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Political games 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.

Most 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.

The People's 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 effective kingmakers.

However, Kumaratunga's 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.

The possibility 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 to collapse.

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.

Clear statements 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.

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