October 20, 2021
Question: Welcome to the Burn Bag Podcast. My name is A’ndre Gonawela. This is the latest and the last episode in our miniseries on Sri Lanka, and I am so honored to be joined by our U.S. Ambassador to Sri Lanka Alaina B. Teplitz who has been in the State Department since 1991. She served as U.S. Ambassador to Nepal between 2015 and 2018, and she has been serving as U.S. Ambassador to Sri Lanka and the Maldives since 2018 and I believe actually, Ambassador, it’s your last two weeks in Sri Lanka, am I correct?
Ambassador Teplitz: This is true. I’m coming to the end of a three-year tour here. It’s been an interesting but tumultuous time.
Question: A very interesting and tumultuous time and we are so greatly appreciative of your service to the United States.
I guess we can get started and dive into this conversation. Ambassador, what do you see as the state of U.S.-Sri Lankan relations in 2021?
Ambassador Teplitz: The bilateral relationship is a complex and a complicated one. It’s a resilient one. And it’s one that’s not solely defined by our government-to-government connections. We’ve got people-to-people ties, business-to-business and I think when we talk about the U.S. and Sri Lanka, we sort of automatically assume it’s all government business, but really, it’s not. There’s a lot happening in those other spaces that we can either facilitate or promote, but not all of which is in U.S. government control, and I think that that’s a good thing.
Our relationship also is one that’s defined by things that we should have in common. Sri Lanka and the United States are both democracies; we both have concerns I think around maritime security; we have concerns around cybersecurity; and we have concerns about climate adaptation and the environment. There’s a lot to be working on together.
Question: So, what are ways in which the United States and Sri Lanka can actually foster closer ties? What can we do better from the U.S. side?
Ambassador Teplitz: I’d like to say we’re working hard at it all the time. This is really important. And I think there’s always an opportunity to be communicating better to the Sri Lankan public. Also, an opportunity to try and communicate better with the government too, and better understand their perspectives. That’s just sort of mainline diplomacy and how we kind of oil the gears of our relationship.
I also think that we have to look at things as they exist today in consideration of our broad range of interests. This is sometimes a challenge for us not just in Sri Lanka but all countries. We’re not interested simply in promoting investment, for example, U.S. investment. And we’re not interested simply in looking at development. We’re not interested just in good governance or a security relationship. It’s that broader array of interests and being mindful of how we advance all of those interests is something that I think can help us in our relationship and as we’re searching for those areas of common interest.
Question: Have ties been strained between the United States and Sri Lanka under the current and prior governments ruled by Mahinda Rajapaksa and Gotabaya Rajapaksa right now respectively. And also, what’s the overall arch of the relationship look like? Especially since the end of the civil war in 2009?
Ambassador Teplitz: Every relationship has ups and downs. It’s got changes in tone over time. Certainly the U.S.-Sri Lanka relationship has had that. And our challenge really is figuring out whether the enduring sets of interests and how to pursue those things through the good times and the bad times.
We do have things in common. A set of values that’s really important that should give us the ability to understand one another better and be able to collaborate around this much broader set of interests. But it is a challenge, obviously, when we do have some concerns in the relationship about the quality of governance, for example, or around commitments to inclusive economic development. These are things that we’ve got to work through. I don’t want to sugarcoat and say that everything is always fine. There are genuinely some issues that we have to work through.
Question: So, in a previous episode on this miniseries, we spoke with the State Minister for Regional Cooperation Tharaka Balasuriya, and he asserted, and I do want to talk about the MCC just for a bit because Mr. Balasuriya asserted that the Sri Lankan government declined the MCC because there was a “lack of transparency with how the previous government handled it” and that there were certain conditions, per se, with how, that this Sri Lankan government was not in agreement to. For example, they had to pay back the money allocated by the MCC and other “technical issues”, as you said.
So, are these assertions true about these conditions and these technical issues? What’s your response to these criticisms leveled by this current government official?
Ambassador Teplitz: First let me sort of frame up the context for talking about the Millennium Challenge Corporation proposed grant, which was a development assistance grant that was proposed. MCC is a U.S. government agency, development assistance agency, and operates in about 30 countries around the world.
To receive one of those grants countries, have to express interest and then they have to meet eligibility criteria which includes a scorecard on economic governance and other dimensions. We have limited resources so there’s a little bit of competition involved in this.
So, the Sri Lankan government had sought one of these grants actually for some time and the original President Rajapaksa administration going back to the early 2000’s. And finally, something was coming to fruition several years ago. In fact, the previous government began to dig into the details what that grant would look like, and finally determined that looking at ways to support land management administration and transportation would be most beneficial. In fact, the government of Sri Lanka funded a study to determine what the binding constraints were to economic growth, and those were the things that they landed on.
So, it was disappointing obviously that the grant wasn’t able to go forward. It was significant. It was $480 million to address challenges in these two areas.
Ultimately the board of the Millennium Challenge Corporation decided to discontinue the grant because of a lack of host government engagement.
So, the technical issues you mentioned, I mean the grant language is standard. It was actually published on a government of Sri Lanka web site, so it was available freely to the public for months and months and months. There was a lot of stakeholder consultation around it as well with not just government but with industry, with civil society, with academics. So extensive work was done to not only validate the choice of areas but sort of how the grant would work.
And grants are generally set up so that the host government really owns them. They form a little mini-corporation, and corporate really refers to the structure. It’s not a private entity, I mean it’s a government entity. To oversee the grant and make sure that it’s progressing. There was never any formal communication from the government of Sri Lanka that they had objections to the framework of the grant or any of the components. So again, I go back to the lack of engagement.
It’s disappointing in the sense that it was I think a real loss for a country that is still developing, that is caught in that kind of upper middle-income trap where it’s on the cusp of sort of expanding the economy but actually is still requiring a lot of assistance to make that advancement and best serve people.
It’s something that I think was kind of a blip in a 70-year relationship and we move on from there.
Question: Definitely. And sort of talking about U.S. economic aid more overarchingly and overall, is it true that U.S. economic aid is often more conditions based? Because this is the sort of claim I’ve been hearing across these interviews in this miniseries. For example, with GSP+, human rights issues are highlighted. Whereas for example Chinese aid is less conditions based.
Is this sort of an accurate assessment of these two countries and the aid programs they offer?
Ambassador Teplitz: No. I think that’s the short answer. Our U.S. aid is really not conditions based and I don’t think we ought to confuse either eligibility requirements versus conditionality. For example, going back to MCC and the scorecard which is an eligibility threshold.
But we look for certain things when we’re offering assistance. I mean the very first thing is if we’re developing programs with a host government, with the Sri Lankan government, there’s got to be an expectation of ownership. They’re identifying the priorities. We’re stepping in as the development partner to help them meet their priorities that they’ve identified probably as part of a far-reaching development plan. Then we work those programs together. We don’t just say hey, we have a good idea would you like to run with it?
Also, an alignment of values I think is really important, and our development assistance is often around technical capacity building. Not just in maybe technical subject matters. It’s not talking economics to the Ministry of Finance, but it could be, for example, helping a parliament set up oversight committees.
So, we’re interested in working together on values we share, and that could include the strengthening of democratic institutions.e
And there has to be some mutual understanding about the goals that we’re trying to achieve as well. So, we do want some alignment and at the end of the day certainly I as Ambassador and others who manage our assistance dollars, we’ve got a fiduciary responsibility to the American people. They want our assistance dollars to be spent and achieve results in ways that they’ve approved. They want to make sure that those results are happening over the course of a grant.
So, I’d say the other piece of this which is not really a condition, but it’s just the way we do business. Not uniquely. World Bank, other development partners do this. But we do our due diligence before offering a grant, and 90 percent of all of our assistance globally is based on grants. But what we’re going to look at is, is something technically feasible. Is it going to generate the result we think, like an economic return or jobs or some positive outcome. Then we’re going to monitor and evaluate over the life of that grant to make sure it is delivering, or shut it down, or rescope, or do whatever we need to do to make sure the money is well spent.
So, in that sense there’s a lot of structure to what we do on the development side of the house. That’s not necessarily true for every development partner, and yet we think it’s super important. I mean you mentioned the issue of China. I don’t know if China’s really giving assistance at the end of the day. It’s not a lot of grants. It’s not really looking at sort of the results-driven end of things. And we want to adhere to high standards. In fact, the United States, Sri Lanka, Japan, other governments have signed up to various international accords that sort of sets standards for development and I think that’s important. You don’t want to end up with maybe a bad metaphor, but a white elephant at the end of the day that doesn’t deliver and in fact costs you.
Question: Certainly. And I guess sort of following up on that question, I mean the perception is, at least from my vantage point and some others in Sri Lanka and in sort of U.S. foreign policy, sort of commentators in general, is that the Chinese are making more headway with Sri Lanka in terms of investments and economic partnerships.
And sort of following up with what you were saying, is it just perhaps “easier” for Sri Lanka to deal with China or is it just because say for example the eligibility requirements, the standards, they’re sort of less attractive. Is that sort of an accurate way to depict that?
Ambassador Teplitz: I think you’ve got to ask questions. If there’s a problem with transparency, if there’s a problem with due diligence, if there’s a problem with doing like proper feasibility work including environmental impact studies, if there’s a problem in making public the framework for such agreements, who benefits from that? Why would people be opposed to those things? Those things can only be good, especially in democratic societies where we should be accountable to our publics and taxpayers that fund these efforts.
So, I think that’s part of the challenge that is out there and maybe the easier piece of that. It might also be the who benefits at the end of the day from some of this. And looking at what do you want to do? The U.S. government doesn’t invest in a metaphorical sense in projects that aren’t going to generate real results. And maybe that’s where there ends up being some controversy. Because it isn’t about the result people want, it’s about something else. It’s about domestic politics, or it’s about an image or something like that. We actually want to produce development results, or we wouldn’t be extending that support.
Question: So, when it comes to the Sri Lankan relationship with China, we’ve definitely seen it grow over the past decade and in recent years. How does the U.S. government perceive the relationship between Sri Lanka and China? What is the U.S. government’s position on the relationship if there is a position to be had?
Ambassador Teplitz: I think that’s the important question. We don’t perceive our foreign policy in the region through the lens of what does it mean vis-à-vis China. We’re looking at the relationship with Sri Lanka and of course there are geostrategic kind of considerations but that’s not fundamentally what it’s about and certainly not over a long history, 70 years since Sri Lanka’s independence, so plenty of time to have evolved a relationship and have gotten to know one another, if you will.
That said, globally in the Indo-Pacific as well and in other regions of the world, we’ve expressed concerns about ways of doing business, and we don’t tell the Sri Lankans what to do. As a friend and partner, we’ve often expressed concerns about the openness and transparency of the deals that they’re making. More out of concerns that they become vulnerable as a result of non-transparent arrangements, or arrangements that might obligate them financially and don’t deliver any economically productive results at the end of the day. And then what leverage could be exerted against them and what that might mean, more so than anything else.
If relationships are mutually beneficial, if they’re open, if they’re transparent, these are good results. Again, particularly in a democratic society. And often we find that the PRC’s arrangements are opaque and not necessarily mutually beneficial.
In the end, depending on where one sits, and can take a look at that.
I think another piece of this in terms of, again, how we would approach sort of whether it’s development work or business work, we’re big on public/private partnerships, we’re big on letting opportunities grow organically to a certain degree, and that’s not really part of I think the future of other relationships. That makes it hard then to mesh up our different ways of looking at things.
Question: So, when it comes to these loan agreements that have made quite a lot of news in the U.S. at least, there have been many articles in the U.S. media outlets about them. Is there enough transparency around both the loan agreements and perhaps some of the more foreign direct investment programs that have occurred between Sri Lanka and China?
Ambassador Teplitz: There’s not a lot of transparency around the loan agreements. Most of these texts aren’t public. Often the PRC is asking countries to sign non-disclosure agreements so they can’t reveal loan agreement details. So, it’s highly problematic.
I mean it would be very difficult for anyone, not just speaking from the U.S. government perspective, but if I were a Sri Lankan wanting to assess whether the agreements being entered into render some benefit or if they are going to cause problems down the pipe. So that I think is difficult. And it’s difficult to assess the true value of projects. Was it really what it cost? Then what’s the ROI on that? At the end of the day that’s challenging.
I also think we have to look at kind of investment and ask questions or maybe just better define what that term means. When we, the U.S., talk about investments, often we do mean it, it’s literal in the sense that we’re putting money on the table maybe in the form of a development grant, but it’s kind of a metaphor. We don’t really expect anything in return other than hopefully the good results from the program that we are funding. There aren’t quid pro quos on the table in that sense.
And U.S. companies might come in and make investments, genuine investments where they put their money on the table and they’re looking for partnerships where they can build a business and presumably profit from that.
I think investment is kind of misapplied to other arrangements that might actually turn out to be loans, where you might have the Sri Lankan government in fact that has taken out a loan to invest in its own development. So, it’s not necessarily that country investing in that development, maybe they’re facilitating.
But that’s where good decision-making on the part of the government is also essential. So again, coming back to these loan agreements and not necessarily knowing what they provide for, you know, are the policy decisions good in advance of signing those agreements? And are they going to yield the results that people are expecting or are people going to be left holding the bag?
Question: I think it’s so important that you distinguish between the loans and the actual investments that are occurring, but when we look at the Belt and Road Initiative linked investments and projects, are those fair per se? If many of these are linked to Chinese contractors, for example, are they actually fair to the Sri Lankan firms on the ground?
Ambassador Teplitz: That’s a really good question. A lot of the tendering procedures related to these programs or projects are again, non-transparent. Were potentially not even open to broader competition. There were requirements perhaps that the country providing the money, those firms are selected. There’s not really a true kind of private sector I think in the PRC, so you see loans coming from that source being tied mostly to state-owned companies. So, you’re not seeing private deals taking place. That’s not necessarily really investments.
There is some BRI activity in Sri Lanka that might not be all bad. You’ve got an expressway that’s really important, going to help open areas of the country to tourism, but you don’t know how much that expressway costs. So, there’s really no way to kind of measure whether the return equals the expense.
There’s also kind of efforts to build investment that isn’t around that kind of infrastructure. The Port City which is not a port. It’s intended to be a financial city but it’s reclaimed land. And this was something that CHEC China Harbour Engineering and some of its subsidiaries put money into to develop. Right now, it’s basically a big sand bar.
But for example, the legislation that’s meant to define this special place is really troubling. It could potentially open the door to corrupt practices, to money laundering and other activity that is going to not just impact what happens in that space but perhaps spillover into the Sri Lankan economy and affect Sri Lankan companies.
So I think there are a lot of questions, and some of this just means that countries really need to think through how they’re going to approach all of their partners, and what kind of arrangements they’re comfortable with, and what disclosure has to be on the table and what’s in their best interest at the end of the day, and what are those sort of kind of loopholes or fine print that are going to get them in trouble?
Question: You mentioned this is an earlier answer and you sort of alluded to it right now, to talk about whether some of these agreements and these arrangements are mutually beneficial. So, in your view, Chinese investments, have they generated economic benefits to the average Joe in Sri Lanka? Or has it largely benefited the elites? Who is it really helping out here?
Ambassador Teplitz: Again, it’s hard to determine because there’s not a lot of transparency around amounts of loans or terms and conditions surrounding any given project. But I see a lot of projects sitting around that were developed with funding that the government of Sri Lanka obtained from the Chinese government and that aren’t generating revenue.
So, I have to draw the conclusion that, the broad-brush answer is yes, there are projects that are not sort of benefiting the average Joe on the street. Hambantota Port is one that’s often raised as an example, but I think even better is to consider that developed around the same time was also an airport, a hospital, a cricket stadium, a telecommunications tower in Colombo called Lotus Tower. These things are either under-utilized, or in the case of Lotus Tower completely empty, and yet the government’s on the hook for paying back those loans.
So, they’re not revenue enhancing. They’re not generating the income and the jobs that everybody might have expected from them. Did this come from poor feasibility work or somebody just kind of getting ahead of themselves? I don’t know. But you can clearly see that there are projects that really didn’t deliver results. Maybe they will in the future, but they’re not doing so today.
Question: You mentioned the Hambantota Port. We’ve heard a lot about that in the U.S. media and a lot of foreign policy conversations that have been occurring, and there’s a lot of discussion that centered around the 99-year lease that Chinese entities have over the port. What concerns specifically does the U.S. have over the Hambantota Port?
Ambassador Teplitz: Just thinking about the region, Sri Lanka sits next to the major shipping lanes that crisscross the Indian Ocean. Eighty percent of the world’s container traffic passes either by or through Colombo and past Hambantota as well. So certainly, there was an economic opportunity that the Sri Lankans were seeking to seize in developing Hambantota, which is a little closer to those shipping lanes than the Colombo Port which is on the other side of the island.
The port was developed, and it was obviously developed with support from PRC companies and now there’s this lease arrangement. The issue becomes what else might be happening in those spaces and what leverage the PRC might have in its relationships with Sri Lanka that could kind of accrue benefit that would either lead to something that’s militarized or would become problematic.
There’s been a lot of research done by think tanks going back for years, and the study I can think of is the Harvard study from a couple of years ago that discussed port development across the region. Hambantota could be one of those places.
That said, I think the Sri Lankans do obviously have an economic need to develop that port and make sure it’s going to work. So, they’ve got to find a partner that is going to work for them and have some control over that asset, not only from a national security perspective but just from an economic perspective so that they can make sure that it’s going to deliver for them.
Question: Touching on the Hambantota Port and some of these other investments and some of these other basically projects that have been occurring, do aspects of China’s relationship with Sri Lanka, do they raise concerns within U.S. government circles about Sri Lanka’s sovereignty?
Ambassador Teplitz: Yes. Frankly, they do. And the American approach, the U.S. approach, is one where we would like to see countries able to fully exert their sovereignty over their territory, over their exclusive economic zones particularly in the maritime space. This is essential. And projects that maybe don’t obviously infringe on a country’s sovereignty can do so in maybe kind of back doorways.
I come back to the potential for leverage. If a country, it may not even be majorly indebted to another bilateral partner but the agreements that they signed have onerous requirements in them or would lead them to negotiations to hand over assets or offer special rights to do things that wouldn’t really be in their national interests but now they’ve become obligated to. That leverage can be really dangerous to a country’s sovereignty, and this is where transparency in development work or in business investment or whatever is really essential to avoid these arrangements or again the fine print that might not have been obvious.
And the more vulnerable a country, the less well performing the economy, or the higher the debt loads, obviously leverage can be exerted with more force. So that would be very worrisome.
So, it’s not to say that any given project I think is in and of itself a threat to sovereignty, it’s when it begins to accumulate and you kind of look at the whole context to a country and what they’re going to need to get out of these programs and projects.
We haven’t quite touched on this yet, but the Sri Lankan economy is not in good condition. Their credit rating is kind of the lowest of the low right now. Nobody’s really going to lend money to them, not very credible lenders. So, they’re in a vulnerable place. It just might become difficult to defend sovereignty in not just kind of a literal sense but an economic sense as well.
Question: I will return to a question on Sri Lanka’s economy towards the end of the interview, but I just want to touch on a couple of other things very briefly.
You did mention that obviously when we look at our relationship with Sri Lanka, we’re looking at the relationship with Sri Lanka, not necessarily in the context of U.S.-China relations. But can you sort of speak to how Sri Lanka perhaps fits into the broader nature of the U.S. Indo-Pacific strategy?
Ambassador Teplitz: Maybe that’s a good way to frame that. When we’re talking about our Indo-Pacific strategy or our vision for the Indo-Pacific it isn’t about choosing sides. It’s really a discussion about buy-in to key principles and of like-minded countries coming together around those principles and in support of those principles. This could be things like dispute resolution, free and open trade, or unhindered air and sea navigation. It’s very important international norms that allow in fact countries to protect their sovereignty, but also allow us to kind of get along, and for international commerce to proceed in ways that are going to generate the growth and development we want to see in all countries. The prosperity that we’re looking for.
So, when we think about the Indo-Pacific vision, Sri Lanka’s obviously kind of at the heart of some of that given its geography, its geographic location next to these shipping lines. And maybe that’s the best example I can also offer of why the principles we talk about in the context of the Indo-Pacific vision are so important and should be also to Sri Lanka. Freedom of navigation is essential to facilitate the container traffic the cargo traffic that is the lifeblood of Colombo Port and something that Sri Lanka wants to cultivate even more of as it’s developing Hambantota and potentially expanding other port capacity. But without that right, that privilege that can be safely asserted, their economy is at risk. It also risks our global supply chain and our ability to ship our goods and services. And the United States is actually the largest single country export destination for Sri Lanka. So, this is an important part of our bilateral relationship is the ability to ship the goods produced here to the United States.
So, when we talk about this principle it’s not a vision that should exclude anybody, it’s a vision about principles that should be most meaningful to us in the sense of our sovereignty as countries. I think, again, it’s been easy to kind of take something that has a title – Indo-Pacific Vision or Indo-Pacific Strategy – and turn that into something that’s heavily politicized when the content itself is actually something that we can all agree on. And in the case of Sri Lanka, we do work together on maritime security. We have interests not just in facilitating freedom of navigation but in interdicting international illicit traffic, and whether that’s trafficking in people or smuggling of drugs and guns and what have you, we collaborate around that too. Looking at illegal fishing, looking at all of the things that concern us in the maritime space.
So, we’ve got the collaboration happening in real time and sometimes the rhetoric deviates from that a little.
Question: You mentioned supply chains, and just for our audience, I’m sure we all realize the importance of supply chains right now as we sort of face this economic moment. But another question is South Asia is somewhat notorious I guess for being one of the least integrated regions in the world. Are there more opportunities for integration, for regional integration in South Asia?
Ambassador Teplitz: Absolutely. And you noted I’ve previously been Ambassador to Nepal. This was something I talked about frequently when I was there as well. The untapped economic potential in South Asia is huge. I mean it could be a driver of prosperity not just for the countries of this region but globally as well for their trade partners and some mutual investment that could be generated. So, there’s big potential.
I think Sri Lanka already is sort of at the heart, again, of some of that because Colombo Port is a transshipment port for a lot of India. It’s a deep-water port and so container ships come here and disburse their cargo to many smaller ships that head off then back to India or over to Bangladesh.
There’s obviously more potential for that and vice versa, for goods that are manufactured there to be consolidated in shipping here and then sent off to its destination. Port capacity would obviously have to be expanded and everything would have to work out, and the Sri Lankans in fact have facilitated an arrangement with an Indian company to develop their Western container terminal in the Colombo port, so some of that is already underway. There’s probably also great potential for regional electricity and energy sharing. Sri Lanka doesn’t share a land border but restoring sort of ferry service or even road connectivity with India which is to facilitate commerce. Air connections. The Sri Lankans are reestablishing an air route into India that had been shut down for a while.
So that kind of thing can grow and if countries can find ways to negotiate to renew some of the tariff and non-tariff barriers to facilitate that trade and connectivity, I think they would really only benefit. This is not something the United States is going to accomplish; it’s really going to take the countries of the region being committed to this. But we can certainly try and facilitate buy-in, encouraging and providing technical assistance where it’s asked for to make that happen.
Question: What opportunities for security cooperation exist between the U.S. and Sri Lanka? Have we seen security cooperation be elevated between Sri Lanka and China?
Ambassador Teplitz: Between the U.S. and Sri Lanka, the first thing I’d say is our security cooperation really does exist in the context for a concern around democratic governance and human rights and we take a holistic view of all our engagement along the whole spectrum of our various interests. And there is security cooperation. I just mentioned maritime cooperation for example where we work with the Sri Lankan Navy. We do some joint exercises also with other navies in the region to support patrolling of the maritime space and make sure that various services are trained in how to maybe board boats or interdict sort of illicit activity.
The United States has provided in the past two excess U.S. Coast Guard cutters to the Sri Lankan Navy. In fact, the last one is right now the biggest ship in the Sri Lankan Navy’s fleet. And it’s done more than just kind of deal with what’s illegal out there. It’s also been key to response to maritime disasters, and that’s a whole other dimension of I think the challenge in looking at a busy commercial world where you have a lot of ships going back and forth, there have been two very near disasters to Sri Lanka that have leaked oil, where there have been fires. The last ship exuded these nurdles which are little plastic pellets that ended up on beaches. And the Navy, the Sri Lankan government’s ability to respond to those disasters is really important not only for Sri Lanka’s well-being but for nearby countries as well. So, our engagement has also been in that sort of humanitarian disaster assistance, disaster response phase also. And I think it’s important to be able to continue that. If we want to have partners we’ve got to work together. We need to figure out if we can exercise together and have some joint capabilities. So that’s an important part of it.
On the other hand, we’re also very thoughtful about who we engage with and why and we want to make sure that we’re always engaging in ways that are consistent with our values.
Question: So, in 2021 we saw the inauguration of President Joe Biden. We also saw President Trump’s administration take a lot of initiative and action with regards to Sri Lanka. We saw Secretary of State Mike Pompeo visit just I think a week before the U.S. elections actually, which I thought was very interesting.
But has there truly been a shift in U.S. foreign policy towards Sri Lanka? We often think of two presidents as being politically different, but some things are fairly consistent. So has there been a shift?
Ambassador Teplitz: Some things are fairly consistent. I mean every administration has an emphasis, a certain set of priorities. But what we have been working to achieve with regard to Sri Lanka and in some extent the broader region, really has transitioned not just from the last administration to this one but across multiple administrations. So, it’s been transparency, it’s been economic development, it’s been concern for human rights, it’s been looking at quality development standards. It’s been an evolving Indo-Pacific vision. These are all things that we continue to work on and are looking at ways to expand engagement.
President Biden has announced his particular emphases and of course one of them is the environment. So, looking more at climate adaptation and the environment is something we’re focused on now, and post-pandemic recovery. When we’ve reached the end of this experience, that’s going to be I think a challenge globally, something we’ve obviously focused on in providing pandemic assistance, but it’s become a necessity as we look at the impact on economies across the globe.
Question: The end of Sri Lanka’s civil war was quite controversial, and the United States has promoted some initiatives for accountability. We saw some conversations occur in the United Nations just last month, actually, about some of the human rights allegations against Sri Lanka.
So, can you sort of outline more specifically what is the United States government doing to promote accountability for controversies that abounded at the end of the Sri Lankan civil war?
Ambassador Teplitz: Just to also frame this, I mean during the 30-year civil conflict that ended in 2009 but even after the conflict we have asked the government of Sri Lanka invest itself in reconciliation and also to pursue accountability for allegations of gross violations of human rights and any other criminal acts.
Sri Lanka does, at various points in its history have had these episodes and so I wouldn’t say that our concerns around human rights center just around that time period. There are early examples of enforced disappearances and other problems. And those are equally problematic and things that I think for Sri Lanka’s sake and the sake of the Sri Lankan people, addressing these things is going to certainly make for a healthier and more stable future.
So, with that said, we have encouraged the government in accordance with its international obligations and its domestic obligations to address these issues. And I feel that fundamentally the democratic government that is accountable to its people should be willing to genuinely and credibly investigate and adjudicate criminal allegations. I mean that is a bottom line in the rule of law and something that the Sri Lankan government I hope comes to the point where they would very fully embrace that. That has been the subject of conversations at the UN Human Rights Council, of observations made by Human Rights High Commissioner Michelle Bachelet and many others. Those who are in the international human rights NGO community, governments, not just our own, about some of the challenges here in Sri Lanka.
It’s a very tough question because I think it’s very emotional when you talk about issues of accountability. Families of the disappeared, they deserve answers about what happened to their family members. People who were the victims of unlawful acts deserve some justice at the end of the day. And in the end, democratic societies, this is kind of our baseline.
So, we do talk about that with the government of Sri Lanka. We talk about other concerns on human rights as well and look at kind of that broad array of human rights issues. But I think this particular challenge because it goes back to multiple points in Sri Lanka’s history, because it is such a sore in relationships and kind of rightly so. It’s something that has to be healed and it can’t just be covered over. It speaks to a culture of impunity that’s fundamentally corrosive to Sri Lanka’s democracy and that’s something Sri Lankans have to address and have to be willing to kind of confront and look at openly. We can encourage, we can continue to keep a spotlight on this set of issues. We can continue to in fact try and facilitate measures of reconciliation, but Sri Lankans are really going to have to embrace this and own this. It’s a challenge that they have to solve for a better future.
Question: Does a lack of movement towards accountability and a discussion on human rights on the Sri Lankan side at least, does it hamper the U.S.-Sri Lankan relationship? And could this perhaps hamper engagement in other areas such as economic relations?
Ambassador Teplitz: It’s certainly an issue around which we do not always agree. And in that sense, we have very hard conversations related to this particular topic. Again, in our foreign policy and our engagements abroad, we’re leading with our values on these issues. Not only are we committed to solving these problems for ourselves in the United States as President Biden laid out in the Interim National Security Guidance, but we want to see our partners also being able to address these challenges. And in a country again that is a democracy, I think it’s essential that all of the people, all of their rights, all of their civil liberties are respected all of the time.
And I’d point out too, that I think the dimensions of the problem are simply not Tamil and Sinhala one. We haven’t really gone deep into the details of sort of what that 30-year conflict is about. There are multiple communities in Sri Lanka and there are challenges along various dimensions. So, this becomes a much more fundamental question than simply one relating to the conflict era. And it’s not a question we as Americans are really going to shy away from. It’s fundamental to who we are and how we’re going to engage. And our understanding also of how societies can grow and prosper. Back to linking to economic results, if you can’t get kind of the politics and the governance right it’s really hard to get the economics right and to see inclusive, equitable economic growth as a result.
We also look at Sri Lanka, again, across that broad spectrum of interests. We don’t compartmentalize but we do understand that our interests are linked and back to our earlier discussion about some of the security relationship. We don’t engage with military units, for example, that might have allegations against them, unadjudicated allegations that have been made against them for wartime conduct. We do ensure that our engagements adhere to strict human rights principles and norms. And I think we would not be true to ourselves as Americans if we didn’t engage that way and make sure that our partners understand our perspectives.
Question: So now looking to the future, we saw a recent deal signed between the United States based New Fortress Energy company and Sri Lanka. Is this indicative perhaps of further U.S. engagement with Sri Lanka economically? Especially as China, for example, has longstanding dominance in the energy sector?
Ambassador Teplitz: The New Fortress Energy project as it comes to fruition, this is a great example of genuine investment. It’s a well-regarded, well known U.S. company, independently pursuing a business opportunity and bringing their own money to the table. There are no sovereign guarantees, there’s no kind of government facilitated loan. So, in that sense it presents the opportunity for the Sri Lankans to show that they can be investment ready and that they can work with an array of partners.
I think one of the weaknesses of the Sri Lankan investment environment is that they don’t necessarily have a broad array of investment partners and they really need to show that they welcome investment from all corners so it can send those positive signals at the end of the day.
Question: How does a trade deficit between the U.S. and Sri Lanka, how does that affect economic ties?
Ambassador Teplitz: It doesn’t really. Clearly there’s a trade disparity with Sri Lanka sending many more goods to the United States than the U.S. exports to Sri Lanka. But the relationship continues to grow and evolve, and we do have Sri Lankan investment in the United States and we’re looking for more investment in this direction, New Fortress Energy is just one example.
I will say that U.S. investment in this direction has been stagnant over the last several years. That’s disappointing and a situation I’d like to see change because I know there’s so much potential here. There are a lot of businesses that would be eager to have relationships with U.S. companies which are known for helping with technology transfer, they hire local people, they adhere to high standards of environmental concerns and worker safety and health. So, we have a gold standard in terms of our business relationships.
The investment environment in Sri Lanka is a little bit of a challenge. They kind of rate in the bottom half of all the indexes, whether it’s the Corruption Index or Ease of Doing Business Index. So those are things they’re going to have to address.
We’ve been very clear about what would be helpful to address to attract investment and that certainly would extend to transparency in government decision-making. It would extend to things like predictability in regulations, contract enforcement, the basics. It would certainly make this a more attractive destination.
So, in that sense the private sector is kind of just deterred on the face of the difficulty of the environment, the risks inherent in the environment. It’s not necessarily a feature of an efficient trading relationship.
Question: What’s the appetite actually look like among U.S. investors, perhaps looking to do business in Sri Lanka? You talked a bit about how they’ve been deterred by the environment that’s been set, but have some of the tense political situations over the past few years, some of those political events, has that significantly deterred new investors from going to Sri Lanka?
Ambassador Teplitz: I’m sure it’s a combination of factors. Companies are going to assess their risk and potential exposure in a given environment. You referred to some political events. There was in late 2018 a constitutional crisis that lasted for about 50 days, and just a couple of months after that there was a devastating terror attack that occurred in Colombo and Batticaloa targeting hotels and churches.
These are events I’m sure investors take note of and want to see some predictability and stability in the environment that they’re dealing with, but that regulatory aspect, that sort of ease of doing business component, I think it’s probably the preponderant part of that equation. Investors want to see that they can make a return and it doesn’t cost them more than they can afford to make that investment. So, the welcoming business environment, just doing things like having a single window to streamline permits and approvals. It’s that kind of thing that I think is going to make the difference. And as we’ve suggested to the government of Sri Lanka, you have a lot of global competition. U.S. investors have choices. We’d like to see U.S. investors here because we think there’s potential, and potential in the region and we have history of people-to-people ties and business-to-business ties, but clearly there’s more opportunity that right now could be seized.
Question: Sri Lanka’s economy, as we mentioned earlier and throughout this episode is frankly in dire straits right now. But the Sri Lankan government does not still deem it necessary to go to the IMF, the International Monetary Fund. Do you think Sri Lanka’s economy can rough it out through the crisis? Or do they need IMF aid? Would the U.S. sort of suggest that IMF aid be sought out?
Ambassador Teplitz: Dire straits is a good way to maybe describe the economic situation. It’s not good and it’s driven by much more than just the pandemic. There’s been some poor policymaking that has seen import bans instituted, price controls, policies that have cut into government revenue, a lot of things that have contributed to the poor situation, compounded by debt sustainability. So, is the IMF really the only option? It’s certainly the best option on the table and maybe the only viable option.
The IMF was formed initially to not just end poverty but also support financial stability globally, and Sri Lanka’s an IMF member country. They should avail themselves of the technical expertise certainly of the IMF. This is something we have urged the government of Sri Lanka to do, to go to the IMF.
You noted former Secretary Pompeo’s visit. It’s something he raised during his visit, urged the government even then, a year ago, to consider going to the IMF for financial support but also again that technical support.
This has become a heavily politicized issue in a country where foreign interference or the trope of foreign interference is something that kind of generates votes and it’s been politicized, I think kind of dangerously because the country really does need to find a solution out of its economic situation. And while I think it’s a thing of the past to equate IMF and austerity in people’s heads, that’s kind of old versions, there are going to have to be tough political choices and putting together a plan or a program to engage in economic reform with the IMF. It’s maybe going to take some political will. It’s really going to be necessary. You can’t run an economy on Swap lines alone. You’ve got to have something that’s sustainable, something that will be a seal of approval to investors.
Question: So, what type of COVID related aid is being provided directly to Sri Lanka? We’ve seen COVID really take a hit on this economy. And we’ve seen China provide a lot of Sinopharm vaccines to Sri Lanka. What’s the U.S. doing?
Ambassador Teplitz: Globally the United States has put forward about $9 billion to support addressing the pandemic across the world. This includes almost 200 million doses of vaccines globally. In Sri Lanka the U.S. government has provided about 2.4 million doses of Pfizer and Moderna vaccine free of charge through the COVAX facility. I would note there is Sinopharm and Sinovac here. Some of that was purchased by the government of Sri Lanka. Our donations have all been just that, donations and free of cost.
In addition, we’ve provided about $18 million worth of other assistance, whether it was in kind like ventilators, rapid assessment test kits, PPE, and then other support to help the government message on public health measures and awareness and in fact even to help them clean up polling places after the last elections, do things like that so they can manage better in the pandemic.
So, we’ve been aggressive in addressing the public health needs in Sri Lanka, and it’s not a sector that we’ve worked in recently. The U.S. used to be a development partner in that space. In fact, we helped Sri Lanka end malaria here which had a good outcome I think for everybody. While we were able to surge back into the space because of partnerships we’ve developed over time and obviously our commitment to trying to combat the pandemic globally.
Question: So, as we begin to wrap up this conversation, how does the U.S. government view the state of democracy in Sri Lanka?
Ambassador Teplitz: That’s a loaded question. [Laughter]. I note that Sri Lanka is South Asia’s oldest democracy and there are obviously strong traditions here and I think a genuine desire among people to pursue those traditions, retain those traditions. But like many countries, Sri Lanka has seen its institutions tested, seen some of its values such as freedom of speech threatened, to a certain degree. We see a really solid election process happening and yet we see demonstrators that are being dispersed or potentially even detained.
So, there are some challenges with the state of democracy here and we do have concern around the strength of democratic institutions and around the civil liberties that all people in Sri Lanka should be enjoying to the fullest.
Michelle Bachelet, the UN High Commissioner, highlighted a number of these challenges in her statement. You noted conversations in September but going back to March and the UNHRC session then which resulted in a resolution regarding Sri Lanka, 46/1. She noted, of course, harassment of human rights defenders, journalists, some harassment of families who have disappeared, some of the challenges in judicial proceedings, concern about militarization of civilian functions. And while I don’t want to paint the picture that Sri Lanka is a place on fire, because that I think is not true, there are governance quality issues, rule of law issues that really raise questions for people and raise questions among Sri Lankans. Fundamentally, Sri Lankans have to own their democracy. It has to be something of their making, and we can certainly offer our observations and our support. And I mentioned for example earlier some of the work we have done with parliament in helping establish oversight committees.
We continue to want to be a friend in spaces where we’re welcome to support Sri Lanka’s democracy, but this is something that when we look at international conventions, Sri Lanka has joined the Convention on Civic and Political Rights where we feel maybe there’s room to improve in terms of the quality of the governance that we’re seeing.
We hope that that’s something that we can work on together as two democratic countries. Again, we should share some values in common. There are things that we can collaborate around, and we’ve collaborated in the past and maybe we can do so again in the future.
Question: My last question, especially significant since you’ll be wrapping up your time in Sri Lanka very shortly. What do you hope to see with regards to the U.S. government’s engagement with Sri Lanka in the years ahead? What do you hope this relationship produces in the years ahead? And what can we in the U.S. do better?
Ambassador Teplitz: We talked earlier about effective communication and sort of mutual understanding. We have to consider the long arc of the relationship. You noted this yourself. We have 70 years of history. We really can’t think about that to the exclusion of the future or our future interests or the exclusion of generating frankly practical and meaningful results for the Sri Lankan and the American public. That’s fundamentally what our end goal should be about, our diplomacy should be about, is making things better for the American people and hopefully for our partners as well.
If there’s a long arc along history in the past, we have to assume there’s a long arc going forward. So, coming back around to your question what can that look like, I think we have a lot more space to collaborate on some of these governance issues and looking at rule of law and looking at ways to strengthen institutions here, and to do so in ways that are not necessarily adversarial. That obviously relies on the government of Sri Lanka being willing to shift some of its stances, but I think if we think about this in the terms of broad international commitments, think about them in terms even of the sustainable development goals, particularly goal 16. These are the kinds of things that we can collaborate on. It’s just going to take some probably long talking to get to that point.
But really importantly, I think that relationship of the future also has to look at the other kinds of connectivity. Business-to-business, people-to-people. We live in a world that’s very global where we can communicate with one another in an instant and where you and I can talk to one another and be halfway around the planet and yet see one another. Our futures are not completely constrained by what two governments agreed is going to happen. And the future I think is really around what people decide to do and sort of take into their own hands. And whether that means studying together, doing business together, or family relationships that span the globe, that’s what our future’s going to look like so we should be in a position to be facilitating that engagement, making it positive, making it durable and making it something that leads to prosperity and peace. I think that’s what most people want at the end of the day. I don’t think the American public is really hoping for much different.
These are things that we have to think several steps ahead about how to get to that space and how to find that future where we can work together seamlessly on multiple levels.
Question: Ambassador, thank you so much for joining us today for this hour-long conversation. It was very insightful, very in depth and thank you so much for providing direct answers to so many of my questions. I really appreciate it and we want to thank you for your service to our country. Thank you so much.
Ambassador Teplitz: Thank you, A’ndre and thanks to Ryan as well.
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