The Sunday Times Economic Analysis

The Sunday Times Economic Analysis By the Economist

The proof of the pudding
A huge aid commitment of US$ 4.5 billion has been pledged by donors in Tokyo for the reconstruction of the North and East. Japan offered up to $1 billion over three years.The Asian Development Bank matched Japan's pledge, and the European Union offered $293 million.

The aid commitment of 4.5 billion US dollars was about one and a half times the expectation of the government.This assistance, to be spread over four years is about the amount pledged for post-war reconstruction of Afghanistan last year. That comparison gives an idea of how large the aid package is. It is certainly very substantial and could make an important contribution to reconstruct the North and the East as well as boost the economy as a whole.

However it all depends on whether the full sum would in fact be utilised as the donors have made it clear that the funds would be released only on the attainment of a durable peace. The proof of the pudding is in the eating of it.

The donors and especially the Japanese and the US have made it clear that the implementation of the aid package would be linked to progress towards a permanent peace. This is as was expected. The all important question is whether all sections of the Sri Lankan population would support a pragmatic solution to the problem.

The U.S. Deputy Secretary of State Richard Armitage has said Sri Lanka had "a duty to repay the donors' generosity by ensuring that it actually achieved peace, improved its human rights record and disbursed the funds in a transparent way." In fact the Sri Lankan government, the LTTE and all parties concerned have a duty to the people of Sri Lanka to ensure a durable peace and a constitutional settlement that would enable the utilisation of these funds for the reconstruction of the devastated areas and to assist a rapid economic growth.

A very special responsibility lies with the LTTE to the Tamil people of the country. The inability of the LTTE to arrive at a reasonable solution and be flexible and pragmatic in the face of the plight of the Tamil people would be the great betrayal. It is the Tamil people who have most to gain by this aid. It is the Tamil people who have the most to lose by not accessing this aid for the reconstruction of their homes, roads and railways and other economic and social infrastructure of their region.

It is therefore vitally necessary for the Tamil people to articulate their aspirations for a decent life and not allow the LTTE to deny them their last hope. The benefits of this aid would be direct for the North and East. The rest of the country too would benefit from the reconstruction, the flow of aid, peaceful conditions and investor confidence. It is an opportunity that cannot be missed. And yet there is every possibility that it might be missed. The US government position has been a firm and unequivocal one.

Armitage told the LTTE "Prove to your people, to all the people of Sri Lanka, and to those donor nations that want to help you, that you are committed to a negotiated settlement. Prove it by coming back to the table. It is time for the parties to delineate and agree to a shared vision, not only of where they want to end up, with a federal structure based on internal self-determination, but also of interim steps that will carry them in that direction and will lead the country to that destination". Will the Tigers heed this advice? Will the donors take a new firm stand against the Tigers if they fail to respond?

The future of the Sri Lankan economy is very much dependent on whether this aid package can and would be utilised.

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