6th January 2002

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The Sunday Times economic analysis

Economic revival and realistic goals

By the Economist
In the past two decades the country has been striving to achieve an annual economic growth of around 7 to 8 per cent over a period of a decade. This has proved an elusive goal. Last year's economic stagnation and the low rates of growth in recent years have meant that the desired rate of growth has shot up. 

The prime minister articulated our current needs to be around 9 to 10 percent annual growth on GDP sustained over a period of a decade. It is only such a rate of economic growth that could provide the needed employment opportunities, raise per capita incomes to about double the current levels at the end of this decade and have a serious impact on poverty alleviation.

While his projection must remain our goal, the immediate need is to put back the economy on a much more modest growth path. Even the achievement of a 5 percent growth that we have achieved during normal years appears unrealistic in the current context. The destabilization of the economy in 2001 and the fiscal overhang from last year makes domestic recovery difficult. 

The biggest constraint to achieving a higher rate of economic growth would be international market conditions. Although the international economy is expected to revive, only a modest recovery is expected. And that too is uncertain. The Japanese economy is still struggling to generate growth and is expected to take some time. The US economy may achieve better results as it recovers from the shock effects of the September 11 blasts. The increased availability of funds for reconstruction and the reduced interest rates may also stimulate the US economy. Yet a robust growth cannot be expected. Overall the global conditions are likely to be somewhat better than last year, but expectations of a rapid growth is not on the cards. 

Even a modest recovery will help sustain our exports to slightly higher levels than that of last year. It is on the domestic front that the new government must make the moves to render our exports more competitive. This should not imply the conventional IMF-World Bank prescription of a depreciation of the currency. What is needed is a new thrust to reduce costs of domestic industry through enhanced industrial efficiency. Better management practices, an improved work ethic and good employer-employee relations could reduce costs. Speedier actions on the part of the government to resolve bottlenecks could also assist.

Improvements in infrastructure could help in the long run. 

There are expectations once again that peace is around the corner. There can be absolutely no doubt that an improvement in the security situation would be a big boost to the economy. The economy has not fired with all its cylinders for the last twenty years. Peace could generate a new growth momentum. It would change the climate for foreign investment, enable the full exploitation of our tourist potential, increase agricultural production in the North and East, expand the area for fishery exploitation and generate new economic enterprises in the East in particular.

The reconstruction efforts would have multiplier effects on all sectors of the economy. The foreign funds that are expected to redouble the reconstruction effort would enhance income-generating opportunities arising from the rebuilding of the North and East. The foreign funds would also assist in replenishing our dwindled foreign exchange reserves.

While the potential peace dividend is large, we cannot pin our efforts for economic recovery on this expectation alone. A wise government will make every effort to revive the economy and achieve a higher rate of economic growth without peace. It must aim at about a realistic 6 percent growth for a start. A ten percent growth can realistically be expected only with peace, the reconstruction effort and better global economic conditions. The speed at which the government is able to provide adequate power for rapid industrialization would be an important determinant of our economic growth.The capacity of the government to put in place a package of policies to assist agriculture would also be an important factor in achieving the desired higher economic growth rate.

LTTE-Dawood-ISI ring in smuggling

India has told Interpol and Sri Lanka that Pakistan has been a nerve-centre for LTTE for smuggling narcotics, arms and ammunition with active connivance of Dawood Ibrahim's gang. According to Home Ministry sources, Karachi is the hub of all LTTE activities led by Kumaran Padmanabhan. Here the Dawood Ibrahim gang supplies heroin and other narcotics worth thousands of crores to LTTE cadre who distribute the drugs to European and African countries. The Pakistan government is fully aware of the contraband trade, which also involves buying of arms and ammunition for LTTE terrorists, the sources said.

On behalf of LTTE, Lakhsman, Moinuddin, Shahjahan and Belachari Stanley buy narcotics from Dawood followers like Iqbal Mirchi, Anis Bhai Kaskar and Naved Khan and smuggle them to Malaysia, Singapore, Ghana, India, Nepal, Nigeria, Australia, Britain and other European countries. In India, LTTE men receive smuggled narcotics in Rajasthan, Mumbai and Gujarat and then export them through Chennai and Tuticorin coasts, the sources said. The ships, which carry the narcotics goods emanating from Karachi, are insured by Dawood Ibrahim and if these goods are seized, full amount is paid to the purchasers. Dawood's gang is packaging drugs in the skin of oranges after removing the pulp and in readymade garments. One woman named Appa in Singapore is coordinating smuggling activities of Ezaz Pathan Dawood, the sources said, adding that some terrorists arrested in Mumbai and Colombo have disclosed the modus operandi and the close links between the LTTE and Dawood Ibrahim who enjoys the patronage of ISI. The sources, however, did not confirm whether the list of criminals and terrorists sent to Pakistan and the US by India included the names of LTTE operatives in Pakistan.- Deccan Herald India
The convicts seen outside the Court of Appeal on Friday. 

The Embilipitiya Judgment:

Where the mills of justice did grind

Focus on Rights 

By Kishali Pinto Jayawardene
When the judg- ment of the Court of Appeal this Friday, affirming the convictions of six accused (subject to certain variations) in the Embilipitiya case where 24 schoolchildren had been abducted from their homes and subsequently disappeared in 1989, was explained to the relatives of the children outside court, it was predictably an emotional moment. The Court of Appeal Bench comprising Justices P.H.K. Kulatilaka and Raja Fernando, in a one hundred and five page judgement delivered by Justice Kulatilaka, affirmed the sentences of five and ten years rigorous imprisonment (to run concurrently) imposed on the accused, including Dayananda Lokugalappaththi, former Principal of the Embilipitiya Central School.

The convicts seen outside the Court of Appeal on Friday.The convicts seen outside the Court of Appeal on Friday.

The Embilipitiya Case, the like of which we would be fortunate never to experience again in this country, concerned the "disappearances" of students of the Embilipitiya Central School during the height of the JVP rebellion. This was one of the most horrific of personal vendettas during those extraordinary times, where selected students were given the ultimate punishment for having flouted the authority of the principal of the school over an affair being conducted between the principal's son and another student in the school. The students had been "disappeared" by officers of the nearby Sevana Army camp, instigated by the affronted principal.

The trial into the "disappearances" proceeded against Dayananda Lokugalappthatthi and his son, Chaminda who were the first and the second accused while the rest included Lt. Col. R.P. Liyanage district coordinating secretary for the area and army soldiers attached to the Sevana Army camp. Evidence placed before the Ratnapura High Court in a long drawn out trial spanning over three years since the date of indictment, was revealing for many reasons. 

The High Court heard the testimony of a number of students who were thus abducted, teachers of the school who testified that the first accused cherished an enmity towards some students in the school whom he saw as flouting his authority, that the first accused had asked them to supply a list of such rebellious students so that 'he could ask the army to take care of them" that the first accused functioned in his school with weapons including a gun and a grenade kept on his desk and that he was on terms of close friendship with the soldiers at the Army camp nearby. Evidence also established conspiracy between the fourth to ninth accused and the first accused who gave to the soldiers a list of students whom he wanted "lifted", in which list, the names of the twenty five students along with a number of other students were specified. As the bodies of the students were never found, no charges of actual murder of the students were brought however, against the accused.

The Ratnapura High Court found the Lokugalappaththi and the accused army officers guilty of numerous offences under the Penal Code. All of them were given varyingly severe sentences but in practical terms limited to a period of 10 years. It was the appeal of the accused against these sentences which was dismissed by the Court of Appeal this week.

The third accused, the principal's son, Chaminda meanwhile, was acquitted of the charges against him on the basis that even though evidence proved that he had made certain statements saying that those students opposed to him would end up on tyres, no other evidence could be established implicating him. Lt. Col. Rohan Parakrama (Parry) Liyanage, District Coordinating Secretary for the area was also acquitted on the basis that no evidence could be found linking him to the charges of abduction with intent to kill.

Brigadier Liyanage's acquittal meanwhile led to other interesting repercussions when he subsequently won a fundamental rights case against his non promotion to the rank of Major General, even though the Army Commander had recommended his promotion. The promotion had been denied to him by the Defence Secretary who took the position that Brigadier Liyanage had shown himself to have had "insufficient control over his subordinates" during the time that the Embilipitiya 'disappearances' had occurred. Thus, the Secretary maintained that it was in the best interest of the Sri Lanka Army to deny him his promotion.

The Supreme Court however disagreed, stating that in the absence of direct involvement in the disappearances, Brigadier Liyanage merely occupied a place of authority in the chain of command. The Court found the promotion of others above and below him (such as Brigadier Vajira Wijeratne, the Provincial Commander of the area who was Brigadier Liyanage's immediate superior and Capt. K.V.V. Chamarasinghe, Detachment Commander), to indicate discriminatory treatment. 

While Wijeratne had admittedly not been indicted in the Embilipitiya case, Chamarasinghe who was an officer in charge of the Sevana Detachment had been so indicted. 

The Court did not accept the plea of the State that the "disappearance case" had attracted international as well as local concern and that the miscreants must be seen to have been suitably dealt with. On the contrary, there was no rational reason why Brigadier Liyanage should be singled out from those who might be held accountable because of their positions in the chain of command.

The "recommendations of the Commander of the Army" sent to the Secretary, Defence (regarding Brigadier Liyanage's promotion) were directed to be "implemented". Brigadier Liyanage was also given compensation. Interestingly however, the judgement of the Supreme Court was not complied with by President Chandrika Kumaratunge who, through the Military Secretary, served Brigadier Liyanage an order "regretting that she cannot agree to the recommendation of the Commander of the Army " to promote him to the rank of Brigadier General." The Supreme Court thereafter refused to hold that the Presidential refusal to promote him amounted to contempt of court.

Thus it was that with Friday's judgment of the Court of Appeal, this week saw yet another chapter in the Embilipitiya "disappearances ' saga closing. Perhaps more than any other instance in the recent history of this country, the Embilipitiya disappearances highlighted the impunity given to individuals who instigate officers of the State to commit acts of disappearances over private vendettas and those officers who commit such acts under colour of office. 

The plight that the parents of the disappeared children underwent, subsequent to the heinous incidents, demonstrated this very well. 

Though they had petitioned the authorities from the then Army Commander Hamilton Wanasinghe to the then President Ranasinghe Premadasa and though promises of investigation were made, no real action was taken. It was only after an independent monitoring body, the Human Rights Task Force investigated the matter and found definite evidence of culpability of the Principal and the members of the forces at the Sevana Army Camp that public indignation compelled the Government to take action leading to indictment being filed by the Attorney General. Reports filed by the Southern Disappearances Commission on the Embilipitiya 'disappearances', later on, also impacted on the initiation of the legal process, ultimately resulting in the Appeal Court judgement this Friday. 

The mills of God therefore did grind though they ground exceedingly slow.

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