CFA gone, sentiment lost

There were two interesting comments made when our reporters spoke to a cross-section of the people as to whether there were any economic benefits during the 6-year old truce which ended last week.

JVP spokesman Wimal Weerawansa said abrogating the CFA doesn’t mean the war situation will increase. JHU’s Udaya Gammanpila said the government achieved ‘nothing’ by abolishing the CFA. “On the other hand the government has unnecessarily antagonised the international community,” he said. These two statements were among other comments they made to the newspaper. Does one see a silver lining here from what are regarded as the main groups opposing any truck with the LTTE? In a way yes … given that they believe a solution to the ethnic conflict ultimately lies in a political and peaceful settlement.

The survey that we ran to ascertain the views of sections of the public on the benefits of the ceasefire saw nearly 90 percent saying there was an economic benefit. However some argued that the benefits should be counted in the first few years because though the ceasefire agreement was operative till last week, it was just a piece of paper.

Nevertheless there are clear indications that the period even after the ceasefire virtually didn’t exist was good for business in Sri Lanka. The stockmarkets were alive (not that they would crash now) and sentiment was good. Tourism was also recovering with a group of 10,000 British travellers accompanying their test and one day cricket team to Sri Lanka last year while a mega-literary festival drew some of the world’s best writers to Galle last week. It’s unlikely that the culmination of the ceasefire will deter British cricket enthusiasts or world-famous novelists from visiting the country.

The point however we are trying to make is exactly what Gammanpila is saying that even though the CFA is a worthless piece of paper there was a sense of optimism in the air that the peace talks would someday resume or the violence would end. The past few years has also seen many top personalities like singers Paul McCartney, Paul Simon and Sting visiting the country and staying – virtually hidden – in boutique hotels and plantation bungalows. Stories on Sri Lanka in the world press and magazines would still invariably refer to a ceasefire being in force since 2002 although broken by bouts of fighting. This gave a feeling to the world that there was still some hope even though the CFA had been shattered by resumed fighting. A piece of paper no doubt but still providing a window of hope and opportunity!

The biggest economic benefit in the ceasefire was the opening of the A-9 highway and the flood of people travelling from the south and vice versa. For the first time southerners visited Jaffna and the same for northerners to Colombo. Many Colombo businessmen, CEOs, chamber heads and senior marketing officers would recall how they got onto a plane to Jaffna or took the high road to Jaffna, running through LTTE territory. It was the first time since the riots of 1983, which triggered the bloodbath, that this highway has seen such a flow of traffic. The A-9 was dubbed the ‘Road of Hope”, “Road of Prosperity” or even the “This-way-that-way road”. The last label was more amusing. It came after ‘so-called experts’ recommending development of the north, presented plans after driving on the A-9 with their recommendations based on merely sby looking left and right of the highway without venturing into the interior to assess the situation! Figures don’t lie and post-CFA growth rates in the north and the east show a tremendous surge (in the first few years) in agriculture, fisheries and services, far higher than the speed of growth in the much richer western province. There was also some interest for tourist hotels in the north while eastern hotels got a revamp. Sentiment was positive.

So what happens now? With Sri Lanka being a resilient nation, the country entering a state of intense war is unlikely to jeopardize growth, though there could be a slow down.

Other issues that might confront the economy is a slowdown in the US economy, seen heading towards a recession, which is affecting garments exports. On the positive side, the success of the Aitken Spence Group to venture in hotel management in India and the Maldives shows the potential for companies to venture overseas and balance one’s options since making money in Sri Lanka is constrained by war.

Creating a positive sentiment for business and foreign investment in the midst of a war is one of the key responsibilities of the government.