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by Lionel Wijesiri

"The Tamil people want to maintain their national identity and to live in their own lands, in their historically given homeland with peace and dignity. They want to determine their own political and economic life; they want to be on their own. These are the basic political aspirations of the Tamil people. It is neither separatism nor terrorism." (Velupillai Prabhakaran, in his Heroes' Day Message, 2001.)

"I wish to impress upon you that the LTTE doesn't operate with the concept of a separate state. Our demand for a homeland is not a demand for a separate state," (LTTE negotiator Anton Balasingham at the conclusion of three days of Norwegian-brokered discussions).

For the first time in almost 20 years, a peaceful settlement of our ethnic conflict appears within reach. The country has been beset by a bloody civil war since 1983, in which some 65,000 people have lost their lives so far, with over 850,000 displaced. In the areas most involved in the fighting - the island's north and east - the infrastructure has been largely demolished. This tourist paradise has been threatened with economic collapse.

The path to peace talks has been smoothed by the two hostile sides' realization that they cannot defeat their adversary by military means, as well as by a growing war-weariness in the population. In addition, Norway's energetic involvement has been of invaluable importance.

This is not the first time that representatives of the two sides have been talking to each other, but every previous initiative failed because of profound mutual mistrust. With the help of a neutral mediator, more has been accomplished in the past year than ever before, including a cease-fire, which has been in place since February and has been largely observed.

That the peace effort is moving at all is testimony to the existence of a peace constituency in Sri Lanka. President Chandrika Kumaratunga was the first Sri Lankan leader to tap into this political vein in her first two elections in 1994. Despite her party's defeat in the December 2001 elections, the fact that a peace initiative is now considered good politics is probably her best political legacy.

Cohabitation

Prime Minister Ranil Wickremesinghe's government is trying to avoid repeating some of the mistakes the government made during earlier negotiating rounds, especially in 1994-1995, but also during the 1980s. The clearest contrast lies in its much greater attention to detail and to the procedures for implementing any agreements it reaches. This year's eight-page ceasefire contrasts with the very brief and ambiguously worded one inaugurated in January 1995.

The government's decision not to put forward a comprehensive proposal at this stage is a recognition that its eventual peace plan needs to emerge from a process that gives the LTTE "part ownership" of it, unlike the 1995 proposals, which the LTTE never formally acknowledged or negotiated. The move to set up a peace secretariat, with two of its ablest ministers in charge of the negotiations and the preparatory work, will leave the government much better equipped to carry out a negotiation.

However, Prime Minister Ranil Wickremesinghe does not have undisputed command of the government. President Chandrika Kumaratunga is still the commander in chief of the armed forces and a formidable political force. The enforced political "cohabitation" could provide a framework for ensuring that both the major political parties are briefed on the peace process, something that did not happen in the last effort. Thus far, however, this has not worked well. The President has threatened to challenge the constitutionality of peace moves made without her participation. She has also challenged some of the government's key tactical decisions, including the issue of what should have been on the agenda for the first meeting.

President has two specific weapons that could spell sudden death for the peace efforts if she chose to use them. The first is her power to dissolve parliament after it has sat for one year (i.e., by December 2002). UNF government is trying to introduce a constitutional amendment that would curb this power; its prospects are uncertain. Her second weapon is the constitutional requirement that the President, rather than the Prime Minister, submit to parliament any constitutional amendment requiring a referendum. For the moment, this is far down the road.

In addition, both the Sinhala nationalist right and the JVP have challenged the peace initiative. Either could become a potent adversary, especially if they made common cause with President Kumaratunga. Issues

The LTTE, meanwhile, has also begun to broaden its political base, a movement that began in November 2001 when all the non-Tiger Tamil political parties participating in the parliamentary election then in process agreed to support the Tigers' position and their pre-eminence as Tamil spokesmen.

This decision gave the LTTE's standing as Tamil spokesman a credibility it had not previously had.

The list of issues the parties will have to deal with on the road to peace is sobering, beginning with the interim authority itself. The LTTE's expectation is that it will have a free hand in running northern and eastern Sri Lanka. The coexistence of an autocratic enclave within an otherwise democratic Sri Lanka poses fundamental problems.

Other difficult issues include the future role of LTTE cadres; the role and status of minorities, notably the Muslims in the east; the army's future presence in the north and east; and division of the country's finances.

Beyond these specifics, consensus has yet to emerge on the basic constitutional shape of the country, the level of power to be devolved to the provinces, and the issue of whether all provinces will have equal powers or whether the north and east will enjoy greater autonomy than the rest of the country.

Perhaps the most fundamental question of all is what, if anything, a settlement offers Prabhakaran personally. Any viable solution will need to go beyond the modified Indian-style constitutional model the government proposed in 1995. It will need to provide more effective mechanisms for the Tamil population to take part ownership of the national government as well as the provincial leadership.

These are complex issues for future negotiations but we have undoubtedly arrived at a crucial turning point leading to the final resolution of the National question. As Prime Minister, Ranil Wickremesinghe said at the UN General Assembly recently, the people cannot wait for the peace talks to end before they benefit from the peace dividend. "Resources must flow into developing the areas ravaged by war. The people want normalcy restored. Not tomorrow - but today", he added. The Prime Minister called on the international community to help rebuild Sri Lanka. He further said, " Without international support, the gloss on peace can be dulled."

International assistance

The problems of reconstructing our destroyed economy are only partly those of reconstructing a war-torn economy, although the lessons from the reconstruction of other war-torn economies remain useful. More fundamentally they are the problems, common to many countries, of arresting a long period of decline. A turnaround is possible. For example, ten years after the unification of Vietnam in 1975, real incomes fell. After 1986 the government rapidly liberalized the economy, got inflation under control, improved the tax system, and attracted foreign investment; the reward was a doubling of GDP since then. What does Sri Lanka need to do to pick up the pieces and get onto a path of sustainable growth? Sri Lanka, like all the war-torn countries, needs more foreign investment.

There has been no recorded considerable foreign direct investment in the country for the past two decades.

In the short term, foreign firms may be attracted by the country's natural resources; if these firms succeed, investments in other sectors (tourism, distribution, manufacturing) may follow. Realistic expectations are important, because most investors will steer clear of Sri Lanka until they are convinced that the country is politically stable and economically welcoming. An early step towards attracting foreign investment is the promulgation of a clear and straightforward foreign investment law.

After most civil wars, it is necessary to open and secure the main roads, ports and railroads. In Sri Lanka, most of these are now open and relatively secure.

There is a real need to invest heavily in improving the transportation infrastructure. There are undoubtedly plenty of small and useful projects, which could be initiated and financed by donors very quickly, but major projects will need to be properly appraised.

A priority should be the development of local capacity to appraise and manage large projects. Different donors will be interested in different projects, and there will be a need to ensure that donor efforts are channelled into a coherent set of infrastructural investments.

Unlike most war-torn economies, the agricultural sector in Sri Lanka is not in immediate distress. The sector is however suffering from two decades of neglect and an inadequate transport infrastructure, which should be rectified quickly.Again in contrast with most war-torn economies, Sri Lanka does not face an immediate public health crisis, such as the need to maintain adequate sanitation in large refugee camps.

However, there is a significant population of war-related widows and orphans requiring care and attention.

The UN World Food Program staff have grave concerns about the malnutrition rates in the conflict-affected areas, where studies show that up to 50 percent of children are underweight and 50 percent of women and adolescent girls have anaemia. On the other hand, government spending on health care and on education is not high when compared with the other developing countries. Both sectors need to be rehabilitated. The most pressing problem is to reconstruct viable institutions, such as State Banks and Institutions, the revenue collection system, and the statistical services; and to professionalize the police.

Role of donors

Sri Lanka will not be able to make the transition from war-torn economy to sustainable growth without very substantial donor support. Since the government has already proven in the last few months its track record, there is substantial goodwill towards the present regime, and a recognition that the country needs help.

The biggest question is where to start.First, donors should provide substantial budgetary support. At first it needs to be largely unconditional, and to be disbursed rapidly. The tax system is simply not up to the task of providing enough revenue yet.

Second, donors should spend, quickly, on small projects throughout the country - rehabilitation, road repair, the stocking of primary health care clinics, immunization drives. Almost anything will do, provided it has a visible effect on improving people's lives. This will help consolidate support for the new Government, and help establish its economic competence.

Third, the major donors should choose an international lead organization to put together a short-term action plan for economic rehabilitation, with donors committing to execute parts of the plan in a reasonably coordinated way.

This was done very successfully by the World Bank in Cambodia. A committee of the major donors should meet regularly with their counterparts in government to help speed the implementation of the early efforts. Government coordination of donor efforts can be institutionalised in due course.

Donors should also move quickly with technical training. For example: support for project appraisal and management, for a small group involved in working with donors (who will inevitably be involved in all major projects); short-term experts in the Central Bank to help master the inflation problem; training and resident experts in the Ministry of Finance, to strengthen tax collection and (in due course) expenditure control and audit; technical and other support for those parts of private sector that could pay off rapidly in terms of higher output.

It would also be valuable to bring key policy makers and administrators on short visits to successful countries, such as Taiwan, perhaps Vietnam, Mauritius, and Ghana, to get a clear sense both of what is possible on the economic front, and the sorts of policies needed to get there.

At least on the economic front, the way forward for Sri Lanka is clear. The budget needs to be mastered, so the government no longer had recourse to monetary financing and therefore inflation will fall. In the short run donors will need to provide budgetary resources, but then the tax system must be reconstructed. Once macroeconomic stability has been restored, infrastructure and institutions need to be rehabilitated - roads, rail and rivers, health services and school.

It is now quite clear that the new Government will be robust enough to introduce the changes which are needed to re-ignite economic growth. The international community must take the gamble: as the Prime Minister rightly said, if it does not support us today, then our economy will surely fail tomorrow.

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Copyright 2001 The Associated Newspapers of Ceylon Ltd.
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