Silver linings in a turbulent week | Sunday Observer

Silver linings in a turbulent week

Finance Minister Ravi Karunayake´s mobile phone ran incessantly the past few days while a stream of visitors were seen at his apartment at Monarch Towers, next to the Cinnamon Grand Hotel in Colombo. They were all concerned about reports that come tomorrow, May 22, exactly 45 years after Sri Lanka became Republic in 1972, Asia´s best Finance Minister may no longer hold that position.

Political circles have been expecting the change of portfolio for Finance for some time now. However, there were also reports of intense negotiations, between Minister Karunanayake and Prime Minister, Ranil Wickremesinghe and Minister Karunanayake and President Maithripala Sirisena, and then finally between the Prime Minister and the President. It appears that a compromise had been reached – with Finance Ministry portfolio being offered to current Foreign Minister Mangala Samaraweera and the Foreign Ministry to Minister Ravi Karunanayake. Visitors to the Minister´s apartment were to comment that Minister Karunanayake was unhappy with the move, but that he will accept the leadership decision.

Almost three weeks ago, another cabinet minister, a senior member of the United National Party, who was apprehensive of his own position, was to accompany President Sirisena on a three day long series of engagements, starting from Passikudah to Mahiyangana and ending in Kataragama. That night, while relaxing at Kataragama, he was to tell an associate that the only change which he can be sure of, is that of Minister Karunanayake, as the President was not wavering in his decision to change that particular portfolio.

It was left to Prime Minister Wickremesinghe to find the compromise. He did this before he left on a three-day official visit to Jaffna, immediately after his return from the Beijing one-belt, one-road summit.

Navin and Ravi at Sirikotha

Meanwhile, the inapt practice of dominating the Finance Ministry portfolio by executive presidents was changed by this government by appointing a talented minister to run the post, Plantation Industries Minister Navin Dissanayake told a press conference at the UNP Headquarters Sirikotha on Friday.

Minister Navin Dissanayake further said that Minister Karunanayake took over the ministry at a time it was passing through dried coffers.

He said allegations are made against all politicians including his father former minister, the late Gamini Dissanayake, former minister, the late Lalith Athulathmudali and former president, the late Ranasinghe Premadasa on many things. Minister Dissanayake said all Cabinet ministers are bound to respect collective responsibility.

He also said that government ministers need freedom to perform their duties properly and he has such freedom to execute responsibilities in his current portfolio.

The Minister said that despite the freedom a Finance Minster gets from the President and the Prime Minister, he has to face other challenges from outside organizations such as International Monetary Fund and World Bank as countries with cash-strap economies such as ours are constantly relied on their monetary assistance.

Therefore, Finance Ministers are challenged in taking somewhat unpopular decisions whether they may cause forfeitures in their political career.

Plantation Industries Minister Navin Dissanayake also recollected the freedom given to former finance minister Ronnie de Mel by the then President the late J.R. Jayewardene in 1977 to take critical decisions. He said such a tradition was changed after Chandrika Bandaranike Kumaratunga was elected the President.

Minister Dissanayake who disapproved such dominance in Finance Portfolio said consequent to such supremacy, former Treasury Secretary Dr. P.B. Jayasundera acted de facto Finance Minister during the Mahinda Rajapaksa regime.

While his cabinet was in somewhat of a turmoil, the Prime Minister´s Jaffna visit was not without some turbulence either. That came from Chief Minister, C.V.Vigneswaran, who said that his administration would not like “industries coming up in the province to use locally available resources and would want them to deploy resources procured or purchased from outside the province,” while addressing a meeting where Prime Minister was present on the Economic Development of Jaffna District in Jaffna on Friday, 19 May.

In what appeared to be a broadside at the Board of Investment, which has come under considerable pressure recently to find investment opportunities and investors, the Chief Minister went on to comment “We do not approve of one stop offices in Colombo dictating the course of internal investments and economic regeneration in our areas.”

“In Private-Public partnership, preference must be given to our local investors first, our own Diaspora investors next, and if unavailable, to others from outside the Northern Province. We cannot be used as a vassal Province for the benefit of wayward investors,” Vigneswaran is reported to have said.

As regards the workforce in the industries in the Northern Province, he said: “We would like to give priority to our regional work force, then to our provincial work force, and thereafter to others.”

“Our economic development must ensure that we the people of this province are at the helm of our own affairs. We are proud of our heritage; we like to live a life of our own rather than be dictated to by outsiders,” he had asserted.

While the Chief Minister was rallying against outside investors and asking not to use internal resources for development of the province, news from elsewhere was more positive.

First, it came from Beijing where agreement was signed to grant 400 million Yuan (approx. 58mn US$) to develop the economic and Technical cooperation between China and Sri Lanka at the Public auditorium on May 16.

The agreement was signed in front of Chinese Prime Minister Li Keqiang and Sri Lankan Prime Minister Ranil Wickremesinghe by the Chinese Deputy Trade Minister Fu Ziying and Minister of Development Strategies and International Trade Malik Samarawickrema of Sri Lanka.

Then, Chinese President XI Jinping promised to give two billion Yuan (approx. 145mn US$) to Sri Lanka, in addition to the promised Yuan 400 million, stating that China will support Sri Lanka’s peace, unity, reconciliation and economic development.

Those pledges came days after Indian Prime Minister Modi made several other pledges to supply housing, ambulances, rail tracks, and roads during his visit as the chief guest for the UN Vesak Day.

Along with Prime Minister Modi´s pledge, Sri Lankan officials noticed an increase of unsolicited proposals flowing in. One in particular, has caused some concern. This was a proposal sent to Colombo regarding the construction of the 65,000 houses for resettlement in the northern and the eastern provinces. The initial tender for this, first awarded to Mittal Steel, a global giant, was cancelled following intense lobbying by civil society and TNA politicians. Two weeks ago, cabinet announced that 6,000 houses would be awarded to Mittal Steel while an official committee would be appointed to study proposals for the remaining 59,000 houses.

Sources say that before the cabinet decision was announced, a proposal was forwarded by Engineering Projects India (EPI) Limited, a state owned enterprise (SOE) of India through an Indian Businessman named Prakash Nair, to the government, proposing that they build these 59,000 houses. According to these sources, Prakash Nair portrays himself as a close ally of Ram Madav, the General Secretary of the BJP, Prime Minister Modi´s party and attempts to use Madav´s name to gain entry to various business deals.

EPI was party to the tender submitted for the initial 65,000 houses project by a company owned by the son of a UNP cabinet minister, Olympus Construction. However, while the cost of the tender was lower than what was offered by Mittal, the EPI connected Olympus Construction did not win the tender, as they failed to submit certain financial guarantees.

Officials were perturbed as to how the unsolicited proposal reached Sri Lanka before the cabinet decision to re-tender was announced.

The other good news came from Brussels.

From Friday last week, Sri Lankan exporters were once again able to export over 6,000 products duty free to European Union countries, giving a much-needed boost to the export sector.

The decision by the European Commission to grant GSP+ to Sri Lanka has been printed in the official journal of the European Union (EU) on May 18 and Sri Lanka has access to the EU market under the special scheme from May 19.

Amending Annex III to Regulation (EU) No 978/2012 of the European Parliament and of the Council applying a scheme of generalized tariff preferences, it has been entered that on 12 July 2016, the Commission received a GSP+ request from Sri Lanka.

"The Commission has examined the GSP+ request from Sri Lanka in accordance with the provisions of Article 10(1) of Regulation (EU) No 978/2012, and the Commission has established that Sri Lanka meets the conditions. Sri Lanka should therefore be granted GSP+ from the date of entry into force of this Regulation. Annex III to Regulation (EU) No 978/2012 should be amended accordingly," the entry in the journal said.

"Pursuant to Article 13 of Regulation (EU) No 978/2012, the Commission should keep under review the status of ratification of the relevant conventions, the effective implementation of those conventions, as well as the cooperation with the relevant monitoring bodies by the government of Sri Lanka," it further said.

The Regulation enters into force on Friday, the day following that of its publication in the Official Journal of the European Union

According to the Chamber of Commerce, GSP Plus offers incentives in the form of duty reductions on exports as a reward to developing countries for their commitment to upholding the 27 core international conventions on human and labour rights, sustainable development and good governance. Then the country must also be considered 'vulnerable' under two conditions; the country is not competitive in the EU market (the import-share ratio is less than 6.5% of EU’s total GSP imports) and the country does not have a diversified export base (seven products account for over 75% of that country’s total GSP imports to EU). There are currently eight other GSP Plus beneficiaries - Armenia, Bolivia, Cape Verde, Kyrgyzstan, Mongolia, Pakistan, Paraguay, and the Philippines.

Sri Lanka will continue to be eligible for GSP Plus as long as the periodic reviews (the first one coming in two years) by the EU do not raise any red flags with regard to implementation of agreed human rights and governance reforms. Yet, once the country graduates to an ‘upper-middle income economy’ status (as classified by the World Bank) and remains at that classification for three years, then Sri Lanka becomes no longer eligible for GSP Plus (with a grace period of around two years). Moreover, at that stage, Sri Lanka would no longer be eligible even for the regular GSP scheme.

While there was some froth appearing within official circles regarding the deal flow from India and China, Trincomalee harbour also became a focal point again with a quiet visit of an Australian naval contingent.

State Minister of Defence Ruwan Wijewardene visited the Australian Offshore Patrol Vessel 'Ocean Shield' at the Trincomalee harbour on Tuesday, 16 May. The vessel was on a two-day visit and was welcomed by the Sri Lanka Navy in compliance with naval traditions.

High Commissioner of Australia to Sri Lanka Bryce Hutchesson, State Officials, senior naval officers, and ship's crew were present at the occasion.

The Australians were not only in Trincomalee.

Commander Joint Agency Task Force (CJATF) of Australia Air Vice Marshal Stephen Osborne met Secretary to the Ministry of Defence Eng. Karunasena Hettiarachchion 15 May. He was accompanied by the Deputy Commander Maritime Border Command Jo Crooks.

During the meeting, bilateral discussions were held on a number of issues including cooperation between both countries in fighting transnational crime including human smuggling.

Australian High Commissioner in Sri Lanka Bryce Hutchesson, Commander of the Navy, Vice Admiral Ravindra Wijegunaratne, Chief of National Intelligence Deputy Inspector General (Retd) Sisira Mendis, Director General Operation of Navy, Rear Admiral Piyal De Silva, Director General of Sri Lanka Coast Guard, Rear Admiral Samantha Wimalathunga and Military Liaison Officer of the MOD, Brigadier DAR Ranawaka were also present during the discussion.

Sri Lanka Navy was certainly busy last week.

The 28th International Maritime Boundary Line (IMBL) annual meeting between the representatives of the Navies of Sri Lanka and India was held on-board SLNS Sayura at the Indo-Sri Lanka Maritime Boundary Line off Kankasanthurai on 19 May. The Sri Lankan delegation comprised Deputy Director General of Sri Lanka Coast Guard Commodore Sujeewa Perera, Director Naval Operations Commodore Kalana Jinadasa and another eight naval officers, was headed by the Commander Northern Naval Area, Rear Admiral Jayantha De Silva. The Indian delegation was headed by Flag Officer Tamil Nadu Area (FOTNA) Rear Admiral Alok Bhatnagar along with 7 more Indian naval officers. Both delegations consisted of officers specialized in diversified fields.

The annual Indo-Sri Lanka IMBL meeting provides an opportunity to exchange views and ideas with regard to operational effectiveness through common understanding of the Navies and Coast Guards of the neighbours. As far as the 28th meeting is concerned, maintaining effective maritime security in the region by integration of forces through co-operation, coordination and collaboration was the primary focus. Mementos were also exchanged to mark the occasion.

Meanwhile, the second Staff talks between Sri Lanka Navy (SLN) officials and US were held at the Navy headquarters in Colombo on 16 and 17 May. According to Navy media sources, discussions were held between senior officers of SLN and US 7th Fleet.

The SLN delegation was led by Director General Operations, Rear Admiral Piyal De Silva while the US delegation was led by Captain Brian Anderson of the US 7th Fleet.

During the discussions, the importance of similar dialogue for furthering cooperation between the two navies was highlighted. Captain Brian Anderson expressed contentment over the range of matters including bilateral cooperation, training and ports of call made over the past years.