Tremendous improvement in EU-Sri Lanka relationship

EU Ambassador Tung-Lai Margue 

By Nisthar Cassim

Relations between the European Union and Sri Lanka have seen tremendous improvement, affirms the outgoing Ambassador of the EU to Sri Lanka and the Maldives Tung-Lai Margue. The EU is by far the biggest export market for Sri Lanka accounting for nearly 30% or Euro 2.8 billion of the total. Ending a very successful three-year tenure in Sri Lanka, Ambassador Tung-Lai Margue in an exclusive interview with the Daily FT says since the reinstatement of GSP+ in May 2017, Sri Lanka’s exports to the EU have increased by over 20%.

The EU is also one of the longstanding major development partners of Sri Lanka with an impressive portfolio of socio-economic projects and Tung-Lai says EU has no hidden agenda because partnerships are built on trust. “We are a predictable and reliable partner,” he emphasises. 

Commending Sri Lanka’s commitments before the Human Rights Council, the EU Ambassador points out that meaningful and lasting reconciliation which addresses the grievances of all communities is a key challenge for Sri Lanka going forward.

He also stresses, “If the goal is to transform Sri Lanka into a financial, technological, and transshipment hub, then you have to be open for business. Protectionism and trade are just not compatible.”

Following are excerpts of the interview in which Ambassador Tung-Lai Margue shares key insights to EU-Sri Lanka relations, recent progress and cooperation as well his views on some of Sri Lanka’s immediate and future challenges: 

Q: Compared to pre-2015, how strong and progressive has EU-Sri Lanka relations been and what were the key initiatives taken to strengthen EU-Sri Lanka relations?

A: In the first few decades we only focused on traditional development assistance, but we have diversified our engagement with Sri Lanka since 2015. So it is not easy to pinpoint specific initiatives during these three years because this period has been particularly intensive and fruitful for EU-Sri Lanka relations. But let me focus on four main areas: political dialogue, development cooperation, economic diplomacy, and cultural diplomacy.

There has been a tremendous improvement in the EU-Sri Lanka relationship during the last three to four years. You see this in the high-level institutional dialogues which take place regularly between Colombo and Brussels. Building partnerships through dialogue is a key approach of the EU’s foreign policy. The EU-Sri Lanka Joint Commission, for instance, is about building an equal partnership between the EU and Sri Lanka by discussing matters of mutual interest. 

One of the things I have consistently made clear to our partners is that the EU has no hidden agenda because partnerships are built on trust. We have, on numerous occasions, clearly articulated our core values. And this is what we bring to the table. It is what makes us different. In a very challenging global environment, we are a predictable and reliable partner. This is the approach I have been promoting as EU Ambassador. 

I have consistently made clear to our partners is that the EU has no hidden agenda because partnerships are built on trust. We have, on numerous occasions, clearly articulated our core values. And this is what we bring to the table. It is what makes us different. In a very challenging global environment, we are a predictable and reliable partner

On development cooperation, the EU takes real pride in being the world’s leading provider of development assistance, this is no small thing, and we have proved that here in Sri Lanka. 

The EU has provided humanitarian assistance in the aftermath of the Boxing Day tsunami and to help communities rebuild after the war. But we have turned a new chapter in our partnership. Our funding is going towards a wide variety of development priorities identified in collaboration with the Sri Lankan Government. For instance, we are providing EUR 40 million to finance the capacity development of local authorities to provide efficient services to people in the Northern, Eastern, North Central, and Uva Provinces. 

The STRIDE project will also support the strengthening of local mediation boards. We are providing EUR 30 million to build up poor communities and develop businesses in the Central and Uva Provinces, we are providing EUR 30 million to the modernisation of the agriculture sector, helping to link small farmers to markets both domestic and international, improving the cold chain for fresh produce, and improving food safety. We have helped to develop an overarching agricultural policy and plan to support its implementation through budget support  

Since the reinstatement of GSP+, Sri Lanka’s exports to the EU have increased by more than 20%. The EU is by far Sri Lanka’s biggest export destination with nearly 30% of the total exports going to Europe, a value of EUR 2.8 billion. I believe that GSP+ readmission came at a critical moment for the Sri Lankan Government which was looking to strengthen its international image....Recently concluded GSP+ monitoring mission will present its assessment to the European Parliament early next year

We have also channelled EUR 15 million into building institutional capacities and reducing language barriers to strengthen reconciliation. We have sustained our support to strengthening civil society and human rights. We are undertaking an assessment of the local media landscape to help us engage more effectively with journalists and media institutions.

In addition to all this we have the ongoing Trade-related Assistance project which is helping Sri Lankan SMEs to overcome export difficulties. The EU-funded actions are many and they are varied. Taken as a whole they are a tangible demonstration of the EU’s commitment to supporting the growth and stability of the Sri Lankan people. 

Sri Lanka’s readmission to the EU’s Generalised Scheme of Preferences or GSP+ scheme in May 2017 was a key development during my tenure. I don’t think I can overstate the importance of the GSP+ scheme to Sri Lanka’s exports because the numbers speak for themselves. Since its reinstatement, Sri Lanka’s exports to the EU have increased by more than 20%. The EU is by far Sri Lanka’s biggest export destination with nearly 30% of the total exports going to Europe, a value of EUR 2.8 billion. This is ahead of the EUR 2.4 billion worth of exports to the US. 

I believe that GSP+ readmission came at a critical moment for the Sri Lankan Government which was looking to strengthen its international image. The EU recognised this effort and re-granted GSP+ with the confidence of seeing timely and substantial progress in key areas. A recently concluded GSP+ monitoring mission will present its assessment to the European Parliament early next year. This is a process that ties into our regular political dialogues with the Sri Lankan Government.  

I like to congratulate Sri Lanka on being delisted from the Financial Action Taskforce’s Grey List. This is great news and does a lot to raise the country’s profile in the fight against money laundering and terrorist financing. You may recall that the EU also placed Sri Lanka on a list of third countries with weak anti-money laundering and terrorist financing regimes. I’m confident that the FATF’s decision will soon be followed by a similar decision by the EU as well.

Economic diplomacy has become a key area in the EU-Sri Lanka relationship. I see the EU-Sri Lanka Investor Dialogue, which began in 2017, as a platform to translate mutual agreements into concrete actions. It is a very direct link to communicate issues faced by European businesses in Sri Lanka to those responsible for actioning government commitments. The forum proves to foreign investors that they are welcome in Sri Lanka. But let me be clear: while a great deal has been done to improve the business climate, we need to work together to do more and do better. But the work done to-date has only been possible because of the trust established over the last few years. 

But aside from politics, trade, and development assistance, the EU Delegation during my term has also stepped up its cultural engagement. We celebrated 10 years of the European Film Festival in 2017; the festival’s eleventh edition just concluded. Our annual Living Heritage event has managed to bring together government, academics, and those interested in the protection of cultural heritage on to a single stage. We had the Prime Minister and the Mayor of Colombo as our Chief Guests. We have also supported local artists and initiatives, such as Colomboscope. We see culture as an essential part of our relationship with today’s world. It makes us a stronger and more sovereign global actor.

And of course we have science and education exchanges. Horizon 2020 is the largest science and research program ever and we want to increase Sri Lanka’s share in it. Under the Erasmus plus program, Sri Lankan universities, staff, and students benefit from various exchanges, capacity building programs and scholarships in the EU, in Sri Lanka and elsewhere.

Q: What would you single out as the most significant initiative during the past three years?

A: I will do better and point out ‘two’ significant initiatives. 

GSP+, definitely. It has had a significant impact on Sri Lanka’s exports to the EU. It also encourages the promotion of democracy and the protection of human rights because trade incentives are based on respect for core UN conventions. 

You know the world tends to see the EU primarily as a trade partner, but our role is more complex than that and it is rapidly expanding into new areas. We recognise the value of defending a stable international order that promotes democracy and openness, including global institutions like the UN, the IMF, and the WTO. Of course, the EU also recognises the hazards of globalisation, which is why we strive to ensure that all our partnerships are win-win situations. For example, we want human rights including social, cultural, and labour rights to be protected. We want to ensure that technology transfers occur. We want intellectual property rights protected. We want to ensure that economic development occurs in a way that can be sustained.  

Meaningful and lasting reconciliation which addresses the grievances of all communities. This is a challenge that many countries have failed to overcome. But I hope for a different outcome in Sri Lanka. The eventual loss of GSP+, because of the country’s higher income status, will hurt if Sri Lanka isn’t ready for it. So it is crucial that exporters do two things: take maximum advantage of the scheme while preparing for the future.

The second initiative I want to highlight is the EU’s response to a request by the Sri Lankan Government in the wake of the Easter Sunday terror attacks. Terrorism is an evolving threat. It has impacted both our societies, targeting our youth. Terrorist attacks in Europe tell us that radicalisation can happen not only in a matter of months but also in a matter of weeks. This is why the EU is working on ways to tackle the internal and external dimension of the threat. Outside our borders, we know that the strength of our partners is our own strength and that is why we are focusing on capacity building, providing assistance in the areas of security sector reforms, and prevention of radicalisation. 

We very quickly mobilised funding to address Sri Lanka’s post-Easter Sunday challenges. We are collaborating with UNODC, UNDP, and INTERPOL to support the prevention of violent extremism and countering terrorism. We are helping to develop and strengthen law enforcement capabilities to prevent and disrupt terrorism and terrorist-related activities. 

We are supporting the government to develop a comprehensive policy and legislative framework for counter-terrorism that is fully compliant with the rule of law, human rights standards, and fundamental freedoms, and improving capacities for effective implementation. This joint action will also develop Sri Lanka’s ability to detect the trafficking of explosives and IED components, strengthen security in selected prison facilities, and introduce a classification system for prisoners.

Q: In your view what would you list as key achievements of Sri Lanka during the past five years? 

A: Let me start with a very recent achievement. I like to congratulate Sri Lanka on being delisted from the Financial Action Taskforce’s Grey List. This is great news and does a lot to raise the country’s profile in the fight against money laundering and terrorist financing. You may recall that the EU also placed Sri Lanka on a list of third countries with weak anti-money laundering and terrorist financing regimes. I’m confident that the FATF’s decision will soon be followed by a similar decision by the EU as well. 

I think the tourism sector must be singled out for some praise. The sector hit record numbers in 2018. If my memory serves me well, Sri Lanka achieved over 250,000 arrivals in December 2018 alone. That growth and momentum was obviously severely impacted by the 21 April attacks. It will be interesting to see how well the industry bounces back from this. I think this has already begun with EU Member States and others lifting their travel advisories. People are starting to come back. Slowly. But they are coming back. European tourists, particularly high-end tourists, have started to come back. We’re looking into how to make the Sri Lankan wellness industry more attractive to European consumers.  

Another achievement, whatever its critics may say, is Sri Lanka’s commitments before the Human Rights Council. They are significant because a Sri Lankan Government acknowledged that there are wrongs that need to be set right. I truly believe this is important in countries that have suffered the violence of conflict if they mean to build towards long-term peace and security. The Human Rights Council resolution should be seen as an opportunity. An opportunity for Sri Lanka to build a stronger and more resilient society.

Another achievement, whatever its critics may say, is Sri Lanka’s commitments before the Human Rights Council. They are significant because a Sri Lankan Government acknowledged that there are wrongs that need to be set right. I truly believe this is important in countries that have suffered the violence of conflict if they mean to build towards long-term peace and security. The Human Rights Council resolution should be seen as an opportunity. An opportunity for Sri Lanka to build a stronger and more resilient society. 

Q: From an EU perspective what are Sri Lanka’s challenges in the medium and long term?

A: Reconciliation. Meaningful and lasting reconciliation which addresses the grievances of all communities. This is a challenge that many countries have failed to overcome. But I hope for a different outcome in Sri Lanka. 

The eventual loss of GSP+, because of the country’s higher income status, will hurt if Sri Lanka isn’t ready for it. So it is crucial that exporters do two things: take maximum advantage of the scheme while preparing for the future.

Q: Any advice you have as to how Sri Lanka can address those?

A: On reconciliation, I prefer to talk about its possibilities. 

The EU is described as the world’s largest peace project. This is because nearly 70 years ago countries in Europe united against a recurrence of war. I think reconciliation in Europe has important parallels for Sri Lanka. Mind you, there have been challenges to European integration – we’re facing one right now. But we’re still here because we believe we’re stronger together. 

There are successful examples of reconciliation processes at the level of countries – South Africa being an obvious example. The recent peace agreement in Mozambique, an important partner for the EU, offers the promise of reconciliation and democratic consolidation.  

If the goal is to transform Sri Lanka into a financial, technological, and transhipment hub, then you have to be open for business. Protectionism and trade are just not compatible. 

As for trade one word – diversification. Sri Lanka must diversify its exports. We are not just saying this but we are helping SMEs to realise this objective through the Trade-related Assistance project, focusing on policy development and regulatory reforms. Another EUR 10 million project will target food safety and quality compliance. These are key to entering and staying competitive in the European market. Sri Lanka also needs to look closer at the business environment for investment, help start-ups, encourage innovation, produce higher quality goods, and make the shift towards sustainable production concepts.

The world has changed and Sri Lanka has changed right along with it. If the goal is to transform Sri Lanka into a financial, technological, and transshipment hub, then you have to be open for business. Protectionism and trade are just not compatible. 

Q: What can Sri Lanka expect from the EU going forward?

A: Sri Lanka can expect what the European Union has always provided: a strong and reliable partnership. It’s a partnership which will hopefully grow in strength whatever the outcome of the presidential and parliamentary elections. 

More concretely, we are helping Sri Lanka to address the shared challenges of climate change. As Greta Thunberg pointed out to the European Parliament, “our house is falling apart, and we’re rapidly running out of time”. The EU is serious about addressing climate change and we’re determined to lead the fight against this threat. In Sri Lanka, we are funding a project that will look at establishing the greenhouse gas emission baseline of the industry sector and help Sri Lanka to reduce them. It will establish a monitoring, reporting and verification system and pilot test several technologies. 

We are also working with stakeholders to strengthen the responsiveness of the justice system and to improve access to justice, particularly for women. We hope to soon start a project to strengthen public financial management and accountability. We’re also providing new funding opportunities through the SWITCH-Asia regional program, targeting sustainable consumption and production. 

Depending on how the new European Commission shapes EU spending, the EU-Asia Connectivity Strategy may mobilise support for infrastructure development. More funds may become available through the European Investment Bank (EIB). EIB has already provided EUR 50 million to improve and expand sewage networks in Colombo.

Sri Lanka can expect a great deal from its partnership with the European Union. 

Q: Your perspective of EU without Britain for Sri Lanka?

A: A Brexit deal means Brussels and London would start working out a new relationship which includes matters relating to trade. This would also be good news for Sri Lanka because there would be a transition phase of two years that would also include an extension period for all the existing trade arrangements such as GSP+. 

Q: What was your most unforgettable experience in Sri Lanka?

A: The three years as a whole have been unforgettable. But if I had to pick one thing it would probably be the relationships that my wife, who is an artist, and I have established. We have found so many good friends among Sri Lankan people from different ethnic and religious backgrounds. As EU Ambassador, when I speak of Sri Lanka’s diversity, I speak from first-hand experience, because I have seen it all over the country. These friendships give us a great deal of pleasure and satisfaction. It is these relationships that have made us feel at home in Sri Lanka.