The controversial Millennium Challenge Corporation (MCC) Compact, which caused a huge uproar particularly prior to the recently concluded presidential election, would be soon launched in Sri Lanka, according to a top US State Department official.
“We have another MCC that we’re launching soon in Sri Lanka that will undertake the same kind of nitty-gritty reforms in land registration and motorway harmonisation that will, we determine, you help unlock economic development,” the US Principal Deputy Assistant Secretary of State for South and Central Asia, Alice Wells, said in Washington DC last week.
The previous Cabinet of ministers of the Sirisena-Wickremesinghe government had given approval to the then Finance Minister Mangala Samaraweera to sign the Compact with MCC.
However, the newly appointed SME and Enterprise Development, Industry and Logistics Minister Wimal Weerawansa this week affirmed that the MCC Compact wouldn’t be signed under the new government headed by President Gotabaya Rajapaksa.
Wells in her speech highlighted that Sri Lanka was one of the victims of China’s One Belt and Road Initiative, having forced to cede its sovereignty over a key asset (Hambantota Port).
“In Sri Lanka, even though multiple feasibility studies repeatedly rejected the commercial viability of a large scale port facility at Hambantota, Beijing went ahead and loaned the government over one billion dollars for the project.
The result—Sri Lanka struggled to service those loans and eventually handed over a 99-year lease on the port to Beijing in return for debt relief.
Sri Lanka’s not the only country that has ceded, effectively ceded sovereignty over a key asset. You’ve had reports out of Tajikistan overland swaps in order to get out of excessive debt. And this is a real issue,” she elaborated.
Despite the criticism of Western multilateral organisations such as the World Bank and the International Monetary Fund, Wells pointed out that these organisations have never asked countries to compromise their national sovereignty as China has done. “All I can say is that however much you might dislike the World Bank or IMF, they don’t take 99-year leases or strip away the sovereignty of countries that they engage in. So let’s be very clear-eyed about the terms that multilaterals bring to the table versus the terms that are being imposed under some of these programmes,” she said.
She went on to note that several other Chinese-financed projects remain vacant and unused in Sri Lanka, including a US$104 million telecommunication tower and a US$209 million international airport in the south with zero regularly-scheduled flights.
She emphasised that the United States shares India’s concerns in countries ceding sovereignty over the projects financed under China’s One Belt One Road Initiative.
“I think India has been crystal clear from the outset that they saw the geopolitical nature of elements of the One Belt One Road. We share India’s concerns over projects that don’t have an economic basis and that lead to countries ceding sovereignty,” she added.
Wells urged China to be transparent while committing to international standards in lending to developing nations such as Sri Lanka.
“Why not adopt Paris Club standards? Why not increase your concessional loans as well as incorporate grants as part of your development assistance to lesser developed countries? Why not abide by the infrastructure principles at the G20 of which China obviously is a member, has adopted? Why not be transparent? Report your official lending to other countries.
Right now neither the IMF nor any other multilateral organisation truly know the indebtedness of countries who are involved in these One Belt One Road projects, and that creates its own risks and can have its own knock-on effect.
So the simple request is to be a global good citizen. Be transparent. Adopt the high standards that G20 nations should be promulgated,” she said.