Sri Lanka Perspectives – June 2010

By Col R Hariharan

India-Sri Lanka relations

India and Sri Lanka signed seven agreements during President Mahinda Rajapaksa’s visit to New Delhi from June 8 to 11, 2010. The maiden visit after his re-election may be considered a success for the President as India barely touched upon sensitive issues like the UN advisory panel on human rights violations during the war and devolution of powers to Tamil minority in the interactions with the President and his delegation.

Indian Prime Minister Dr Manmohan Singh’s statement that “a meaningful devolution package, building upon the 13th Amendment, would create the necessary conditions for a lasting political settlement” showed by and large India had accepted the Rajapaksa approach. India’s stress on rehabilitation issues of Tamils would indicate that its continued focus on this aspect rather than on resuming a dialogue on ethnic issues. The allocation of Rs 1000 crores as assistance to build 50,000 houses for people displaced due to the war and other assistance to improve communication and other infrastructure illustrate this.

In a bid to build closer relations both countries agreed upon taking a number of steps. These include improving interconnectivity with the introduction of Colombo-Tuticorin, Talaimannar-Rameswaram ferry services, Indian assistance to improve Palaly Airport and Kankesanthurai Harbour, and conducting a feasibility study for linking electricity grids of the two countries. India has also offered to extend the bandwidth to set up satellite-interactive terminals in Sri Lanka.

The joint statement issued after the meeting between the President and Indian Prime Minister indicated some cautious steps taken to build closer strategic relations. These include: India’s assurance to examine a Sri Lankan suggestion for establishing a joint information mechanism on the likely oil and gas fields straddling India- Sri Lanka maritime boundary; promotion of dialogue on security and defence issues including an annual defence dialogue; and promoting the use of space technology for a variety of services. The Treaty on Mutual Legal Assistance on Criminal Matters and Agreement on Transfer of Sentenced Prisoners signed during the visit would provide for structural improvement to security and legal framework.

The Comprehensive Economic Partnership Agreement (CEPA) proposal was not mentioned in the joint statement, although measures for developing “a framework for sustainable economic partnership and addressing outstanding issues” of the Free Trade Agreement found a place in the joint statement. This would indicate that CEPA would come up sooner than later. The agreement on establishing Indian consular presence in Jaffna and in Hambantota also should be viewed in the context of furthering trading interests rather than strategic linkages.

China-Sri Lanka agreements

Chinese Vice-Premier, Zhang Dejiang led a 30-member delegation to Sri Lanka on a three-day official trip close on the heels of President Rajapaksa’s visit to India. It showed Sri Lanka’s careful balancing of relations between India and China.

During the visit Sri Lanka signed six agreements for enhanced cooperation in highways development, information technology and communications, development of maritime ports and the second phase of the Hambantota Port Development project (for which China has offered financial assistance of US$ 200 million) and maintenance of the Bandaranaike Memorial International Conference Hall built by China.

Vice Premier Zhang, when he met President Rajapaksa on June 12, also discussed the progress of projects including the Norochcholai Coal Power Project, the Hambantota Port Development and the Mattala International Airport.

International issues

Sri Lanka has reacted angrily to UN Secretary General Ban Ki-moon’s appointment of an expert panel to advise him on human rights violations in the final stage of the island’s civil war. The UN panel announced on June 22 is headed by former Indonesian Attorney General Marzuki Darusman, with Ms Yasmin Sooka, a former member of South Africa’s Truth and Reconciliation Commission and Steven Ratner, an American law professor, as members. According to a UN spokesperson the advisory panel’s mandate was limited to advising the secretary general and it was “not a fact-finding or investigative body.”

President Rajapaksa rejected the UN move, and the External affairs minister G.L. Peiris called it “an unnecessary interference” and said the government should be given “a free space to make its own findings.” The government has also said it would not issue visa for the UN panel members to visit Sri Lanka. China, Japan, India and Russia had been generally supportive of Sri Lanka government move to investigate the human rights aberrations on its own while the West, particularly the EU and the United States had been for an international panel.

Although the issue has whipped up national sentiments among the people, both General Sarath Fonseka, army commander during the war who is under arrest now, and the Liberation Tigers of Tamil Eelam’s US based activist and a member of the Transnational Government of Tamil Eelam Rudrakumaran have offered to co-operate with the UN panel. This is likely to further embarrass the Sri Lanka government who see an international conspiracy to demean the country’s achievement in these moves.

As though to confirm this conjecture, the EU also announced on June 22 that it would extend GSP+ tariff concessions to Sri Lanka after August 15 for “a limited additional period, subject to a clear and written commitment” to undertake 15 specific actions it considered as related to  human rights within a six-month period from July.

The 15 areas for action included implementation of the Sri Lankan constitution’s 17th Amendment, the repeal of emergency regulations, co-operation with UN human rights bodies, release of a list of detained LTTE combatants and other suspects, and an end to harassment of journalists.

Prof GL Peiris, External Affairs Minister, rejecting the conditions said the government would not “surrender decision making powers, very sensitive and crucial matters to any foreign government.”

This does not augur well for Sri Lankan exports, particularly ready made garments which are heavily dependent upon EU markets. In the coming months we can expect Sri Lanka government to scale down its rhetoric and take some action repair its international relations.

National budget

Sri Lanka budget for the current year, already delayed by seven months, aims to reduce the budget deficit to 8% as against last year’s 9.9% deficit. This would represent the biggest reduction in deficit in recent times. With a view to spur growth targeted at 7% this year the government halved the import tax on cars and cut levies on electronics goods in the run up to the budget. The government hopes to increase tax revenue to at least 17 percent of GDP over the medium term, from 14.5 percent in 2009.

However, its meagre increase in wages for government servants and levy of additional taxes on food articles are likely to stir up public protests.

Sri Lanka’s budget plans are apparently in conformity with the International Monetary Fund’s conditional loan to replenish Sri Lanka’s foreign exchange reserves. Under the IMF’s $2.5 billion loan programme, during the month the fund approved the release of fifth tranche of $ 408 million. This would indicate the IMF is satisfied with the government’s measures to tighten fiscal discipline.

Political moves

The government appears to have taken some action to use Kumaran Pathmanathan known better as KP, former international representative of the Tamil Tigers held in captivity, to build better relations with pro-LTTE Diaspora. In a carefully orchestrated move it allowed KP to visit North with a Diaspora delegation ostensibly to consider some rehabilitation project. In the coming months its political impact could be far reaching.
June 30, 2010
South Asia Security Trends Vol 4 No 6
Courtesy: http://www.security-risks.com