Post-Aragalaya economic recovery depends on implementation of IMF formula – Japanese Ambassador

Since May 2022, Japan has been providing grant assistance in response to the unprecedented economic crisis that compelled the government to officially accept bankruptcy status in April of the same year. Totalling USD 111 mn, the Japanese assistance covered several fields, with the latest addition being a high profile anti-corruption drive. Japanese Ambassador Hideaki Mizukoshi didn’t mince his words when he declared that curbing waste, corruption, irregularities and mismanagement must be top of Sri Lanka’s agenda whatever the outcome of the Presidential Poll.

Text and pic by
Shamindra Ferdinando

Japanese Ambassador Hideaki Mizukoshi says Tokyo won’t take sides at the forthcoming presidential election. “Regardless of who takes the helm in the next election, we are committed to further deepening the trust and bonds between our two countries.”

The Ambassador insists the responsibility on the part of whoever wins the Sept. 21 national election, the first since violent public uprising, allegedly fomented by the US-led Western camp, forced President Gotabaya Rajapaksa out of office, to adhere to the IMF remedies.

The Samagi Jana Balawegaya (SJB) has repeatedly alleged that certain IMF conditions are not fair. It says it will amend the IMF agreement in case of winning the upcoming presidential election.

In an exclusive interview with The Island, at his official residence at No 12, Maitland Crescent, the Japanese envoy discussed a range of issues, both local and global. However, Ambassador Mizukoshi politely declined to comment on the situation developing in Bangladesh in the aftermath of a ‘successful’ regime change operation also blamed on the US.

The US State Department, however, has categorically denied the accusation directed at Washington by no less a person than ousted Premier Sheikh Hasina, who it claims crushed the democratic Opposition through unlawful means.

Excerpts of the interview:

(Q) During the recent speech delivered at Sasakawa Memorial Hall, you emphasized the responsibility on the part of Sri Lanka to adhere to IMF remedies, regardless of the outcome of the Presidential Poll. Obviously that is the view of all creditors, not only Japan. Don’t you think that position is very much favourable to the incumbent President?

(A.) Japan has no intention of favoruing any one candidate over the others. For Sri Lanka to achieve economic recovery, it is crucial to first restore international community’s trust. To this end, it is essential to steadily implement the various economic and social reforms laid down as conditions by the IMF, which is also the basis for the agreement on the debt restructuring.

(Q) Would it be fair to say that the Japanese position vis-a-vis Sri Lanka is compatible with that of other Quad countries?

(A) Japan, Australia, India, and the United States share the fundamental values, and are committed to strengthening a free and open international order, based on the rule of law. Along this line, we share a common interest in ensuring peace and prosperity in the Indian Ocean, highlighting the importance of Sri Lanka. Also, all these countries are members of the Official Creditor Committee (OCC) for Sri Lanka, therefore the four countries have a common position on the agreement on the debt restructuring, which, in turn, is based on the agreement between Sri Lanka and the IMF.

(Q) Did the utterly irresponsible and irrational decision to suspend the mega Japanese light rail transit project in late 2020, contribute to the deterioration of relations between the two countries? During your address to the Lanka Japan Friendship Society (LJFS) on July 26, reference was made to the resumption of 11 Yen loan projects, suspended in May 2022. What is the status of the Light Rail Transit (LRT) project?

(A) Japan and Sri Lanka have maintained a strong friendship since the speech by the late President Jayewardene at the signing of the San Francisco Peace Treaty in 1951. This longstanding friendship between our peoples has not changed over many decades. Even so, the cancellation of the LRT naturally had a negative impact on the Japanese investors. We decided to resume the disbursement of 11 Yen loan projects, which have been suspended since 2022, immediately after the MOU between Sri Lanka and the creditor countries was signed to support early recovery of Sri Lanka. On the contrary, the status of the LRT project, which was unilaterally cancelled by Sri Lanka, rather than suspended by default, is set apart from those 11 Yen loan projects. Therefore, it cannot be resumed in the same manner as the other projects. Nonetheless, we are aware of the strong interest shown by Sri Lanka in the LRT project. While closely monitoring the situation, we keep our doors open for new projects, including the LRT, in coordination with Sri Lanka.

(Q) Would you/other creditor nations be talking to political parties represented in Parliament in the run-up to the Presidential Poll as regards the need to continue with the post-Aragalaya agreements/understanding between Sri Lanka and the IMF?

(A) Japan supports Sri Lanka’s agreement with the IMF as well as the reforms being undertaken, based on this agreement. We have been making our position clear to many political parties whenever we have a chance to talk to them.

(Q) What is your take on the ‘Economic Transformation Bill’, approved by Parliament without a vote on July 26, as the government repeatedly declared that it was meant to ensure the continuation of IMF remedies in case the next national election resulted in a change of government?

(A) My understanding is that the Economic Transformation Act aims at achieving medium and long term economic transformation in Sri Lanka through setting targets on economic development, such as debt sustainability targets, based on the current IMF programme, and by encouraging trade and investment. Having completed bilateral debt restructuring and undergoing the reforms under the IMF support programme, Sri Lanka is now at the stage of preparing for substantial economic growth after overcoming the economic crisis. If this new Act will ensure the consistency and predictability of the business environment in Sri Lanka for foreign investors, including Japanese businesses, we welcome the approval of the Bill, without a vote by the Parliament.

(Q) Would you mind explaining the relevance of the ‘Comprehensive Partnership Agreement’ signed in Oct 2015, in Tokyo, by the then Premier Ranil Wickremesinghe and the late Shinzo Abe, the then Japanese PM, to the current Japanese position?

(A) As you are aware, Japan and Sri Lanka are “comprehensive partners.” Over many years, the two countries have built bonds of friendship and trust. In 2015, the late Prime Minister Abe and the then Prime Minister Wickremesinghe, representing their respective countries, issued the “Joint Declaration on the Comprehensive Partnership between Japan and Sri Lanka.” The value of this joint declaration, which stands on the foundation of a long history of friendship, is unparalleled and holds more meaning than words alone can convey. This joint declaration addresses key pillars for Japan-Sri Lanka relations, such as Promotion of Investment and Trade, National Reconciliation and Peacebuilding, Maritime Cooperation, and People-to-People Exchange, and continues to be an important document today. Regardless of future changes in government, in either country, this partnership will surely be inherited, further deepened, and expanded.

(Q) The US and India, on numerous occasions over the years, expressed concerns over what they asserted as growing Chinese presence in Sri Lanka. The next US Ambassador is on record as having said that Sri Lanka, at their behest, declared a ban on Chinese research vessels for a period one year, commencing January 1, 2024. As a member of Quad, what is the Japanese stand on the continuing controversy over Chinese ‘activity’?

(A) While I would like to refrain from commenting on what the Ambassador-designate said, I can say that Japan places great importance on achieving a “Free and Open Indo-Pacific” based on the rule of law in the South Asian Region. In this regard, Japan’s perspective aligns with that of Sri Lanka and the members of the QUAD. During Foreign Minister Sabry’s visit to Japan, in early July, he stated at the Foreign Ministers’ meeting that Sri Lanka, as a peace-loving maritime nation, will continue to “cooperate with various countries” and contribute to the peace and stability in the Indian Ocean. Japan is supportive of such a position of Sri Lanka.

(Q) In late August 2018, the then Japan’s Minister of Defence Itsunori Onodera visited the Hambantota port. Onodera also visited Trincomalee. Over the past decade, Sri Lanka received visits by many Japanese warships (Japan Maritime self-Defence Force). You have also provided significant support to Sri Lanka Coast Guard and the provision of the night navigation system to Trincomalee harbor last year. Do you believe closer cooperation between Japanese and Sri Lankan militaries is beneficial to both countries?

(A) Sri Lanka is strategically located in the Indian Ocean, through which one-third of international cargo and two-thirds of the world’s oil cargo pass. The stability of the Indian Ocean region is essential for the economic activities of many countries, including Japan, and it serves as an important transit point for the Japan Maritime Self-Defence Force’s anti-piracy operations in the Gulf of Aden and off the coast of Somalia. One of Sri Lanka’s challenges, such as drug smuggling in its waters, can lead to maritime security deterioration, affecting the stable use of vital sea lanes. Therefore, close cooperation between Japan’s Self-Defence Forces and the Sri Lankan military, as well as between the Japan Coast Guard and the Sri Lankan Coast Guard, is crucial for addressing this issue. This cooperation contributes to maintaining and improving maritime security, benefiting both countries. It also aligns with Japan’s “Free and Open Indo-Pacific (FOIP)” initiative, which promotes the rule of law, freedom of navigation, and free trade.

Additionally, the provision of the Night Navigation System to Trincomalee Port on February 17, 2023, primarily aims to contribute economically. This system enables 24-hour operations, including nighttime, at Trincomalee Port, thereby enhancing navigational safety.

(Q) You recently talked about the Japan-Switzerland-South Africa troika in supporting Sri Lanka’s reconciliation efforts. What are your recommendations to Sri Lanka on achieving national reconciliation?

(A) Since the dispatch of Special Representative Yasushi Akashi to the Sri Lankan peace process, Japan has provided various forms of support and advice to help Sri Lanka address issues related to peace, reconstruction, national reconciliation, and human rights improvement on its own. My colleagues and I have visited various regions, including the North and the East as well as the South, meeting with local people.

In Colombo, we continuously exchange views with various levels of stakeholders, including Sri Lankan government officials, opposition parties, civil society, residents, and the diplomatic corps. Our close cooperation with the Swiss Ambassador and South African High Commissioner has also been extremely beneficial. My recommendation to the government of Sri Lanka is first to gain trust of the minority people by listening to their grievances about everyday life and proposing best possible practical solutions to them; and then to promote discussions on issues such as truth and reconciliation committee and devolution with all stakeholders in a transparent way.

(Q) What is Japan’s stand on the war in Ukraine? And the war in Gaza?

(A) Regarding the situation in Ukraine, Japan’s position is that Russia’s aggression against Ukraine has threatened the very foundation of the international order that the international community has built up over a long period of time, and that unilateral changes to the status quo by force should not be tolerated.

Concerning the Israel-Palestine situation, the most important objectives are achieving a ceasefire and de-escalating the situation as soon as possible. A broad international engagement is crucial for supporting Palestine. Japan is actively involved in reforming the Palestinian Authority (PA), rebuilding Gaza, and promoting the process towards a two-state solution. Furthermore, Japan will continue its diplomatic efforts to prevent further destabilization in the Middle East and to lay the foundation for long-term stability in the region.

(Q) Did any Japanese national die here during the 2019 Easter Sunday attacks?

(A) Sadly, one Japanese national was killed in the attack and four others were injured. The terrorist attacks killed a total of more than 250 people and injured an additional 500 people. Irrespective of the nationality of the victims, all the losses are irreparable and gave grave sorrow for everyone who has witnessed this tragedy and the atrocity. I would like to renew my deepest condolences to the families, friends and all those who lost their loved ones in the attacks, and I strongly condemn the heinous act of terrorism.

(Q) Finally, having served in Colombo for three years ahead of our first national election, what is your candid advice to political parties here?

(A) Throughout its history, Sri Lanka has built a strong foundation as a democratic nation by respecting the process and results of national elections. We hope that the upcoming elections will also be conducted peacefully and in a transparent way. Additionally, we wish that the election campaigns by political parties will promote national reconciliation and integration rather than creating a divide in the country.

Japan has always been a true friend of Sri Lanka, maintaining friendly relations with all past regimes and prioritizing the well-being of the Sri Lankan people. This stance will remain unchanged. Regardless of who takes the helm in the next election, we are committed to further deepening the trust and bonds between our two countries.

(Q) Have you watched the movie “Oppenheimer,” which is about the father of the atomic bomb? If yes, how did you feel?

(A) Yes, I watched it and I think, as a movie, it showed interesting aspects of American history. As a Japanese citizen, I hope the movie will provide an opportunity for the audiences to reflect on the unspeakable misery brought about by the atomic bombs and promote positive arguments on nuclear disarmament.

The US bombed Hiroshima and Nagasaki on August 06 and August 09, 1945, respectively. The bombings, carried out while the Japanese were on the verge of surrender, claimed the lives of tens of thousands of civilians in the horrific blasts and thousands succumbed to radiation poisoning later. Within 24 hours after the bombing of Nagasaki, Tokyo accepted the Allied surrender terms as dictated by the US, the UK and China.