The Dangers Of The Millennium Challenge Corporation Agreement
One of the foreign agreements that had received much attention in Sri Lanka recently is the Millennium Challenge Corporation (MCC) agreement. The MCC, also known as MCC compact, was established in 2004 by the US Congress during the tenure of late US president, George Bush. It was established with the objective of providing development assistance to low income countries. Every year, a country is selected for this grant through a rigorous process and the eligibility depends on a number of factors. Its focus is mainly on countries which are free of corruption and without human rights violations. The MCC selects the development project suitable to the country based on the local situation and, once it is selected, the project is designed by the MCC itself. A cost benefit analysis is also carried out to decide the economic impact of the project to the country. Sri Lanka is the 17th country to receive this grant. Under this agreement, Sri Lanka is to receive US$ 480 million for two development projects: a transport management project and an agriculture project. Of the previous 16 countries that received this grant, most have successfully completed the MCC agreement although a few countries have later withdrawn from the agreement.
In the case of Sri Lanka, however, there is a strong opposition to this agreement. Unlike in other countries, where this agreement has been successfully implemented, the situation in Sri Lanka is different. The problem In the case of Sri Lanka is that the MCC is linked to two other agreements: Acquisition and Cross Service Agreement (ACSA) and States of Forces Agreement (SOFA). Of these, the ACSA has already been signed. These three agreements could give the US certain degree of control which can have a serious impact on Sri Lanka’s sovereignty. This agreement has generated a large number of articles and seminars opposing the signing of this agreement.
The Americans are pushing hard to get the MCC agreement signed since the beginning of 2019. The present American Ambassador, Ms Alania B. Teplitz, on several occasions gave ultimatums to the government to accept the MCC project or lose the grant. So far this has not happened despite nearly a year passing since the agreement was forwarded to the Sri Lankan government by MCC officials. This agreement was about to be signed by the leaders of the former government when it was abandoned due to the starting of a hunger strike by a Buddhist priest against the signing of the agreement. In response to the hunger strike, President Gotabaya Rajapaksa announced that he will not implement the agreement when he becomes the president after the presidential election. It ended the hunger strike as well.
Millennium Challenge Corporation (MCC) Compact agreement
Sri Lanka’s eligibility for the MCC compact was first announced in December 2016 by the directors of the MCC; it received the final approval from the Board on April 25, 2019. As noted above, countries that are eligible to receive this five year grant from the MCC are normally fall within the low income category. Out of the 17 countries, including Sri Lanka, that had received this agreement so far, eleven countries had a per capita income between US$ 461 (Madagascar) and US$ 2482 (Honduras) in 2018. Five countries, including Sri Lanka, had a per capita income above US$ 4,000 in the same year. In 2016, Sri Lanka was on the border between low income and middle income category. With a per capita income of US$ 4,103, Sri Lanka was elevated to an upper middle income country in 2018. The selection of Sri Lanka to receive this grant appears to have not been made on the basis of per capita income, but on some other grounds favourable to the US. Most of the countries that had received this grant in the past are relatively poorer than Sri Lanka and many more countries which had not received this grant still remain under the low income threshold. Sri Lanka is also not totally free of corruption since political corruption in the country has become a common subject of frequent discussions. The US and other Western countries have also alleged human rights violation against Sri Lanka, particularly during the last phase of the LTTE separatist’s war.
The MCC proposes to address two development constraints for Sri Lanka under this agreement: inadequate transport logic and planning and lack of access to land for agriculture, service sector and industrial investors. The first is to improve the efficiency of the transport system, reduce travel time and operation costs and increase the efficiency of transport services. The second is about land management with the objective of reducing constraints to the use of the land for productive activities. Out of the US$480 million grant, US$ 350 million (73%) is allocated for the transport project. The agriculture project receives US$ 67 million (14%) and the balance US$ 30 million (13%) for administrative expenditure.
States of Forces Agreement (SOFA)
The States of Forces Agreement (SOFA), also known as Visiting Force Agreement (VFA), is the most detrimental agreement to the country. It simply focuses on turning Sri Lanka under the authority of the US government. Furthermore, it expects the Sri Lankan government to facilitate the handover of our sovereignty to the US to operate according to their wishes without any interference by the Sri Lankan government. The US officials involved in this project as well as the contractors and other personnel working with the US government are free to enter or leave the country without checks by the Sri Lanka border control agencies. While on duty all foreign personnel wear their official uniforms. They do not pay taxes and are exempted from customs inspections. The most dangerous aspect of the SOFA agreement is that Sri Lanka becomes a logistic hub which comes to operation in the event of a war where the US is involved. As a logistic hub, it allows the US to use Sri Lanka without any constraints or objections of the Sri Lankan government or its people. The SOFA will allow the US government to turn Sri Lanka as a base of the US government. This agreement is not being signed yet as the former president refused to put his signature on the agreement. He wanted the incoming government to make a decision as he has already been subjected to criticisms for signing the earlier agreement.
SRI LANKA 