Wednesday Apr 24, 2024
Wednesday Apr 24, 2024
Saturday, 9 May 2020 00:20 - - {{hitsCtrl.values.hits}}
EU’s new Ambassador for Sri Lanka Denis Chaibi assumed office in November 2019 when the country was busy electing a non-political candidate as the president and coming to terms with the early days of the winner Gotabaya Rajapaksa’s new administration.
Denis, a Belgian national, first visited Sri Lanka only five years ago as a tourist and perhaps didn’t imagine he would come back later as the EU’s flagbearer in Sri Lanka and the Maldives. The EU is Sri Lanka’s biggest source for tourists, second biggest export market, and third largest foreign investor. More importantly, for the past 25 years, it has been a key development partner for Sri Lanka, promoting sustainable and inclusive socio-economic development, and championing democracy, good governance, and reconciliation.
In his first interview with Sri Lankan media, and coinciding with Europe Day which falls today (9 May), Denis spoke to Daily FT on the status of EU-Sri Lanka ties and their future potential, as well as Sri Lanka’s own challenges and opportunities in becoming a progressive nation. Following are excerpts:
By Nisthar Cassim
What were your first impressions after arriving in Sri Lanka?
My first impressions of the country were formed when I first visited Sri Lanka as a tourist in 2015. What impressed me then, as it does now, is the resilience of the Sri Lankan people. In spite of conflict, in spite of the devastation wreaked by the 2004 tsunami, or last year’s horrific terrorist attacks, people continue to live, work, and smile – always looking towards the future. Such a display of strength is a great inspiration to all Europeans who visit the country.
In your view, how important and progressive have EU-Sri Lanka relations been?
EU-Sri Lanka relations started progressively, with a 1975 Commercial Agreement, and accelerated in 1995, when an EU Delegation was established in Colombo. So this year marks 25 years of EU presence in Sri Lanka.
Over the last 25 years, the EU has grown to be among Sri Lanka’s top three: 1) export markets; 2) investors; 3) providers of tourists. For example, bilateral trade has grown by 74% in the last decade, mainly to the benefit of Sri Lanka, which has a trade surplus with the EU of over EUR 1 billion. The Generalised Scheme of Preferences Plus (GSP+) has of course been an instrumental part of these relations. However, Sri Lanka has now graduated to an upper middle-income country. This shows a positive growth trend but puts Sri Lanka in a different category.
Still, development assistance remains a significant aspect of EU-Sri Lanka relations. I am proud to say that, over the last 20 years, the EU has supported Sri Lanka with over EUR 800 million in development and humanitarian assistance, including more than EUR 200 million in recent years. This assistance has helped communities affected by the tsunami and the ethnic conflict as well as vulnerable people in other parts of the country.
We are active in electoral assistance and in support to civil society organisations and local authorities. The environment, human rights, and academic exchanges are recurrent features in our development programmes.
We are helping low-income communities through economic development and by strengthening local governance. One of our priorities is to support efforts to modernise agriculture by making sure that farmers get a good price for their products, local companies produce safe food, and that consumers get a fresh and affordable product. We assisted the development and implementation of the National Export Strategy. We have been helping Sri Lankans gain better access to justice and will expand our efforts.
This year, the COVID-19 crisis poses the risk of a serious economic setback for Sri Lanka as for much of the world. The scale of this challenge requires a similarly global response. We recently announced a grant package of EUR 22 million to support Sri Lanka’s COVID-19 response. This will go to the health sector, through the World Health Organisation, and to the agriculture and tourism sectors.
What is clear is that Sri Lanka has had a very difficult, very challenging year. The slow recovery from the devastating Easter Sunday attacks has been interrupted by this global health crisis. The country was already grappling with a challenging macroeconomic situation of low growth rates and significant fiscal pressure in the aftermath of the attacks. This is now exacerbated. Like many countries facing the high social and economic costs of COVID-19, Sri Lanka will have to make difficult decisions; public finance is an immediate challenge, amid already high public debt and external refinancing needs
Any recent milestones you want to single out as significant that both countries can be proud of?
Sure, just to mention a few. First, there is Sri Lanka’s readmission to GSP+ in May 2017. We give Sri Lanka better access to the EU markets and in turn Sri Lanka commits itself to making progress on implementing various UN conventions – whether these are social, labour and human rights, environmental, or others. Since reinstatement, Sri Lanka’s exports to the EU have increased by more than 20%—this is a lot, and it could be even higher if Sri Lankan companies would actually use the scheme more, which is possible. But aside from the economic benefits, the re-granting of GSP+ has also helped to strengthen the EU-Sri Lanka relationship, providing opportunities for important conversations on areas of mutual interest and shared international commitments.
Sri Lanka’s transition to an upper middle-income country is another significant milestone. It is an achievement, but it is also a challenge. In my view, achieving inclusive and sustainable growth will require an open and competitive investment climate, improved infrastructure involving the private sector, and an even more skilled workforce.
Our support towards Sri Lanka’s COVID-19 response is our current priority. Our current development partners have already adapted their action to fulfil community needs arising from the pandemic. Now we are channelling funds to critical sectors. We will overcome this crisis together. In the mid-term, we hope to work with the Government on sustainable growth
In the EU’s view what are Sri Lanka’s medium- to long-term challenges?
It is vital for Sri Lanka, as it is for other countries, to avoid the so-called ‘middle-income trap,’ or stagnating in middle-income status due to slowing productivity gains, by ensuring the economy unleashes new sources of growth. The move from an estimated GDP per capita of $ 4,000 to $ 10,000 and above requires stronger talents, more efficient institutions, and new products. It requires higher labour productivity.
Shifting to advanced skills, innovation, digitalisation, and knowledge-driven activities means a stronger focus on education and training, not just in universities but also in vocational training.
Moving up the value chain requires investment in advanced infrastructure, research, and development. Strong institutions, improved governance, and an open dialogue between Government and business are also important for Sri Lanka to spur growth. To make full use of geographical location – and fulfil the potential as a regional hub – Sri Lanka’s economy would benefit from more openness, in particular for investors and traders.
The country will also need to intensify efforts to fight climate change because it is so vulnerable to it. We are happy to support Sri Lanka in reducing its greenhouse gas emissions and would be happy to also come in to assist in ‘greening’ the economy.
More fundamentally, long-term prosperity can only be guaranteed by repairing decades of conflict, which is undoubtedly an enormously complex task. Sri Lanka is as strong as its people, and the diversity of the Sri Lankan people is one of the country’s most important strengths, showcasing something that we Europeans also highly value – namely, unity in diversity. In the last couple of weeks, although subdued due to the curfew, I have seen the country celebrating the Sinhala and Tamil New Year and Easter Sunday. Now, Ramadan is being observed by a part of the population as well.
Sri Lanka has tremendous potential: A vital geostrategic position; strong relationships with regional and global powers; and an island rich in history, resources, and people, with a high Human Development Index. By being open to the world and studying how best to contribute to the global economy, Sri Lanka can make effective use of those resources and relationships
You assumed duties in November 2019 amidst political changes in Sri Lanka, with a government in transition. How has the country progressed since then?
Progress is difficult to assess because of the COVID-19 crisis. What is clear is that Sri Lanka has had a very difficult, very challenging year. The slow recovery from the devastating Easter Sunday attacks has been interrupted by this global health crisis. The country was already grappling with a challenging macroeconomic situation of low growth rates and significant fiscal pressure in the aftermath of the attacks. This has now been exacerbated.
Like many countries facing the high social and economic costs of COVID-19, Sri Lanka will have to make difficult decisions; public finance is an immediate challenge, amid already high public debt and external refinancing needs.
The EU has been one of the most severely-affected regions by the COVID-19 pandemic. What were the key learnings and what challenges lie ahead?
The restrictive measures introduced by Member States have been necessary to delay the spread of the virus and alleviate the pressure on healthcare systems—better known as ‘flattening the curve’.
In prioritising and targeting our response, we found testing invaluable – we have focused on large-scale testing that can provide fast and reliable results. We have also come to the conclusion that we would only admit to hospitals those at most serious risk while ensuring people with mild symptoms remain quarantined and treated adequately.
We have also learned painfully that we have to always reflect and reassess the right balance between health and the socio-economic impact of the pandemic. We realise that we will have to live with the virus until a vaccine is found – this means being tremendously cautious in our social distancing. We therefore encourage clear, transparent, and timely communication, as well as educating people on their own responsibility to contain the virus. Public engagement and self-discipline are not easy, of course.
The EU has also put forward a roadmap for recovery, which builds on the expertise and advice of the World Health Organisation, among others. The priority is to preserve public health while gradually lifting containment measures to restart community life and the economy. Therefore, the roadmap is not set in stone, and will be revised as new data becomes available. Besides looking at our own countries, we are also helping other countries worldwide and in my case here we help both Sri Lanka and the Maldives.
More fundamentally, long-term prosperity can only be guaranteed by repairing decades of conflict, which is undoubtedly an enormously complex task. Sri Lanka is as strong as its people, and the diversity of the Sri Lankan people is one of the country’s most important strengths, showcasing something that we Europeans also highly value – namely, unity in diversity
The EU is one of the biggest development partners, and largest tourism source and export market for Sri Lanka. In your view, what should Sri Lanka do to continue to benefit from this status of the EU?
It is hard to predict now how EU-Sri Lanka relations in the areas of development assistance, trade, and tourism will develop in a COVID-19 world. What I can say is that the EU continues its work to support partner countries in their efforts on environmental issues, on open economies, on green growth. Trade and cooperation is a two-way street, so we hope that Sri Lanka will remain active in open markets, which has the ability to prevent greater hardship.
On tourism, I am totally convinced that Sri Lanka’s incredible beauty, rich scenery, and amazing food will always attract European tourists. It is now for the Government and economic operators to build confidence in anticipation of reopened borders. When it’s safe, the tourists will return. We are planning to help more parts of the country and more communities to benefit from tourism, so that Sri Lanka becomes an even better destination for wellness and wildlife.
Over the last 25 years, the EU has grown to be among Sri Lanka’s top three: 1) export markets; 2) investors; 3) providers of tourists. For example, bilateral trade has grown by 74% in the last decade, mainly to the benefit of Sri Lanka, which has a trade surplus with the EU of over EUR 1 billion.
How critical will the EU sans the UK remain for Sri Lanka?
Even without the UK, the EU remains a significant partner for Sri Lanka as its first provider of tourists (per spending), as its second largest export market, and as its third largest investor. Since Sri Lanka is in discussion with the IMF, it is important to recall that the EU has a strong presence in the IMF, with two Member States among the top six share of votes per country and the EU area accounting for a 21.5% share of votes. The EU is also Sri Lanka’s second largest provider of development assistance grants. I am therefore confident that the strong relationship between Sri Lanka and the EU will endure.
What plans to strengthen EU-Sri Lanka relations during your tenure? What can Sri Lanka look forward to?
Our support towards Sri Lanka’s COVID-19 response is our current priority. Our current development partners have already adapted their action to fulfil community needs arising from the pandemic. Now we are channelling funds to critical sectors. We will overcome this crisis together.
Development assistance remains a significant aspect of EU-Sri Lanka relations. I am proud to say that, over the last 20 years, the EU has supported Sri Lanka with over EUR 800 million in development and humanitarian assistance, including more than EUR 200 million in recent years
In the mid-term, we hope to work with the Government on sustainable growth. We can be useful in developing Sri Lanka’s start-up ecosystem, as well as raising awareness and building partnerships between Sri Lankan and EU research and development institutions, with special focus on climate change.
At the end of the day, Sri Lanka can expect from the European Union what it is well known for: A strong and reliable partnership, open markets and no hidden agenda, based on core values enshrined in international conventions. In this regard, we will continue our longstanding work on reconciliation, as well as support to civil society and human rights.
How do you see Sri Lanka’s future socio-economic growth potential?
Sri Lanka has tremendous potential: A vital geostrategic position; strong relationships with regional and global powers; and an island rich in history, resources, and people, with a high Human Development Index. By being open to the world and studying how best to contribute to the global economy, Sri Lanka can make effective use of those resources and relationships.
Our support towards Sri Lanka’s COVID-19 response is our current priority. Our current development partners have already adapted their action to fulfil community needs arising from the pandemic. Now we are channelling funds to critical sectors. We will overcome this crisis together. In the mid-term, we hope to work with the Government on sustainable growth
