Sanath, Aravinda set Oval ablaze

• Colombo markets hit by rouble crash
• MEP complains to UN body about PC candidates
• UNP appoints 40 fund managers
• PA revamps itself at district level
• Lanka, India to oppose Taleban at NAM summit
• PC polls by January, GL reassures

Colombo markets hit by rouble crash

By Feizal Samath and Ayesha Rafiq

A downturn in Sri Lanka's stock markets mainly due to the Russian economic and currency crisis is causing widespread concern among tea companies and investors and has prompted an urgent meeting of tea exporters and the state-run Tea Board to seek a compromise solution, trade officials said yesterday.

The Colombo Stock Exchange all share index fell to 507 points on Friday from 598 points at the end of last month — a near 100 point slump — as concerned investors held back purchases and buyers were hard to come.

All over the world, markets saw a fall in values as the crisis in the Russian economy sparked widespread rumours about the currency.

Broking analysts said local markets were becoming dicey primarily because of the impact on commodities such as tea.

"With the devaluation of the Russian rouble, tea earnings of local companies are getting hammered. Blue chips are not looking blue any more," a senior analyst at a Colombo brokerage said.

Some of Sri Lanka's biggest conglomerates such as John Keells — where 38 percent of the group income comes from tea — Aitken Spence, Hayleys and Richard Peiris, are heavily exposed fluctuations in this commodity.

"Emerging markets are worried that the fall in the Russian rouble may lead to other major currencies falling, like the Chinese yuan for instance," the unnamed analyst said.

He said, given current economic trends, most brokerages were also estimating the value of the US dollar to rise to 70 or 70 plus against Sri Lanka rupees by year's end from about 65 now.

Other brokers said that they were looking at a limited upside in the market in the next few weeks and lacklustre trading.

There was speculation that the government was buying in the market last week through state institutions such as the EPF to boost sentiment, and that it would continue to do so to keep up sentiment in a depressed market scenario. However there was no confirmation of this report from government sources and most brokers said it was just a rumour.

Ken Balendra, chairman of John Keells Ltd, said stock markets all over the world were troubled by the Russian crisis and over here, while there were tea orders from Russia, exporters were having problems with banks with regard to credit facilities.

"There is a squeeze on credit because banks are worried about repayments by Russian buyers," he told The Sunday Times.

Tea Board sources confirmed that a meeting had been arranged tomorrow by the Tea Board with banks and exporters. "While the exporters to Russia are being asked to provide all kinds of new documentation and guarantees by banks, the banks are naturally worried that they may be providing credit to lost cause," a Tea Board source said.

He said the concerns of both sides had to be taken into account and a compromise solution reached at the meeting. "The banks have to be protected and the trade must also go on," he said.

Russia accounts for a sizable chunk of Sri Lankan tea exports. The Commonwealth of Independent States (CIS), which includes Russia, accounts for 30 percent of direct and indirect (tea sold through a third party) purchases of Sri Lanka's total tea exports.

The Russian currency crisis is said to have been sparked by international financier George Soros, about two to three weeks ago. Mr. Soros blamed many a time for market disruptions all over the globe with his controversial moves — had said in a London Financial Times report that the Russian currency was overvalued.

His comments were picked by international news agencies and wires hummed across the world, causing intense speculation in the rouble against US dollar and other major currencies. The rouble fell to 11.2 against the dollar on Friday compared to a 6.5 rate before the crisis. Mr. Soros has massive investments in Russia.

Tea board sources said it was difficult to take a long-term view of the tea market, and its impact on stocks, but they were hopeful that Tuesday's meeting between Russian President Boris Yeltsin and US President Bill Clinton, during the latter's visit to Russia, could come up with a solution to the crisis.

"It is unlikely that the US will allow the Russian economy to slide. It is not in their interests to do so. There is probably bound to be some crisis-building mechanism that may come out of the meeting," a board source said.

"We are trying our best but we can do little as it is an international crisis over which no one seems to have control," Tea Board's Promotions Director A. H. de Alwis told The Sunday Times.

The amount of unsold tea at the tea auction has risen from 10 to 15 percent mainly due to the Russian economic collapse.

Asia Siyaka Commodities (Pvt) chief R.L. Kumararatna said there had been a decline in sales and prises but the situation at present was not very serious. But if the crisis in Russia continued for another month or so, then Sri Lanka's tea market could fall by 10 to 15 percent.

Somerville & Co. Ltd. in a trade report said the crisis in Russia was sending shivers down the spine of its trading partners.

Prices for the low growns and a range of high and mid growns, declined, due to the CIS countries, especially Russia, being very selective in their purchases.

The collapse of the Russian economy and the rouble during the past few weeks led to the sacking of the Russian Government and sparks speculation about the resignation of the ailing President Yeltsin himself.

MEP complains to UN body about PC candidates

While the UNP is holding countrywide protest meetings against the postponement of provincial elections, the MEP has taken the case to the United Nations human rights commission.

MEP leader Dinesh Gunewardene said yesterday the party had petitioned the UN body, highlighting especially the plight of upto 500 public servants who had resigned their posts to contest the polls and were now without jobs.

He said the MEP had asked the Elections Commissioner to intervene in providing relief to the jobless candidates. But since the polls chief had not acted, the party took the matter to the UN which is likely to probe the matter within the next few days.

Meanwhile, the PA, it is learnt, also discussed the loss of income by its councillors as a result of the dissolution of five provincial councils. At a meeting with party organsiers, President Kumaratunga is said to have asked ministers to work out a scheme to provide an allowance to these ex-councillors.

UNP appoints 40 fund managers

Launching a major fund raising campaign, the UNP has appointed 40 managers and set a target of Rs. 10 million to collect within three months.

The fund managers, appointed at a meeting at the Hotel Oberoi on Thursday, included entrepreneurs of repute, professionals, economists and MPs, party sources said.

All fund managers were issued bags, each containing 250 certificates to the value of Rs.1,000. The first certificate was issued to UNP leader Ranil Wickremesinghe.

Next month the fund-raising campaign will be taken to the elite US cities of Los Angeles and New York. Mr. Wickremesighe and other top rungers, including the party treasurer, will go there to raise upto Rs. 26 million to boost the party coffers, officials said.

PA revamps itself at district level

By Chamintha Thilakarathna

In apparent preparations for elections the ruling People's Alliance is restructuring itself with emphasis on district organizations.

"For the past few weeks, we have been holding district conferences to strengthen the alliance at district level," Minister S. B. Dissanayake said at the Presidential mobile service in Kegalle yesterday.

He said that the next conference would be in Matale and more meetings would be held after that every month.

"We we are planning a national conference as well," he said. Mr. Dissanayake said he and Minister Mangala Samaraweera would co-ordinate the district organisation while also handling the publicity and public relations work.

Lanka, India to oppose Taleban at NAM summit

By Our Diplomatic Correspondent

India, with possible support from Sri Lanka, will oppose the bid by the Taleban rulers of Afghanistan to obtain recognition at the Non-Aligned Movement summit in Durban.

"We will oppose it tooth and nail," Indian papers quoted an Indian Foreign Ministry official as saying yesterday.

Though the Taleban today occupies 95% of Afghanistan, it is recognised by three countries only, Pakistan, UAE and Saudi Arabia. Others recognise the ousted regime of Burhanuddin Rabbani, whose government in exile has a seat in NAM.

In case the Taleban tries to push its case for recognition in Durban, India would seek the help of Iran, Uzbekistan, Turkmenistan, and some Arab and African countries to stall it. India's argument is that Taleban, with the assistance of Pakistan and fugitive millionaire Osama bin Laden, is an active sponsor of terrorism in Kashmir.

No senior Foreign Ministry official was in Colombo to say what Sri Lanka's stand might be on the issue. Foreign Secretary T.H.W. Woutersz said that he was not aware of the Taleban's bid to obtain NAM recognition.

But going by the official reaction to the bombings of the American missions in Kenya and Tanzania, and the retaliatory missile bombardment of Osama bin Laden's hideouts in Afghanistan, it is evident that Sri Lanka would not be eager to support Taleban's case.

A media statement issued by the Sri Lankan Foreign Ministry on Thursday was delicately balanced in so far as it condemned both terrorism and the retaliatory action of the US in violation of national sovereignty.

It said that Sri Lanka believed that terrorism should not be tackled by unilateral action but by the international collectivity in full conformity with international law, the principles of the UN Charter and respect for the sovereignty and territorial integrity of all states.

But it also "severely" condemned the "dastardly" acts of violence against the US embassies in Kenya and Tanzania. The statement said Sri Lanka believed that no "terrorist" or terrorist group should be afforded safe haven anywhere.

In other words, without mentioning either Osama bin Laden or the Taleban administered Afghanistan, Sri Lanka has said that it disapproves of shelter being given by the latter to the Saudi born terrorist.

Sri Lanka is on the horns of a dilemma and this stems from several factors. Firstly there is the indisputable fact that the Taleban controls all but 5% of Afghanistan. Secondly, Pakistan, a country friendly to Sri Lanka, is keen on getting world recognition for the Taleban regime, its protege and alter ego all rolled into one. Thirdly, after the US witchhunt, Osama bin Laden has the support of many Muslim countries and Muslims all over, including Sri Lanka. The statement mentions the Muslims in Sri Lanka, who it said, "shared" the suffering of people directly exposed to the US attacks.

But at the same, Sri Lanka cannot endorse Osama bin Laden's and the Taleban's sponsorship of terrorism or terrorists, given its own experience with the LTTE and its sponsors overseas.

It is likely Sri Lanka will push for a strong NAM stand against terrorism.

Further, Colombo would not go against New Delhi, given the exceptionally close ties with India now.

As during the SAARC summit here in July, Sri Lanka is likely to go along with India. It would hope that Pakistan would not press for Taleban's membership at this juncture.

PC polls by January, GL reassures

A top government minister has indicated that the stalled provincial elections may be held in December or January by which time Operation Jaya Sikurui is expected to cross the hump.

Minister G.L. Peiris outlined this position at a panel discussion organised by the Foreign Correspondents' Association at the Galle Face Hotel on Tuesday.

FCA sources said that under fire from the audience as well as the other three panelists, Dr. Peiris said no government could postpone elections indefinitely. He said the current state of Jaya Sikurui was the only consideration and the decision to postpone the PC elections was under constant review.

The Defence Ministry, had said it expected Operation Jaya Sikurui to cross the hump in four or five months' time. The government would presumably then study the manpower requirements of both the military and the elections, and take a decision, he said.

Dr. Peiris was not willing to concede that Jaya Sikurui was at a "stalemate''. Rather it was at a ''critical phase'' poised for a thrust forward.

Justifying the priority accorded to the operations, Dr. Peiris said the enormous benefits would accrue to the country if the Main Supply Route (MSR) between Vavuniya and Kilinochchi was opened. It would bring down the cost of transporting supplies to the beleaguered Jaffna peninsula substantiall. Militarily, it would weaken the LTTE by dividing the rebels into two in the Wanni.

On the need for giving adequate security cover for the elections, Dr. Peiris said hundreds of candidates and practically all the top political leaders and government ministers would be out in the field for weeks and every one of them had to be protected from the LTTE, which, he said, was ''just waiting for such an opportunity to create mayhem.''

Another panelist, UNP frontliner Tyronne Fernando said the elections had been held earlier in more dangerous circumstances as in 1988, when the JVP had threatened to kill every candidate. In his own area, polling could not begin before 10 am because of a rumour that the path to the booth was mined. In 1989, parliamentary elections were held under threat, and with a security force half the current size.

"By postponing the elections, the government has offered the LTTE victory on a platter,'' Mr. Fernando charged.

He scoffed at the government's promises saying that by it would continue to say that the war was still not over and again postpone the elections. Slamming the use of emergency provisions to postpone elections, Mr. Fernando said that as per Article 155 (2) of the Constitution, the emergency could do everything except violate the Constitution and the postponement of elections was a violation of the Constitution. The provincial council was a creature of the Constitution, he pointed out. ''You have throttled the five councils, the Governors have seized power, it's a coup d' etat,'' Mr. Fernando declared.

Another panelist, Vasudeva Nanayakkara of the LSSP, blamed both the PA and the UNP, for the current state of affairs. In 1982, the UNP had postponed the general election by law. He charged that the ruling party and the UNP were horse trading in the matter of elections.

He was referring to UNP leader Ranil Wickremesinghe's promise to ensure a two thirds majority to legally postpone the PC elections in return for a promise to hold presidential elections instead. On its part, the government had said that it was not afraid of picking up the gauntlet.

Mr. Nanayakkara said the war could never be touted as an excuse to postpone elections. The current tendency to do so was indicative of a "creeping authoritarianism."

He argued that since elections were to be held in only five provinces, police from other provinces could have been requisitioned.

He charged that the war was only a fig leaf and that the real reason was that the government did not want a setback. But there was no need to fear a setback as the government would have won in any case.

"They would have used the state machinery to ensure victory by having the ballot boxes stuffed," Mr. Nanayakkara said, despite being a member of the PA.

He also charged that the government had not consulted the constituent parties of the PA before postponing the elections.

The fourth panelist, law lecturer Rohan Edrisinha of Colombo University said that it was dangerous to use emergency regulations to postpone elections. The same regulations could be used to postpone parliamentary and presidential elections too.

He pointed out that the prelates of Malwatte and Asgiriya had said that there should be no elections before the war was won.

Mr. Edrisinha said it was wrong to point an accusing finger at the LTTE in this matter. The LTTE might be interested in killing presidential candidates, not those for the PCs. Further, the "biggest" perpetrators of election violence in Sri Lanka were the two main political parties, he said.

He described Dr. Peiris' reference to the people's not wanting elections, as a ''dangerous argument''.

Mr. Edrisinha said that the PA was willing to face the Presidential elections, as it felt that it had a chance, but it was not willing to face the PC elections because it feared defeat.

Being given the right to reply, as he was the only spokesman of the government, Dr. Peiris said it was wrong to say that the PA was afraid of losing the PC elections.

"We have won every election since 1994 convincingly,'' he asserted.

The UNP, he said, had no right to criticise the PA as it had arrogated to itself power in a ''horrendous'' manner in 1982. It had also misused the emergency to regulate adoption of children and the salt industry.

He said the PA government had not gone for a legal enactment to postpone the PC elections because using the emergency was more democratic. Unlike an enactment, the emergency was a temporary state, which had to be ratified every 30 days.

Dr. Peiris recalled that in the late eighties, the UNP had dissolved the North East Council by a special act thus precluding any parliamentary scrutiny or challenge. He disputed Mr. Nanayakkara's contention that the member parties of the PA were not told before the Cabinet took the decision to postpone the elections. ''The member parties were called and told an hour before the Cabinet met,'' Dr. Peiris said.

As regards security needed to conduct an election of this sort, Dr. Peiris said any comparison with the Kandy perahera or the SAARC Summit would not hold water because the polls campaign were spread over five weeks and on polling day 6,970 polling booths had to be protected.

On being criticised for saying that the people were more interested in finishing the war than in having elections, Dr. Peiris said the people would not take continuous postponement of elections. He assured that the decision on postponement was under constant review, the only consideration being the demands made by the current ''critical'' phase of Operation Jaya Sikurui.