Transparency vital in ties with India, China

PSUNDAY, APRIL 23, 2017

rime Minister Ranil Wickremesinghe leaves for New Delhi next week on what is a working visit with Indian leaders in the backdrop of some controversial issues in an otherwise seemingly friendly environment between the two countries. It is no secret that India entertained concerns over Sri Lanka’s previous Administration cosying up to China a little more than India would have liked. Given the nature of the situation, however, the incumbent Government in Colombo (which India was happy to see in the saddle) has had no option but not to jettison the widening China connection. The expansion of the Colombo harbour, the Colombo Port City and the Hambantota harbour are all fait accompli and there is no turning back.

To allay India’s unease at the time, former President Mahinda Rajapaksa told the then Indian High Commissioner who came to complain of Chinese backed expansion of the Colombo harbour; “I will give India the next project”. That sop hardly comforted India, and this Government is trying to ‘balance’ the giveaways to China with handouts of its own to India. Put bluntly, it is a policy of ‘giving’ China the south and India the north (and the east).

The PM’s recent visit to Japan was aimed, partly, at bringing that country – for years Sri Lanka’s main donor, into this equation. Along with invitations to the US Pacific Command to have access to Sri Lankan ports, the incumbent Government’s Non-Aligned policy is not, it seems, so much as to distance itself from all the superpowers, but have them all fighting it out for a stake in Sri Lanka. The ETCA (Economic and Technology Cooperation Agreement) is the sticky point – with India. The Indian side is at pains to show that ETCA is something Sri Lanka wants more than India because Sri Lanka wants products manufactured in its planned industrial zones to have access to the huge market that is India. If ETCA is to be the natural extension to the FTA (Free Trade Agreement) between the two countries, questions do arise. Items given concessionary duty terms under the FTA were no match for the large scale imports of cars, tuk-tuks and foodstuffs from India to Sri Lanka outside FTA, causing a massive trade balance in favour of India.

For Sri Lankan companies, FTA has been a bitter-sweet experience. Bitter for Maliban biscuits and sweet for Damro furniture, for instance. India has no uniform tax structure and its many states torpedo what FTA grants. The fundamental issue the Government faces in promoting ETCA with its detractors in Sri Lanka is its lack of marketing ability, i.e. ‘selling’ ETCA to a suspicious public. The lack of transparency that even the President has complained of is at the root of often unwarranted suspicion that a quartet in the Government, some with vested interests, is taking all the decisions.

Still, there is no way out for Sri Lanka other than to drop anchor with the emerging economic powers of Asia viz., India and China. Sri Lanka ‘missed the bus’ in the 1960s by not aligning itself with the emerging nations of South East Asia viz., South Korea, Singapore, Thailand etc., because of left-wing agitation in the country. Are we to miss the second bus as well? But this does not mean going headlong with weak negotiation skills as it did in the Colombo Port City and Hambantota harbour deals with China. Last week we wrote about the need for Sri Lanka to look towards West India for a change. There is no political baggage there like there is in the vitriolic state of Tamil Nadu. Western Indian states of Maharashtra, Gujarat and Goa are the financial, commercial and entertainment hubs of India with a GDP of US$ 554 billion. With ancient links to Buddhism and the Sinhala language, that part of India has a huge middle class, some 45,000 persons from these states alone visited Sri Lanka from January to November last year.

There is an even stickier issue than the ETCA which is not attracting opposition in Colombo as it should, because it impacts directly in the north – even though its overall fallout is on Sri Lanka’s economy. This is the issue of poaching by Indian fishermen in Sri Lankan waters and the continuing rape of the marine resources in the area. Sri Lanka loses 20,000 – 30,000 metric tonnes of fish valued at Rs. 5 billion annually as a result. However, the country has capitulated in the negotiations with India on this vexed issue by being coaxed to have talks at fishermen’s union level when the issue is a matter of sovereignty and territorial integrity. The Fisheries Ministry is fighting a losing battle with little support from the Foreign Ministry, unlike in the case of negotiations on the Kachchativu issue in the 1960s and 1970s. Those talks were spearheaded by able, gutsy Foreign Ministry officials with bi-partisan UNP-SLFP political backing at the highest levels.

The PM’s visit will no doubt be closely scrutinised as an MoU will be discussed on granting Indian companies greater access to Trincomalee’s surroundings. The oil tank farm and the Liquid Gas projects are already having differences within the Unity Government. India already has a substantial footprint in the north. It is in the interest of Indo-Lanka relations for both Governments to be more open because, ‘secret negotiations’ breed suspicion, and a replay of the 1987 Accord between the two countries is not the best of examples to go by, and must be avoided, at all cost.