AFAIK, National carriers can initiate any route with any country. Emirates at that time was not a national carrier. At that time Air Lanka had a lot of access to Europe destinations and the emirates used that to gain access to Europe in the early days.
Emirates did well and got profits=> This is true and we should keep it that way without chasing them. But again, that deal was not 100% transparent. Basically $ that should end up for ppl's benefits went to someone else private bank account. Like tsunami fund.