prospect of a billion dollars a year in foreign aid over the next
three or four years appears to be in jeopardy given the impasse
over the LTTE boycott of the peace talks and their refusal to take
part in the June aid meeting in Tokyo at which these aid pledges
were to be formally announced.
had been hoping for a grand show in Tokyo with representatives from
35 countries and 20 multilateral organisations expected at the conference
that would be jointly opened by Japanese Prime Minister Junichiro
Koizumi and Premier Ranil Wickremesinghe. That meeting is to be
followed by an investment seminar at which the government hopes
to attract Japanese investments.
It will be highly
embarrassing for the government and the international players in
this peace process who are behind the conference if the Tigers do
not turn up for the show. Perceptions are all important in such
matters and the LTTE's boycott of the aid conference would definitely
send negative signals to foreign investors.
This is the
LTTE's way of rocking the peace boat. The timing of the LTTE's brinkmanship
has been, as it usually is, impeccable. It knows very well that
more than the money that will be pledged in Tokyo it is the confidence
factor that is important - to attract the foreign investment so
badly needed to accelerate economic growth. And without that acceleration
of economic growth no government can hope to improve living conditions
and stave off the social unrest that is bound to come with any deterioration
in the quality of life of the people. If living conditions get tougher
opposition parties are bound to turn on the rhetoric and the pressure.
The LTTE has
decided it is not going to allow the government to use the peace
card to get large dollops of aid and investment without getting
its own share of the cake.
chief negotiator and Cabinet spokesman Professor G.L. Peiris is
believed to have said that the current impasse in the peace process
will not pose difficulties in encouraging investments. Coming from
the Minister of Industrial Development who would be in routine contact
with foreign investors this is indeed laughable.
of aid agencies and even Norway's special envoy Erik Solheim have
spoken very bluntly about the adverse implications of the current
deadlock. Solheim has warned that Sri Lanka cannot expect significant
amounts of foreign aid and investment if the LTTE stays away from
the peace process. The former Harvard don, Professor Jeffrey Sachs,
one of this government's international advisors, said during a flying
visit earlier this month that foreign investors were waiting for
a permanent peace deal before investing their money. "The more
the peace process continues the more international help would be
forthcoming," Sachs said. Peiris must surely not be unaware
that any investor unwise enough to put money into a war zone that
has temporarily cooled stands the risk of seeing his money going
up in smoke.
Then there was
Peter Woicke, executive vice president of the International Finance
Corporation, the private sector arm of the World Bank, who said
that Sri Lanka would not be able to attract big foreign investments
if the peace process collapses. "If you have stability, you'll
have more money," he said. Foreign investors do not like volatility.
Sri Lanka will attract more long-term investments by private investors
when the peace process makes progress, he said.
We can only
hope that the LTTE is indeed merely posturing and that the "international
safety net" that this government has boasted of would be able
to get them back to the negotiating table.