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Colombo fails to meet obligations linked to GSP+ Scheme

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Sri Lanka’s rights abuses flout EU trade benefits requirements

By Claudio Francavilla
(from Human Rights Watch website)

Sri Lanka’s economy has contracted every year since 2019, but exports to the European Union have increased, providing vital income in desperate economic times. This has largely been due to the EU’s Generalised Scheme of Preferences Plus (GSP+), which grants Sri Lanka tariff-free access to the EU market so long as it complies with core human rights and labor rights treaties.

But, as the EU noted in a new report, the Sri Lankan government is falling well short of the mark.

The report identifies two bright spots for human rights in Sri Lanka: the “resilience” of civil society; and the 2022 Aragalaya (“struggle” in Sinhala) movement in which thousands protested for good governance “in the spirit of democracy and freedom of expression and assembly.”

Yet the report makes clear that civil society’s “resilience” is necessary in the face of government “harassment and intimidation.” Since President Ranil Wickremesinghe took office in July 2022, the government has adopted a “repressive response” to protests, arresting the movement’s leaders and employing “disproportionate use of force.”

This challenges the EU’s policy to assist Sri Lanka’s recovery from its economic, governance and human rights crises. As the report states, “The process of reform will be more sustainable and robust if Sri Lankan civil society is part of it and if the approach is truly inclusive.”

Notably, the government has yet to repeal the abusive Prevention of Terrorism Act – a key commitment to the EU – and even broke a moratorium on its use. As the International Monetary Fund noted in September, civil society’s “oversight and monitoring” of government actions is “restricted … by broad application of counter-terrorism rules.”

Instead, the government has proposed new counterterrorism legislation that does not meet rights standards, and an Online Safety Bill that the EU says “could lead to censorship.” Other rights concerns the EU highlighted include the “treatment of minorities … hate crimes … allegations of torture … decriminalising same sex relations … domestic violence and child abuse … [and] harassment and threats against human rights defenders, lawyers and journalists.”

These and other developments are incompatible with the GSP+ human rights requirements, and yet Sri Lanka’s government continues to benefit from the program. For conditionality to be credible, the GSP regulation needs to be reformed to require clear, public, and timebound benchmarks for compliance. This is what EU lawmakers should focus on: making GSP more effective in fostering human rights progress in beneficiary countries.



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Contentious Chinese research vessel docks in Maldives

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Xiang Yang Hong 03 has previously visited Indian Ocean on several other occasions

A contentious Chinese research ship reached the Maldives on Thursday in the latest sign of the archipelago’s diplomatic reorientation towards Beijing and away from its traditional benefactor India.

Local residents said they had spotted China’s Xiang Yang Hong 3 at the Thilafushi industrial port near the capital Male.The 100-metre-long (328-foot) vessel was at an anchorage near Male on Thursday evening, according to the website Marinetraffic.

The Maldives’ pro-Beijing government said earlier the vessel was docking for a port call to rotate crew and take on supplies, on the condition that it would not conduct “research” while in its territorial waters.

Media reports in India had suggested that the vessel was conducting surveillance for Beijing.

India is suspicious of China’s increasing presence in the Indian Ocean and its influence in Sri Lanka and the Maldives, which are strategically placed halfway along key east-west international shipping routes.Relations between Male and New Delhi have chilled since pro-China President Mohamed Muizzu won elections last year.

Muizzu has asked India to withdraw 89 security personnel based in the Maldives to operate reconnaissance aircraft by March 15.But the president has also insisted he does not want to upend ties with New Delhi by replacing Indian troops with Chinese forces.

Sri Lanka refused entry to Xiang Yang Hong 3 after two other port calls from Chinese vessels since 2022 raised objections from India.That included the ship Yuan Wang 5, which specializes in spacecraft tracking and which New Delhi described as a spy ship. (AFP)

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MP Harsha in Australia as “Special visitor”

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Harsha de Silva

Opposition MP and Chairman of the Committee on Public Finance (COPF) Harsha de Silva is currently in Australia as a special visitor.

Taking to ‘X’, the Samagi Jana Balawegaya (SJB) MP said he had embarked on a nine-day visit on an invitation extended by the Government of Australia.

“My engagements with policymakers, academics, scientists and investment managers began in Melbourne and will continue in Adelaide and then public officials and politicians in Canberra,” he added.

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ADB country chief hopes Lanka could sustain policy reforms despite elections

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Takafumi Kadono

ECONOMYNEXT –The Asian Development Bank (ADB) expects Sri Lanka not to reverse its International Monetary Fund-led policy reforms despite elections soon, the ADB Country Director for Sri Lanka Takafumi Kadono said.

The island nation has witnessed repeated reversals of policy reforms in the past due to greedy politicians who misled  the people to vote for them by sowing the seeds of subsidy mentality with unsustainable debts at expensive borrowing costs, economists say.

That led the country into an unprecedented economic crisis in 2022 with a sovereign debt default. Sri Lanka is still struggling to come out of the crisis.

The IMF has strictly placed some reforms including in state sector enterprises, fiscal and monetary sectors.

Sri Lanka has implemented the painful IMF reforms so far including higher personal income taxes, but economists have raised concerns over the sustainability of the current reforms due to possible changes in the policies in the event of a new president or government comes to power after democratic elections.

“If that kind of reversal happens, we also cannot justify our support,” ADB Country Director for Sri Lanka Takafumi Kadono told EconomyNext on late on Wednesday.

“We do expect these policy reforms to be sustained. So that is our expectation. That is the premise which we are providing our budget support. If they reverse, the whole premise will be collapsed. That kind of policy reversal cannot happen.”

The island nation had sought IMF bailout package for 17 times including the ongoing support. However, the authorities have failed to complete most of the past IMF loan disbursements due to politically motivated contradiction with the global lender’s tight fiscal policies.

Sri Lanka has shown some signs of recovery in the third quarter of 2023 with the economic growth turned to positive from contraction for the first time in seven quarters.

However, opposition political parties have promised to revisit the IMF deal if they come to power.

Higher taxes, soaring cost of living, and lack of salary hike have made President Ranil Wickremesinghe’s government unpopulour among the public, analysts say.

Wickremesinghe has said the country will hold both presidential and parliamentary election by 2025.

Some government politicians have told EconomyNext that the higher taxes would be eased from April and the authorities will try their best to meet the IMF conditions for the third disbursement in June this year.

The presidential polls should be held by October this year, but opposition parties have said President Wickremesinghe is in the process to delay the poll.

However, Wickremesinghe’s office last week said Presidential Election will be held “within the mandated period”, without giving an exact time.It also said the General Election will be held next year, “according to the current timeline”.

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