s notorious friends”
The Adani Group’s back door” entry into Sri Lanka’s energy sector disrupts the country’s competitive electricity generation system, the Opposition has said, accusing the Rajapaksa government of pampering” Prime Minister Narendra Modi’s notorious friends”.
It is with deep regret that we note that the Adani Group has chosen the back door to enter Sri Lanka. Avoiding competition is not something we take kindly. It hurts our battered economy, aggravates the balance of payment issues, and causes further misery to our citizens,” said Ajith P. Perera, chief executive of the Samagi Jana Balawegaya (SJB or United People’s Force), Sri Lanka’s largest opposition party.
The statement follows a recent agreement signed by India’s Adani Group to set up two renewable energy projects in Mannar and Pooneryn, in Sri Lanka’s Northern Province. The Memorandum of Understanding (MoU), which official sources confirmed was signed on March 11, 2022, has drawn attention, also for the apparent secrecy around it.
The development came to light only after Sri Lankan newspapers reported on the deal, quoting officials in Colombo. The agreement for two-large scale renewable energy projects, with an estimated investment of $ 500 million, had been inked the same day the National Thermal Power Corporation (NTPC) of India formalised an agreement with Ceylon Electricity Board (CEB), to jointly set up a solar power plant in Sampur, in Sri Lanka’s eastern Trincomalee district. However, the agreement involving the Adani Group was not made public by either side.
PM Modi may have given us crucial financial assistance during our current economic crisis, but that doesn’t mean our renewable energy sector’s most valuable lands and resources can be stolen for his friend Adani…The [Rajapaksa] government has many decent ways to thank PM Modi rather than pampering his notorious friends,” Mr. Perera said, adding that a global player like Adani would be most welcome” through proper channels.
A former State Minister of Power and Renewable Energy, Mr. Perera said that over the years, Sri Lanka had gained a good handle” on renewable energy development, establishing a robust competitive system” to gain the best value from private investments.
The bidding rounds run by the state-owned CEB paid off handsomely, realising 4.00 US Cents/kWh for small 10MW scale solar projects, and 6.50 US Cents/kWh for similar sized wind projects during my time in office (2015-2019). The pinnacle of renewable energy development was the realisation of 4.85 US Cents/kWh in the 100MW Mannar wind power project developed by the CEB.”
‘Violation of law’
SJB parliamentarian and economist Harsha de Silva said the agreement violated Sri Lanka’s energy laws, especially the Sri Lanka Electricity (Amendment) Act of 2013 that mandates competitive bidding for all electricity generation.
The Mannar basin has one of the best energy yields. Giving it to an investor outside of a competitive process is a clear violation. We are talking about 500 MW in one of our best locations,” he told The Hindu.
The CEB has not yet responded to The Hindu’s request for a comment.
The recent renewable energy deals in northern Sri Lanka come months after Adani Group Chairman Gautam Adani visited Sri Lanka and met President Gotabaya Rajapaksa and discussed possible investment in the island nation’s energy sector, coinciding with Colombo’s thrust on clean energy. The projects in northern Sri Lanka are the group’s second major investment in Sri Lanka, following the West Container Terminal (WCT) Project at the Colombo Port, where it holds majority stakes.
Even in the WCT project formalised in September 2021, or the earlier intergovernmental East Container Terminal project that it replaced, the Adani Group entered as a nominee” of the Government of India, and not through a competitive bid, sparking questions about due process.
Country seeks IMF bailout to deal with worst debt crisis in decades.
COLOMBO: Sri Lanka has cancelled exams for millions of students as the country has run out of printing paper and is short on dollars to finance imports, officials said on Saturday.
Education authorities said the tests, scheduled for March 28, would be postponed indefinitely due to an acute paper shortage as the country contends with its worst financial crisis since independence in 1948.
School principals cannot hold the tests as printers are unable to secure foreign exchange to import necessary paper and ink,” the Department of Education of the Western Province said.
Official sources said the move could effectively hold up tests for around two thirds of the country’s 4.5 million students.
Term tests are part of a continuous assessment process to decide if students are promoted to the next grade at the end of the year.
A debilitating economic crisis brought on by a shortage of foreign-exchange reserves to finance essential imports, has resulted in the country running low on food, fuel and pharmaceuticals.
The cash-strapped nation of 22 million announced this week that it will seek an IMF bailout to resolve its worsening foreign debt crisis and shore up external reserves.
ADVERTISEMENThttps://c96017b82567cffd7d1653afadc5ff07.safeframe.googlesyndication.com/safeframe/1-0-38/html/container.htmlThe International Monetary Fund on Friday confirmed it was considering President Gotabaya Rajapaksa’s surprise request to discuss a bailout.
Around $6.9 billion of Colombo’s debt needs to be serviced this year but its foreign currency reserves stood at about $2.3 billion at the end of February.
Long queues have formed across the country for groceries and oil with the government instituting rolling electricity blackouts and rationing of milk powder, sugar, lentils and rice.
Sri Lanka earlier this year asked China, one of its main creditors, to help put off debt payments but there has been no official response yet from Beijing.
The China-backed Hambantota International Port was promoted by former president Mahinda Rajapaksa, the elder brother of the incumbent, to spur economic development in his home district, and against the advice of critics who warned against heavy borrowing to build it. The site had few users in its first few years of operation.
Struggling to pay back over $8 billion in Chinese loans and investments, the government in 2017 handed over an 85% stake in the port complex to a Chinese state-owned company on a 99-year lease to raise $1.2 billion.
Work is now nearly complete on expanded facilities that are expected to start attracting more business later this year.
Envoys of the United States and several other key nations in the west, as well as Japan on Friday, called on Sri Lanka to join in active support against the Russian invasion of Ukraine.
In a joint statement, the ambassadors and high commissioners to Sri Lanka urged the island nation to raise vocal support” for Ukraine, international law, including the United Nations charter.
We urge Sri Lanka to join us in calling on Russia to end it hostilities immediately.”
The statement was issued by the head of the delegation of the European Union, high commissioners of Australia, Canada, New Zealand and the United Kingdom, and the ambassadors of France, Germany, Italy, the Netherlands, Norway, Japan, Rumania, Switzerland and the United States.
We will work together with our friends and allies around the world to ensure that the sovereignty and independence of Ukraine is restored. We stand with Ukraine; and for freedom, democracy, and the sovereignty of nations around the world,” the envoys said.
The envoys condemned Russia’s invasion of Ukraine as an unprovoked, unjust and illegal attack on a peaceful, democratic and sovereign state. This outrageous attack is a gross violation of international law, including the UN charter.”
The statement slammed Russia for dramatically escalating its attacks on civilian neighbourhoods and infrastructure, leading to large numbers of civilian casualties. Millions of ordinary civilians – mainly women, children and older persons – have been forced to flee from their homes into neighbouring countries as refugees, making it the fastest-growing refugee crisis in the last 70 years, it read further.
Russia threatens the fundamental principles of sovereignty and territorial integrity that underpin peace and security around the world, the representatives to Sri Lanka stressed.
The statement also read: We stand united in condemnation of the Russian government’s attacks on Ukraine. In the UN General Assembly on 2 March, 141 countries – an overwhelming majority – voted to condemn Russia’s invasion. This demonstrates Russia’s utmost isolation from the international community. Countries supporting Ukraine have imposed an unprecedented package of targeted sanctions to inflict heavy cost on Russia. These aim to degrade Russia’s capacity to pursue its attacks against Ukraine, and to press Russia to withdraw from hostilities. We have seen organisations from banks to oil companies, to football leagues, make it clear that Putin’s actions have consequences and his regime can no longer be part of the international community.”
It said the friends and allies of Ukraine have committed significant levels of economic and humanitarian assistance with many countries opening their boarders to Ukrainian families fleeing the war.
The envoys also accused Russia of promoting false narratives as a pretext for invasion.
The Russian government has conducted an aggressive disinformation campaign against Ukraine in a spurious attempt to justify its invasion. There is no justification for Russia’s campaign to subvert its democratic neighbours. Russia falsely accuses NATO of provocation. NATO is, and always has been, a defensive alliance, and poses no threat to Russia.”
The presidents of the two countries have held talks discussing the hottest international and bilateral issues.
China’s President Xi Jinping urged his US counterpart Joe Biden to engage in talks with Russia to address the reasons behind the ongoing conflict in Ukraine, stressing it should be resolved through diplomacy. The two presidents held talks via a video link on Friday, discussing various international and bilateral issues. The talks were held at the request” of Washington, China’s Foreign Ministry noted in a statement.
China’s leader stressed that Beijing has always stood for peace and opposes war,” urging all the parties involved in the ongoing conflict between Moscow and Kiev to stick to diplomacy.
All sides need to jointly support Russia and Ukraine in having dialogue and negotiation that will produce results and lead to peace,” the Chinese statement issued after the talks reads. At the same time, President Xi told Biden that the ongoing crisis should be addressed on another level as well.
The US and NATO should also have dialogue with Russia to address the crux of the Ukraine crisis and ease the security concerns of both Russia and Ukraine.
Biden, for his part, underscored his support for a diplomatic resolution to the crisis,” warning Beijing of the implications and consequences if China provides material support to Russia,” a brief readout of the talks released by the White House reads. Both Moscow and Beijing have denied Russia had ever sought help from China amid the ongoing offensive in Ukraine, refuting media reports suggesting so.Read more Russia’s divorce from the West has pushed it into China’s arms, here’s how it will work
Biden and Xi also discussed the outstanding issues in the bilateral ties of their countries, with China’s Foreign Ministry and the White House producing somewhat contradicting accounts of the statements made by the two leaders during the talks.
President Xi pointed out that the China-US relationship, instead of getting out of the predicament created by the previous US administration, has encountered a growing number of challenges,” the Chinese statement reads, blaming the current situation” in the bilateral ties onto some people on the US side” who have not followed through on the important common understanding reached by the two presidents.”
Biden reiterated that the US does not seek a new Cold War with China; it does not aim to change China’s system; the revitalization of its alliances is not targeted at China; the US does not support ‘Taiwan independence’; and it has no intention to seek a conflict with China,” the statement reads.Read more China declares position on Ukraine conflict
The White House, however, said that Biden only reiterated that US policy on Taiwan has not changed, and emphasized that the United States continues to oppose any unilateral changes to the status quo.”
Taiwan has been one of the main issues in US-China relations for years already. Beijing considers the island as an integral part of its territory, yet it has not governed Taiwan for decades, as it became the last stronghold of nationalist forces during the Chinese civil war.
At the same time, Taiwan has enjoyed a cozy relationship with the US, particularly in military cooperation, which Beijing regards as a breach of the One China policy, which America recognizes. China has repeatedly accused Washington of meddling in its internal affairs and of fueling separatist” sentiments on the island. Both the US and China have repeatedly flexed military muscle near the island, with Beijing frequently staging massive drills near it, as well as sending in large air and naval forces into areas claimed by Taiwan as its sovereign territory.
Kiev initially claimed Russian bombs had killed more than 1,000 people, but local officials now say otherwise
More than 200 civilians have been rescued unharmed from the bombed Mariupol Drama Theater, in Ukraine, and one injured woman has been taken to hospital, the local deputy mayor told reporters on Friday. Initial claims from Kiev estimated that over 1,000 people may have been killed in what they alleged was a Russian airstrike.
Ukrainian media announced on Wednesday that the Drama Theater – located on the main square of the city – had been struck by the Russian air force while civilians were sheltering inside. The declaration was widely amplified by Westerners on social media.
By Thursday morning, however, reports switched to saying that those civilians had survived, with a journalist from expat journal the Kyiv Independent calling it a miracle.”
On Friday, Deputy Mayor Sergey Orlov told Human Rights Watch that more than 200 people have so far been rescued from the rubble unharmed, but one woman had been taken to hospital with injuries. Earlier in the day, Ukraine’s human rights commissioner, Lyudmila Denisova, told reporters that some 1,300 civilians had been trapped inside.
Responding to the Ukrainian accusations on Wednesday, the Russian military said none of its planes had carried out any ground attacks in Mariupol that day, and the theater had not in any case been on its list of targets.
Previously, it was known from the refugees who got out of Mariupol that the Nazis of the Azov Battalion might be holding civilians hostage in the theater building, using the upper floors as firing points,” military spokesman Major-General Igor Konashenkov said at the time. He added that what he described as reliable information” from locals had indicated that the militants might have blown up the building to try to pin the blame for any civilian deaths on Russia.
Russia says Mariupol is the stronghold of Azov, the notorious Ukrainian militia that uses as its emblems Waffen-SS symbols and other iconography of Nazi Germany. The city has been surrounded by Russian regular troops and those of the Donetsk People’s Republic, a breakaway region Moscow recognized as independent in February.
Moscow attacked its neighbor in late February, following a seven-year standoff over Ukraine’s failure to implement the terms of the Minsk agreements, and Russia’s eventual recognition of the Donbass republics of Donetsk and Lugansk. The German- and French-brokered protocols had been designed to regularize the status of those regions within the Ukrainian state.
Russia has now demanded that Ukraine officially declare itself a neutral country that will never join the US-led NATO military bloc. Kiev insists the Russian offensive was completely unprovoked and has denied claims it was planning to retake the two republics by force.
Moscow has deployed Kinzhal missiles for the first time since the start of its military operation.
The Russian military has said it used its state-of-the-art Kinzhal hypersonic missiles to destroy an arms depot near the city of Ivano-Frankivsk in western Ukraine.
The strike with the air-launched missile system took place on Friday, Russian Defense Ministry spokesman Igor Konashenkov said during a briefing.
It targeted a large underground depot of missiles and aerial munitions of the Ukrainian forces” in the village of Deliatyn, he added.
Kinzhal, which means ‘dagger’ in English, was used by the Russian military for the first time since the start of the Ukrainian conflict on February 24.
Kinzhal missiles are carried by MiG-31K supersonic interceptor aircraft, which NATO calls ‘Foxhound’.
The hardware is one of several hypersonic systems prepared for the country’s military in recent years, together with the Avangard glider, which is fitted on silo-based ICBMs, and Zircon (Tsirkon) missiles, developed for the navy.
Moscow sent its troops into Ukraine last month following a seven-year standoff over Kiev’s failure to implement the terms of the Minsk agreements, and Russia’s eventual recognition of the breakaway Donbass republics of Donetsk and Lugansk. The German- and French-brokered protocols had been designed to regularize the status of those regions within the Ukrainian state.
Russia has now demanded that Ukraine officially declare itself a neutral country that will never join the US-led NATO military bloc. Kiev insists the Russian offensive was completely unprovoked and has denied claims it was planning to retake the two republics by force.
Beijing is the only major power to benefit from Moscow’s conflict with Kiev
Russia’s military operation in Ukraine and the consequent economic embargo of Moscow by the West is the largest upheaval in world politics since at least the end of the Cold War. The result will be a complete reformatting of the country’s foreign economic relations and its economic model, as well as Russia and the US sinking into a protracted military-political confrontation in Eastern Europe.
Both factors will have a direct impact on the situation in East Asia amidst a gradually growing confrontation between China and Washington there. As a result of standing on the sidelines of the crisis and calling on the parties to show restraint, Beijing will be the only world center of power to benefit from the Ukrainian catastrophe in the long run. It is possible that the events in Ukraine will predestine China’s success in opposing the United States.
China’s position on the Ukrainian crisis
The Chinese position on the Ukrainian crisis was expressed to the fullest in a telephone conversation between its Foreign Minister Wang Yi and a number of his European colleagues. In brief, it boils down to five points:
China believes it is necessary to protect and respect the sovereignty and territorial integrity of all countries.
China stands for common, sustainable, comprehensive security. The security of some countries cannot be enhanced at the expense of others by strengthening or expanding military blocs. Given the five waves of NATO expansion, Russia’s legitimate security demands must be taken seriously and properly responded to.
China is closely monitoring the situation in Ukraine and what is happening there is not what it would like to see. The parties must exercise restraint, avoid escalation, and prevent a humanitarian crisis and the death of civilians.
China supports any diplomatic efforts that could lead to a peaceful solution of the Ukrainian crisis. China welcomes direct dialogue between Russia and Ukraine. The Ukrainian issue has a complex historical context. Ukraine should be a bridge between East and West, not a line of confrontation between great powers. China also supports EU-Russian dialogue on European security.
The UN Security Council should play a constructive role in resolving the Ukrainian crisis and avoid actions that could exacerbate points of contention.
China has expressed its regret over the ongoing tragedy, and welcomes any negotiations leading to peace. This is the rhetoric traditionally heard from Beijing regarding conflicts and crises in which it is not involved. The Xi Jiping government has avoided condemning Russia, while leveling veiled criticism at the West for NATO expansion and its unwillingness to listen to Moscow’s security concerns.
Chinese officials are not calling Russia’s actions in Ukraine an ‘invasion’. Its state media does not publish materials that present Moscow and its president in a negative light. In the Chinese blogosphere, Vladimir Putin, as well as his actions and rhetoric connected with the Ukrainian operation, are met with wide approval by nationalist-minded people who draw parallels between this situation and China’s relationship with Taiwan.
Despite widespread speculation that Beijing, as Russia’s only remaining friendly major trading partner, could put pressure on Moscow to conclude a peace agreement as soon as possible, there is no indication that Beijing has even considered doing so.Read more Beijing rebukes Washington’s threat over Russia sanctions
China has taken a position of neutrality that is friendly to Russia concerning the conflict. Representatives of the country’s Foreign Ministry and the Chinese banking regulator have repeatedly stressed their intention to fully maintain relations with Russia despite the situation.
During the UN Security Council vote on the Ukrainian crisis China abstained, electing not to support the Russian veto. But it did the same during the Crimean crisis. In principle, China cannot recognize precedents that support changing the status of territories based on referendums (as happened in the Crimea, Lugansk and Donetsk Republics) since this will affect the Taiwan problem. It should also be noted that Russia does not recognize and does not support the Chinese position in its territorial dispute with India, or Chinese claims in the South China and East China Seas.
American statements about having ‘discussions’ with China about the situation surrounding Ukraine and even of China giving some consideration to Westent sanctions are divorced from reality. This is not the first time this situation has occurred. In 2014, President Barack Obama tried to convince the Chinese not to conclude an agreement with Russia on the construction of the Power of Siberia gas pipeline, which was nonetheless signed in May of the same year.
Economic cooperation
As in the previous stages of the Ukrainian crisis, Chinese companies and banks operating on the world market should take into account the possible negative impact of US and EU sanctions. In this respect, they do not differ from the businesses of any other country. However, the Chinese typically exhibit an acute fear of falling under punitive American measures, which leads them to a wide interpretation of sanctions.
Therefore, regardless of the position of the Chinese government, sanctions have always had a certain negative impact on Russian-Chinese cooperation. In addition, the shock effect from the disruption of usual payment mechanisms, production chains, and logistics in the coming months will inevitably manifest itself. Businesses will have to find new ways of operating.
At the same time, the parties have so far carried out significant work to put a secure infrastructure in place to ensure bilateral trade, and such efforts have continued until very recently. In 2020, the share of the ruble in bilateral trade reached 7 percent, and the yuan – 17 percent. China is striving to internationalize its currency, and it can now be used for settlements between non-residents of the country.
Preparing for a tough conflict with the West, Russia has sharply increased the share of yuan in its gold and foreign exchange reserves. According to some estimates, the Bank of Russia has $140 billion worth of Chinese government bonds denominated in yuan alone. Indirectly, this may also indicate that the current volume of sanctions has been expected for a long time.
In addition, China’s CFETS trading system and the Moscow Exchange have been trading in the yuan-ruble currency pair since 2010. Thus, conditions exist for all trade between the two countries to be shifted to national currencies, mainly to the yuan, due to the volatility of the ruble.
In 2020 and 2021, China’s share of Russian trade was about 18 percent. Beijing is Moscow’s largest nation state trading partner, although the EU as a whole takes a bigger share. It was about 38 percent in 2020. Since 1999, the China’s share has been steadily rising, while the EU’s has been gradually falling since the second half of the 2000s.
If this trend were to continue, one would expect the levels of the China and the EU in Russian trade to be roughly equal in the early-mid 2030s. However, with the EU’s embargo of Russian imports, the process of reorienting to China may slightly accelerate, and China could become Russia’s main trading partner within the next two or three years. As a result, the trade between Russia and its main trading partner will be safe from external influences.
A sharp increase in Russian raw material exports to China may be constrained by lack of appropriate infrastructure, including the capacity of railways, pipelines, and port terminals. China exports mainly finished goods, which are less dependent on transport capacity.
Consequently, in the next free years, we should expect a sharp increase in Chinese exports to Russia with a more modest increase in Russian exports to China. There may be a significant imbalance in favor of Beijing in Russian-Chinese trade for some time.
In this context, the early accumulation of huge yuan reserves indicates that Russia’s authorities have been preparing for something resembling the current configuration of economic sanctions.
Beijing’s promotion to the role of the sole or main buyer of some types of Russian products and trade in exchange for yuan is likely to mean some price losses for Russian exporters. But, under the current difficult conditions, this can hardly be considered critical. With the development of new logistics, China may eventually replace the European market.
The importance of redirecting exports to China means development of the requisite infrastructure in the Far East will need to be accelerated. Given the importance of speed, it will probably have to be built with the involvement of Chinese investment and companies. Construction projects like this can give important impetus to development in the Russian regions.
The issue of expediting the conclusion of contracts for this construction will also arise, as well as the question of completing the Soyuz Vostok gas pipeline (a continuation of the Power of Siberia – 2), which taps into the same raw material base as the pipelines to Western Europe, ahead of schedule.
China may have significant interest in redirecting Russian raw material exports to itself while converting it to yuan, as this will not only give Beijing numerous political and strategic benefits, but also bring it huge economic gains. In particular, China’s protection from sanctions and embargo attempts will sharply increase, the cost of acquired resources will decrease, while the role of the yuan in world trade will dramatically rise (the internationalization of the yuan is an important goal for Chinese policy).Read more Yuan deposits replace dollar and euro in Russian banks
Russia’s earlier attempts to diversify its economic ties with Asia can be considered dead after the region’s three most developed economies (Japan, South Korea, and Singapore) supported anti-Russian sanctions to varying degrees, albeit under severe pressure from the United States.
China will inevitably become the dominant partner, and it is possible that, in the near future, its share in Russian trade will be comparable to the peak values of the EU’s share at one time (more than 50 percent).
A positive point for Russia is the growth in the number of Chinese companies that have fallen under various kinds of American sanctions which occupy strong positions in mechanical engineering, information and communication technologies, and the aerospace industry. This increase in pressure from US sanctions began in 2020, and there is reason to expect that this will only grow. Sanctioned Chinese companies will not need to fear the costs of working with Russia.
Chinese partners, including those under sanctions, are capable of occupying places in many important segments of the Russian market formerly held by European and American companies. This is, first of all, in the sale and production of cars, consumer electronics, and industrial equipment in Russia. In many areas, the Chinese are quite capable of replacing Western suppliers – sometimes with a moderate loss of quality, and sometimes without.
An important area where the Chinese cannot be useful to us as of yet, where they are experiencing problems similar to ours, is the aviation industry. China, like Russia, depends on imported equipment. As in Russia, its own civil aviation programs (ARJ21, C919) are dependent on Western components and vulnerable to sanctions pressure that is already being exerted. Strengthening cooperation in replacing Western civil aircraft is an urgent issue.
Prospects for political relations
In order to somehow curb economic dependence on China, Russia will have to use the few tools at its disposal to diversify foreign trade. Nevertheless, it is obvious that, while it is facing an economic blockade by the West, Russia will have no choice but to increasingly expand political and military cooperation with Beijing.
The importance for China of Russia’s resource, technological, economic, and military potential amidst confrontation with the United States will allow Russia to avoid sinking into a clearly subordinate position in this partnership. But China will set the tone, nonetheless.
The real political goal will be to preserve the ability to restore Russia’s ‘strategic autonomy’ with a possible weakening of the embargo in the long term.
Moscow has not been involved in many disputes between Asian powers, and its policy towards Asia has been independent from China’s, except for that of generally containing the influence of the United States. Now Russia will have to protect its ties with independent players, in particular with India and Vietnam, while sacrificing its relations with US allies in the Indo-Pacific region, primarily Japan and Australia, for the sake of strengthening its partnership with China.
The negative trend that has recently emerged in Russian-Japanese relations will sharply intensify. Events like the joint patrol of Russian and Chinese fleets around Japan that took place at the end of 2021 will continue. There may be a question of coordinating the two countries’ positions in territorial disputes with Tokyo (Chinese claims to the Diaoyu /Senkaku Islands and the problem of Russia’s southern Kuril Islands).Read more Japan expands list of banned exports to Russia
As it moves to more actively promote its global initiatives and concepts of world order (Community of Common Destiny, relations between great powers in a new era, the Belt and Road initiative), China may be interested in attracting proactive support from major countries, and it is likely to receive such backing from Russia. Actually, this was already manifested in a joint Russian-Chinese declaration following Vladimir Putin’s visit to China on February 4, 2022.
China probably can’t radically ease the shock of the first months or year of the embargo for Russia – everything will depend on Russian economic policy here. In the long term, Russia’s partnership with China, along with its own industrial policy, will become the basis of a new model for Russian economic development. And, in some respects, a healthier foundation than its previous partnership with the EU. China is less attractive to the elite as a place to extract capital and then permanently relocate, and it has a more rational and predictable system for economic decision-making. Finally, the Chinese economy will grow faster than Europe’s in the foreseeable future, as well as its market demand.
China will replace the EU as our main trading partner, and a gradual reversal of trade flows to the East may become a factor in the development of Siberia and the Far East, right down to the relocation of part of the population there from the European part of the country. The negative impact of Western sanctions on Russian-Chinese cooperation will gradually weaken as China itself is drawn into the sanctions confrontation with the West. Another important factor in this will be trading in yuan.
With a rational policy, Russia can come out of the Western embargo significantly strengthened, with more diversified foreign trade and better developed export infrastructure in the Far East, as well as more balanced foreign relations that are more resistant to sanctions.
The price for this will be the undermining of the policy Moscow had been pursuing for many years to diversify its ties with Asia. Russia will be forced to act in line with China’s Asian policy not only to contain the United States, but also to confront US allies led by Japan. The negative impact of its partnership with China on relations with India and Vietnam can be minimized as long as these countries remain independent players, not unduly beholden to the United States, and, thus, do not become priority targets for Chinese pressure.
The question of forming a military alliance with Beijing will most likely not arise in the near future. But hypothetically, it is still impossible to exclude the emergence of a formal Russian-Chinese military alliance, or situational military interaction in the event of military crises in the Pacific. Or, for example, appeals to article 9 of the Russian-Chinese Treaty on Good Neighborliness, Friendship and Cooperation of 2001. This article stipulates that, in the case of a threat to one of the parties, urgent consultations are to be held to eliminate such a threat. This is quite a realistic prospect in the event of a crisis concerning Taiwan, when Beijing will be interested in Russia’s ‘nuclear umbrella’ to prevent American intervention.
By Vasily Kashin, Political Science PhD, Director of Centre for Comprehensive European and International Studies (CCEIS) of Russia’s Higher School of Economics National Research University
Official data showed yesterday that Sri Lanka’s tea crop suffered its lowest yield in 13 years, reducing output in the country’s main export commodity as the island grapples with its worst economic crisis in seven decades.
The Sri Lanka Tea Board figures showed that monthly tea crops dropped to 18.16 million kilos in February, down nearly 20% from the corresponding period last year.
Tea exports brought in 1.3 billion US dollars annually before the fertilizer ban.
