The controversial Millennium Challenge Corporation (MCC) compact will be launched in Sri Lanka soon, US Principal Deputy Assistant Secretary of State for South and Central Asia Alice Wells said.
Speaking at a discussion at the Wilson Centre in Washington DC on the China-Pakistan Economic Corridor last week, Wells said she is proud of the kind of “thoughtful development” carried out by the MCC in Nepal and elsewhere in enhancing regional connectivity and creating export markets.
“We have another MCC that we’re launching soon in Sri Lanka that will undertake the same kind of nitty-gritty reforms in land registration and motorway harmonisation that will, we determine, you help unlock economic development,” she said.
“So we have to do our work, and that involves working in closer partnership with our private sector, but we’re proud of the fact that already the United States has almost a trillion dollars in Foreign Direct Investment in the Indo-Pacific and over $1.5 trillion in bilateral trade. So we’re very much a power in the Pacific,” she added.
Wells also spoke at length on Chinese investments in the island, with particular emphasis on the Hambantota Port deal, noting that Sri Lanka ceded its sovereignty to the emerging superpower.
“In Sri Lanka, even though multiple feasibility studies repeatedly rejected the commercial viability of a largescale port facility at Hambantota, Beijing went ahead and loaned the government over one billion dollars for the project. The result: Sri Lanka struggled to service those loans and eventually handed over a 99-year lease on the port to Beijing in return for debt relief,” she said.
“We also see in Sri Lanka a number of Chinese-financed projects sitting vacant and unused, including a $104 million telecommunications tower and a $209 million international airport in the south with zero regularly-scheduled flights. Indeed, the Center for Global Development found in 2018 that eight One Belt One Road (OBOR) recipient countries including Pakistan, Maldives, Tajikistan and Kyrgyzstan, were at high risk of debt stress due to Chinese financing,” she added.
The Ambassador further said India has been crystal clear from the outset that they saw the geopolitical nature of elements of the OBOR. The US, she said, shares India’s concers over projects that don’t have an economic basis and that lead to countries ceding sovereignty.
“Sri Lanka’s not the only country that has ceded, effectively ceded sovereignty over a key asset. You’ve had reports out of Tajikistan overland swaps in order to get out of excessive debt. And this is a real issue,” said Wells.
“All I can say is that however much you might dislike the World Bank or IMF, they don’t take 99-year leases or strip away the sovereignty of countries that they engage in. So let’s be very clear-eyed about the terms that multilaterals bring to the table, versus the terms that are being imposed under some of these programs,” she added.