Financial Times

Crisis affects jobs and investment
One thing is clear from the present impasse in the efforts to end the political crisis triggered by President Chandrika Kumaratunga's takeover of three key ministries and her move to have a more decisive role in the peace process: the business community, which both the main political parties regard as the engine of economic growth, lacks the clout to prevail upon our political leaders to end the squabbling that threatens to destroy the gains of the past two years of tenuous peace.

Nor do the international backers of the peace process, led by the United States, Japan, the European Union and India, who have appealed to both leaders not to jeopardise the peace process, appear to have the desired influence.

Various chambers and business leaders have issued numerous statements and the private sector has had several meetings with the president and Prime Minister Ranil Wickremesinghe and those in the inner circles of these two leaders. The folly of the present course of action and its frightening repercussions have been pointed out time and again. There have been warnings that the stalemate could destabilise the economy and the peace process and that the power struggle could affect investment and jobs.

Government spokesman and Industrial Development Minister G. L. Peiris has said investors had placed their plans on hold because of the crisis. It has cost 15,000 jobs and placed on hold foreign investments worth up to $150 million, he said, adding that investors, while not abandoning the country, had adopted a wait and see attitude. He spoke the day after the latest round of talks between the president and prime minister failed to achieve a breakthrough. There was no agreement on who takes the responsibility for the peace process and the talks with the Liberation Tigers of Tamil Eelam.

Both have dug in their heels on the dispute over the defence portfolio and appear not willing to compromise. Wickremesinghe is insisting on having total control over the military to pursue the peace process with the Tigers, but Kumaratunga has made known she will not hand over defence responsibilities to anyone and that the constitution prevents her from doing so.

Meanwhile, there is growing unease that the impasse means that the country is heading towards another general election and that a poll would be announced when the debate on the budget ends on December 18. An election, with its expense, bloodletting and divisive rhetoric is the last thing anyone wants. There is a widespread belief that another election would not solve the problem because it would not alter the present balance of political forces.

The result is likely to be the same as the last poll with no significant change in the composition of parliament since both the main parties are ensured of their bloc votes. The only party that could gain from an election would be the Janatha Vimukthi Peramuna. While the JVP's participation in parliamentary politics is to be welcomed, their virulent opposition to free market economic policies and resistance to devolving significant power to the Tamils would surely be a cause for concern in the business community.

The Tigers have warned that if the two main political parties continue to squabble, the Tamils would have no choice but to secede. It is only the LTTE that stands to benefit from the continued fighting between Kumaratunga and Wickremesinghe.
The LTTE is positioning itself to take advantage of the power struggle and appears to be preparing the ground to withdraw from the peace process while putting the blame on the two national leaders. If they do resume the war the president and prime minister will have only each other to blame.

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