Indian foreign policy fiasco in Sri Lanka

kokkulaay_map_67484_445The controversy that took centre stage in the run up to the New Year holidays was the leaking of a list of Sri Lankans who had allegedly maintained secret bank accounts in Panama. This was part of a global expose which has already caused the Prime Minister of Iceland to resign with pressure mounting on British PM David Cameron to follow suit. Though people connected to the yahapalana campaign like Dr Wickremabahu Karunaratne said that he expected the Rajapaksas to be on that list, it so turned out that there were no Rajapaksas on it but one of Minister Champika Ranawaka’s closest allies, Vidya Dilruk Amarapala. In putting out the list of Sri Lankans named in the Panama Papers, Colombo Telegraph said cautiously that there are legitimate uses for offshore companies and trusts and that they do not intend to suggest that any persons or companies named had broken the law or acted improperly.

However the very phrase ‘undisclosed bank account’ leaves a bad taste in the mouth. Even David Cameron is being asked to resign not because he had millions stashed away in Panama accounts but because he had shares amounting to 30,000 pounds in a company started by his father in the 1980s. In a knee jerk reaction to the news of Sri Lankans being among those holding offshore accounts in Panama, the Anti-Corruption Front run by CAFFE and headed by Ranjith Tennakoon went to town saying that the Indian government had formally informed Panama that the money in the accounts held by Indian nationals belonged to India and he lamented the fact that the Sri Lankan government had not yet done anything of the sort.


Vidya Amarapala is well known in political circles as a close confidante of Champika Ranawaka and was at one time the Chairman of the CEB. Journalist Faraz Shauketaly refers to Amarapala as a ‘fund raiser’ for Champika Ranawaka. However this is not the first time that Amarapala has been in the news over offshore accounts. The same matter came up back in 2013 and at that time Amarapala said that prior to his appointment as the Chairman of the Ceylon Electricity Board, he served as an Executive Director at IWS Holdings Group of Companies. Sovereign Capital Corporation had a joint venture with IWS Holdings Group Company and Amarapala had been appointed as a Director of Sovereign Capital Corporation by IWS Holdings as its representative back in 2003. Amarapala claimed that his appointment was only to represent IWS interests in the Joint Venture and had no involvement with any financial matters in the Sovereign Capital Corporation.


However Dr Harsha de Silva then a UNP parliamentarian was not satisfied with Amarapala’s answer and he said that no one is interested as to who appointed him to the board of the company that held the secret account or his job description in that company. The only question is as the Chairman of a public corporation, did Amarapala disclose this information in his annual filings as required by law? Dr Harsha also said that the CEB Engineers’ Union had made various allegations regarding highly irregular deals during his tenure particularly the Aggreko contract which according to de Silva, violated government tender guidelines. It is unlikely that de Silva will take this matter up in the same way since he and Amarapala are now on the same side.


As Minister Champika Ranawaka was at the forefront of making allegations of corruption against the previous regime, the fact that his protégé’s name transpired in the Panama Papers will come in for much scrutiny after the New Year holidays. The fact that this latest revelation comes when members of the government have been making multiple trips to Dubai to ferret out the money supposedly stashed there by the Rajapaksas, will not help either Ranawaka or Amarapala to explain things. Already newspaper editors have been referring to a ‘Swindler’s List’. Usually these offshore companies registered in various tax havens are just shell companies for individuals to hold money under. If a corporate executive was named as a representative of a company he worked for this will be a legitimate appointment. But if that individual has not disclosed this legitimate appointment, that may necessitate some explaining.


PM’s China trip


The fact that Prime Minister Ranil Wickremesinghe went to China at all reveals many things. Many believe that the Indian intelligence outfit RAW played a major role in bringing the present government into power by organizing the minorities. However it appears that the Indians don’t have as strong a hold on their supposed protégé’s as first thought. The halting of the Chinese Port City project was a constant and plainly stated Indian demand when the Rajapaksa government was in power. Now the present government too has given the Chinese the go ahead to build the Port City and are trying to negotiate further Chinese involvement in Hambantota. The Chinese may now in fact be better off than they were before, because earlier it was one political party seeking Chinese involvement in Sri Lanka – now both the main political parties are seeking Chinese involvement in Sri Lanka. Earlier the Indians had at least one major political party that would toe its line against the Chinese; now it has none.


One reason the government is keen to sign at least an ETCA framework agreement with India would be to placate the obviously furious Indians. As far as Indian foreign policy goes this is yet another fiasco like the involvement of the IPKF in the north and east in the late 1980s. The Indians tried to impose their will on Sri Lanka by sending troops to this country and at the hands of the LTTE, they faced more casualties than they had ever sustained even in the wars with China and Pakistan. They had to leave SL with their tails between their legs and to make matters worse, for two decades the Indian central government never dared commemorate the Indian soldiers who had died in Sri Lanka for fear of rubbing Tamil Nadu on the wrong side. What has now happened to the Indians is even worse. The very government that they helped bring into power is opening the doors for China to come in. This is truly the land of Ravana as far as the Indians are concerned. Whatever they touch in this country blows up in their faces.


The Indian High Commissioner’s eagerness to get the ETCA framework agreement signed is probably due to the need to have something to show New Delhi. When the present government abruptly halted all Chinese funded projects including Port City which was inaugurated by the Chinese President himself, everyone thought that was a mortal insult to a country that had been so helpful to Sri Lanka over the decades. The insult to China now pales into insignificance in comparison to the insult that India has suffered. The Indian intelligence services would now be the laughing stock of Asia – having done everything to bring the present government into power, they now watch helplessly from the sidelines as their own protégés go to China to assure the Chinese everything that the Indians objected to in the first place.


The humiliation of India has been compounded by members of the ruling coalition including the TNA raising objections to the Sampur coal power plant project which the Indians had been pursuing assiduously. While India has been promoting the return of land acquired for security purposes in the north and east back to their original owners, it is this very factor which is now blocking the Sampur power plant with the new returnees alleging pollution concerns and the TNA also taking up their cry. The 65,000 houses project for former IDPs has also run into problems with the TNA raising objections to the Indian sponsored project – with good reasons as the material that was to be used for the construction of houses was simply not suitable to the climate in the north and east. Clearly this appears to be a time when Indian policy in Sri Lanka is in a state of collapse. At one moment it seemed as if Indian influence in Sri Lanka was at an all time high reminiscent of the 1986-87 period when India was able to bully Sri Lanka into following its diktat.


Sri Lanka may not have obtained as much as it expected from the Chinese government but they have got a fair amount. Sri Lanka expected a 1.5 billion currency swap from China which did not materialize. The irony in this is that when the Chinese President visited Sri Lanka in September 2014, China granted SL a 1.6 billion USD currency swap which was not taken by the new government in their pro-Western and pro-Indian euphoria in the early days and allowed to lapse. However Sri Lanka got a 77 million USD grant from China which is much more than we got as grants from any country that the incumbent leaders visited up to now. However the government does not appear to have been able to renegotiate the 125 million USD penalty demanded by the Chinese contractor for the delay in the Port City project. It is unlikely that the Chinese government would want to intervene in a signed commercial contract. The entire grant received from the Chinese government plus 50 million USD more would be needed to pay compensation to the Port City contractor.


The lead set by Bhutan and Nepal


In any event what this means is that Sri Lanka has moved away from the Indian orbit the way Bhutan and Nepal have in recent years and months. With the rise of China, Bhutan obtained more elbow room. According to the two page 1949 India-Bhutan Friendship Treaty, Bhutan became a virtual protectorate of India with its foreign policy being guided by India. Under this ‘friendship treaty’ landlocked Bhutan was allowed to transport its imports and exports across Indian territory and the citizens of the two countries were allowed to live and work in each other’s territories. At the time Bhutan obtained its independence, the threat to its continued existence as a nation came from China. The People’s Republic of China was created in 1949 and Tibet was overrun by the People’s Liberation Army in 1950. With the Chinese tending to see Bhutan as an integral part of Tibet, Bhutan had to seek Indian protection to maintain its independence. Indian security too was helped by having a buffer state on the border with China.


In 2007, as Bhutan’s northern neighbour China became a force to contend with, Bhutan was able to wrest a degree of autonomy from the Indians by renegotiating the 1949 Friendship treaty with India and dropping the requirement that Bhutan would be guided in its foreign relations by India. Thus a new treaty was signed in 2007, with Bhutan getting more elbow room to function as an independent nation rather than as an Indian state in all but name.


Nepal was another country that signed a two page friendship treaty with India in 1950. This friendship treaty differed from the one with Bhutan the previous year only in that there was no provision saying that Nepal’s external relations would be guided by India. Other than that, the provisions binding Nepal to the Indian economy were just the same as in the case of Bhutan. Landlocked Nepal was allowed to import or export anything through the territory of India and the citizens of both countries were allowed to work and reside in one another’s territories. In other words, Nepal differed from an ordinary Indian state only in that it had its own foreign policy and army. Millions of Nepalese live and work in India, with some even serving in the Indian army.


All this led to Nepal having to dance to India’s tune. So long as Nepal was a monarchy, it functioned like one of the many kingdoms that sought the protection of the British Raj in the old days. But with Nepal becoming a republic with elected governments, tensions came to the surface. When Nepal tried to promulgate a new constitution recently, India disapproved of certain sections in it and were accused by the Nepalese of actually imposing an undeclared blockade on Nepal halting the import of food and fuel into Nepal so as to have their way. This led to measures being taken by Nepal to import fuel from China. At a recent visit to China by the Nepali Prime Minister, a formal agreement to allow Nepal to use Chinese harbours and roads to transport supplies was entered into. There will be limitations on the use of Chinese territory for Nepal’s needs due to the difficult Himalayan terrain on the Chinese side. Furthermore the closest Chinese port that can be used by Nepal is 3,000 km away whereas the closest Indian pot is only 1,000 km away. Rail and road connectivity between India and Nepal are also much easier than with the northern neighbour.


Despite these difficulties, India has lost its pre-eminent position as the virtual protector of Nepal, thanks to a boorishly interfering attitude. That Pakistan remains a mortal enemy of India is not surprising given the age old Hindu-Muslim tensions and the manner in which the two nations were formed. However given the cultural ties between India and Nepal, that the Indians have managed to appear as an oppressor, is quite an achievement. Even in Nepal there is hostility to India among the public. In Sri Lanka too despite an acute awareness that India is the fountainhead of our culture, people hark back to Dambadiva with reverence while the Indian state is seen as a bully that always works to Sri Lanka’s detriment. Anti-Indian sentiment among the Sri Lankan public will only grow in the coming months if India tries to force ETCA on this country.


Last week, Minister Harsha de Silva commenced the setting up of the much spoken about Indian ambulance service by sending youths to Hydrabad for training as paramedics. There will be no issue so long as what takes place is training and preparing. However the moment this ambulance service becomes operational on the ground, the sequence of events that will take place will be quite predictable. We have seen this kind of thing happening since the J.R.Jayewardene era. There will be a massive strike in the health sector demanding that this Indian ambulance service be taken over by the government, ambulances, paramedics and all. The very paramedics that Dr Harsha de Silva sent off to India last week will most probably be at the forefront of the agitation that the ambulance service run by an Indian NGO be taken over by the government because a government job means a government pension.


In any event, the Indians will be financing the program only for the first year. There was nothing said in the cabinet paper on the Indian ambulance service about what happens after the first year. No employee is going to tolerate such uncertainty. And in any case, if this ambulance service is going to start off on the basis of an MOU signed with the Health Ministry it will take only one more push to get it incorporated into the government service proper. It will be like the ‘manpower’ workers in institutions like the CEB agitating to get into the government service proper. The medical profession is well known for demanding takeovers – like the Ragama private medical faculty in the 1980s and the SAITM medical college at present. It is too much to expect them not to demand the immediate absorption of the Indian ambulance service (sans the Indian management) into the local health service. It would have been better for the government to have obtained a donation of ambulances and training opportunities for paramedics in India instead of inviting an Indian NGO to start an operation which may never be operated by the Indians after all.

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