Shifting the goal-post on economic front, too

By N Sathiya Moorthy

If there is one thing that continues under the Rajapaksas’ regime after a gap of governance by their political rivals, it is their ability and consistency, if it’s any, to keep shifting the goal-posts, and at a global level. Earlier, under President Mahinda Rajapaksa, now Prime Minister, the international community (read: West) was peeved at what they claimed as such, especially on post-war commitments to ethnic reconciliation.

Today, under incumbent Gotabaya Rajapaksa, the trend has extended to cover bilateral commercial relations, this one though entered into by the predecessor regime. In modern international vocabulary, it is ‘protectionism’ by another name – or, in the name of ‘nationalism’ and ‘sovereignty’.

India is only the latest, along with Japan, to feel peeved at the Government going back on the trilateral Memorandum of Cooperation (MoC) for developing the Eastern Container Terminal (ECT), with the other two. Then, there was the light rail project with Japanese funding, again a product of an agreement entered into by the previous Government, which again the present incumbent has dumped.

If this Government uses the specious plea that they were not the ones to give a commitment of the kind, and were only reviewing all major agreements of the kind, initiated by the previous Government, it is not how international trade and investments are conducted. Just as successive Governments in Colombo are expected to honour global commitments made by the Sri Lankan State as an entity, independent of which party or leader is in power at a given point in the long history of a nation-State.

Before India and Japan, the US felt the same way, when the incumbent Government went back on the predecessor’s commitment on the MCC grant MoU, the very same way. Both the Rajapaksas, and also their Chinese principal should be wondering what if the predecessor Government had similarly gone back on President Mahinda’s earlier commitment on the debt-for-development funding at Hambantota, and asked Beijing to take a walk.

It is still possible for future Governments in Colombo to do the same thing, on other projects in which China has put in money, notwithstanding the Chinese presence in Hambantota for a 90-year-long period, no thanks to the debt-equity deal struck by the previous Government of President Maithripala Sirisena and Prime Minister Ranil Wickremesinghe.

It is thus ironical that the Sirisena-led rump SLFP should be among the parties now declaring that the ECT deal with India and Japan should be taken off the board. It is worse than anything to say that in Government I will initiate something, or acquiesce to whatever my Prime Minister initiates and has it initialled – but out of power, I will dishonour my own commitments from the past. Ironically, the SLFP, if not Sirisena personally is now a part of this Government, too, and yet…

Not the first time…

Incidentally, this is not the first time that the Sri Lankan State has gone back on its commitment, incidentally, one of them to India, earlier – though not of the commercial kind like the ECT. In 2006, the maiden Mahinda Government went back on the commitment made decades earlier by a rival political dispensation, on the North-East merger. In that case, the Government cited a Supreme Court decision on the merger, which flowed from an international commitment under the Indo-Sri Lanka Accord of 1987 – or, two decades earlier.

Of course, the Supreme Court’s decision was not on the Accord but on the specific provisions of the Provincial Councils Act, 1987, which formed a part of the 13th Amendment of the same year, which in turn had its genesis in the Accord. It is another matter that the Court had upheld the Accord, when agitated before it, soon after Parliament had cleared it. It is not about the political part of who was right and who was wrong on the Accord and the Amendment, but it was/is still all about the Sri Lankan State not keeping up a promise.

The same applies now to the ECT, too, in a different and more distinct way.  The real problems started during the run-up to the parliamentary polls in August last. When the labour unions wanted the ECT deal thrown into the sea, both President Gota and Prime Minister Mahinda had given the impression that they would back it, and back out of the previous commitment.

But soon, both of them turned around, and said that around 70 per cent of the transhipment business of Colombo Ports involved Indian goods, either to or from, the northern neighbour. President Gotabaya in particular conceded that India was justified in seeking a stake in the Colombo Port as its strategic interests were involved, thus. The reference was in particular to the ECT, and was not open to the Western Container Terminal (WCT), as if now being reportedly offered to the private sector promoter from India.

In fact, that was also the situation when India’s External Affairs Minister S Jaishankar came calling on a three-day official visit in the first week of January. It can now be safely argued that no commitment was made on taking the MoC on ECT forward and making it into a full-fledged agreement, also involving Japan. But it cannot be gainsaid thus, as oral observations on a commitment already made are only reiteration of what is already on record – and does not indicate a review of unilateral rescinding of the same. Which is what it has now become.

Sole investor or what…

The way the Government is going about externally-funded projects, it is becoming increasingly clear that the nation would be deprived of further funding from the global investor, both Governments and private entities. This is particularly when the incumbent leadership has been openly urging foreign entities to put their moneys here, on viable projects, to create jobs for Sri Lankans nearer home, incomes for their families, and revenues for the host-Government.

Two, the three sacked overseas-funded projects come at a time when the nation’s economy is in dire straits. Blame it on the Easter blasts, the Covid pandemic or mismanagement by the predecessor Government, or all or any two of them put together, the fact remains, it is now left to the present dispensation to pull the nation out of the economic quagmire, into which it is admittedly sinking.

The foreign investor is already put off by international rating agencies’, which do not see a bright future for early economic recovery for the nation to be able to provide him with the wherewithal to take back his investments and with substantive benefits for their stock-holders, and in good time. Now, if you were to go back on past commitments, and also make an institutional habit of it, then, nations and enterprises would stay away from Sri Lanka, and for good.

Is it the kind of message that this Government wants to send out?

All of it can boil down to only one thing. Granting that China still wants to put in more of its money, then that could well mean more of land-grabbing by China and land-surrender by Sri Lanka, whenever repayments become due. In international political terms, it translates as the nation handing over its territory to a foreign power — which is precisely what the cancellation of the ECT deal purportedly wants to revert, and for good.

The fact is that even without the Easter attack and Covid pandemic, the nation has been sinking in debts of its own making. Translated into simple English, the nation has been living beyond its means, independent of whoever was in power and whatever leader has done it. If anything, no leader or party in power could exonerate itself, himself or herself from such a situation.

Beginning with the JVP insurgencies, followed or accompanied by LTTE terrorism, which was much more horrendous in terms of the duration and the economic-hit that the nation took, successive Governments have found reasons, justified and otherwise, to defend their borrowing from their own people and from outside the country. If news reports of the time were to be believed, the previous Wickremesinghe Government was believed to have taken a huge credit from a private European entity. According to Wickremesinghe, this Government was asking individual Sri Lankans to put in $ 10 m to purchase Covid vaccines. At least, that claim does nsot seem to have been denied.

Protectionism or what

All told, by going back on the Sri Lankan State’s commitment to go forward with the MCC, light rain project and now the ECT may fall into an unmistakable pattern, especially of the kind identifiable with the Rajapaksas – of shifting the goal-posts, time and again. On a single deal as the ECT, over the six months or so, the Government leaders who matter have been talking in multiple voices, whether intended or otherwise, whether their voices differed on specifics, and at different times.

Already, the Sri Lankan trade reputation is at the bottom of the pit, after this Government imposed unilateral ban on imports of certain commodities. It could well mean ‘protectionism’ at one level under WTO and other international norms. At a more plausible level, it could well mean reneging on import commitments, with the result, those nations can also renege on export commitments for Sri Lanka. This can create more job losses and income losses for individuals and industry in the country.

Already, the EU has taken it up with Foreign Minister Dinesh Gunawardena. But that is only one side of the action. On the more actionable side is the fading memory of the older generation of Sri Lankans, who may come to recall instances of early Governments under the SLFP, which is the parent party of the Rajapaksas and their SLPP.

If SLPP founder S W R D Bandananaike as Prime Minister, who created the mess that is still now the ‘naitonal problem’ of ethnic orientation, by introducing ‘Sinhala Only’. His wife and successor, Sirimavo, messed up the economy enough, by taking the ‘socialist model’ to the ends of democratic political existence, when raids, arrests and the State reneging on commitments of post-Independence Sri Lanka became the order of the day.

Are we back there?

(The writer is Distinguished Fellow Head-Chennai Initiative, Observer Research Foundation, the multi-disciplinary Indian public-policy think-tank, headquartered in New Delhi. email: