Sri Lanka: Costly peace

The Hindu Business Line, Chennai
May 6, 2002

By Rasheeda Baghat

For the Sri Lankan Prime Minister, Mr Ranil Wickremesighe's Government, the peace process is running up a huge bill, not only in political terms but also the economic cost of keeping the process going.

On the political front, the Opposition and the Sinhala diehards, such as the JVP and allied groups, are waiting to pounce on the government for smallest misstep. As the Minister for Economic Reforms, Mr Milinda Moragoda, pointed out in a recent interview, the Opposition, particularly President Chandrika Kumaratunga's party, is hoping the government will trip up on one issue or another, and that would be undoing!

Mr Wickremesinghe earlier pointed out that he was walking a tightrope with nothing to hold on to. For Sri Lankans, devastated by a long, violent and bloody conflict, the cessation of hostilities between the government and the LTTE has raised expectations that, this time around, peace will not elude them. But, as Ms Dushni Weerakoon, Research Fellow, Institute of Policy Studies, points out, in 1990 "the ceasefire held for about 15 months while the peace talks were going on. But what happened at the end of that? There is a certain amount of scepticism on how far this peace process and the ceasefire will go."

Given the history of the peace initiatives and ceasefire declarations in Sri Lanka, there is a feeling that this time the ceasefire may last two years or so, and only after that some direction could emerge on what Sri Lanka's future holds vis--vis lasting peace. As for the peace initiative and the existing ceasefire improving investor confidence, bringing in foreign investment and boosting private sector participation in the economy, she says, "Whatever foreign or even local investment comes in, it is not going to be a huge increase.

It would be very optimistic to expect investors to come in and invest with a long-term view right now. They are going to wait for another three years to see how this process has evolved. But we do need a period of stability to get the economy going. So in that context I think the ceasefire is really helping. And let us hope it will last." Her colleague, and Director of the Institute of Policy Studies, Dr Saman Kelegama, is more forthright on the cost of the peace dividend when he says that many Sri Lankans "thought that with a ceasefire in place, the defence expenditure would come down immediately. But that has not happened. We as economists know that it cannot come down because defence payments are on a deferred basis. Debt settlements for equipment we have purchased will have to go on for four-five years. So you cannot see a drastic reduction of defence expenditure, and the so-called peace dividend is not a costless dividend. It is a costly dividend."

The huge cost of reconstruction and rehabilitation that stares the Sri Lanka government in the face as the negotiations with the LTTE approach a somewhat concrete phase could be daunting. International donors have shown interest and generosity but, as Mr Moragoda indicated, while the Northern and Eastern parts of the country need massive reconstruction and rehabilitation efforts, some backward regions in the South will have to be simultaneously developed. To concentrate on the North and the East, and not devote adequate attention and resources to the neglected regions of the South would be political suicide for any government, and would invite charges of "pampering" the LTTE.

However, there is another demand that the people in the North-East are bound to make once the talks resume and take shape with regard to the devolution of power to the Tigers in the North-East. The peace dividend that the Tamil population will demand is bound to pertain to the guarantees from the LTTE on human rights, where the track record has been dismal.

As the Media Director, National Peace Council of Sri Lanka, Mr Jehan Perera, pointed out to Business Line, "Such a demand is being already made by the civil society in this country and this should be increased."

According to him, the Tamil Tigers have set de-proscription as a condition for the talks, "the ban will have to be lifted. But at the same time the LTTE should accept the demand for a human rights agreement too. As a leader of civil society, I am increasingly getting this demand from the people, the Tamils themselves, who have stood up and constantly fought for Tamil rights, that the LTTE should give some assurance on the human rights front."


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