President gets Cabinet approval for more sovereign bonds, but analysts say it is to bridge Budget deficit President addresses UNGA on Tuesday; Pillay’s report to UNHRC on Wednesday President Mahinda Rajapaksa was in an unusually buoyant mood last Thursday when he chaired the weekly cabinet meeting late afternoon at the President’s House in Kandy.  At [...]


Polls over: Govt. borrows billions more; key world issues next week


  • President gets Cabinet approval for more sovereign bonds, but analysts say it is to bridge Budget deficit
  • President addresses UNGA on Tuesday; Pillay’s report to UNHRC on Wednesday

President Mahinda Rajapaksa was in an unusually buoyant mood last Thursday when he chaired the weekly cabinet meeting late afternoon at the President’s House in Kandy. 

At other times this meeting would have been postponed on account of the day being Binara Poya. However, he was on a tight schedule with plans to leave Colombo over the weekend. He is scheduled to address the United Nations General Assembly (UNGA) on Tuesday. Only a third of some 60 cabinet ministers were present. The others had engagements, mostly polls related in Northern, North Western and Central Provinces.

The controversial poster deemed by polls observers as a violation of election laws appeared on Jaffna walls on the eve of polls day. Pic by N. Prameshwaran

Rajapaksa reminisced about the days when the Sri Lanka Freedom Party (SLFP) Government held sway in the 1970s. There was a scarcity of rice. The then Prime Minister Sirimavo Bandaranaike had placed a ban on serving of rice in restaurants on Tuesdays and Thursdays. A businessman from Hambantota was at a restaurant in Colombo. He was about to have a rice-and-curry meal when he was stopped by the Police. He was nearly arrested. In 1977, the SLFP Government was routed at the general elections. That no doubt was a cause that contributed to the downfall. The moral of the story, Rajapaksa explained, was that a government should not introduce regulations that placed serious burdens on the people. 

He then referred to the staging of the satirical comedy Puswedilla at the recent Dialog Cricket Awards 2013 held at the Water’s Edge in Battaramulla. Rajapaksa felt this was a clear conspiracy to ridicule his Government. Some of those in the Cricket Board were not in the dark as it was made out to be. National cricket selection committee chairman Sanath Jayasuriya was ridiculed. So were others only because they had gone to smaller schools and not the elite and reputed ones. He said the parody was inappropriate.

The comedy series Puswedilla has played to packed crowds on the stages of the Lionel Wendt Theatre periodically. In that, Chaminda Puswedilla, the head of that imaginary nation Arsikland, is seen parodying on the political goings on in Sri Lanka. In their last one, their satire included the opening of an international airport and a cabinet re-shuffle. If parallels to ruling party members were cautiously chosen, perhaps to avoid any form of reprisals, there was an overdose when it came to the Leader of the Opposition. 

At the cricket awards ceremony, Puswedilla and other actors staged an adaptation. When a foreign correspondent (Robert Western Thinking or Westa) who regularly poses questions in the original play to Puswedilla, asks him about a world cup match arranged in Colombo by the ICC (International Cricket Conference), he replies “ICC has nothing to do with this.” He then refers to countries like Syria, Uganda, Belarus and Tanzania coming over for the match in a plane with a “special lock” on the door. “The only door you can open,” he says “is the bathroom door.”

In another instance, Cyril Nitharama Suffering, his Secretary introduces to Puswedilla, a national dress clad, tennis shoe wearing Sirisena Six Wicket Mahattaya. “Why in sports shoes,” asks Puswedilla. He replies, “After 40 years, I believe there is a small chance to play in another match. I am ready for that.” In one instance, there is a slip in the use of the English language in a purported live television commentary at a cricket match. Another instance is an Indian dance sequence which an actor performs. 

Backers of cricketer turned parliamentarian Sanath Jayasuriya have claimed that the portrayals were aimed at poking fun at him in poor taste and allege it was deliberate. They say he had played cricket when he had reached 40 years, delivered live cricket commentaries and taken part in the reality show nachballiye on an Indian TV channel. However, an official related to the event declared “it was pure fun and nothing bad was intended at all.”

Rajapaksa then spoke on the results of a survey conducted on yesterday’s polls for the Northern, North Western and Central Provinces. It had forecast that the UPFA would win 60 per cent of the votes cast. A discussion ensued on the basis of the survey. Since the sampling had been on 100 persons in each province some ministers wanted to know whether that could be considered sufficiently broad-based.

Yet, others felt, it was indicative of the voter trend. The fact that the polls would nevertheless “re-inforce public confidence” in his administration was perhaps the cause for Rajapaksa’s buoyancy. He could thus move for Provincial Council polls in Southern Province (last held on October 10, 2009), Uva Province (last held on August 8, 2009) and Western Province (last held on April 25, 2009) next year. It will no doubt be a precursor to a possible Presidential election thereafter. An indicator perhaps would be the upcoming budget to be presented in Parliament by Rajapaksa who is also the Minister of Finance. It is likely after the Commonwealth Heads of Government Meeting (CHOGM) on November 15, 16 and 17.

Besides the informal discussion outside the agenda, the ministers did engage in official business during the weekly meeting in Kandy. An important recommendation was by President Rajapaksa to increase Sri Lanka Development Bonds (SLDBs) issuance limit from US$ 1,500 million to US$ 2,250 million. It was unanimously approved. It was only in July this year ministers granted approval to increase the limit to US$ 1,500, within the borrowing limit for 2013, authorised under the Appropriation Act (No 23 of 2012).

Rajapaksa pointed out that in view of the recent approval, the Central Bank of Sri Lanka has re-issued maturing SLDBs of around US$ 750.7 million (around Rs 97.5 billion) and has issued new SLDBs of around US$ 679.12 million (around Rs 88.3 billion) to the market during this year. In addition, he said the National Savings Bank (NSB) had issued Sovereign Bonds to the international market and raised US$ 750 million to cater to its investment requirements.

As per budget proposals for 2013, Rajapaksa revealed, it has been suggested that the DFCC Bank and the NDB Bank raise over ten year tenure long term foreign development finance up to US$ 250 million each, to provide long term funding for SME sector exports, plantation, energy, tourism, construction industry and other manufacturing industries. Accordingly, they are in the process of issuing Sovereign Bonds to the international market.

As these bonds are denominated in foreign currency, Rajapaksa said on the flow of such funds to the domestic money market, it was necessary to facilitate investment opportunities under different maturities to hold such funds as fixed investment to obtain funds necessary for their different investment programmes. He has said that the SLDBs could be used for this purpose and these foreign currency bonds could he held for a specific period in investments. It is to accommodate such investment, Rajapaksa said it was necessary to increase the SLDBs issuance limit approved to US$ 2250 million, which is within the Parliamentary approved gross borrowing limit of Rs 1,303 billion for 2013. The new SLDBs will be issued by the Department of Public Debt of the Central Bank.

“This is another way of funding the budget,” a local financial analyst who did not wish to be identified, said yesterday. “Increasing foreign currency bonds even more only increases the country’s total borrowings,” he said.

“However, the Government has to strike a balance on Debt-to-GDP ratio. Hence, it is parking state financial institutions to ensure they do not get listed as Government borrowings,” he said. He claimed that the funds would be more to bridge the budget deficit and fund development investment locally.

The decision by ministers to raise the SLDB limit came in the backdrop of yesterday’s elections to three PCs. They seemed a foregone conclusion. A victory for the Tamil National Alliance (TNA) in the North and victories for the UPFA in the two other provinces appeared a certainty. That said, as hours tick by today, how the main opposition United National Party (UNP) fared, where the Janatha Vimukthi Peramuna (JVP) would be placed and any inroads former General Sarath Fonseka’s Democratic Party (DP) would make will all unfold. The JVP in particular is fielding candidates in all three provinces under relatively difficult circumstances. The party split in the middle last year with one faction forming the Frontline Socialist Party (FSP). Thus, if it turns out, it is unable to secure a single seat, it is sure to spark a controversy within its ranks. On the other hand, JVP stalwarts contend they would at least win one if not two seats in the NWP.

Marring polls activity in the North was an incident at 12.40 a.m. on Friday where the residence of Ananthi Shashitharan, a TNA candidate, was allegedly attacked by a group of persons who came in a truck. Sugash Kanagaratnam (28), a lawyer and polls monitor, was among nine persons injured. He was representing the People’s Action for Free and Fair Elections (PAFFREL). Ms Shashitharan is the wife of the ‘missing’ Tiger guerrilla Political Wing leader for Trincomalee. She was touted early this week as a candidate who would be among the first three on the TNA preferential votes list. Her campaign had included her travails and how her husband, surrendered to the army at the end of the ‘war’ in 2009 and was never heard of again. She was one of those who testified before the Lessons Learnt and Reconciliation Commission (LLRC) and later met United Nations Human Rights High Commissioner Navi Pillay when she visited Jaffna.

Ms. Shashitharan has complained that mobile phones belonging to her supporters who were at her residence have been taken away by the attackers. She has alleged that the attackers also shot at and deflated the tyres of the vehicles parked at her residence in Chullipuram near Kankesanthurai. Nine persons, reportedly injured, have been admitted to the Jaffna National Hospital. Elections Commissioner Mahinda Deshapriya told a news conference on Friday that he had received a report on the incident but did not elaborate. 

Lawyer Kanagaratnam said in a statement that when he went to the candidate’s residence, she had been moved to another place because of a reported threat. Then the armed group who came had rounded him up and the others in a former banana plantation that adjoined Ms. Shashitharan’s house, got them to kneel and berated them. He alleged that they had threatened to kill all. There were concerns over the incident in the Colombo based diplomatic community. The US Embassy in Colombo said the attack, in the lead up to the polls “should be transparently and independently investigated, and the perpetrators involved should be brought to justice swiftly. We call on all parties to refrain from violence and observe a peaceful, open and transparent electoral process — one that is free, fair and credible and allows for the full expression of the voters to select democratically the representatives of their choice.”

A statement from Canada’s Deepak Obhrai, Parliamentary Secretary to the Minister of Foreign Affairs and for International Human Rights, said, “Canada is deeply concerned by continuing reports of violence against electoral candidates and an election observer in the lead-up to the three provincial council elections……. Such acts of intimidation are completely unacceptable, and the perpetrators of these crimes must be brought to justice.”

Most news agents in Jaffna received an unusual edition of the Uthayan newspaper for marketing yesterday. Its front page lead story said Ms Shashitharan had changed her allegiance from the Tamil National Alliance to the UPFA. Publishers of Uthayan said it was a fake issue and posted an announcement on their website disowning it.

A poster with an assault rifle circled in red with Tamil wording surfaced in various places in Jaffna on Friday. It said “Think twice. Are you ready for another war? Vote for the TNA?” Keerthi Tennakoon, Executive Director of the Campaign for Free and Fair Elections (CaFFE) said his NGO had received complaints “from political parties and their observers in Jaffna who had seen these posters.” He said, “This is done to create fear psychosis among voters. Scaring voters of the consequences if they vote to a particular party is a dangerous thing to do. We condemn such action.”

This was the first time Provincial Council elections were held in the North. It was earlier linked to a North-Eastern Provincial Council and was separated only after a Supreme Court ruling. The last polls for the North Western and Central Provincial Councils were held on February 14, 2009. This was just three months before the military defeat of Tiger guerrillas. The military’s successful northern advance and the capture of Kilinochchi, the guerrilla heartland, in January 2009 placed the UPFA in an advantageous position. The UPFA secured a two thirds majority in the NWP though it fell just short of a two thirds majority in the Central Province. In the NWP, the UPFA secured 37 seats as against the UNP’s 14 seats and the JVP won just one. In the Central Province, the UPFA garnered 36 seats and ceded only 22 to the UNP. There are 36 seats in the Northern Provincial Council with two more as bonus seats. The NWP Council will have 50 seats (with two bonus seats) and the Central Province 56 seats (with two bonus seats).

The outcome of yesterday’s polls would be significant for the UPFA in many ways. They have taken place in an environment devoid of the separatist war. Economic hardships, issues related to democracy and development activity in non-priority sectors have all been issues on the opposition polls platform. Allegations have also been levelled against the Government over the alleged mistreatment of minorities, vast scale bribery and corruption. More importantly, on the other hand, in respect of the NPC, the Government has called for a mandate of sorts to challenge the TNA victory. Organisations backed by it have already gone to courts to question the controversial TNA manifesto. Thus, a victory for the UPFA will come as endorsement of its policies by the voters and a rejection of accusations by the opposition, though ironic enough, some of the important issues they raised persist. 

In fact, Rajapaksa is expected to make reference to the outcome of the polls, particularly in the North, in his address to the UN General Assembly on Tuesday. Just this week, UN Secretary General Ban Ki-moon said in a statement that he views these elections, particularly in the Northern Province, “as an important opportunity to foster political reconciliation and to build confidence between Sri Lankans after many years of conflict.” A Government source said the President would also deal with the accusations against Sri Lanka in the second US backed resolution before the UN Human Rights Council (UNHRC) in Geneva.

At the on-going UNHRC sessions in Geneva (September 9 to 27), listed in the agenda for September 25 is the following item – “HRC to listen to an oral update from the High Commissioner on the implementation of the resolution 22/1 on promoting reconciliation and accountability in Sri Lanka.” The reference to 22/1 is the second US resolution which required the UN High Commissioner for Human Rights, Navi Pillay, “with input from relevant special procedures mandate holders, as appropriate, to present an oral update.” She is also required to provide a “comprehensive report” that would be “followed by a discussion on the implementation of the present resolution” at the 25th sessions of the UNHRC in Geneva in March next year. Wednesday’s oral statement by Pillay will be played out on a live webcast. 

In her opening statement when the on-going sessions began, Ms. Pillay listed some 15 countries for different forms of human rights violations. In relation to Sri Lanka, she said: “I am grateful to the Government of Sri Lanka for facilitating my recent comprehensive visit, which allowed me to assess the progress being made towards reconstruction, reconciliation and accountability in the aftermath of the war — as well as the broader human rights situation, including religious intolerance, governance and the rule of law. I will be reporting on my observations later in the session, but wish to stress my immediate concern for the protection of human rights defenders, journalists and communities I met during my visit from any reprisal, intimidation or attack.

“The Secretary-General’s report on cooperation with the United Nations, its representatives and mechanisms in the field of human rights is before the Council at this session. It refers to cases of alleged reprisals, or intimidation, against persons as a result of such cooperation, from 16 June 2012 to 15 June 2013.”

Interesting enough, Pillay also had some comments to make on the United States, which moved two resolutions on Sri Lanka at the UNHRC and the United Kingdom in her opening remarks. She said: “The broad scope of national security surveillance regimes in countries including the United States and the United Kingdom, and the impact of these regimes on individuals’ right to privacy and other human rights, continues to raise concern. Laws and policies must be adopted to address the potential for dramatic intrusion on individuals’ privacy which have been made possible by modern communications technology. While national security concerns may justify the exceptional and narrowly-tailored use of surveillance, I would urge all States to ensure that adequate safeguards are in place against security agency overreach and to protect the right to privacy and other human rights.”

In respect of Australia, where the new Government of Prime Minister Tony Abbott has launched “Operation Sovereign Borders” to tow away to the waters off Indonesia all refugee boats, Pillay has made some critical comments. It came before this operation led by a former Special Forces commander Angus Campbell was announced. She said: “I also regret that Australia is re-imposing the discredited policies of transferring those arriving by boat to Papua New Guinea and other locations and I urge the authorities to respect both the letter and spirit of Australia’s international obligations under the 1951 Refugee Convention.” Large groups of Sri Lankans are among those who have attempted to enter Australia illegally. Local operators have been charging them anything over a million rupees for a ‘new haven’ which in reality has been hell for the asylum seekers with many deaths due to poor condition of the boats or rough seas. Yet others were flown back home. One mastermind behind a major human smuggling operation has already come under Police investigation.

That the US position over issues articulated in its two resolutions remains firm was underscored by Nisha Desai Biswal, the new Assistant Secretary of State, last week during hearings on her nomination before the Senate Foreign Relations Committee. She said “I would be remiss if I did not also touch upon key challenges in the region with respect to democratic governance, human rights and corruption. As Sri Lanka works to rebuild its society after a devastating civil war, we continue to stress the importance of sustainable post-conflict reconciliation, ensuring accountability for wartime atrocities, and fulfilling the government’s own commitments to its people.”

She added: “If confirmed by the Senate, I will continue to use our broad engagement with countries throughout the region to underscore that, while we will continue to work with them to safeguard against the threats of terrorism and extremism, we believe that progress towards democracy and human rights, so that people have peaceful avenues for expressing dissent, is essential to achieving that goal.” 

The appointment of Biswal, who was earlier Assistant Administrator of USAID, as Assistant Secretary for South and Central Asia in the Department of State, was revealed exclusively in the Sunday Times (Political Commentary) of May 19. The earlier incumbent in that position was Robert Blake, one time US Ambassador to Sri Lanka.

The new Deputy Assistant Secretary for South Asia will be Fatemah Sumar, who was a staffer when John Kerry, the Secretary of State, was a Senator and chairman of the Senate Foreign Relations Committee. She was one of two staffers who visited Sri Lanka then. Their report urged a more ‘balanced’ policy by the Obama Administration on Sri Lanka. Sumar’s report was often quoted by External Affairs Minister G.L. Peiris. However, policy is set at a much higher level. Sumar succeeded Alyssa Ayres who has quit the Department of State to serve in a think tank in Washington DC. Another Deputy Secretary of State, Jim Moore, one time Deputy Chief of Mission in Colombo (under Blake), has been named the US Principal Officer in Curacao, a southern Carribean island off the Venezuelan coast. It is considered a part of the Netherlands and hence the Principal Officer enjoys the status of a head of mission. 

Yet another event of importance to Sri Lanka is the meeting of the Commonwealth Ministerial Action Group (CIMAG) in New York on September 26. Ahead of that, Sri Lanka, the future chair, has arranged for a session of Commonwealth Foreign Ministers to be held in New York on the sidelines of the UN General Assembly sessions. External Affairs Minister G.L. Peiris is expected to brief them on current arrangements for the CHOGM in Colombo. All the senior officials handling UN matters at the Foreign Ministry have flown to New York mainly because the President will be there, and none has gone to Geneva to attend to UNHRC matters.

These developments come at a time when the cabinet of ministers have decided on new policy guidelines for Sri Lanka to migrate from the existing communication networks to a new Next Generation Network (NGN). The move came on a recommendation by President Rajapaksa. 

With the three provincial polls over, the focus now shifts to the international front. Rajapaksa addresses the UN General Assembly on Tuesday. A day later, Navi Pillay will tell the UN Human Rights Council her views on the week-long visit to Sri Lanka. The following day, CMAG will meet for the last time ahead of the CHOGM in Colombo. All these mean, Sri Lanka would have to engage in a lot of diplomacy. With a largely non-functioning External Affairs Ministry, it is no easy task.

Lanka migrating to next generation communications

A Government policy on next generation communications networks in Sri Lanka has ruled out any interference with Google and Skype. Conceding that these applications can be controlled, the policy guideline notes that discriminating against them would send a “strong negative message internationally regarding Internet policies in Sri Lanka, and may hamper innovation and investment.”

The policy and framework for Next Generation Networks in Sri Lanka was approved by the Cabinet of ministers on a recommendation made by President Mahinda Rajapaksa.

The regulatory authority will be the Telecom Regulatory Commission of Sri Lanka (TRCSL). Rajapaksa told his ministers that the TRCSL has now decided to permit the importation of VoIP (Voice over Internet Protocol) phones “to ensure all customers have equal access to VoIP technology, irrespective of the device they use to access it.”

Traditional Telecommunication Networks, President Rajapaksa has explained to his ministerial colleagues, were designed to carry a single type of service such as Public Switched Telephone Network (PSTN) for voice calls. As such, he said, Ttelecommunication services providers have had to maintain a number of separate networks (with each of them having its own architecture) for different services they provide. By contrast, the Internet is a “packet-based” network and could be used to provide different services.

President Rajapaksa has added: “Next Generation Networks (NGNs) carry all types of services, including voice, video and e-mail, on a common platform. This ‘network convergence’ allows operators to save money by having to maintain only one network platform and to provide new services that combine different types of data. NGNs are more versatile than traditional networks because they do not have to be physically upgraded to support new types of services. NGNs offer significant cost savings to operators and new services to consumers, but there are also challenges in maintaining the quality, reliability and security of communications.”

Migration to NGN from traditional networks, Rajapaksa has pointed out, “raises a range of regulatory and policy challenges. These changes imply profound shifts in the nature of the competition, which may create a need for regulatory changes. 
The TRCSL commissioned one of United Kingdom’s leading regulatory consulting firms, Analysis Mason, to formulate Sri Lanka’s policy and regulatory framework. The consultancy was carried out at a cost of US$ 230,000 in four phases under the IDA Grant funds of the World Bank.

To encourage competition in the wireless broadband market, the policy framework has spelt out two different measures. They are (a) Encourage the sharing of mobile infrastructure (sites and towers and backhaul) between competing operators; (b) Facilitate access to backhaul for remote sites using either Universal Service Obligation (USO) funds or the NBN to build backhaul, or by mandating wholesale leased-line access from the incumbent. 

The policy framework calls upon engagement with the Ministry of Mass Media and Information and harmonise matters. It is “to promote competition regarding the issue of accessing TV content” that will be key to ensuring competition in the Sri Lankan telecoms market. In addition it also calls for a review “of the market regarding TV content.

The TRCSL is to collaborate more closely with existing telecoms consumer associations to better understand the requirements and issues of end users and ensure that:

  • Information relating to consumer-switching processes is made available by the respective service providers in a consumer friendly format.
  • Advertised broadband speeds are not exaggerated and in line with what end users can expect in practice.
  • Consumers better understand prices vs. quality for voice and broadband service offered by each operator to ensure consumers can make an informed decision.
  • Consumers are treated fairly by their operators.
  • Consumer interests are accorded rigorous protection through, for example, a broad ranging data-protection legislation.

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