U.S. will voice its concern for transparency, good governance, rule of law and reconciliation through accountability per se the LLRC By Namini Wijedasa The United States’ support for non-governmental organisations (NGO) in Sri Lanka is “quite transparent”, said U.S .Ambassador Michele Sison last week, responding to allegations that NGOs funded by Western governments were conspiring [...]


Our support for local NGOs is ‘quite transparent’: U.S. envoy Michele Sison


U.S. will voice its concern for transparency, good governance, rule of law and reconciliation through accountability per se the LLRC

By Namini Wijedasa

The United States’ support for non-governmental organisations (NGO) in Sri Lanka is “quite transparent”, said U.S .Ambassador Michele Sison last week, responding to allegations that NGOs funded by Western governments were conspiring to topple the regime in Sri Lanka. 

The US Ambassador making a speech at Matara

In an exclusive interview with the Sunday Times, Ambassador Sison added that the U.S. stands by concerns it raised in recent weeks, including the impeachment of Chief Justice Dr Shirani Bandaranayake.

Asked whether Sri Lanka, as a sovereign country, did not have the prerogative of removing a Chief Justice, in keeping with the terms of its Constitution, Ambassador Sison replied: “Of course, Sri Lanka is a sovereign country. But, as a friend of Sri Lanka and as a partner in many sectors, I think it is incumbent upon a friend to offer observations, when something this important comes up.”

“We stand by those concerns as articulated from the beginning of December onwards, up until last week, that we do believe the events raised serious questions about the rule of law and the separation of powers here,” she said. “It’s an observation.”

Ambassador Sison pointed out that several statements issued from other capitals or from diplomatic missions in Colombo, had raised similar matters. This includes views expressed by the Commonwealth and the European Union.

“Of course, there are a number of other concerns that the U.S. and some other partners have also raised in recent weeks,” she said. “One, for example, would be related to the freedom of expression. Another would be the concern that a number of us have expressed on the situation in the North, recently at Jaffna University. And most recently, on legal defenders, human rights activists, civil society organisations that appear to be under threat or, in some cases, actually under attack.”

The Ambassador, however, stressed that the U.S. had a “two-way dialogue” with Sri Lanka. “Our economic side is out there, every day, talking with U.S. businessmen and Sri Lanka’s businessmen, on what the investment climate for trade looks like,” she said. “Our other diplomats are out there with various political parties, human rights activists, civil society organisations, making sure we have a reliable picture of how it is on the ground.”

Economic diplomacy is considered to be a key component of U.S. foreign policy, the Ambassador said, pointing to President Barack Obama’s ‘National Export Initiative’. “We would like to see our bilateral trade relationship grow,” she asserted. “That not only grows jobs for the U.S. at home, but it brings Sri Lanka’s consumers better products, encourages joint ventures, and better agent and distributor networks. That’s healthy.”

“Having said that, we’ll stand by that emphasis on the need for a good regulatory framework, labour law, the rule of law, an efficient courts system and ingredients in the rule of law and confidence in the rule of law,” she said.

Commenting on the investment climate, Economic and Commercial Affairs Chief of the US Embassy in Colombo, Allison V. Areias-Vogel said the Government of Sri Lanka (GoSL) made a wise move in devaluing the rupee last year. She also said the economic roadmap was “very ambitious”. 

However, obtaining the growth the Government desired, required a larger increase in efficiency, combined with strong investment in education. “They want to attract FDI (Foreign Direct Investment),” she said. “To attract FDI, you need to really work on your good governance, your economic good governance, you need to have transparency.”

Ambassador Sison said these issues were not “Sri Lanka specific”. “They are recommendations or observations that would be pertinent to just about any country,” she pointed out. “So they are observations, rather than being prescriptive.”

Referring to her recent remarks (made during the course of a speech in Matara) about the rule of law being tied to investment, she said, “It’s not a newsflash”.

“It is common sense that a serious long term investor does look at good governance, good labour laws, a clear regulatory framework,” she elaborated. “So, if you’re serious about attracting good, long term investors who are going to bring capacity building, an element of technology transfer, and long term capital, you look to rule of law, good governance, good regulatory framework and good labour laws.”

“If you’re looking for short term investment, you know, four or five-year term, maybe you’re not as concerned,” she accepted. “But anyone trying to plan, I think, would go for that first option.”

Asked to define what elements of good governance Sri Lanka lacked, she said: “I’m going to speak broadly. What is good governance? Good governance would be efficient systems, transparent systems, level playing field in terms of investment decisions.”

Ambassador Sison explained that the Embassy’s role was to represent U.S. views to the GoSL. “I think, we have been very consistent in registering concern, but also in following up assiduously on issues such as the Lessons Learnt and Reconciliation Commission (LLRC),” she said.

U.S. diplomats have been devoting “a good amount of time” in recent weeks, on briefings and documents provided to them by various ministries including the External Affairs Ministry and Presidential Secretariat, on the implementation of the LLRC recommendations. These updates have been offered to other diplomatic missions, as well. 

“All of these updates are analysed,” Ambassador Sison assured. “And we look at the commitments made by the GoSL to its people, in statements and in the LLRC Action Plan, and this feeds into the analysis.”
Asked whether the U.S. was satisfied with the progress made in implementing the LLRC recommendations, she replied, “The main point, as we look at the compendium of information that’s being presented in the regular briefings provided, is to look at the overall question of accountability leading to reconciliation.”
“We would never want to have the exercise devolve into a checklist,” she said. “As a friend of Sri Lanka, we look to the larger goals.” The ultimate objective, she concluded, was reconciliation.

U.S. single largest investor in GoSL’s securities market

The United States holds 75% of rupee denominated and 40% of foreign currency denominated debt, making it possibly the single largest international investor in Sri Lanka’s Government securities market.
“The Government of Sri Lanka (GoSL) allows only 12.5% of rupee denominated Treasury bills and Treasury bonds to be given out to foreigners,” said Allison V. Areias-Vogel, Economic and Commercial Affairs Chief of the US Embassy in Colombo. “Of that, 75% is held by US investors.”

This means, of the total US$ 3 billion worth of rupee denominated Government securities held by foreign investors, US investors hold a massive US$ 2.4 billion.

“In terms of international and foreign currency denominated debt, the US holds US$ 1.4 billion worth of the total US$ 3.5 billion issuance in Sri Lankan sovereign bonds,” Ms. Areias-Vogel said in an interview with the Sunday Times. “Again, at 40%, that’s quite a lot.”

Much of it comes from Investment Funds. “It’s not individual investors choosing to come here and invest their money,” she explained. 

US Ambassador Michele J. Sison declined to analyse why US investors maintain such a strong presence in the GoSL’s securities market. “I would just say it’s a snapshot of what it is today,” she said during the joint interview with Ms. Areias-Vogel.

Economists point out that, while China and India are displacing Sri Lanka’s traditional donors, the country is still heavily dependent on traditional markets such as the U.S., with more than 40% of Sri Lanka’s garment exports still going to the U.S. 

“The U.S. is the single largest country market for Sri Lanka’s exports,” said Development Economist Muttukrishna Sarvananthan. “On top of it, the private capital of the U.S. is the single largest overseas investor in the GoSL’s debt market.”

“Thus, there is a growing mutually dependent economic relationship between the two countries, despite the decline in Official Development Assistance (ODA) to Sri Lanka from the USA in the past decade or so,” he explained. “Economically speaking, the significant voluntary investment and trade from the USA is far more advantageous to the Sri Lankan economy than the ODA from the U.S. Government, which often comes with strings attached.”

Dr. Sarvananthan said U.S. investors were looking for higher returns. “Firstly, due to the economic depression in the U.S. since late-2008, returns on investments in the domestic capital market, for individuals and corporations, have dropped dramatically,” he explained. “Therefore, American capital has been seeking higher returns in the international capital market.”

“In consequence, over 7% returns on Sovereign Bonds issued by the GoSL, for example, is a huge bonus to American investors,” he said.

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