Sri Lanka’s Millennium Challenge Compact and the US ‘Pivot to Asia’

By LasandaKurukulasuriya

During the run-up to Sri Lanka’s November presidential election there was widespread agitation against attempts to rush the signing of a compact with the US’s Millennium Challenge Corporation.  The Millennium Challenge Compact (MCC), was approved by the previous pro-western government’s cabinet, just two weeks ahead of election day. As a result of the public outcry, the two front runners in the campaign were compelled to pledge they would revoke any such deal if signed ahead of the election, and to ensure proper debate on it. The draft agreement was finally released amid criticism about the lack of transparency. Sri Lanka is yet to sign the agreement, which raises concerns over sovereignty. For example, under the agreement, a private company called the ‘Millennium Challenge Account’ (‘MCA Sri Lanka’) would have control of all MCC monies and management of lands coming under the project. Analysts say its powers would over ride those of the government. The new government of President GotabayaRajapaksa has suspended the project and appointed a four-member committee to review it. Ministers have since hinted that the government would consider signing if the agreement is ‘amended,’ but there is uncertainty as to what this could mean.

Indo Pacific strategy

On 14th Jan. this year, the same day that US Principal Deputy Assistant Secretary Alice Wells met President GotabayaRajapaksa in Colombo, the US Senate passed an Act called the ‘Indo Pacific Cooperation Act 2019.’ Its purpose was to state US policy to addressthe challenges posed by China in theIndo Pacific.Asserting that China ‘seeks Indo Pacific regional hegemony’ at the expense of the US to achieve ‘global preeminence,’ the Act says it is the policy of the United States:

(1) to expand military, diplomatic, and economic alliances and partnerships in the Indo-Pacific region and with Europe and like-minded countries around the globe that are critical to effective competition with the People’s Republic of China;

(2) to develop, in collaboration with such allies and partners, a unified approach to addressing and deterring significant diplomatic, economic, and military challenges posed by the People’s Republic of China; and

(3) to promote, in partnership with like-minded countries around the globe, the values of democracy and human rights

The new law emphasizes the importance of US moves to push back against China in the Indian Ocean region, as part of its overall military strategy to maintain American dominance in the world.As part of this exercise the US has renamed the region the ‘Indo Pacific,’ to include the Asia Pacific, and also renamed the USPacific Commandas ‘US Indo Pacific Command.’

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In his Independence Day message to Sri Lanka US Secretary of State Mike Pompeo said that Sri Lanka and the US “share a commitment to a free and open Indo-Pacific region,” though Sri Lanka has said nothing to warrant such an assertion. As Russian Foreign Minister Sergey Lavrov pointed out during his tour of Sri Lanka and India in January, the ‘free and open Indo Pacific’ idea is nothing but a strategy aimed at containing China.Since his election President GotabayaRajapaksahas said Sri Lanka does not wish to be drawn into big power conflicts.

It becomes increasingly clear that Sri Lanka,on account of its strategic location near a busy East-West sea lane, is vital to USmilitary plansunder its ‘pivot to Asia.’At a State Department media briefing on return from her January tour of Sri Lanka, India and Pakistan, Alice Wells observed that“Sri Lanka occupies some very important real estate in the Indo-Pacific region, and it’s a country of increasing strategic importance in the Indian Ocean region.”At the Woodrow Wilson Centre in Washington on 21st Nov. she lambasted the US$60 billion China Pakistan Economic Corridor (CPEC), a flagship project in China’s Belt & Road Initiative (BRI). During the Q&AWells wasasked to comment on US engagement with New Delhi, given India’s rejection of the BRI and its own concerns over CPEC in Pakistan.In her response she referred to India’s participation in the ‘Quad format’ (the grouping of US, India, Japan and Australia to push back against China):

“Where we’ve been able to work I think effectively with India in a new way is in that Quad format. … and are we engaged enough, are we reinforcing one another’s activities, are there possibilities through the Millennium Challenge Corporation to do cross-border connectivity?”

Wells’s remark placing MCC in the context of the Quad – which involves military activities like the Malabar Exercise – shows that MCC is part and parcel of US military strategy. It couldalso perhaps relate tothequestion put to Prime MinisterMahindaRajapaksa while in India,by Padma RaoSundarjifor the Hindustan Times – “Will Sri Lanka join the Quad if asked?” (The prime minister replied that the subject had not come up for discussion.)

MCC and the ‘pivot to Asia’

In Sri Lanka the MCC is being marketed as a development project aimed at poverty alleviation.It consists of two components – a land project and a transport project.  The transport project is said to be aimed at easing traffic congestion by improving the road and rail infrastructure.  The MCC viewed in the context of the US’s overall military strategy in its pivot to Asia, where Sri Lanka plays a crucial role, would show that the project’s real objective is not to ease the burden on Sri Lanka’s longsuffering commuters caught up in traffic jams, but to upgrade the country’s transport infrastructure to facilitate its use as a military hub.

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The potential uses of a highspeed electric railway cutting across the country and connecting the ports of Trincomalee and Colombo are self evident, in enablingswiftmovement of US military personnel, weapons and supplies. These two ports, located on the island’s East and West coasts respectively, are in close proximity to the country’s two most important airfields. We should not forget that the US has on at least two occasions already carried out ‘cargo transfer’ exercises using these locations, to test what it called an ‘air logistics hub’ in Sri Lanka, to service its naval craft in the Indian Ocean. The ports of Trincomalee and Colombo are ‘highly conducive to naval basing,’ according to an article in which referred to Sri Lanka’s road and rail infrastructure and said there is need for ‘a great deal of improvement’ in overall infrastructure for the establishment of a US naval base. Could this explain the motivation behind the MCC’s transport project?

Under its Land project, the MCC will gather information on land availability, land values, land use and land administration in Sri Lanka. An inventory of state landthat could be made available for foreign investmentis to be produced, focusing initially on seven districts along the Colombo –Trincomalee corridor.  Amendments to existing land laws and new laws are expected to promote the ‘tradability of land,’ paving the way for foreigners to buy large tracts of state land without the checks that prevailed earlier. Already the Supreme Court has ruled that one of the laws sought to be introduced with a view to obtaining MCC funds, is in violation of the constitution (State Land (Special Provisions) Bill.)

Under a Status of Forces Agreement(SOFA) that the US is pressing the government to sign, the US Department of Defence(DoD) will be permitted to ‘contract for services’ including construction. If there is construction of military-related facilities this will require land, and the MCC’s land project will create the necessary conditions to make it available. Under the proposed SOFA, the DoD may “contract for any material, supplies, equipment, and services (including construction) to be furnished or undertaken in Sri Lanka without restriction as to choice of contractor, supplier, or person who provides such material, supplies, equipment or services. Such contracts shall be solicited, awarded and administered in accordance with the laws and regulations of the Government of the United States of America.”

The US embassy has sought to reassure the MCC’s critics that the US government will not own land under the project.  But under the terms of the proposed SOFA, a ‘contractor’ could be anybody of its choice – an agent of the US government who may be a private individual or private company or organisation.These private entities could even bea cover for the CIA.With changed land laws such private entities could freely buy land in the Colombo – Trincomalee corridor or elsewhere.

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Countering China

It may be seen from the foregoing that the MCC cannot be considered in isolation of the other US defence agreements. While the ACSA of 2017 gives access to various units of the US military to enter the country, the proposed SOFA grants such personnelimmunities and privileges. ‘Contractors’ too would enjoy immunities and privileges. The MCC if signed will giveaccess to the country’s valuable natural and physical resources as well. All of which will be leveraged to achieve the military objective of countering China’s influence in the region.

A perceptive analysis by the Military Study Circlehas also drawn attention to the potential threat posed to India by Sri Lanka’s MCC. It says:

“Showing the Chinese bogey and preying on India’s concerns with China, the US military has inveigled itself to come within touching distance of India. ….  It is our considered view that the US poses a direct military threat to India.Indeed, the US will be in an enviable position if it were allowed to pivot to Colombo. It then has the option of prioritizing the Enemy it would engage, China, Iran or India. And this option will remain always because they would never de-pivot from Sri Lanka.”(India’s national security threatened by Sri Lanka’s MCC compact’ – Lankaweb 28.11.19)

Sri Lanka, with its longstanding friendly relations with the rising powerhouse of China, will need to take stock of the consequences of being sleepwalked into signing such agreements. As a founder member of the Non-alignedMovement it needs to consider the awkward diplomatic situations that could arise, and the potent danger of being unnecessarily drawn into a third party conflict involving nuclear-armed big powers.