IT was almost a year ago when the Sri Lankan government was forced to fall back on plans to endorse the Indo-Lanka Comprehensive Economic Partnership Agreement (CEPA) after local businessmen took to the streets in protest against the scheme. It came after President Mahinda Rajapaksa's own assurance that he would not enter into any pact that would harm the island's economic interests that the demonstrators backed off and temporarily ended the campaign then. Now muscles are being flexed again as India is putting pressure on Sri Lanka to enter into this agreement, followed by its quick implementation. More than anyone else, Rajapaksa is faced with a major dilemma: bow down to India or stand firm with influential local entrepreneurs most of whom are the government's political backers, financially and otherwise. The crux of the problem is that local business interests fear the CEPA will see a flood of Indian goods and services, including labor, at much cheaper rates than that offered by Sri Lanka and not only kill local industry but also eat into the job market. Samantha Kumarasinghe, an influential local businessman leading the anti-CEPA campaign, says that while the Indo-Lanka Free Trade Agreement (FTA) limits tariff concessions to goods, the CEPA covers services such as banking and other labor-related facilities. It will pave the way for Indian professionals to work in Sri Lanka. “Under this set up any professional even an Indian barber can come with his family to work in Sri Lanka,” he was quoted as saying in a newspaper interview in May last year. The FTA has been in force since 1998. Kumarasinghe says the CEPA will destroy Sri Lanka's control of trade and services and bring more benefits to Indian business and professionals. However Kusal Perera, a well-known newspaper columnist and political commentator, argues that local industrialists are simply lazy, abhor competition and not prepared to provide the consumer a quality product. “They produce third-grade stuff and fear competition which would ultimately benefit the consumer,” he said, adding that the government also doesn't want to ruffle the feathers of the business community because of their political and financial backing. In recent weeks, a series of political discussions between Sri Lankan and Indian leaders in Colombo and abroad have centered on the need for quick implementation of the CEPA. On the political front, India wants Sri Lanka to provide more political concessions and rights to minority Tamils on the island which has been a huge debate in Colombo, and in the course of that is pushing for implementation of the CEPA. POLITICAL analysts say that India has been concerned and bitter about Sri Lanka's growing political and economic ties with China and wants to play an even bigger, or at least similar role in Sri Lanka. China is Sri Lanka's biggest lender of commercial credit and is helping in many infrastructure development projects like roads, harbors and airports. So the high-stakes battle has become a push-pull game for India as it increases the pressure on Sri Lanka for more economic access in the country, particularly after the end of nearly 30 years of ethnic clashes. The dispute over the CEPA comes at a bad time for Rajapaksa as he faces growing public discontent of the government particularly over rising cost of living (COL). The COL issue is being manifested through many problems the government is facing like bloody protests over a proposed pensions law; wage hike demands by university teachers who have threatened to cripple state universities; demands by bus companies to increase fares, and other problems. Prof. S. I. Keethaponcalan, a political scientist, says that while the president is still very popular (and unbeatable), the government on the other hand is losing popularity. Though the government won at the recent local council elections (in March), its percentage of votes fell while that of the main opposition United National Party (UNP) gained. “The UNP gained without any effort,” he said. The UNP has been battling an internal leadership crisis in the party for many years. Prof. Keethaponcalan, also head of the Political Science and Public Policy Department at the University of Colombo, is in a school of thought that believes the CEPA is detrimental to Sri Lanka because Indian influence in the local economy would grow. “Locals would find it difficult to compete with Indian companies and services. That is the basis of the local resistance,” he said, adding that the government is also not happy to endorse the CEPA. “Coalition partners in the government are also opposing the agreement and some of them are against Indian influence in Sri Lanka. I think the government is using other ways like this to show its own concern over the CEPA,” he said. Last week, the opposition UNP in a rare, come-together with government parties, joined a protest against the CEPA. At a public meeting organized by the anti-CEPA business group, UNP General Secretary Tissa Attanayaka joined politicians from nationalist parties in the government to endorse a statement declaring that they were against the implementation of the CEPA. Political commentator Kusal Perera says the government is playing politics with the CEPA. “They don't want to offend local business which is a short-sighted policy and there are enormous benefits for Sri Lanka from the agreement.” FOR example, doctors in Sri Lanka, who charge fat fees for consultation, will have to improve their services if doctors from abroad are permitted. “Sri Lankan doctors or other professionals need not fear any foreign professionals working here if the former provide a better service. Furthermore local professionals have an advantage of the (local) language. So why get scared?” he asked. Newspaper reports say that Indian Prime Minister Manmohan Singh has accepted an invitation to visit Sri Lanka. Such a visit would put more pressure on the small island to bow down to the enforcement of an agreement that has been many years in the making and is seen as increasing Indian political and economic interests on the island. __
