10th March 2002

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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 very pragmatic. 

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 finally attained. 

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 integrity.

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 LTTE leader. 

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 the PA. 

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 the House.

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 Kumaratunga.

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 for talks. 

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.

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