COLOMBO: Relations between Sri Lanka and the United States are in for a hard time this year as Sri Lanka’s concerns over its sovereignty and independence clash with the geopolitical interests of the US.

Though couched in the language of goodwill for Sri Lanka and Sri Lankans in the short and long term, America’s interest in the island nation is essentially, if not exclusively, in preventing it from going into the waiting arms of China, the regional and global rival. The bitter pill of geopolitical interest is sweetened by economic offers.

If the bid to make Sri Lanka sign the Status of Forces Agreement reflects America’s geopolitical game plan, the offer of USD 480 million as grant under the Millennium Challenge Corporation Compact is meant to sweeten the bitter pill.

Since the Rajapaksas (President Gotabaya and Prime Minister Mahinda Rajapaksa) took charge of the country following Gotabaya Rajapaksa’s good showing in the November 16 presidential election, Sri Lanka has asserted its sovereignty in the UN Human Rights Council by opting out of co-sponsorship of Resolution 30/1 of 2015, which had required it to solve the problem of post-war ethnic relations in ways that are politically unsustainable and constitutionally untenable.

To soften the withdrawal’s impact on the UNHRC, the government formally told the Council that it would work with the UNHRC to implement the implementable parts of the resolution. But the government also told the High Commissioner of Human Rights that it is aiming at disassociating with the resolution in 2021, clearly indicating that opting out of co-sponsorship is but a prelude to total dissociation with the resolution.

Past events show there is little the UNHRC can do against a rebellious member. In Sri Lanka the High Commissioner expressed disappointment with Colombo’s decision, but according to sources in the Lankan delegation, the top rungs in the Office of the High Commissioner understood the validity of the Lankan government’s arguments.

While the Status of Forces Agreement had little or no chance of being signed because it would brazenly violate Lanka’s sovereignty, law and constitution, the Millennium Challenge Corporation compact was a different kettle of fish. It was developmental aid, a grant of USD 480 million. A major part of it was non-controversial and very useful too.

However, some of the mechanisms envisaged by the scheme are unacceptable as per the report of the committee appointed by President Rajapaksa to examine it. Additionally, in the eyes of Lankan nationalists, a foreign power’s largesse and focus on some parts of the country are suspect.

A paper on the MCC done by the Pathfinder Foundation, a Sri Lankan think tank, says that Mahinda Rajapaksa’s government had partnered the MCC from 2005 to 2007 to design a program of rural road rehabilitation, rural electrification and the development of small and medium enterprises. But then the war intensified and due to the security situation the MCC put the program on hold. In 2015, the Sirisena-Wickremesinghe regime recommenced negotiations to secure the MCC grant again.

Non-Controversial Transport Project

The “Yahapalanaya” led by Prime Minister Wickremesinghe eventually got USD 480 million in grant form for two types of projects: for digitalising land holdings in certain districts, and for modernising and improving transport and communication in some other districts where there are bottlenecks.

According to the University of Moratuwa, the opportunity cost of traffic congestion to the Sri Lankan economy will total Rs 1.847 trillion annually next year. The USD 350 million MCC transport project is designed to reduce traffic congestion on all major transport corridors in and out of Colombo through an advanced traffic management system; modernising the bus service in the Western Province to make it safer, more reliable and more comfortable; and upgrading interprovincial roads to better connect people and goods in the central region with ports and markets. This part of the project appears to be the least controversial.

Controversial Land Project

The most controversial is the land component of the project. Most, if not all, critics believe or pretend to believe that the objective of the land component is for the Americans to own Sri Lankan land in the designated districts. But actually the MCC land project may be considered as funding for programs Lanka already has: the Bim Saviya, improving land valuation and the survey department, and digitalising deeds.

The Pathfinder Foundation paper says that the USD 67 million land administration project is to scale up existing and historically under-resourced Sri Lankan government initiatives in several districts by inventorying state lands, digitising records for efficient and speedy land-related delivery of land transactions, and strengthening land tenure security, especially for smallholders and women, so as to give farmers, small businesses and people the flexibility to improve their livelihoods for their families.

The issue of land rights and the need for proper titling has been on the agenda of many successive governments since the early 1980s. Grants and permits have been issued under the Swarnabhoomi, Jayabhoomi, Rathnabhoomi and Ranabhoomi programs. But there remain over 1.4 million hectares of alienated State lands across the country without survey plans.

However, the Pathfinder Foundation believes that there are legal implications to the MCC agreement which need thorough legal analysis by carefully scrutinising the draft agreement. Based on its study of the agreement, the Foundation recommends the following:

According to the MCC agreement, the land project will focus on seven districts. But these are not the only districts where poverty is at its worst, and where land reform will benefit most people. These selected districts ironically led to the perception that the MCC is to build an economic corridor between Colombo and Trincomalee and facilitate a land grab by foreigners. The Pathfinder Foundation suggests that the government select other impoverished districts that will benefit most from the MCC.

The Foundation also proposes that the MCC-funded land component be brought under the purview of the Information and Communication Technology Authority which is responsible for digitalisation. MCC implementation must be carried out by Sri Lankans and provide only “observer status” to officials of the donor agency.

According to the Foundation almost all previous USAID projects were mainly managed by US contractors and were not overseen or managed by the Sri Lankan government. In fact, USAID procurement guidelines are used for all tenders, and payments are made directly to contractors and not to the government, but USAID approval of all major actions is required.

MCC projects will be managed by a “company limited by guarantee”. On this the Pathfinder Foundation asks: “Why would Lanka have a company to implement this grant?” It recommends that the government decide what form the MCC implementation structure will take, whether a trust, a non-profit, or under a government ministry.

The Foundation says the government must employ legal experts of the highest calibre to scrutinise the MCC agreement, or for that matter any agreement with foreign countries or institutions, to ensure that Sri Lanka’s national interests are not compromised. Any provisions that would harm the country’s independence, sovereignty and national security must be excluded.

With regard to accepting or rejecting any offer of grants, Lanka should not throw out the baby with the bathwater, the Foundation believes. “Let us hope the government will explore the possibility of negotiating the compact to produce a favorable outcome and give a strong signal to the world that Sri Lanka, under the new administration, is in business,” its report says.

All foreign-funded projects and negotiations on them are now at a standstill because of the parliamentary elections which are to be held on April 25. The election result will show just how much power the Gotabaya Rajapaksa government has. Its decisions on pending projects, issues and controversies will depend on the nature of the new parliament and how strong or weak it is in that parliament.

Thus, the MCC’s fate, and Sri Lanka’s relations with the US as a whole, will be known only after April 25.