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Tuesday, 20 March 2012






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Economic terrorism of LTTE:

As the world decides to vote…

As the world decides vote on Sri Lanka on the methods used on the eradication of terrorism in Sri Lanka, my mind goes back to December 2008 when three of us were organizing the staging of the first Industrial Exhibition in Jaffna so that the North gets connected to the South on a economic front, the objective being to mitigate the business support of the North to the LTTE.

One hundred and fifty companies plus decided to be part of the exhibition that led to strong ties forming between the North and the South and today we have more than 250 new companies setting up in the Jaffna peninsula. The cost could have been that many of us could have lost our lives, given that twice we were attacked by the LTTE when flying over Pooneryn. I guess it was country before self at that time on and off the field.

The economic terrorism that the LTTE waged for 25 years can be estimated to have cost Sri Lanka over $ 200 billion.

What the world does not know on LTTE

Whilst I was going through the media over the weekend, the initial thought that went through my mind was many have forgotten the horrifying facts on the twenty four years of life of the LTTE - killing 120 devotees in the Buddhist sacred city of Anuradhapura in 1985, 110 people in the bomb blast in Pettah, 70 Muslims in the Kattankudy mosque, the Central Bank attack killing 86 people and injuring 1338 which in fact far exceeded the Mumbai casualties of 26/11 which was only 193.

The Sri Lankan number exceeds a 70,000+ but I guess Mumbai 26/11 may be stronger in one’s mind due to the sensational coverage that NDTV relayed to the world which Sri Lanka could not command in the thirty year old war that we were up against.

SL tried 6 times for peace

Political leaders assassinated by the LTT E

The fact of the matter is that Sri Lanka tried six times to come to peace with the LTTE. The first ceasefire was the famous 'Thimphu talks’ where LTTE came in solidarity with five Tamil Groups - the TULF, PLOTE, EROS, EPRLF and TELO. It ended with the LTTE unilaterally walking out but during this time the LTTE strengthened themselves and secured total control of the Jaffna peninsula which was called 'Operation Liberation’.

The second ceasefire was championed by Lalith Athulathmudali from the April11 to 17, 1987, for the Sinhala/Tamil New Year. The LTTE reciprocated by ambushing three buses at Kithuluttuwa in the Polonnaruwa district, separating the Sinhalese passengers from the others and killing almost 127in total.

The third ceasefire came into effect with the so called Indo Lanka Accord. The LTTE, which pretended to surrender arms ([while surrendering only their defective and unusable arms) used the confinement of the Sri Lankan troops to barracks in terms of that ceasefire to engagement and thereafter went on to murder almost 200 Sinhalese and Muslim civilians along the Eastern seaboard between October 1 and 7,1987.

The fourth ceasefire was orchestrated by the then President Premadasa from June 1, 1989 and 'Peace Talks’ commenced. The LTTE once again used that ceasefire to strengthen themselves and then abrogated the ceasefire by attacking all police stations in the East on June 11, 1990, and murdering about 678 unarmed police officers who had laid down arms and surrendered to them.

The fifth ceasefire came into effect under the leadership of President Kumaratunga in January 1995 that once again resulted in the LTTE sinking two naval gun-boats anchored at Trincomalee, murdering 12 sailors and thereafter murdered 264 members of the security forces and 57 civilians in 27 separate attacks over the next 39 days. Subsequently, the LTTE with surface to air missiles brought down two Avro aircraft on April 28 and 29, 1994 killing 99 persons including two journalists which once again the world watched with the Sri Lankan economy reeling.

The sixth and last ceasefire that Sri Lanka saw was in 2002 under Prime Minister Ranil Wickremesinghe. Once again the LTTE violated that ceasefire murdering Sri Lanka security force personnel, informants and political opponents and led to the act that the LTTE and its sympathizers will never forget– shutting off water at the Mavil Aru anicut in August 2006 that led to the final battle and the subsequent wiping out of terrorism in our land. As we look back at the last 25 years let me track back on the cost of terrorism to Sri Lanka which can be called economic terrorism.

Economic terrorism - GDP

The LTTE as a movement fits in to this definition given their behaviour in the North-East. The taxes that were levied on the A9 Road by the LTTE, when the private sector transported goods from the South to the North is in fact is against the governing structure of a country leaving aside the perspective of economic terrorism. The stifling of the agricultural and dairy industries in the North East economy was very evident as, in the time of Peace Dividend between the periods of 2002 -2004, the GDP in the Northern Province quadrupled to 12.6% while in the Eastern Province it doubled to 10.1%, as per the World Bank statistics. Even though this growth did not have a major impact on the national economy, the fact remains that this is the opportunity cost that can be termed economic terrorism in my view.

Economic terrorism – quality of life

The 2003/2004 Socio Economic indicators report that the access to pipe borne water in the Northern Province is only 3.1% whilst in the East it registers 17.4%. The national average stands at a high 30.8%.

The non accessibility to toilets which is a stronger indicator of the quality of life stands in the North at 14.4% and the East a staggering 29.2% whilst the national average stands at a respectable 5.6% which again is a result of economic terrorism from a quality of life perspective that has been at play in the last 24 years. As per the Labour Force Survey of 2002, the labour force participation is at 50.3% nationally, whilst in the North it drops to 33.8% and in the East to 40.3% which can directly be reflective to the health gaps in these regions that helps foster the ideology of the terrorists is what research reveals.

Some say that this was the ethos of the LTTE leader so that the ideology of terrorism can be diffused quicker in the community.

If we examine the key health indicators as per the 2003/2004 Socio Economic Survey Data, we see that almost 46% of the children below five years of age in the North East were underweight compared to 29% of the rest of the country. The percentage of babies born underweight in the country is around 18% but the reality is that in the North East it is as high as 26%.

On the area of access to electricity and communications, the North and the East emerge as a clear underdeveloped region due to the fear that the LTTE had created for businesses to operate.

The connectivity through mobile and land phones are at a low ebb of 10% in the North and 15% in the East as per the 2003/4 census.

Even though the penetration of electricity is at a high 64% of the households in the North East, in-depth research reveals that in remote areas of Killinochchi, Mannar and Mullativu the non availability of power can reach figures as high as 90% as infrastructure development was next to impossible at that time, which can give us an idea of the deprivation and isolation that existed during that time which was ideal to foster a terrorism culture in a country.

Real economic terrorism – over $ 200 bill

However, if we analyze the real cost of waging war on the LTTE that really amplify economic terrorism is that the number exceeds Rupees 20,000 billion in the last 24 years is my estimate.

On tourism in 1983 Sri Lanka enjoyed 337,530 visitor arrivals whilst a country such as Cambodia had around 200,000 tourists at that time.

Today Cambodia has over 2 million tourist arrivals whilst Sri Lanka is at around 0.5 million with a revenue of 43 billion Rupees whilst actually Sri Lanka should have had around 1.8 million tourists by now (at a conservative estimate) and earnings touching 200 billion Rupees. On a GDP contribution basis it would have contributed almost eight percent to the country.

The Strategic Foresight Group who has researched this topic on the theme Cost of the war in Sri Lanka have estimated through a simple extrapolation that the loss of revenue due to the curtailment of FDI’s into the country is around 3000 billion Rupees.

If we hypothetically take the 400 billion Rupees that that had been spent on the war in the periods 2006-2009 and divert it to the investment that can be made on Research and Development (R&D) it will be almost 7% of GDP which will be way over the 4% spent by developed countries like South Korea on innovations that has produced power brands like Samsung.

This gives us an idea of the opportunity cost that economic terrorism has caused to Sri Lanka.

International perspective

There are many theories globally on the cause of terrorism.

Russel Ackoff an emeritus professor at Wharton School of Business designed to promote private businesses role in combating terrorism says, ‘The basic problem that spurs terrorism is miss-distribution of wealth within a country.

The challenge is that we don’t understand how to close that gap that makes matters worse. Post the 9/11 terror attack in the US, strangely, western politicians and policy experts have begun to drive in a correlation between terrorism and poverty.

Much of the information points to academic literature stating that poverty drives conflicts and this can lead terrorism with the administrative system in play.

Next steps

1) Let’s use the 2012 national census to identify the geographical areas where poverty really exists and address them with a private-public partnership approach.

2) Fast track the setting up of the Atchuchuveli Industrial Estate in Jaffna and thereafter set the stage for similar estates in Kilinochchi and Mulativu so that we make sure that economic terrorism do not ever happen in Sri Lanka.

3)The Divi-Neguma programme can be linked to the Samurdhi recepients of the country so that we open up a new employment base that was not accessible to Sri Lanka and also spurs up the overall SME GDP growth.

4)Monitor the ground situation closely given that in 1983 Prabhakaran is supposed to have had only 12 cadres and 8 shot guns but he went on to build an army of 45,000 highly trained fighters and sea and air fleets which was termed the most ruthless terrorist organization in the world.


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