Be careful about a free lunch. Sri Lanka was happy at first, but ultimately had to reject a US development compact.
The $480m deal with Millennium Challenge Corporation (MCC) was supposed to tackle two binding constraints on economic growth.
MCC claimed the deal would benefit 54% of Sri Lanka’s population as “these investments will reduce severe traffic bottlenecks, create safer, more reliable public transportation, and lower the transport costs required to connect people and goods with booming markets.”
Then comes the Trojan embedded in the draft: “The MCC and the United States Government or any current or former officer or employee of MCC or the United States Government shall be immune from the jurisdiction of all courts and tribunals of Sri Lanka for any claim or loss arising out of activities or omissions under this Compact.”
It was a poison pill and it caused a stir.
Could it mean large-scale privatization of precious farmland and then lease of it to someone else for other use? What if someone collects sensitive landscape data? And diplomatic immunity for U.S. businesses under the MCC umbrella could enable almost any kind of negative corporate behavior.
“Are we going back to colonial times again?” Local media and intellectuals are charging that the MCC is an instrument of a new-type imperialism pursuing economic hegemony over poorer countries. Noted columnist Shenali Waduge earlier wrote “In short the plan is to turn Sri Lanka into another colony, an American military base in the Indian Ocean.”
They have every reason to worry. In Nepal, a similar MCC compact worth 500 million US dollars is still hanging upon parliament for approval. The clauses include “the government waives any and all claims against MCC or the United States Government ... for all loss, damage, injury, or death arising out of activities or omissions under this Compact, and agrees that it shall not bring any claim or legal proceeding of any kind against any of the above entities or persons for any such loss, damage, injury, or death.”
Sounds familiar? Seems like a standard clause for every MCC compact.
In Madagascar, MCC-funded land reforms resulted in 1.3 million hectares of farmland being leased free of charge to a foreign private company for 99 years for export agriculture, as clauses and provisions in MCC’s compact shall not be subject to Madagascar laws. In other words, national sovereignty, security and policies have been sold out.
The MCC is applauded by some as a better alternative to China’s Belt and Road Initiative (BRI). But ironically, from 2013 till now, over 200 countries, regions and international organizations have signed BRI deals with China without a single clause asking for any kind of immunity for any Chinese companies. All Chinese staff and activities must strictly abide by local laws. No hidden agenda. No neo-colonialism.
The MCC compact intends to do exactly what China is alleged to be doing but has never even attempted.
By Ge Anna
Note: Ge Anna is a staff reporter at China Plus. The article reflects the author's views.