Sri Lanka should engage with China in ways that protect its sovereignty

- ALAINA B. TEPLITZ -

A 2019 World Bank study concluded that more than 60 percent of People Republic of China (Prc)-funded Belt and Road Initiative (BRI) projects are allocated to Chinese companies and stressed that tender processes are opaque. The World Bank called for open and transparent public procurement to increase the likelihood that BRI projects are allocated to the firms best placed to implement them

Sri Lankan think tank Verité Research analyzed 50 high value loans from the PRC to Sri Lanka. All but one loan (where data was available) were 100 percent “tied” – meaning the loan terms dictated that contracts and tenders be awarded to Chinese contractors, limiting the ability of Sri Lankan and global firms to compete for these projects. Fair competition would lower prices and ensure better quality

Will encourage if China relationship with

Sri Lanka transparent, mutually beneficial Sri Lanka must not be vulnerable in its relationships

United States will not dictate the quality of Sri Lanka’s partnerships

Shame MCC agreement became so politicized

2019 World Bank study concluded 60% of China funded Belt and Road Initiative projects are allocated to Chinese companies and tender processes are opaque

India’s assistance during MT New Diamond fire great example of regional partnership

The United States has had a strong but often shaky relationship with Sri Lanka. The relationship was on rocky ground when Mahinda Rajapaksa was President and seems to be facing a similar situation now with Gotabaya Rajapaksa heading the government. In an interview with Daily Mirror, U.S. Ambassador to Sri Lanka Alaina B. Teplitz speaks about US concerns on China’s role in Sri Lanka, the controversial MCC agreement and the state of US bilateral ties with Sri Lanka.

QThe US relationship with Sri Lanka seems to be on shaky ground after the current administration took office in Sri Lanka in November. But we see efforts being made by Washington to try and bring some sort of stability in that relationship. Can you tell us where things stand now?

There are always periods of adjustments when administrations change but the important thing is to look at the overall arc of the relationship – and in that framework the partnership between our two countries remains strong and resilient.

Our bilateral trade relationship, which is Sri Lanka’s largest bilateral trade relationship by a significant margin, amounts to about three percent of Sri Lanka’s GDP and creates meaningful jobs for Sri Lankans. By our estimates, Sri Lankan exporters to the US provide direct employment for at least 180,000 people here.

That’s in addition to the more than US$2 billion of grant assistance to Sri Lanka the American people have provided over the last several decades. We’ve helped eliminate malaria, feed school children, build bridges, and repair irrigation systems. Right now, the United States is funding a dairy project that is helping more than 15,000 farmers increase milk production by 94% by 2022. We’re providing career guidance for talented youth around the country in cooperation with technical and vocational schools. And in times of disasters like the 2004 tsunami, landslides, and floods, we have played a key role in humanitarian assistance. we’ve donated two cutters to the Sri Lankan Navy that have helped secure the country’s sovereignty by increasing Sri Lanka’s capability to fight drug smuggling and to protect Sri Lanka’s marine life after incidents such as the MT New Diamond fire.

Every partnership has room for growth and discussion, and we look forward to engaging with the current administration on all aspects of the relationship. In his address to UNGA, President Rajapaksa highlighted the responsibility of government and international organizations to create sustainable solutions that meet the real needs of people. The United States will continue to support democracies globally as they fulfil the economic and social needs of their citizens in a way that respects the values enshrined in the UN declarations.

Q One of the main tools used by some groups in Sri Lanka to target the US has been the proposed MCC agreement. Is the MCC still on the table for

Sri Lanka to consider?

The US Government offered the MCC grant after receiving a request from the Government of Sri Lanka. Our goal in responding to this request is to alleviate poverty and to boost inclusive economic growth, both goals integral to the founding charter of the MCC, which is a US Government development agency.

The decision on whether to proceed with the proposed MCC development grant programme rests with the Government of Sri Lanka. It is a shame that the agreement became so politicized given the non-political, data-driven, consultative framework in which the development projects were conceived. The proposed $480 million programme – a grant, not a loan – would directly benefit more than 11 million Sri Lankans by reducing traffic, facilitating the transit of agricultural products to markets, and providing safer public transport options. These are issues that appear almost daily in the newspapers as ones of compelling interest to Sri Lankans – which is not a surprise given that the programme was designed around economic problems identified by Sri Lankans through research and a collaborative economic constraints analysis.

Q Sri Lanka is placed at a very strategic location in South Asia. How important a partner is Sri Lanka to countries like the US to ensure not just the security of the Asian region but even the US?

Sri Lanka has an important role to play in the region, both as South Asia’s oldest democracy and as a sovereign leader in maritime security. We’ve partnered with the Sri Lankan government to ensure this country has the tools and training needed to secure its waters and airspace in protection of its sovereignty. An example of our support for Sri Lanka’s security is the gift of two ships to the Sri Lankan Navy. One of them, the SLN Gajabahu, is now the largest ship in Sri Lanka’s fleet. The SLN Samudura is the other. Both ships have advanced communications, weapons and other operating systems – all of which are operated by their Sri Lankan Captains and crews. Some countries tie these donations to the inclusion of their own “technical advisors,” who are embedded. We don’t do that. We believe in the Sri Lankan Navy’s ability and skill – and the MT Diamond incident clearly shows our trust is well-placed, as demonstrated by the employment of US provided Beechcraft fixed-wing aircraft and the SLN Samudura.

The United States is a Pacific nation and a strong Indo-pacific partner, so the security and openness of the region is not just a passive interest of ours, but a very real concern with direct, concrete impact on our own security and economic stability. We’re very pleased to be able to work with Sri Lanka to protect this mutual interest.

Q China’s strong presence in Sri Lanka has been an issue which has been discussed over the past few years. What are US concerns on China in

Sri Lanka?

Sri Lanka has had a long relationship with China. The US believes that partnerships between countries should be open, transparent, and mutually beneficial – and if this is what Sri Lanka’s relationship with China embodies, then we encourage it.

Our concern is that Sri Lanka not be vulnerable in its relationships, and that this country is able to negotiate the best deals supporting sustainable, environmentally sensitive, and affordable results. President Rajapaksa has endorsed the SDGS and expressed a determination to eliminate poverty, ensure equal opportunity, and support local entrepreneurship. We believe in development partnerships that adhere to the four principles of the Busan Partnership for Effective Development Cooperation, to which the United States, Sri Lanka, and China are signatories: 1) Country ownership over the development process; 2) A focus on results; 3) Inclusive development partnerships; and 4) Transparency and mutual accountability.

A 2019 World Bank study concluded that more than 60% of People’s Republic of China (Prc)-funded Belt and Road Initiative (BRI) projects are allocated to Chinese companies and stressed that tender processes are opaque. The World Bank called for open and transparent public procurement to increase the likelihood that BRI projects are allocated to the firms best placed to implement them. Sri Lankan think tank Verité Research analyzed 50 high value loans from the PRC to Sri Lanka. All but one loan (where data was available) were 100% “tied” – meaning the loan terms dictated that contracts and tenders be awarded to Chinese contractors, limiting the ability of Sri Lankan and global firms to compete for these projects. Fair competition would lower prices and ensure better quality.

Sri Lanka is a sovereign nation and it is not up to the United States to dictate the quality of Sri Lanka’s partnerships, but we do believe it is better for countries if transactions are transparent and cost-effective, and if they create jobs and other material benefits for local people. It’s important that global standards of free trade and a fair investment climate are in place for the benefit of Sri Lankan and US businesses.

Q The Chinese often claim that they have no hidden agenda in Sri Lanka. Does the US have evidence to say otherwise?

I’ll focus on the transparency of our own development agreements. For example, the United State Agency for International Development (USAID) has been providing grant assistance through agreements jointly developed with the Sri Lankan government since 1956. Sri Lankans know USAID and know what USAID provides. Many recall USAID having provided the biscuits they ate at school or remember projects supported by the American people that provided help with reconstruction work after the devastating 2004 tsunami. Others may have read just recently about a newly-launched USAID project, Srilanka@100, that will support the development of medium-sized Sri Lankan firms to advance inclusive growth. The point is, we want people to know what we are doing in Sri Lanka. We welcome transparency and openness and make information publicly available for all of our programming. We want Sri Lankans to know how the American people are helping to advance inclusive, democratic growth in the country, because we stand as a long-term and committed partner and a friend to Sri Lanka. The grantfunded projects we support are just some of the ways in which we demonstrate our friendship and partnership.

In terms of how some PRC development projects have transitioned, their evolution in Djibouti and Cambodia may be worth examining. People should also look towards the PRC’S actions in the South China Sea, which has undermined the sovereignty of the region’s countries and endangered the livelihoods of those dependent on fishing.

The US stands with Sri Lanka and other nations in asserting their sovereignty. In August, Secretary Mike Pompeo announced a US position rejecting Beijing’s unlawful maritime claims in the South China Sea. In doing so, we made clear our support for Southeast Asian allies and partners to protect their sovereign rights to offshore resources, consistent with their rights and obligations under international law.

Since 2013, the PRC has undertaken massive dredging to build up more than 3,000 acres across the South China Sea, destroying coral reefs and fisheries, all in an attempt to further Beijing’s unlawful maritime claims. The PRC has continued to militarize these artificially expanded disputed features, including by adding sensor arrays, bunkers, ports, and anti-ship and air defense missiles. Beijing has used these outposts as staging grounds for its maritime militia, civilian law enforcement agencies, and the PLA Navy to harass and inhibit Southeast Asian states from accessing offshore resources. The PRC’S campaign of coercion is threatening regional security and blocking

Southeast Asian coastal states from accessing a potential $2.5 trillion in oil and natural gas and some of the world’s richest fishing grounds. Again, our interest is in preserving an open and secure Indo-pacific region – and that means open and secure for all nations.

Q One of the points often mentioned when concerns on China’s presence in Sri Lanka is raised is that the Chinese often offer financial support to Sri Lanka with no preconditions, whereas the US doesn’t. Why should Sri Lanka pick the US over China then?

Our development programmes globally are about 90% grants and not loans. We absolutely have expectations regarding respect for democratic rights and values. As a fellow democracy, we believe Sri Lankans care about these issues also.

We encourage Sri Lanka to have strong, healthy relationships with a range of nations that are built on a foundation of reciprocal benefit. Of course, Sri Lanka should engage with the PRC. It should do so in ways that protect its sovereignty and generate real prosperity for everyone, not just elites. It’s not about choosing between countries, it’s about transparency and charting a path that truly benefits all Sri Lankans, and promotes Sri Lankans helping themselves. For example our partnership supports small- and medium-sized Sri Lankan enterprises (SMES) to grow and thrive, helps firms improve and expand operations to create job opportunities, and increases employment opportunities for Sri Lankan youth through vocational training in targeted, high-demand sectors. The Srilanka@100 programme leverages Sri Lankan know-how to support entrepreneurs ready to scale their business to the next level and international markets. These efforts enable Sri Lankan firms to help drive Sri Lankan growth, but it also helps the US. As an important trading partner, we want to see Sri Lankan enterprises grow to further strengthen the trade relations our two countries share. But not at the expense of the democratic rights and values that we think both Sri Lankans and Americans hold dear.

Preconditions are not bad things, if they secure the integrity of the transaction for all parties involved. If the lack of such preconditions creates potential infringement on Sri Lanka’s sovereignty, or otherwise mortgages its future, would it not be in the country’s best interest to ensure preconditions exist?

Q How would US sanctions on some Chinese companies affect future US-SL trade ties especially since some of these China companies are involved in projects in Sri Lanka?

Under these sanctions, certain Us-origin items may require a licence subject to Export Administration Regulations (EAR) before they can be provided to companies on the Entity List. These sanctions are targeted at PRC entities, and the United States further encourages countries to manage risk when dealing with CCCC and its subsidiaries. CCCC has done untold environmental damage, been involved with malign actions around the world, and caused instability in the region.

Q The US has in the past worked with India on key matters related to Sri Lanka. How do you see Indo-us collaboration on Sri Lanka in the weeks and months ahead?

Let me step back and point out that South Asia is one of the most populous,but least connected, regions in the world, so there is real scope to build connectivity on many fronts - regional economic growth, private sector opportunities, maritime security, and people-to-people ties. With its resources and human capital, India certainly has a vital role to play in the region, and we have a close, deepening relationship with India across many fronts.

In the same way, we are deepening our cooperation with Sri Lanka and we recognize that Sri Lanka is a sovereign country with a unique history and proud heritage. To the extent Sri Lanka cultivates and maintains its own independent relationships with India and other countries in region, we welcome it and look forward to working with all of our partners to realize the potential of the region and to promote a free and open Indo-pacific. India’s assistance during the MT New Diamond fire is a great example of regional partnership. These types of relationships can help promote regional security, whether it’s cooperation to counter trafficking or disaster response.

Q Some feel that the US is this “big bully” and is attempting to dictate terms to smaller countries like

Sri Lanka. How would you respond to such claims?

We are a friend and a genuine one. This means when we have a concern, we’re going to raise it. It’s indicative of the respect we have for Sri Lanka that we take note of the commitments the government makes and believe they will follow through on them. We also follow through on our commitments. Whether it’s more than the US$6 million we have provided to help Sri Lanka combat COVID-19 or helping entrepreneurs build their businesses, the American people want to help Sri Lanka achieve its vision of a prosperous and peaceful country.