5 March, 2021

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Unpacking Port Patriotism: Lack Of Internal Process & Its External Effects

By Rajan Philips

Rajan Philips

The first consequential announcement that the ECT deal is kaput came from Prime Minister Mahinda Rajapaksa. Early last week he was reported to have assured the port workers that the East Container Terminal (marked East on the map) “will neither be sold to any country nor handed over to any country for administration.” The PM’s announcement came as a surprise to everyone, most of all to the Indian High Commission in Colombo. It was not clear if, when and how India and Japan were formally advised of the government’s decision. It was clear, however, that the Prime Minister was trying to diffuse a gathering political storm at home and was not worrying about diplomatic niceties.

The Port Terminals & Depths

Both local politics and diplomatic caution were clearly lost on the Indian High Commission spokesperson who blurted out the same day that he wanted “to reiterate the expectation of the Government of India for expeditious implementation of the trilateral Memorandum of Cooperation (MOC) signed in May 2019 among the Governments of India, Japan and Sri Lanka for the development of ECT with participation from these three countries.” It was hardly the way to express India’s position given the context in which the Sri Lankan Prime Minister had announced his government’s decision. Indian diplomacy can still learn a lot from the Chinese about being suave in dealing with smaller countries with worrisome politics. That difference first showed up way back when in Bandung, between Jawaharlal Nehru’s impatience and Zhou Enlai’s charm. 

Never mind. By Wednesday, Prime Minister Modi (Nehru’s current antithesis) was calling the Sri Lankan PM to felicitate Sri Lanka’s 73rd Independence anniversary. He was the first foreign leader to do so, beating Xi Jinping to the wire. The Chinese President later sent a message of felicitations to President Gotabaya Rajapaksa. Mr. Modi may have taken the high road in his call with the Sri Lankan PM, without harping on the ECT deal cancellation, and leaving it to his High Commissioner in Colombo to formally register a protest with the Sri Lankan government. High Commissioner Gopal Baglay has reportedly done just that, and has called on the President and the Prime Minister separately in a double registration of India’s protest. 

What will India do?

What will India do? For now, it is all a matter of speculation. Will it retaliate by reducing the transhipment of Indian goods via Colombo? Indian goods account for the largest volume (70%) of cargo in Colombo, and according to Indian commentators “Colombo tranships more Indian goods than all of India’s own ports.” Sri Lankan commentators have noted that without the Indian volume, Colombo will not be able to maintain its current port-status in the world – 25th largest container port and 19th best-connected. 

The new port in Vizhinjam, Kerala, has been touted as a response to this regional imbalance, and as a new deep water (20-24 metres) port Vizhinjam is anticipated to be India’s first Mega Transshipment Container Terminal. Coincidentally or not, the private developer of the port is none other than Adani Ports apparently India’s leading private sector port developer and operator. The USD 930 M port is being developed as a Public-Private BOT undertaking with the Kerala State government as owner and the Central government providing USD 110 M gap funding support. Prime Minister Modi is also reported to have mused about a new transhipment port in the Great Nicobar Island, which too could be a threat to Colombo’s current status. 

How will the Vizhinjam port affect Colombo? According to former Prime Minister Ranil Wickremesinghe, who joined the ECT fray with his own little statement, the now defunct 2019 ECT Memorandum of Cooperation (MOC) that his team had negotiated included the condition that committed India to treat the Kerala and Colombo ports equally without giving preference to the new Kerala port. Will India continue to do that? Or will it divert and reduce Indian transhipment through Colombo? Could it be that India cannot do anything about its cargo that now passes through Colombo because it suits India’s own distribution requirements. For example, increasing the country’s cargo handling in Kerala, at the expense of Colombo, might require significant expansion in the ground transportation infrastructure within India. So, Sri Lanka might be left with the better of both worlds. Keep the ECT as a sovereign enterprise and still receive the same volume of Indian transhipment cargo.  

More speculatively, how will India and Japan respond to what the Indian media is calling as Sri Lanka’s “compensatory offer” of the West Container Terminal (WCT) to be developed as a Public Private Partnership undertaking. As can be seen in the map above, the contentious East Terminal is partially developed, whereas the West Terminal (that will be to the left of CICT in the map) will be an entirely new undertaking involving a full construction component. Colombo government sources have apparently touted it as a bigger and better deal for India and Japan. According to the same media reports, sources in Colombo have indicated that the Indian response to the WCT offer has been “ambiguous” and “almost rejecting.” Indian officials, on the other hand, are said to have countered that there had been “no formal communication about WCT” from the Sri Lankan side. I have not seen any formal government announcement about the compensatory WCT offer by Sri Lanka.

As well, to Indian media queries about the likelihood of a future political opposition to WCT down the road, the Sri Lanka government sources have reportedly ruled out  “chances of any further trouble on the cabinet-proposed West Terminal offer.” Can anyone be so sure that the ECT history will not be repeated for a future WCT deal? If an apparently smaller ECT is so crucial to be kept under 100% Sri Lankan control, how could the bigger WCT be given to foreigners in the future, and that too to the Adani group that is allegedly in cahoots with the Modi government?

Port Development

The first major development in the Colombo harbour was the late 19th century (1872-85) construction of the Southwest Breakwater. It was directly undertaken by the colonial government without hiring contractors to keep costs within estimates and loans repayable. Both were accomplished successfully. The loan repayment was made entirely out of the port revenue. The cost of construction was kept lower than normal because the labour used was convict labour supplied cheap by the Prisons Department, which collected less than minimum wages as its revenue and fed the convicts with “wholesome food.” The convicts were preferred apparently because of their “superior physical strength … and a certain degree of regimentation.” It was also because of the short supply of regular “coolies,” local or Indian, and their alleged lack of physical strength and regimentation. The harbour expansions thereafter were few and far between. Notable milestones are the conversion to a “sheltered harbour” in 1912, and the completion of the Queen Elizabeth Quay and expansions in 1954. 

Much container cargo has transhipped through the Colombo port in the intervening years, but all of the current container terminals were added only after 1985. Three of them under the protection of the old breakwaters – the Jaye Container Terminal (JCT), Unity Container Terminal (UCT) and the  South Asia Gateway Terminal (SAGT) – were developed between 1985 and 1999. The South Asia Gateway Terminal is the expansion of the old Queen Elizabeth Quay and is the first and perhaps the most successful Public-Private Partnership undertaking in the Port and in Sri Lanka. 

The subsequent expansion of the port facilities has been under the umbrella of the South Harbour Development Project, the technical studies for which were completed in 2006.  The South Harbour expansion is a significant addition to port’s terminal and operational capacities. The expansion is based on the construction of new breakwaters and the development of three new container terminals, viz., The Colombo International Container Terminal (CICT, already built, and known previously as the South Container Terminal); the now famous East Container Terminal; and the now-touted-compensatory West Container Terminal. 

But the procurement process for developing these facilities has been getting murkier and murkier with every passing cargo ship. Not everything was transparent in the selection of the consortium for the CICT facility, although the main consultant and the contactors apparently did a good job of work, at least according to the project evaluation report of the Asian Development Bank, which has been the prime lender for the South Harbour undertakings. And nothing was made transparent about the negotiations and the eventual agreement for the ECT. Why?

The answer may lie in the internal decision making processes of the government of Sri Lanka. Rather, the answer is in the lack of any process for the procurement of public goods and service, big or small, local, or foreign. Things get complicated when public undertakings are large and involve foreign investment and participation. Add to the lack of process in procurement, the lacuna of parliamentary scrutiny and overall transparency. In fact, there is no better and more compact example for the deteriorations in process, scrutiny, and transparency in the matter of public undertakings in Sri Lanka than what you will find in the saga of the recent developments in the port of Colombo and its terminals.

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Latest comments

  • 1
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    Thank you ever so much for such a clarity in this matter to CT readers. As usual we expect nothing less from Rajan Sir.

    My understanding now is

    (1) When India-SL-Japan discussed the deal they would all have reviewed the South Harbour development Project Technical Studies.

    (2) they would have specifically agreed that they are discussing ECT (pertly developed) for this venture and nothing else correct??

    (3) Now our GOSL has back tracked on this and stating to the Partners that due to the internal issues they are willing to offer the WCT which needs be developed from scratch but is a much larger entity.

    Based on someone confirming my points being correct based on Rajan article

    (1) Japan and India are cheesed off about it and if so that would be because they have already said their mind/invested time/reviewed studies/did further in-house work/studies to come to the table and agreed for the 49/51 deal.

    (2) Now our GOSL is asking them without any protocols to revisit the agreement already made/signed?

    (3) With the understanding of SL internal issues and lack of strength in proceeding with “agreements” wholeheartedly due to failed internal good practices/public outcry…then India/Japan being a bit more experienced/developed Nations and the long term history and understanding amongst them am sure can come to more amicable arrangements etc??

    • 0
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      (4) The original intent / interest was for the larger entity the WCT to be developed by all (unless otherwise there are structural and development issues highlighted in the studies regards to WCT or Monetary limitations from one of the partners to develop the larger entity) but a spin is on to limited the outcry from the objectors in the first place??and is being played out accordingly by all parties to dazzle us all?

  • 1
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    Any hostile Indian action pushes SL further towards China (and Pakistan).

    May be India should develop its own port in Kannikumari and restart Sethsamudram canal.

    • 0
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      ” May be India should develop its own port in Kannikumari and restart Sethsamudram canal.

      Will Lankawe give permission to India to deepen Sethusamuthram. Last time it went to International Court of Justice to block the development. It will do that always.

      • 0
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        ” Last time it went to International Court of Justice to block the development.”
        Really?
        When?

  • 4
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    It was traitor Don Juan Dharmapala (Reincarnated) who messed up the whole thing. There was no agreement to give ECT to Japan and India. The ECT was developed during Rajapakshe regime and at the time Government changed in 2015 one third of the terminal had been completed and was operating. Tenders had been called to buy cranes to complete the remaining part but Don Juan Dharmapala (Reincarnated) stopped the work that was in progress and decided to hand over the terminal to Japan and India probably to take the check and put it in his pocket as he did with the check (US$973 million) given by Chinese for Hambantota port. The ‘Jadapalana’ Government had signed a MOU and a MOC but had not signed an agreement.
    According to an expert in this field, Colombo is the cheapest place for shipping lines for trans-shipment to India. Ports do not dictate shipping lines where to park their ships.

    • 1
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      Dear EE

      What you have done is to provided additional info to complement what Rajan has written. OK I remove the personal attack parts and what you say add substance to the discussion.

      Therefore what we saying is this deal was done during the last government with ECT in mind and the current GOSL saying (be it not following protocols) to Japan/India we want to revisit the agreement and upgrade this to the WCT to be developed??

      If we now remove the politics from this point onwards then we get to respect all the partners GOSL/Japan/Indian Businessman who all need to discuss matters accordingly to make their business plan materialise??

      Over politicising may kill something that is very critical to us economically/regionally and politically too as they all are part of Nation Building too…and sometimes best to add knowledge/info for the public without attacking the elected GOSL will only enhance the transparency??

    • 0
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      Ports do not dictate shipping lines where to park their ships.
      Yes, Indian buyers and sellers has that options. They can select the shipping lanes or shipping lines or both. It is not blind game.

  • 3
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    Sti Lankas Sovereignty is limited to Indias Security and Modi will have to act to keep control of Chinese access to Sri Lnkan Ports either by taking over ECT by force if necessary or warning SL that encroachment by China will see the Indian Army presence in SL. India developing the Indian Ports is only a matter of time and the looser will be SL.

    • 1
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      There is no security issue for India in Sri Lanka nor Sri Lanka see any security issue based in Indian foreign policies that is ever so changing according to their needs.

      This is illegal/immoral/corrupt thoughts by India playing games in another mans country to have things their way……..time we state things for what they are is a good starting point to find solutions.

      Some of us think SAARC countries to unit and make themselves very efficient in delivering justice to all their citizens playing by some “set rules”….the whole point of regional corporations to work with all other International Players like China/USA to deliver the same.

      We do not feel weak or powerful discussing something to do with developing a port?? I am not even sure why this kind of talk exist in this forum from those angels??

    • 1
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      Sri Lanka never ever lose anything, in fact, Sri Lanka is a Rawana country and Indians and Indian rulers never ever forgetting how Sri Lankan sailor gave world’s best guard of honor to Rajiv Gandhi and LTTE gave the last salute to Gandhi also

      • 0
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        (1) Is the shame LTTE and GOSL had so many things in common and could’ve workout things where LTTE assimilated and become the coast guard for the entire “One Nation” solving all our MARINE security problems forever with minimal expenditure.

        (2) The compensation for the destruction by Tamil Nadu/FP/TULF yet to be discussed by each and every family at the UN.

        • 1
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          Rumble,
          “where LTTE assimilated and become the coast guard for the entire “One Nation” solving all our MARINE security problems forever with minimal expenditure.”
          What a great idea. Even smarter than the ones you regularly have! Why not go even further and assimilate the child soldiers into the army? That would solve the University admission problem . We could give the cyanide capsules to Covid patients, solving THAT problem too!

          (

          • 0
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            Thank you and I know I am very smart and am glad you are rating all my suggestions too.

  • 3
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    The ECT decisions are made by China. Sri Lanka is now under full control of China. It is a game plan of Rajapakses creating the image that they made the decision after the protest by unions and Monks. Rajapakses need China and China need Rajapakse’s. Now no body talks about China’s 99 year Hambantota deals and China’s deals to Windmills development in Mannar and islands (Neduntivu etc) whivh aso brings Chinese man power.

    India and the western world should understand the true face of Sri Lanka which is similar to Myanmar. It is time for isolate Sri Lanka economically and politically.

  • 4
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    “Never mind. By Wednesday, Prime Minister Modi (Nehru’s current antithesis) was calling the Sri Lankan PM to felicitate Sri Lanka’s 73rd Independence anniversary. He was the first foreign leader to do so, beating Xi Jinping to the wire. The Chinese President later sent a message of felicitations to President Gotabaya Rajapaksa.”
    *
    These matters are routine and follow protocol.
    PM to PM; President to President.
    Why did Joe Biden miss out on the act? Was he busy Putin watching?

  • 1
    1

    Thanks Rajan Philips,it is a pleasure reading your articles-very informative and in a lucid style.
    Most of the grey matters are clarified.
    Still some clarifications are due. If it is BOT, not BOOT, what is that they are going to build, and How the Indian contractor going to get back the cost plus profit? How will the 51%, 49% operate in practice? We have Procurement Guidelines and Procurement Manuals since the time of President Chandrica Bandaranaike for all types of procurement-big and small, local and foreign, even for BOT/BOOT Procurement.
    Yet transparency seems to be lacking!

  • 2
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    KM Panikar, the eminent Indian diplomat even before independence had declared that of Sri Lanka and Burma should be kept within India’s sphere of influence for effective defense of India.

    Now both Myanmar and Sri Lanka are so close to China…….

  • 2
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    The ego of Rajapaksas led to the clumsy handling of the Eastern Container Terminal in Colombo Port by the Rajapaksas. Now they have given three islands in Jaffna to China after Sri Lanka settled the loan of Rs.3,000 crores. Rajapaksas think they are smart but failed to honour the pledge. Delft island is close to Rameswaram. India is not happy. There is a possibility that India can retake Kachchativu in terms of the Srimavo-Sashtri Pact. If India takes back Kachchativu, the next step would probably be to decalre that North-East Province be annexed as an Independent Terrirtory within the Union of India. Let us watch the development.

    • 0
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      Dear AR –

      Realism???

      (1) Forcing the Sinhalese to accept Lat 10 years arrival of Indian workers in 1948 live in their own space without any due consideration/respect to the Majority and their needs – many of us die.
      (2) 50-50 – many of us die.
      (3) Federalism – many of us die.
      (4) Separatism – many of die
      (5) TNA- FP/TULF/PLOTE/TELO …never asked for separation but devolved power within a unitary state – will find out soon enough how many of us die
      (6) Your new theory pop merging North and East with India – will find out soon enough how many of us die.
      (7) Please spend your time explaining your planning with the Muslim in the north and east …power sharing/devolving/separation/all out war and then where you going to settle the rest from down south including the Indians 9for discussion purpose you can assume no Sinhalese left in the North and East juts incase you use that as an excuse).

  • 0
    1

    Old King explained to Indian HC that the Port workers’ union strike killed the port deal. (Remember Banda Chelva pact? But, Railway union strikes for fore more than 10years. It could not stop Lankawe buying defective Trains from China. These trains were rejected by engineers on the test drive itself. Now China is simply saying “if they use the train for 12 years then they have to service the breaks- A Canadian-Japanese Yarldevi like Western built Diesel runs for up to 50 years. Further, recently, again, Lankawe computers also died. The hackers made sure only “dot LK” systems go down. Media said these are primarily government computers. It is not sure if that was the reason Lankawe paid back Indian loan in a hurry and pulled India off with root out this matter. Recently Old King was missing from action points. He explained that he was silently serving for people. Some writers [Dr.Amir?} questioned if that was true, and would a glamour seeking person like him standing behind the stage silently. There is a chance Old King might have organized all port drama, behind the scene. Old King was the reason King got caught in California into the hands of Ahimsha’s’ private agents.

    • 0
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      1957 – Was Banda-Chelva (classmates/studies in the same places) pact approved by the parliament and voted by the people on a referendum then?? if they did this all procedurally then I wonder what would have been the outcome??

      What was trues was he got elected on that basis and delivered this/try to change it to help his friend and got killed??

      1977 – UNP/TULF screwed up our life on earth.

      2015 – Would this be just like the last parliament where TNA explains the scenario that “Devolution” package be approved by the Parliament and then be put out for referendum and all vote for this and TNA bring home the victory deal?? is it how they got elected last time and someone voted for them too??

      Hon RW/UNP got himself where he and his party is today??

      It is a toxic affair…we the Tamils from Jaffna know this very well from the Ratha Pottu Days.

  • 0
    2

    Another point, is King said some are saying that a Presidents doesn’t go to People, but what he will do it in his way. Who are those some people? Old King, an ex EP never reached people?).
    East Terminal deal is nothing but only one more in line of successful hundreds of Lankawe’s Banda-Chelva pacts. Pariah Demelo Dr. Jeysankawe was kicked on the buttock in Colombo to go fall in Delhi, in the port deal. India is ashamed to talk about of its ill-fated deal. But the minor partner Japan has already said it was disappointed. Japan promised to Norwegian Envoy $2.5 B if the parties agree to peace. But later Japan secretly gave that all to government. That was another issue in past government was not cooperating for anything, thinking they have Japan for kicking wall, while get bored. Then Lankawe put Japan in back burner as China gave $3B loan. Shiv Shankar Menon, Sonia and Dr. Manmohan Singh did the same foolishness too. In 2011, when IMF had conditions to loan for Lankawe, India offed their $2.9B. So Lankawe defeated IMF’s conditions.

  • 0
    2

    Now, Media says that China demanded Lankawe to return the Indian loan fearing that India may use it as leverage to come back to East Terminal. There is a meaning on that because Dr. Harsha de Silva, the main con-artist of SBJ, is asking that where from Lankawe did got this surprise $500, while it took months for Lankawe to negotiate that from India. India did not ask to return the currency swap in untimely manner as China always do to capture additional lands, but the loan is returned. Is it another MCC grant rejection?
    Still, for more than a year, Lankawe is trying to negotiate $1.5B from China. It had not come to their hand yet. So the question is did this $500B was lent by China, without any written deal with CB, but in hard currency to Lankawe? Because Dr. Jeysankar came to Colombo with Free Vaccine vials to take care of his love bird in Colombo, Lankawe killed fishermen, sunk the boat for no reason; nationalized Kurunthur Malai Siva- Iyanar temple; dismantled UOJ Mullivaaikkaal memorial structure; banned East to North Journey by NGOs. Dr. Jeysankar jet out back all the way from Colombo and fell In Delhi, with one kick on the buttock?

  • 0
    2

    There is a Tamil stanza written by Sangam Poet Awai goes like this: (Here sounding voiced Suntharampal is acting and singing as Avai in the movie Avaiyar, a famous , High flying Tamil classical production by S.S. Vasan, in Tamil Cinema)
    https://www.youtube.com/watch?v=KIjq8525CQI
    Just in few words of English of what happened to Dr. Jeysankar in Colombo, in Avai’s way, when he went with free Vaccine Vials: “The man combed the hair to clean the lice; put make up for his wife; then noticing that she was happy with the service he performed, he revealed that one of his friend (Avai) has visited their house and he had seat her outside. He has to provide lunch for the guest. She jump on to her toe; danced; sang; brought a torn off winnowing pad; beat him, chasing on the road, people to watch and laugh at the poor. (At least for the movie, director S,S,Vasan made the woman to plade sorry from Avai) Come on guys! This is not a defense department drawing of PM Manmohan Singh sitting and struggling underneath CM Jayalalitha’s skirt. Shame for whole India! Unlike Japan, India fears to tell a word about the characteristics of Lankawe government’s officials.

  • 0
    3

    “Indian diplomacy can still learn a lot from the Chinese about being suave in dealing with smaller countries with worrisome politics. That difference first showed up way back when in Bandung, between Jawaharlal Nehru’s impatience and Zhou Enlai’s charm. ” These are purposeless talks to fill up an essay. Some even blame SJV and leader Pirapaharan for trying to free Tamils. The truth is “Vaenda Pendadi Kai paddal Kurram; Kaal Paddal Kurram.” (If the unwanted wife, either if she touch by leg or touch by hand, it is crime; kiss or kick only produce same result from a husband who tries to do without her. Talak, Talak, Talak!)

  • 0
    0

    Let us not forget or completely ignore what “Rajapakse & Co. Inc” did prior to the elections, both Presidential and Parliamentary. In this context, it is very “NOTEWORTHY” what the SLPP Union President said at the Media Briefings. He clearly said: “When we were drafting “Saubagye Dekma”(Vision of Prosperity) this matter of Port Development was considered. We specifically said that “East Terminal” will remain with the Port Authority and that is what we are demanding”. In another Media Briefings, another representative pulled out the relevant page of the “Saubagaye Dekma” and read out the “Pledge”. The question for us is: Why was it specified to have the East Terminal with Port Authority? The only reason that we can think of was: To attack the Yahapalanaya, Ranil’s MOU with India & Japan. Not only that, that “Saubagye Dekma” went to the extent of making another bold statement and said: “We will re-visit Hambantota Lease”. That was the “Strategy” in winning elections, but never “Divilged” the complication such “Promises” would lead the country and the people to face. So, the “BLINDED” slaves voted in “Full Force” to establish another “Rajapakse & Co.Inc,” I continue……….

  • 0
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    I continue…..Immediately after GR getting elected, his “FIRST” visit abroad was to India. In that meeting with Modi, he promised $ 400 million. Remember that “Episode”. Beyond that, “WHAT” was discussed and promised never came to public scrutiny. Did he take with him the “Saubagyae Dekma” and mentioned about “MOU” of Yahapalanaya with India and Japan pertaining to East Terminal and other “Relevancies” of Ports in Sri Lanka? Now, who has told us the “TRUTH” about “East Terminal”? Is he the Union Spokesman or the President who put the entire thing on an “MOU”? At this point, I would request the readers to “Judge” who the “CREATOR” of this “National Problem”. This is the “NET RESULT” of playing “DIRTY POLITICS” by the “Cheeky”, “Corrupt” and “Selfish” politicians who have mastered the game of “Hoodwinking” the “Innocent” voter at home. But they cannot “ESCAPE” that easily from others abraod. This is our predicament as of now.

  • 2
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    “Indian diplomacy can still learn a lot from the Chinese about being suave in dealing with smaller countries with worrisome politics. “
    It was not just about being suave. Socialist China was serious about considering all countries as equal and CPC insisted that all Communist Parties were equal.
    There is another thing in Oriental diplomacy. It is ‘Face’, which means that one’s adversary is not absolutely humiliated and is spared some honour to salvage, even in war.
    Rulers of former British colonies are too used to the arrogant ways of the Empire.

  • 2
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    Sri Lanka will cease to exist if the CRIMINALS are not careful. The next visit will be by the Indian Defence Minister before Lanka is brought under control with a permanent Indian miltary presence. . MAKE NO MISTAKE . The only army to have set foot on Sri Lanka since independance was Indian Army and the World didnt cry foul and when India acts in her defence no force in the World can question. YES there is a security issue a serious one.

    • 0
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      Very true AR.

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