Features
Danger of disregarding Geopolitical Realities
Negotiating Agreements for Foreign Investments:
By Dr. S.W. Premaratne
Attorney-at-Law
Foreign Policy decision-maker, of a state, have to take into consideration the prevailing geopolitical environment of the international system, and of the region concerned, at a given time, when there is a foreign policy aspect involved in the decision that has to be taken regarding any issue Omission, or failure to give consideration to this aspect of the issue, can lead to disastrous consequences. Several examples from the recent political history of Sri Lanka can be given to illustrate this point.
Sri Lanka’s conduct of foreign policy, in the 1980s, is a clear example of the serious consequences of ignoring India’s concerns regarding Sri Lanka’s pro-West tilt in its foreign policy. Sri Lanka’s declared policy was non-alignment in maintaining relations with other states, specially the Big Powers in the West and the East. However, the J.R. Jayewardene government, that came to power, in 1977, sought to develop a closer relationship with the Western countries, led by the USA. The nature of the interactions between the diplomats of the USA and Sri Lanka, at the time, had given the impression to India that Sri Lanka was seeking the assistance of the USA for suppressing the Tamil militant movement in Sri Lank, fighting for the rights of the Tamil community. There were also reasons for India to suspect that there was an understanding between the Sri Lankan Government and the USA to allow the Trincomalee harbour to be used by the USA. It was this perception of India that Sri Lanka was following an anti-India foreign policy, endangering the security of India that motivated India to intervene militarily in the year 1987 to thwart the progress of the Vadamarachchi operation, aimed at militarily defeating the Tamil militant movement.
After aborting the progress of the Vadamarachchi operatio, the Indian government proceeded to compel the Sri Lankan Government to sign an Agreement – the Indo-Sri Lanka Accord of July 1987 – to ensure that Sri Lanka respected India’s security concerns and other interests when seeking assistance from outside Powers for Sri Lanka’s economic development or national security.
India’s concerns regarding China’s excessive involvement in Sri Lanka’s development projects
Sri Lanka’s political leaders and diplomats, whenever they get an opportunity, express their affection for their Big Brother, India, and express the need for further strengthening the friendship for the mutual benefit of both countries. India’s perception, however, is that, especially after the change of government in 2005, there is an evolving special relationship between Sri Lanka and China posing a serious threat to the national security of India.
Sri Lanka felt intensely isolated from the international community after adopting the Resolution A/HRC/46/L. Rev. 1 against Sri Lanka, at the UNHRC, in Geneva, in March, 2021, especially because India also decided to support the core-group indirectly by abstaining from voting.
The only consolation for Sri Lanka now is China’s expression of willingness to further strengthen its strategic relationship with Sri Lanka by extending further development assistance to Sri Lanka, within the framework of the Belt end Road Initiative. Subsequent to a telephone conversation between the two leaders, the President of China and the President of Sri Lanka, in a statement issued by the Chinese Embassy in Colombo, on March 30, 2021, it was stated that “China attaches great importance to the development of bilateral ties and stands ready to work with Sri Lanka to determine the strategic direction and achieve steady growth of the relationship. China stands ready to steadily push forward major projects, like the Colombo Port City and the Hambantota Port, and promote high quality Belt and Road Co-operation, providing robust impetus for Sri Lanka’s post pandemic economic recovery and sustainable development”. China projecting Sri Lanka as an intimate partner of the Belt and Road strategy indicates that Sri Lanka is distancing itself from the path of non-alignment and adopting an anti-Western and anti-India approach.
In the matter of obtaining foreign investments for development projects, Sri Lanka has failed to foresee the foreign policy implications of overreliance on China. The two massive development projects, initiated during the Mahinda Rajapaksa administration, which came to power in 2005, were the Hambantota sea port and the Port City Project in Colombo. The amount of money invested for these two projects, by China, was so massive that Sri Lanka happened to sign an agreement for permitting the management and control of the Hambantota Port by the state-controlled company of China, under a 99-year lease agreement. The Management and control of the Colombo Port City area also has been granted to the Chinese construction company, under a 99-year lease agreement. Not only India, but also the USA and other Western countries have expressed serious concern regarding the involvement of China in strategically significant massive development projects in Sri Lanka. India’s perception now is that Sri Lanka is an aircraft carrier of China, stationed in the Indian Ocean, close to India. Hambantota Port is viewed as another pearl in the string of pearls maintained for containing India by China.
India is also concerned over the lack of interest on the part of the Sri Lankan Government to go ahead with the development projects regarding which agreement had been reached with India, during the Sirisena-Wickremasinghe coalition government. In May, 2019, a Memorandum of Understanding was signed by the Sri Lanka Ports Authority (SLPA), Japan and India proposing the development of the East Container Terminal jointly, Sri Lanka and Ports Authority retaining 51 percent shares. However, the present Government deviated from that understanding and decided to nominate one Indian investor, Adani Group, disregarding Japan. But, the attempt of the Sri Lankan Government to involve the Indian Company in this project by offering 49 percent of the shares of the ECT was thwarted by the trade union action of the port workers, supported by an influential section of the Buddhist priests and also a section of the ruling alliance. The Sri Lankan government had no alternative but to respond to the demand of the trade unions by getting the Cabinet approval for developing the ECT only by the Colombo Port Authority, without involving India or Japan.
India has also expressed concern over the attitude of the Sri Lankan Government concerning the development and management of the Trincomalee oil tank farm. The lower farm has been managed jointly by the Ceylon Petroleum Corporation (CPC) and the Indian Oil Corporation (IOC) via Lanka IOC Private Limited. The 2003 tripartite agreement signed by the Sri Lankan Government, LIOC and the CPC covers the entire tank farm. India is now concerned about the excessive delay in granting the Sri Lankan Government’s approval for commencing the development of the Upper Tank Farm, comprising 84 tanks.
Another joint venture, regarding which Sri Lanka sought the involvement of India’s Petronet LNG Ltd. Company, and also a Japanese investor, was the proposed liquefied natural gas LNG terminal that was to be set up near Colombo. Although Indian and Japanese Investors had indicated their willingness to join this project, as partners, the Sri Lankan Government has not yet given its final approval for commencing the construction work.
India is also very much concerned over the lack of progress in the reconciliation process initiated after the end of the war. India’s concern in this regard was expressed very effectively and in very clear language in a statement made by the Indian Foreign Minister Jaishankar in the course of a media conference during his two-day visit to Sri Lanka in January, this year. In his statement the Indian Foreign Minister said: “As we promote peace and wellbeing in the region, India has been strongly committed to the unity stability and territorial integrity of Sri Lanka. Our support for the reconciliation process in Sri Lanka is long standing as indeed for an inclusive political outlook that encourages ethnic harmony. It is in Sri Lanka’s own interest that the expectations of the Tamil people for equality, justice, peace and dignity, within a united Sri Lanka, are fulfilled. That applies equally to the commitments made by the Sri Lankan Government on meaningful devolution, including the 13th Amendment to the Constitution”.
Sri Lanka should not consider that India’s interest and involvement in the post-war reconciliation process as a case of a foreign country intervening in the internal affairs of Sri Lanka illegally. India is guided by a mindset that there is a moral responsibility on her part to intervene and bring about a final settlement to the conflict in Sri Lanka.
Colombo Port City Economic Commission
Colombo Port City Economic Commission Bill which was challenged in the Supreme Court, purported to establish an Economic Commission for the administration of the Port City, built by a construction company of the Chinese Government, adjacent to the Colombo Port. This Bill seeks to grant extensive powers to an institution called the Colombo Port Economic Commission, whose members will be appointed by the President of Sri Lanka. According to the provisions in the Bill, the supervisory power of the Parliament of Sri Lanka has been excluded, both regarding the manner of exercising the powers granted by the proposed legislation to the Commission, and also regarding the selection of persons to be appointed as members of the Commission.
Moreover, regarding the activities that take place within the Colombo Port City area, some institutions of the Government of Sri Lanka are excluded from exercising their authority. Dr. Wijedasa Rajapaksa, in his written submissions submitted to the Supreme Court, in connection with the petition filed challenging the Bill, makes specific reference to the Customs Ordinance. He gives the warning that there may be importation of prohibited substances such as drugs, weapons, etc. He points out that in the event of any violation of International Treaties and Conventions, within the Port City area, it is not the Commission but the Sri Lankan Government that is responsible.
Conclusion
In view of the intense power struggle between China on the one hand and India and other partners of the Quad, led by the USA on the other hand, for dominance in the Indian Ocean area, the Parliament of Sri Lanka passing legislation for permitting such a high degree of autonomy to an administrative authority that can be controlled by the Chinese government will be considered by India as a serious threat to its security. This pro-China foreign policy orientation will also be an obstacle for Sri Lanka to promote friendly relations with democratic countries in the West determined to thwart Chinese domination in the Indian Ocean region.
by Dr Gotabhya Ranasinghe
Senior Consultant Cardiologist
National Hospital Sri Lanka
When we sought a meeting with Hon Dr. Ramesh Pathirana, Minister of Health, he graciously cleared his busy schedule to accommodate us. Renowned for his attentive listening and deep understanding, Minister Pathirana is dedicated to advancing the health sector. His openness and transparency exemplify the qualities of an exemplary politician and minister.
Dr. Palitha Mahipala, the current Health Secretary, demonstrates both commendable enthusiasm and unwavering support. This combination of attributes makes him a highly compatible colleague for the esteemed Minister of Health.
Our discussion centered on a project that has been in the works for the past 30 years, one that no other minister had managed to advance.
Minister Pathirana, however, recognized the project’s significance and its potential to revolutionize care for heart patients.
The project involves the construction of a state-of-the-art facility at the premises of the National Hospital Colombo. The project’s location within the premises of the National Hospital underscores its importance and relevance to the healthcare infrastructure of the nation.
This facility will include a cardiology building and a tertiary care center, equipped with the latest technology to handle and treat all types of heart-related conditions and surgeries.
Securing funding was a major milestone for this initiative. Minister Pathirana successfully obtained approval for a $40 billion loan from the Asian Development Bank. With the funding in place, the foundation stone is scheduled to be laid in September this year, and construction will begin in January 2025.
This project guarantees a consistent and uninterrupted supply of stents and related medications for heart patients. As a result, patients will have timely access to essential medical supplies during their treatment and recovery. By securing these critical resources, the project aims to enhance patient outcomes, minimize treatment delays, and maintain the highest standards of cardiac care.
Upon its fruition, this monumental building will serve as a beacon of hope and healing, symbolizing the unwavering dedication to improving patient outcomes and fostering a healthier society.We anticipate a future marked by significant progress and positive outcomes in Sri Lanka’s cardiovascular treatment landscape within the foreseeable timeframe.
by Fr. Emmanuel Fernando, OMI
Jesuit Fr. Aloysius Pieris (affectionately called Fr. Aloy) celebrated his 90th birthday on April 9, 2024 and I, as the editor of our Oblate Journal, THE MISSIONARY OBLATE had gone to press by that time. Immediately I decided to publish an article, appreciating the untiring selfless services he continues to offer for inter-Faith dialogue, the renewal of the Catholic Church, his concern for the poor and the suffering Sri Lankan masses and to me, the present writer.
It was in 1988, when I was appointed Director of the Oblate Scholastics at Ampitiya by the then Oblate Provincial Fr. Anselm Silva, that I came to know Fr. Aloy more closely. Knowing well his expertise in matters spiritual, theological, Indological and pastoral, and with the collaborative spirit of my companion-formators, our Oblate Scholastics were sent to Tulana, the Research and Encounter Centre, Kelaniya, of which he is the Founder-Director, for ‘exposure-programmes’ on matters spiritual, biblical, theological and pastoral. Some of these dimensions according to my view and that of my companion-formators, were not available at the National Seminary, Ampitiya.
Ever since that time, our Oblate formators/ accompaniers at the Oblate Scholasticate, Ampitiya , have continued to send our Oblate Scholastics to Tulana Centre for deepening their insights and convictions regarding matters needed to serve the people in today’s context. Fr. Aloy also had tried very enthusiastically with the Oblate team headed by Frs. Oswald Firth and Clement Waidyasekara to begin a Theologate, directed by the Religious Congregations in Sri Lanka, for the contextual formation/ accompaniment of their members. It should very well be a desired goal of the Leaders / Provincials of the Religious Congregations.
Besides being a formator/accompanier at the Oblate Scholasticate, I was entrusted also with the task of editing and publishing our Oblate journal, ‘The Missionary Oblate’. To maintain the quality of the journal I continue to depend on Fr. Aloy for his thought-provoking and stimulating articles on Biblical Spirituality, Biblical Theology and Ecclesiology. I am very grateful to him for his generous assistance. Of late, his writings on renewal of the Church, initiated by Pope St. John XX111 and continued by Pope Francis through the Synodal path, published in our Oblate journal, enable our readers to focus their attention also on the needed renewal in the Catholic Church in Sri Lanka. Fr. Aloy appreciated very much the Synodal path adopted by the Jesuit Pope Francis for the renewal of the Church, rooted very much on prayerful discernment. In my Religious and presbyteral life, Fr.Aloy continues to be my spiritual animator / guide and ongoing formator / acccompanier.
Fr. Aloysius Pieris, BA Hons (Lond), LPh (SHC, India), STL (PFT, Naples), PhD (SLU/VC), ThD (Tilburg), D.Ltt (KU), has been one of the eminent Asian theologians well recognized internationally and one who has lectured and held visiting chairs in many universities both in the West and in the East. Many members of Religious Congregations from Asian countries have benefited from his lectures and guidance in the East Asian Pastoral Institute (EAPI) in Manila, Philippines. He had been a Theologian consulted by the Federation of Asian Bishops’ Conferences for many years. During his professorship at the Gregorian University in Rome, he was called to be a member of a special group of advisers on other religions consulted by Pope Paul VI.
Fr. Aloy is the author of more than 30 books and well over 500 Research Papers. Some of his books and articles have been translated and published in several countries. Among those books, one can find the following: 1) The Genesis of an Asian Theology of Liberation (An Autobiographical Excursus on the Art of Theologising in Asia, 2) An Asian Theology of Liberation, 3) Providential Timeliness of Vatican 11 (a long-overdue halt to a scandalous millennium, 4) Give Vatican 11 a chance, 5) Leadership in the Church, 6) Relishing our faith in working for justice (Themes for study and discussion), 7) A Message meant mainly, not exclusively for Jesuits (Background information necessary for helping Francis renew the Church), 8) Lent in Lanka (Reflections and Resolutions, 9) Love meets wisdom (A Christian Experience of Buddhism, 10) Fire and Water 11) God’s Reign for God’s poor, 12) Our Unhiddden Agenda (How we Jesuits work, pray and form our men). He is also the Editor of two journals, Vagdevi, Journal of Religious Reflection and Dialogue, New Series.
Fr. Aloy has a BA in Pali and Sanskrit from the University of London and a Ph.D in Buddhist Philosophy from the University of Sri Lankan, Vidyodaya Campus. On Nov. 23, 2019, he was awarded the prestigious honorary Doctorate of Literature (D.Litt) by the Chancellor of the University of Kelaniya, the Most Venerable Welamitiyawe Dharmakirthi Sri Kusala Dhamma Thera.
Fr. Aloy continues to be a promoter of Gospel values and virtues. Justice as a constitutive dimension of love and social concern for the downtrodden masses are very much noted in his life and work. He had very much appreciated the commitment of the late Fr. Joseph (Joe) Fernando, the National Director of the Social and Economic Centre (SEDEC) for the poor.
In Sri Lanka, a few religious Congregations – the Good Shepherd Sisters, the Christian Brothers, the Marist Brothers and the Oblates – have invited him to animate their members especially during their Provincial Congresses, Chapters and International Conferences. The mainline Christian Churches also have sought his advice and followed his seminars. I, for one, regret very much, that the Sri Lankan authorities of the Catholic Church –today’s Hierarchy—- have not sought Fr.
Aloy’s expertise for the renewal of the Catholic Church in Sri Lanka and thus have not benefited from the immense store of wisdom and insight that he can offer to our local Church while the Sri Lankan bishops who governed the Catholic church in the immediate aftermath of the Second Vatican Council (Edmund Fernando OMI, Anthony de Saram, Leo Nanayakkara OSB, Frank Marcus Fernando, Paul Perera,) visited him and consulted him on many matters. Among the Tamil Bishops, Bishop Rayappu Joseph was keeping close contact with him and Bishop J. Deogupillai hosted him and his team visiting him after the horrible Black July massacre of Tamils.
Sri Lanka-Singapore Free Trade Agreement
By Gomi Senadhira
senadhiragomi@gmail.com
“You might tell fairy tales, but the progress of a country cannot be achieved through such narratives. A country cannot be developed by making false promises. The country moved backward because of the electoral promises made by political parties throughout time. We have witnessed that the ultimate result of this is the country becoming bankrupt. Unfortunately, many segments of the population have not come to realize this yet.” – President Ranil Wickremesinghe, 2024 Budget speech
Any Sri Lankan would agree with the above words of President Wickremesinghe on the false promises our politicians and officials make and the fairy tales they narrate which bankrupted this country. So, to understand this, let’s look at one such fairy tale with lots of false promises; Ranil Wickremesinghe’s greatest achievement in the area of international trade and investment promotion during the Yahapalana period, Sri Lanka-Singapore Free Trade Agreement (SLSFTA).
It is appropriate and timely to do it now as Finance Minister Wickremesinghe has just presented to parliament a bill on the National Policy on Economic Transformation which includes the establishment of an Office for International Trade and the Sri Lanka Institute of Economics and International Trade.
Was SLSFTA a “Cleverly negotiated Free Trade Agreement” as stated by the (former) Minister of Development Strategies and International Trade Malik Samarawickrama during the Parliamentary Debate on the SLSFTA in July 2018, or a colossal blunder covered up with lies, false promises, and fairy tales? After SLSFTA was signed there were a number of fairy tales published on this agreement by the Ministry of Development Strategies and International, Institute of Policy Studies, and others.
However, for this article, I would like to limit my comments to the speech by Minister Samarawickrama during the Parliamentary Debate, and the two most important areas in the agreement which were covered up with lies, fairy tales, and false promises, namely: revenue loss for Sri Lanka and Investment from Singapore. On the other important area, “Waste products dumping” I do not want to comment here as I have written extensively on the issue.
1. The revenue loss
During the Parliamentary Debate in July 2018, Minister Samarawickrama stated “…. let me reiterate that this FTA with Singapore has been very cleverly negotiated by us…. The liberalisation programme under this FTA has been carefully designed to have the least impact on domestic industry and revenue collection. We have included all revenue sensitive items in the negative list of items which will not be subject to removal of tariff. Therefore, 97.8% revenue from Customs duty is protected. Our tariff liberalisation will take place over a period of 12-15 years! In fact, the revenue earned through tariffs on goods imported from Singapore last year was Rs. 35 billion.
The revenue loss for over the next 15 years due to the FTA is only Rs. 733 million– which when annualised, on average, is just Rs. 51 million. That is just 0.14% per year! So anyone who claims the Singapore FTA causes revenue loss to the Government cannot do basic arithmetic! Mr. Speaker, in conclusion, I call on my fellow members of this House – don’t mislead the public with baseless criticism that is not grounded in facts. Don’t look at petty politics and use these issues for your own political survival.”
I was surprised to read the minister’s speech because an article published in January 2018 in “The Straits Times“, based on information released by the Singaporean Negotiators stated, “…. With the FTA, tariff savings for Singapore exports are estimated to hit $10 million annually“.
As the annual tariff savings (that is the revenue loss for Sri Lanka) calculated by the Singaporean Negotiators, Singaporean $ 10 million (Sri Lankan rupees 1,200 million in 2018) was way above the rupees’ 733 million revenue loss for 15 years estimated by the Sri Lankan negotiators, it was clear to any observer that one of the parties to the agreement had not done the basic arithmetic!
Six years later, according to a report published by “The Morning” newspaper, speaking at the Committee on Public Finance (COPF) on 7th May 2024, Mr Samarawickrama’s chief trade negotiator K.J. Weerasinghehad had admitted “…. that forecasted revenue loss for the Government of Sri Lanka through the Singapore FTA is Rs. 450 million in 2023 and Rs. 1.3 billion in 2024.”
If these numbers are correct, as tariff liberalisation under the SLSFTA has just started, we will pass Rs 2 billion very soon. Then, the question is how Sri Lanka’s trade negotiators made such a colossal blunder. Didn’t they do their basic arithmetic? If they didn’t know how to do basic arithmetic they should have at least done their basic readings. For example, the headline of the article published in The Straits Times in January 2018 was “Singapore, Sri Lanka sign FTA, annual savings of $10m expected”.
Anyway, as Sri Lanka’s chief negotiator reiterated at the COPF meeting that “…. since 99% of the tariffs in Singapore have zero rates of duty, Sri Lanka has agreed on 80% tariff liberalisation over a period of 15 years while expecting Singapore investments to address the imbalance in trade,” let’s turn towards investment.
Investment from Singapore
In July 2018, speaking during the Parliamentary Debate on the FTA this is what Minister Malik Samarawickrama stated on investment from Singapore, “Already, thanks to this FTA, in just the past two-and-a-half months since the agreement came into effect we have received a proposal from Singapore for investment amounting to $ 14.8 billion in an oil refinery for export of petroleum products. In addition, we have proposals for a steel manufacturing plant for exports ($ 1 billion investment), flour milling plant ($ 50 million), sugar refinery ($ 200 million). This adds up to more than $ 16.05 billion in the pipeline on these projects alone.
And all of these projects will create thousands of more jobs for our people. In principle approval has already been granted by the BOI and the investors are awaiting the release of land the environmental approvals to commence the project.
I request the Opposition and those with vested interests to change their narrow-minded thinking and join us to develop our country. We must always look at what is best for the whole community, not just the few who may oppose. We owe it to our people to courageously take decisions that will change their lives for the better.”
According to the media report I quoted earlier, speaking at the Committee on Public Finance (COPF) Chief Negotiator Weerasinghe has admitted that Sri Lanka was not happy with overall Singapore investments that have come in the past few years in return for the trade liberalisation under the Singapore-Sri Lanka Free Trade Agreement. He has added that between 2021 and 2023 the total investment from Singapore had been around $162 million!
What happened to those projects worth $16 billion negotiated, thanks to the SLSFTA, in just the two-and-a-half months after the agreement came into effect and approved by the BOI? I do not know about the steel manufacturing plant for exports ($ 1 billion investment), flour milling plant ($ 50 million) and sugar refinery ($ 200 million).
However, story of the multibillion-dollar investment in the Petroleum Refinery unfolded in a manner that would qualify it as the best fairy tale with false promises presented by our politicians and the officials, prior to 2019 elections.
Though many Sri Lankans got to know, through the media which repeatedly highlighted a plethora of issues surrounding the project and the questionable credentials of the Singaporean investor, the construction work on the Mirrijiwela Oil Refinery along with the cement factory began on the24th of March 2019 with a bang and Minister Ranil Wickremesinghe and his ministers along with the foreign and local dignitaries laid the foundation stones.
That was few months before the 2019 Presidential elections. Inaugurating the construction work Prime Minister Ranil Wickremesinghe said the projects will create thousands of job opportunities in the area and surrounding districts.
The oil refinery, which was to be built over 200 acres of land, with the capacity to refine 200,000 barrels of crude oil per day, was to generate US$7 billion of exports and create 1,500 direct and 3,000 indirect jobs. The construction of the refinery was to be completed in 44 months. Four years later, in August 2023 the Cabinet of Ministers approved the proposal presented by President Ranil Wickremesinghe to cancel the agreement with the investors of the refinery as the project has not been implemented! Can they explain to the country how much money was wasted to produce that fairy tale?
It is obvious that the President, ministers, and officials had made huge blunders and had deliberately misled the public and the parliament on the revenue loss and potential investment from SLSFTA with fairy tales and false promises.
As the president himself said, a country cannot be developed by making false promises or with fairy tales and these false promises and fairy tales had bankrupted the country. “Unfortunately, many segments of the population have not come to realize this yet”.
(The writer, a specialist and an activist on trade and development issues . )
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