The second argument is that the GCC agreement is an attempt to undermine Sri Lanka`s national security. While both allegations have been disputed by MCC country director Jenner Edelman, there remains a suspicion. Two major arguments have been made against this agreement. The first is that the land project means that the country owned by the Sri Lankan government will be available to the U.S. government for purchase. This is a standard protection, characteristic of international aid agreements that are used to ensure that subsidies are used exclusively to achieve the pact`s objectives and do not fall into the wrong hands. While it is important for Sri Lanka to consider all the modalities of implementation of the pact, it is equally important to consider the benefits that could be lost if the government continued to delay the approval of the agreement. The main points of contention are: where does the money go and what does this funding mean? In accordance with the draft publicly available agreement, the MCC is providing this grant to address two of the “binding constraints” that Sri Lanka imposes on economic growth: (a) inadequate infrastructure and transport logistics planning and (b) lack of access to land for agriculture, services and industrial investors. Other concerns regarding the construction of a physical economic corridor, links to the SOFA and ACSA agreements, the acquisition of Sri Lankan land by the U.S. government, dumped land transactions, the construction of U.S. settlements and/or military bases, the construction of electric fences and the destruction of the local environment were also confirmed as unfounded in the review of the agreement. The opposition`s argument that the agreement should be suspended until after the elections also carries serious risks of losing the entire subsidy due to Sri Lanka`s recentgradation to higher middle income status. Late last month, Sri Lanka`s Cabinet of Ministers approved, in a major step forward, the implementation of the $480 million Millennium Challenge Corporation (MCC) grant and published the final draft grant agreement to the public for review.
Even after the signing of the agreement, Sri Lanka still has the option of amending the agreement, provided that these amendments do not exceed the funding allowance allocated or extend the grant period by five years. The document makes it clear that the Sri Lankan government is “the primary responsibility for monitoring and managing implementation” of projects, and legal advice signed by the Sri Lankan GA must be sought before the agreement enters into force. But since then, the agreement has been frozen. Since the organization traditionally only funds low- and low-middle-income countries, Sri Lanka`s recent middle-income status has jeopardized the eligibility of the MCC grant, unless the agreement is signed before 2020, as the country is not on the organization`s 2020 scorecard. The agreement will not enter into force until it has been presented to the Sri Lankan Parliament and adopted by Parliament and will provide comprehensive safeguards to ensure that all relevant stakeholders are involved in the approval process.