| The Sunday Times Economic Analysis By the Economist | ||||||
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A pittance from Oslo aid conference By the Economist In as far as substantial aid commitments are concerned, the Oslo conference was a disappointment. Only 70 million US dollars appear to have been committed. Some parts of that sum are expected to be released in the next six to eight months to begin rehabilitation work. Now the expectation is that substantial aid would be committed at the forthcoming Tokyo Conference next year. This would no doubt depend on clearer evidence of a lasting settlement to the conflict. The US $ 70 million promised in Oslo is a pittance in comparison with the very large sum of money that would be needed for the reconstruction of the affected areas. Initial estimates place the required amount to be in the region of US$ 700 million over a five-year period. The final requirements may even exceed this amount especially with the likely inflation that the reconstruction effort itself would induce. The costs of reconstruction would also depend on the scale and nature of the reconstruction effort. If the reconstruction were to be more than the repair of the destroyed buildings and infrastructure, much more aid would be needed over the next five years. The reconstruction and modernisation of infrastructure of the North and East on a higher scale may require funds in excess of US$ 1000 million. In either case
there should be a well thought out plan for such a development of
the North and East. The presentation of a well thought out plan
of development of the war devastated areas would enhance the chances
of the country obtaining the higher amounts of finance. This costlier
exercise the donors can view as a 5-year phased plan of reconstruction.
The funds would be disbursed over a period of time, but the commitment
should be made at once. It is one thing to obtain funds, quite another
to spend them effectively and expeditiously. As the Resident Representative
of the ADB John Coney pointed out two weeks ago. "The problem
is not so much the money but getting it spent". He went on
to state that "there are adequate funds available especially
in the North and East, the difficulty is in disbursing it effectively
and quickly". He attributed the low utilisation of aid to"
the absence of proper project management skills and awkward procedures."
These same constraints could result in a low utilisation of funds
for reconstruction. In fact even at present there are funds committed
to reconstruction that remains unspent. The country
has received large doses of aid that have not been utilised owing
to an incapacity of the government agencies to implement their programmes.
The funds committed in Oslo and those to be obtained later in Tokyo
should not suffer a similar fate. The government must put together
a more effective mechanism to ensure the expeditious use of the
funds for reconstruction. The United States has insisted that the
LTTE renounce terrorism as a means to achieve their ends. Other
countries too would commit substantial aid for the reconstruction
of the war-affected areas only after clear evidence of a durable
peace. The meagre amount of aid indicates the lack of conviction
that a durable peace is secure. The amount of aid that would be
ultimately available after the Tokyo conference will depend on clear
evidence that a constitutional and political settlement is in sight.
A final settlement would be a pre-requisite for the disbursement
of any substantial amount of funds. The donors may even insist on
certain fundamental constitutional provisions in the settlement
for commitment of aid, as the US statement implies. Only a just,
democratic and equitable solution for all parties could ensure a
durable peace. However the
most serious obstacle to obtaining aid is the LTTE itself. There
are several reasons for this. They are unable to comply with the
requirement of donors to make a clear statement that they are renouncing
violence. In fact there is evidence of their attempting to mobilise
resources for conflict. Their undemocratic approaches are a real
threat to the proper utilisation of aid. There is a danger in the
LTTE utilising the aid funds for their own purposes. Although the
government is attempting to bring in the LTTE for the reconstruction
of the North, it would be difficult for the government to give it
a responsible role to utilise the funds for reconstruction in the
light of their past record and the recent intolerance of the LTTE
of other Tamil parties. There are real fears of the LTTE utilising
the funds for terrorist purposes. The donors would be well aware
of the possibility of this happening once again. The settlement
of the constitutional and administrative arrangements of the North
and East is vital for obtaining the disbursement of aid. Without
the resolution of this issue the donors may not be willing to disburse
the funds. A constitutional arrangement must precede the government's
bid to obtain more aid in Tokyo. The Tokyo meeting might not give the needed aid unless a durable constitutional settlement is arrived at prior to this conference. |
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