16 October, 2021

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The Right Way To Do The Eastern Container Project

By Kumar David

Prof. Kuma David

The fracas about the Eastern Container Terminal is mostly if not entirely political; concerns re finance, technology and traffic, in so far as the spat in the public domain is concerned, are not of substance. The scuffle is twofold – domestic nationalist ideology and Lanka’s positioning in geopolitics. In the domestic arena it is all about Indian participation, and the principal protagonist is Sinhala Nationalism. There is subliminal ideological aversion in the Sinhala nationalist mind to things Indian. This is not the place to explore why; whether Raja Raja Cholan, domestic antagonisms, or Tamil Nadu’s 60 million, lie at the root of the antipathy is a topic for another day. My only assertion today is that there is a gut distaste of India in the nationalist psyche. The point is that a pathological driver in the ECT standoff is Indian involvement irrespective of its suitability or otherwise. It lubricates the spleen of monk and laity alike and affects decrees of policy bosses. 

The other input which I take as given, is that there is strategic tension in this region between China on one side and the Quad (India-US-Japan-Australia) on the other. Foreign Minister Colambage as reported on the front page of the Island of 28 Jan, when asked whether US, India, Japan and Australia would take a common stand against Sri Lanka on accountability, dismissed the possibility. “Sri Lanka is important to them” he said, while describing them favourably as four pillars of a Quadrangular security alliance. Hmm how will Beijing look at this jelly-fishy flopping? Exploring the good and bad of Chinese Belt & Road billions, versus capitalist liberal-democracy, will take me to far afield today. 

There are four options on the table, everything else is simply variation on one of these themes.

Option 1: Implementing the project as a consortium arrangement where Japan and India are the key players. Perhaps Japan will invest/loan $500 million, perhaps the Adani Group (India’s country’s largest port developer and operator) will manage operations, and perhaps an agency of the government of Sri Lanka will take a stake. I will mention variants anon.  

Option 2: China takes the leadership role in the project, most likely within the umbrella of the Belt & Road programme. Many variations are possible – Hambantota or Norochcholi style where China finances and builds and Lanka operates and repays debt, or in addition to this operates the project for an agreed number of years, or a third variant is where China lends capital and it is up Lanka to construct, operate, make a profit and repay.

Option 3: This is what hard nationalist have wet dreams about; raise every kopek in the domestic market, have a love fest with the trade unions, borrow within this framework. Essentially, a Lankan conceived, financed, constructed and operated eastern harbour terminal. 

Option 4:  Do bugger-all; forget about ECT; live without it; which may be where Lanka will end up given the pluripotent cock-up that is now unfolding on all sides.

These options have been discussed ad nauseam in press and TV and readers I think are fed up with saturation coverage. So I will go directly to what should be done. a) The China option – Option 2 should be discarded. I am not anti-China, not but we are already hugely indebted to China and debt repayment schedules to the PRC are hefty (about $2 billion a year for the next four years). We should put no more eggs in that basket. b) Lanka must play the non-alignment game to full advantage; pan-whoring is the way to go. How well Nehru, Nkrumah, Sukarno and SWRD-Mrs B played that game. Beggars must choose wisely and position their begging bowls judiciously. The ECT is the point to switch our tender maidenly virtues to course correction away from Chinese totalitarians to rapacious raiders from the capitalist powers. The forces behind Option 3 are powerful; unions, monks and nationalists who can bring GR, MR and SLPP to their knees. In any case it’s appropriate that domestic funds, whether from entities such as the EPF, the Lankan capitalist class or trade unions take a stake, Why not? And it this may set a model for financing development in a future where we are less broke. c) Option 4 is out of the question unless Lanka is to crawl into a cave. 

Hence my position is that the way forward is to blend of Options 1 and 3. Let me go a little further on this road and explore a feasible project model. The site (contingent land and sea) will remain state property. A Project Company will be established by the principal Japanese and Indian partners for the purposes of: raising capital – maybe $700 million, building the terminal facilities, operating the harbour, developing contacts with international shipping lines, generating a profit, servicing debts incurred in project construction and in say 30 years transferring ownership to a government entity at a price discounted at an agreed annual rate (say 2% to 3%). This is quite similar to the BOT (Build, Operate and Transfer) concept that has been very successfully used with power projects all over the world. There will have to be some differences; for example a local partner is desirable because unlike a power project a harbour interacts with thousands of workers every day. Even better would be if the offer made by the trade unions to provide part finance is taken up. Either would need local partners who can raise say $100 million (Rs 20 billion) as co-investment. An additional take on making ownership part domestic would be to list 10% to 20% as shares on the local stock-exchange. 

I appreciate that the challenge is more complicated than a BOT power-project where the most complex tasks arise during project construction, thereafter dispatching electricity to the grid under the control and supervision of a centralised network operator are familiar in electricity supply systems. Making a port project operationally successful and profitable will be far more complex and require commercial and pricing ability, good international networking and management of labour. Handing the whole project over to a Japanese-Indian consortium for an annual rental of such and such an amount is straightforward. The developers will raise funds, service debt, operate the facilities and pay easy-picking rental to the state, but the fever of Sinhala nationalism and trade union restlessness make this difficult. I concede that dim witted military types who are in charge of everything under Gotabaya will find that approach comfortable; just sit on an armchair and function as rent collectors. However the lay of the current political landscape may make this lazy approach infeasible. I think the government will have to get off its indolent backside and work out a project plan that includes some complexity since to let the project die is objectionable waste of economic opportunity. 

I do not propose to discuss the report of the Presidential Commission of Inquiry handed over last week, except to the extent that it may influence the Eastern Container project. A expose can be found in Colombo Telegraph at: https://www.colombotelegraph.com/index.php/full-text-of-the-leaked-report-war-criminals-murderers-and-fraudsters-exonerated-by-nandasenas-political-victimisation-commission/ The CT story alleges that the report is an attempt to “exonerate, white-wash and acquit without charge perpetrators of the most heinous crimes committed in Sri Lanka in the recent past and in many cases reward murderers, abductors, and money launderers with compensation by the state”. The report unanimously recommends that “indictments against every accused in emblematic cases highlighted by the UN be dismissed, indictments in currently active trials be quashed; that high military officers, sergeants and sailors charged with rape, kidnapping, extortion rackets, abduction and assaulted be acquitted and released”. 

This commission from hell was chaired by disgraced retired Supreme Court Judge Upali Abeyratne and included retired Court of Appeal Judge Chandrasiri Jayathilake and former IGP Chandra Fernando. It was a Gota regime whitewash squad reflecting regime thoughts and desires. The release of this stinking report at this moment, the eve of the Geneva UNHRC meeting where a devastating attack on the Lankan Government by the UN High Commissioner pointing to escalation of punitive measures is feared, has detonated a bomb under the regime’s backside. The recommendations are music to the ears of Gota’s military junta and it is impossible for the regime to condemn the report as this would enrage chauvinists and monk-mobs. On the other hand the MR loyal political side is acutely embarrassed. In order to minimise a skewering at Geneva and reprisals from the West will the government assuage Western anger by handing over the Eastern Terminal project to the Japan-India consortium? I expect to see heightened tension in the government between the military (GR) and the political (MR) wings of state power in the coming months.

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Latest comments

  • 0
    1

    Sorry about a typo:
    “Hence my position is that the way forward is to blend of Options 1 and 4”.
    This is an error, it should rear Options 1 and 3.

    • 1
      1

      Wrong. Best way forward, hand it over to China which is already managing the entire south port and Hambantota port. China also managed the Singapore port where most investments are by China and the Chinese family government of Singapore. China also manages ports in Pakistan, Bangladesh, Maldives and Myanmar. So why not!

    • 0
      0

      if we start anything based on false foundation on blatant lies, that cant move forward. Its reverse would be inevitable. It is like karmic retribution. As of today, our eyes believe today that they cant correct their mlechcha lies spread for power gain tactics. Signing MOUs are common in communications between two countries. But if you would interpret the kind of agreements without thinking twice, you would not move an inch forward because the very same peoples would stand against you.

      https://www.youtube.com/watch?v=C9FajgrUi64

  • 4
    1

    This is a complicated isssue. India wanted the Eastern Container Terminal in the Colombo Port. Wimal Weerawansa, some Buddhist monks and the Port workers are against India. Gota at first stated a firm No. Now India says it wants the Eastern Container Terminal, and control over Palaly and Trincomalee. Rajapaksas leaned towards China and couldn’t reply about China’s Debt Diplomacy Policy. India will apply pressure on implementing the 13th Amendment though idiot Sarath Weerasekera is against the Peace Accord. Sarath Weerasekera is echoing the voice of Rajapaksas. Apparently there is pressure from UNHCR. Now India has donated some 500,000 vaccines on the pretext of ‘Neighbouring countries First’. When Tamils support UNHCR for strong actions against Sri Lanka, Rajapaksas said India did a good job in the battle against the LTTE though China and Pakistan used lethal weapons. Gota wanted to get around India somehow or other. A fine drama and everyone wanted to know the climax.

    • 2
      4

      13A is now dead. Awaiting a decent burial.

      Hand over Point Pedro/KKS port and Jaffna port to India. That is good. And a new IPKF army base in Jaffna. IPKF already has a very good operational history there. Should be second nature to them.

      But Trincomalee port must go to a consortium of Saudi-UAE-Qatar-USA to balance things out. Saudi, UAE and Qatar have done most investments in Trinco district already. USA have one of the strongest defence agreements with them. I’m sure the majority of Trinco district would love it too.

      • 0
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        ’13A is now dead. Awaiting a decent burial.’
        .
        A cremation is more likely.

        • 1
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          Svenson,
          There is already a split among the Rajapaksas over the Eastern Container Terminal in the Colombo Port. Now India had warned Sri Lanka to implement Agreement in respect of the Eastern Container Terminal. At the same time, Dr.Jaishankar had told the Rajapaksas to implement the 13th Amendment. What is the advice from China to Rajapaksas. Will Kachchativu go out of hands from Sri Lanka and there are number of issues. Climax scene is yet to come.

    • 0
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      SR,
      UNHCR is United Nations High Commissioner for Refugees whereas,UNHRC is United Nations Human Rights Commission which one you really referred to?

    • 1
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      AR
      “Rajapaksas said India did a good job in the battle against the LTTE though China and Pakistan used lethal weapons.”
      MT spoke the truth when he said shortly after the war that SL fought India’s war against the LTTE terrorists.
      *
      Give India its due credit for all the support it gave the war effort of the MR government, including systematically sabotaging the ‘peace talks’.
      *
      Have you details of the supplies of weapons to the GOSL? About the providers of logistic support? About support on ground?
      *
      You keep puling some fast ones and hope to get away with them. Sorry to have been a spoilsport.

      • 0
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        Sorry about the typo.
        MR spoke the truth when he said shortly after the war that SL fought India’s war against the LTTE terrorists.

  • 2
    2

    President Gotabaya Rajapaksa thinks, rather foolishly, that appointing the army generals, both retired and in service, in key posts in the government will automatically result in a more efficient administration, And perhaps a corrupt-free government, Such wishful thinking is not borne by history.

    Pakistan has been ruled by the military more than the civilian rule since independence. Yet Pakistan is a backward country with a stagnant economy. The civilian government is unable to shake off the military in running the country. The army continues to breathe down the neck of civilian politicians. Sooner or later, perhaps sooner, that military-dominated government will not solve their problems, What the country needs is a united and secular country in which the principle of rule of law shall be scrupulously followed both in letter and spirit.

    • 3
      3

      How about Israel?

      Ruled by the military and retired militarymen and it is the only successful country in the region despite not having any oil!

      Secular is out of the question. Unitary is a given. If Tamils and Muslim do not agree, the island must be divided into 3 mono ethnic nations equitably. Stuck in the middle is not a solution.

  • 3
    3

    If these people who ‘almost’ demand that ECT should be given to them are civilized they should tell the Government of Sri Lanka to listen to the voice of the people in the country and forget about ECT. If they keep on insisting that ECT should be given to them ignoring the voice of the people in a sovereign country that expose their tribal mentality to rest of the world.

    • 2
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      EE,

      You are right but there is another side. SL is planning to bury the now dead 13A. Endia insists SL keeps it. By giving the ECT to Endia it will agree with SL to bury 13A. That is the plan.

      Choose between the two. Keep 13A or handover 49% of ETC to Endia and Japan. Endia is not the enemy.

      Adani group also wants farm land in Vanni. Another good strategy. It will diversify the Tamil-only ownership of Vanni land and boost SL’s agri exports to Endia. Over 80% of land in Vanni are unused. Of course this can happen AFTER burying 13A because land powers are with the PC (on paper) and Adani group is not taking the risk of court cases.

      Think beyond the obvious EE.

  • 6
    0

    I have only two important matters to worry right now .
    How to prevent the country’s Financial system from going bust.
    And even more worrying is the masive disaster the unregulated mining is going to cause, it is not funny nor minor to have multiple tremors , another yesterday.
    The Geological experts are monkeying around .
    They must remember, its they who will be held totally responsible , not the government or the totally selfish , greedy and ignorant minners.

    To date they have not bothered to educate the people or the miners about excess mining.

    You can not totally ban Mining, but you can regulate and punish the illegal miners without proper approvals.

    This where the Army is needed not in hotels of Quarentine.

  • 3
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    ‘My only assertion today is that there is a gut distaste of India in the nationalist psyche.’
    .
    I hope the Covid vaccine will cure it. That was one of its many purposes.

  • 0
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    The foreign debt payments cannot be sustained without the help of India. Hence, any solution needs to be with the concurrence of India.

    • 4
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      The problem in Sri Lanka is that everything is politicalized.

      For onething most Sri Lankans are quite well informed today thanks to the internet.

      The term sold has become a political tool , People are in deep distress , not knowing how to cope day to day life, and with no favourtiism , we must be fair , it is regretful that we were hit by this pandemic, however the government has faired well.

      Is it not funny to hear that the government is selling off our country’s
      national assets and land , when the law discourages it to great extend to prevent even ordinary lands to be bought by foreigners?

      Right now we have to sustain , rather than the people panicking they should update themselves without having to believe politicians.

      Those who oppose the decision also must come up with an alternative and not volkswagen plant and tire factory in the blue skies.

      We need the help of India right now and urgently.

      Sometimes leaders have to make decisions to arrest certain situations , that is all about leadership..

      Just because you appoint a Captain to your ship., you can not tell him how sail the ship in stormy seas and yet hold him responsible for your decisions.

  • 0
    1

    Dear AR

    Climax is is what you said 13th Amendment and as Peace Accord??

    Where did they ask for Palaly?? and Trincomalee?? please. If they did it would be absurd in the Indians part….I do not think they will go down to that level. Bad FP/TULF thuggery/politics does not mean India is written off from our future. We just have to come to terms with what took place in our Nation because of this folly…lost so many four children for no reason.

    Indian embassy has to be removed from Jaffna as this has no relevance for the diplomatic arrangements between the 2 Nations?? I am sure GOSL can request this as part of the current port offer.

    Anyway I totally agree with the first part of the Prof’s analysis and the GOSL decision already made….for entirely different reasons

    (1) there has to be a SAARC foundation and India need opportunity to work to that too. Our Nation offers this opportunity.

    (2) Indian and China should learn to work together for regional development and where else is possible except in Sri Lanka. This in its own merit a ghetto politics be it geo nature and one should move away soon. They can both focus on being the post colonial countries who changed the world for all the right reasons….where justice was delivered to all equally.

  • 6
    0

    For reasons good or bad, there is lurking suspicion among the Sinhalese about Indian intentions from early days.
    Indian conduct in South Asia is seen as domineering by many and India has done little to alter such impression.
    Some of the Indian High Commissioners were true diplomats and knew how to conduct business without making waves. But quite a few have acted like Viceroys in the days of the Empire.
    Knee jerk reactions of Indian Foreign Ministry of late have not helped. either.
    Indian intentions on the national question were never sincere and misunderstood by both Tamils and Sinhalese. The more the Tamil leaders try to portray India as a bastion of support, the greater is Sinhalese suspicion. Memories of 1987-90 are deep in the Sinhala mind. (They should be in the Tamil mind to, but the Tamil leaders chose to write it off, despite 30 years of Indian poaching in Palk Strait to the detriment of Northern fishers.)
    Indian efforts to impose its will on Sri Lanka have always had a negative effort.
    *
    East Asians know a thing or two about diplomacy that successors to the British Empire lack badly.
    Even the once aggressive Japan, despite stubbornness about its immoral stand on Korean “comfort women” during WW2, conducts business with a show of respect to the other.

    • 0
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      There is so much to learn from ASEAN….has more relevance to our future in many ways.

      SAARC should follow ASEAN in everything? I am sure they do not want to know us now as we are very toxic in-terms of Geo Politics.

      The barrier is the Indian continent genes are different to everyone else..when it comes to absurd/pathetic/uncivilised behaviour a particular evolutionary stamp/trade mark that is common to every single Indian continent individual I know if including myself.

      Good for outsiders but not for themselves.

  • 1
    2

    Sri Lanka is already in a big debt trap to China. It is better to take a loan from international lending body like ADB or world Bank. Both India and China and to a lessor degree USA are keen to keep Sri Lanka as their subordinate because of geopolitical reasons. Rather than taking a big loan it is better to develop it in stages where debt of the construction can be manged with less damage to the already collapsed Sri lankan economy.

    • 5
      0

      @Jack .
      ADB and WB has already dished out fully all of Sri Lanka’s Quota , we need to ask Mr.Clean and Clan what they did with the billions of dollars ,not a single Sri lankan who deserve benefitted, yet no one knows what happend to the billions and grants.

      Right now no one will give us any funding , no.investors are going to move any funds in a hurry too, we need to think independently, we need a float to survive next two years , that is the truth ,like it or not.

      Even if you offer the whole Island as collletral no one is in a position to dish out, the entire world may go into a severe recession and may last atleast for a year if not two.

      India is our only best option.

      • 4
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        FK
        One little catch.
        The Indian economy itself is shaky; and now the goviyo are on the war path about Modi’s agriculture policies.

        • 2
          2

          Adani group also wants agri land in Vanni. Over 80% of land in Vanni are unused. That is a good strategy SL must agree. It will pit Tamils against Endia. Foolish if Gota disagrees.

          • 0
            0

            It is already 30%++ Indians a long time ago…and not sure now must be more. Ceylonese Tamils are not control anything….all they can do is bark at the Passive Sinhalese for all their blunders.

            All the Fram lands owned by Tamils needed labourers just as the household servants in Jaffna…………who else will allow them to be exploited….you got it…estate Indians folks (just as they were needed in the estates then for the Tamil leaders estates and their foreign masters estates from SL to Malaysia)……………all the Jaffna children are only good for civil service as trained by the British. Even today no one want to do any menial work…toilet washing in western countries are considered different for the obvious reasons.

            Hence the low caste system retained so there is always someone to wash their backside.

            Now the Jaffna man entity is totally whitewashed and gone a long time ago. All the discussion on crime against humanity and the UN games are all about India getting the rest whatever left……In Singapore/Malaysia and the Western Countries the same all being systematically taken over from the Ceylonese by the Indians. So any noice here in CT is from India or some retired in western countries.

            • 0
              0

              The household work start like this when an Indian gentleman approach one household for work eg….from gardening to all the household chores..before you know entire landscape/village and the next is taken over and the original inhabitants are only good for finding the money to sustain the needs of the new arrivals….same story world over.

              This is how the estate workers numbers also went up…..one arrival get to invite the rest of the village…..all the stories of the British Brought them in shackles are all BS even then. Then the FP drama for the last 10 year arrival got spun and spun until we all died…cool.

              • 0
                0

                Funny part is it was not even a landscape belongs to these folks.

                So I would not blame you for selling anything left of Vanni to Indians may be you want to consult the Global Tamil Forum if Adani is acceptable for their agendas…ie he may not be a Tamil????

                • 0
                  0

                  How about Mannar as a port for the Indians as there future connection you may want to check with AR, Dr GS, PK, LC and various FP folks as well as with Hon Sampanthan MP the leader for the past 50 years.

                  He also may be interested in taking in the rest of upcountry Tamils to East for permanent relocation as part of the devolution just to outset the Muslim numbers.

        • 2
          0

          @SJ
          The farmer’s issue is a pinch of salt in the mighty ocean for India.

          They have enough reserves , not many people are aware how really rich those Indians who are rich.

          For India and China thier domestic market is more than enough to survive for next two years until the pandemic is done with.

          With this rate of interference in government policies and intimidation over voter obligation, which has lead to halting many options to sustain ,
          I doubt very much we will survive next two years.
          I do not mean to say a total collapse .
          We may just exist , hand to mouth.

          Most small and medium business may go off the market and possible with some larger ones too.

          It is an absurd and baseless alligattion by opp , against the gosl regarding.the dollar hike.

          There is nothing the gov can do what it could have in normal curcumstences.

          The world has stop turning and while the gosl is trying hard to negotiate with what is available , politicians without coop to help the country sustain are trying to gain political miles
          Shameful.

          When the nation is in crisis the whole cabinet must stand by the government not against.

          Such solidatry will stablize the nation at a time of uncertainity.

          • 0
            0

            FK
            Do you know the size of the agricultural sector of India?
            The pinch is probably a pinch in ‘Almighty God’s fingers’.
            Have you seen the size of the protest? Trouble with farmers is much more than a market question.
            The Indian economy has been shaky for an year even before farmers’ protests.
            *
            “When the nation is in crisis the whole cabinet must stand by the government not against.”
            I wonder you have some idea about who screwed up in handling of Covid-19 infection. Was there much thought to the livelihood of the people amid chaotic clampdowns?
            When they are themselves the cause of the crisis and are clueless about what to do, whichever way they stand will make little difference.

    • 3
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      J
      I wonder which country works desperately to impose various military deals on this country and unsuccessfully tried to impose a $500 million gift with strings attached.

    • 2
      0

      Wrong. Chinese loans are just 10% of total foreign loans and not the reason for the debt trap. SL is in a debt trap because of sovereign bonds. These are commercial bonds at very high interest rates. They were all consumed. No investments.

      Best thing SL can do is to default on these. That will also prevent future SL governments from getting these loans.

  • 0
    2

    Lankawe is about to shut down Garment Industry as the export goes only to West and with their GSP+ Lankawe doesn’t like that. Lankawe can take only free dumping grounds, no taxes. Tea Estate is at very shaky position. Rented ME workers are dying hard to come back to Lankawe. The interesting part is Hangbangtota Harbor came to Lankawe hand from China and was retaken. But Pahatu Tower did not come to Lankawe, though China withheld a 15M loan saying Lankawe was very slow in approving the works. That is the biggest joke in in lending world, where the lender is charging penalties to borrower, not for the delay in payment, but for the delay in borrowing. Royals named there Slap Party as Pakatu Party hoping to tally with the landmark tower; but the Pahatu tower has now slipped from Lankawe. So now the Pahatu name is detriment for the party. Aanduwa already reported they are paying for the tower, but they didn’t earn any income- Same Hangbangtota story. But cunningly these guys didn’t let the story get out of hand like Ranil did in MCC & ETC. ETC is not going to India. Pariah Demelo, Dr. Jeysankar, like EU was rushing to give the GSP+, he too rushed to lot of some free vaccine. There is time let for him to the lesson, Rajiv took from Vijithamuni and Narayan took from Royals.

    • 0
      0

      Tea should be shut down anyway and the folks over to Vanni and Jaffna to make use of the land for themselves away from the cattle range life/slave life style. They should own the lands in the North and East and we should work for them for a change as labourers??

      Sinhalese can have their land back for their own use as required.

  • 4
    0

    The Prime Minister ,.has officially decalared along with The President The ETC will not be leased or sold.
    Hopefully the strike be called off and workers will return to duty without criplling the economy, which is struggling like the rest of the world.

  • 2
    0

    I am sure now the sour grapes bunch must be happy that They blocked MCC and now ETC.

    Let those who opposed go and find funds.now.

    The President and PM need not take responsubity. .

    The President and PM should never have given in to stopping.the MCC and ETC

    • 1
      0

      FK
      ‘Sour grapes’ occurs when you want something and not get it and then try to dampen your disappointment.
      Were MCC and ECT out of reach like the grapes to the fox?

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