Part I: Nexus between MCC and National Physical Plan
In November last year shortly after Sri Lanka’s presidential election US Principal Deputy Assistant Secretary Alice Wells in a speech at a Washington think tank mentioned that the US would be soon launching the controversial Millennium Challenge Compact (MCC) in Sri Lanka.
This was news to Sri Lankans who, during the run-up to the election had demonstrated their opposition to the project, approved by the cabinet just two weeks ahead of election day. As a result of the widespread agitation the two front runners in the campaign were compelled to pledge they would revoke any such deal if signed, and ensure proper debate on it.
“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 harmonization that will, we determine, you help unlock economic development,” Wells said, during a November 21 talk at the Woodrow Wilson Centre, where she critiqued the US$60 billion China Pakistan Economic Corridor (CPEC), a flagship project in China’s Belt & Road Initiative. Can the long-time diplomat’s remark be dismissed as a ‘mistake?’ What circumstances led her to refer to the launching of the MCC as if it was a foregone conclusion?
A healthy public skepticism has resulted from the protests over the MCC and the debate that followed, showing how its conditions could seriously undermine Sri Lanka’s sovereignty. For example, a private company called the ‘Millennium Challenge Account’ (‘MCA Sri Lanka’) would have control of all MCC monies and management of lands coming under the project. Analysts say its powers would override those of the government. The astonishing degree of power held by this ‘independent and autonomous’ private company is revealed in Annex 1 to the MCC draft on p34:
“MCA – Sri Lanka shall be the Government’s primary agent responsible for exercising the Government’s rights and obligations to oversee, manage and implement the Programme and Projects.
MCA-Sri Lanka shall have operational and legal independence and full decision-making autonomy, including, inter alia, the ability, without consultation with, or the consent or approval of any other party to
(i) enter into contracts in its own name,
(ii) sue and be sued,
(iii) establish an account with a financial institution in its own name and hold MCC funding, in that account,
(iv)expend MCC funding, (
v) engage contractors, consultants and/ or grantees, including without limitation, procurement and fiscal agents and
(vi) competitively engage one or more auditors to conduct audits of its accounts.”
Dr Palitha Kohona, Sri Lanka’s one-time ambassador to the UN in New York, who headed the UN Treaty Section from 1995 to 2005, said the project is to be governed by international law and not Sri Lankan law. “Some of the provisions of the MCC covenant as presented to us are not, in my view, consistent with our interests, we have very little safeguards incorporated in it” he told the Sunday Observer in an interview.
While MCC’s inherent dangers got aired to some extent as a result of the public outcry ahead of the election, this has not been the case with the National Physical Plan 2050 (NPP). The updated NPP covering the period 2018 to 2050 is drawn up by Sri Lanka’s National Physical Planning Department which comes under the Ministry of Megapolis and Western Development. Two pictures reproduced on this page show a map prepared by the National Physical Planning Department titled ‘The proposed spatial structure 2050.’
These images would show that there is a clear nexus between the MCC and the NPP. One image is from June 12, 2019 Gazette on the National Physical Plan (page 12A) and the other is from a September 25, 2018 MCC document titled ‘MCC Land Project in Sri Lanka’ (page 3, titled ‘Map of geographical areas of focus for MCC land investment’). BOTH DOCUMENTS CARRY THE SAME MAP.
"The assertion that the NPP can bypass parliament would surely raise eyebrows considering that public finance comes under the control of parliament according to the constitution"
MCC’s advocates had maintained that there is no such thing as a ‘Colombo–Trincomalee Economic Corridor’ in the MCC project. But page 3 of the MCC document showing the map says “7 districts along the Colombo-Trincomalee Economic Corridor are proposed for geographically based land investment activities.”
The Colombo-Trincomalee Economic Corridor is also the 
centrepiece of the NPP 2050. The ‘Proposed Spatial Structure 2050’ map shows an electric railway line running through this East-West corridor, connecting the strategically located ports of Trincomalee and Colombo.
The NPP was quietly gazetted on June 12 last year. If public discussion on the MCC was lacking, it was virtually non-existent with regard to the NPP.
Government officials have kept mum on the nexus between the MCC and the NPP. The MCC draft agreement was released by the then Finance Minister Mangala Samaraweera only after protests against it peaked ahead of the elections, with a monk having launched a death fast at Independence Square.
The NPP, though it was gazetted on June 12, 2019 was uploaded on the National Physical Planning Department’s website only five months later on November 6, 2019, just 10 days ahead of the elections.
Lack of transparency is one of the most worrying aspects of both the MCC and the NPP. According to Director General of the National Physical Planning Department Dr Jagath Munasinghe the NPP does not need to be debated in parliament. It is a ‘policy document,’ not a Bill, and therefore it only needs to be gazetted he said, in a phone interview last May.
The NPP involves an array of infrastructure projects including roads, railways, industrial parks, tourism zones, urban centres etc. spreading across several districts. The NPPD’s Director General is also on record saying these would be implemented “through various government agencies,” and for the infrastructure projects “each agency will have to find its own financing, mainly supported by the Treasury.” (Daily Mirror, May 22, 2018).
The assertion that the NPP can bypass parliament would surely raise eyebrows considering that public finance comes under the control of parliament according to the constitution. Apart from questions over financing, there also seems to be little public awareness of the radical social and economic transformations anticipated in the Plan itself, involving new patterns of land use and mass movements of population. The implementation of these proposals would raise potential environmental concerns as well as fundamental rights issues, especially if they involve an element of coercion. “Head of the State Level intervention to enforce the National Physical Planning Policy” is the first among a list of measures ‘suggested’ for successful implementation, in an NPP document titled ‘Preparation of National Physical Plan.’
The nexus between the MCC and the NPP raises some critical questions.
Was Alice Wells’ statement on November 21 at the Woodrow Wilson Centre - that an MCC would ‘soon be launched’ in Sri Lanka - stem from the green light in the form of the NPP gazette uploaded online on November 6 - or on some other assurance? Has the transformation envisaged in the NPP already been set in motion by the National Physical Planning Department – a process that would not require signing of the MCC? Is the NPP in fact nothing less than the MCC in disguise – with Sri Lanka doing the heavy lifting, putting infrastructure in place, at its own expense, and in violation of its own constitution?
The newly elected government suspended the MCC and appointed a four-member committee to review the agreement. Since then a state minister is reported saying the government ‘never said it would never sign’ the MCC but that it would consider signing if the committee suggested amendments that would ‘safeguard national security and the economy.’ What’s already known about the MCC however shows that the project takes control away from the state on matters vital to the national interest, and that like the proverbial curate’s egg, it cannot be ‘partly bad and partly good’ but would have to be rejected in its entirety if sovereignty is to be safeguarded.
To be continued...
