By Feizal Samath
COLOMBO, Apr 21 2008 (IPS)

Sri Lanka’s government, under pressure over human rights violations, is abandoning support from traditional but rights-sensitive partners like the United States and Europe and turning to countries like China and Iran to finance its infrastructure projects.

Relations between the country’s traditional partners and the government turned frosty in recent months as the U.S., the EU and international human rights groups raise concern over growing rights violations, including the harassment of journalists.

Recently World Bank officials were told by a senior functionary of the treasury: “We don’t need your money (with all those strings).”

Foreign affairs analysts and economists say President Mahinda Rajapakse nationalist government is relying on ‘outside’ support because foreign aid in the form of grants and concessional loans comes with strings attached – which the government does not want to accept.

Last year, the International Monetary Fund (IMF) pulled out of Sri Lanka and has no programmes in this country while the Bank recently completed a series of consultations with civil society groups, including farmers and journalists, seeking input for a new three-year country strategy. The real reason however, according to a civil society activist, was to “use us to put pressure on the government because the authorities don’t listen to the World Bank any more’’.

Analysts like Nanda Godage, a retired diplomat and commentator, says there appears to be a ‘clumsy’ policy in relation to foreign affairs. “Normally the foreign ministry should have a (well researched) paper assessing relationships and the economic and political fallout (of sidelining countries like the U.S., the EU). This is missing… we need to diplomatically tackle institutions like the Bank and the IMF instead of being blunt with them.”

Sri Lanka’s foreign minister Rohitha Bogollagama and his foreign secretary Palitha Kohona are known to be at loggerheads over various issues, while Rajapakse has also independently taken decisions on foreign policy.

Another sore point in foreign policy will come to the fore this week when Iranian President Mahmoud Ahmadinejad visits Sri Lanka on Apr. 28 on the first stop of his first ever Asia tour. When Rajapakse visited Iran last year, Washington voiced concerns.

‘The Sunday Leader’ newspaper said this week that Israel is unlikely to respond to a Sri Lankan request for arms sales because of this country’s increasing ties with Iran. The paper said these concerns were communicated to Sri Lankan Prime Minister Ratnasiri Wickremanayake during a recent visit there.

Financial support from the U.S., the EU and the multilaterals has dwindled since Rajapakse won the presidential poll two years ago and ended a shaky ceasefire with Tamil rebels and ordered the troops to wipe out the rebels from their northern and eastern lairs. Security forces have been successful in the east where the rebels have retreated into the jungle and residents are facing a provincial poll next month.

But fierce fighting is on in the north amidst widespread allegations against the government of human rights abuses through abductions and harassment of the private media. The government denies all charges but is unable to dispute mounting evidence – particularly on abductions.

Analysts say with western aid tied to governance, transparency and spending discipline, conditions the government has rejected, Rajapakse has been compelled to woo ‘friendly’ countries to help the many infrastructure projects like super highways, railways, ports and airports. China and Iran have come to the country’s aid rescue with loans, albeit at commercial rates of interest.

China is funding a coal power plant and a harbour with more than 700 million US dollars, while negotiations are underway for another 450-million-dollar loan for two highways.

Iran, on the other hand, is granting 450 million dollars for a hydropower project and investing one billion dollars in an oil refinery. It recently provided a seven-month credit facility so that Sri Lanka’s entire crude oil requirement could be sourced from there.

All this is in addition to other support these two countries have been providing to Sri Lanka. Rajapakse has visited China twice in the past two years, the latest being two weeks ago. He is yet to pay official visits to the U.S. or to any of its European allies.

Jehan Perera, director of the National Peace Council and a newspaper commentator on the peace process, says that countries like Sri Lanka need to maintain good relations with larger and more influential countries. “Shutting out one section of the international community is not helpful especially when that section has had long standing relations with us,” he said.

Most analysts agree that the current government’s foreign policy may, in the short term, find solutions to immediate needs but is disastrous in the long term. Sirimal Abeyeratne, an economist at the University of Colombo, says spending discipline (conditions on loans) is necessary for countries like Sri Lanka where spending is wayward and used for projects other than the intended purpose.

Ravi Karunanayake, a former trade minister and now frontline opposition politician, believes the country is falling ever deeper into debt as the government resorts to costly commercial borrowings as against soft loans and grant aid. “We’ll be paying through our noses for generations to settle this debt,” he said.

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