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The Right Way to do the Eastern Container Project

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by Kumar David

The fracas about the Eastern Container Terminal is mostly if not entirely political; concerns re finance, technology and traffic, in so far as the spat in the public domain is concerned, are not of substance. The scuffle is twofold – domestic nationalist ideology and Lanka’s positioning in geopolitics. In the domestic arena it is all about Indian participation, and the principal protagonist is Sinhala Nationalism. There is subliminal ideological aversion in the Sinhala nationalist mind to things Indian. This is not the place to explore why; whether Raja Raja Cholan, domestic antagonisms, or Tamil Nadu’s 60 million, lie at the root of the antipathy is a topic for another day. My only assertion today is that there is a gut distaste of India in the nationalist psyche. The point is that a pathological driver in the ECT standoff is Indian involvement irrespective of its suitability or otherwise. It lubricates the spleen of monk and laity alike and affects decrees of policy bosses.

The other input which I take as given, is that there is strategic tension in this region between China on one side and the Quad (India-US-Japan-Australia) on the other. Foreign Minister Colambage as reported on the front page of the Island of 28 Jan, when asked whether US, India, Japan and Australia would take a common stand against Sri Lanka on accountability, dismissed the possibility. “Sri Lanka is important to them” he said, while describing them favourably as four pillars of a Quadrangular security alliance. Hmm how will Beijing look at this jelly-fishy flopping? Exploring the good and bad of Chinese Belt & Road billions, versus capitalist liberal-democracy, will take me to far afield today.

There are four options on the table, everything else is simply variation on one of these themes.

 

Option 1:

Implementing the project as a consortium arrangement where Japan and India are the key players. Perhaps Japan will invest/loan $500 million, perhaps the Adani Group (India’s country’s largest port developer and operator) will manage operations, and perhaps an agency of the government of Sri Lanka will take a stake. I will mention variants anon.

 

Option 2:

China takes the leadership role in the project, most likely within the umbrella of the Belt & Road programme. Many variations are possible – Hambantota or Norochcholi style where China finances and builds and Lanka operates and repays debt, or in addition to this operates the project for an agreed number of years, or a third variant is where China lends capital and it is up Lanka to construct, operate, make a profit and repay.

 

Option 3:

This is what hard nationalist have wet dreams about; raise every kopek in the domestic market, have a love fest with the trade unions, borrow within this framework. Essentially, a Lankan conceived, financed, constructed and operated eastern harbour terminal.

 

Option 4:

Do bugger-all; forget about ECT; live without it; which may be where Lanka will end up given the pluripotent cock-up that is now unfolding on all sides.

These options have been discussed ad nauseam in press and TV and readers I think are fed up with saturation coverage. So I will go directly to what should be done. a) The China option – Option 2 should be discarded. I am not anti-China, not but we are already hugely indebted to China and debt repayment schedules to the PRC are hefty (about $2 billion a year for the next four years). We should put no more eggs in that basket. b) Lanka must play the non-alignment game to full advantage; pan-whoring is the way to go. How well Nehru, Nkrumah, Sukarno and SWRD-Mrs B played that game. Beggars must choose wisely and position their begging bowls judiciously. The ECT is the point to switch our tender maidenly virtues to course correction away from Chinese totalitarians to rapacious raiders from the capitalist powers. The forces behind Option 3 are powerful; unions, monks and nationalists who can bring GR, MR and SLPP to their knees. In any case it’s appropriate that domestic funds, whether from entities such as the EPF, the Lankan capitalist class or trade unions take a stake, Why not? And it this may set a model for financing development in a future where we are less broke. c) Option 4 is out of the question unless Lanka is to crawl into a cave.

Hence my position is that the way forward is to blend of Options 1 and 4. Let me go a little further on this road and explore a feasible project model. The site (contingent land and sea) will remain state property. A Project Company will be established by the principal Japanese and Indian partners for the purposes of: raising capital – maybe $700 million, building the terminal facilities, operating the harbour, developing contacts with international shipping lines, generating a profit, servicing debts incurred in project construction and in say 30 years transferring ownership to a government entity at a price discounted at an agreed annual rate (say 2% to 3%). This is quite similar to the BOT (Build, Operate and Transfer) concept that has been very successfully used with power projects all over the world. There will have to be some differences; for example a local partner is desirable because unlike a power project a harbour interacts with thousands of workers every day. Even better would be if the offer made by the trade unions to provide part finance is taken up. Either would need local partners who can raise say $100 million (Rs 20 billion) as co-investment. An additional take on making ownership part domestic would be to list 10% to 20% as shares on the local stock-exchange.

I appreciate that the challenge is more complicated than a BOT power-project where the most complex tasks arise during project construction, thereafter dispatching electricity to the grid under the control and supervision of a centralised network operator are familiar in electricity supply systems. Making a port project operationally successful and profitable will be far more complex and require commercial and pricing ability, good international networking and management of labour. Handing the whole project over to a Japanese-Indian consortium for an annual rental of such and such an amount is straightforward. The developers will raise funds, service debt, operate the facilities and pay easy-picking rental to the state, but the fever of Sinhala nationalism and trade union restlessness make this difficult. I concede that dim witted military types who are in charge of everything under Gotabaya will find that approach comfortable; just sit on an armchair and function as rent collectors. However the lay of the current political landscape may make this lazy approach infeasible. I think the government will have to get off its indolent backside and work out a project plan that includes some complexity since to let the project die is objectionable waste of economic opportunity.

I do not propose to discuss the report of the Presidential Commission of Inquiry handed over last week, except to the extent that it may influence the Eastern Container project. A expose can be found in Colombo Telegraph at: https://www.colombotelegraph.com/index.php/full-text-of-the-leaked-report-war-criminals-murderers-and-fraudsters-exonerated-by-nandasenas-political-victimisation-commission/ The CT story alleges that the report is an attempt to “exonerate, white-wash and acquit without charge perpetrators of the most heinous crimes committed in Sri Lanka in the recent past and in many cases reward murderers, abductors, and money launderers with compensation by the state”. The report unanimously recommends that “indictments against every accused in emblematic cases highlighted by the UN be dismissed, indictments in currently active trials be quashed; that high military officers, sergeants and sailors charged with rape, kidnapping, extortion rackets, abduction and assaulted be acquitted and released”.

This commission from hell was chaired by disgraced retired Supreme Court Judge Upali Abeyratne and included retired Court of Appeal Judge Chandrasiri Jayathilake and former IGP Chandra Fernando. It was a Gota regime whitewash squad reflecting regime thoughts and desires. The release of this stinking report at this moment, the eve of the Geneva UNHRC meeting where a devastating attack on the Lankan Government by the UN High Commissioner pointing to escalation of punitive measures is feared, has detonated a bomb under the regime’s backside. The recommendations are music to the ears of Gota’s military junta and it is impossible for the regime to condemn the report as this would enrage chauvinists and monk-mobs. On the other hand the MR loyal political side is acutely embarrassed. In order to minimise a skewering at Geneva and reprisals from the West will the government assuage Western anger by handing over the Eastern Terminal project to the Japan-India consortium? I expect to see heightened tension in the government between the military (GR) and the political (MR) wings of state power in the coming months.



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Trump’s tariffs, AKD’s gazette and Sri Lanka’s diplomatic slumber

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“We are rather respectable in Colombo. We go to bed fairly early, and we remain there till morning. “

According to Sri Lanka’s diplomatic folklore, the late S.W. R. D. Bandaranaike uttered these words while explaining the reasons for Sri Lanka’s abstention on the UN resolution condemning the Soviet invasion of Hungary. Apparently, SWRD’s foreign ministry officials were asleep at home when the diplomatic cable seeking instructions was received from New York. In those days, there were no cell phones, Internet, or even fax or telex machines. The diplomatic cables were sent through post offices. Decoding them was a slow and time-consuming process. Thus, the government could not provide appropriate instructions to our mission in New York in time, and the Sri Lankan delegation abstained on that sensitive UN vote.

Sri Lanka’s Absence from Section 301 Consultations

But then, how does one explain Sri Lanka’s absence from the crucial bilateral consultation held in Washington by the Office of the United States Trade Representative (USTR) during March-April on “Forced Labour” under the Section 301 of the US Trade Act of 1974? Didn’t our foreign and trade ministries send appropriate instructions to Washington in time? Even if the instructions from the foreign ministry were transmitted to our embassy in Washington by pigeon carriers, there was enough time for Sri Lanka to participate in those meetings.

In March, the USTR initiated these 301 investigations on 60 trading partners, and invited all of them for confidential consultations. Out of the 60, 46 participated in these consultations. Sri Lanka was not one of them. Other countries that didn’t participate in these consultations included China, Russia, and Venezuela! In addition to that, the Section 301 Committee conducted a public hearing with interested parties on April 28 and 29. Washington-based diplomats, representatives from few trade ministries as well as representatives from many foreign trade associations and chambers participated in these hearings. Sri Lanka was once again conspicuously absent.

As a result, when the USTR published the proposed forced labour tariffs on June 2nd, Sri Lanka ended up with a 12.5% duty. Pakistani and Indonesian diplomats participated in these consultations and took appropriate follow-up measures, and managed to enter the 10% duty category. As even a threat of a modest tariff hike could disrupt supply chains and reduce competitiveness, particularly in an industry such as garments, I discussed this issue on 15 June and underscored the importance of Sri Lanka’s participation at the next hearing, which was scheduled to be held from July 7th .

Awakening from Diplomatic Slumber and AKD’s Gazette

Fortunately, Sri Lanka finally awoke from weeks of diplomatic slumber, and Ambassador Mahinda Samarasinghe participated in the public hearing on 9 July, and promised, “…. · We have agreed to the text in our negotiations with the USTR on forced labour, …. The gazette as we speak is being printed and I’m getting the gazette tomorrow morning, and the gazette will be shared with USTR as I get it“.

As promised, President Anura Kumara Dissanayake issued a gazette on 10 July banning the imports of goods produced by forced labour. These new regulations are very similar to what Pakistan and Indonesia enacted in April, after their consultations with USTR in March. Why couldn’t we do it in April? Why did we wait till the very last minute?

Challenges ahead

“War is too important to be left to generals alone,” is a famous saying attributed to former French Premier Georges Clemenceau. Similarly, monitoring our main markets is too important to be left to diplomats alone. The United States is the largest single-country market for Sri Lanka. Therefore, Sri Lankan trade chambers and associations should become more proactive in these markets and participate in these events. For example, the chairman of the Pakistani apparel exporters association participated in the April hearings. Similarly, representatives from the Indian Agricultural and Processed Food Products Export Development Authority, the Federation of Indian Chambers of Commerce and Industry, the Confederation of Indian Industry, and Reliance Industries also participated in July hearings. At an event where each speaker is given only five minutes (strictly enforced), having a number of speakers from a country is an advantage. The presence of industry representatives in these kinds of events also help them understand the market dynamics and the future challenges. This is important, particularly because there will be many more challenges with Trump’s tariffs.

With the gazette issued on 10 July, Sri Lanka has imposed a prohibition on the importation of goods produced with forced labour. Now, the challenge will be to effectively enforce the prohibition. And what are the goods produced with forced labour? The USTR list only focuses on aluminum, cotton, electronics, lithium-ion batteries, rice, and tobacco. However, according to the U.S. Department of Labour, the list is much longer. Hence, this list may change continuously during the next two years and tariffs may fluctuate once again.

So, this is definitely not the time to slumber.

(The writer, a retired public servant, can be reached at senadhiragomi@gmail.com)

by Gomi Senadhira ✍️

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Tales of Mystery and Suspense 10 Casino for Sale

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After the overwhelming grotesquerie of J K Rowling’s latest Cormoran Strike novel (written, I should have noted, as the others were, under the pseudonym Robert Galbraith), I thought I should return to the world of fun, and also a much shorter description since this thriller moves quickly without the layers of detail that Rowling engages in.

I then move to the second comic thriller by Caryl Brahms and S J Simon. This, their second story to feature Vladimir Stroganoff and Adam Quill, was Casino for Sale, as lunatic a romp as the first, though without the emphasis on the ballet that characterized A Bullet in the Ballet.

This one begins with the impresario Stroganoff buying a casino cheap from Baron Sam de Rabinovich, only to find that it was a rundown place, not the grand casino of La Bazouche, a resort on the Frenc+h Riviera, as he had initially thought. The grand one belonged to Lord Buttonhooke, and Stroganoff could  not compete, until he thought of bringing the Ballet Stroganoff to the casino – which of course leads to Buttonhooke deciding to have ballet performances in his Casino too.

Stroganoff invites Quill to visit him, which Quill decides to do since he has left Scotland Yard, having come into a legacy. No one believes this, and he has to face questions as to what he did to have been sacked, with sympathy for having been found out.

Caryl and Simon

The day he arrives in La Bazouche there is a murder, of a vitriolic critic called Citrolo, in Stroganoff’s office. He had been going to write a damning review of the opening night of the ballet and Stroganoff, when he realizes Citrolo cannot be swayed, drugs him and dictates the review himself to the papers. He leaves Citrolo sleeping and finds him shot the next morning, whereupon he decides to muddy the waters and leave a suicide note and lots of other murder weapons. So much overkill, as it were, of course ensures that he is arrested.

But the excitable French detective who makes the arrest follows up his suggestion that Buttonhooke was also involved, and so the two casino owners find themselves in cells next door to each other, with the detective Gustave quite happy to provide creature comforts for a fee.

Quill decides he must investigate, and finds Gustave most cooperative, since he has a laid back attitude to work. So it is Quill that finds a notebook which makes it clear Citrolo is an accomplished blackmailer, and that there are lots of possible murderers, including Stroganoff’s croupier, who was crooked, Rabinovich, who was now working for Buttonhooke, a confidence trickster called Kurt Kukumber, whose prospectus for a dud gold mine was found in the office and Prince Alexis Artishok who was engaged in a deal to buy diamonds from the ballerina Dyra Dyrakova.

Stroganoff had been trying to get Dyrakova to dance for him, but having done so previously she had refused. But then to Stroganoff’s chagrin she agreed to dance for Buttonhooke. The clearly crooked Artishok had told Buttonhooke’s mistress Sadie Souse, who was not very bright, that Dyrakova possessed diamonds she was willing to sell cheap, and Sadie was determined to have them.

Quill meanwhile finds out that there was a secret passage to Stroganoff’s office, the obvious solution to what had begun as a locked room mystery, and that this was known by almost everyone apart from Stroganoff himself. And then Rabinovich is murdered, just after Gustave had released his two original suspects, leading him to blame Quill for having insisted on that and thus allowing them to kill again.

Soon afterwards Dyrakova arrives, and the town is full of posters announcing that she will appear in the casinos, elaborate posters for either one, since Stroganoff is determined that she will dance for him, and if she does not come willingly, he has devised a scheme to make her do so unwillingly. So, though Buttonhooke has her taken off to his yacht immediately she arrives at the station, Quill along with Arenskaya gets her into a launch and to Stroganoff’s casino, where she performs to tumultuous applause, not knowing for whom she is dancing.

When Quill asked her about the diamonds, she said she had sold them long ago, and that gave Quill the solution to the mystery. Rabinovich had known about this, and Artishok had killed him to prevent Sadie learning it from him, he had killed Citrolo who had recognized him for an accomplished card sharper, not a Russian prince at all. But before he is arrested, he gets away in a boat, and the police launch that pursues him is on the point of catching him up when it runs out of petrol.

Again, lots of excitement, and entertaining references  – Gustave grows marrows – and if not quite as brilliant as its predecessor, Casino was certainly a delightful read.

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The challenge of being positive about SAARC

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The RCSS forum addressed by SAARC Secretary General Ambassador Md. Golam Sarwar in progress. (Pic courtesy RCSS)

It was a few years back that a former President of Sri Lanka took it on himself to pronounce SAARC ‘dead’. Since then there have been other sections of Sri Lankan opinion that have joined the critics of SAARC and taken the solemn stance that SAARC has indeed died what may be called a natural death.

Their fatalism is understandable. SAARC has failed to meet at heads of government or state level for the past several years to take the SAARC process notably forward. Regional cooperation has more or less been only an appealing idea. No substantive concrete projects have taken off to make the idea a hard reality. ‘Inner paralysis’ seems to be SAARC’s lot. Hence the fatalism in these circles.

However, being one of the worst cash-strapped regions of the world and a teemingly populated one with people virtually left to their devices, what choices do the ‘SAARC Eight’ have other than to try their best to band together and continue with their cooperation efforts, however small they may be?

There is no escaping the mounting debt trap for many of these countries and bankrupt Sri Lanka is a glaring example, but ‘throwing in the towel’ and abandoning themselves entirely to the diktats of the strongest economies and their agencies will prove a ‘living death’ for many countries in the SAARC fold.

The gains may be meagre but giving-up on SAARC cooperation in full would prove self-defeating for the organization and South Asia. Right now, the collective intention ought to be to salvage what the region could from the tenuous cooperative efforts. Moreover, such initiatives could go some distance to generate a degree of goodwill among the Eight and help in sustaining a dialogue process.

Given this backdrop it proved ‘a stich in time’ for the Regional Centre for Strategic Studies (RCSS), Colombo, to recently host the SAARC Secretary General Ambassador Md. Golam Sarwar to a round table discussion on the unifying potential of SAARC and its future possibilities, besides other related issue areas.

Held on June 24th and moderated by RCSS Executive Director and former ambassador Ravinatha Aryasinha, the forum brought together a vibrant, wide ranging audience comprising academicians, diplomats, senior public servants, civil society activists and many others. Following the presentation by Ambassador Golam Sarwar titled, ‘Reigniting SAARC: Achievements, Challenges and the Way Ahead’, a lively Q&A followed.

The above forum could be described as an act of lighting the proverbial ‘candle’ rather than ‘cursing the darkness.’ It surely is a ‘darkness’ that could be seen as daunting considering that the region’s pivotal powers, India and Pakistan, are failing to act in a spirit of accord but are engaged in bitter finger-pointing on a number of questions of vital importance to SAARC.

On the other hand, what is the rest of the region doing to bring the above sides together? It is disappointing that to date the rest of SAARC has failed to launch a major diplomatic drive to bring peace between the feuding regional heavyweights. It needs to act without delay and establish its earnestness and this effort would need to prove SAARC’s staying power in the unfolding months and even years.

In assessing SAARC’s seeming failure local opinion in particular has failed to factor in what could be described as weak leadership. Since Sheikh Mujibur Rahman of Bangladesh, the founding father of SAARC, the region has failed to produce a visionary leader who could advance the SAARC cause with charisma and drive.

Among other reasons, weak leadership accounts considerably for the faltering and stuttering status, as it were, of SAARC. Badly needed are leaders who could go the extra mile, think less of narrow national interests and work diligently towards the collective well being of the region but SAARC’s millions of ordinary people have been made to wait in vain for leaders of such stature. Instead, they have been burdened with politicians who seem to be relishing the apparently moribund state of SAARC.

Looking back, it could be said that it was the dynamic leadership factor that led to the launching of the Non-Aligned Movement and for its sustenance for a few decades. True, it could be seen in some quarters that NAM is no more, but as in the case of SAARC, the former too has been unfortunate to be burdened over the years with politicians who lack the vision and drive to unflaggingly advance the fortunes of the South. NAM and SAARC lack the dynamism and vision of leaders of the stature of Jawaharlal Nehru, for example, to give them the required guidance and intellectual depth.

The reasons are complex for there not being among us currently political leaders with the vision and the steadfast commitment to advance the legitimate interests of the South. However, it could be stated with conviction that the majority of Southern leaders have too easily caved in to the demands of the global North and its financial agencies.

These leaders have failed to see, for instance, that the largely market economy oriented Northern governments would not view with favour a centrist economic model that attaches priority to the interests of the dis-empowered publics of the South. This realization ought to have dawned on the current government in Sri Lanka, for instance, some while ago but it has no choice but to abide by IMF dictates since economic survival at present is unthinkable without the latter’s succour.

Accordingly for SAARC this should be the time for some soul-searching. Priority needs to be attached to ending the feuding between India and Pakistan since at present the material fortunes of the region hinge largely on these regional giants giving peaceful relations among them a try. This is no easy challenge to meet but some daring, visionary diplomacy needs to take hold among the rest of SAARC.

There is some sense in SAARC bringing the peoples of the region together through programs that address their best collective interests. A meeting of minds among SAARC nations could enable SAARC and its agencies to build a region-wide people’s movement for progressive political and economic change that could in turn lead to the region’s political leaders sensitizing themselves more to the neglected needs of their publics.

However, the time is ‘now’ for the initiation of these progressive changes and the voice of SAARC well wishers would need to drown out those of their critics.

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