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The Millennium Challenge Grant and the Government’s political calculations

3 March 2020 12:10 am - 1     - {{hitsCtrl.values.hits}}



The government last week announced that it would not be signing the Millennium Challenge Cooperation (MCC) Agreement, a US $ 480 million development grant from America that was negotiated by its predecessors of Yahapalanaya. The government’s decision might make a cynical political logic as electoral calculations loom over everything else and the country is set to go for an all- important parliamentary election in the latter part of April. (Parliament was expected to be dissolved last night as it completed 4 and half years, the D day after which that the president could call fresh elections)   

The whole spectacle of the last week’s announcement was intended to the gallery. Two government ministers, Keheliya Rambukwella, the government spokesman and Bandula Gunawardene, Cabinet spokesman offered two versions on the government’s position.   

Rambukwella said the Government ‘has taken a final decision not to sign the Millennium Challenge Corporation (MCC) agreement with the USA’. Meanwhile, Bandula Gunawardene said that the Cabinet of Ministers has decided to suspend the signing of the Millennium Challenge Corporation (MCC) agreement, but open to re-negotiation.   

The MCC compact is a US $ 480 million grant that is to be disbursed over five years in two main projects: A transport project to improve the efficiency in the Colombo Metropolitan Region and a land project to digitalise the land registry and increase the availability of information on private and public land.   


The transport project envisages introducing an advanced traffic management system, Bus  transport system modernisation and upgrade of 131 km in the Central Ring  Road


The transport project which is allocated the lion’s share of the fund envisages introducing an advanced traffic management system, Bus transport system modernisation and upgrade of 131 km in the Central Ring Road.   

The land project will introduce a parcel fabric map and state land inventory, digitalise deeds registry, improve land valuation system, convert state land grants into freehold land and improve the land policy and local governance.   

None of the above poses a security concern. Rather they provide a substantial improvement to two areas that are rotten to the core. A 2017 research by Moratuwa University found that traffic congestion has cost the country around 1.5% of GDP, which is approximately US $ 1.3 billion a year as a measure of $ 88.9 billion GDP of 2018. To make matters worse, the number of commuters using public transport has declined by 25 per cent from 2008 to 2016.   

Also, Sri Lanka’s land registration is one of the most inefficient, tedious and kickback prone- one reason why some quarters of lawyers who had been milking the cow for so long might now want to fight an imaginary international threat.   

President Gotabaya Rajapaksa earlier appointed a committee to study the MCC- It initially felt like a distraction from all the fireworks of his supporters who during the run-up to the presidential election went to town against the proposed agreement.   

The presidential committee headed by Colombo University Professor Lalithsiri Gunaruwan had former Secretary to the Ministry of Transport D.S. Jayaweera, President’s Counsel Nihal Jayawardena and Architect Nalaka Jayaweera as other members.

By the expertise of the members, which is transport and assorted fields, it appeared, if there is anything that they would examine, it would be the technicalities of the two projects. Having a second review from a group who might be more trustworthy to the government is not altogether an anomaly.   

Now the government says, the transport experts in the special presidential committee has discovered clauses that “threaten national security and social and economic welfare of Sri Lanka.”   

In that sense, it does not appear as out of place, when transport experts decide on national security, even imaginary ones.   

Foreign policy was once considered as a matter of itself, above all other considerations of the state. This notion harks back to the influential Prussian theoretician, Leopold von Ranke, who argued for the primacy of foreign policy, i.e., the strict subordination of the domestic affairs of a state to its foreign policy needs since the survival of the state depends on its position in the international system. Bismarck, who shared the same sentiments quipped, “foreign affairs are a purpose of themselves, I rate them higher than all other matters.”   
(This conceptual foundation that considers the external behaviour of the state as being guided by the external pressure of the international system is the essence of the dominant theory of international politics, realism)   However, in practice though, often ( except in an extreme security vulnerability of the state) foreign policy is a political football to be pushed around for domestic political considerations.   

That is all the more truer in small states which neither faces a major external threat nor has a purpose in the international system. Sri Lanka is one such country.   

In that placid external environment, leaders have often used foreign policy to prop up their image or to mobilise local masses. What is interesting though is not only did political leaders have regularly taken foreign policy decisions against the interest of the country, they have successfully defended their decisions and impressed upon the average folks as if they were deciding in the interest of the country.   

In retrospect, some of these decisions, such as Sirima Bandaranaike’s rhetorical Non-Aligned policy or JR’s picking a fight with Indira Gandhi - only to be shown his place by her son Rajiv - are ego-fueled demagoguery. But, there were hordes of suckers, including the so-called intelligentsia, who defended such buffoonery.   

This latest one may not make headlines, but its logic is no different. The simplest explanation for the supposed rejection of the MCC agreement is that the government expects it to pay off in the election. Its acolytes earlier argued that pilgrims would have to obtain a visa from America to visit Sigiriya as a result of ‘restrictions’ placed by the MCC. That is nonsense. But, there were enough takers, including some who take pride in their ignorance.   

As the government would build on that success, expect a lot more fear-mongering against the West and dog-whistling against the minorities ahead of the elections.   

What makes the last week’s announcement even more disappointing and even an unwarranted cost is that the outcome of the general election itself is a foregone conclusion. Pohottuwa (SLPP) will prevail over the disorganised Opposition. Why would the Rajapaksas want to throw away half a billion dollars of a grant, when they can win the election, and make a claim for development that it would usher in ( though, there might be less of room for kickbacks due to stricter auditing by the Americans).  

Probably some in its ranks think it is worth the cost if it paves the way for a two-third majority in parliament. The precursor to revoke the 19th Amendment and bring the independent courts and commissions under the thumb of the president.   

Most observers believe that after the election, the government would take a U-turn and if needed, after a superficial second review would sign the MCC.   

The Government isn’t foolish to forego $ 480 mn grant, tweets Former deputy governor of Central Bank W.A. Wijewardene.   

However make no mistake, as much as the government is not foolish, it could well be callously opportunistic. If it finds being cocky with America would divert attention from domestic problems and facilitate its effort to concentrate power at the expense of the independent institutions, it would stick to the guns.   

Follow @Ranga Jayasuriya on twitter   

  Comments - 1

  • dickie bird Tuesday, 03 March 2020 03:40 PM

    Afterall what is $ 480m ? Its just peanuts.

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