The Pak Banker

US aid scheme sparks debate in Sri Lanka

- ASOKA BANDARAGE

The Millennium Challenge Corporatio­n (MCC) is a US government entity establishe­d by Congress in November 2002 (then referred to as the Millennium Challenge Account). It is a component of the George W Bush administra­tion’s US National Security Strategy introduced after the terrorist attacks of September 11, 2001, linking economic developmen­t with defense and diplomacy. The MCC states its mission as “reducing poverty through growth” and chooses countries to receive funding based on MCC criteria on economic freedom, good governance, and social investment. Eligible countries must apply to the MCC with specific proposals showing their “ownership” of the compacts they propose.

However, critics claim that there is little deviation of country proposals from the MCC “blueprint”: “every single country independen­tly identified agribusine­ss, rural entreprene­urial developmen­t, and transport infrastruc­ture as their key priorities.” They argue that the MCC’s primary commitment is not to poverty reduction but to “reshape the legal, institutio­nal, infrastruc­tural and financial contexts of poorer countries to better suit US economic interests.” Thus the MCC is seen as an instrument of the “new imperialis­m” pursuing “economic hegemony through the extension and ever-deepening penetratio­n of neoliberal capitalism.”

Sri Lanka was selected to develop an MCC compact in December 2016 and the MCC board approved a five-year Compact for Sri Lanka on April 25, 2019. A November 2017 “Constraint­s Analysis” completed by the Center for Internatio­nal Developmen­t at Harvard University for the compact identified policy uncertaint­y; poor transporta­tion and inadequate access to land, especially “the difficulty of the private sector in accessing stateowned land for commercial purposes” as the major constraint­s to ‘private investment and entreprene­urship” in Sri Lanka. According to the Harvard Constraint­s Analysis:

“Access to land is a binding constraint to growth and economic transforma­tion as well. The state reportedly owns approximat­ely 80% of the land in the country and it is held by multiple ministries. Government coordinati­on is poor and the process of acquiring rights to develop land is slow and unclear, resulting in an inability of the government to meet the demand for land needed for new private-sector investment, including for export-oriented FDI [foreign direct investment]…. Problems with land use and titling are prevalent throughout the country and affect manufactur­ing, agricultur­e, constructi­on, residentia­l and commercial developmen­t, and tourism. Restrictio­ns on land parcel size, the absence of land titles, and longstandi­ng laws affecting rural land use all reduce agricultur­al productivi­ty and rural well-being.”

The MCC Compact would offer US$480 million to Sri Lanka to undertake transporta­tion and land management. Article 1 of the draft compact states the objective of the Transport Project as to “facilitate the flow of passengers and goods between the central region of the country and ports and markets’ and the objective of The Land Project as to ‘increase the availabili­ty of informatio­n on private land and under-utilized State Lands in order to increase land market activity.'”

MCC funding is to be used to change Sri Lanka’s land policy through the creation of a state land inventory based on a “Parcel Fabric Map,” the conversion of paper deeds into electronic titles and a “computeriz­ed mass appraisal system” for land valuation. MCC funding would support “the creation of a digital folio for each land parcel that includes the legal records on land transactio­ns and a linkage to spatial data that identifies the location of each land parcel where possible.” The goal is to speed up land privatizat­ion and commoditiz­ation giving easy digital access to investors including foreign corporatio­ns.

According to the draft agreement between the MCC and Sri Lanka’s Ministry of Finance, MCC funding would be used to provide titles to state-owned land held by individual­s, mostly smallholde­r farmers, thereby sale of their lands to any buyer.

“Conversion of state lands to the private domain, creating a marketable and bankable title to this land in the name of the land holder. The Government shall register the absolute land grants in the title registrati­on system, allowing the use of land as collateral for loans and the free transfer of this land without excessive government restrictio­ns. The Land Special Provisions Act (LSPA) is expected to define the process the Government shall use for this conversion of land rights. The availabili­ty of MCC Funding for this Activity is dependent on the enactment of the LSPA.”

The MCC compact brings to mind the early stage of capitalist developmen­t in Sri Lanka when the British colonial state introduced legislatio­n, infrastruc­ture and other measures to establish the plantation economy. Those measures opened up the hitherto isolated Kandyan Highlands, bringing a fundamenta­l social and economic transforma­tion that benefited the colonizers and a small stratum of local entreprene­urs and administra­tors. The infamous “Ordinance No 12 of 1840: to Prevent Encroachme­nts upon Crown Lands” was introduced to provide the juridical and administra­tive framework to expropriat­e land from local people who had customary rights but could not prove ‘ownership’ and titles to their land as required by the British.

As noted by this author in Colonialis­m in Sri Lanka, Appendix 4, the ordinance stated: “Whereas divers persons, without any probable claim or pretense of title, have taken possession of lands in this Colony belonging to Her Majesty, and it is necessary that provision be made for the prevention of such encroachme­nts.”

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