Sri Lanka lost USD 480 million or nearly a half billion dollars when the Board of Directors of the US Government Millennium Challenge Corporation (MCC) cancelled the already approved grant. At its most recent meeting on December 15 the MCC Board decided to discontinue the already approved grant to Sri Lanka while unanimously adding Sierra Leone, Kiribati and Solomon islands to the programme and continuing assistance to Benin, Burkina Faso, Côte d’Ivoire, and Niger.

In 2005 President Mahinda Rajapaksa initiated an application for the MCC grant sending the then secretary to the Prime Minister, Sirisena Amarasekera to Washington to discuss the request. These initial efforts were unsuccessful since Sri Lanka failed to meet the MCC eligibility criteria, which include healthy democratic rights and corruption control indicators. After reviving the application in 2015, the Yahapalana government was ready to sign the MCC compact in 2018 for a USD 480 million grant to be disbursed over five years. The process to obtain the development aid has been in the works years since 2015 with President Maithripala Sirisena meeting with the Chair of the MCC Board on several occasions during his trips to New York.

Former Foreign Secretary Ravinatha Aryasinha was the key mover behind the stifling of the grant that may have proved a life line for the ailing Lankan economy during these pandemic months. Aryasinha was appointed Foreign Secretary during Maithripala Sirisena’s failed constitutional coup in October 2018 shortly before the grant was due for signing.

Sources within the Foreign Ministry say Aryasinha used the friction between then President Sirisena and Prime Minister Ranil Wickeremesinghe to carry out this ‘political contract’ for the then SLPP-led Joint Opposition. He provided dossiers of false information to then opposition MPs, Dinesh Gunawardena and Wimal Weerawansa. The MCC grant was made to be part of a grand conspiracy linked to the renewal of the Acquisition and Cross-Services Agreement (ACSA) and the Status of Forces Agreement (SOFA) with the United States. In reality the development grant and the security agreements are not linked but used to excellent effect by the SLPP to whip up anti-American sentiment and derail the critical funding that would have eased congestion on the roads and digitized and updated an archaic Land Registry. Led by ultra-nationalist Weerawansa and Gammanpila and heavily backed by the GMOA and the BASL which had no stake in the projects concerning traffic management and bus modernisation, the SLPP claimed that the MCC project would result in an economic corridor to the strategic Trincomalee harbour and Sri Lankan citizens would require a “visa” to enter Anuradhapura. The SLPP disinformation campaign was strongly supported by sections of the media.

Observers said the Bar Association was opposing the digitization of the land registry and updating of the systems – a 60 million US dollar project because if it were successful, hundreds of thousands of lawyers would lose a main source of their income pertaining to land registration and title deeds. The complicated and outdated system requires citizens to obtain legal assistance to complete simple tasks including searching for a title deed at the registry.

ACSA and SOFA meanwhile were defence cooperation agreements with the US, extensions of agreements signed in 2007 by then Defence Secretary Gotabaya Rajapaksa and in 1995 on the recommendation of former Foreign Minister Lakshman Kadirgamar. Some 100 countries in the world have active and similar defence cooperation with the US to govern the status of US troops when they engage in training exercises in foreign jurisdiction which includes making them immune from legal suit and allowing them to carry weapons in a foreign country, a requisite of the training exercises.

Sri Lankan soldiers who join UN Peacekeeping missions – a lucrative practice for the Sri Lankan army – also enjoy Status of Forces Agreements governed by the UN in countries they are posted. It was based on such SOFAs that Sri Lankan troops were expatriated to the island instead of facing justice in Haiti after a huge sex scandal involving under-age girls.

However Aryasinha drunk on power after his appointment during a highly contentious time in 2018 carried out the contract for the opposition informed President Sirisena that the MCC would harm Sri Lankan interests and was linked to the ACSA and SOFA agreements. Sirisena despite meeting the Board of the MCC on several occasions distanced himself from the grant and feigned ignorance of the agreement after being briefed by Aryasinha.

It can be reliably reported that Aryasinha even instructed officers at the Foreign Ministry to willingly misguide their own minister, Tilak Marapana on several occasions. On one instance he admonished the legal division of the Ministry for providing the actual facts of the MCC compact to Marapana who had wanted clarifications in the wake of the Aryasinha’s media blitz against it. The gullible Sirisena however swallowed the hook of a ‘US conspiracy’ and duly blocked progress on the grant which would have no doubt brought in significant benefits to the country, least of which added USD 480 million to the foreign currency reserves at a time when Sri Lanka’s reserves are precariously low.

Aryasinha’s media operation against the MCC was carried out by several ‘guns for hire’ who were briefed with selective elements of the agreement. MCC was erroneously linked to ACSA and SOFA, two agreements already operational for years. Mind blowing conspiracies were hatched in the media, some claiming that the US will be ‘granted’ a land corridor between Trincomalee and Colombo. ACSA and SOFA agreements which had been operational for years, particularly under the previous Rajapaksa regime in which Gotabaya was defence secretary was made out to be a US military takeover of the country. Aryasinha’s ‘hired guns,’ one a once respected senior columnist at the Sunday Times and another a political lackey at the Maharaja network who had gone on several diplomatic postings courtesy of the Rajapaksas dutifully carried out this media operation which served their political ends as well.

Despite the pre-election blitz against the MCC one year into assuming power, President Gotabaya Rajapaksa a former US citizen never withdrew Sri Lanka’s application or informed the US government of its intention to withdraw from the compact after coming into power. With the US having withdrawn its offer on its own volition, there is no chance of reviving the negotiations.

It was the Ministry of Finance of Sri Lanka which identified the areas in which to use the grant money, especially to improve the transport infrastructure and land administration practices. The grant would have provided funding for two key projects. The transport project would have received the bulk of the funding with USD 350 million disbursed for transport modernisation and advanced traffic management systems in the Greater Colombo area. The Land Project would have received USD 67 million to expand and improve existing Government of Sri Lanka initiatives to increase the availability of spatial data and land rights information.

Together, the two projects were projected to benefit 11.3 million people, which accounts for 54% of Sri Lanka’s population

This component of the MCC was made into a scandal by the then Joint opposition.

Dinesh Gunawardena who spoke at length in parliament with information fed by Aryasinha rewarded the latter for all his services in undermining the Yahapalana government and enhancing the rift between Sirisena and Prime Minister Wickremasinghe by keeping in his post as Secretary even after the presidential election. Aryasinha was the only secretary to a cabinet ministry who was not removed when the Government changed. Since then despite repeated allegations of corruption against Aryasinha and clear evidence of him abusing his powers as Secretary to cover up those crimes, as extensively reported by Colombo Telegraph, Foreign Minister Gunawardena chose not to take any action against Arayasinha.

Having done the opposition’s bidding and scuttled what would have been Sri Lanka’s largest development assistance grant in history, Aryasinha is now the Ambassador to the US. Getting booted out by President Gotabhaya Rajapaksa after the Parliamentary election in August, it is learnt that Aryasinha lobbied the Rajapaksa brothers through an influential media tycoon and a former civil servant citing his loyal service to them during the Yahapalana regime. He has now been rewarded with the ambassador post to the US where his child is a citizen.

Reliable sources in Washington DC told Colombo Telegraph that it is unprecedented that the MCC Board of Directors had taken the drastic decision to remove Sri Lanka from its grant programme just weeks before a new administration is due to take over. A new MCC Board of Directors will be appointed by the incoming Biden administration which could gave given a chance for Sri Lanka to renegotiate some of the elements of the grant offering a face-saving opportunity for the government to hold on to it despite its election rhetoric. However Aryasinha had failed to make any headway even to ensure that this decision be postponed for a few more weeks till the new US administration takes over.

The loss of the MCC grant is not just about the USD 480 million. This grant would have been a vote of confidence on the Sri Lankan government and its policies. It would have been a clear indicator for potential investors on the stability, laws and rights situation in the country which are all considered by the MCC criteria. In addition to being a confidence booster for investors the grant would have also replenished the dwindling foreign currency reserves of the country. All this has been lost due to the machinations of a few individuals who claim themselves to be patriots.

Ravinatha Aryasinha’s record will now stand as the ambassador in Brussels who lost the EU GSP plus trade concession for Sri Lanka in 2011 who in 2018 as Additional Secretary in charge of Economic Affairs worked to prevent Sri Lanka regaining GSP Plus and now Foreign Secretary and current ambassador to Washington DC who prevented Sri Lanka obtaining its single largest economic grant in history.(By Chinthika De Silva)