A Fresh Perspective On The Mcc Compact


By Neville Ladduwahetty

With the submission of the final report reviewing the MCC Compact by an Expert Committee headed by Prof. Lalithasiri Gunuruwan to President Gotabaya Rajapaksa and Prime Minister Mahinda Rajapaksa, public interest as regards the government’s response to the compact has resurfaced. Earlier interests in the MCC Compact related primarily to its long-term impact on the state and the people. Against the background of the forthcoming parliamentary elections, the compact has become a hot political topic with opinions expressed by political parties, either as champions or betrayers of the nation’s interests.

The original claim of the compact was to address poverty. With this in mind the Centre for International Development of Harvard University together with the Government of Sri Lanka carried out a constraint analysis to ascertain the factors that were impediments to economic growth without which poverty could not be alleviated. Although three factors were originally identified as constraints, the decision was to focus on two primary factors, namely, inadequate transport logistics infrastructure, and lack of access to land for agriculture, the services sector and for industrial investors.

While these professed intentions are noteworthy, one has to look at history as forewarned by the words of Thucydides who, in 5th Century B.C. said: "Knowledge of the past is an aid to interpretations of the future." Therefore, there is a need to strip the ginger bread and trimmings of the stated purpose of addressing poverty and look at the Compact for what it is really intended to serve.

Knowledge of History

What is the history that is pertinent to the MCC Compact? For that, we need to refer to Dr. Colvin R. de Silva’s Magnum Opus "CEYLON under the BRITISH OCCUPATION 1795 – 1833", Vol. One.

With the British conquest of the Dutch possessions in Ceylon in 1796, the British realised that although India was the jewel in the crown of the British Empire, it was the strategic location of Ceylon that made all the difference to the protection of that crown. This perspective was conveyed by Dr. de Silva when he stated: "The choice of Ceylon – and Trincomalee in particular – is to be explained by its strategic importance. Pitt said in Parliament of its acquisition that it was ‘to us the most valuable colonial possession on the globe, as given to our Indian empire a security which it had not enjoyed from its first establishment’. That security particularly, ‘the finest and most advantageous Bay in the whole of India…the equal of which is hardly known, in which a whole fleet may safely ride and remain in tranquility’. Governor Maitland later called it ‘the real key by possession of which alone you hold the naval superiority of India. Its mere geographical position’, he continued, ‘if looked at nearly carries perfect conviction on this head along with it. But when you couple with its situation the periodical winds that blow in this country, when we reflect that no vessel can sail from one side of the Peninsula of India to the other, without coming nearly in sight of it, not a doubt can remain in the mind of any considerate man that it is the sole point in India that can enable you to enjoy the full benefit you ought to derive from your naval power in this country" (p. 20-21)

With the Maritime provinces coming under the British and the rest of the country continuing to remain as part of sovereign Ceylon, Governor North "stipulated" the need for the recognition of each other’s sovereignty for the sake of "amity". This resulted in Governor North laying down several demands on the King of Kandy, Sri Wickrama Rajasinghe. One of these demands was for the King to allow the construction of a road "between Colombo and Trincomalee through Kandyan territory". Commenting on this Dr. de Silva stated: "The British were to be allowed to build a road between Colombo and Trincomalee through Kandyan territory, with rights of free passage, post and rest houses to British subjects and troops. Over and above the right of the British freely to collect cinnamon west of Balana, and the preservation of the British monopoly, Kandy was to supply all cinnamon needed from the east of Balana … (and) British subjects were to have the right to cut timber in the Kandyan territory" (p. 88).

It is therefore clear that what was a road from Colombo to Trincomalee for strategic reasons 220 years ago, is today presented as an economic corridor on the pretext of "alleviating poverty" through the MCC Compact. The ‘right of free passage for British subjects and troops’ 220 years ago is to be governed by International Law (Section 6.4) under terms of the MCC Compact. The impact of the MCC Compact on Sri Lanka’s national interests, financing of the project, the Constitutional implications associated with drafting fresh legislation to ensure compliance with provisions of the MCC Compact and other related issues would most likely have been addressed by the Expert Committee. However, in addition even if the Expert Committee did address military and security related issues, its scope must necessarily be limited because their mandate was only to review the MCC Compact. Preparedness".

Military Preparedness

In the context of today’s geopolitical and strategic developments coupled with the US policy of Pivot to Asia, in which Sri Lanka is naturally positioned to play a significant role because of its unique strategic location, there is a strong possibility that Sri Lanka could be drawn into the vortex of these developments to such a degree that it could compromise its stated Foreign Policy of Neutrality. Although the British too realized the importance of Sri Lanka’s strategic location 220 years ago, Sri Lanka being one of Britain’s own Colonies, it was free to use the positioning of Sri Lanka in any way it chose. However, even though the exercise of such unilateral actions are not acceptable in this day and age, the fact that there have been several instances where raw power has been used in the pursuit of major power interests, must mean Sri Lanka has to act with extreme circumspection.

Military preparedness is an indispensable component in the pursuits of interests of major powers. How countries such as Sri Lanka are expected to contribute towards a regional security network that is of interest to the US is what is reflected in the MCC Compact, ACSA and SOFA. Enunciating U.S. interests, Acting Secretary Shanahan’s Remarks at the IISS Shangri-La Dialogue 2019 were: "The BUILD Act establishes a new U.S. International Development Finance Corporation that will prioritize low- and middle-income countries. Through it we will more than double U.S. development finance capacity, from $29 billion to $60 billion, helping to unlock the potential of private capital to support high quality, high standard, transparent investments to better service infrastructure needs across the region and the world… by focusing our investments on preparedness, strengthening our alliances and partnerships, and empowering a regional security network. For that network to thrive, we need all who seek to derive benefit from it to contribute their part".

It is thus abundantly clear that the strategy of the US is to invest in "preparedness" by strengthening alliances and partnerships in order to develop a regional security network. This is to be achieved by investing in better service infrastructure needs in low and middle income countries across the region. In the case of Sri Lanka such infrastructure would be a total of $350 million to improve traffic signaling systems, modernizing bus transport and improvements to provincial roads connecting the Central, Sabaragamuwa, Uva and Eastern Provinces. The balance of the $ 480 million MCC Grant, i. e., $ 130 million, is to prepare an inventory of State Lands and Administrative costs. Thus, the $140 million allocated for improving provincial roads that would connect Colombo and Trincomalee is what really matters to the US. This amount is a mere pittance for the strategic link between the two key ports which is a vital element in the equation for preparedness.


The stated aim of the MCC Compact is ‘how to address poverty’. The strategy to achieve this objective was developed jointly by the Center for International Development of Harvard University and the Government of Sri Lanka. Their joint decision was to address poverty by improving Transport Logistics infrastructure and access to Land. Behind the façade of addressing poverty is the need of the US to develop a regional security network with the participation of low and middle income countries in the region as stated by Acting Secretary Shanahan of the US at a Shangri-La Dialogue in 2019.

How Sri Lanka contributes to this plan is by developing that particular component in the MCC Compact relating to improvement of roads in judiciously selected provinces such as Central, Sabaragamuwa, Uva and Eastern Province that would connect the ports of Colombo and Trincomalee. This strategic corridor is what gives meaning to the US interests for a Regional Security Network. The rest is contained in the Access and Cross Service Agreement and the Status of Forces Agreement. It is the combined effect of ALL THREE AGREEMENTS that gives real meaning to the US interests. Therefore, reviewing the MCC compact in isolation WITHOUT the other two Agreements will very likely distort the true picture.

The need to connect the ports of Colombo and Trincomalee is not a new idea. According to Dr. Colvin R. de Silva it was first conceived by Governor North in the early 19th Century because he realized its strategic military importance for the defence of India. How Sri Lanka contributes to meeting the expectations of the US without sacrificing the people’s sovereignty and its stated policy of neutrality, is going to be a formidable challenge for Sri Lanka that would test its soft power to the ultimate.

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