and corporate jitters
The business community appears to have got a case of political jitters
now that President Chandrika Kumaratunga has the power to dissolve
parliament following the expiry of the one-year time limit that
prevented her from dismissing the United National Front government
till now. Stock brokers have reported that some investors were nervous
about the possibility that President Kumaratunga could dissolve
parliament, although the dull trading on the Colombo bourse in the
last few weeks was more a result of a lack of cash among punters
following the successive IPOs that flooded the market.
analysts do not believe Kumaratunga will exercise her option to
dismiss the UNF government, especially considering her pledge to
parliament not to do so for three years. This is because they believe
the UNF still has sizeable support from the electorate, given the
seeming success of its peace effort and the economic revival that
appears to be underway. Furthermore, the opposition is still weak.
Alliance has not yet recovered from its humiliating defeat last
year, and is not considered to have the ability to win a snap election.
Even if another election is held the outcome would be predictable
- another hung parliament where the balance of power would be held
by parties representing minority communities which would be the
pledge not to dissolve parliament came with a qualifier. That is,
she pledged not to dissolve parliament as long as the UNF was able
to command a working majority in the House. What was left unsaid
was that this means she could dissolve parliament if the UNF loses
its wafer-thin majority in parliament. Kumaratunga has also warned
that she would use her powers if the UNF's talks with the LTTE were
seen to be a threat to the sovereignty of the state.
of the UNF losing its slim majority in parliament is now very real
given the mighty split in the Sri Lanka Muslim Congress whose support
is crucial for its survival. Loss of SLMC support ahead of the crucial
vote on the budget could destabilise the ruling UNF coalition and
prompt Kumaratunga and the PA to attempt to regain parliamentary
power. This could disrupt the peace process. The LTTE has already
warned that the entire peace process could be jeopardised if Kumaratunga
were to regain power, although it seems unlikely that the Norwegian
mediators and the powers behind them would allow the peace effort
Even if the
peace process was not affected, the political uncertainty that these
developments could generate would undoubtedly affect business sentiment,
especially that of foreign investors whose support is critical for
this country to get back on a solid economic footing.
All the talk
of cohabitation and compromise, and of national governments this
past year appear to have come to nothing. There is no sign of any
lessening of the hostility and antagonism that exists between the
two main political parties in this country and their leaders.
The need for
compromise and accommodation by both sides is now greater than ever,
especially considering that the peace talks seem to be making some
unexpected headway. One of the concerns of the PA is the belief
that the peace initiative started by the PA regime has been hijacked
by the UNF. This may seem irrelevant to the public, which is unlikely
to care which party ushers in a lasting peace, but is an issue that
needs to be addressed if there is to be an end to the baiting and
hostility that have marked relations between the two main political
parties. One possibility would be to include a delegate from President
Kumaratunga or the PA in the peace talks with the LTTE. There does
not appear to be any harm in the UNF government doing so.
of policy by both President Kumaratunga and Prime Minister Ranil
Wickremesinghe would also go far in calming the fears of investors
and restoring some sense of economic stability.