The immense costs for rehabilitation of around 300,000 refugees and the reconstruction of the North and East are mind boggling. The reconciliation of the national minorities through a political and constitutional solution, as well as meaningful actions on resolution of ethnic tensions are challenging responsibilities. The reconciliation of the minorities to a just and equitable solution would be the foundation for a stable polity and society that is an indispensable foundation for a rapidly expanding economy. The economic opportunities provided by economic prosperity would undoubtedly be the bedrock for national unity in a plural society.
Finding the finances required for rehabilitation from within the country, in a particularly severe financial bind the country finds itself in, is difficult, if not impossible. Catering to the daily needs of about 300,000 refugees in the camps by providing them with accommodation, water, food, medicines and shelter are staggering tasks. Although the UN Secretary General’s and some foreign accounts of the conditions of these people are dismal, there are reliable reports that indicate the government is making a good effort in the overwhelming situation of the huge refugee problem.
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The international accounts appear to not recognise the enormity of the task, the limitation in resources both physical and personnel and the security concerns that have to be looked into in the admission of personnel and supplies. It is in this context that the work of the government must be viewed. It is also owing to the enormity of the task that the country does not have the resources to accomplish it satisfactorily. There is therefore a need for foreign assistance.
There is also a need for reducing the costs effectively, especially at this initial stage. One of the strategies already adopted has been to let the elderly men above sixty years to leave the camps. This is an essential move to reduce costs, on the one hand and, on the other hand, to permit these people trapped in the conflict to find better conditions of living and ultimately their own livelihoods. There is much more scope of action that needs to be explored in this direction of reducing costs. It should not be too difficult to identify the least probable LTTE cadre. Pick women over 40, children below 10, men over 60. This could account for about 40-50 per cent of the IDPs. If they are released to go to their own homes or of friends and relations then the refugee burden would be reduced in a manner that would also be far more hospitable to these people.
Meanwhile action needs to be taken to repair their homes which would have been destroyed. Emergency crews should be deployed to do temporary repairs until a full account of the reconstruction challenge is compiled. The work of volunteers in the region and of other community assistance organizations such as Sarvodaya and the Association for the Lighting of a Candle (AFLAC) that have good track records, especially not only during the Tsunami, among others, could be utilized for this purpose. The selected NGOs could also be the conduits for assistance from other sources.
It is agreed that no consequential extent of reconstruction could be undertaken without foreign assistance. This too has to be obtained in a global context of recession with developed economies in a quandary as to how they could put their own economies back on track. In as far as Western countries are concerned, the recent spate of controversies, largely fuelled by the Diaspora, and tactless diplomatic encounters, are not likely to help in the cause of financing the rehabilitation and reconstruction.
Nevertheless the United States, Canada and some European Union countries have promised assistance. Asian countries, most notably China, India and Japan have on the other hand come up with generous offers of assistance and a component of the immediate needs have been met from their generous assistance.
Once the rehabilitation process is accomplished to a large extent, there is the need for repair and reconstruction of the North and East. This would be a huge cost. There would be a need for very large sums for assistance over a short period of time. Fortunately India has pledged Indian Rs. 5000 million crores (a crore=10 million) for reconstruction of the North and have even a plan for the reconstruction. This would be a good starting point but even this large amount is not likely to be adequate. Assistance from other countries would be needed for the various areas of reconstruction and re-establishment of the economic, social and housing infrastructure.
At the moment the balance of payments is in severe strain owing to the impending debt repayment. The trade balance is not of much anxiety as the trade deficit is much more manageable than that of last year. The country is fortunate that in the first quarter of the year the trade deficit was more than offset by private remittances. However the reserves at around US$ 1..2 billion would be quite inadequate to meet the debt repayment. It is for this reason that the IMF facility of US 1.9 billion is critical and its delay is worrisome as there was a fear of political factors affecting the disbursement.
However the worst is over and perhaps the international community will look at the IMF facility as important for facilitating the undertaking of the rebuilding of the North and East. However this facility is a balance of payments support not a project loan. The country would have to seek assistance from the World Bank for reconstruction. It is from the World Bank, ADB, China, Russia and India that we could expect substantial assistance. Other countries, such as Iran, Saudi Arabia, and other Middle Eastern countries are also likely to help. European countries and the US appear to be more circumspect owing to their own economic woes and financial bind, but also owing to various diplomatic problems and issues of human rights and civilian casualties. Nonetheless the country is likely to receive substantial assistance, though some of the disbursements may be much less than the promises and commitments. Some of the funds would also have conditions with respect to the devolution of power and other minority safeguards.
The peace dividend is still a way off as an acceptable solution of the minority problem is needed for a lasting solution and peaceful conditions. This aspect of reconciliation and peace is not a financial issue but one that will bear heavily on the country’s economic development. There is an air of optimism that reconstruction in the North and East would set the economy on a high growth path. While this is likely if there is a peaceful polity and society, one cannot expect such economic gains immediately. Also the investments in infrastructure development are likely to result in inflation as most of the expenditure of the first phase of construction is likely to generate inflationary pressures.
The country lives in the hope of peace and prosperity. The immediate task is the care of the refugees and reconstruction that would have to go hand in hand. Successful resolution of minority problems and the reconciliation of the various components of our plural society to a settlement would be what would enable the economy to perform to its full potential. |
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