9 April, 2020

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From Mahaweli To Millennium Compact: The New Degeneration Of An Old Debate

By Rajan Philips

Rajan Philips

Sometime towards the end of 1969, Dr NM Perera made the longest speech in his long parliamentary vocation, opposing the Mahaweli development agreement between the then Government of Ceylon and the World Bank. The speech was a well-researched critique that was based on BH Farmer’s equally well-researched critique of the Gal Oya development scheme, Sri Lanka’s first multipurpose irrigation project in the modern era. The government of course was a UNP government and Dudley Senanayake was Prime Minister. Mr. Senanayake was manifestly taken aback by NM’s withering attack, because the UNP was set to showcase the Mahaweli agreement as a singular achievement in the general election, that was coming up in early 1970. NM Perera and the United Front Opposition were out to scupper the PM’s elections plan. The government had able defenders in parliament – in CP de Silva, Philip Gunawardena, JR Jayewardene and the Prime Minister himself. Yet, the Prime Minister persuaded GG Ponnambalam to leave his hospital bed for added reinforcement and make a pointed intervention in parliament. True to form, Ponnambalam declared that he had just read through the agreement and found nothing in it that would be detrimental to national interests. That led to a spirited exchange between Ponnambalam on the government side, and SA Wickramasinghe and Colvin R de Silva on the opposition side.  

I remember and say all this because I was a university Engineering student at that time in Peradeniya, and concurrently followed the news reports of the debate in parliament before rivetedly reading it first hand in Hansard at the Kandy Public Library. Three years later, I began working in the first of my Mahaweli projects in Ukuwela and got drawn to that small universe of Sri Lankan heavy construction industry in irrigation and hydropower projects. Many years later I added Urban Planning as a complementary aside to my engineering, with interest in the David Harvey school of Geography, and a new professional focus on urban transportation and transportation engineering. So, when I opened by not so small mouth on the Millennium Challenge Compact, the unnecessarily controversial (provisional) agreement between the governments of Sri Lanka and the US, there was more than political cynicism behind my mischief. I was also, and still am, professionally curious to see if Sri Lanka would walk away from the MCC Compact with two straightforwardly beneficial projects and, if so, why? By the way, and just to correct the most recent distortion in the matter, there are no two compacts in the MCC, Land Compact and Transport Compact – but two PROJECTS, the Transport Project and the Land Project under one COMPACT.  

Quite apart from my personal trajectory and curiosity, there is much to be said about the massive changes that have taken place in Sri Lankan politics and everything else, over the fifty years after NM Perera made his longest parliamentary speech on the diversion of the Mahaweli Ganga. For starters, the UNP (government) lost the 1970 election, and lost it badly in the number of parliamentary seats though not in the popular vote. The impressively victorious United Front (government) did not walk away from the Mahaweli agreement that they had politically savaged from the opposition and throughout the election campaign. There were initial reviews and implementation changes that ensured significant location agency participation in different projects, viz., the Mahaweli Development Board, State Engineering Corporation, the State Development and Construction Corporation, and Ceylon Development Engineers – Sri Lanka’s only private firm in heavy construction at that time. If the extent of local participation was a definite plus, the main negative fallout was the delay to the implementation of the plan and its individual projects. 

Chickens came home to roost in 1977, when the UF government broke up to become an SLFP government that was left to face its own election and found it had nothing to show for its Mahaweli achievements. None of the projects was entirely complete and there was no diverted water to send to the farmers in the North Central Province. So, the government made the political decision to send water through the irrigation tunnel in Boawatenna even before the tunnel construction was complete. That was to please the farmers downstream, but was insultingly not enough and the government of Mrs. Bandaranaike paid a shattering price in the July 1977 elections. Thus, the waters of Mahaweli turned the wheel of Sri Lankan politics a full circle in seven years. The losers in 1970 became the biggest parliamentary winners in 1977. Dudley Senanayake was dead by then, his death in 1973 itself becoming a political watershed moment, and the benefiting winner was JR Jayewardene. 

Prime Minister Jayewardene became President Jayewardene and he accelerated the Mahaweli scheme with a vengeance as one of his three signature initiatives, the other two being the Second Republican Constitution and the open economy. Practically every project under the scheme was started simultaneously, the funding for each was arranged on a bilateral basis with different donor countries who sent their own firms to undertake the projects with minimal participation by the local engineering industry. This was quite a departure from the multilateral aid scheme that Dudley Senanayake had negotiated with the World Bank and because of which, or in spite of which, he lost an election. The implications of accelerating the Mahaweli scheme were significant. 

On the negative side, the old discipline and framework for undertaking engineering projects based on open tender, pre-qualification and price, were broken up for good. The country is still picking up the corrupt pieces with the two main political alliances taking turn in accusing each other of corruption and winning elections. On the politically positive side, aggregate results were achieved in extending the irrigation network and significantly increasing rice production. The UNP was finally able to make the political economy claim of achieving self-sufficiency in food production while opening the economy at the same time. That political success provided the material basis for the UNP’s uninterrupted 17-year rule till 1994. 

To digress a little here, there is apparently a 20/25 year cycle in Sri Lanka’s political fortunes according to some political watchers. The Senanayakes held sway between 1931 and 1956. Then it was the Bandaranaikes from 1956 to 1977, followed by the singular Jayewardene and his executive legacy from 1977 to 2005. Since then, it has been the Rajapaksa yugaya, a new phase in which has just begun. There might be interruptions in government, as in March 1960, 1965 to 1970, and 2015 to 2019, but the main cyclical swing apparently persists. The ten-year Kumaratunga presidency (1995-2005) might seem an outlier decade.   

The Debate

Let us turn to the old debate and its new degeneration. Who was right and who was wrong in 1969? NM or Dudley? Were the people right or wrong in massively throwing out the UNP in 1970 and even more massively throwing out its successors seven years later? The old debate over Mahaweli was the debate between two competing visions for Sri Lanka, its polity and its economy. It was not about the legality or the constitutionality of the Mahaweli agreement. To the extent, NM based his criticisms on BH Farmer’s critique of the Gal Oya Development scheme, they were criticisms of the economic efficiency failures of an irrigation project and not a question of sovereignty or environmental stewardship. In fact, the loaded terms that are now thrown about in the current MCC debate were not even part of the political vocabulary in 1969. 

No one spoke about sovereignty then even though the island was technically under a foreign monarch at that time. That did not trim our democratic sails in any way. Sovereignty and its assertion became a legal necessity when the country transitioned from its dominion status to become a republic. What Dr. Colvin R de Silva powerfully intoned for legal effect has now become a political albatross. Environmental assessments were nearly a decade away. In the UK, the Third London Airport debate was just beginning, and it would have huge implications for insisting on cost-benefit analysis and public participation in public investment decisions everywhere. In the US, President Nixon started the world’s first Environmental Protection Agency as a government institution in July 1970. The UN commitment to sustainable development was more than a decade a or two away.   

International aid in 1969 was driven by superpower rivalry in the context of the US-Soviet Cold War, when socialism was still a political option in Sri Lanka and several other developing countries. The opposition to aid, therefore, was part of a domestic political program. The collapse of the Soviet Union that ended the Cold War also foreclosed the socialist option for developing countries. The dynamic of aid has changed in the new environment of globalization and rampant market forces. While the traditionally major donors, the US and Japan, are scaling down government and promoting the foreign operations of their private companies, China is rolling out its Belt and Road initiative to capture infrastructure markets anywhere and everywhere. India, lacking China’s international muscle while matching its population size, is keen to have Sri Lanka as a neighbourly beneficiary of its limited aid agenda.  Consistent with their domestic policy changes, western and by extension international agency aid initiatives are now strictly aligned with environmental regulations and gender equality requirements. 

Sri Lanka has received and used, with mixed effects, foreign aid through all its manifestations – from the Gal Oya development scheme, Soviet aided industrial corporations, the Mahaweli scheme under both (multilateral) World Bank and bilateral dispensations, and more currently receiving loans, aids and grants from India and China. The US and Japan, not to mention Korea, are also in the picture, with Japan showing quite a bit of involvement in the urban transport sector. In this scheme of things, what is it that is in the two Millennium Challenge Compact (MCC) Projects that makes them and the Compact so vehemently objectionable? 

The current opposition to MCC differs from NM’s criticisms of the Mahaweli development scheme in quite a few fundamental respects. His criticisms were well-intentioned and part of an alternative political vision. He did not fault Dudley Senanayake for failing to ‘consult the people’, as almost all of the MCC critics are currently clamouring. Instead, he raised his objections to the scheme on behalf of the people, left it for the people to decide in the upcoming election, and left his logic to stand the test of history. The people seemingly went along with his argument in 1970, but reversed themselves through 180 degrees seven years later, and history has both validated and invalidated NM’s criticisms in different respects. Honestly and quite humbly, I fail to see the same honesty of political purpose and intellectual rigour that NM manifested in 1969, in the criticisms of the MCC projects now. 

*To be continued…

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Latest comments

  • 0
    2

    Hello Rajan,
    Thank you for a well presented commentary on the impacts of political thinking on the implementation of the Mahaweli Development Scheme. My understanding of the workings at the higher political levels was pretty basic although I was baffled by the speed of the implementation of the Mahaweli Development Scheme.
    Even the UNDP reports noted a much longer time horizon.
    The major criticism we all had was that a great opportunity to develop Sri Lankan Engineers was lost.
    I look forward to the next installment, particularly the details of the MCC compact in respect of current debate on the implications to Sri Lankan sovereignty.

    • 5
      0

      Heard tat these old dudes like, Rajan Phillips and Wijewardena, are being paid and bought to sell the MCC project, just like Advocata and Pathfinder and LKI!

      Wonder what Rajan will say about SOFA and ACSA in relation to MCC?! Poor guy seems to be smitten by the MCC blonds who make out that MCC is all about American “apple pie and mother’s milk” – good for a silly natives who have not got a clue about GEOPOLITICS and uncle Sam’s gifts and wars in Latin America, Mid East and Afghanistan.. Ukraine and the list goes on!

      • 3
        0

        Baby-faced blonds selling cute ‘lily pad’ bases of the American Deep state with an MCC bribe to old codgers is the latest scam of the biggest Rogue State in the world; now that China is officially the number Super-power, but does not make a fuss about it.
        USA seems to have lost the plot..
        Hope Rajan will read David Vine’s work on ‘lily pads’ and book on the Chagos Islands, not so far from Lanka:
        “Island of Shame: The Secret History of the US Military Base on Diego Garcia. Princeton University Press 2009

  • 5
    1

    My friends, in 60s, 70s and 80s, Care Organisation of USA, gave millions of dollars worth of protein fortified biscuits for school the kids, and ship loads of wheat flour and soya oil to the poor of Sri Lanka, under public law 380, which were pure free grants to help the poor and needy, and yet the Americans never took over the country. When they had the first conference in Kuala Lumpur, heads of founding nations of ASEAN to formulate strategies to get it off ground, they were looking up to Ceylon for it’s next to Japan in Asia at that time, PM Tunku Abdur Razak of Malaysian postponed the meeting several times until the arrival of PM Dudley Senanayake, in the end, they were informed he was not coming for our comrades made huge commotions against it. Later when JR wanted to joint, they flatly refused. They had the conference without Ceylon, and see now ASEAN is 10 nations, 600 million consumers and nearly 3 trillions dollar economy and big trading block. It’s benefits to the member nations are huge and all of them are growing at break neck paces. This MCC grants of nearly half trillion dollars are pure free grand for projects which are badly needed for the development of the country like Gal Oya and Mahawelli but these brain dead people are making such noises to kill it for good. These people are real nuts, even if we fall at their feet and beg them, no country whether US or China or India or for that matter any country, would take over Sri Lanka, and it’s huge headache for them to occupy a country. In this age, they all have many devices to dominate and project their power in any country without physical presence. Hence, please let all these projects to go ahead for the good of all. All those opposing this have their own agendas in order to achieve their selfish greeds.

    • 4
      3

      Shan,
      The only way any meaningful large scale investment project can implemented successfully in SL is use Chinese tactic which is to offer bribes ($ 35,000 to Alle’ Gunawanse) to politically active Buddhist monks of all sides. How else Buddhist monks supporting a US citizen with criminal record for presidency while at the same time standing against MCC can be explained? This kind of inconsistent behavior can’t be explain with stupidity at all! How does W Weerawanse emerge like saint when JVP lose its election deposit?

      Looking at the the direction of the direction Rajan is heading, it is not difficult to figure out what his final point could be but, I would rather wait for my comment. However, my point is already implicit in the first para.

      • 1
        4

        D.P.
        “How else Buddhist monks supporting a US citizen”
        —-
        Buddhist monks did not support a US Citizen. They supported a ‘Son of Sinhale’ who is a patriot compared with the traitor who agreed to the demands of racist Wellala Politicians.

        • 4
          1

          Eagle Eye,
          I have never heard of a “son of sinhale” becoming a US citizen by giving up SL citizenship. Living in the US is not the same as taking an oath to defend it against its potential enemies, SL included! GoRa was betraying either US or SL!

          I know that there are many Lankans living abroad as dual or single citizens. Vast majority of them consider that having the opportunity to work & live abroad is privilege; and they don’t have the same respect for their mother land. I don’t believe that GoRa & his family was any different.

    • 1
      0

      Shan you’ve got to be kidding, right?!
      Like Rajan are you also smitten by the fairy tales of the blond babes who swear on the Bible that MCC has nothing to do with ACSA and SOFA?!!
      US wheat flour and corn was sent to make rice-eating Asian societies dependent on American genetically modified Gluten and the global processed food industry so that we all get diabetes and then by the meds of the Big Pharma companies..

      Meanwhile, Southeast Asia was made a battlefield of ethnic and religious conflict to block the spread of communism after thousands of leftists were purged and killed in Indonesia, Malaysia, Phillipines etc while Buddhism was weaponized in Thailand and Malaysia, just as Islam was weaponized in Afghanistan and Osama and Al Qaida were funded by US Deep State!
      Please read Yale University Don, Eugene Fords book “Cold War Monks: Buddhism and America’s secret strategy in Southeast Asia” and then lets talk about US fake Aid to Debt trap countries while promoting corruption rackets with Fake xperts and advisors to turn Parliament into a Cesspit of Corruption and likewise the Judiciary!

  • 4
    1

    Oh Yes, Gamini D of Mahaweli. Wasn’t he called the original Mr 10% ? He is the bloke who gave a whole new meaning to the term ‘Kick Backs’. Long before MR, Basil and the Rajapakses there was Gamini D. The man who started it all. What a legacy!

  • 3
    1

    Yes PSE you are right.
    In fact Basil Rajapakse was employed by Gamin.D. in the Mahaweli Project. He began his apprenticeship for his 10%.
    Young Rajan Phillips has left out Gamini.D, in this essay. Staging Hamlet without the Prince of Denmark eh?
    The Mahaweli flowed into Trinco.
    The funds flowed into Finco!
    Both flows took place with a Hydraulic Jump!

    • 2
      1

      Plato

      “Both flows took place with a Hydraulic Jump!”

      You mean in the 2500 years old hydraulic civilisation.

      • 1
        0

        Native Vedda
        the 2500 years old hydraulic civilisation that you tamils had nothing to do with and wouldn’t even have the brains to even if you people wanted to.

        • 2
          0

          Jayasuriya

          You have had brilliant brain yet the Iranians, Canadians, the Brits, either built/renovated tanks, Chinese have to come all the way to build roads, harbours, Power stations, hotels, airports, Hindians supply everything from spices, onions, autos, cars, films, medicines, ….. give you loans and tell you how to run this island, …..etc, …… and you simply send your women folks to Medieval Middle East kingdoms to earn a few dollars in foreign exchange so that you lazy bums could buy imported whisky and have fun while they are away for a long time.

          What a pathetic lot you have become in a short period of time and elected a mad man for president, ….. Go sit on your head for another 2500 years.

    • 1
      0

      @Plato, just an anecdote to your comment: In the 1980s a gentleman known to us was the Sri Lankan ambassador in a Western European country which was a partly funding the Mahaweli Development Scheme. I can remember him saying how once the foreign minister of that country had summoned him to the ministry to complain that it was almost impossible to deal with Gamini D because he always insisted on his 10% cut at every turn. JR was fully aware of all this but took no action. In the end, where did Gamini D take his billions? Nothing lasts forever especially wealth by ill-gotten means. The Karmic forces are immutable. These are good lessons for everyone.

  • 0
    1

    Rajan Phillips: What is important to consider is everything leading to the proposal of MCC-Compct. Both the Mahinda chinthanaya and Yahapalanaya govts were very corrupt. YEt, no one was interested in that. I think West is angry with Mahinda Rajapakse because he neglected American Requests to hand over parts of the country to them. Mahinda Rajapakse with the help of his brother defeated LTTE which was supported by them. In addition to that, Mangala, Ranil, Raajitha, CBK, PENTHOUSE RAVI groups laid lot of foundation work to enact MCC-COMPACT. they changed lot of financial legislation and monetary rules to suit and facilitate legal money laundering. Mangala was preparing Sri lankan banks for sale via the stock market, Sri lanka imported even Vegetables and spice from overseas. Last thing of the straw was Land registry and the MCC-COMPACT.[edited out]

  • 2
    2

    Dams are essential for power generation, especially as populations grow and consumption increases. So Mahaweli was a good idea, irrespective of the source of funding. This is the path of development Sri Lanka was following before LTTE terrorism put a full stop to everything.

  • 0
    0

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  • 0
    0

    Pohottuwa MP , the JPHU Leader Gammanpila says 70% is good and 30% is bad in Dr Ranil & MCC Agreement which Mangala Samraweera was desperately trying to sign off in the Eleventh Hour before My3 Sira went to pastures.

    Wonder whether that 30% got something to do with Dr Ranil’s separates Federal States with our great assets which will come under Independent CMs and their Cabinets ?.
    The likes of Trinco and Mannar Natural Harbors, Palali Airport, Natural Gas Resources , Pasture Lands , Kalpitiya Shore Line and the 12.000 Sq Kilometers which have been ear marked as no go Zones to our Police, Military and even Judiciary..

    Can’t wait to see Dr Rajan’s next Chapter..

  • 3
    0

    River diversion was the catchcry of the World Bank, IMF and ADB in the 70s. The objective was to lenf mega loans to tie poor countries to the Washinton Consensus. Corruption in the Mahaveli caravan was so gret, Gamini Dissanayaka (who himself was going around in a Volvo by the courtesy of Skanska), publicly admitted that corruption in such mega scale projects was unavoidable.
    ]
    But the worse crime was the environmental disturbance cause by the dams. The obstructed river flow turned down-tream section of the river in to puddles, providing havens for mosquito breeding.
    ]
    We are now dealing with Dengu! But we have several extra MW of electricity.
    ]
    Who knows what MCC compact promises?

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