Financial Times

A chance to rebuild, reunite
The effects of an earthquake powerful enough to make the earth wobble and shift tectonic plates by 15 metres is likely to leave deep scars on the economy and psyche of a nation as small as ours, long after the initial recovery and reconstruction effort. Some analysts have described the damage wrought by the freak tsunami as the worst blow the economy has suffered.

The images of the destruction along large swathes of the island's coastline are reminiscent of the bombed out settlements and desolation left by 20 years of fighting in the north and east. While the hardest hit sectors have been tourism and fisheries, the tidal wave damage will surely have ripple effects across the entire economy.

It is inevitable that economic growth, that was already slowing down owing to the political uncertainty earlier in the year and then the oil price shock, would slow down even further. The government and the private sector would face higher expenditure on account of the re-building effort and lost business opportunities. Apart from the physical damage, the loss of human capital is also great.

For a country that has suffered so much from ethnic strife and natural disasters, this latest blow to the economy appears almost too much to bear. But the experience of the past 20 years shows that ours is a remarkably resilient economy which has repeatedly bounced back from one set back after another. Already, there are calls to turn this disaster in an opportunity to re-build and re-unite the nation.

A massive reconstruction effort along the lines of that planned for the north-east would be required to get the economy back on its feet. President Chandrika Kumaratunga has put the cost of rebuilding in the 15 districts that were affected at some Rs 100 billion. The public, government and business community have galvanised themselves into action to help the bereaved and homeless, and assistance from abroad is pouring in. But much of the long-term cost of the re-construction effort would have to be borne by the international community as this country simply cannot afford to do it on its own given the poor shape of its economy after 20 years of war.

The government would do well to closely involve the private sector in the relief and rehabilitation effort given the business community's flexibility, agility and availability of skills. The business community has already reacted with much alacrity and its skills would surely help ensure better co-ordination in the relief effort and that aid reaches those who really need it.

It is also in a good position to provide volunteers for the relief effort. Many events planned by the private sector and celebrations have been called off in the wake of the tragedy. The government has the checklist of requirements and these could be fulfilled by the private sector if the two co-ordinate their efforts. There are reports of confusion, lack of co-ordination and duplication in the relief effort. While this is inevitable given the scale of the disaster, speedy action is required to remove bottlenecks and ensure relief measures are effective. Complaints have been made, most notably by the Tamil Tigers, that the government is giving preference to the south in the relief effort and neglecting the north and east. While this is most probably the LTTE's usual disinformation it is important not to let such an impression gain ground.

A massive rebuilding campaign must now surely follow the initial relief effort to repair the homes, commercial buildings, roads, rail tracks and power and telephone lines that were washed away. This might provide the impetus the economy required for a sustained period of growth which the much-touted peace dividend failed to provide.

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