The signing of the re-negotiated Colombo Port City project now re-named as the Colombo International Financial Centre was fast forwarded for last Friday. No one knows what the rush was when it was earlier scheduled for August 16. What’s in a name, one might ask; a rose by any other smells as sweet; or conversely, [...]


Port City: A ‘dragon’ in the making


The signing of the re-negotiated Colombo Port City project now re-named as the Colombo International Financial Centre was fast forwarded for last Friday. No one knows what the rush was when it was earlier scheduled for August 16. What’s in a name, one might ask; a rose by any other smells as sweet; or conversely, a stink is a stink.

Coinciding with the signing ceremony in Colombo, is the Prime Minister winging away to China on what is officially referred to as an “observation” tour to study that country’s industrial zones. How roles have been reversed. Back in the 1960s, Singaporean Prime Minister Lee Kuan Yew studied Sri Lanka as a model state to turn his own city-state into a bustling economic hub. In the 1980s, then Chinese leader Deng Xiaoping sent a delegation to study Sri Lanka’s Free Trade Zones. And now, we are studying theirs.

Last week, our Political Editor referred to the heated argument in the Cabinet when a minister raised issue on the Government’s position on the Colombo Port (International Financial) Centre project. With the Prime Minister all fired up, there was no definitive conclusion to the discussion as the President intervened to cool things and proceedings went their merry way. Cabinet approval was thus obtained.

Unfortunately, there was no public discussion on what the Government was going to sign, and all that came out into the public domain were sketchy statements, lacking uberrimae fidei (utmost good faith). Under the newly enacted Right to Information Law, it shall be the duty of the minister of the project to communicate “to the public generally, and to any particular persons who are likely to be affected by such project” all the information relating to the project. The ‘to be set-up’ Right to Information Commission needs to provide guidelines on how such information is to be provided. While this far-reaching law exempts the disclosure of information that can be “seriously prejudicial” to Sri Lanka’s relations with another state, the principle of transparency and good governance, the hallmark of this nearly new Government would require it to have divulged the details of this project to the people of Sri Lanka before placing its signature to it.

The former Government was guilty of entering into an agreement for this project sans transparency – and paid the price for it. Is this Government making the same mistake? Are the people of this country to pay the price for it too?

It is an open secret that the Chinese project developers strained every sinew to get the project re-started. We have quoted the well-known US diplomat Henry Kissinger before where he referred to “the Chinese people’s millennially tested capacity for endurance”, but in this instance there were signs of impatience. They spent lavishly in massive public relations campaigns and canvassed select ministers. The PM’s octogenarian economic adviser, a hand-picked MBA graduate and local agents for Chinese companies took charge of the Sri Lankan side of the negotiations. In an unprecedented move, the Chinese ambassador was invited to Cabinet committees to discuss issues relating to Chinese projects in Sri Lanka. They played hard-ball and asked for compensation for work suspended by the new Government post the 2015 Presidential election.

Sri Lanka’s Attorney General was asked for an opinion and he said the Chinese were not legally entitled to ask compensation, and now the Chinese have backed down on that claim and the Government says it is because of the “goodwill” they have towards the President and the PM.

As much as the previous Government or so it was said, gave the Chinese free-hold rights over parts of this “city within a city”, this Government says how wonderful they have been in negotiating a 99-year lease instead to the developer and any third party investor in that ‘city’. After the signing of the agreement on Friday, a media statement was issued saying, “under no circumstances will the project company get any land for a lease period of more than 99 years”. Is it then clear that there will be no further offer of another 99 years beyond 2115 should the Sri Lankan Government opt out of purchasing the land after 99 years, as was envisaged in the proposal. Why shouldn’t the agreement in its entirety be made public even at this late stage if the Government wants to clear this point without hiding the details from the public only to face the consequences. These are matters concerning Sri Lanka’s sovereignty and its territorial integrity and not something to be trifled with.

The Colombo Port (International Financial) Centre Project is now a fait accompli. As it stands, it is an eye-sore and there was no alternative but to go ahead with the project notwithstanding howls by environmentalists and engineers, the Department of Coast Conservation placing 70 conditions, and a section of the National Unity Government still in doubt (or they don’t know and want to know). Negotiations have been handled by a coterie of people, claiming that a fair deal has been struck with the Chinese. The new Government has now hijacked this project as being its own crowing it has bettered on the 2014 agreement. One can only hope it has not let down the nation.

The PM said this week that the proposed trade agreement with India, ETCA, will be tabled in Parliament before signing. Why then, was, and still is, the secrecy that this agreement is shrouded in.

That the Government is in dire straits financially is an open secret. Foreign debts have weighed it down and the lack of anticipated support from the West has made it rely on Chinese largesse. The previous Government tied up Sri Lanka’s economy to so many dud projects that this Government has the unenviable task of making them work. Most of these were unsolicited projects – mooted by Beijing and readily accepted by the Mahinda Rajapaksa administration.

According to Central Bank reports, the total debt in 2015 was Rs. 8.5 trillion of which the foreign debt is Rs. 3.5 trillion. This Government also borrowed heavily in 2015 (Rs. 700 billion) and another Rs. 300 billion in the first quarter of 2016. How much of it was to pay for the sins of the Rajapaksa government and how much is due to mismanagement, an obese Cabinet, duty free cars for MPs, and wage increases to public servants, etc., is the question.

The unaccounted debt of public enterprises (Petroleum Corporation, CEB, SriLankan Airlines, Port etc.,) is Rs. 1.4 trillion, but these are guarantees given by the Government and not in the accounts of the Ministry of Finance or the Central Bank as these loans get so accounted only when those enterprises cannot pay the loans and the Cabinet must approve settling them. These arcane procedures and mind-boggling figures seem to confuse not just the public, but ministers as well.

The upshot of it all is that politicians, past and present, are playing with fire using the debt card to attack each other as the country slides down the slippery slope of a debt trap. Then, the Government places the future of the country in the hands of a secretive few, some with vested interests, accusing others of destabilising the country’s economy when they are doing just that by themselves.


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