The Sunday Times Economic Analysis
Economics of war and peace
By the economist
The Prime Minister has adopted a pragmatic and practical approach to the
cessation of hostilities. He has said in no uncertain terms that the path
to peace is a thorny one and that many stumbling blocks remain. He told
the armed forces that this halt to hostilities was a time to prepare for
war in case the peace efforts failed. It was a time to work out new strategies
and improve the skills and manoeuvre for fighting. Given the past failures
and intransigence of the LTTE such an approach is indeed
This approach must also be replicated with respect to the economy. There
can be no doubt that a lasting and durable peace would bring enormous benefits
to the economy. Again, as Mr. Ranil Wickremesinghe has been careful to
point out, these gains in terms of reduced costs will be with respect to
military hardware. The large salary bill for the armed forces and the pensions
for the retired officers and the families of the dead will remain with
us. The deployment of the forces for peaceful purposes and productive enterprises
is another issue that the government would have to address when peace is
For the present, the thrust towards peace must be accompanied by a realistic
assessment. The peace that has eluded us many times may elude us again.
As we have said in these columns before, we cannot put all our eggs in
the basket of peace. The efforts for economic recovery must not be vitiated
by the peace prospects. While those who are directly responsible for the
peace efforts can concentrate their attention on these, there are the larger
number of other ministers and officials who should not be distracted in
their efforts to put back the economy on a path of growth. There are several
reasons why this is important. It is important for both the peace effort
and the war effort. The government's bargaining capacity would be strengthened
by a stronger economy.
The tigers will see a weak economy as a strength to them. If we want
peace we must prepare for war on the basis of a sound economy. If hostilities
were to commence again, we must have the economic capacity to fight it
effectively. The war is an expensive exercise and only a healthy economy
can sustain it. The rationale for focusing on the economy does not lie
entirely with the issue of the war expenditure. If the war is to continue,
then it is no reason why the lives of our people should not be bettered.
The low per capita incomes of the country must be raised; the incidence
of poverty must be brought down; unemployment must be reduced; and the
quality of life of our people must be strengthened.
Even though the economy has to perform on a reduced number of cylinders,
it must find ways and means of firing the remaining cylinders more powerfully.
The engines of economic growth must generate a reasonable growth. The war
should not be used as an excuse for inattention to the economy; it must
be a reason to redouble our efforts. Unfortunately a clear vision and strategy
for economic growth is still to be seen. The fact is that the peace efforts
have been a distraction from the economic effort, the gimmickry of the
100 days programme has derailed more substantial longer term planning,
the untidy cabinet composition has led to confusion and lack of more purposeful
action on several economic fronts.
It is time now to focus more sharply on the economy, accept mistakes
that have been made in the first one hundred days, awaken the country to
the economic difficulties we face, and develop and implement a programme
of economic recovery, reconstruction and reform. Both the short term needs
and long-term economic growth must be looked after.
The March budget would of course be the cornerstone of the government's
financial and economic policy.
Doves drive vampires to peace
By Dilrukshi Handunnetti, Our Lobby Correspondent
Shakespeare wrote "there is a tide in the affairs of men, which taken at
the flood, leads onto fortune
Omitted, all the voyage of their lives is
bound in shallows and miseries. And we must take the current when it serves,
or lose our ventures".
Perhaps this was the thinking behind the government too, as the ceasefire
agreement with the LTTE was debated in the House last week. There were
moments of intense feeling, rhetoric and prudent thought.
But the silver lining was that both main political parties appeared
to have shed their political differences as they agreed that a negotiated
solution was required to end the crisis. This somewhat marginalized the
JVP which saw largely the evil aspects in the agreement.
Although a far cry from the days of opposing for the sake of opposing,
there was a mountain of criticism on the issue of boundary demarcation
with parties giving different interpretations.
In this backdrop of emerging consensus the Prime Minister made his statement.
Treading cautiously, he said this was the first time the LTTE had accepted
a negotiated settlement as an alternative and explained that he was given
a mandate to pursue peace whilst safeguarding the country's territorial
Mr. Wickremesinghe noted he had much to learn from the past the failed
talks and the setbacks. He said he believed that one of the reasons that
the talks failed last time was that the humanitarian problem had not been
tackled. He said the economic embargo on the north was relaxed because
he believed that all people should have the right to the same quality of
life. But this alone was not enough. There should be devolution of power,
through which people could determine their own social and economic future,
the prime minister explained.
He said the agreement itself was wide enough to cover areas of child
proscription and forced recruitment two major concerns.
Adding a note of caution, the Prime Minister reiterated that "the road
to peace had more pitfalls and setbacks than successes anyway".
But certain sections in the opposition were unconvinced and they tried
to interpret the demarcation lines in line with the Kashmiri situation
where troops of India and Pakistan are separated by a line of control
a defacto international border.
But the main opposition PA's official stand on the ceasefire pact was
reaffirmed when Opposition leader Mahinda Rajapakse took the government
to task for showing the draft of the pact only after it was signed by the
The PA' apparent fury over this cohabitation bypass was also directed
at the Norwegians, who entered the scene as facilitators on the invitation
of the PA itself.
Mr. Rajapakse raised concern over the Norwegian role in the peace initiative,
echoing the President's observation that the facilitators were now playing
the role of mediators.
Chief Opposition Whip Mangala Samaraweera interjected to highlight other
areas of dispute. He asked whether Kilinochchi and Mullativu had already
been gifted to the LTTE on a platter, as these two districts were out of
bounds for international monitors.
In response the UNP turned its guns more towards the JVP than towards
UNP's Lakshman Yapa Abeywardhane described the JVP as a group of sadistic
political vampires who sucked the nation's blood out by scuttling every
opportunity to solve the conflict. Calling the JVPers saboteurs of peace
amidst JVP's catcalls about failure to secure a portfolio he said that
since the Duraiappa assassination, this country had seen only blood, mayhem
and political bickering that made peace an illusion.
JVP's firebrand group leader Wimal Weerawansa called the agreement an
accord of betrayal which sought to confine Tamils to an open prison and
other communities to a hotbed of LTTE violence. Condemning the government
for not disclosing the letters exchanged between parties prior to reaching
the agreement, he defended the President's constitutional right to be consulted,
much to the amusement of the government. His fears were manifest in his
claim that the accord had given tacit recognition to a separate state by
giving legal status to the LTTE armed forces.
Samurdhi Minister S. B. Dissanayake who has steadfastly campaigned for
a negotiated political solution, reminded the JVPers that the ethnic problem
had only one solution sharing power without dividing the country.
Responding to the query raised by his erstwhile colleague Samaraweera,
Mr. Dissanayake said even the PA omitted the Kilinochchi in its proposals
last year due to lack of control over the area. "Mullativu was a recent
addition, thanks to the Kumaratunga administration allowing the Mullaitivu
camp to be over-run by the LTTE," he said.
Making a passionate appeal to both main parties to make a genuine attempt
this last time was Tamil National Alliance President S. Sivasidambaram
who spoke from his wheel chair. The silver-haired veteran lauded the leaders
of both sides for having had the moral courage to enter this agreement
but treaded on the collective sentiments of the nation when he said that
the LTTE leader's words were binding on the cadres and their commands were
equally binding on the Tamil nation," which roused much feeling inside
Similar sentiments were expressed by Gajendrakumar Ponnambalam, son
of late Kumar Ponnambalam who doubted the ability of a Sinhala government
to see an end to the conflict with its bitter history of failed attempts.
Casting serious doubts on the possibility of peace and making a clarion
call to defend the motherland was MEP's Dinesh Gunawardane. He thundered
that the TULF, which vowed never to return to the House unless Ealam was
achieved, had returned and that the LTTE was taking the government for
a merry ride.
"What have you done?" he asked. "You have legitimized the LTTE and recognized
the existence of a separate army. To declare an independent state, an entity
requires a population, territory, sovereignty and an army all of which
the UNF in its foolhardiness might legally recognize," he sniped.
UNP's new spokesman Gayantha Karunthileke too enjoyed JVP bashing. The
Southern MP drew a vivid picture of the positive effect of the agreement
which ushered in a sense of peace to the villages. With the seeming return
to normalcy, life was assuming greater meaning, he noted as he spoke of
the simple joys in life like mothers having their soldier sons returning
home instead in sealed coffins.
"Only those who have suffered would know the pain this war has wreaked
on the Southerners," he said, accusing the JVP of thriving in war, chaos
and economic downturn.
But a division among the PA rank and file showed as the debate continued.
While Ven. Baddegama Samitha Thera and young Dilan Perera thought that
if the agreement was flawed, it should be modified yet pursued with vigour,
the likes of Ricahrd Pathirana saw only evil in what he called a 'sham'.
UNF's Rajitha Senaratne said the PA had had no right to pick holes in
the agreement as it was an improvement of the one prepared by President
Countering arguments about the new agreement, he thundered that conflicts
were created by rejection of human demands and that this agreement was
merely an attempt to hold the guns silent while preparing the backdrop
Speaking in the House after a long lapse was former Speaker Anura Bandaranaike,
who put all that gifted oratory into full use, firstly to defend President
Kumaratunga's inalienable right to see the draft agreement before anybody
signed it and then to question how prudent was the government's course
of action at present.
Whilst admitting that there was a need to build confidence, he noted
that the majority community and others were also in need of some assurance
by the LTTE that there would not be a bloodbath if talks failed.
"Don't forget that we are dealing with a group of ruthless terrorists
who know nothing about political activity but about butchering people.
After one attack on the US Twin Towers, Osama bin Laden was not to be found
but here is a guerrilla leader who had killed an Indian prime minister
and a Sri Lankan President caused permanent injury to the incumbent President
and killed thousands of innocent people. It is an impressive record on
his part, but one that has devastated this land," said the burly legislator.