The Entire Constitution Under Comprehensive Review So The ‘Devolution of Power’ In North And Open To Central Bank Autonomy With IMF: Sri Lankan Foreign Minister GL Peiris

Sri Lanka Foreign Minister Gamini Lakshman Peiris with Manish Kumar Jha (Mofa, Colombo)

The Entire Structure Of The Constitution Under Comprehensive Review; So The ‘Devolution of Power’ In North East: Sri Lankan Foreign Minister GL Peiris

We can accept greater autonomy for the banks, greater fiscal discipline, enhancing revenue, and pruning expenditure. Those are the standards terms and conditions: GL Peiris

I opened up with Foreign Minister on the entire range of issues. Ironically, despite a thriving maritime trade, country is facing a severe economic crisis with less than USD 2b in its reserve & faltering on sovereign bond; it faces immediate debt payments of about $4 billion for the current year. Central bank is printing rupees and inflation is rising to a record high of 17.5 %. Long ques for fuel can seen be in Colombo. Indeed, it results from very poor economic policies that linger on the legacy. Finally, after shedding months of resistance, Sri Lankan government said, it would begin talks with the International Monetary Fund (IMF) for a way out of the crisis. 

I raised the severity of crisis and the structural changes to the economy and the institutions for the long terms solutions. Foreign Minister Peiris agreed on the inevitability of the institutional reforms, beginning with the Central banks of Sri Lanka. He said: "We have to think for long term as well. There is a strong likelihood of the relationship with the international monetary fund. That has not been worked out yet.  Finance Minister is traveling is travelling to Washington in April. But it in explanatory stage that I must insist. Collaboration with IMF is being looked at seriously."

Under its 'Neighbourhood First' policy, India extended support Sri Lanka to overcoming in economic development as also to assist in its economic challenges posed by the COVID-19 pandemic. In January 2022, India extended a US$ 400 million currency swap to Sri Lanka under the SAARC Framework and to deferred Asian Clearing Union (A.C.U.) settlement of US$ 515.2 million till May 6, 2022. A new Line of Credit of US$ 500 million was extended to Sri Lanka by the Government for importing fuel from India. In addition, India has extended a credit facility of USD 1 billion for the procurement of food, medicine and other essential items from India.

Within the broad framework of the Sri Lankan foreign policy, the Foreign Minister talks about the priorities, especially in the context of maritime security cooperation with India in the IOR.  On the conflicting issues over the fishing rights in the Palk Strait coastal areas, Foreign Minister says that the time has come to remove such “constant irritant”. He asserted that this issue would be among the agendas to be discussed during the visit the Indian Foreign Minister, S. Jaishankar to Colombo on the occasion of  the BIMSTEC summit  scheduled on 30 March. 

But what is the final political solution to the North East Conflict in Sri Lanka? He speaks on the 13th amendment and the questions related to the ‘Devolution of Power’ for the Tamil minority in North East Jaffna.

On this, Peiris explained: " ... It is currently at the stage of being drafted by the experts committee what they consider to be the appropriate constitutional provisions. It's now being put into the appropriate legal format by the legal draft department and we expect this draft to be submitted to government within the next couple of months. 

"A Week from today by next Friday, the President is meeting the Tamil National Alliance for a preliminary discussion. So, all of this is indicative of our desire to move forward on those issues."

Excerpts:

Manish K. Jha: Sri Lankan foreign policy is anchored on maintaining strategic autonomy. How do you look at the bilateral relations with India amid the complex geopolitical environment in the region? And while India puts ‘Neighbourhood First’ in its foreign policy, do you also see the relations in similar way with India?

GL Peiris: Certainly, the emphasis is on economic objectives.  Sri Lankan foreign policy is focusing very sharply on the economic goals. We have sixty six missions abroad and we have told all of them in very clear terms that our priority in this year will be economic diplomacy, by which we mean trade, investment and tourism. So our relationship with India is at a very satisfying threshold. My visit to India was then followed by the  Finance Minister, Basil Rajapaksha. 

Dr. Jaishankar is coming here on the 28 March for the BIMSTEC meeting.  The economies of two countries and, indeed, the destinies of two countries are inextricably intertwined. So, there is now closer integration in every sector, whether the power sector or the tourism sector.  Now take Power as an example. Ceylon Electricity Board can produce just about 4300 MW  of electricity. But one Indian company – NTPC-- produces about 60400 MW of electricity.  We are also interested in generating wind power in Mannar Island and adjacent districts. The Adani group and others in India are interested in developing this.

Then if you take the oil, petroleum gas sector, we have a lot of opportunities. We concluded the Trincomalee oil tank cooperation. We have 99 tanks there that had been lying idle for 17 years. So now that it has been sorted out and we have entered into the agreement in a joint venture where 51% stakes will be held by CPC and 49% by Lanka IOC.

"The storage capacity of the port is beneficial. With fluctuating oil prices, we can buy and store oil when the prices are reasonable and boost our overall capacity of reserves. And also, since India is the third largest oil consumer in the world and since Sri Lanka would have to access International markets for purchasing oil, it would make sense for us to access International markets through India. There would be price advantage."

In terms of tourism, about 1/3 of tourists arrive in Sri Lanka come from India.  And there is considerable interest from India to invest in the hospitality sector, for example, Taj Hotels. The economies of the country is closely knitted together. Therefore, both countries will benefit. Public opinion is firmly in support. So, we can look forward to closer collaboration on all these sectors.

G.L. Peiris with S. Jaishankar_MEA

It is not the interest of one country at the expense of other. Instead, It is a win-win situation for India and Sri Lanka.

Manish K. Jha: It is imperative that we talk about the economic situation of Sri Lanka. You said the government is gradually building back reserves to ensure it can honour its debts. The government settled $500 million due on sovereign bonds in January and the gross official reserves stood at $2.36 billion at the end of January, according to the country's Central Bank. How do you look at India’s approach and initiatives in mitigating the prevailing economic crisis? In the light of our greater bilateral relations, what more can be done what are expectations?

GL Peiris: 

India's contribution is definitely going to help us tide over the immediate problems, which are quite acute. So, we have the 1 billion credit line, which was finalized in New Delhi this month.  Nirmala sitharaman and EAM Dr Jaishankar were present with our finance minister Basil Rajapaksha. Therefore, we have USD 1 billion credit line for food items, medicines, and cement for the construction industry and so on.

That is not all. There is also USD 500 million dollars as it is being made available to us by India for the purchase of oil over and above the USD 1 Billion. India extended a USD 400 million currency swap to Sri Lanka under the SAARC Framework.  Asian Clearing Union (A.C.U.) has given two additional months for the settlement of USD 515 million payment. So all of these taken together cumulatively is very helpful in fighting over the immediate crisis.  

But we have to think for the long term as well. There is a strong likelihood of a relationship with the international monetary fund (IMF). That has not been worked out yet.  Finance Minister is traveling is travelling to Washington in April. But it in explanatory stage that I must insist. Collaboration with IMF is being looked at seriously. Threshold of confidence will rise. We have received assistance from other countries as well. But all of them will derive comfort from negotiations with the international monetary fund (IMF). And that is the way, we are headed.

Manish K. Jha: But Foreign Minister, even though you are immediate requirement is being fulfilled, you need to have grater corpus of fund-- probably in the range of about USD 10-12 billion to get the economy on track. So, what is that you are looking at long-term? What are the measures on your mind to salvage the ongoing economic stress?

GL Peiris: There are other large payments which are due like USD 1.5 billion in July.  So that is why we need medium term stability. It is not just a question of raising money for immediate purposes that is necessary; much more to be done. But we appreciate the assistance which we have got from India and other countries.  

There has to be a longer term strategy and that is where the institutions like the IMF would come in. The finance minister will talk to the World Bank. That is precisely for the purpose that you indicated for the longer term purposes.

Manish K. Jha: We had a similar situation in 1991, and we had to open and restructure our economy. In situation like this, for example, the IMF will put some conditions and ask for  greater autonomy for the Central Bank. What are the conditions, and what is Sri Lanka expecting from IMF? What are the structural changes that can be done?

GL Peiris: All of that would need to be discussed with IMF.  It will not be a zero sum exercise. There is flexibility. It is not a leave-it or take-it situation where IMF will impose conditions. Some countries have managed to negotiate very successfully, indicating their requirements. What is acceptable as conditions--the point beyond which they cannot go because of domestic constraints. For example—Vietnam conducted its negotiation very successfully with IMF.

Today, we have the greater scope for that kind of resilience with  a green economy. 

With IMF, there is every possibility for Sri Lanka to indicate what our requirements are and what we can accept as conditions—of course, as you say, greater autonomy for the banks, greater fiscal discipline, enhancing revenue, and pruning expenditure. Those are the standards terms and conditions.

So, those we will obviously have to be discussed.  But for the precise modalities-- in those areas-- there is considerable scope for manoeuvre in indicating the country's specific requirements in question. It's not a one-size-fits-all formula.

Manish K. Jha: In Colombo, I have seen a lot of port infrastructures projects being planned and some of them being implemented like Colombo Port city, West Cost Terminal and East Coast terminal among others? How will such mega projects build up scale and capacity and how confident are you to bring back economic growth on track? Besides, how sustainable are these projects in terms of the return on investment (ROI)? 

GL Peiris: These were negotiated carefully. We entered the agreement with the People’s Republic of China for Hambantota seaport, then Port City Project, and  Batticaloa Airport. There are extensive projects in regards to highway, railways etc.  

For Hambantota, we had paid back the substantial amount what had been borrowed. But unfortunately, at that point of time, there was disruption. It happened after the change of the government. A very clear example is when Mattala airport was to be used for paddy storage purposes. It was an international airport. If that kind of disruption has not happened, we would have proceeded with the payment. 

On Colombo Port City projects, there is an interest from other country as well, including India. French has an interest in building a hospital there. The British are thinking of a state of the art school. So, it is a sustainable project (the Colombo Port City) in every way.

East and West Port Terminal

On Western Terminal, we expect to start the dredging work within three months, where Adani is the major player with local partner John Keels Holdings. So, these projects will be up and running and these are sustainable projects that are going to make significant difference to our economy.

Manish K. Jha: But then it is often argued that  the Sri Lankan economy is too dependent on China and most of the projects are funded by China. How valid is the argument, foreign minister?

GL Peiris: No, No! In fact, Indian investment is Sri Lanka is also huge. Indian has invested in substantial housing schemes, in the plantation areas, in power projects, into fisheries and harbour and the Jaffna Cultural Centre, among others. There is an agreement with regard to the purchase of two Dornier Aircraft and a Floating Dock. I want to stress that Sri Lankan Foreign policy has no element of exclusively with regard to political relations or investment or trade. We don't deal exclusively with our country. There is no question of preference of one against the other.

And there's no personal relationship with one that is exclusive and at the expense of all the others—that is certainly not how t Sri Lankan foreign policy is being conceived of.

Manish K. Jha: Within the broad canvas of the Sri Lankan foreign policy, what are your priorities. especially in the context of maritime security cooperation with India?  Could you share your thoughts on the concepts like SAGAR in the IOR? How does it work for you? 

GL Peiris: Yes! That’s already happening. Sri Lanka being an island, there is a natural focus on activity related to the oceans. Sri Lanka is currently the chairman of BIMSTEC summit which is taking place on 30 March. 

We co-chair the Indian Ocean Rim Association (IORA) now.  And two months ago, we both-- President Gotabaya Rajapaksa went to Abu Dhabi to participate in the fifth meeting of the Indian Ocean Conference. Indian Foreign Minister Dr. S Jaishankar was also there.

We want to develop container shipping at Colombo and Hambantota Port in that area. About 70% container shipping is India bound, either from India or to India. So, it makes sense for greater collaboration between Indian and Sri Lankan ports.

Then we already have triangular relationship with India, Sri Lanka and Maldives concerning security aspects [in the IOR]. That is working very well. Things like, control the narcotics, the gathering the sharing of intelligence information and other things like biodiversity and the protection marine resources.

So, recently, we had the visit of an Indian ship from Chennai. I visited the ship. There was a reception on board the vessel hosted by the Indian High Commissioner. On the ocean related activity, there is already a very robust collaboration but there is a scope for further expanding the parameters of that equation.

Manish K. Jha: So, how do we see Sri Lanka playing a greater role in maintaining the sanctity of the ocean in terms of international rules and regulation.  How do I see Sri Lanka more active on such lines?

GL Peiris: It is not generally known that a very distinguished Sri Lankan diplomat played a very crucial role with regard to UNCLOS--The United Nations Convention on the Law of the Sea.  His name is Shirley Amerasinghe who was the president of the UN General Assembly. So, we have played a major role in the development of the body of law, relating to the ocean. And we there are several principles and we are very committed such rules based order and also the right of navigation of all ships in the international water. So there is very substantial foundation for collaboration between India and Sri Lanka in those areas because we both subscribe to those concepts and principles.

Manish K. Jha: Despite the historic bilateral relations with India, there are some conflicting issues over the fishing rights in the Palk Strait coastal areas. What are your thoughts and suggestions for removing such “constant irritant” in our relations? What is that you are going to discuss with the Indian foreign minister as he is scheduled to visit Colombo soon?

GL Peiris: It has been a problem for a long time, which really needs to be resolved because it is causing very considerable tension in the northern part of Sri Lanka. 

The Tamil fishermen in the North are being deprived of the means of their livelihood. And the most strenuous is the bottom trawling. The number of Indian vessels entering our water and coming very close to the shore is increasing. So, when the Indian fisherman and their boats are taken into custody, there is always a strong pressure to release the fisherman and the boats.

So, this has been happening now,  and it is facing extreme pressures from the northern fishers not to continue doing this. It has been suggested that there should be discussions through a joint working mechanism of that sort and perhaps between foreign ministers and the fisheries ministers of both countries. Some time ago, there was a suggestion that these discussions should commence at the level of Cooperative Society of the fishermen from across the Palk Strait. Unfortunately, there has not been very much progress. So, with increasing impatience, I guess, I used the word ‘constant irritant’ and it is a problem that now demands solutions in overall context.

While the bilateral relationship is so healthy and there is potential for even further development. This is a matter which needs to be resolved which is now a flashpoint.

Manish K. Jha: How important for you to question of livelihood also as you also see the historical relations,  cultural interactions and people to people to people movement in the coastal areas? Of course, the sea lines are well settled but despite such understandings these elements keep coming. It will antagonize the fishermen across the bay in the coastal side of Tamil Nadu.  

GL Peiris: It is basically a practice that has lasted a long time, but it is now becoming a critical issue in terms of protecting the livelihood. The fishermen are in a situation where there are economic pressures at a very high-level post Covid led pandemic.  So, we have to handle that because the binding strength of the bilateral relationship is about people to people. It is just not a relationship confined to the two governments' corridors in Delhi and Colombo.

India's greatest gift to Sri Lanka was  the heritage that is Buddhism. We have large numbers of pilgrims going from here to India. 

Prime Minister Modi and his initiative of the fund of USD 15 million is to be used for the refurbishment of temples and so on. That’s one intent. And the expectation is that a minimum of USD 3 billion will be spent every year. So there is a great deal of people-to-people connectivity. 

So that's why as one of the reasons why this issue should not be allowed to drag on. In the context of the fishing conflict, time has come to settle down.

Manish K. Jha: What is the final political solution to the North East Conflict in Sri Lanka? As you said, the time has come to give it a rest to such a protracted conflict in the Northeast. What is your perspective on the 13th amendment and the questions related to the ‘Devolution of Power’ for the Tamil minority in North East Jaffna? 

GL Peiris: You're probably aware that there is an expert committee, which has been appointed by the President to look at all aspects of our constitution, including the Devolution of power--Thirteenth Amendment, the relationship between the central government and the provincial Council. So, this is an exercise, that is now underway.

It is currently at the stage of being drafted by the experts' committee what they consider to be the appropriate constitutional provisions. It's now being put into the proper legal format by the legal draft department and we expect this draft to be submitted to government within the next couple of months. Then it [Constitutional Draft] goes into the Parliamentary process--select Committee of the Parliament, consisting of all political parties in the parliament. Then, of course, the plenary session and the debate will take place in the Parliament.

So, the entire structure of the Constitution is under comprehensive review at the moment and that includes the issue you refer to.  A Week from today, probably by next Friday, the President is meeting the Tamil National Alliance for a preliminary discussion. So, all of this is indicative of our desire to move forward on those issues.  

Manish K. Jha: And the divergent views are being taken by the government on such issues?

Yes. There will be divergent views and we have to work towards extending middle ground and constructing a consensus on these issues. These are emotive issues. They have generated strong emotions in the past. Now the comprehensive constitutional exercise is being undertaken, this would necessarily be a part of that process.  

Manish K. Jha: We see a lot of new concepts are being talked about like Indo-pacific and mechanism like QUAD. I understand Sri Lankan focuses more on the regional aspect of maritime cooperation. Its regards for regional understanding and the environment is time- tested and unique. So, should we not forge our regional maritime alliance among each other—something like SAGAR proposes? 

GL Peiris:

I think, we should strengthen our regional institutions. BIMSTEC is useful bridge between SAARC and ASEAN. But I think IORA is the organization which has considerable potential. Because countries in this region have very strong common interests. 

We have strong ties with each other. So, Sri Lanka’s approach is very much inclined towards invigorating and strengthening these institutions further. I'm sure we shall be able to play a much vital role in Indo-Pacific affairs.  After all, the heart of the world economy is no longer in the Atlantic Ocean but in in Indian Ocean and the Pacific Ocean

We have about 60 thousand ships passing through the southern coast of Sri Lanka per year and more than third of the world’s oil supply passes through this route.  So, in global economic terms, these oceans are of cardinal important. These are some of things that we propose to address at BIMSTEC-- The Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation. 

We have the foreign secretaries meeting on 28 March followed by the foreign minister's meeting on 29 March. On the 30 March, we have the Summit. That is the idea opportunity to focus on the ocean related mechanism and find ways and means to strengthening the advantages that we can derive from the proper management of our ocean.

Manish K. Jha: What is message that you would like to convey to the people of India who know Sri Lanka through Ramayana and share a very common bond on such historical relations?

GL Peiris: Our people have bound together over the centuries. So, it is a relationship that envelops all aspects of our life, and we have always been there for the other in times of need. That there is an intuitive repo that you don't have to ask. There's an intuitive understanding of our requirements by the other side, vice versa. So, my short message is that India and Sri Lanka are like brothers. It is not just a former relationship, but it permeates  the very foundations of society in both countries. Because, they have so much in common. So my message is: "Let’s make use of the opportunities that are available to alleviate the relationship to even higher level. It's no longer a transactional relationship. We have transcended that. It is being elevated to the overall plan under the comprehensive strategic relationship. So let us make a success of it. That would be my insurance."

Manish K. Jha: India says ‘Neighbourhood First’ and Sri Lank is at the core of such policy. How Does Sri Lanka reciprocate?  

GL Peiris: PM Mahinda Rajapaksa has said India is a close relative. So that reflects the spirit of the relationship that spirit that permeates in our bilateral relations.