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Geneva resolution: Human rights and economic impact
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Good governance is intrinsically good for the nation and people irrespective of any economic consequences. Nevertheless, if the government fails to ensure law and order and protect human rights of her citizens, it would harm the country’s economy in several ways. This was the gist of the message from the LBR-LBO CEO forum on “Meeting the Challenges of a Resolution on Sri Lanka by UN’s Human Rights Council” on April 23rd.
Although the Forum focused on the broader issues and consequences of the UNHRC March resolution, its economic implications figured much in the comprehensive discourse. Last week’s column analysed the economic consequences discussed by the British High Commissioner and a Deputy Governor of the Central Bank. Today we discuss pertinent economic implications and consequences the other three speakers brought out at the Forum.
Dayan’s prescription
Dr Dayan Jayatilleka’s masterly contribution as a political analyst and expert in international relations contained significant economic implications as well. He was emphatic that Sri Lanka should improve the rights of its citizens, while resisting an international inquiry into alleged war crimes by UN’s Human Rights Council. His prescription of 4R’s — Reform, reset, rebalance and roll-back — meant that we have to clean up our act as it reduces international pressure.
By reform he meant the implementation of the LLRC report within a compressed time frame and the 13th Amendment that involves greater devolution of power to the Northern and Eastern areas through provincial councils in full and expeditiously.
The re-set button with India necessarily involves the full implementation of the 13th Amendment that was a ‘pre-condition’ to good relations with any administration in New Delhi due to political pressure from Tamil Nadu. He stressed, “If we reform, if we re-set, our relationship with India for the better, if we rebalance by bringing back the third world and the non-aligned movement, the global south, then we can roll-back the inquiry.”
World public opinion
Dr Jayatilleka observed that world public opinion was a powerful force for Sri Lanka’s economy since Western governments respond to what people feel in democratic societies. Therefore human rights issues must be addressed. Sri Lanka did not fully understand this and how the outside world worked. Dr Jayatilleka contended: “There could be economic measures taken by legislatures, but also driven by public opinion. In the 21st century as the economies — especially of the West — are susceptible as never before to social pressures.” Therefore it is imperative that the government takes affirmative action to safeguard human rights.
The Shah perspective
The Chairman of the Ceylon Chamber of Commerce Suresh Shah said that although official sanctions, unilateral or other were possible, but hopefully far away, the bigger worry was international public opinion. He pointed out that Sri Lanka had been getting a lot of negative press overseas, that were hurting the economy. In contrast, Vietnam and Myanmar had been getting much more positive press than Sri Lanka. This despite the fact that they were not fully fledged democracies. This negative publicity could have an impact on FDI flows, and in tourism, where public perceptions mattered. “So our potential can certainly be affected,” he said. Furthermore, Shah said that foreign investments were inadequate and they constituted only a fraction of what countries like Myanmar and Vietnam were attracting, and the increase in tourism, though certainly was a bright spot, was not commensurate with increases in world tourism.
Implications for the economy
Dr. Nishan de Mel, head of Verite Research, pointed out that the Geneva resolution had implications for both the economy and for governance. He contended: “The main economic impact will be losing potential opportunities. Strong economic sanctions are away but sanctions could be quite varied and multifarious. There can be limited sanctions on certain types of investments, policies that can prevent Sri Lanka from being drawn into certain international agreements.”
De Mel pointed out that foreign direct investment (FDI) that was at present quite low (about 2 per cent of GDP) could be adversely affected as the resolution would increase the perception of risk and reduce the appetite to invest in Sri Lanka. However, this will not have a huge impact since FDI does not at present play a very large part in Sri Lanka’s economy. Nevertheless, future growth potential would be constrained by inadequate FDI. Similarly, de Mel pointed out that tourism to Sri Lanka was not high (about 6 per 100 population) and that since tourism’s contribution to GDP was small (around 2 per cent) the impact of the resolution was not likely to be large. However the converse of this argument is that with low foreign investment and tourists, their potential for growth would be hampered owing to international perceptions of human rights violations.
Trade balances
Interestingly de Mel observed that 52 per cent of our exports go to countries that voted for the resolution, while only 9 per cent of our exports go to countries that voted against the resolution and that Sri Lanka had trade surpluses with countries that sponsored the resolution and trade deficits with countries that voted against the resolution or abstained from voting. Therefore perceptions of civil society buttressed by the diaspora could affect our exports to Western countries that remain the main markets for Sri Lankan manufactured exports.
Human rights crucial
The perception that our human rights violations do not have an economic impact is wishful thinking. The economic impact has to be viewed in a much broader perspective than mere economic sanctions that may or may not be imposed. It is not only government policy in these countries that matter but public opinion in them as well. Violation of human rights, stressful relations with India and foreign trading partners, failure to achieve national reconciliation and societal harmony and the lack of law and order will undoubtedly affect the economy adversely. Irrespective of any economic consequences of the Geneva resolutions, the Government must ensure law and order and protect human rights of the citizens.