Sri Lanka writes to IMF

The Government of Sri Lanka (GoSL) has written to the International Monetary Fund (IMF) requesting technical assistance and a mission from the IMF will visit Sri Lanka in the near future to assess the country’s economic situation and provide a set of proposals for the way forward.

This was disclosed by Finance Minister Basil Rajapaksa at a press conference yesterday, in response to repeated questions by journalists on whether the GoSL has sought IMF assistance and whether it will enter into an IMF programme.

Rajapaksa added that Japan is facilitating the visit by the IMF delegation and that discussions between the GoSL and the IMF are ongoing.

This is the strongest signal yet that the GoSL may enter into an IMF programme considering the current economic crisis and appears to directly contradict the statements made by Central Bank of Sri Lanka (CBSL) Governor Ajith Nivard Cabraal that Sri Lanka would not opt for an IMF programme. If Sri Lanka does decide to, it would be the 17th such programme that Sri Lanka has entered into with the IMF in its history.

In late November, the IMF told The Morning that its staff stands ready to discuss options with the Sri Lankan Government, during the visit of the fund’s representatives to Sri Lanka in December.

The IMF disclosed this in response to media inquiry regarding the Article IV mission to Colombo in December.

“A staff team from the IMF is scheduled to visit Colombo during the period from 7 to 20 December to conduct the 2021 Article IV consultation with Sri Lanka. The IMF has not received a request for financial support from Sri Lanka recently, but the staff stands ready to discuss options if requested,” noted IMF Mission Chief for Sri Lanka Masahiro Nozaki at the time.

However, during the Monetary Policy Review press conference, held the next day, Cabraal stated that Sri Lanka is neither afraid nor has hindrances to approach the IMF for financial assistance, but it simply chooses not to, merely because it does not feel the need for it.

“We have sought IMF assistance in 2009 and 2010. We, certainly, do not have any issues in going to the IMF if really required to do so. The reason why we have chosen not to seek their assistance is that our international sovereign bonds (ISBs) shot up to $ 15 billion by mid-2019 from a mere $ 5 billion in 2014. However, the gross domestic product (GDP) did not proportionately increase. As a result, we have begun looking for alternative financing options and that is what the IMF wants too. That is what they call ‘debt restructuring’,” Cabraal added.

He further noted that if they are to seek IMF assistance, the fund might require the Government to depreciate the Sri Lankan rupee, increase interest rates, cut down the number of public servants, slash pension schemes, and sell state properties, which is a reform agenda the Government is not willing to comply with at the moment.

Samagi Jana Balawegaya (SJB) MP Dr. Harsha de Silva stated at a press briefing on 12 December that the GoSL could have gotten into the IMF train eight months ago and the country could have also managed without a debt default.

He stated: “Paying debts – we will have to restructure it the way we can know. The IMF’s structural assessment or stabilisation, that train has gone. Now the problem is deeper. Tell the Cabinet that we cannot pay our debts and we need a few years to go back to normal, with international help. We are ready to support the Government; for the sake of the public, we are willing to leave political differences aside.

“If this (forex crisis) was discussed in November last year (2020), the country could have managed. The application for the IMF was postponed on multiple occasions, saying that money comes from here and there, and then swaps,” said Dr. de Silva, criticising the delay.

Subsequently, United National Party (UNP) Leader and Parliamentarian Ranil Wickremesinghe said that the USD crisis in the country has reached a “severe point” as businesses are closing, the middle class is under pressure, people are losing jobs, and farmers have been abandoned.

“The Government is yet to come up with a solution. The Government must either go to the IMF or come up with a credible alternative. Neither has taken place so far. In the meantime, the people are suffering and the national mood is turning hostile to the Government.”

SL begins groundwork to borrow US $200mn from Pakistan

The government has commenced groundwork to secure US$ 200 million credit line extended by the Government of Pakistan while a US$1 billion credit line from India is expected to materialise next week. The discussions on the US$ 200 million credit line was taken up during Trade Minister Bandula Gunawardana’s recent official visit to Pakistan.

Speaking to Mirror Business, Secretary to the Treasury Sajith Attygalle revealed that the two countries have agreed US$ 200 million in principle while the details of the credit line is yet to be worked out.

Under this credit line, cement, basmati rice and medicines manufactured in Pakistan are to be imported through the State Trading (General) Corporation.

Emphasis would be paid for the importation of cement as Sri Lanka saw a cement shortage in the market recently, which had led to sky rocketing prices.

Attygalle noted that the tenure of the credit line is yet to be finalised and the Treasury along with the Trade Ministry and the High Commission are working on drafting the agreement, which is to be cleared by the Attorney General’s Office.

Meanwhile, the government is expecting to secure US$ 1 billion credit line requested from India next week.

The US$ 1 billion Indian credit facility is to be financed to import essential items such as food and medicines from India.

India’s External Affairs Minister Dr. S. Jaishankar and Finance Minister Basil Rajapaksa during a virtual meeting held last month reviewed the progress of the credit line.

In addition to that India has already extended a US$ 500 million credit line for fuel.

Sri Lanka already has drawn down from a US$ 200 million currency swap it entered into with Bangladesh Bank, for which the country sought a 3-month extension of the validity of the loan in December 2021.

Sri Lanka gets US$ 500 million Indian credit for oil purchases

The Export Import Bank (EXIM) of India and the Government of Sri Lanka (GOSL) signed a USD 500 million Line of Credit (LOC) Agreement for purchase of petroleum products on February 02, 2022, in the presence of the Minister of Finance of Sri Lanka, H.E. Mr. Basil Rajapaksa and the High Commissioner of India to Sri Lanka, H.E. Mr. Gopal Baglay.

The Agreement was signed by Treasury Secretary, Mr. S.R. Attygalle from the Sri Lankan side and Chief General Manager of EXIM Bank, Mr. Gaurav Bhandari from the Indian side.

The Government of India (GOI) support for fuel imports by Sri Lanka from India, through the LOC of USD 500 million is in response to GOSL’s urgent requirement. This critical support comes in the wake of a virtual meeting between the External Affairs Minister of India and the Hon’ble Minister of Finance, H.E. Mr. Basil Rajapaksa on January 15, 2022, during which they discussed a range of issues.

As Sri Lanka’s closest neighbour and long-standing partner, India is committed to assist Sri Lanka in its post-Covid economic recovery. Signing of the LOC Agreement is another landmark in our bilateral cooperation and is in continuation of India’s recent foreign exchange support of over USD 900 million to Sri Lanka. These measures are in line with the discussions between the two sides during the visit of Hon’ble Minister of Finance to India in December 2021. With the recent support, India’s overall development assistance to Sri Lanka stands at close to USD 4 billion.

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President inspects operations at Thambapavani Wind Power Station

President Gotabaya Rajapaksa inspected the Ceylon Electricity Board-owned “Thambapavani” Wind Power Station in Mannar, on Wednesday.

The “Thambapavani” wind farm project commenced in 2014 with the aim of empowering the country with electricity, providing a stable power supply and accelerating the development process.

The power plant is located on 150-hectare land, 13 km off the coast of Mannar, which faces both major monsoon winds.

The power plant has 30 towers with a turbine height of 90 meters. The diameter of the rotating blades (windmills) is 126m and the wind turbines generate 3.45 MW of electricity. The project includes a 36km transmission system to Nadukuda Green Sub-Station and Pudukaman in Mannar. The total power capacity 103.5 MW.

The Ceylon Electricity Board says that the cost of generating a unit of electricity from this system is less than Rs. 8.00.

This eco-friendly, state-of-the-art wind farm with a number of specialized technologies for optimal power supply is considered a milestone in the journey towards renewable power generation.

Plans have been made to add another 50 megawatts to the national grid from the Thambapavani Wind Power Plant. President Rajapaksa inquired about the progress of this and instructed the officials to prepare a report immediately on the locations where new wind farms could be built. At present, 248 MW are added to the national grid by wind power plants. The purpose of the visit was to explore the possibility of increasing this in a short period of time and the President inspected all the operations of the power plant.

The government aims to obtain 70% of the country’s total electricity generation from renewable energy sources by 2030. It also aims to reduce electricity bills in the future by promoting low-cost electricity generation without harming the environment.

Minister of Power Gamini Lokuge, State Minister Duminda Dissanayake, Principal Advisor to the President Lalith Weeratunga, Secretary to the Ministry of Power Wasantha Perera, Secretary to the State Ministry K.H.D.K. Samarakoon, Vice Chairman of the Ceylon Electricity Board Nalinda Illangakoon, Acting General Manager Rohantha Abeysekara and a number of officials joined the President in the visit.

Sri Lanka seeks technical support from IMF: Basil

Sri Lanka has sought technical support from the International Monetary Fund and a mission is likely to arrive, Finance Minister Basil Rajapaksa said.

“We have not officially done anything,” he told reporters at a forum in Colombo when asked whether a decision has been made to go for an IMF program.

“But we have written to them and sought specialist advice from them. The IMF is an international institution set up to give advice to countries that are going through crisis situations.

“We also need funds. We have sought funds from Japan.

“The IMF will give us advice about things that we do not know. Whether we take the advice is another matter. Before we go we need to know what they give. Before we go to any bank to get housing loan also we need to know.”

Sri Lanka officials have previously said they had the IMF as an option but was trying other methods to solve the external problem as Washington based lender would request a currency depreciation and spending cuts.

Several cabinet ministers have said publicly that Sri Lanka should consider going for an International Monetary Fund program as forex shortages disrupted supplies of various goods.

There has been a softening of attitude towards the IMF among ruling party politicians in recent. Minister Dullas Alahapperuma last months said IMF should not be demonized as it had helped the country in the past.

The matter had been discussed at the cabinet on several occasions.

Sri Lanka’s foreign reserves have fallen sharply due to liquidity injections made to keep interest rates down as economic activity recovered.

Sri Lanka’s imports are soaring amid a large budget deficit and recovering private credit.

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SLPP ready to face any election: Basil

Sri Lanka Podujana Peramuna (SLPP) is ready to go for any election, which the law permits, anytime, Minister of Finance Basil Rajapaksa said today.

“This is my personal opinion and the opinion of SLPP,” he told a press conference.

“It is not possible to hold a general election or a presidential election as per the constitution. Therefore, the only election that can be held is the local government poll. Even our party Leader Mahinda Rajapaksa prefers going for an election,” he said.

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Proposed PTA Amendments fall short

Another year, another pre-Geneva scramble. At the brink of economic collapse and desperation to maintain GSP+ trade status with the EU, the Government of Sri Lanka has finally begun to feel the heat. Enough, that is, to put forward half-hearted reforms in hopes of appeasing international demands on January 27 the Government gazetted a Bill to amend the Prevention of Terrorism Act No. 48 of 1979 (PTA). As Sri Lankan Attorney Ermiza Tegal writes in her recent op-ed, “the minimal reforms proposed fail to address the most significant problems identified with the PTA.” From problems in defining terrorism to failing to ensure judicial oversight over arrests and address the root cause of torture, Tegal details several of the Bill’s fatal flaws. (Ermiza Tegal, “Initial reactions to the PTA Amendment Bill: Failure to reform, The Morning (30 Jan. 2022).) To appreciate her points, it is worth returning to basics”.

Last year, the U.N. Human Rights Council passed resolution 46/1 requesting Sri Lanka to review the PTA and “ensure that any legislation on combatting terrorism complies fully with international human rights and humanitarian law obligations.” (U.N. Doc. A/HRC/RES/46/1.) Sri Lanka ratified the International Covenant on Civil and Political Rights (ICCPR) in 1980, and the Supreme Court recognised that its rights extend to all persons in its territory. (Weerawansa v. Attorney General & Others [2000] 1 Sri L.R. 387; Comment: The ICCPR is not to be confused with the oft-misused domestic ICCPR Act No. 56 of 2007.) Article 9 of the ICCPR prohibits arbitrary arrest and detention and defines five core rights:

The Bill does not materially change sections 6 through 9 of the PTA, which facilitate arbitrary detention by limiting a Magistrate’s role in making arrests and detentions. These sections allow warrantless arrest by a police officer followed by 72 hours of custody before a detainee is produced before a Magistrate

1.“Everyone has the right to liberty and security of person. No one shall be subjected to arbitrary arrest or detention. No one shall be deprived of his liberty except on such grounds and in accordance with such procedure as are established by law.

2.“Anyone who is arrested shall be informed, at the time of arrest, of the reasons for his arrest and shall be promptly informed of any charges against him.

3.“Anyone arrested or detained on a criminal charge shall be brought promptly before a judge or other officer authorized by law to exercise judicial power and shall be entitled to trial within a reasonable time or to release. It shall not be the general rule that persons awaiting trial shall be detained in custody, but release may be subject to guarantees to appear for trial, at any other stage of the judicial proceedings, and, should occasion arise, for execution of the judgement.

4.“Anyone who is deprived of his liberty by arrest or detention shall be entitled to take proceedings before a court, in order that court may decide without delay on the lawfulness of his detention and order his release if the detention is not lawful.

5.“Anyone who has been the victim of unlawful arrest or detention shall have an enforceable right to compensation.”

In December 2021, several U.N. Special Rapporteurs and the Working Group on Enforced or Involuntary Disappearances listed five “necessary prerequisites” for the government to make the PTA comply with international law. (U.N. Doc OL LKA (7.2021).) Sri Lanka was advised to more narrowly define terrorism to safeguard freedoms of expression, association, opinion, religion or belief. The experts recommended protections to prevent arbitrary deprivation of liberty, torture, and enforced disappearance, and suggested due process and fair trial guarantees through improved judicial oversight and access to counsel.

Unfortunately, the gazetted Bill does none of these things. The definition of terrorism remains unchanged. As it stands, section 2(h) of the PTA permits arrest of any person whose speech, writings, signs, or visible representations “causes or intends to cause commission of acts of violence or religious, racial or communal disharmony or feelings of ill-will or hostility between different communities or racial or religious groups.” This astonishing overbreadth facilitated arbitrary mass arrests of ordinary Muslims following the 2019 Easter attacks—precisely what article 9.1 of the ICCPR prohibits.

The most obvious change in the Bill would reduce the maximum period of detention without trial from 18 months to 12. But unless “terrorism” is more narrowly defined, this reduction does little to change the grossly unjust reality for poor families struggling to survive as their breadwinner is arbitrarily detained. In allowing a whole year of arbitrary detention, the Bill fails to recognise the liberty interest central to article 9.1 of the ICCPR. Moreover, neither the PTA nor the Bill offer any compensation for those wrongfully arrested or detained, as required by ICCPR article 9.5.

Substantively, the Bill does nothing to address the rampant torture of detainees that has long alarmed the human rights community. For example, the Bill grants Magistrates the authority to direct police to commence investigations into alleged torture of individuals detained or restrained. Access changes little—during past visits by the Human Rights Commission of Sri Lanka (HRCSL), lawyers reported that police hid tortured detainees from view. Critically, the Bill does nothing to change the admissibility of confessions under section 16 of the PTA, which is what incentivizes the use of torture in the first place. What’s more, the Bill maintains blanket immunity under section 26 of the PTA for claims “against any officer or person for any act or thing in good faith done or purported to be done in pursuance or supposed pursuance of an Order made or direction given under this Act.” In a country where custodial torture is rampant and accountability nonexistent, maintaining such immunity likely forestalls change.

The Bill does not materially change sections 6 through 9 of the PTA, which facilitate arbitrary detention by limiting a Magistrate’s role in making arrests and detentions. These sections allow warrantless arrest by a police officer followed by 72 hours of custody before a detainee is produced before a Magistrate. Bail may be granted to pretrial detainees only if the Attorney General consents. Government Ministers have the power to order up to 18 months of detention if they have “reason to believe or suspect that any person is connected with or concerned in any unlawful activity.” The only change proposed in the Bill is to reduce the length of arbitrary detention to 12 months, while doing nothing to make arrests less arbitrary.

In terms of judicial oversight, the Bill codifies the availability of fundamental rights petitions or writ relief to detainees and explicitly grants Magistrates and attorneys access to detainees. But as Tegal notes, these provisions merely make explicit existing constitutional guarantees, which have failed to offer meaningful remedies or prevent custodial torture. Although the proposed requirement to serve detention orders on the HRCSL is promising, U.N. experts have highlighted how the independence of that body has been compromised following the Rajapaksa Government’s passage of the 20th amendment to the Constitution. (OHCHR, “Sri Lanka: Experts dismayed by regressive steps, call for renewed UN scrutiny and efforts to ensure accountability” (5 Feb. 2021).)
Problems with the PTA are not merely theoretical. Thousands were forcibly disappeared during the war and whole communities are persecuted today, destroying the very fabric of Sri Lanka’s democracy. Just this week, prominent minority rights lawyer Hejaaz Hizbullah was denied bail even though the Attorney General consented to his release. Why? Because section 15 of the PTA strips the courts of jurisdiction to authorise bail once trial begins. A man initially detained on false pretenses of being linked with the Easter bombers, Hizbullah was charged under the PTA a full year into his detention for a speech he allegedly gave on the treatment of Palestinians. A year later, when even the state consented to his release on bail, the courts are without power to do so. The travesty in Hizbullah’s case, as in so many others, demonstrates why the PTA is incapable of reform and must be repealed. Until that happens, the international community must recognise that the gazetted Bill simply misses the mark. Indeed, at the same time it proposes ineffective PTA reforms, the Rajapaksa Government seeks to enhance its powers of arbitrary detention through proposed “deradicalisation regulations” that would authorise forced incarceration without conviction. Its motives are clear, and the human rights community must demand more.

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Sri Lanka’s inflation rate accelerates to Asia’s fastest

Sri Lanka’s inflation rate surged past Pakistan to make it the fastest in Asia, stoked by failed harvests, import restrictions to conserve dwindling foreign-exchange reserves, and high global prices of key commodities.

Consumer prices rose 14.2 per cent in January from a year earlier, faster than the median estimate of 13.2 per cent in a Bloomberg survey. The average annual inflation rate rose to 6.9 per cent.

Quickening prices pushed the central bank to raise its main interest rate for the first time in three meetings this month. The island nation’s foreign reserves were about $3.1 billion in December, with almost $7 billion of overseas debt due for repayment in 2022.

President Gotabaya Rajapaksa’s administration announced a $1-billion relief package this month, raising salaries of government employees and offering farmers compensation for failed crops in a bid to temper public anger over surging prices of food and medicine.

Sri Lanka’s cabinet has also approved importing rice from India to cool prices. It is seeking a debt restructuring from China — its biggest creditor — after drawing down a $1.5 billion Chinese swap line and securing another $400 million facility from India.

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Economic crisis tightens grip on Sri Lanka’s hinterland

Amid shortages, families are forced to ration tea, meals

As Sri Lanka’s economic crisis makes global headlines, estate worker B. Sundararajan is watching it manifest in his teacup.
In recent weeks, he has cut his usual, two cups of tea a day to one. “Milk powder is not easily available. When it is available it is not affordable. There is no other option but to cut down our tea,” said the resident of Doloswala village in Sri Lanka’s southern Ratnapura district. Besides the irony of a tea plantation worker, producing the famed ‘Ceylon tea’, rationing his own tea intake, Mr. Sundararajan’s reality lays bare the severity of Sri Lanka’s current economic meltdown.

Rising inflation

The country’s fast-depleting foreign reserves — $3.1 billion at the end of 2021 — have pushed the Rajapaksa administration into a corner. The government needs dollars to import basic food items, fuel, and medicines, which have frequently been in shortage in recent months. As has milk powder, which Sri Lanka mostly imports and widely consumes in place of fresh milk.
Scores of consumers are struggling to afford essentials such as rice, pulses, vegetables, fish, and meat whose prices are soaring, amid import restrictions imposed to save foreign exchange. Consumer price inflation hit 14% last week. Finding LPG cylinders, in short supply, remains a challenge.
And if the consumer is a daily-wage worker like Mr. Sundararajan, where his hard-won LKR 1,000 (₹366) wage is tied to tedious production targets, forgoing a cup of tea or even a meal, like in the case of many poor families, is the only option.
The story of Sri Lanka’s economic crisis came to the fore amid the pandemic, which dealt a severe blow to the country’s crucial, foreign exchange earning sectors. Colombo has foreign debt obligations totalling nearly $7 billion this year, and Sri Lanka is “trying all options’” to avoid a default, Finance Minister Basil Rajapaksa recently told the Financial Times.
India and China have extended emergency assistance by way of loans and currency swaps, but Sri Lanka is still on the edge. The national polity, policy makers and think tanks are debating if the country should opt for an IMF bailout. Some analysts are even arguing that Sri Lanka must prepare to default, and subsequently restructure its debt, although the government is determined to keep the country’s unblemished record in foreign debt servicing.
Meanwhile, Sri Lanka’s plantation workers, like the nearly 900 employed in tea and rubber estates in Doloswala village, did not have to wait until the pandemic to know deprivation.
“Over the last few years, the 1,000 rupee-wage struggle of our workers was in focus. They won the wage, but there are 1,000 other problems facing the community for decades,” said Anthony Masilamani, who works at the local administrative authority. He was speaking at a recent event organised by the catholic church in the village, to remember local heroes who had died fighting for the community’s rights.
“Our people are still living in crammed line room housing, no matter how big their families are. Our schools don’t have mathematics and science teachers for higher classes. We don’t have enough toilets. This is our reality,” he said, pointing out that the country’s recent economic downturn aggravated the workers’ misery, and didn’t create it.
Several youth who were employed in shops and restaurants in capital Colombo have returned to the village jobless after the pandemic struck, said Fr. Jeewantha Peiris, who organised the event. “Physical distancing is impossible in their line room accommodation. Many children were already malnourished. The situation has only got worse due to the current shortages.” Speaking of the event, he said it was “just to remember our local figures” who asserted the community’s rights in the past. “They didn’t fit into big movements, so they aren’t usually commemorated the same way,”he added.
Even otherwise, Sri Lanka’s rubber estate workers get much less attention, compared to their counterparts working in the tea estates largely in the central highlands. This, despite rubber being the third largest item in Sri Lanka’s exports basket, after apparels and tea, and fetching nearly $1 billion in exports last year.
Lourde Manila works in a local rubber factory and says she must put in three people’s work to earn the maximum wage. “I have three children, and their education and future depend on what I am able to spend today,” she said. “But when cost of living is so high and wages are stagnant, how are we supposed to feed our children and pay for their education?”
Workers also spoke of long-denied land rights of the community that has left them economically vulnerable for generations. “If we had a piece of land to call our own, we might build a small home, grow some vegetables, seek a bank loan showing our documents to start a small business. With no ownership, we can’t do any of that. We can’t even cut the branches of a tree in front of our house to make a roof,” said A. Anton.
Most NGOs working on plantation sector rights tend to focus on the tea estates in the upcountry districts, according to Mr. Masilamani. “We live here, down south amidst a majority of Sinhala people. Sometimes even our own people elsewhere don’t consider us Malaiyaha [hill country] Tamils. It’s like we are invisible,” he said.

How a double agent in Madras helped change the course of the subcontinent’s history

It might be hard to imagine Madras as the nerve centre of a high-stakes, international espionage operation. Thanks to its languid, laid back approach to life, it might seem even futile to conjure up a super-spy episode in this part of the country, except within the febrile imagination of storytellers and filmmakers. Back in 1954, the Sivaji Ganesan starrer Andha Naal (That Day), a murder-mystery cum spy thriller which was inspired by Akira Kurosawa’s Rashomon, had the proud distinction of being Tamil cinema’s first noir feature, and that too set in Madras.

Several decades later, Madras, now renamed Chennai, formed the backdrop of yet another inspired take on the spy thriller. The 2013 Bollywood film Madras Cafe, starring John Abraham was set against the turmoils of the Sri Lankan Civil War, a cause for misery on both sides of the Ocean. The latter film deftly interweaves vignettes from an episode that had taken place in Madras in the 1980s that was not only a source of embarrassment and agony for the Indian intelligence agencies, but was so closely guarded that the truth was not revealed until much later.

The episode unfolded during the peak of the Lankan Civil War when State-sponsored pogroms by the Lankan military and retaliatory strikes by the LTTE cadre were in full swing. The surge of Tamil refugees into our State lent an emotional gravitas to the proceedings and the then Prime Minister Rajiv Gandhi was compelled to play peacemaker. What started as an exercise to shelter refugees, soon led to air-dropping of food and relief materials, and finally, stationing the Indian Peace Keeping Force (IPKF). It was an unnecessary war that India was unwittingly drawn into, and was referred to by many political observers as India’s Vietnam. As a regional superpower, India had no need to undergo such indignation, but it could be argued that a large share of the blame for India’s military debacle in its southern neighbour could be placed at the feet of intelligence failure, more specifically, the betrayal of a spy who had been in charge of coordinating India’s most sensitive covert ops – tackling Tamil militancy in Lanka.

In the late 1980s, it could be argued that there was little information in the public domain regarding an Indian spy who was honey trapped by foreign agents and who in turn transformed into a double agent, while supplying the enemy with sensitive information. The unearthing of this mole in India’s armour was carried out after a year-long exercise that involved phone tapping, trailing and stakeouts which ended in the arrest, in-camera trial and imprisonment of the spy in Tihar jail. What follows is a retelling of how this spy was brought to justice.

The Research and Analysis Wing (RAW) was founded in the 1960s when the Indira Gandhi government decided that India needed a full-fledged, modernised security agency that went beyond the call of the Intelligence Bureau (IB). Though not as celebrated as its peers like the Israeli Mossad or UK’s MI5, RAW has been involved in more than its fair share of espionage and undercover activity.

The episode involving the Spy from Madras was so painful for the RAW, that its top officer would reveal the same on the day of his farewell from the agency. And that’s how the news was released to the public. On the day SE Joshi retired as the RAW Chief in 1987, he addressed his fellow officers and revealed the most painful episode of his tenure – of a senior RAW official being charged and arrested for spying for the Americans. His name was KV Unnikrishnan and he was a 1962 batch IPS officer, heading the Madras bureau of RAW.

The deception came to light as New Delhi and Colombo were set to sign a peace accord to end the Tamil insurgency in Sri Lanka. Comprehensive negotiations had been taking place with an aim to instil peace between the warring factions and to settle the Tamil issue once and for all. But during these discussions, the Indian government was surprised to find that Sri Lankan authorities were already well-informed of classified details pertaining to the Indian side.

The Lankans were up to date on India’s talks with Tamil militants and the Indians could never take the Lankans by surprise on information pertaining to the shipment of arms or the confiscation of weapons. It was a running joke that the Sri Lankans had typed answers to questions the Indians had not yet asked.

The Home Ministry then decided to follow up on its hunch that there was an insider clandestinely feeding the counterpart with intelligence. A wide net was cast to catch the mole. Perhaps the largest counter-intelligence operations since the inception of RAW took place when the hunt shifted to Madras. Politicians, police officials, and RAW officials were placed under surveillance as their phones were tapped and recording devices planted.

It came as a body blow to the government to discover that Unnikrishnan, who was placed in charge of India’s negotiations with Sri Lankan Tamil militants based in Madras, was the mole.

Although he was not part of the policy making apparatus, as the one coordinating talks with various Tamil militant members, he was privy to the particulars of the hush-hush negotiations involving New Delhi, Colombo and the militant Tamil groups. Ironically, by the time he was caught, he had been endorsed to the Prime Minister’s Office for elevation.

But why and how did Unnikrishnan turn rogue? The answer could be summed up in two words: human nature. Since the dawn of time, spies have employed sexual allure as a means to coerce sensitive information out of gullible individuals – from the Biblical story of Samson and Delilah to the Mauryan Vishakanyas, to the legendary German double agent Mata Hari who spawned a whole subculture of ‘sparrows’. During the Cold War, East Germany is known to have set up spy schools where the art of seduction was part of syllabus.

Unnikrishnan was honey trapped by a PanAm air hostess almost a decade earlier. The CIA had waited until he was transferred to the crucial Madras posting before milking him for information. The Ministry of External Affairs even registered a protest with the US Embassy to expel the diplomat involved. However, on the day Unnikrishnan was arrested, his handler in the US consulate was quietly sent home, no questions asked.

But the damage had been done. The insider’s information had strengthened the Sri Lankan side and it subsequently wrecked the peace accord. The Indians were left bloody-nosed fighting a pointless war where they had intended to play peacemakers. History remembers India’s involvement in the Lankan crisis as a catastrophic error that led to the loss of numerous lives, which did not really bear the desired outcome.

To avoid publicity, Unnikrishnan was tried in a secret tribunal, dismissed and imprisoned for a year in Tihar jail. Many months after this painful episode, the RAW leadership was engaged in changing its confidential codes and communications practises which might have been compromised. While RAW emerged stronger over the next few decades, the episode of the double agent had far-reaching ramifications on the geopolitical history of the Indian subcontinent.