By Vidura Prabath Munasinghe
Bringing the MCC back to forefront of public discussion
The conversation about the United States’ offer of aid through the Millennium Challenge Corporation, commonly referred to as MCC, re-emerged after the submission of the review committee’s final report to President Gotabaya Rajapaksa on 25 June 2020. The previous government’s approach to this agreement was the subject of intense criticism by the Sri Lanka Podujana Peramuna (SLPP) during the Presidential election campaign.
The report of the review committee states (in page 18) that the present President and the cabinet do not have a mandate to sign an agreement that was rejected by the people when they elected President Gotabaya Rajapaksa as he campaigned strongly against MCC. With the conclusion of the parliamentary elections in August 2020, the people are eager to see the approach of President Gotabaya Rajapaksa and the newly elected Parliament that has the SLPP enjoying a 2/3 majority, towards the MCC.
Various analyses about the agreement have been presented to the public during the last few months. The majority of them were focused on its impact on land rights and national security. The focus of this article is to evaluate its impact on the legislative and monetary powers of the people that are vested in the Parliament. I base my arguments on the findings of the MCC review committee appointed by the President. However, I am also mindful of the present political context that is based on the landslide victory of the SLPP that campaigned against MCC. An overwhelming majority of the people of this country exercised their sovereignty and voted to give a 2/3rds majority to the SLPP in Parliament. This gives the SLPP an almost unrestricted control over Parliament that exercises the legislative power of the people and controls the States powers of public expenditure.
The MCC agreement and its impact on the people’s sovereignty
According to Article 3 of the Constitution of Sri Lanka, the sovereignty of the State is vested with the people – it is an inalienable power. Sovereignty includes the legislative, executive and judicial powers of the people, their fundamental rights and the franchise. The legislative powers of the people are exercised by Parliament through representatives who are elected by the people. These powers may also be exercised directly by the people through a referendum, and the president, directly elected by the people, exercises the executive powers of the people. The judicial powers of the people are exercised by Parliament through the courts, established or recognised under the Constitution. Further, according to Article 148 of the Constitution, the State’s monetary powers are under the full control of Parliament. The MCC review committee report is of the view that the MCC agreement challenges the people’s legislative powers that are implemented by Parliament, the judicial powers that are exercised by Parliament, through the courts and the powers to control public finance vested with t Parliament. If this is the case, it undermines the people’s sovereignty.
According to Article 7.1 of the MCC compact agreement, the MCC agreement must be passed as an Act of Parliament. However, the aid provided under the MCC and the specific programmes implemented under this agreement are not governed by the Central Bank and other oversight structures that are already in place in Sri Lanka. Instead, the oversight will be undertaken by MCA-Sri Lanka, which is a company limited by guarantee and is established exclusively for the purposes of this agreement. Sri Lanka authorities may not regulate the activities of MCA- Sri Lanka’s are not regulated by any Sri Lanka authority (page 21 of the report). However, the MCC Corporation is entitled to intervene in a range of matters, such as the appointment of employees, suppliers and contractors, making payments to them or suspending their payments, and reviewing progress. The review committee observes that a great effort has been made to ensure that the MCA-Sri Lanka Corporation is independent from the control of the Sri Lankan government, yet it has not been made independent from the control of the MCC Corporation.
In the event where a Sri Lankan regulatory authority is given the power to issue guidelines on the activities of the corporation, Article 6.8 of the compact agreement provides for the corporation and the government of the United States of America to be absolved from responsibility where damage, loss, injury or death that could arise out of non-compliance (page 21, 22 of the report). The MCC Corporation, its officials and the United States of America enjoy immunity from the Sri Lankan judicial system. Furthermore, the committee report highlights that the management of the MCC funds are outside the framework of institutions established under the Central Bank of Sri Lanka. The auditing of the management of funds is not under the purview of the Parliament and it is carried out according to MCC guidelines. This is a departure from the constitutional provisions, providing for the people’s control of public finance through Parliament. (page 28 of the report).
Although the government of Sri Lanka does not have the power to regulate the agreement, it is responsible for achieving the expected targets therein. The Sri Lankan government is liable to fund any ‘financial responsibilities that might arise’ due to the activities of the MCA-Sri Lanka Corporation (page 22 of the report). Furthermore, the main representatives of the MCA-Sri Lanka can amend the MCC agreement after the MCC agreement is passed by Parliament. The review committee notes that amending provisions of an agreement approved by Parliament without the approval of the Parliament amounts to a violation of the legislative powers that are vested in Parliament (page 27 of the report).
Thus it is evident that the MCA-Sri Lanka Corporation that is established to implement the MCC agreement in Sri Lanka is capacitated to exist outside the scope of Parliamentary oversight and control in respect of legislative matters and financial matters and as it enjoys legal immunity, it exists outside the scope of judicial authorities as well. The review committee notes that such an entity that is unregulated, unaccountable and lacking in transparency and enjoying legal immunity could have a negative impact on the Sri Lankan economy and in the lives of its people.
Economy driven by circles of friends and family networks
The new Constitution introduced in 1977 was accompanied by the introduction of an open economy. The constitution established a powerful executive presidency that operates outside the purview of Parliamentary oversight. The nexus between the new constitution, the executive presidency and the neo-liberal economy has been critically discussed during the last 40 years. The end result of all these reforms was the consolidation of an economic system that was marked by a lack of democracy, accountability and transparency and operated outside the control of a sovereign people.
One of the main critiques of the governments advancing these neo-liberal policies was that it gave the opportunity to a small group of loyalists of the people in power to run the entire economy. During political campaigns, they have been referred to as a ‘Gaja mithuru kalli’ and ‘Raja paul,’ implying that they constituted an inner circle controlling the economy by functioning outside of the people’s representatives. What the MCC is proposing is to create is an institutional framework that would play a major role in the economy while situated beyond the financial controls and legislative powers of the parliament, and beyond the reach of the judiciary too. This is repugnant to the sovereignty of the people of this country.
During the General Election, there was a call for electing educated people and technocrats to the parliament. During the presidential election, a major campaign slogan supporting the current President was that he would give prominence to educated people. Following this line of argument during the parliamentary election too, there was a call by the President and his political party to elect more candidates from the ‘Viyath Maga’ organization that supported his presidential campaign. People of this country have listened to this call and selected a majority of the candidates from ‘Viyath Maga’. But if the MCC agreement is implemented even these educated people who are in the parliament will not be able to influence MCA-Sri Lanka Corporation through the parliament. Thus, even the educated representative in Parliament will not be able to impact many of the crucial decisions regarding the Sri Lankan economy. Thus the MCC agreement will invalidate the discourse of the need to elect educated people to the parliament.
What does a Parliamentary majority of 2/3 signify?
According to the MCC review committee report, the State Land Ordinance no. 8 of 1947 needs to be amended in order to make land available for the market. The special bill that was tabled by the previous government for this purpose was withdrawn on 20 August 2019, as the Supreme Court determined that for it to become law, Parliament must pass it with a 2/3 majority. A similar bill that was tabled in 2003 could not be passed because the Supreme Court determined that a 2/3 majority in Parliament was required to pass it (pages 28-29 in the report). Ranil Wickramasinghe’s government was in power on both occasions but was not supported by a 2/3 majority in the parliament. In the 2020 General election, the SLPP campaigned for a 2/3 majority in the parliament, arguing that a 2/3 majority is needed for the President to create the legal framework required to fulfil the promises he made at the presidential election. However, a clear mandate was given to the President at the presidential election and most of his promises could be implemented with the support of a simple majority in Parliament. Furthermore, the President has a Parliament that he can count on, unlike the president that he succeeded. What is clear, is that the exceptional Parliamentary majority will be used, as it was during the past 40 years to weaken the powers of Parliament. In a weakened Parliament the interventions of family and friendship networks of the powerful political elites in the country’s economy will be further escalated. Although some may argue that the currant president would not permit such interference, it is most important to remember that a Constitution is not drafted by taking into consideration an individual or a political party. When Parliament is weakened, the people’s capacity to control economic management and challenge corruption is also weakened. Vital decision making powers will be vested in the hands of a few who are close to the leadership.
The President commissioned the report of the MCC review committee, and the report states that the present President and the cabinet do not have a mandate to sign an agreement that was rejected by the people. The peoples vote in the Parliamentary elections, giving the SLPP a 2/3 majority is regarded as a further reiteration of popular disapproval of the MCC. Since the MCC has been rejected by the people of this country twice in two sets of elections by voting for the party and a leader who campaigned against it, the present government has the people’s mandate to reject MCC and to safeguard the sovereignty of the people of Sri Lanka. A 2/3 majority does not promise an unrestrained free hand to the government and the people of this country, must keep a close eye on the government to ensure that the government is truly committed to their campaign promises.
Reblogged from Law and Society Trust