Sunday, 31 July 2011


<%on error resume next%> Features | - Sri Lanka
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Sharp decline since 2005:

Drop in US aid no surprise

China: topmost aid provider

The Chinese government has become the topmost aid provider to Sri Lanka this year with a total aid commitment of US$ 759.8 million during the period of January to end of April 2011, according to a recently released report by the Finance and Planning Ministry.

The mid-year Fiscal Position Report-2011 released by the Finance and Planning Ministry lists China as the top lender surpassing Japan.

China has committed nearly 55% of the total aid to the Sri Lankan government while Japan came second with nearly 30%. Asian Development Bank (ADB) and World Bank (WB) committed US$ 413.2 million multilateral aid.

All of China’s aid is for the rehabilitation and improvement of road networks in Sri Lanka. A majority of US$ 500 million is for the improvement and rehabilitation of Priority Roads. Another US$ 138.2 is for the construction of the Southern Expressway from Pinnaduwa to Godagama in the South. Lenders and donor agencies to Sri Lanka have made a total commitment of US$ 1.385 billion from January till end April 2011.

Project loans amounted to US$ 1.361 billion while grants have only amounted to US$ 24.4 million.

China’s influence on Sri Lanka has raised concerns in the United States.

A recently released US Congressional report has said that China, seeking to gain influence in the Indian Ocean, has increased its aid to Sri Lanka dramatically since 2005. “In the view of some analysts and observers, China is seeking to gain influence with the Sri Lankan government as part of a ‘string of pearls’ naval strategy to develop port access in the northern reaches of the Indian Ocean,” the report by bi-partisan and Congressional Research Service has reportedly said.

The Finance Ministry’s mid-year report states that the government now has an undisbursed balance of foreign financing of US$ 8.6 billion available with a time period of 2-5 years for project implementation. A major portion of the un-disbursed funds, US$ 3.1 billion is for Roads and Transport while US$ 1.09 billion is for Power and Energy. Among other major sectors that un-disbursed funds are earmarked include, Water Supply and Sanitation - US$ 922 million, Agriculture, Fisheries, Irrigation and Land - US$ 722 million, Ports - US$ 388 million and Rehabilitation of Conflict Affected Areas - US$ 338 million.

(Courtesy: ColomboPage)


The United States Congressional committee, House Foreign Affairs Committee last Thursday, 21 July, on a voice vote, halted $13 million aid to Sri Lanka in the Fiscal Year 2010 (commences October thru September 2011) projected in the 2010 Appropriations Bill, now before the Congress for debate and approval.

This was the direct result of the screening of Channel 4 documentary ‘Sri Lanka’s Killing Fields’ in the Congressional Capitol Building in Washington last week sponsored by several US-based rights organizations in which Democratic Party Congressman Jim McGovern gave the key note address.

The screening was a strategic move by pro-Eelam lobby which has been gaining momentum since the defeat of Tamil Tigers in Sri Lanka in May 2009 which has significantly penetrated to policy decision ‘quarters’ in Washington successfully negating all endeavours of Sri Lanka’s diplomatic efforts here in Washington and in Colombo’s External Affairs Ministry.

It has been reported that the US aid to Sri Lanka would resume only when Obama administration certifies that it has made progress on key issues. Sri Lanka would be required to improve its records on probe into human rights violations and alleged war crimes to score on the US scale.

It would also have to allow freedom to press and come clean of thousands still missing since the end of the civil war. The US Agency for International Development had requested around $13 million for Sri Lanka in the 2010 fiscal year.

The Sri Lanka government’s inadequacy to grasp the scenario of US-Sri Lanka relations was amply exhibited in a statement made by the GSL spokesman minister Rambukwella in declaring “If the US was to bring about a ban of this nature, then it would be against the same principles of democracy that they teach; this issue of accountability has to be discussed then unilaterally.” The United States drastically reduced its economic aid package to Sri Lanka since 2004, long before the human rights issue surfaced when this South Asian nation faced the most critical challenge to its sovereignty, territorial integrity and democracy by the world’s most ruthless terrorist outfit, the Tamil Tigers.

In the process of ‘enlightening’ about the U.S. economic assistance to Sri Lanka, Asian Tribune would like to highlight what former US Ambassador to Sri Lanka Jeffrey Lunstead wrote in his report ‘The United States’ Involvement in the Sri Lanka Peace Process 2002-2006’ to the San Francisco-based Asia Foundation about his country’s interest in this South Asian nation: He said that Washington has no ‘significant’ strategic or economic interest in Sri Lanka.

Ambassador Lunstead very clearly states that the U.S. has no significant strategic interests in Sri Lanka ‘certainly in comparison to other areas of enhanced U.S. engagement.” Here’s what he wrote in the study which can be considered a reflection of the USG policy plank toward Sri Lanka: “U.S. has no significant strategic interests in Sri Lanka, certainly in comparison to other areas of enhanced U.S. engagement. If the U.S. developed anything approaching a strategic interest in Sri Lanka, it derived from the feeling in the post-September 11, 2001 world that the threat from terrorism had to be confronted globally, and that governments facing terrorist threats should cooperate against them. Even though the LTTE had never targeted Americans, the simple fact of the LTTE’s status as a designated terrorist organization under U.S. law brought the two countries closer together.

The U.S. provided assistance on global terrorism issues, to which Sri Lanka responded willingly. For example, U.S. Treasury experts on terrorism financing visited Sri Lanka several times to work with the government on strengthening the Sri Lanka financial system’s ability to cut off terrorist financing flows. (This assistance, and GSL cooperation on this issue, continued after the fall of the Wickremesinghe government, and continues today.) While this might be considered a strategic interest, it was also limited by the fact that the LTTE is essentially a local Sri Lankan phenomenon with no clear ties to other terrorist groups with a world-wide reach.”

It is this scenario that the spokesman for the Government of Sri Lanka Minister Keheliya Rambukwella needs to understand, and seriously discuss, to refrain from proclaiming sentiments that have absolutely no substance which reflect bad on the Rajapaksa administration.

The Minister’s ‘proclamation’ denotes the lack of public diplomacy and strategic communication along with the inability of Sri Lanka’s foreign policy handlers to understand the strategic nature of the United States foreign assistance program.

To replenish the knowledge of those who are handling foreign policy in Sri Lanka it is vital to enlighten them on the Trends in US Foreign Aid worldwide: United States human rights policy is a combination of humanitarian and strategic concerns.

Foreign aid is an important mechanism to further U.S. national interests. By gaining allies, maintaining allies, and by building economically strong dependent states the United States can ensure its economic and strategic advantage.

In any case, human rights play little or no role in the allocation of security assistance says a study by the Institute of International Relations and Area Studies, Ritsumeikan University.

Section 502B of the Foreign Assistance Act has never been evoked as justification for reducing or restricting military aid to any country. It would be detrimental to U.S. strategic interests to characterize a friend and ally as a gross violator of internationally accepted human rights.

On the face of the data, one would assume that the majority of U.S. foreign assistance is given for development assistance. But, this fact conceals the United States’ reliance on Economic Support Funding (ESF).

The United States’ government has been able to counter domestic and international objections to its billion-dollar military assistance program by reducing military aid and increasing ESF funding. ESF funding, although officially listed as economic aid, is generally recognized as military assistance since it is used to financially support those countries considered to be politically and strategically important to United States’ security interests.

The largest category of economic assistance is the Economic Support Fund (ESF). On average ESF loans account for more than half of all U.S. economic assistance. The Economic Support Funds (ESF) program is categorized as economic development assistance, not military aid, even though its primary purpose is to support U.S. political and security interests. The ESF program is financial assistance for budget support so that recipient countries could use their own resources to build up their defense infrastructures.

ESF is aid given for diplomatic, security, or political purposes and includes the sale or grant of military arms and equipment. The Economic Support Funds program is intended to promote political stability in countries deemed important to United States economic, political or military interests. Its military component is evident by the fact that the State Department, not USAID, controls its allocation and disbursement.

Foreign aid is used by the United States to maintain the geopolitical status quo. In effect, the United States has bought its hegemonic position. Unquestionably, foreign aid as a policy tool is designed to serve the United States’ own interests. Typically, the United States has used foreign aid to maintain friendly relations with foreign governments, to facilitate cooperation, and to build strong alliances.

Although foreign aid may have a humanitarian effect, the primary reason for its allocation is self-interest, says Institute of International Relations and Area Studies, Ritsumeikan University study.

The U.S. government in 1961 passed the Foreign Assistance Act (FAA) under which it established the Agency for International Development (USAID) to coordinate development aid, humanitarian assistance, food aid, free labour unions, and business-promotion programs. All these components of USAID undoubtedly had the dual objective of 1) keeping recipient nations politically aligned with Washington and 2) promoting the economic interests of corporate America.

Dwindling US Aid to Sri Lanka During FY 2004 through FY 2007, the percentage drop of United States economic assistance to Sri Lanka is 64.6% which may be a revealing data even to Sri Lanka’s finance ministry and treasury authorities.

The following statistics and data were obtained from the Congressional Research Service, the non-partisan and independent research arm of the United States Congress.

USAID data sheet (2007) obtained from the Congressional Research Service in fact supports a federal system which it says is the key demand of the LTTE to reach a negotiated settlement at a time there is a national debate about the most suitable unit of devolution that will satisfy the aspirations of the Sinhalese, Tamils and Muslims.

Here is what the official U.S. Government document says: “USAID program supports the establishment of a stable post-conflict society. This program will create structures and develop the capacity for increased citizen engagement in decentralized government, the peace process, and nonviolent dispute resolution at the community level. ...Increased citizen engagement with government is an important tool in garnering support for devolution, an essential element of a future federal system and a key demand of the Liberation Tigers of Tamil Eelam to reach a negotiated settlement”. (Asian Tribune emphasis) The reduction of economic assistance, suspending military aid/support and taking Sri Lanka out of the eligibility list of the Millennium Challenge Corporation Grant from 2006 through 2009 was a familiar feature of Sri Lanka-U.S. relations since the incumbent President Mahinda Rajapaksa was inaugurated in November 2005.

The Rajapaksa administration was viewed by the State Department as a regime not amenable to U.S. interests.

The Colombo regime while battling the ruthless terrorist outfit LTTE (or Tamil Tigers) turned a deaf ear to the instructions, lectures, proposals and dictates of the State Department officials when it seriously decided to take on the Tamil Tigers militarily after failing twice, at the insistence of the US/West, to bring them to the negotiating table.

A close examination of (US) Congressional documents from 2006 through 2009 shows that the economic assistance and military aid Sri Lanka received before the advent of the Rajapaksa regime, especially during the short-lived pro-Western Ranil Wickremasinghe regime in the early years of this decade, had significantly and drastically declined giving no choice for Colombo to turn to other sources.

When Sri Lanka was battling the Tamil Tigers from July 2006 until the annihilation of the terror outfit in mid-May 2009 there were no military assistance forthcoming instead reduced at the outset and suspended charging the Colombo regime of violation of human rights and bad governance.

So were the reductions of economic assistance during this period. Senator Patrick Leahy, chairman of the Judiciary Committee and Chairman of the Sub-Committee for Foreign Assistance and Related Matters, introduced a resolution in the 2007 Appropriation Bill suspending Millennium Challenge Corporation Grant to Sri Lanka, and several months later striking this South Asian nation from the Eligibility List of 16 nations.

It is to the utter detriment of Sri Lanka that the Subcommittee on State, Foreign Operations and Related Programs of the Senate Judiciary Committee took a hard line view of Sri Lanka in 2007 when the joint State Department and the USAID International Affairs Budget came before the Senate in the year 2007.

On the other hand, the Appropriation Bill for 2008 jointly prepared by the State Department and the USAID clearly reflects a reduced economic assistance package for Sri Lanka clearly sending a signal to the potential foreign investors to look for other areas.

Section 690 of the State Department Appropriation Bill for 2008 read “None of the funds appropriated by this Act under the heading ‘Foreign Military Financing Program’ may be made available for assistance for Sri Lanka, no defense export license may be issued, and no military equipment or technology shall be sold or transferred to Sri Lanka pursuant to the authorities contained in this Act or any other Act, unless the Secretary of State certifies and reports to the Committees on Appropriations that the Sri Lankan military is suspending and the Sri Lankan Government is bringing to justice members of the military who have been credibly alleged to have committed gross violations of human rights, including extrajudicial executions and the recruitment of child soldiers.”The joint State/USAID budget 2007 provided US $ 850,000 for Foreign Military Financing and US $ 600,000 for IMET program. Sri Lanka received in 2006 US $ 3,615,000 for Nonproliferation, Antiterrorism and Demining but allocated US $ 1,150,000 for 2008. One could see the drastic reduction.

The International Affairs Budget -2008 was a joint presentation of the State Department and the USAID. A close scrutiny of the document clearly shows that Sri Lanka has received a raw deal for 2008.

The United States has drastically reduced its foreign assistance package for Sri Lanka, and the trend started since 2005.

The three United States Government offices in Sri Lanka that are jointly responsible for the Sri Lanka component of the economic assistance figures that are incorporated in the 2008 Appropriation Bill are USAID, Economic and Political Offices of the American Embassy. The total aid component for 2008 was US $6,950,000.

It was very much higher in 2006 which was US $14,527,000.

Economic Support Funds (ESF) programs involve a wide range of uses (except military) that support U.S. security interests and promote economic and political stability in the recipient countries and regions.

This is what Sri Lanka received from FY2005 through FY 2009: FY 2005 - US$ 9,920,000 FY 2006 - US$ 3,960,000 FY 2007 - US$ 3,000,000 FY 2008 - US$ ZERO FY 2009 - US$ ZERO The declining United States interest in Sri Lanka is clearly reflected in the FY 2009 International Affairs Congressional Budget.

The U.S. FY 2009 budget estimates for Sri Lanka denote a steady decrease from US$ 23 million in FY 2007 to US$ 7 million in FY 2008 to US$ 6.5 million for FY 2009.

How much development assistance does Sri Lanka get for FY 2009? U.S. provided US$ 3 million under Economic Support Fund (ESF) in FY 2007.

No allocation for FY 2008 and no funding for FY 2009. Under Economic Growth, for financial sector - infrastructure - private sector competitiveness - economic opportunity FY 2009 allocation is US$ 2.2 million. It was US$ 2.75 million in FY 2008 and US$ 2.5 million in FY 2007.

It is not a very disturbing factor that the United States reduction of economic assistance to Sri Lanka since 2004 and the total halt of that assistant just announced by voice vote at the U.S. House Foreign Affairs Committee.

After all, Ambassador Lunstead very clearly states that the U.S. has no significant strategic interests in Sri Lanka ‘certainly in comparison to other areas of enhanced U.S. engagement.

(Courtesy: Asian Tribune)

(The writer is the US National Correspondent Asian Tribune in Washington, DC. (


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