Aid flows and utilisation higgledy-piggledy
There is an utter confusion about the amount of aid flow and its utilisation. What seemed a massive inflow of aid appears as a trickle in terms of the actual utilisation. Tsunami victims are without a semblance of rehabilitation and have turned to protest. The promised housing appears distant, almost a mirage. The Secretary to the Treasury says only a small fraction of the promised aid has come in. The World Bank Country manager has got into political boiling water on how the aid should be spent in LTTE areas. The East is awfully lacking in official assistance and at boiling point.

The euphoria about foreign assistance rebuilding the country is fast fading away. As we said in January only a part of the aid pledges would be realised. This has been the experience of calamities elsewhere in the world. It is partly due to spontaneous promises not being backed by financial provisions in the donor countries. It is also owing to the waning of international interest over time.

There are other reasons as well. Conditions attached to the utilisation of aid may be difficult to fulfil especially when there are political requirements and donors have their own political agenda in a country where some of the affected areas are in the control of terrorists. The human tragedy is unfortunately tangled in a mesh of political dissension. The flow of aid would also be dependent on the capacity of the government to utilise the aid.

This has no doubt been a serious problem. The ineffectiveness in the use of aid and the well-known fact that aid is not flowing to victims must be deterring donors from opening the pipeline. The government made some fundamental errors from which it is difficult to extricate itself. The initial goodwill and social response has been frittered away by the government's intent to control the rehabilitation and to bring credit to itself. There are more mul gals(foundation stones) than evidence of people being rehabilitated.

The biggest blunders have been in the area of housing. This basic need of the affected people to live and make a livelihood remains unfulfilled. Two fundamental errors were made. First it enunciated an environmental and coastal preservation rule. Experts lauded this idea and thought the government was visionary and taking measures to protect the environment and the lives of people against a future tsunami or similar oceanic disaster. What the experts failed to recognise are the ground realities.

The availability of land, the aspirations of the people and the practical difficulties of providing housing inland, were not considered. Consequently the government failed to build the houses, even adequate temporary housing. In addition they failed to give private individuals, community organisations and NGO's the permission and land to build houses. The political and bureaucratic inefficiency and confusion was such that lands given or promised to NGO's and others were taken back.

This has been the sorry state of affairs in housing. At one time it appeared that the number of houses to be built would be several times the number destroyed. What we now have are a large number of people without proper shelter and many of them have lost hope. And that is why there are protests in the affected areas.

Whether the government could recognise the problems and retrieve the situation is the critical issue. We have three suggestions. First, give up the rigidity of the rule about the distance from the sea and ensure that lands are available for the government as well as private donors to build houses. The priority is the availability of land not the rule. In many areas the new houses may have to be built in the same locations.

This is inevitable due to the density of population in most of the affected areas. Second, obtain some of the aid commitments as project loans where the donors themselves complete the construction.

If this were done it is likely that the progress on the reconstruction of infrastructure would be rapid and modernised. The problem of Accountability will not be an issue for the government. Third, act cautiously on the use of aid that has conditions with respect to use of funds, with high foreign cost components in particular.

Use grants rather than repayable aid. Any wasteful use of aid would result in increasing the country's debt burden.

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