Millennium Challenge Grant: USA and the trust deficit

Tuesday, 3 September 2019 00:00 -     - {{hitsCtrl.values.hits}}

MCC Sri Lanka Resident Country Director Jenner Edelman addressing the ‘Understanding the MCC Compact’ forum

  • A trust deficit occurs when there is a gap between what is said and what is done. It also occurs when one thing is said and done in one place and the opposite is said and done in another place. Duplicity creates a trust deficit


By Raj Gonsalkorale

The United States hopes that Sri Lanka will eventually approve the $ 480 million Millennium Challenge Corporation (MCC) grant that will assist Sri Lanka to address binding constraints to economic growth. 

“We plan to sign the grant last December, but the political crisis here unfortunately put our mutual plans on hold. As soon as the crisis was over our board of directors reconvened and approved the $ 480 million grant for Sri Lanka and now we are waiting for the cabinet approval,” MCC Sri Lanka Resident Country Director Jenner Edelman told members of the Sri Lanka-USA Business Council of the Ceylon Chamber of Commerce in Colombo recently.

Speaking at the ‘Understanding the MCC Compact’ forum, Edelman noted that MCC grant will help to upgrade Sri Lankan road network and improve the primary mode of public transportation.

“Getting transport right is the key to mark Colombo as a regional hub for finance, trade and investment” she added. Speaking further, Edelman noted that, under this agreement, Sri Lanka will retain oversight and control of all aspects of the proposed projects, all roads undergoing improvements and every aspect of the effort to digitise land records and to produce accurate land surveys.

“Now this project has got a lot of negative intention in the media.”

“First the US and the MCC will not buy, own any land under this agreement. It is illegal under Sri Lankan law for foreigners including Americans to buy or own land here. Second, MCC compact has no connection with US military.”

“We are independent,” she added.


Why are Sri Lankans worried about this agreement?

Why are Sri Lankans worried about this agreement which at least on the surface looks a genuine effort to help Sri Lanka in some areas of need? It is a grant, and not a loan. Shouldn’t we look a gift horse in the mouth? Should we accept the gift without question? Or like the prophecy of Laocoön, priest of Troy, who in Virgil’s Aeneid, tells his countrymen to “Beware of Greeks bearing gifts”, should we also beware of this gift?

Would it be unjust to say Sri Lankans are concerned mainly due to the trust deficit that the US bears on their shoulders and which like the Sword of Damocles, is an ever present peril in countries that the US has ventured to “help”? 

Dionysius craftily enticed Damocles to his throne for a day but the huge sword that hung above Dionysius throne, held only by a single hair of a horse’s tail to evoke the sense of what it is like to be king: though having much fortune, always having to watch in fear and anxiety against dangers that might try to overtake him. Damocles finally begged the king that he be allowed to depart because he no longer wanted to be so fortunate, realising that with great fortune and power comes also great danger. 

Sri Lankans, like many others in the world have seen the aftermath of US entry into several countries in recent times. Iraq and Libya are examples. Their support and involvement in Saudi Arabia and Israel, their intervention in Iran and Syria have caused havoc in the region. Can we be blamed for thinking that the seeming generosity of the US has the undertones of a Sword hanging above our heads? 

Why is there a trust deficit? A deficit occurs when there is a gap between what is said and what is done. It also occurs when one thing is said and done in one place and the opposite is said and done in another place. Duplicity creates a trust deficit. The US preaches democracy and supports one of the most undemocratic countries in the world, Saudi Arabia. They preach human rights and supports Israel who has consistently trampled the rights of Palestinians. 

The list is long and if one were to hark back to Vietnam and Laos, where millions were killed by American troops violating the rights of the people of those two countries. Afghanistan is still a killing field and an outfit reportedly created by the US itself, and which committed untold human rights violations, has become a partner for discussions about a settlement in that country.


The MCC compact

The MCC compact will be composed of two projects: a Transport Project and a Land Project. Of the total $480 million MCC grant, $350 million is for the transport infrastructure project while $67 million is dedicated to the land administration project.

The Transport Project aims to increase the relative efficiency and capacity of the road network and bus system in the Colombo Metropolitan Region and to reduce the cost of transporting passengers and goods between the central region of the country and ports and markets in the rest of the country.

The land administration project will assist the Government to map and survey State lands and enter data in the Government’s e-State Lands Information Management System, strengthen the Government’s capacity to accurately assess State and private lands, carry out research in support of measures to improve land administration policies.

Furthermore, “the MCC compact will provide opportunities for Sri Lankan companies to compete and win multi- million dollar projects,” Edelman said. “This program was proposed by Sri Lankans. Developed by Sri Lankans and will be managed and supervised by Sri Lankans. We are looking for talent. We want private sector expertise and we pay really well,” Edelman added.

Why are Sri Lankans wary of the US trying so hard to get this agreement signed and sealed? 

It is the land project in the MCC Sri Lanka Compact that has caused concern to many analysts, and in particular the mention of a Colombo-Trincomalee economic corridor and the granting of absolute land grants, the setting up of a State Land Bank Commission, privatisation of some State land where such land does not yield a profitable return to the country. These are some of the inclusions in the agreement which are suspicious primarily because of the paucity of information.

The MCC document states: “Land Project: The Government has recently prepared two draft legislative acts that seek to convert permits and grants to state land to absolute land grants given for the use of households to marketable and bankable titles and to establish an authority that gathers information on state lands and facilitates investment in underutilised state land. MCC believes that the acts, as written, will not achieve these objectives and suggests revisions before the acts are sent to Parliament. The substance of these suggested revisions centre on decentralising authority for the approval of absolute land grants, simplifying procedures, and ensuring gender equality in the issuance of absolute land grants, among other factors.”

The MCC compact document states that it will also include two conditions precedent to the disbursement of compact funds to address legislative gaps that will inhibit the success and sustainability of the Registration of Land Grants and Deeds Conversion Activity.

The Government of Sri Lanka tried very hard to pass the special legislation that the MCC compact sought to convert permits and grants to State land to absolute land grants given for the use of households to marketable and bankable titles and to establish an authority that gathers information on state lands and facilitates investment in underutilised state land, in order to meet the conditions precedent.

Protests from various quarters, including from the President himself, the Opposition, and even some members of the Government itself, saw the withdrawal of this bill. For how long? Should there be a future UNP Government after the next General Election, and they have a majority in Parliament, it is more than likely that this bill will be reintroduced and passed.

Many opine that in respect of the land project, once the conditions precedent are in place, some tracts of State land will be given to foreigners as absolute grants for them to set up industries in the Colombo-Trincomalee economic corridor. The US Ambassador herself has denied this, but again, it is the trust deficit that makes Sri Lankans feel that there is a gap between the real intentions and the stated intentions of this compact agreement. If the real intentions come to pass, and land is allocated to non Sri Lankans to set up industries, and the nature of such industries is not defined, a gateway could be opened for any kind of industry including military industries to be situated in such lands.


Strange coincidences

There are other events that strangely coincided with the rush to have this Grant passed by the cabinet. Again, thanks to the President, it did not get Cabinet approval.

The rush of blood to have this agreement passed seemed to get top billing in the US Embassy soon after the Easter Bombing. While the US Embassy maintained that the Millennium Agreement had no link to two other agreements, we witnessed the entry of the SOFA and ACSA agreements into the limelight. 

These agreements, particularly SOFA and ACSA were and are very contentious, and although not signed by Sri Lanka, again, thanks to the President, from all accounts, they have only been shelved temporarily. The ACSA agreement reportedly does not require periodic renewals as previous agreements had been subject to. This means that they are there for perpetuity. If this is correct, and the public has no way of knowing whether these assertions are correct or incorrect, as they are not publicly available agreements, the present generation and the many to come would be bound by what is in these agreements.

The MCC Sri Lanka Compact is essentially a commercially-oriented document that is intended to increase the efficiency and effectiveness of Sri Lanka’s economy. Investments will naturally have to come from overseas as Sri Lankans do not have such investment resources to justify a return for the $ 480 million that the MCC Sri Lanka Compact will invest in Sri Lanka as a grant. 

The safety and security of such overseas investments and the investors will have to assured and protected, and this is potentially where the SOFA and ACSA Agreements come in. 

These two agreements are not dead, but put to hibernate until the time becomes right to introduce them and get them inked. As they say, the devil is in the detail, and these two agreements reportedly are in substantial detail with several annexures in addition to what is in the body of the documents. These details are not known to the public.


The danger to Sri Lanka

The MCC Sri Lanka Compact on its own would not have raised many eyebrows except for its open promotion of private enterprise and the reduction of the role of the State, particularly in the area of land policy. Although not directly linked, there is strong suspicion that the MCC, SOFA and ACSA agreements are a compact in itself, and that it is a matter of time before they are signed and Sri Lanka becomes a hot bed of activity for warring Global giants the US and China, and the regional power, India. 

The danger to Sri Lanka would come from the combined operation of these three agreements. Many analysts believe that it is bound to happen if the Millennium agreement is signed and then, there will be no turning back. They contend that we will become a vassal of the USA, paying homage and being obedient, in order to receive some crumbs thrown at us. There is a fable printed in 1858 in which an Arab miller allows a camel to stick its nose into his tent, then other parts of its body, until the camel is entirely inside and refuses to leave, while the miller is outside pleading with the camel to leave the tent. Sri Lankans should think long term and decide whether they wish to be like the Arab miller and give in to the camel or keep the camel where it should be – outside the tent.