Pressure on Lankan government to drastically modify MCC Compact

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"We are going to change the law to ban foreigners buying land or taking it on long lease,” State Minuster Nanayakkara asserted.
Lanka Web | 13 December  2019

By P.K.Balachandran/Daily Express

Pressure on Lankan government to drastically modify MCC Compact

Colombo, December 13: Nationalist and left wing members of the Sri Lankan parliament are putting pressure on the Gotabaya Rajapaksa government to drastically modify the US-Lanka Millennium Challenge Corporation (MCC) Compact, which had been approved by the cabinet of the preceding Ranil Wickremesinghe government but had not obtained parliamentary approval.

Foreign Minister Dinesh Gunawardena who belongs to the nationalist Mahajana Eksath Peramuna (MEP) has said that the MCC Compact, like other international agreements entered into by the Wickremesinghe government, will be reviewed.

Another nationalist MP, Udaya Gammanpila, who is allied with President Gotabaya’s Sri Lanka Podujana Peramuna (SLPP), said that while the transport and road improvement parts of the US$ 480 million Compact (70% of it) is acceptable, the land registration part of it is not.

He feared that the latter could well be a Trojan Horse enabling Western and allied foreign companies to buy off land along the proposed Colombo-Trincomalee Economic Corridor.

While Sri Lanka is all for giving secure land titles to individuals to enable them to put their land to productive use, any attempt to make them available to foreign buyers as result of a pact like the MCC will not be unaccepted, Gammanpila said.

The MCC Compact, as approved by the previous government, says that one of the aims is to increase availability of information on private land and under-utilized State land in order to increase land market activity.” According to the MCC website, one of the aims of the MCC compact is to identify the root cause of problems in the land sector because of the difficulty in access to land for investment purposes.”

While the US Embassy has denied that the US will buy up any land under the MCC, Vasudeva Nanayakkara, a Leftist and State Minister for Water Supply, claimed that the land covered by the MCC Compact from Colombo to Trincomalee ( a very large tract) will go into hands of the US-Lankan joint company in which the US will use its financial clout to get land released for foreign buyers.

Sri Lanka will be obligated to accept such land transfers, having taken the US$ 480 million MCC as a grant” from the US, Gammanpila said.

We are going to change the law to ban foreigners buying land or taking it on long lease,” Nanayakkara asserted.

Such land transfers will lead to the impoverishment of the rural masses, whose economy is land based.

We want the land project to be dropped and the transport and road connectivity projects retained. But the US wants us to accept the entire package or forego the grant. That is not acceptable,” Gammanpila said.

However, he clarified that Sri Lanka is all for a modernized system to register land which clearly establishes ownership and enables the purchase of land with a clear title. But we should do it ourselves,” he added.

A monograph of the Institute of Policy Studies says that only 30 to 40% of the lands in the rural areas have a clear title. In 1998, the government initiated a land title registration scheme called the Bim Saviya program. But it ran into financial and other problems and had to be abandoned. The MCC will fund its completion. But Sri Lankan nationalists would like it done independently.

African Experience

According to literature on the working of the MCC in Africa where land is being acquired in vast quantities by foreign entities in the guise of promoting economic development, the project has many flaws. Gammanpila mentioned Madagascar in particular as a case Sri Lanka should study.

An article in www.grain.com says that in the scramble for Africa’s land resources some of the players are turning up the heat to ensure that the corporate interests they defend get their piece of the pie. The MCC is indeed very private sector oriented, and its American and local partners will be predominantly from the private sector which will not come without profit in mind.

As experiences with its land projects in Mali, Ghana, Mozambique and Benin make plain, the MCC is playing a key role in commodifying Africa’s farmlands and opening them up to US agribusiness,” Grain.com says.

On Madagascar, the article says that in December 2008, it became apparent that the government that was using MCC funds to allocate certificates to thousands of rural Malagasy under the National Land Program was also selling off these lands to foreign investors.

The people of Madagascar were shocked to learn, via the international media, that their government had allocated a 1.3 million hectare land concession to the Korean company Daewoo Logistics, and that it was negotiating another agreement with the Indian company Varun, covering several hundred thousand hectares, both for large-scale farming projects.”

The Daewoo deal included lands where certificates had already been allocated through the MCC-funded program while Varun was proposing that the land program be extended to the area it was targeting, so that certificates could be awarded to farmers on condition that they make their lands available to Varun!”

In fact, the government had signed away, or was in the process of signing away, nearly 3 million hectares of agricultural land to foreign investors through a system of long-term leases (up to 99 years) that it established in 2008 as part of a new investment law supported by its donors.”

MCC’s Characteristics

About the MCC’s basic characteristics, the www.grain.com article says: The MCC’s approach is hard-hitting and akin to a structural adjustment program. It has a large budget (which Congress has increased under the Obama administration, by 26 per cent in 2010). This money is disbursed in the form of grants, not loans, to specific countries that the MCC deems eligible for funding. So there is a big carrot dangling to lure countries in.”

But even to become a candidate for funding, a country must first pass an MCC scorecard test, which looks at such criteria as ‘Encouraging Economic Freedom’ and is based on indicators taken from neo-liberal institutions like the World Bank, the Heritage Foundation and the International Monetary Fund (IMF).”

Having passed through these hoops, a country can then move into the process of developing and signing a Compact with the MCC, which will specify four or five projects for MCC funding.”

The way this usually works is that a team of US consultants flies in to guide the government in crafting the Compact proposal, pointing it towards those areas that are most salient to opening the country up to foreign investors.”

Once the Compact is approved, the money starts to flow, although the tap can quickly be turned off if the government changes direction in a manner that does not suit Washington. MCC funding to Nicaragua was cut off when the Sandinistas were elected to power, but was maintained in Honduras after the illegal coup d’état of 2009.”

With the signing of the Compact, the recipient government must set up an institution to administer the funds, often called a Millennium Challenge Account (MCA), which operates autonomously, with its own Board of Directors, yet under the oversight of a designated ministry.”

The Compact lasts typically for five years, with regular evaluations and strict targets that have to be met, each year or so, before new tranches of funding are released. Vincent Basserie, a land specialist with Le Hub Rural in Senegal, who has seen the MCC in action, likens it to a bulldozer – pursuing a strict ideological agenda, without regard for previous experiences.”
Original source: Lanka Web
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