Lanka Loses Half A Billion-Dollar MCC Grant; Gota Rewards Main Culprit As US Envoy

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.

DECEMBER 18, 2020

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.

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