With the third Budget of the government just round the corner, USAID has painted a dismal picture on Lanka's economic prospects.
According to USAID, long term assistance to Sri Lanka is likely to be affected due to the prevailing situation as far as security is concerned and the reluctance of donors to invest money and make pledges when they are not sure of implementation.
A top level meeting to discuss the current situation was held recently between USAID and Sri Lankan officials.
The US team comprised the USAID Assistant Administrator Ms. Carpenter, US ambassador Peter Burleigh and USAID Director, David Cohen. Sri Lanka was represented by Foreign Secretary, Rodney Vandergert, Additional Secretary Nihal Rodrigo and Director N. Sikkander.
The US administration was finding it difficult to enhance aid programmes in conflict situations. At best, existing levels would be maintained. Sri Lanka was not in the same category as Somalia, Bosnia etc., but Ms. Carpenter said she would have a major task in convincing the administration that aid to Sri Lanka was making an impact.
These views were shared by other donors and she expected them to be raised at the Aid Consortium Meeting next month.
A number of projects in Sri Lanka were success stories. These however were being over-shadowed by a number of problems.
This applies in general to all projects in Sri Lanka but more specially for those in the North and East.
The appeal of the President launched in July was sympathetically considered but there was a serious shortcoming in that it was rather too general for serious projects to be considered.
Political and security reasons were also a negative factor and there is doubt whether any long-term investment in the North and East would be possible, given the continuing shadow of LTTE threats, US officials said.
Access to the North and the East was restricted for donors not only to undertake feasibility studies (which were essential given the lack of detail in the July appeal), but also for continuous monitoring of any implementation.
The Sri Lanka government unfortunately seemed to lump all NGOs in one category, although there were some excellent NGOs through whom the US and other donors could work efficiently and effectively, they said.
Ms. Carpenter confirmed that while food aid and other supplies would continue, long-term assistance would be affected given the security situation and reluctance of donors to invest money and make pledges when they were not sure of implementation.
There appeared to be a lack of co-ordination on the part of the Sri Lanka government organisations involved in aid implementation, particularly in the North and the East.
While Ms. Carpenter said conditions in camps for the internally displaced in Sri Lanka were better than some other camps elsewhere in the world, conditions were far from comfortable. More effort should be directed at integrating people in these camps with communities in the surrounding areas. The Ministry pointed out some difficulties that had arisen between residents of the area and people in the camps. It was also indicated that Sri Lanka Government policy was directed at seeking to have the displaced returned to their original homes as soon as feasible.
Mr. Vandergert briefed Ms. Carpenter and the delegation of the efforts being made to restore normalcy and to effect a return to civilian administration in the North and the East. Efforts were being made to build up responsible grass-root organisations in these areas, so that the military presence could be phased out gradually. The President was very conscious of the need to restore civilian administration in these areas. Ms. Carpenter said she would speak about success stories in Sri Lanka and the potential of the country to benefit from US assistance.
She also pointed out the negative impact of certain confusing signals about economic policies in the country and specifically mentioned the proposal of the state to recover privatised business enterprises which the state thought were not running properly.
During the meeting, Ms. Carpenter drew the attention of the Foreign Ministry officials to the following:
USAID has not only expressed their views about the poor performance of the government but also categorically expressed its concern over the Public Enterprises Rehabilitation Bill which was taken up on Friday.
Though the President has fixed a time frame and specified as to what type of enterprises would be taken over by the government, industrialists and investors are still opposing the Bill saying that workers could create situations which would ultimately compel the government to take over the privatised public enterprises.
The opposition UNP vehemently opposed it on the ground that it could be used for political victimisation and only the government's cronies could do business under these circumstances.
Simultaneously some top businessmen are of the opinion that this could scare away possible investors and it was against the very essence of market economy.
But it appears that the government was determined to go ahead and pass the Bill since some of the affected business concerns (which were privatised under the previous regime) are in her electoral districts.
Not only the UNP, many other political parties in the opposition as well as the government are also opposing the move.
The DUN(L)F led by Minister Srimani Athulathmudali is likely to meet the business community before taking a decision on the matter, and it appears that the DUN(L)F members are very much concerned over what they see as a draconian piece of legislation such as the GST Public Enterprises Bill.
The DUN(L)F, it is learnt would write to the President outlining their views and proposing major amendments to the Bill.
They think that since the power is vested in the President in taking over ailing industries it would be rather difficult for an aggrieved party to take the issue to court.
Hence the DUN(L)F has decided to write to the President and propose some drastic changes. If the government doesn't show any flexibility in the matter or fails to accommodate the amendments the DUN(L)F is likely to abstain when the Bill comes up for voting on Tuesday.
Though there were so many issues such as the Public Enterprises Rehabilitation Bill and the Bill to introduce Goods and Services Tax the monthly group meeting of the government Parliamentarians became a non-event due to the low turnout.
Only a few ministers attended while the President chose not to attend it. In the absence of the President and the Prime Minister, Minister Richard Pathirana took the chair.
During the proceedings which lasted for about 30 minutes the Minister spelt out some guidelines to the members if they were to undertake foreign assignments and trips in the future.
The Minister said that all government MPs were required to obtain prior approval from the President if they were to go out of the country in the future.
Bandula Basnayake who spoke said the government should inform members who were undertaking foreign trips frequently.
He said it would be appropriate if the members inform the government parliamentary group before undertaking such trips abroad giving details and the purpose.
Though Mr. Basnayake came out with this proposal it did not get off the ground probably because most of the members felt it was inappropriate.
Soon afterwards DUN(L)F member Ravi Karunanayake spoke on the new Good and Services Tax (GST) to be introduced by the government.
He said the decision to introduce the GST was good but it had to be done carefully leaving no room for misuse.
If it is not properly implemented it could easily be abused, Mr. Karunanayake said.
Unless we implement it carefully and monitor it regularly, it could send the cost of living to dizzy heights, he warned.
At this stage Deputy Finance Minister G. L. Peiris said the GST would not be abused or misused and that the government would see to the proper implementation of it without leaving room for misuse.
At the weekly Cabinet meeting, Ministers discussed a proposal to send all industrial disputes before a compulsory arbitrator and that the Trade Unions should be given the right to stage strikes only if 51 percent of the general membership vote in favour of such a decision.
Ministers S.B. Dissanayake, Mangala Samaraweera and Richard Pathirana spoke in favour of the proposal, while Minister Rajapakse opposed the move.
President Chandrika Kumaratunga who was not present at the initial stages of the discussion however listened carefully to what Minister Rajapakse told the Cabinet summing up the debate on the issue.
Minister Rajapakse said the government should not introduce private sector conditions to the state sector.
The state sector employees had been there always with SLFP government and the party should not take any decision without holding talks with Trade Union representatives and get involved in another controversy when there are enough to handle.
LSSP leader Bernard Soysa who interjected at this stage supported the position taken by Minister Rajapakse and said the government should not make enemies on all fronts.
At the end of this discussion the President said it would not be wise to introduce the proposal at this stage.
However the President agreed to appoint a Ministerial Committee to look into the merits and demerits of the proposal.
The Committee comprising Leader of the House Ratnasiri Wickramanayake, Ministers Mahinda Rajapakse and Amarasiri Dodangoda was subsequently appointed to go into this matter in detail.
The Cabinet also discussed the lifting of the press censorship and some Ministers queried as to why it was lifted in a hurry even without informing the Cabinet. Minister Ratwatte explained that they accomplished their mission after capturing Kilinochchi and the Jaffna peninsula.
Media Minister Senanayake said it was lifted in keeping with the government policy to give a free hand to the media.
Apart from this, they also discussed next month's Budget and it was agreed that there should be strict financial discipline since the country would not get the expected quantum of aid from the donor countries.
The Cabinet also hosted a farewell dinner for the outgoing Cabinet Secretary R. Abyeratne which the President and the Prime Minister attended.
During the dinner the President was seen having a chat with her trusted Lieutenants S.B. Dissanayake and Mangala Samaraweera. The discussion centred on the Colombo Port, P&O operations and the QEQ (Queen Elizabeth Quay). The President suddenly raised her voice and the others heard her as saying, "I will not allow Ashraff to have his way".
Apparently Ports Minister Ashraff had deferred with President Kumaratunga over the awarding of a tender to Peninsula and Oriental Shipping to develop the Queen Elizabeth Quay.
In another development, when Health Minister Fowzie presented a Cabinet paper to appoint Dr. Harsha Amal Silva as the Director of the Lady Ridgeway, Minister Rajapakse said it was not necessary to put up a Cabinet paper to make the appointment. The Minister could do it on his own. The President said Minister Fowzie should be able to manage the affairs of the Ministry. But when it was noted that the Secretary to the Ministry had opposed the move by the Minister, the President said it was Minister Fowzie who wanted to keep him as the Secretary.
Minister Fowzie has apparently encountered problems when he tried to appoint Dr. Amal Harsha de Silva as the Director of the LRH. Dr de Silva who has obtained his postgraduate qualifications in Hospital administration looked after the duties of Director LRH for two years while serving in the capacity of Deputy Director and had also maintained good relations with almost all the medical officers there.
Beside these, the government is facing a fresh problem as far as the North-East Co-ordinating Committee is concerned.
At the last meeting they had with the President EPDP leader Douglas Devananda insisted that the government follow the British system where the government of Britain had appointed a separate Minister to look after the affairs of strife-ridden Northern Ireland.
In other words, Mr. Devananda requested the government to appoint a Minister in charge of North- East affairs which led the President to come out with an open invitation to both the EPDP and the PLOTE to join the People's Alliance government.
The two parties gave serious thought to this move, but lately the EPDP was perturbed over some incidents that had taken place at Trincomalee and elsewhere involving the police.
The police who accused armed EPDP cadres of involvement in the killing of a Sub Inspector and a Land Officer in Trincomalee recently have urged the government to disarm the Tamil groups who go side by side with the armed forces in the North.
But the Tamil parties say that they have not been informed of such a decision taken by the government.
They say that the weapons had been issued by the armed forces and the police would not have any authority to disarm the Tamil groups operating in the North and the East.
The recent incident where the police raided the EPDP office in Trincomalee while two Tamil MPs were present there, is to be taken up by the party with the Speaker as a breach of Parliamentary privilege.
The two Tamil parties say that the police cannot have their way when President Kumaratunga wanted to give them weapons to go to Jaffna along with their cadres.
During the last meeting the Tamil political parties had with the President who had urged them to go to Jaffna and work along with the security forces.
They had been told to take their weapons and cadres since the government was not in a position to deploy troops to hold the vast land area captured during Operation Riviresa.
But now after a careful assessment, the Tamil parties have expressed their reluctance to go to the peninsula, taking up the position that the government did not want them to go to Jaffna when they made a request at the initial stage shortly after the Jaffna peninsula was recaptured by government troops.
But the actual reason may be that the Tamil groups are fearing an attack by the LTTE on Jaffna in December. The LTTE is likely to use the vacated Pooneryn area to hit the peninsula using artillery they removed from Mullaitivu.
In this backdrop, Attorney General Sarath N. Silva has put the final touches to the regulation banning the Liberation Tigers of Tamil Eelam (LTTE) and sent it to the President for the approval of the government.
But whether the government would ban the LTTE or not is still doubtful at this juncture since there are moves to initiate a dialogue once again for a peaceful settlement.
The government would have been compelled to consider the possibility of a dialogue amidst concern that some donor countries may be pushing for the government to allow a UN role in the North-East conflict and linking that with the provision of aid.
India has expressed concern over this attempt and some analysts believe it fears the presence of UN troops in the Jaffna peninsula might be a precedent for countries like Pakistan to seek a similar UN role in Kashmir.
In these circumstances Indian High Commissioner Nareshwar Dayal has had a meeting with President Kumaratunga to review the refugee situation in Madras.
At the meeting he had emphasised the need to stem the refugee influx to India and had expressed his strenuous concern over the matter.The government has given some assurance that it would take necessary steps to stem the exodus from Sri Lanka shores but the LTTE activists in the high seas go on unabated.At the same time the LTTE activists elsewhere in the world are busy lobbying international attention to the conflict at home.
The Executive Committee of the International Federation of Tamil which met during the last week of September passed the following resolution in support of the creation of a Tamil homeland in the North and East.
"1. From ancient times the two Peoples, the Sinhalese people and the Tamil people have inhabited the island of Ceylon (Sri Lanka) having distinct languages, religions, culture, customs of their own and clearly demarcated geographic territories. The Sinhalese people and the Tamil people are by any and every test two distinct nations.
2. Since 1948 all attempts by the Tamil people to live with the Sinhalese people on the basis of the right of self-determination and equality was thwarted brutally by the successive Sinhalese governments. Having exhausted all avenues for peaceful existence, the Tamil people, exercising their free will, gave their overwhelming democratic mandate to establish sovereignty in the Tamil territories in the general elections of 1977, which took the character of a referendum.
3. The military occupation of Tamil territories and oppression of the Tamil people who seek to exercise their right of self-determination and to live as equals, is violation of internationally accepted norms, democratic principles and humanitarian laws. The armed struggle arose to defend the Tamil people against intolerable national oppression and a savage form of state terrorism, and is therefore just and lawful.
4. The Tamil national conflict in Sri Lanka requires a political and not a military solution. The military aggression on Tamil people under the slogan of war for peace by the Sri Lankan government is immoral, inhumane and unacceptable. This war has resulted in immense human tragedy, gross violation of democratic and human rights and economic decline of Sri Lanka as a whole.
5. This conference wishes to highlight the plight of the Tamil people in the Jaffna peninsula, the Vanni and the Eastern district. By decaying the Tamil people of Vanni area the very essential food and medical supplies needed for minimum existence, the government of Sri Lanka is using the embargo or food and medical supplies as a weapon of war. The people living in areas under the army control are treated like prisoners in an open camp. This conference appeals for free media access into the affected north eastern war-torn areas and to the urgent and independent relief and rehabilitation work by governmental and non-governmental Humanitarian Organisations.
6. This conference strongly believes that a lasting solution to the Tamil national conflict can only be reached on a voluntary basis and all the efforts by the government to impose its own solution by force or aggression will only aggravate the situation. Therefore in order for Peace initiatives to succeed, conducive conditions should be created. This conference is firmly of the view that the Sri Lankan army must withdraw from Tamil areas occupied for the purpose of aggression in order to create conditions of normalcy, that will pave the way for the Sri Lankan government and the Liberation Tigers of Tamil Eelam to enter into negotiation without preconditions, with the help of a mutually acceptable third party."
Though government troops have liberated certain areas in the North from the LTTE, the ethnic conflict appeared to have aggravated with a heavy influx of refugees to Tamil Nadu, and donors trying to link aid with UN troops for Sri Lanka. On top of all this the government intentions to push the Public Enterprises Rehabilitation Bill through Parliament will put the country and the economy in jeopardy since the very essence of this Bill goes against market economy.
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