Even while Sri Lanka appears to be making headway in its debt restructuring effort with one of the main stumbling blocks in that process, China, finally agreeing to fall in line with treatment parameters, it is learning the hard way that there is nothing called a free lunch and that years after funds were freely disbursed with almost no questions asked, that lender is flexing its muscles to extract its pound of flesh. As to where all that money went is an altogether different story, but suffice to state that none of it appears to have gone into any productive venture capable of generating funds to repay those hefty loans obtained at commercial rates.
Deny as they might, China appears to be flexing its diplomatic muscles, leveraging on the strength of its financial assistance amounting to billions of dollars in loans to stake a claim by proxy in Indian Ocean geopolitics, much to the chagrin and annoyance of regional powers, most notably, India. That Sri Lanka is caught in the vortex of a geopolitical battle for supremacy in the Indian Ocean region, having blindly walked into a debt trap, is now beyond question. The latest power play in this continuing saga is the controversy over recurring visits by Chinese ‘research’ vessels on our very doorstep to the world – the Indian Ocean and the sea of Sri Lanka, extending up to 600 nautical miles from shore, equivalent to nine times the country’s landmass.
After weeks of bravado by the Ministry of Foreign Affairs in denying permission for the Chinese ship Shi Yan 6 to enter Sri Lanka’s territorial waters, initially scheduled for sometime this month, the ministry took a step back last week, stating that the decision on the date of arrival was under discussion. As to what difference a delay of a few weeks will make to research plans of the ship that has already been skirting the fringes of the sea of Sri Lanka for weeks now, only that particular ministry will know.
However, what takes the cake and in fact connects the dots on what is at stake is that no sooner the news broke that permission would be granted by Colombo for the arrival of the controversial ship, the long-stalled debt restructuring process with the biggest Chinese lender, China EXIM Bank, was back on track, with the bank agreeing on a ‘basic framework’ to restructure $ 4.2 billion owed to it.
At first, the reason given for the ship’s ‘visit’ was for ‘research purposes’ in collaboration with the University of Ruhuna. But soon enough, the university smelled a rat and withdrew from this so-called research programme. Under normal circumstances that would have been adequate grounds for the intended programme to be scrapped, but that was not to be, with the Chinese maintaining their determination to carry on, fuelling speculation of more sinister motives.
Given what’s at stake, it will be interesting to observe if the President, who is to leave for Beijing tomorrow to attend the 10th anniversary celebrations of the controversial Belt and Road Initiative, will take up the matter in his scheduled meeting with the Chinese President. As far as China is concerned, it acted in its own interest back then when doling out loan after loan and is continuing to do so by leveraging its financial clout. If fingers need to be pointed, they must be aimed solely at our own leadership that failed to see the bigger picture, being blinded by greed for vanity projects – most of which are located in one constituency.
It was barely three weeks ago that the incumbent President went ballistic against the Western media in an interview with German State broadcaster DW and questioned as to why it was treating Sri Lanka as a second-class nation. What the President, like his predecessors, appears to have failed to comprehend is that, unlike the East that doles out cash with little or no conditions taking advantage of the naiveté and greed of our politicians, the West ties its cash to stringent performance barometers which invariably seem like second-class treatment. At the end of the day, if being first class is of such importance, then we should not be borrowing from anyone in the first place, mitigating the necessity for uncomfortable questions and conditions.
Notwithstanding the President’s grandstanding, it is the West that is likely to have the last say as far as Sri Lanka’s economic revival is concerned, with the IMF’s Governance Diagnostic Assessment (GDA) shedding light on some shocking revelations, most of which inadvertently point to Chinese-funded projects. Item nine of the GDA report under the heading ‘Severity of corruption’ makes the following revelation: “A comparison of construction costs in Sri Lanka determined that highway construction costs per kilometre were three times global averages. The explosion of domestic and external debt since 2005 has also closely tracked actions that have restricted the independence and competency of key institutions, increased the concentration of authority among closely connected individuals, and committed the State to financing mega projects approved at the Cabinet level using opaque processes.”
Based on this exposure, the level of corruption pertaining to just highway construction is unfathomable. Three times the global average cost means this country, which currently has four highways, should actually be having 12 for the cost expended, and then we wonder why this nation is bankrupt.
It appears that the IMF has a better understanding of the ground reality than the majority of parliamentarians in the present Parliament or Cabinet for that matter, who simply raise their hand for anything put forward by the ‘close few’ as indicated by the IMF report, to secure their political survival. The issue here is that the West, which has been less crude in extracting its pound of flesh, will now be emboldened to follow the Chinese example in obtaining better bang for its bucks, leaving this nation at the mercy of its creditors.
The only way out of this vicious cycle is to put a stop to obtaining loans to pay off loans, adding mountains upon mountains to the already existing mountain of debt. With the corruption bomb having now exploded in the face of those who have led this country since 2005 as per the IMF, there is little wonder that every possible avenue is being explored to muzzle the people’s freedom of expression, which too is being frowned upon by the West, making a bad case worse as far as the regime is concerned.
One of the main contributory factors to unbridled corruption is the corrupt top crust of the governance structure, as pointed out by the IMF. At the end of the day, fighting corruption is really no big deal if the cleansing begins from the top, for the bottom will then automatically fall in line. If Sri Lanka persists in continuing its strategy of doing the reverse, that too in the most lethargic manner, the nation can only expect more of the same.
It is no secret that when politicians end up in hot water, the usual response is to switch sides and pledge allegiance to the leadership in power. What usually follows hardly needs to be spelled out. Politicians on both sides of the political divide, no matter how serious the allegations against them, continue to hold sway because of this corrupt system and the resultant culture of impunity it breeds.
However, the silver lining to this dark chapter is that politicians long accustomed to crossing sides when opportune to do so will now think twice following the historic ruling by the Supreme Court on former Environment Minister Naseer Ahamed’s parliamentary membership, which has now shifted the onus on disciplining MPs to their own respective political parties.