Financial Times

Biz community says crisis erodes confidence
Sri Lanka's business community last week expressed concern over political uncertainty after President Chandrika Kumaratunga triggered a virtual mini coup, sacking three key ministers and declaring a state of emergency.

The Sunday Times FT spoke to a cross section of business leaders in Colombo, Jaffna and Trincomalee with many saying the only hope for the country was for the two parties to get together and lay a firm foundation for peace, development and prosperity.

The interviews conducted by reporters Ruwanthi de Silva in Colombo and S. Gurunathan in Trincomalee on Thursday and Friday came as fresh developments occurred on Friday when the president reversed the state of emergency and also delayed an address to the nation.

The developments unfolded as Prime Minister Ranil Wickremesinghe returned from a visit to the US to a tumultuous welcome from thousands of green-clad supporters at the Katunayake airport. Here are the interviews and other stories connected to the crisis:

U.S. embassy contradicts 'GLspeak' on FTA
The United States embassy last week denied a claim by cabinet spokesman G.L. Peiris that the crisis triggered by President Chandrika Kumaratunga's political moves had scuttled plans to clinch a free trade deal during the Prime Minister's visit to Washington.

Peiris said last week that the United States had delayed finalising a free trade agreement with Sri Lanka during PM's visit because of the island's political crisis. Wickremesinghe, who met with President George Bush on Wednesday, was keen to finalise the trade pact with the United States, which is the island's largest trading partner, Peiris said. "The US was ready to finalise the agreement during the Prime Minister's visit and make an announcement when the Prime Minister was in Washington," Peiris told reporters.

"Now the U.S. has decided it would not be possible to take this final step and they will wait for the parliament to assert full authority". However, a U.S. embassy official on Thursday was quoted by news agencies as playing down Peiris' claim. "That is just not true, there has been no decision on going ahead with that. There are a lot of domestic considerations to look at," the embassy official said.

Apparel Exporters Association
Tully Cooray - Secretary General, Joint Apparel Exporters Association: "It is still too early to detect any set backs in the apparel industry. Naturally, due to the uncertainty economic growth will slow down, and the normal cyclical ups and downs of the stock market will be more apparent. We were waiting for the budget but now there is a crisis and it has to be resolved first. Hopefully the two parties will come together.”

Not completely unexpected - IPS economist
Dr Dushni Weerakoon, senior fellow at the Institute of Policy Studies: "The economy will be adversely affected. The actual impact depends on how long the uncertainty prevails and what the next step is going to be.

What has taken place brings to the surface the political uncertainty that was present for the past two years. Confidence was picking up but that's going to level off for both local and foreign investors with the latest crisis. In the tourism industry, we are heading for the peak period and arrivals could be adversely affected. But in the longer term economic growth depends on how the political situation works out and whether we have elections, which will have fiscal implications - there will be a period of 3-4 months in which the work programmes on the economy will all come to a standstill more or less.

That is not a very healthy situation for the economy. The longer the uncertainty remains the more harmful it is likely to be in terms of sustaining the growth momentum. Much of the foreign aid was tied to progress in the peace process - so some bilateral aid might be held off if the crisis is not resolved.

This is a period of uncertainty but it was not completely unanticipated - there was always the possibility of some kind of political issue coming up given the differences between the two main parties."

Put the country first, pleads biz peace group
Sri Lanka first, the business peace group that emerged after the LTTE's disastrous attacks on the Katunayake airport, said in a statement it was extremely concerned about the current political developments. These developments should not endanger the peace process, just as the country is beginning to show signs of recovery, with the economy looking up, it said.

The statement is as follows:
"We recognize that issues and concerns will continue to surface on the road to peace. However, political differences should never outweigh national interests. We urge the President and the Prime Minister and all political leaders to put the country ahead of their party agendas, and work for the greater good of our nation. "The people of Sri Lanka have given a mandate for peace and it is the bounden duty of our political leaders to respect the wishes of its people.

"Two years ago peace loving Sri Lankans expressed their solidarity for peace by forming human chains across the Island. We have traversed a long distance since then. There is an economic resurgence, endorsements from the international community and a new hope and optimism, all of which has been possible due to the peace process. We need to safeguard these positive developments. Sri Lanka First stood steadfastly for peace then and we stand steadfastly for peace now. Please put the country first! "

Tourist industry official says ..
Kumar Mallimarachchi, Managing Director, Associated Hotels Company and Past President Tourist Hotels Association: "This is a constitutional problem and should not affect the day-to-day problems.

As long as there is no violence it will not affect tourism. I haven't got any cancellations. We were set to have a good winter with the tourist bookings being high, and I think this will remain. Cohabitation is possible and if it happens it will be a good thing.

I think if the business community comes together, they can bring the two parties together as they are the people who fund both parties. Sri Lankans should go about their business as usual. It is important that sanity prevails."

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