• Now, we need a stable, simple procedure so that the people have confidence in Sri Lanka’s investment climate
• We need a stable legal environment, which makes it easy for European investors to transfer funds, to convert Rupees, to invest in forex without discriminatory taxation. We need equal access to property, with legal protection and the possibility of being able to be present in Sri Lanka to work
• The introduction of a limit of dividends that could be transferred abroad was a blow to investors’ confidence. When the limit was increased, it was another difficult moment for long-term investors

European Union’s Ambassador Denis Chaibi responds to questions from Daily Mirror about Sri Lanka’s reapplication for the GSP + under the revised criterion

next year, bilateral ties, the Indo-Pacific strategy and others. Excerpts: 

Q Sri Lanka is going to reapply for the GSP + under the revised category for the next ten-year period in 2024. As the ambassador to Sri Lanka, what is your assessment of Sri Lanka’s legality to qualify for it next year?

It is hard to say beforehand because the new regulations, under which Sri Lanka will have to reapply in 2024, have not been finalized yet. So we don’t know exactly the new conventions that will be added. At the moment, we have 27 conventions. There will be a couple that will be added. We don’t know what the increased conditions will be. The second important element is the assessment report that will come out this summer regarding the final period of the current GSP regulation. It will be an important element for the assessment of Sri Lanka’s candidacy for the next GSP + regulation.  
 When Sri Lanka got the GSP + back in 2017, it had committed either to repeal or review the Prevention of Terrorism Act (PTA) to align it with international standards. There has been a reform in March, 2022, but it is not sufficient. The government has to review the PTA, or it has to continue with the proposed Anti-Terrorist Bill (ATB). There are some issues with the ATB initial draft. We welcome the fact that the government has proposed the adoption of a new bill and is consulting with stakeholders. We hope the result of that review will be conducive to the granting of GSP + under the next regulation.  

Q So my next question is now about Sri Lanka’s strategic positioning in the Indian Ocean. America talks about the Indo-Pacific strategy. We listen to a lot of stories about EU perspective. They talk about the rule-based order. When you say rule-based order, what does it mean? Does it differ from the current international laws governing maritime affairs or something?

There are angles to your question. The EU believes in the supremacy of international law, United Nations and multilateralism in its current structure when it talks about the rule–based order. The EU believes that those precepts are good for the world. Some other countries find this a Western dominated system. But when we look at rule-based order in the Indo-Pacific, it has a wider scope. We have an Indo -Pacific strategy that the EU adopted last year. In it, we have seven areas of cooperation, including prosperity-trade agreements, digital connectivity, security and defense, human security, digital governance and green transition. These are broad areas where we try to develop agreements - trade agreements, digital agreements and others. For example, we have a digital partnership, in which the data from one country is collected with a high degree of privacy and can be transferred to another country thanks to the same standards. The companies can transfer the data because there’s enough safeguards to maintain the users’ privacy.  

Q But it is widely interpreted, or perceived by many people as an attempt by the Western powers to contain the Chinese influence in this region. What is your comment as the ambassador here?

The EU and the Swedish Presidency recently organized the Indo-Pacific Forum in Stockholm - the second after Paris last year. Sri Lankan Foreign Minister Ali Sabry was there and moderated a roundtable about prosperity. This really shows the EU’s focus on engagement and cooperation with countries in the Indo-Pacific rather than lining up against a specific actor. China is a systemic rival to the EU and also a fierce economic competitor. But it is also a necessary partner for global issues such as climate change. We need to have China on board in our negotiations. So we look at the different aspects of China. But our strategy is not just about lining up against China. It is more about finding points of engagement and cooperation with all the countries that are interested in that approach in the Indo-Pacific.  

Q What kind of assistance will the EU extend for Sri Lanka in its current debt restructuring process? 

International debt restructuring is a very complex issue, not an easy one to deal with. The EU Member States that had given loans to Sri Lanka gave their reassurances about Sri Lanka’s economic plans. The EU Member States with seats at the IMF board voted in favour of the IMF decision to disburse last March. So the EU Member States have been so far very proactive. Now, we are moving to the phase where the current debt has to be reviewed - either to be repaid during a longer period or less to be reimbursed. Or both. Member States continue to be pro-active, with France being part of the initiative to constitute a platform for negotiations with India and Japan. There was a first meeting and there will be further meetings. But as you can see, one member state, France, is taking a strong initiative to help Sri Lanka with debt restructuring. As the EU delegation here, we cannot offer macroeconomic support such as significant loans. But what we’ve done is to continue our work with grants. So for the crisis period from 2020 to 2024, there is 65 million Euros repurposed for crisis response. For example, we took action to buy, as an urgent issue, seeds and chemical fertilizers, and to train farmers to move towards organic fertilizers, namely training them to go for something that is more available locally. Another strand of action has been through a 10 million Euro grant to the World Bank, to do public finance management with the government. We are going to have world class experts, contracted by the World Bank, to come and help the Sri Lankan authorities with public finances. We are looking at sectors that are strategic for Sri Lanka to get out of the crisis the fastest way possible.  

Q As for the reconciliation process, the government is moving ahead to set up the truth seeking mechanism. It is going to be ready with the proposed legislation soon. So it is a kind of a domestic mechanism which the government is proposing. But at the same time, the parties like the Tamil National Alliance (TNA) call for an international mechanism to bring about transitional justice. Now the EU is a key group of countries that sponsors this resolution. So as the EU ambassador, what is your perspective about Sri Lanka’s initiative in this regard?

The EU has voted in favour of that resolution. The resolution provides for an external mechanism. The government has made it clear that it cannot accept it and that it will work on its own internal mechanism. The resolution is valid for another two years. We have to see the results that will be provided in June, to the UN Human Rights Council (UNHRC), and then how this will move over time. I think that one way or another, internally or externally-induced reconciliation is necessary for the government to grow its economy faster. I have often heard over the last four years that Sri Lanka could be the new Singapore. People often forget that what allowed Singapore to move faster is not only the strong personality of Lee Kuan Yew, but also the fact that the different communities - Indian, the Malay, Muslim, Hindus and Chinese - work together. So for me, reconciliation is absolutely necessary, not only for the communities individually, but for the country as a whole to move forward.  

Q What is the direction of bilateral ties in the latest context?

Well, it depends which perspective you take - one year, five years, 10 years, 20 years etc.

Q I mean, in the immediate aftermath of this crisis, for the next couple of years?

Well, I think that the recent years have been quite positive for EU - Sri Lanka relations. If you look at the period during which President Gotabaya Rajapaksa was in charge, people could have predicted difficult relations, which could have led to the withdrawal of the GSP +.  
But in the historical context of Sri Lanka, we welcome the fact that the social movements could express itself. We really believe that the EU - Sri Lanka relations remained positive and stable throughout the whole crisis. We are building on that for the future. We just had the Joint Commission between EU and Sri Lanka on May 9, 2023. We had very fruitful discussions on a number of topics, including Sri Lankan plans to revive the economy. It is not only the IMF plan and debt restructuring, but also how to lift part of the import ban. We had fruitful discussion on GSP + and the reapplication process, and the need to look again at the anti- terrorism bill. We had conversations on how to work together on climate change, with EU funding to ensure circular economy efforts and support to them. We agreed that we would move forward with an investor dialogue to see how EU individual member states can be satisfied about the legal environment so that investments in Sri Lanka can be promoted.  

Q What is your assessment about the current investment climate?

We believe that European investments would be very good for Sri Lanka because they take into account high environmental, social and governance standards. They’re more focused on helping socially in the host country. Because they have such a long perspective, European investors need to be sure that the legal framework will be stable; that the rules will not change every six months. We need a stable legal environment, which makes it easy for European investors to transfer funds, to convert Rupees, to invest in forex without discriminatory taxation. We need equal access to property, with legal protection and the possibility of being able to be present in Sri Lanka to work. I know that all that is possible with the Board of Investment, or the one stop shop principle. In reality, this is difficult. The rules have often been changed sometimes at short notice. It has discouraged a number of European investors. So now we need a stable, simple procedure so that the people have confidence in Sri Lanka’s investment climate.  

Q Can you specify an area where these rules change?

For example, repatriation of profits and convertibility of profits. The introduction of a limit of dividends that could be transferred abroad was a blow to investors’ confidence. When the limit was increased, it was another difficult moment for long-term investors.  

Q As part of the reconciliation process, does the EU insist on holding elections?

Provincial, and local elections are stipulated in the Constitution. As such, anyone in Sri Lanka has a legitimate interest in having the Constitution respected. Now, if there are special conditions or circumstances where this is not possible, it is for Sri Lanka to decide. But as outsiders without any wish to interfere in the local life, we have to say every citizen has an interest in having the Constitution being observed.  

Q What is your assessment of the Russia-Ukraine war on Sri Lanka?

 I know that because of historic links, there is some sympathy in Sri Lanka for Russia. There are a number of tourists from Russia. But this history of strong relations should not make one forget the fact that there’s one invader and one invaded country. All the arguments that there was provocation or that there was no significant attention paid to the needs of a great country like Russia, do not change the fact that tanks and jets and missiles have been sent from one country to another and are causing destruction. There is no justification for territorial aggression, for not respecting the territorial integrity of a neighbour, for killing people, for attacking all the infrastructure in particular linked to energy and transport. This is a very negative development for Sri Lanka. It increases the price of commodities that are essential for Sri Lanka, such as chemical fertilizer, petrol, oil, diesel and grain. A stronger stance by Sri Lanka would be useful. Sri Lanka’s abstention on this matter can be construed by some as condoning the precedent of a territorial aggression.  

Q Though the war is over here, people believe LTTE sympathisers are active in the EU region. What have you got to say about it?

I do not have elements to assess the activity of ex-LTTE members in Europe and elsewhere as there are no official figures but it seems to me, based on my very limited knowledge, that the core of the Tamil diaspora that could have some sympathy for the LTTE is not located in the EU territories. The LTTE is a banned organisation. So any member or any structure or any bank account can be investigated and corrective measures can be taken.