Need for skilled diplomacy, not platform rhetoric

Last week we wrote about the emerging pitfalls in hurting, virtually antagonising an old donor friend in Japan in the economic development of this country. Further scenarios are playing out these days over the Colombo port involving India, and a grant from the United States.

Successive Governments in recent times have indulged in chest-beating nationalism on the one hand and slavishly yielding to foreign diplomatic soft power on the other, each blaming the other from public platforms, succeeding only in taking loans beyond the country’s means to repay and surrendering real estate as an end-result.

This is a textbook case of a ‘debt trap’, the country is facing. It is in this backdrop that there continues to be a ‘ hoo- ha’ about the Millennium Challenge Corporation (MCC) grant by the US -- currently the subject of heated election rhetoric.

The boot is now on the other foot. The ruling coalition that slammed what it called the “sell- out” of the country to Western imperialism is pussyfooting with what to do with it now that this hot potato is on its lap. Not that they’ve not been there before, but they have realised that there’s a world of difference between saying something in Opposition and doing something in Government.

In its previous avatar, the Rajapaksa Administration was not at all coy about the 2004 MCC which it inherited from the outgoing Government. So much so that even the JVP with whom it had a brief tryst wanted the grant extended for irrigation rehabilitation work though it is now howling in protest. It went to the extent of having preliminary discussions whether the agreement should be even signed at the White House.

It was only because the Rajapaksa Government then prosecuted the war against the LTTE correctly ignoring calls from the US to go slow, that the US -- not the Rajapaksa Government -- called off the negotiations citing human rights violations in Sri Lanka at the time of war.

When the US found a more congenial ally in power in Colombo (2015) and still wanted a foothold in Sri Lanka especially given Chinese inroads into this country by then, the MCC resurfaced on the table. Then, the Rajapaksa party used it to beat the nationalist drum and scuttle the process.

Unlike the two military pacts with the US, viz., ACSA ( Acquisition and Cross Servicing Agreement) which the Rajapaksa Government originally signed when relations were good, and SOFA (Status of Forces Agreement) which nearly passed under the previous Administration if not for media exposure, the MCC has come up for scrutiny and rightly so. A moot point being raised is why such intense public and political scrutiny has been absent before the Colombo and Hambantota harbour deals were executed.

The Government’s public posturing is to say they will never surrender Sri Lanka’s sovereignty. In more muted tones they concede they want to renegotiate the MCC grant meaning they haven’t rejected it -- yet. Clearly, the Government wants to avoid making a call before the upcoming elections. The US also has its own timetable and between the two, one adopting delaying tactics and the other impatient to get it signed, the bandwidth could drive the entire exercise over the cliff.

The grant is not particularly large -- USD 500 million or less. It pales into insignificance say compared to what Sri Lankan migrant workers remit annually. But with the country’s foreign exchange situation in such a perilous state, such a grant is not easy to ignore. Otherwise, this Government will not have to consider, as it seems to be doing, a USD One billion ‘ swap’ or ‘ repo’, whatever it is called, from the New York Federal Reserve to boost its flagging dollar liquidity. Having already asked India for such a facility and urging others for debt moratoriums to stabilise the dollar, this anti-imperialist rhetoric is not going to help. Communist China’s recent prosperity is purely due to that country doing business with the US and Europe.

Sri Lanka must skillfully renegotiate all foreign agreements -- MCC, SOFA, ACSA, Hambantota port and FTAs -- to safeguard its long-term interest in the midst of global power play in this neck of the woods. In the process, the country need not look a gift horse in the mouth on some outdated political philosophy of yesteryear long abandoned even by the so-called socialist bloc.