Financial Times

Economic pressure on Sri Lanka

Unhappy with the government’s refusal to accede to requests by the international community to ease off the fighting in the war zone and reduce civilian casualties, world leaders have now turned their attention to applying economic pressure on the country.

In what many Sri Lankans see as unfair and bulldozing tactics, British Foreign Secretary David Miliband and US Secretary of State Hillary Clinton this week said the $1.9 billion IMF standby facility would be a contentious issue since the humanitarian crisis was growing on the island. The two dignitaries are both urging the IMF to delay the loan in return for a halt to the fighting by both sides.

While we disagree with the government on some areas in the war, it is unfair to enforce economic sanctions or influence other agencies to deny loans or other facilities. For, in such undertakings, it’s the people in the country who suffer – not its leaders. Sanctions is a brutal weapon used to tame defiant governments. In the Sri Lankan scenario, since the humanitarian crisis evolved some months back, there have been attempts by some powerful NGOs to persuade the international community to enforce sanctions and other economic pressure.

In fact, the UK and US calls follow similar gestures by human rights groups which have been very critical of the government and its handling of the civilian crisis. Last week, RSF, a global media watchdog, urged the IMF to suspend the standby facility saying Colombo’s record on human rights and media rights was poor.

A local NGO worker, whose agency depends on foreign funds, says they have never called for sanctions even though there is a general feeling overseas that this is the best way to ensure the government listens. “Economic pressure through sanctions will only affect the people – not the politicians,” he said.

Over the past few weeks, there has been a war of words between the government and the international community over allegations of a large number of civilians dying in shelling and the use of heavy weapons. Colombo has also seen a flurry of visits by foreign leaders, all asking the government to halt the fighting and allow the civilians to leave.

Just as all these calls were rejected by the government,the international community began putting pressure on economic issues. Even the GSP+ concessions that are under review, amidst concern over human rights issues, is being used as a ‘weapon’ to apply pressure on the government. Sri Lanka is no doubt losing the war on propaganda.

With no media access to the war front or IDP camps, the media has to rely on second-hand information to get a story out. Government officials are gradually coming to grips with the situation in the camp and – apart from the negatives – there is also a lot of positive developments taking place. But that ‘positive’ story doesn’t get out due to the ban on media access.

The authorities really need rethinking in this area. In business circles, concern and confusion is growing over the delay in the IMF loan. Central Bank Governor Ajith Nivard Cabraal, who once rejected reports in our newspaper about the need for an IMF bailout package and later said such a facility would be beneficial, this week said that there are fall-back options (in case the loan is delayed).

President Mahinda Rajapaksa is also learnt to have expressed similar views when he met bankers on Tuesday. While civilian casualties is of serious concern and adequate precautions should be taken by the government to ensure their safety, calls to suspend the IMF loan or delay GSP+ concessions will hurt the very people the international community is concerned about – the displaced – and other poorer sections of the population.


 
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