Opening Statement of Acting Principal Deputy Assistant Secretary of State Thomas J. Vajda at Pathfinder Panel Discussion

Colombo, Sri Lanka
February 14, 2019


Thank you very much.  It’s a great pleasure to be here and it’s really a great honor to be at this table with two luminaries.  It’s a great pleasure to be next to the Ambassador who has a very extraordinary and distinguished career including service as Ambassador to my country and the Admiral who is former chief of your naval forces.  So thank you for hosting me and thank you for your interest in U.S. policy in the Indo-Pacific.

As noted, I’m the Acting Principal Deputy Assistant Secretary at the Department of State responsible for transnational and economic affairs affecting the region.  And most critically this includes implementation of our United States vision for the Indo-Pacific, which is what I plan to speak about today, and specifically with a focus on Sri Lanka’s important role in the region.

Located at the nexus of the Indo-Pacific, Sri Lanka has the opportunity to shape the region’s future.  For all nations in the region to thrive, that future must be based on a rules-based order, transparent standards on development, assistance, and infrastructure projects, and respect for fundamental freedoms and human rights.

President Trump outlined his vision for a free and open Indo-Pacific in a speech at APEC in 2017.  He described the Indo-Pacific as “a place where sovereign and independent nations with diverse cultures and many different dreams can all prosper side by side and thrive in freedom and in peace.”  This vision continues to frame our work and complement the goals of like-minded partners like Sri Lanka.

Under our approach, we are working with key partners like Sri Lanka to protect and enhance a rules-based order in the Indo-Pacific that respects such principles as peaceful resolution of disputes, freedom of navigation, open and transparent investment environments, and strong and responsible governing institutions.  These principles have created conditions that have allowed for so much growth and prosperity here and elsewhere in the region over the past decades, and in our view they will be critical to the region’s future as well.

I want to underscore that this is not an exclusive strategy, nor are we proposing either/or relationships for our partners like Sri Lanka.  Sri Lanka is a sovereign nation and our respect for its sovereignty and that of other nations guides our actions in the Indo-Pacific.  We fully expect Sri Lanka to build and maintain mutually beneficial partnerships with all countries throughout the region and indeed around the world, just as the United States does.  However, all such relationships should be transparent and truly beneficial to all parties involved over the long term.  Transactions that are based on naked commercial self-interest and hidden agendas that mortgage the future also undermine the long-term stability and vitality of the region.

Our goal both in terms of our bilateral relationship and our engagement under an Indo-Pacific framework is a Sri Lanka that is empowered and enabled through its partnership with the United States and for which broader growth means equal opportunities and gains for all.

What we offer Sri Lanka is a true and transparent partnership, particularly in terms of development and infrastructure.  The United States facilitates projects that make economic sense for Sri Lanka, can attract private capital, and avoid unsustainable debts.

It should not come as a surprise that we view Sri Lanka as a critical partner in the region.  The United States is Sri Lanka’s largest export market, supporting tens of thousands of jobs in agriculture, manufacturing, and service.  In addition, U.S. companies have invested more than $300 million in Sri Lanka, generating hundreds of high-quality jobs.

When U.S. companies bid on projects and win, or invest in a new manufacturing plant like the state-of-the-art Coca Cola plant in Biyagama, they bring the best technology, skills and know-how and share these with their Sri Lankan partners.  As Sri Lanka becomes a hub for information technology and logistics, the potential for U.S. investment and trade is even greater.

We want to see Sri Lanka harness that potential and create an economy that strengthens and grows through good governance, responsible and inclusive economic policy and practices, accountability, and importantly, the rule of law.

We in the United States are prepared to work with Sri Lanka to foster sustainable and inclusive economic growth.  A large part of this rests in promoting entrepreneurship and providing the brightest young minds in Sri Lanka with the space to innovate and develop ideas from concept to reality.  The U.S. embassy has supported a range of programming to this age.  USAID’s YouLead is revolutionizing the entrepreneurship curriculum in Sri Lanka and providing vocational and technical educators with new tools to inspire young Sri Lankan entrepreneurs.

Last year the U.S. Embassy partnered with the Matara District Chamber of Commerce and Industries to launch an American Innovation Hub in that city which will provide employment and leadership skills for young people and will inspire creativity, innovation, and entrepreneurship in the Southern Province through technology and engineering programs.  Such programs are results-driven and have proven effective over time.

In 2011, USAID extended assistance to Sri Lanka through an investment grants program called Biz+, which aimed to empower women in the small and medium enterprise sector and uplift the rural economy.  The program is now in its eighth year, and in that time USG assistance has leveraged private sector investment to create over 7,500 direct jobs and over 5,200 indirect jobs.  These are not one-off investments.  These are commitments that provide dividends for generations.

While we’re looking to the future we are also addressing the present.  One of our key priorities under the Indo-Pacific strategy is to accelerate private sector led economic growth including through U.S. companies that have a strong record of promoting innovation and prosperity.  The United States conducted about 1.8 trillion dollars in two-way trade with the Indo-Pacific in 2017, and the value of U.S. foreign direct investment in the region is nearly $1 trillion.  It has more than doubled over the last decade and made this the largest source of the region’s foreign investment.

To build on this promise we have launched new initiatives to expand our partnership with the private sector in the areas of energy, digital economy and infrastructure and are devoting new funding to support technical assistance, feasibility studies, and regulatory reforms in these key sectors.

We’re also in the process of modernizing our development finance capabilities.  The BUILD Act, signed into law last October, created the new U.S. International Development Finance Corporation, which will have a lending limit of $60 billion, more than double the current limit, and which in turn will unlock over $30 billion in additional funding to facilitate private sector investments in the region.  The IDFC will offer loans, loan guarantees, and risk insurance to support new investments.  They will also make equity investments and fund feasibility studies or potential investments making it even easier to collaborate with partner finance institutions.

Additionally, the United States has made significant progress towards the Millennium Challenge Corporation Compact with Sri Lanka that targets constraints to economic growth in the transport and land sectors.  The Compact, if and when concluded, will represent an investment in Sri Lanka’s future that promises to create efficiencies that lead to greater economic prosperity.  We are doing our part to bring investors here and are working with the government of Sri Lanka to create the most attractive environment possible for those looking to enter this market.

All of this is to say that there will be new opportunities to expand economic partnerships and investments and two-way trade in the Indo-Pacific, and specifically between the United States and Sri Lanka.

Your country has a hugely influential role to play in the region and stands to gain substantially from these opportunities.  For example, we are keenly interested in working with Sri Lanka and like-minded partners on assistance projects that provide high quality infrastructure responsive to the country’s genuine needs, while avoiding vulnerability associated with excess indebtedness to a single lender.

U.S. companies are already major suppliers of power generation and infrastructure and U.S. technology helps guide ships through the Port of Colombo.  The port, in fact, is one of the biggest sources of revenue for the government of Sri Lanka and a huge potential source of economic growth.  It is critical to Sri Lanka’s goal of becoming a logistics hub for the Indian Ocean.

The U.S. government has played a major role in keeping the port safe for secure shipments and trans shipments to the entire world.  Since 2005, the U.S. Customs and Border Protection Agency through its Container Security Initiative has worked alongside the Sri Lankan Customs Central Intelligence Unit to conduct joint targeting of high-risk shipments destined for the United States.  The Port of Colombo also participates in the Department of Energy’s second line of defense Megaport Initiative that helps Sri Lanka detect radiological materials and prevent the spread of radiological weapons.

For security assistance looking forward, we plan to direct $39 million to Sri Lanka to support maritime security, freedom of navigation, and maritime domain awareness as part of our Bay of Bengal Initiative.  They will also bolster humanitarian assistance and disaster relief capabilities in South Asia.

I should say critically, that initiative indeed also has an important economic component as we want to help Sri Lanka and other countries in the region govern their maritime spaces to ensure its use for lawful economic purposes and to combat piracy, illegal unregistered fishing, and smuggling.

Our two militaries also train together in many capabilities including on disaster response, humanitarian assistance and maritime security.  These joint trainings were designed to be mutually beneficial and help transition the Sri Lankan military to a peacetime force.

A state-of-the-art U.S. Coast Guard cutter was transferred to the Sri Lankan Navy at a ceremony in Honolulu in August and Sri Lanka successfully participated for the first time in the Rim of the Pacific Exercises in 2018.

Our partnership with Sri Lanka truly covers all sectors, and most importantly, is mutually beneficial, transparent, and geared towards sustainable outcomes that benefit all people for generations to come.

As the United States increasingly turns its focus to more robust engagement in the Indo-Pacific region, it also looks to Sri Lanka as a valued friend and a partner to be a leader in that process.

So I will conclude by saying that we are deeply appreciative of Sri Lanka’s partnership at all levels in these efforts, including from the dynamic business community here in Colombo.

I will stop there and be happy to take any questions that anybody may have.