Financial Times

Corporate leaders and company executives polled by The Sunday Times FT on their views on the current peace process and threats by the Sri Lanka Monitoring Mission (SLMM) to quit said the country is close to full scale war but believe “we” have to live with it and not give into terrorism.

The questions asked in an e-mail poll of more than 50 respondents were:

(1) The ceasefire between the government and the LTTE is under severe strain with heavy fighting in the northeast, bomb attacks in Colombo. Will this have an impact on business sentiment (local investments), tourism and foreign investment?

(2) The head of the Sri Lanka Monitoring Mission (SLMM) has said that they want to withdraw from the peace process as both the government and the LTTE are ignoring their requests to halt the violence and using them (SLMM) as an 'excuse'. Would the peace monitors withdrawal lead to the resumption of a full scale war and an end to the ceasefire?

(3) Will these developments impact marginally or badly on the economy /business /stockmarkets?

Here are comments that we received for all three questions in addition to the ‘Yes’ or ‘No’ responses.

Impact on business sentiment, tourism:
** No one will want to come to Sri Lanka in the next year as there were other destinations and investment areas.

** We have already seen the impact… At least one international conference that was scheduled has been postponed. Some foreign nationals (interns/volunteers) working in Sri Lanka are also being advised to leave the country before flights start getting full. Not the best communication to be making unless there is a full scale war/police action.

** While local and foreign investments might not suffer right now, the reaction of current and potential tourists seems to imply that there is a great deal of fear and apprehension about coming to Sri Lanka.

** Since the conflict has been going on for over 20 years the economy seems resilient to withstand these adverse affects.

** Despite propaganda by the state, tourism and foreign investment is sliding downwards rapidly – we tend to always say Sri Lanka is resilient, always look back at what happened during the last twenty years but never seem to take a leaf out of those mistakes and correct the situation. You can push the bar only so far before we become a Banana Republic, considering the law and order situation (not only attributed to the LTTE but street gangs, deserters and general lack of respect for law and order), state and diplomatic interference in business and closure of BOI companies on whims and hearsay…..how can one expect business to thrive when the entire environment is going downhill! Don’t blame the LTTE for our business woes!

** Meek people will not take any decisions to invest and blame the war. This is the best time to invest. There will however be a negative impact on tourism.

** If we are to have a long term positive impact on business, tourism and direct foreign investment we need to have peace in our country on a consistent basis. Living from one crisis to the other as we have always done in the past is not a solution. While a political solution is the only way to solve the problem, we also need assertive and consistent action to end terrorism. One cannot negotiate with those who would indulge in terrorist acts, no matter who they are, Negotiations are only possible if there is a genuine desire for peace.

Impact if ceasefire monitors withdraw:
** War is inevitable, including bombings in Colombo similar to pre-ceasefire period

** We already have an end to the ceasefire and are at full scale war!

** No, it would not lead to a full scale war. But we need to keep the SLMM or something similar to that in order to reliably inform the world when atrocities take place and who is responsible for them.

** As I see it they (the SLMM) are not very effective now. I am a bit of an optimist… I do not think either side is prepared for a full scale war. I think ongoing skirmishes and battles will ensue for the moment while the Middle East crisis is the focus of the world view. But the moment there is some sort of stability, who knows…

** We have seen violations of the ceasefire from the beginning. So either way I wonder if they will/can make a difference.

** The peace monitors withdrawal would have no impact as they have no teeth to make a difference either way. The escalation of violence will continue, with or without the SLMM until both parties are willing to sit at the negotiating table!

**The best thing that could happen is for the busybodies to go home. The earlier they go the better. With or without the Norwegians the war will end or escalate

** War will escalate unless another country is willing to be the peace monitor.

** Many business organizations have made healthy profits during the last two decades in spite of the terrorism. Even the developed world has become more sensitized to terror, post 9/11 and London underground incidents. Most sectors will be resilient, provided the businesses are run in a prudent and professional manner.

** Bad impact? Remember the 2001 negative growth.

** Yes but the country (particularly the President) can’t just wait to allow a terrorist leader to dictate terms and therefore, we need to bite the bullet now and eliminate terrorism within a short period with a genuine interest.
It's better to suffer at once rather than suffer over a period.

** Despite the war, most business are doing well and investor confidence hasn’t eased down as yet. However, if the SLMM leaves this will go down. Hence, yes, the country’s economy etc will be badly affected.

** Those in the stockmarket panic and sell their stocks when any incident occurs. Next day the prices go up. This is the best time to buy.

** It will have a major impact on everything.

** The government must convince the local and international community to put good governance at the top of the agenda, so that in spite of a war situation, we can sustain a robust economy and show the LTTE that they cannot weaken our resolve because we are determined to do what is right and not what is politically expedient.

** Impact will be terrible if the war continues for several months.
The issue of displacement of people and the cost to civil society is a huge issue the government will have to deal with.
The need is to get back into the peace negotiation process after weakening the terrorists, without weakening the desire of the Tamil, Muslim and Sinhalese people for peace.