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Central Bank usurps Cabinet powers in bid to change US policy
The UPFA Government’s saga of hiring more PR agencies in the United States to lobby and win over President Barrack Obama’s administration continues. Paradoxically, this is whilst being engaged domestically in a bitter war of words with the US.
Just this week, the External Affairs Ministry (EAM) issued a strange news release with the heading “Examine root cause for US perception of anti-Western sentiment”. It alluded to the security message given to US citizens by the US Department of State Bureau of Diplomatic Security following a demonstration opposite the US embassy in Colombo protesting Israeli military operations in Gaza.
The EAM release had a weird paragraph; “With reference to the US perception that there is increasing anti-Western sentiment, for which the basis is unclear, it would be prudent for the US authorities to examine the root cause for such a development, and corrective measures may be sought in order to stymie the widening gap in the bi-lateral relationship”. By such a reference there was grudging admittance that there is a widening (i.e. growing) gap in US-Sri Lanka, or West-Sri Lanka relations. It puts the onus on the US to correct it.
External Affairs Minister G.L. Peiris told the local media this week that he had met US Secretary of State John Kerry on the sidelines of an ASEAN meeting in Mynamar and invited him to Sri Lanka, but there was no mention of whether he told him to mend fences with Sri Lanka or to “… stymie the widening gap in the bi-lateral relationship”.
Now, the Central Bank of Sri Lanka (CBSL) has signed up with the lesser known Liberty International Group LLC in Florida for a total fee of Rs. 99 million (around US$ 760,000) for a year. The Monetary Board will pay Rs. 8,250,000 (or around US$ 63,300) every month to this firm in terms of the contract from August 1, this year till July 31, next year. Interesting enough, the amount is just one million rupees less than what Botanical Gardens and Public Recreation Minister Jayarathna Herath is seeking approval from his colleagues to complete the second phase of work at the new Botanical Gardens in Hambantota by constructing and developing 60 acres of land.
The contract has been signed on behalf of the Monetary Board of the Central Bank by Deputy Governor Dr. P. Nandalal Weerasinghe, and Liberty International Group President Connie Mack. The company is based at 15081 Tamarind Cay Court, #1005, Fort Myers, Florida 33908. Until January last year, Mack was a member of the House of Representatives. Once a member of the Foreign Relations Committee, he served in the Sub Committee on South Asia.
The documents connected with the latest deal have been filed with the US Department of Justice in accordance with the Foreign Agents Registration Act or FARA. A six-page contract between the Monetary Board of the Central Bank of Sri Lanka and the Liberty International Group LLC, a copy of which the Sunday Times has obtained, gives three reasons why the US firm has been hired. The Central Bank (CBSL) has described them as its “statutory stability objectives.” They are to create:
1. A political environment in the United States of America (US) that is more conducive to enhancing Sri Lanka’s long-term political and economic aspirations;
2. A comprehensive information platform where decision-makers in the US receive clear and accurate information about Sri Lanka’s current achievements and future plans; and
3. A higher volume of private sector investment in Sri Lanka from the US.
The CBSL says these objectives are to be achieved for six reasons. They are:
1. Sri Lanka has suffered a long and brutal war.
2. The current international media focus on Sri Lanka is unbalanced, which the Monetary Board considers as being unfair, unwarranted, and overshadows the impressive post-war socio-economic achievements of Sri Lanka and also could undermine the long term US political geo-strategic and economic interests;
3. Sri Lanka has made an earnest and genuine effort to improve the living standards of people in the conflict-affected areas in the process of post conflict rebuilding and reconciliation.
4. The process of post-conflict rebuilding and reconciliation is a long-term process and cannot be imposed from the outside and therefore, Sri Lanka needs reasonable time and space to undertake the task;
5. There are growing opportunities in Sri Lanka for additional direct US investment and businesses, as a gateway to the fast-growing South Asian region; and
6. It is necessary to have a re-calibration of US policy, based on a wider and fairer information base, leading to multi-dimensional and more balanced engagement with Sri Lanka.
All these six objectives, the CBSL believes, could be achieved by a PR agency headed by a one-time member of the US House of Representatives. That is for Rs. 99 million per year, a cost which is higher than running the Sri Lanka Embassy in Washington DC. The contract calls upon the new PR firm to “plan and execute immediately an ongoing engagement with the US Congress, US Senate and US Governmental Departments.” Among other matters, it also wants the agency to “reach out to opinion leaders in think tanks and academia in the USA and engage with the broader Sri Lankan Diaspora, by organising interactions and meetings as appropriate.”
In the FARA declaration, this is how the PR firm has declared its foreign principal: “It is governed by a five member Monetary Board, comprising the Governor of the CBSL as Chairman, the Secretary to the Ministry of Finance and Planning and three members appointed by the President of Sri Lanka, on the recommendation of the Minister of Finance, with the concurrence of the Constitutional Council. The Governor of the CBSL functions as its Chief Executive Officer. The Governor, two Deputy Governors and several Assistant Governors, along with the Heads of Departments, from the senior management of the CBSL.”
With next month's Uva provincial council elections, believed to be a prelude to a Presidential election, banners hailing President Mahinda Rajapaksa are visible in many parts of the province.
The PR agency has declared that it will “identify US business leaders; Members of the Congress and officials in the Executive Branch; opinion leaders; media outlets; and academics. The registrant will prepare background papers for these audiences and engage them through personal contact. The registrant may also plan a series of meetings between Sri Lankan and US business, government and opinion leaders.”
The latest PR deal by the Central Bank raises a number of vital issues. First is the all-important question whether ‘The Bank’ has in any way usurped the powers of the Cabinet of Ministers? This is in determining both their objectives in the United States and the means to achieve it. Since independence in 1948, it has been the responsibility of the Ministry of (Foreign or) External Affairs to create a more conducive environment in any country for Sri Lanka’s “long term political and economic aspirations.” Such measures have been executed through the country’s diplomatic missions. There were occasions when additional funds for such purposes have been approved for use through these acknowledged channels.
Here is an instance where the latest Central Bank (CBSL) transaction has not even got the approval of the Cabinet of Ministers for the staggering Rs. 99 million it will spend. Another is the CBSL assertion that “the current international media focus on Sri Lanka is unbalanced.” If indeed there is merit in such a claim, the best way to overcome the situation would have been for the CBSL to raise issue with the Ministry of Media and Information. It is this Ministry’s responsibility to formulate strategies and obtain approval from the Cabinet of Ministers. Such approval, perhaps in consultation with the Ministry of External Affairs (MEA), would have even led to the selection of a foreign PR agency after a due process. In this instance, the CBSL has picked on the US agency on its own without any call for tenders or a proper, transparent selection process. Nor has it been conscious of the role of the Sri Lanka Embassy in Washington DC.
A more serious demand from the American PR agency is the requirement that “it is necessary to have a re-calibration of US policy, based on a wider and fairer information base, leading to a multi-dimensional and more balanced engagement with Sri Lanka.” Is it the mandate of a Government or that of a Central Bank to spend public funds to “re-calibrate” the policies of a foreign Government over local concerns? Even if the CBSL did entertain such concerns, is it not the accepted norm that it should have been routed through the relevant Ministry? If it is not the case, it opens the door for any state agency to unilaterally enter into its own agreements with foreign concerns with no recourse to approval by the Cabinet of Ministers.
For example, the Board of Investment could have one US agency, the Tourist Promotion Bureau its own, the Export Promotion Board another and the Tea Board its own. On the other hand, Monetary Board members, who may be experts in their own field, have become judgemental in other specialised areas like communications, foreign policy and governance issues. Would it not have been in the country’s interest, since taxpayers money is being used, to have commissioned a local study first? Also if one is to go by the provisions of the Central Bank’s own contract with the US agency, there may be no need for the functioning of some Government Ministries, more particularly the External Affairs and the Media. PR agencies would become the arms of the Government, at least in the United States.
This is much the same way as the hiring of new PR agencies by Sajin de Vass Gunawardena, Monitoring MP for the EAM. He has hijacked the functions of the Sri Lanka Embassy in Washington DC. The transactions, which have remained a secret, were revealed exclusively in these columns last week. The objectives of hiring those companies were also to win over the Obama administration through different measures. If diplomacy is outsourced to some PR agencies in the US, it is also now a case of outsourcing matters of governance and policy to another. This is whilst locally, a strong campaign against the US has been launched. Until the hiring of Liberty International Group LLC, the Central Bank was serviced by the Thompson Advisory Group (TAG). This deal was signed by Governor Ajith Nivard Cabraal. As revealed last week, in 2013 the Central Bank paid this company US$ 683,635 (or over Rs. 88.87 million). A part of the money went to a Sri Lankan limousine driver for his “expertise” as a consultant.
The hiring of PR agencies in the United States is part of the Government’s new strategy for damage control from possible adverse fallout over international investigations into alleged war crimes. This is now being directed by the OHCHR (Office of the High Commissioner for Human Rights) in Geneva. The hiring of PR agencies, however, has come in for criticism from retired diplomats and US officials. They say that hiring PR agencies and retired legislators to bring about a foreign policy change from the Obama administration is a futile and enormously costly exercise with no commensurate returns.
Besides the efforts in the United States, in Sri Lanka, the domestic inquiry mechanism is also gathering momentum. The scope of the Commission on Disappearances has been expanded to cover alleged war crimes. Four out of a panel of six international advisors have already been named. “I am awaiting the Presidential Secretariat to arrange a formal meeting with the Advisory Council members,” Commission Chairman Maxwell Paranagama told the Sunday Times. He said, “About two weeks back I met Sir Desmond de Silva in Colombo. This was an unofficial meeting. It took place at my office. However, we are awaiting an official meeting to be arranged by the Presidential Secretariat. I am yet to meet with others who have been appointed.
“So far no documents have been exchanged — and official communications have not taken place between the Presidential Commission and the Advisory Council members. ”I have been told that there will be three more members from India, Pakistan and Japan. But it is the Presidential Secretariat which will invite them. The Commission is continuing with its work. We have returned after the public sessions in Mannar and are now going through the information collected. We have not decided on the next sittings so far”, he said.
Those named so far, besides de Silva are Sir Geoffrey Nice and Professor David Crane. Awaiting a Gazette notification is the nomination of Avdash Kaushal, an NGO head in India. On November 26, 2006 President Rajapaksa visited Kaushal’s Rural Litigation and Entitlement Kendra (RLEK). There, he laid the foundation stone for the Indo-Sri Lanka Human Rights Centre for South Asian countries. The Government of India has distanced itself from this appointment.
Besides trouble shooting, for President Mahinda Rajapaksa there is a host of other priority areas in his agenda. He told ministers at their weekly meeting on Thursday that two historic visits would take place next month and that the Government should gain the maximum mileage out of them. One is the official visit by China’s President Xi Jinping. Though the dates are yet to be finalised, it is most likely on September 7 and 8. This is the first time that a Chinese president is visiting Sri Lanka. It is to be followed by the visit of Japanese Prime Minister Shinzo Abe, possibly on September 16 and 17. Immediately thereafter, President Rajapaksa plans to leave for New York to attend the UN General Assembly’s 69th sessions which begin on September 20.
Preparatory work for President Xi’s visit has already got under way. An advance team of two senior Chinese officials was in Sri Lanka. During talks with leaders of the UPFA and its partners, the duo accompanied by an official of the Chinese Embassy, expressed great satisfaction with President Rajapaksa and the policies followed by his Government. It came as China showered more financial assistance for mega projects in Sri Lanka. Last Thursday ministers gave approval to assistance totalling US$ 650 million (over Rs. 84.5 billion) for water projects in different towns.
The Government has also accepted another unsolicited proposal by a Branch of the Export-Import Bank of Hunan Province, to provide US$ 90 million (over Rs. 11.7 billion) for widening and improvement of 64.31 kilometres of roads in Central and Uva Provinces. It will also cover reconstruction of 13 bridges. The roads are: Kandy-Kirimatiya Road (7.64 kilometres), Ampitiya – Gurudeniya Road (2.25 kilometres), Nuwara Eliya-Ragala-Udapussellawa Road (27 kilometres), Welimada-Kirklees Road (17.83 kilometres) and Avissawella-Hatton-Nuwara Eliya Road (9.59 kilometres). Ministers have decided to give approval to the project proposal submitted by Hunan Construction Engineering Group Corporation, China with financing from the Hunan Branch of the Export-Import Bank.
UPFA sources say that more aid packages are expected to be announced during President Xi’s visit. Due to follow are aid programmes from the Government of Japan when Premier Abe is in Sri Lanka. It is in this backdrop that preparations for the budget are taking shape. It is expected to be presented in Parliament in the second or third week of November. President Rajapaksa has told his ministers that “it is essential to prepare the Budget 2015 within the Medium Term Budgetary Framework 2015 -2017 giving priority to increase access to basic infrastructure facilities such as health, education, roads and safe drinking water in districts which are below the national average in social development, basic infrastructure facilities and economic indices.”
Economic targets set for 2015 as a percentage of GDP are Public Investment (6), Budget Deficit (4.4), Total Public Debt (7.1), Economic Growth Rate 8.2 and Inflation (5.5). The expected total Government revenue and expenditure have both been estimated at Rs. 3,000 billion.
The budget assumes even greater significance in view of the impending presidential election. The guessing games continue in the dovecotes of power whether it would be held in January or in March next year. However, the fact that there would be polls is a certainty and many arrangements towards it are under way. One is the launch of a massive publicity campaign, assigned this time to an advertising firm, with which the younger son of a VIP is closely associated.
The Divisional Co-ordinating Committees (DCCs), 225 of them in all countrywide, will each receive a staggering Rs. 300 million (i.e Rs. 67.5 billion in total) for infrastructure development work. This will include road construction, repairs, new bridges and other development activity. The funds for the purpose is now being channelled through the Ministry of Economic Development. The money is being allotted on the condition that all work should be completed by December this year. The Divisional Coordinating Committees include UPFA parliamentarians. Where they are not present, local authority stalwarts, who are often organisers in the area, take their role. The decentralised budget for MPs which stands at Rs. 5 million is to be raised to Rs. 30 million for UPFA parliamentarians only.
Development work in the City of Colombo has also gained momentum. This week, Dudley Sirisena, brother of Minister Maithripala Sirisena, General Secretary of the Sri Lanka Freedom Party (SLFP), the majority partner in the UPFA, won approval for a hotel project at Madinagoda in Rajagiriya. His Green Hills Hotels (Pvt) Ltd. has incorporated a new company, Araliya Grand Colombo Hotel (Private) Limited to carry out the mixed development project. Green Hills Hotels (Pvt.) Ltd. has its registered office at No: 796 Athulampitiya, Polonnaruwa. The lease comes on a recommendation by President Rajapaksa who is also Minister of Defence and Urban Development. Green Hills Hotels already has hotel properties in Polonnaruwa and Nuwara Eliya.
An extent of ten acres, one rood and 29.44 perches, acquired and vested under the Urban Development Authority (UDA), is to be given to the new company on a 99 year lease. The Government Valuer has valued the lease premium at Rs. 270 million. Ninety per cent of the land value is to be paid in one lump sum before the execution of the lease agreement. In addition to the lease premium, an annual “nominal” ground rental of Rs 10,000 per acre or part thereof which is reviewable in every five years will be charged during the period of the lease.
Dudley Sirisena is one of the leading rice millers in the Polonnaruwa District parts of which are among the areas hit by drought. The crisis situation has caused concern for the Government. The Cooperative Wholesale Establishment has been asked to import 5,000 metric tonnes of rice at intervals to prevent shortages. Ministers say this is to ensure price stabilisation and food security. The Food Commissioner’s Department has been directed to build a two-month buffer stock to be released to the market in December and January next year.
Since Sri Jayawardenapura-Kotte area has been declared as the Administrative Capital of Sri Lanka, the UDA has prepared a development plan promoting administrative activities within Rajagiriya, Battaramulla and Malabe area. The UDA has acquired larger acreage of developable lands and low lying lands to fulfil the land requirements for the Government institutions as well as the private sector for development and to maintain the required extent of low lying lands for water retention. The land at Madinagoda abutting the Kolonnawa Ela had earlier been acquired and vested in the UDA. President Rajapaksa has noted that a part of this land remained as high land where there were eight families while a major portion was “not readily available for development.”
Despite most development activity, at least one major partner of the UPFA, the Jathika Hela Urumaya (JHU) is clearly unhappy. “We cannot continue like this,” remarked it’s General Secretary Champika Ranawaka. He said told the Sunday Times that his party would extend its awareness campaign to educate the people of the burning issues and the need for immediate action in several spheres including economy and governance. “There is an urgent need for a political re-structuring programme. Only a few people are making decisions now,” he said. He added that the Maha Sangha was not consulted. “We will talk to all political parties about the situation. There is an urgent need for environment sustainability, social justice and economic growth,” he added.
Though still not content, another UPFA partner, the National Freedom Front (NFF) appears to have at least temporarily resolved issues. The move came after President Rajapaksa directed that the NFF be brought on board for the UPFA campaign for the Uva Provincial Council elections. Sections of the UPFA had believed that the NFF was bluffing when it said it was fielding its own candidates. However, after its nomination list was handed over for the Moneragala District, things took a different turn.
Arriving at the Paget Road official residence of Minister Weerawansa was his ministerial colleague Dullas Allahapperuma. Joining in later was Lasantha Alagiyawanna, Deputy Minister of Construction, Engineering Services, Housing and Common Amenities. A discussion ensued on the “12 point reform package” put forward by the NFF. After a lengthy discussion, the duo adjourned and returned again at near midnight. They proposed some changes to the package and a discussion ensued. “We were agreeable to the changes they suggested. I consulted our party leadership and they endorsed them the next day,” Weerawansa told the Sunday Times. He said with the approval of President Rajapaksa, it was later announced during a news conference at ‘Temple Trees’.
For the main opposition United National Party (UNP), the focus this week was an announcement by the party’s Political Affairs Director Mangala Samaraweera. He told a news conference that he plans to testify before the OHCHR international investigation into alleged war crimes. The strategy appears to be to bare before investigators alleged “LTTE war crimes” and thus expose the role of Kumaran Pathmanathan alias KP, the man singularly responsible for the guerrillas achieving military sophistication at every phase of the separatist war. He procured most of the weapons for the LTTE. Though he is a most wanted man for the murder of then Indian Prime Minister, Rajiv Gandhi, Pathmanathan is a free man in Sri Lanka and heads an NGO in Kilinochchi.
The other leading opposition party in the south, the Janatha Vimukthi Peramuna (JVP), will decide whether or not to contest the upcoming presidential election only after the Uva PC polls are over, its leader Anura Kumara Dissanayake said yesterday. “We will assess the outcome in Uva and the prevailing political situation before taking a decision,” he told the Sunday Times.
If it is carnival time for some PR agencies in the United States, in Sri Lanka there are still many odds President Rajapaksa would have to overcome. With funds flowing for development and other activity, the ongoing drought notwithstanding, there will be a flood of money that could literally drown the opposition.