Indian Foreign Secretary S Jaishankar is no stranger to India’s strategic interests involving Sri Lanka and China. He served as the First Secretary and the political adviser to the Indian mission in Colombo between 1988 and 1990 – one of the most tumultuous times when it comes to Indo-Sri Lanka relations.
When Jaishankar served in Colombo, the Indian Peace Keeping Force (IPKF) was in Colombo and they were facing resistance not only in the North, but also in the South.
The JVP launched an armed struggle against the government, and one of their main demands was to send the IPKF back to India. Even the elements within the then government, including its Prime Minister, Ranasinghe Premadasa, was openly critical of the IPKF and anti-Indian sentiments were widely expressed in the political domain.
Jaishankar was India’s longest-serving Ambassador to China, with a four-and-a-half-year term which dealt with critical issues relating to the Sino-Indian border dispute.
His briefing to the Indian Cabinet Committee on Security, in 2010, regarding China’s refusal to issue a visa to the head of the Indian Army’s Northern Command led to a suspension of Indian defence co-operation with China, but the situation was resolved in April 2011.
In 2012, he became the first Indian Ambassador in ten years to visit Tibet.
Trusted ally
Jaishankar became the Indian Secretary, in 2015, after the dismissal of his predecessor, Sujatha Singh. Since then, Jaishankar has functioned as a trusted ally of the Modi administration.
Jaishankar, who was appointed the Foreign Secretary, a day before his retirement from service, was given his second service extension, this January.
Commenting on the circumstances leading to his second service extension, the Hindustan Times said, the decision was based on the broad principle of the Modi-Jaishankar school of thought in dropping what they consider has been India’s ‘inferiority complex’ vis-a-vis China.
“They subscribe to the view that India and China have a relationship that encapsulates both cooperative and competitive elements, which explains the PM’s frequent meetings with the Chinese leadership and a push on the economic agenda, as well as, creating room for greater Chinese investment,” the Hindustan Times said.
Discussions
It is against this backdrop that Jaishankar visited Sri Lanka this week to hold discussions with the heads of the Sri Lankan government.
Although the Indian Officials described Jaishankar’s visit as a routine one to keep himself abreast of the latest developments in Sri Lanka, the visit took place while the Sri Lankan government was negotiating some comprehensive economic partnerships with China.
In addition, Jaishankar was entrusted with the task of keeping track of the progress of existing Indian development projects, and to explore possibilities of future engagement in the development and commercial sectors.
Before his visit, the Indian media predicted that the “uncertainty” which has crept into the Lanka Indian Oil Corporation’s (LIOC’s) hold on the oil tanks in Trincomalee would be discussed during Jaishankar’s visit.
The Sri Lankan government previously indicated its interest in taking over 3-30 oil tanks for use during the expected power shortage due to drought, but the LIOC was not inclined to proceed with the plan.
The LIOC is of the view that these tanks cannot be arrogated unilaterally as the LIOC had got the tanks through a government-to-government agreement in 2003. The LIOC further stated that if the Ceylon Petroleum Corporation wants some tanks to be refurbished and used, the LIOC could help them do it.
Meanwhile, the Parliamentary Committee on Public Enterprises (COPE), led by JVP MP Sunil Handunnetti, accused the LIOC of not entering into a Lease Agreement and paying the rental regularly. The LIOC, in response, argued that because the tanks were transferred to the LIOC by a government- to-government agreement, no lease agreement was required, and that the annual fee of US$ 100,000 is being paid regularly.
H’tota
Aside from the oil tank issue, the Chinese presence in Sri Lanka also caused a hiccup in the higher echelons of the Indian political realm. Various Chinese economic activities in Sri Lanka, including the Hambantota port project, kept New Delhi on its toes over the past few months.
Not only India, the Japanese are also quite perturbed over the Chinese presence in the India Ocean, and often refer to the port projects undertaken by China in the Indian Ocean rim countries, describing the same as a string of pearls, it was the other day that Japanese professor set economic targets for Sri Lanka by forming a tripartite arrangement with India and Japan
Dr. Satoru Nagao, a Research Fellow at the Tokyo Foundation and Lecturer of Security Studies at the Law Faculty of Japan’s Gakushuin University, urged Sri Lanka to forge stronger ties with India and regional powers like Japan, to balance its relationship with the increasingly aggressive China.
Nagao spoke last Wednesday at the Institute of National Security Studies, and warned that increased cooperation between India, Sri Lanka, and Japan will be key to limiting China’s influence in the Indian Ocean.
The Chinese operations along the Hambantota coast are definitely an eyesore for India, that the Indian Foreign Secretary without much diplomatic parlance put it more bluntly as a ‘strategic threat’ to India.
Secretary Jaishankar met with the President briefly and exchanged pleasantries with the Prime Minister over lunch and paid a courtesy call to Foreign Minister Mangala Samaraweera. Most of his deliberations which centred around Indian concerns relating to various projects were with Development Strategies and International Trade Minister Malik Samarawickrame.
Indian projects
A significant matter among them were the Liquid Natural Gas (LNG) project in Sampur and the east terminal of the Colombo Port. The Indian concern was that the development of the east terminal of the Port should be awarded to an Indian company without ‘much fuss’. The tender documents were changed over a period to suit this requirement, stating that the bidder should be from the South Asian region.
The well-known Mersk shipping partnered with Keells, while a Japanese firm Nippon shipping made their bid along with Hayleys. Aitken Spence and China Harbour Corporation too made their bids with Indian and Bangladeshi partners respectively, in a bid to make their claim for the East terminal.
Though the matter had received high priority the tenderers were perusing the original tender documents that did not have any specifications to say that there should be an Indian or South Asian partner to bid for the tender. There is much confusion over the matter and India is concerned, since the east terminal could be used as a hub for transhipments, mainly from India. It is the Indian perception that with the new Trump administration Trade agreements would not give much impetus to the growth of the economy but various industrial and other projects, hence, India will not push Sri Lanka to sign the much debated ETCA.
India has also urged Sri Lanka to expedite the constitutional process in finding a durable solution to the ethnic issue before India gets too busy with its own election agenda.
Colombo Port City
While the Indian Foreign Secretary was holding discussions with the Sri Lankan authorities, the government was in the process of finalizing the new agreement over the Colombo Port City project.
The Sunday Observer learns that the newly signed agreement by the Government for the Colombo Port City and Financial City has renegotiated extra land for public use. The new park area will be eight times larger than the Galle Face Green. Apart from this, the project will also create a 3 km long beach area (13 hectares) for public use. Only 35 percent of the reclaimed land will be occupied by buildings.
According to official sources, all infrastructure within the reclaimed area will be built by the Project Company, without placing that burden on the Government.
As per the agreement signed by the previous regime, infrastructure and utility connections to the periphery of the site will remain the responsibility of the Government. However, under the new 2016 agreement, the Government has the right to request the Project Company to enter into a Public-Private-Partnership for the provision of such infrastructure.
Another change is the maintenance of the reclaimed area and associated infrastructure which was previously assigned to the Sri Lanka Ports Authority. Now, a new JV company between the Project Company and a party to be nominated by the Government will undertake the Estate Management responsibility, working in cooperation with relevant local authorities, such as, the Colombo Municipal Council.
Apart from this, the land used for public purposes such as roads, parks, pedestrian walkways etc. would be increased by 44 percent, which was the main reason for the expansion of the reclaimed area from 233 to 269 hectares. This would provide the general public with an overall area of 91 hectares for their use and another 62 hectares to the Government for development purposes.
The marketable land is estimated to be over Rs. 200 billion going on today’s value. According to the new agreement, 57 percent of the total 269 hectares of reclaimed land would be for the benefit of the Government and the people of Sri Lanka.
Tax exemptions
However, the tax exemptions for the Port City project caused some ripples in Parliament when the matter was raised before the country’s legislature this week.
Sri Lanka is quite used to seeing politicians grandstanding, especially, in Parliament, which is what happened when tax exemptions for the Port City project, under the Strategic Development Projects Act were brought up for Parliament’s approval.
JVP Parliamentarian Anura Kumara Dissanayake vehemently opposed the move giving a series of reasons which were widely reported in English, Sinhala and Tamil mainstream news on February 22.
The International Financial City or the Port City project was under fire once again. On Thursday, the order under the Strategic Development Projects Act to grant tax exemptions to the Port City was again placed before the House and passed without a vote. That’s the kind of fizzy politics in Sri Lanka- blowing hot one minute and blowing cold the next.
Done deal
In reality, the order for tax exemption should have passed silently through Parliament because it was already a ‘done deal,’ and has its history in the previous regime. In fact, the Standing Cabinet Appointed Review Committee appointed for the Port City project by the previous Government had recommended the granting of SDP status and various incentives by way of their report on August 7, 2013. The decision by the Cabinet of Ministers to approve granting incentives under the Strategic Development Projects Act was based on a Cabinet Paper dated August 25, 2014.
The Gazette Notification under 3(4) was issued on November 17, 2014 and the Ministry concerned had not been able to table the resolution in Parliament due to the impending election. The Minister at that time had informed that the resolution will be tabled after the election, although the process was not completed within 3 months from the date of 3(4) gazette due to the regime change. Therefore, under the SDP law, the procedure had to be repeated by the current Government.
The granting of SDP status was a standard condition under the Agreement of September 2014 and the BOI Agreement of 2014. If this was not honoured, the Sri Lankan government could have been called upon to pay damages. Therefore, this Government had only carried through the commitments entered into by the previous Government and restarted the SDP process after the suspension of the Port City project was lifted.
It is relevant that the SDP gazette being placed before Parliament on December 6, 2016 and January 30, 2017 contains the same concession of the gazette issued by the previous Government on 11th September 2014, other than a change of dates and changes to the reclaimed land area.
The new Act announced by the Government to create a Colombo International Financial Centre (CIFC), was to facilitate financial services companies and regional headquarters of international companies to set up business in Colombo. This is expected to enhance the export of financial services and significantly improve the country’s balance of payments and foreign reserves.
In the Tripartite Agreement entered into between the Ministry of Megapolis and Western Development and CHEC Port City on August 12, 2016, the company has agreed, subject to feasibility, to undertake a new investment to construct the new CIFC building complex. The Government is said to be carrying out various studies connected to the legal and strategic aspects of the CIFC.