Beijing says that sales ‘seriously’ violate one-China principle and 3 China-US joint communiques

China on Sunday deplored and “firmly” opposed US arms sales to Taiwan, saying it “seriously” violates the one-China principle and the three Beijing-Washington joint communiques.

A Chinese Foreign Ministry spokesperson said that Beijing has lodged “serious” protests to the US over the latest arms sales, according to the state-run Xinhua news agency.

Washington on Saturday announced that it has approved $385 million worth of arms sales to Taiwan.

“The US arms sales to China’s Taiwan region seriously violate the one-China principle and the three China-US joint communiques, especially the August 17 Communique of 1982 and China’s sovereignty and security interests,” the spokesperson said.

The decision to sell arms to Taiwan is simply inconsistent with US leaders’ commitment of not supporting “Taiwan independence,” Beijing further said.

“We call on the US to immediately stop arming Taiwan and stop abetting and supporting ‘Taiwan independence’ separatist forces in seeking ‘Taiwan independence’ by building up its military,” the spokesperson said, adding: “China will take strong and resolute countermeasures to firmly defend national sovereignty, security and territorial integrity.”

Source

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London, (16/11 – 57)

Sri Lanka President Ranil Wickremesinghe has laid out the bankrupt country’s budget for 2024, drawing mixed reviews as he strives to meet the demands of an International Monetary Fund bailout program without sowing further public resentment ahead of expected elections.

Some observers applauded the proposals, not only for what they included but also what they did not, no new taxes on top of hikes already announced. But others expressed concern that the budget seemed designed to placate certain voters, and only temporarily, while not doing enough to help the struggling masses.

Sri Lanka’s election-year budget was presented on 13 November, and it straddles line between IMF and its voters. The 2024 plan is praised for ‘sticking to reform,’ but criticized for the apparent contradictions not doing enough to help the struggling masses.

Wickremesinghe unveiled the budget on Monday, announcing his government’s plan to increase tax revenue to 3.82 trillion rupees ($11.67 billion), up from this year’s estimated 2.6 trillion rupees. Two weeks ago, the government had announced a value-added tax (VAT) increase to 18% from 15%, effective from January, as part of efforts to meet targets set by the IMF.

The fiscal deficit target is estimated at 2.85 trillion rupees, or 9.1% of gross domestic product, higher than the revised 8.5% of GDP for the current year. “We are aware of the difficulties faced by the people of this country. The path toward a stable and developed economy is not beautiful. It is difficult, hard and challenging,” Wickremesinghe said in his budget speech, following a recent uptick in protests demanding salary hikes to overcome high living costs.

The president described a country at a crossroads as it attempts to climb out of bankruptcy. “If we successfully navigate through this challenging period, we can create a free and decent society. Instead, if we continue to build sand castles by giving relief to the people based on political motives, the country will again be bankrupt.”

Still, Wickremesinghe proposed new relief measures for civil servants and pensioners. The plans call for handing out an additional 10,000 rupees in cost-of-living allowances to 1.3 million government employees, while raising allowances for 730,000 public pension recipients to 5,025 rupees from the current 2,500 rupees.

Sri Lankans are reeling from an economic crisis that has driven up the costs of essentials, although inflation has slowed.   Meanwhile, in a nod to the IMF, Wickremesinghe proposed a massive 3 trillion rupee allocation for foreign debt restructuring and the settlement of international sovereign bonds under the program. After Sri Lanka defaulted on its foreign debt in 2022, the fund came to the rescue earlier this year with a $2.9 billion bailout.

The country failed its first review of the program in September, but reached a staff-level agreement to unlock a new tranche last month.

According to Wickremesinghe, under the debt restructuring supported by the IMF, public debt is expected to decline from 129% of GDP in 2022 to 95% by 2032. He emphasized the benefits of this shift toward sustainability — greater macroeconomic and financial sector stability — for the nation of about 22 million people.

Wickremesinghe reported that reform measures implemented over the last 18 months have already resulted in significant improvements in Sri Lanka’s macroeconomic position. A primary budget deficit of 5.7% of GDP at the end of 2021 turned into a primary budget surplus in the first half of 2023, he said. Tax revenue grew 50% in the first six months of 2023, despite a deep economic recession. The inflation rate has dropped from 70% in September 2022 to 1.3% in September 2023, and foreign exchange reserves have recovered to above $3.5 billion.

“The economy is being healed due to the correct procedures and methodologies we followed during the past year, building the foundation of this system,” Wickremesinghe argued.

The budget receives much of both applauses and criticism.

Murtaza Jafferjee, chair of the Colombo-based Advocata Institute think tank, praised the president’s budget. “He is sticking to the reform and economic restructuring pathway and is not being excessively political,” he told Nikkei Asia. “This is the kind of budget that we always needed, and the language is not sugarcoated and it is factually correct.”

Mujibur Rahman, a member of parliament representing the opposition Samagi Jana Balawegaya alliance, pointed out what he sees as an inherent contradiction in the plan. “From January, they are increasing VAT, which means the cost of living will increase further, and at the same time they say they will increase the allowance for government workers. So, he is giving from one hand and taking it from the other.”

Sunil Adihettige, a driver employed by a private company in Colombo, was also disappointed. “I was hopeful that the president will announce some relief so that the prices of food items and our monthly bills will reduce. But he only said government employees will be getting a salary increase, but as we are in the private sector, we won’t even benefit from this.”

“Overall, businesses were significantly affected by extensive taxation, but people are adjusting to these increases as they had no other choice and also because they understood the country’s situation,” said Imtiaz Buhardeen, an entrepreneur and investor in Colombo. “The only fear was the possibility of additional tax increases on Monday, but it’s a big relief that there are no new increases.”

Ranjan Jayalal, a trade union leader, suggested the support for government employees was little more than a ploy. “The allowance is expected to be paid from April onwards, but after another couple of months, there will be elections, and then everything will change,” he said.

The next election must be called by September 2024.

Jayalal added that poor people are facing such hardship that many don’t even switch on the lights in their homes due to high electricity costs.

Source

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Sri Lanka is still dealing with the aftermath of its most devastating economic crisis since independence, a government without popular support and intensifying geopolitical competition in its neighborhood, a year after the Sri Lanka’s massive unrest. Known as the Aragalaya protests which were spurred by the economic crisis, the protests led to mass resignations across the government with former President Gotabaya Rajapaksa fleeing the country in July 2022.

In the year since, the country has secured an IMF agreement, and its economy has ambled toward a slow path of recovery. However, there have still been concerns on the human rights front as the current government of Ranil Wickremesinghe has clamped down on further protests and continually postponed elections.

Sri Lanka’s economy appears to be making a slow and steady recovery, but its governance challenges must be addressed to sustain the momentum. Its domestic politics, economics and foreign relations have evolved one year after the country-wide protests.

The government of Wickremesinghe, who was elected president by the Sri Lanka Podujana Peramuna (SLPP), the party of the once politically dominant Rajapaksa family, is engaged in sustained efforts to enact repressive laws that stifle dissent and curtail the freedoms of media and civil society. Since parliamentary elections have not been held in the aftermath of the political crisis the current government is the same as the one headed by Gotabaya, the only difference is that Wickremesinghe is the president. Although the conditions of the IMF bailout package have pushed the government to propose some reforms, such as a new anti-corruption law, the lack of political will makes it unlikely that these initiatives will precipitate change in government behavior. Particularly since those in Parliament are the very same people who were part of the Gotabaya Rajapaksa regime and responsible for the multi-dimensional crisis with which Sri Lanka is still grappling. These parliamentarians have been reportedly demanding ministerial portfolios from Wickremesinghe to continue their support to him, thereby demonstrating the ongoing corrupt political culture and lack of accountability.

The military continues to acquire land in the north and east to expand military camps. Security agencies and the military have continued their surveillance, intimidation and harassment of civil society organizations, the media, families of the disappeared, former combatants and Tamil political and civic activity in conflict-affected areas. The draconian Prevention of Terrorism Act, which does not adhere to international human rights standards and the implementation of which has resulted in human rights violations, is still on the statute books. As part of the Sinhalization of the north and east, which has rapidly escalated, Hindu temples are being destroyed and in their place Buddhist temples being built.

There has also been no progress in holding perpetrators of human rights violations related to the war accountable. Nor has there been any attempt to provide a political solution to the ethnic conflict or undertake substantive constitutional reform. Instead, to avoid being subject to the scrutiny of the U.N. Human Rights Council, the government is proposing the establishment of the National Unity and Reconciliation Commission, its version of the truth-seeking mechanism, while hundreds of recommendations of similar previous commissions remain unimplemented. 

The 2022 protests did ignite increased public discourse on issues of public interest and demands for accountability, at least on certain issues, such as how public funds are spent and corruption. Yet, the decades-long rights struggle of communities, such as the Tamils, which have challenged the state and particularly the Rajapaksas, was largely absent in the narrative and the consciousness of the protesters.

Increased political awareness among the southern public has the potential to be the beginning of the acknowledgment of historical discrimination and repression, which should ideally result in the south heeding and addressing calls for truth, justice and equal citizenship. Such realization can lead to a pluralistic and diverse Sri Lanka where one would not have to divest one’s ethnic or religious identity to be Sri Lankan.

Hence, legal reforms alone will not change the way Sri Lanka’s institutions and politicians behave and perform. To ensure that the momentum generated in 2022 for accountability from elected representatives evolves into sustained challenges to entrenched systems of discrimination and corruption, the root causes of Sri Lanka’s crises and the multiple elephants in the room must be addressed.

Sri Lanka defaulted on its international debt a year ago, after facing unprecedented inflation and a balance of payments crisis. In sight of securing a new IMF program, Sri Lanka’s relationship with New Delhi has grown considerably stronger along economic and diplomatic lines, while their already close defense ties are largely unchanged. By contrast, China’s response has been highly disappointing to Sri Lanka, which continues to wait on Beijing’s full cooperation in debt restructuring.

India’s economic support to Sri Lanka predates the 2022 crisis. In 2020, New Delhi agreed to a $400 million currency swap under the South Asian Association for Regional Cooperation (SAARC) framework. For more than a year, India was reportedly silent on whether it would approve Sri Lanka’s requests for an additional $1.1 billion currency swap and a moratorium on bilateral debt. Since early 2022, however, India’s support for Sri Lanka has been unprecedented. New Delhi perhaps realized the trendline of the impacts to the south was increasingly linked to its own economic and security interests and the credibility of its “neighborhood first” diplomacy.

The nature of support has been mostly lines of credit, currency swaps and deferred repayments. In January 2022, India provided another currency swap of $400 million under the SAARC framework. It also deferred settlement of $2 billion in Sri Lanka’s Asian Clearing Union trade credits, which are mostly for imports from India. In February 2022, it offered a line of credit worth $500 million for importing fuel from India, and the following month it provided a credit facility of $1 billion to buy food and medicine from India and further aid worth roughly $72 million. No less significantly, in January 2023, New Delhi provided the first assurances to the International Monetary Fund to enable the latter’s $2.9 billion package. Recently, India extended its $1 billion credit line for another year and appears likely to offer Sri Lanka a 12-year term to repay its debts. Later this month, President Wickremesinghe will make his first visit to India since entering office.

Beyond economic and diplomatic ties, India continues to be Sri Lanka’s primary defense partner. In the past year, the Sri Lanka Air Force has received a Dornier maritime surveillance aircraft from India, while the two countries held their annual defense dialogue in February and the Sri Lanka-India naval exercise, SLINEX, in April.

In contrast, China has been mostly uncooperative despite being Sri Lanka’s largest bilateral lender. Earlier, it had offered a currency swap worth $1.5 billion that was subsequently criticized because Sri Lanka could not benefit from its stringent terms. It also offered another $500 million loan with interest in 2021. Most importantly, China’s reluctance to actively participate in the debt-restructuring process with other lenders has cemented deeply held concerns about its transactional approach to Sri Lanka and other growing economies. Earlier this year, China finally agreed to a moratorium on debt servicing to Sri Lanka for only two years. But questions remain about whether Beijing will deliver on its assurances about debt restructuring.

Nevertheless, Sri Lankan officials representing their smaller state cannot afford to criticize China. Instead, officials emphasize their hope that Beijing will cooperate on the debt crisis and in other areas of the relationship. Wickremesinghe is expected to visit China in October to seek foreign direct investment in several projects, including for a potential $4 billion oil refinery in Hambantota.

Source: USIP

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