MCC: a matter for the new parliament to decide

Dinesh held talks with Mike Pompeo

Seeks to diversify exports to U.S

The two leaders also discussed the United States’ ongoing COVID-19 assistance to Sri Lanka, which totals almost US$ 6 million to date 

Additionally, the Secretary and the Foreign Minister talked about our shared democratic traditions, respect for human rights

Funding had been committed to Sri Lanka by the US Government under the compact with the MCC

According to the MCC, the transport project aims to increase the relative efficiency and capacity of the road network in Sri Lanka 

 In fact, it vowed to scrap the compact if it returned to power

As United States’ Secretary of State Michael R. Pompeo (Mike Pompeo) contacted Foreign Relations Minister Dinesh Gunawardane over the phone at the appointed time of 6.30pm on Monday (local time), the two highest diplomats discussed a broad range of matters covering bilateral relations.  The call came in the wake of the new political debate on the proposed compact agreement with the Millennium Challenge Corporation (MCC). The MCC agreement, as it is called, has been a controversial topic since before the November 16 Presidential Elections. The debate heated once again, after the committee appointed by the Government to review the agreement came out with an unfavourable response to it.

One would assume that the two leaders discussed the future of the compact with the US during the conversation in great detail. On the contrary, according to informed sources, only one-fifth of the time was devoted to the MCC agreement during the telephone conversation between Gunawardane and Pompeo.

US Department of State spokesperson Morgan Ortagus, in his official comment after the telephone conversation, said, “Secretary Pompeo and Foreign Minister Gunawardane discussed our mutual interests in combating the COVID-19 pandemic and shared commitment to economic stability and sustainable growth. The two leaders also discussed the United States’ ongoing COVID-19 assistance to Sri Lanka, which totals almost US$ 6 million to date and reviewed the longstanding US - Sri Lankan cooperation on health and humanitarian issues. Additionally, the Secretary and the Foreign Minister talked about our shared democratic traditions, respect for human rights and the importance of transparency and prosperity of our people.”

There is no reference to the MCC agreement in this official comment released to the media. However, if there had been any such comment, it would have heightened the present debate on the matter across the political divide to new levels.  

According to informed sources, there was actually reference to the compact in the telephone dialogue, but the US Secretary of State did not insist on it. Instead, he only asserted that funding had been committed to Sri Lanka by the US Government under the compact with the MCC. The sources said the US sounded keen on the compact, though. 

The Board of Directors of the MCC approved, on April 25, 2019, the disbursement of US$ 480 million over a period of five years under the compact. The MCC delivered to the US Congress a congressional notification of its intent on August 13, 2018 to negotiate the compact with the Government of Sri Lanka. In the run-up to the Presidential Elections last year, the then government led by former President Maithripala Sirisena and former Prime Minister Ranil Wickremesinghe gave Cabinet approval to the compact. 

The project has two components- the land project and the transport project. According to the MCC, the transport project aims to increase the relative efficiency and capacity of the road network in Sri Lanka. The goal of the land project, according to the MCC, is to improve land rights and availability of spatial data related to land. The MCC says that it seeks to increase tenure security and tradability of land for small holders, women and firms by digitising deeds records, so that they are less vulnerable to damage, theft and loss. 

The compact came under heavy criticism by the then political opposition.  In fact, it vowed to scrap the compact if it returned to power. Now, the parties that were opposed to the MCC at that time are in power.

Once back in power and handling foreign affairs any government cannot take decisions forthwith without broader calculations of matters at hand. The Government is awake to this reality, though it was harsh on the compact with the MCC when in the opposition. Instead of scrapping the compact forthwith, President Gotabaya Rajapaksa appointed a committee headed by Prof. Lalithasiri Gunaruwan to study the agreement in detail and make recommendations for the new government - whether to implement it in this regard or do away with it. After six months of deliberations, the committee submitted its recommendations. Prof. Gunaruwan said the agreement bordered on the infringement of Sri Lanka’s sovereignty. 

Now the report is with the Government. But, it will not rush to take any decision in this regard. Nevertheless, it will study the report by the committee carefully before taking a final decision. 

Cabinet approval had been given to the compact under the previous government. But, it is yet to be ratified by Parliament. The present Government had a fresh look at it. And, it is not in favour of proceeding with the compact in its present form at any cost. It has reservations in particular, about strings attached to the land project in the agreement. Nevertheless, it will not take a final decision or announce anything until the General  Elections conclude. Then, it will be a matter to be referred to the new Parliament to act upon in keeping with the fresh mandate from people at the August 5 General Elections. Besides, in the run-up to the Parliamentary Elections, the Government will maintain a low profile on this matter as otherwise the opposition, particularly the Samagi Jana Balawegaya (SJB) and Janatha Vimukthi Peramuna (JVP), will amp up the pressure on the Government to walk the talk given to people before the presidential elections. 

Also, in taking its final position on the agreement, the Government will be cautious not to spoil its relations with the US at a time when it is seeking to resuscitate its export economy in the post-pandemic context. This became apparent according to what transpired during the phone conversation between Secretary Pompeo and Minister Gunawardane. Daily Mirror learns that Sri Lanka sought to diversify its exports to the US. 

Secretary Pompeo has responded positively to this request. The US is presently the single largest export market for Sri Lanka’s apparel products. Now the Government is finding ways and means to diversify its export products bound for the US market. In such a context, the Government is reviewing the compact with the MCC with due considerations to the entire gamut of bilateral relations. 

The present Government’s approach to the compact will, however, be different. It will not agree to the land project. It may try to renegotiate the compact in keeping with the kind of fresh mandate received from the public at the elections.