Sri Lanka-India ties at high point, concerns about Chinese presence in country ‘consigned to past’: G L Peiris

Thank you for doing this interview, Mr Peiris. What brought you to New Delhi?

We want to take stock of the current situation, consolidate the achievements that have already been made with regard to transforming the character of the relationship, elevating it from a transactional level to strategic partnership.

What elements are you trying to put in place in order to elevate it to a strategic relationship?

The main element is a realisation in both countries that closer integration of the economy of India and Sri Lanka is of mutual benefit to both.. For example, ports and harbours are every important for us. We want to develop Colombo and Hambantota as a transshipment hub, digital hub, manufacturing hub and so on.

More than 70 per cent of this is transshipment is from or to India. So, India is pivot and many of the Indian ports are Adani-owned, Adani-connected. The dredging work on the West Container Terminal [of Colombo Port, being developed by India’s Adani group, after Colombo cancelled a previous agreement with India for developing the East Container Terminal, subsequently handed over to China] will begin in the next two or three months and the key player is Adani. There is no doubt that greater connectivity with Indian ports is absolutely essential.

The same is true of the electricity sector. Third is oil petroleum and gas. India is the world’s third largest consumer of oil. It will be possible for Sri Lanka to secure oil at more competitive and lower rates, if we act together with India rather than in isolation. Recently the Tricomalee oil tank farm transaction [with India] was completed. You’re talking 99 tanks – the storage capacity is useful for India and for Sri Lanka because when the world market prices are low we can purchase oil and store it.

Then there is Indian investment in tourism. One third of the tourists who come into Sri Lanka are from India and there is the Ramayana train which we are working on that exciting concept. And we are hoping to develop about 52 potential tourism sites to attract more Indian tourists and odd significant Indian investment into the hospitality sector.

Also pharmaceuticals. In Sri Lanka we have three investment zones for the production of pharmaceuticals. We are already producing saline for use in Sri Lanka. There’s also a market for pharmaceutical products made in Sri Lanka, in the Maldives in East Africa. Indian companies have a very substantial substantial expertise in pharmaceutical production. So, it’s a promising area for Indian investment. There’s also food processing cement.

Did these specific sectors figure in your conversations here in Delhi?

I had a detailed meeting with [External Affairs Minister] Dr. S. Jaishankar yesterday (February 7), and we discussed all these potential areas for collaboration. Now that a strong foundation has been laid, we discussed in detail some of what we could do further together for mutual advantage. And I followed up today with a very fruitful discussion with the national security adviser Shri Ajit Doval. We have discussed specifics about where we are and how we proceed further.

Can you provide some more insight into those specifics?

The underpinning is a fundamental consideration that people- to- people connectivity is today very strong between the two countries. There are several Memoranda of Understanding in the pipeline, one of which has to do with $15 million fund which Prime Minister Modi has set up for the development of Buddhist temples, the development of the Buddha Sasana in Sri Lanka.

Buddhism, of course, is the greatest gift that India gives Sri Lanka. It is a very strong bond between the public of the two countries.

India is a tried and tested friend that is always there for us. It is not just the current financial package. When COVID-19 hit us, India was the first on the scene with 500,000 vaccines. When we had that very unexpected maritime disaster, the oil spill, India doused the flames of that ship. Otherwise the calamity would have been far more serious proportions.

Then we have current fiscal difficulties, now at the moment particularly foreign exchange difficulties. India came up with a package to help us which consists of several pillars as they were called. The first was a line of credit 1 billion US dollars for the purchase or food and pharmaceutical products (still being negotiated). The second pillar was oil security that is $500 million revolving funds made available to us by the ExIm Bank of India. The third pillar had to do with the balance of payments 515 million US dollars with the Asian clearing union for which we were given a deferral and sought currency swap of 400 million. In total approximately 1.9 billion US dollars, which helped us enormously to tide over this temporary period of difficulty.

So this this whole financial package that you outlined – the fourth pillar was the Trincomalee oil storage agreement?

No the fourth pillar was substantial Indian investment into Sri Lanka the private sector. Now the Trincomalee oil tank farm was really a part of the energy security pillar, because it was going to help store oil and the arrangement was worked out that is there are 99 tanks in all — 24 for the Ceylon Petroleum Corporation, 14 for Lanka Indian Oil Corporation. The 61 remaining would be a joint venture in which Sri Lanka would have 51% and India would have 49%

Would you agree with the reading that this was a quid pro quo for the financial assistance?

No, it was not a quid pro quo because Indian assistance has been available consistently during the last 15 years. There have been as many as 11 Indian lines of credit, mainly for the development of our railway sector. As recently as January 2022, there was the railway that was resumed between Colombo and Kankesanthurai. That is with Indian diesel engine multiple units. So that’s not correct. It is not as though if you will do this for us, and then we will start releasing the funds that you need.

In the health sector, the Indian ambulances [given] so many years ago, there was no quid pro quo.

Then Prime Minister Modi’s water programmes, sanitation in the schools – this was a dire requirement. So that was done about five months ago when [foreign secretary] Harsh Shringla came to Sri Lanka. Then we have the Grama Shakti programme, under which about 45,000 houses were handed over to families. In all these examples thhere was no quid pro quo, no strings or conditions attached to guys.

The Trinco oil farm is going to require a lot of money. Each of those tanks is going to cost millions of dollars to refurbish and get started. Have there been any discussion with India about this money is going to be raised? And how is Ceylon Petroleum Corporation going to raise the money for its side of the deal in those 14 years?

The first thing was to get the transaction done. Now the basic contours of that have been agreed upon, but there are still a couple of steps to be taken. But those are the minor steps, the lease agreements have to be executed. So we are now focused on those arrangements, which have to be completed before the thing actually gets off the ground.

CPC also has to raise money for its share of 14 tanks. It could raise money from a foreign player. Does that have to be in consultation with India?

No, we haven’t got to the stage of considering in detail arrangements of that nature, because it really is a little premature. We have to get all the legal arrangements in place, which is now still not been completed. We’ll do that and then we’ll focus on the operational arrangements.

You spoke about cooperation in the energy sector. There was supposed to be an agreement between NTPC and Sri Lanka to start a solar farm solar power farm in Sampur [near Trincomlaee]. Is that coming through?

That’s also under discussion. Immediate things in the pipeline – one is this $15 million MOU about Buddhist temples, then we have another one between the Sushma Swaraj Institute of Foreign Service here and the Bandaranaike Diplomatic Training Institute, then there is yet another one about a 4000 metric ton, floating dock. There are several in the pipeline. And we are hoping to complete as many of these as possible.

There is also proposal for the purchase of two Dornier aircraft. There is no finality, nothing has been agreed upon. There are proposals and counterproposals and it is a matter under discussion. There is no agreement or finality.

In about two weeks time the Sri Lankan Finance Minister Mr Basil Rajapaksa will be coming here again [he last visited in December 2021] to firm up all of that. Then we expect Dr. Jaishankar to visit us around the second or third week of March. And it’s still not confirmed, not confirmed at all. But we are hoping that it would be possible for the Indian Prime Minister Shri Modi to come to us for the BIMSTEC summit on March 31. Sri Lanka is currently the chair of BIMSTEC, we are handing over to Thailand. The summit is in a hybrid format. Leaders who can come will do so others can participate online. There’s so much that has happened during the last few months [on the India-Sri Lanka front] that there could be a real substance to that visit.

Regarding BIMSTEC, there’s an issue about Myanmar’s participation. What conversation have you had with India on the invitation to Myanmar? Where does BIMSTEC stand on that?

It would be wrong for Sri Lanka to make a unilateral decision. We would like to do it in a collegial spirit, you know, talk to all the other countries and try to arrive at a consensus on what would they all like to do. It’s a very difficult situation. So we would like to consult with everyone, come to a conclusion that most of the countries are willing to accept, and then make that decision known to others and have an internal consultation before announcing a final decision. And that seems the right way to sit about it.

On the Sri Lankan economic situation, there’s been a lot of debate about going to the IMF or not going to the IMF. Is that something that you are considering?

There is no firm decision to that effect that there has been some consultation, but that is all technical matters. The IMF has made an announcement they would that they would be happy that they have used the word ready. They stand ready to assist if approached by Sri Lanka, but Sri Lanka has not made any overtures to the IMF.

During your visit to Delhi, did you also seek any assurance from the government of India on the upcoming session at the United Nations Human Rights Council, which will take place this month end?

In September last year, there was an oral update [on the situation in Sri LAnka]. Now, at the 49 session which begins on the 28th of February, there will be a written report. In the 51st session in September, there will be a comprehensive report by the ad hoc mechanism, which has been established under the Office of the High Commissioner for Human Rights Michelle Bachelet.

We will be given an advanced copy on February 14 and we have five days in which to respond right. But we are in close touch with the Indian government. And India is very much aware of all the progress that has been made in the recent past, particularly with regard to the work which has been done on the ground by the so called Local mechanisms, such as the Office of missing persons, the Office of reparations, the office of National Unity and Reconciliation, the SDG Sustainable Development Goals 16 Council and the Human Rights Commission of Sri Lanka.

In fact, about two weeks ago, in Colombo, I addressed all the members of the diplomatic community. Each of these institutions was asked to make their own presentation about the work which they have done, not expectations or plans for the future, better results which had been shown on the ground visible, verifiable, measurable results.

Isn’t this a U turn from what we saw when President Rajapaksa said we are withdrawing from the previous commitments to the Human Rights Council. Is this because you’re worried about the withdrawal of preferential tariffs by the EU, which will be a huge setback for your economy?

We did not repudiate obligations. We are members of the UN. We can’t reject the Office of the High Commissioner. We withdrew from co- sponsorship of the resolution. This was a resolution brought by the US and some other countries [in 2015] and the then foreign minister of Sri Lanka Mr Mangala Samaraweera decided to co sponsor. So that was a rather extraordinary situation. The country was co sponsoring a resolution that was very strongly critical of its own armed forces. So when the government changed in November 2019, President Gotabaya Rajapaksa took the position that we cannot do that. We therefore withdrew from the co-sponsorship of the resolution.

But there are some things that we ought to do, not under compulsion, for instance, the reform of the Prevention of Terrorism Act.

There are concerns about how far reaching those reforms are.

That criticism is very unfair … [I]t can be convincingly established to the satisfaction of any dispassionate observer that there really is a fundamental difference between the two. So it is a significant improvement on the existing law. I’m not saying it’s perfect, but it is certainly a substantial advance on the existing law. And we have also made it plain that we are doing it in two stages, we are preparing a completely new law. But since that is going to take some time, some of the urgent amendments have to be brought to parliament before the comprehensive legislation is
ready.

Why not abolish it altogether?

No, that can be done because throughout civilization, there has been an attempt to strike the right balance between security and liberty. You cannot totally jettison security in pursuit of liberty or vice versa, the essential challenge is to strike to remedy an equilibrium between the two. And the the situation in Sri Lanka in the region in the world is such that security cannot be forgotten about. The new legislation brings SriLanka in line with international standards until the comprehensive legislation is ready and we are working on that and it will be brought to Parliament as soon as possible.

On the EU GSP, how concerned are you about that?

If GSP plus is withdrawn from Sri Lanka, which which we consider exceedingly unlikely – but let’s take the hypothetical possibility that it is going to happen — who is going to bear the brunt of it? The most vulnerable segments on the Sri Lankan population, in particular girls working in garment factories. 90% of the employees working in garment factories are women, they have got accustomed to a lifestyle. Many of them are supporting their families, they’re educating themselves. All of this will be affected. Then the fishing communities, because there are 7,100 items that find their way into the markets of Western Europe under the GSP plus scheme, and it is worth approximately 3.5 billion US dollars per year to Sri Lanka. So if you take it away, it is not a punitive measure against the government, it is a punitive measure directed against the poorer sections of the Sri Lankan communities least able to bear that added burden. It simply makes no sense.

One of the one of the issues that has come up repeatedly between India and Sri Lanka, and one that Sri Lanka has not been able to settle, is the Tamil political question. Doesn’t it worry Sri Lanka that this remains a source of tension between the two communities , with a potential of becoming a bigger issue in the future?

The 13th Amendment is an integral part of Sri Lanka’s Constitution of 1978. The basic feature of the 13th amendment is a division of powers between the central government and the provincial councils. What has happened now, for the last two years? There have been no provincial council elections. As we speak, now, there’s not one single elected member of a provincial council. Does that mean the functions of province or councils have reverted to the center? When you come to think of it, an amazing development in constitutional history in any part of the world. Without legislating one word the 13th amendment has been nullified. Who is responsible? None other than the Tamil National Alliance. Why do I say that? The administration of 2015 to 2019 did not hold these elections. They knew that they would be routed, it would be a really humiliating defeat. So they were determined not to hold that election. At the same time, they couldn’t defy the court order [that the election should be held]. So then they hit on an ingenious solution. The solution was to say, Okay, we’ll hold the election, but the electoral system is unacceptable.. we have to change the electoral system. They abolished the system that existed, but deliberately refrained from substituting it with a new system. So you deliberately create a lacuna, a hiatus. How can you hold the election [when] there’s no electoral system. So it is a self induced self created problem for no other purpose, then putting off the elections indefinitely.

The TNA was at that time an uncritical supporter of that government. A two thirds majority was given by the TNA, they had 16 seats. It is supreme irony for the people who created that situation and deprived all the people of Sri Lanka, not only the North and the East, but everybody of the right to have their elected representatives and provincial councils. Having done that deliberately now to appeal to the Government of India. to extricate them from this predicament, can you think of a better example of supreme irony? They created the situation.

But they’re also saying that 13th amendment is not enough, and now there is a need to go beyond that…

Yes. But whatever was given was nullified. totally and absolutely, by this conscious and deliberate action state and now, they’re asking for more, whatever there was they destroyed. It’s now down to zero.

So what is the way forward?

There is a select committee of Parliament which is functioning under the chairmanship of the leader of the House. And the mandate of that committee is to make recommendations about the reform of electoral laws at all levels, that is parliament, provincial councils and local authorities. It is making considerable headway it is meeting sometimes twice, three times a week.

But there’s also the other development of one, one country one law even that has created some unease that it is going to be more centralizing.

Whatever the new constitution is going to be, nobody knows yet. Whatever form that’s going to take, if it is going to be more centralizing, rather than devolving that is pure speculation. Because the preparation of the draft is the responsibility of a committee of experts. And the draft of the new Constitution, they’ve been working on this for about a year and they’re now reaching the final stages of their work, but they have not submitted their report to the government. So all the speculation about the nature of the proposed Constitution, its basic provisions, it is all conjecture, pure guesswork.

India has said Sri Lanka must implement the 13th amendment. Did the issue come up in the in your conversations now?

No, because the electoral reforms are still work in progress.

Is the 13th Amendment going to be part of the new Constitution? There are demands that it should be struck out?

Well, there are a variety of points of view. That is democracy. We cannot stop it. So there are different points of view, some will want it strengthened, some will want it weakened – there would be a diversity of views emanating from different sections of society.

The committee’s own recommendations are not a matter that is known at the moment, because the report is still being prepared by the committee has been submitted.

Sri Lanka is in the middle of this rivalry between China on one side with which it has very close relations, and India, which has a huge problem with you Chinese presence iin Sri Lanka. We have seen that. Now the Quad has brought matters closer Sri Lanka…

That’s not a new problem, but rivalry has been there for a long time. That is part of the geopolitical realities of the Indian Ocean. Itt’s is a fact of life, it is an issue that we have learned to handle over a very long period. And for us, it is not really a vexed problem. Because there is no exclusivity in Sri Lanka foreign relations. There’s no exclusivity,

But it did become a problem. You had tensions with India before this immediate period of the last three months over precisely this.

That is due to certain misconceptions. There is, of course, the Belt and Road Initiative with China. And there is no denying that this has resulted in significant benefits for Sri Lanka, especially with regard to the development of infrastructure, highways or railroad systems, ports and harbours and so on. India was never threatened. There was this perception, which did not accord with the reality. Because if there was Chinese investment into the country, so was the Indian investment into the country. Indian investment. What about the hotel sector, as I said, the ITC, then this HCL holdings that’s very large. Don’t forget that India is the second largest trading partner of Sri Lanka, and the third largest source of investment into Sri Lanka. So if there is a Chinese footprint, there’s also an Indian footprint. And we had never, under any circumstances, allow any country to use Sri Lankan territory or territorial waters or aspects to the detriment of any other country that is a friend of Sri Lanka’s. So India never had reason to feel threatened. But in any case, now India is a very active participant in our economy. And as I see it, we do not think that there was really a rational basis for those apprehensions. Because there is something very special about Sri Lanka’s relationship with India. It has a special quality about it. So it was inconceivable that Sri Lanka would have allowed our country to be used against India, it was never ever going to happen. But now in any case that is consigned to the past, because there is very vigorous cooperation with India in a whole range, a vast array of economic activities across the spectrum. We are now reaching a high point in the relationship. The one flashpoint is a fisheries issue. Yeah. But apart from that, it is an unreservedly positive relationship at this point in time.

So when you say it’s a flashpoint, how serious is a flashpoint?

It is serious because almost every week there are fishermen being taken into custody there are boats being taken into custody. Then there’s pressure to release the fisherman on the boats, when the fishermen in the north are complaining that they’re being deprived to their means of livelihood. What is required is not an ad hoc response to the problem. There really is a very urgent need for a viable and lasting solution. There is agreement about the urgency of the problem and the paramount need for a rapid solution. So next month in Sri Lanka, we are planning a joint working group, the two foreign ministers, the two fisheries ministers, and also possibly some representation from Tamil Nadu from Chennai. Because I don’t think it’s a problem that can be solved entirely by the discussion between New Delhi and Colombo, you don’t need to involve the Tamil Nadu administration.