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Asian Tribune is published by World Institute For Asian Studies|Powered by WIAS Vol. 12 No. 2959

U.S. MCC Grant to Sri Lanka could be in danger if rule of law is diluted

By Daya Gamage – Asian Tribune Investigative Report
Washington, D.C. 12 November (

Since the constitutional upheaval emerged in Sri Lanka unilaterally replacing Ranil Wickremasinghe with Mahinda Rajapaksa by the country’s President Maitripala Sirisena followed by a political turmoil with the suspension of its Parliament, the Asian Tribune has been in contact and conversation with many U.S. lawmakers holding prime and influential positions, who directly combine US aid recipient nations’ governance and foreign economic assistance, expressed dismay of the manner in which the constitutional provisions were handled by Sri Lankan governing authorities.

What alarmed these lawmakers was the use of the ‘constitutional manipulation’ could lead to the devaluation of the rule of law and disrupt the independence of democratic institutions, and undermine the constitutional rule largely improved since the advent of a new government in January 2015.

The concern was if and when a new administration emerges through this political turmoil, such an administration could reverse some of the institutional and constitutional measures taken in the past three years that strengthened the rule of law and democratic institutions.

The American lawmakers do always attach the rule of law, strengthening of democratic institutions, independence of the media and judiciary, and upholding of human rights to economic and other assistance.

The lawmakers with whom the Asian Tribune exchanged views are expected to assume significant House Committee positions in the new two-year session of the congress scheduled for inauguration in January 2019.

Following the November 06 mid-term elections, the Democratic Party regained control of the House of Representatives which, under the Federal Constitution, is the sole authority that decides which foreign country gets what economic assistance, grants, aids and other assistance, and the volume of such assistance.

The concern was expressed to a group of Sri Lankan delegates, in which this Asian Tribune correspondent was a member, by U.S. Congresswoman Dina Titus early last week following a series of events that took place in Sri Lanka with the appointment of a new prime minister, prorogation of the Parliament and Sri Lanka president’s refusal to summon the legislature to obtain a vote as to who has the mandate to be the prime minister, the ousted or the installed.

It is in the interest of Sri Lanka to note that Congresswoman Dina Titus, who supported Sri Lanka’s battle toward safeguarding her sovereignty and territorial integrity during the Eelam War IV, will assume as the head of the Sub-Committee on South Asia-Pacific Affairs of the Foreign Affairs Committee of the U.S. House of Representative next January for the two-year term of the new congressional session.

The Foreign Affairs Committee of the House is responsible for the foreign assistance programs following its scrutiny of domestic situation and political trajectory of recipient countries.

More than the current developments - the Asian Tribune was apprised - the U.S. lawmakers are looking forward what trajectory Sri Lanka would take in the near future in the areas on rule of law, democratic institutions, constitutional changes and other areas of democratic governance knowing full well that they are part of the American governing system that connect all of the above when deciding foreign assistance.

Congresswoman Dina Titus, and other ranking members, expressed their concern whether the current political disturbance and uncertainty could lead to the dilution of the fundamental democratic rights that were improved and sustained since the advent of the new government in 2015. It is this grave concern that motivated the three Democratic Party Ranking Members of the House Foreign Affairs Committee to alert the President in their November 09 communication that any attempt to dilute fundamental democratic rights may drastically affect the foreign assistance program now in place, especially noting the lucrative economic assistance Sri Lanka is currently gaining through the Millennium Challenge Corporation Grant (MCC) awarded in 2017 after Washington was satisfied that Sri Lanka had taken positive legislative and related measures to strengthen the rule of law, democratic institutions, constitutional changes and improvement in democratic governance.

The letter addressed to Sri Lanka’s President Maitripala Sirisena on November 09 by three ranking lawmakers of the U.S. House Foreign Affairs Committee, simultaneously made available to Asian Tribune, categorically stated, “We fear that recent actions, if not corrected, will threaten your country’s democratic development and derail the progress made in recent years. It has caused a political crisis, and could have an impact on the MCC program, U.S. foreign assistance, and other engagements and programs.”

(Refer to Asian Tribune report titled US Congressional stalwarts warn Sri Lanka holding ‘Power of the Purse’ - )

With the dissolution of the Parliament by the President early this week, Sri Lanka is scheduled to go for elections on January 05 to elect new lawmakers followed by the formation of a new administration. The feedback Asian Tribune received from the lawmakers, and the direct conversation this correspondent had clearly indicated that they could hold the MCC Grant as the ‘Sword of Damocles’ over Sri Lanka closely scrutinizing – in this case with the new session of the Congress the Foreign Affairs Committee holding the Power of the Purse – the trajectory of the new administration in the areas of rule of law and sustenance of the internationally-accepted democratic governance. This committee has the mandate to communicate to the Board of the MCC of domestic developments in MCC-recipient countries upon which changes could be effected.

Sri Lanka is already aware how the grants from the MCC are effected using the rule of law and good governance yardstick. This is a reminder to that effect by the Asian Tribune.

Overall evaluation of Sri Lanka

The MCC Board looked at three legislatively-mandated factors in its evaluation of Sri Lanka for compact eligibility: (1) policy performance; (2) the opportunity to reduce poverty and generate economic growth; and (3) the availability of MCC funds.

In the area of Policy Performance: The MCC Board relied to the maximum extent possible upon the best-available objective and quantifiable indicators of policy performance. These indicators act as proxies of Sri Lanka’s commitment to just and democratic governance, economic freedom, and investing in its people, as laid out in MCC’s founding legislation. The scrutiny comprised of 20 indicators in the categories of “encouraging economic freedom,” “investing in people,” and “ruling justly. The mandatory passing of either the “Political Rights” or “Civil Liberties” indicators is called the “Democratic Rights” “hard hurdle” on the scorecard.

Democratic Rights “hard hurdle:” This hurdle sets a minimum bar for democratic rights below which the Board will not consider a country for eligibility. Requiring that a country pass either the Political Rights or Civil Liberties indicator creates a democratic incentive for countries, recognizes the importance democracy plays in driving poverty-reducing economic growth, and holds MCC accountable to working with the best governed, poorest countries. When a candidate country is only passing one of the two indicators comprising the hurdle (instead of both), the Board will also closely examine why it is not passing the other indicator to understand what the score implies for the broader democratic environment and trajectory of the country. This examination will include consultation with both local and international civil society experts, among others.

Awarding the MCC Grant in 2016 to Sri Lanka, Washington scrutiny had these:

1. Political Rights: Independent experts rated Sri Lanka on the prevalence of free and fair electoral processes; political pluralism and participation of all stakeholders; government accountability and transparency; freedom from domination by the military, foreign powers, totalitarian parties, religious hierarchies and economic oligarchies; and the political rights of minority groups, among other things.

2. Civil Liberties: Independent experts rated on freedom of expression and belief; association and organizational rights; rule of law and human rights; and personal autonomy and economic rights, among other things.

3. Freedom of Information: Measures the legal and practical steps taken by the government to enable or allow information to move freely through society; this includes measures of press freedom, national freedom of information laws, and the extent to which a county is filtering internet content or tools. Pass: Score must be above the median score for the income group.

4. Rule of Law: An index of surveys and expert assessments that rated Sri Lanka on the extent to which the public has confidence in and abides by the rules of society; the incidence and impact of violent and nonviolent crime; the effectiveness, independence, and predictability of the judiciary; the protection of property rights; and the enforceability of contracts, among other things.

Satisfied with the government’s improvement on the areas Washington was concerned, the Board of Directors of the United States Millennium Challenge Corporation (MCC) reselected Sri Lanka for its grant program December 2016. This enabled MCC to continue developing its compact program with the government of Sri Lanka for which Sri Lanka was selected.

MCC compact programs are large, five-year grants for selected countries that meet MCC’s eligibility criteria of good governance, economic freedom and investment in their citizens. The selections are based on performance indicators compiled by MCC in an annual scorecard for countries under consideration.

The U.S. Congress has the mandate to keep the Board of the MCC informed if there were any changes in any recipient countries, and that responsibility rests in the House Foreign Affairs Committee in which the three signatories to the special letter dispatched to the President of Sri Lanka will be heading from January next year.

A delegation from the U.S. Government’s Millennium Challenge Corporation (MCC), led by Chief Operating Officer Jonathan Nash, visited Sri Lanka September this year to continue progress on the proposed MCC compact – a large-scale five-year grant program. MCC is developing the compact in partnership with the Government of Sri Lanka to promote inclusive economic growth that will benefit Sri Lankans.

Previously, in June this year, Millennium Challenge Corporation (MCC) Managing Director for Europe, Asia, Pacific, and Latin America Caroline Nguyen visited Sri Lanka to advance the development of the proposed MCC compact – a large-scale five-year grant program.

The U.S. lawmakers with whom the Sri Lankan community in the U.S. had exchanges, and the communication the Asian Tribune had with the lawmakers clearly indicated the ongoing economic assistance program was well linked to how Sri Lanka handles its domestic governance - following the political upheaval - as stipulated by the 1961 Foreign Assistance Act.

- Asian Tribune -

The criteria that made Sri Lanka eligible for MCC Grants

MCC Chief Jonathan Nash meeting Sri Lankan premier Ranil Wickremasinghe
In Colombo September 2018. Acting US ambassador Robert Hilton in the middle
The criteria that made Sri Lanka eligible for MCC Grants
The criteria that made Sri Lanka eligible for MCC Grants
diconary view
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