Sri Lanka – Progress Towards Peace and Prosperity

By Dr. Palitha T.B. Kohona

(February 23, Colombo, Sri Lanka Guardian)Talking about peace, economic development and prosperity after a heavy meal might be a serious imposition on all of us. But peace and economic development is a priority for Sri Lanka at the moment. Prosperity has beckoned us for a long time and has evaded our grasp repeatedly.

Many a time, we have had our hopes raised, only to be disappointed. So let us now see what we can do as a country to reach prosperity through peace and economic development. Of course, and I shall underline this, many people would not necessarily consider economic development to be a pre-condition for prosperity. We have known societies in history, and even in the contemporary world, which have not reached economic development as it is understood in the West, but which are prosperous in their own way, where people are content, tend to live for a long time and do not yearn for many worldly goods. An example comes to mind, the country of Bhutan - a member of SAARC, nestled in the high Himalayas, which is a dream destination for many of us. It enjoys this reputation as the modern-day Shangri-La because it is considered to be the ideal place to live and the people seem to lead very satisfied lives there, they are happy with their economic conditions, they are happy with their religion, they are happy with their rulers, so much so that the last King of Bhutan abdicated at the ripe old age of 51 years and handed over the throne to his son. In addition, he also conducted free elections despite the express reluctance of his people to be involved in elections. They were so content with the old king and his benevolent rule. The king actually forced an election on his people so that the people could elect their own representatives to govern them.

I am not sure whether Sri Lanka which has been exposed to a range of influences from around the world, and which has entrenched itself in an open economy, would be able to emulate this dream- world situation that we find in Bhutan. We are a people driven by normal ambitions and greed. Besides, our aspirations appear to be very similar to those of industrialized countries whether in the East or the West. As we reach out to become more developed in the traditional sense, there are some factors that are in our favour. Sri Lanka has succeeded in bringing down absolute poverty to about 15 percent. This is the best performance in South Asia with regard to lowering poverty. We can be justly proud of this achievement. Sri Lanka also succeeded in attracting over USD 800 million in foreign direct investments in 2008. Again, a very creditable performance given all the factors that seem to militate against us. Our exports continue to grow, especially in the non-traditional area, and on top of it, many of our imports have become cheaper. Oil which was selling at $ 147 a barrel earlier in 2008, has now dropped to roughly around to $ 36 a barrel. We import large quantities of steel and cement, they have also come down in price. Our food imports are much cheaper now than they were at this time last year. Our citizens abroad continue to repatriate around $ 3 billion annually. These are all positive factors which suggest the potential to progress towards prosperity. But, we have to remember that there is one factor which is militating seriously against us.

This is the scourge of terrorism – terrorism has been a major challenge to our development aspirations for over 25 years. It raised its ugly head in the early 80’s – at a time that Sri Lanka was being praised in the Western world as a model liberalized economy. We opened our economy to global competition much before our neighbours and we succeeded in breaking into other markets with great success. Sri Lankan industry began to excel in certain sectors. Unfortunately, a terrorist war was imposed on us, resulting in a huge drag on our development efforts. Business confidence ebbed, investors shied away, investments became uncertain, tourism suffered seriously – pressure was exerted on our currency, borrowing became difficult and we became seriously doubtful about our own ability. The terrorist challenge is estimated to have cost the country over $ 200 billion.

However, our resilience became apparent before this challenge. Despite the terrorist threat, we continued to advance economically. Let us examine some of the attendant factors. Sri Lanka’s success in expanding its economic activities following the liberalization of the economy has contributed significantly to its compliance with wider global standards. In a sense, this is real progress towards prosperity. The financial resources for the purpose were generated through expanded economic activity. Considerable success has been demonstrated in accomplishing the Millennium Development Goals, as agreed at the UN Millennium Summit in 2000, which aim at reducing poverty and improving the lives of people. We should be proud that the number living in poverty in Sri Lanka has dropped to around a low level. This is remarkable for our part of the world. Our literacy rate remains very high. The female to male ratio at schools is 100%. The Government has a target of achieving a 50% computer literacy by 2010. While much more needs to be done, the progress Sri Lanka is making is noteworthy, especially at a time when the entire country is challenged by the brutal terrorism perpetrated by the LTTE.

In this context, it needs to be remembered that the LTTE, consistent with the strategy of other terrorist groups who have sought to cripple the economies of target countries, has aimed its sights at the economy of this country. It is a strategy which appears to have succeeded to some extent, unfortunately due to the conscious or unwitting acquiescence of certain international players. The LTTE has attacked major economic targets in the country and has threatened to continue such attacks. This country is struggling to maintain its democracy, its democratic institutions, and its economic and social achievements in the face of the LTTE’s determined efforts to destabilize it economically and deserves the sympathy of other democracies, and not their criticism. Tourism, inward investments and business confidence have been a key focus for the LTTE. No great wisdom is needed to understand the terrorist motive. The LTTE’s prime motive has always been to see that Sri Lanka is debilitated economically, that its development is stultified, and the lives of its people made miserable. Terror has been sown to reap a harvest of misery. What then is remarkable is that successive Governments of Sri Lanka have continued the process of ensuring economic development amidst vast difficulties. Not only that; they have continued to meet the food needs and care for the health needs of the people under LTTE control.

Sri Lankan governments have taken proactive diplomatic initiatives to maintain a continuous dialogue with key international players with a view to ensuring continued economic connectivity and national security. For example, H.E. the President has made several visits to targeted countries over the last three and a half years. He has also attended the General Assembly of the UN, the ILO, meeting different world leaders, the G-11 Summit, the Baoa Forum, the Commonwealth Heads of Government Summit and the World Food Summit. Almost all his visits have enabled business delegations, which have accompanied him, to exploit resulting opportunities. The Government has a strong policy of encouraging the private sector. All of these visits have been used by the President to consolidate our bilateral relations to explain Sri Lanka’s position to the world, to highlight positive developments, reassure the world of our policy approaches, including on economic issues, and to listen to the views of our interlocutors. Some of the benefits obtained following these contacts to facilitate business may not be obvious, but nevertheless, are very significant. Many foreign delegations at senior level have come to our fair isle in recent years. Regular visits to Sri Lanka have been undertaken by senior officials of the UN and other international organizations. We are hosting a senior UN Official even now. A very successful SAARC Summit was held in Colombo last year. Importantly, in the face of a determined terrorist challenge and its sophisticated propaganda machine, we have used these visits to explain to the world measures undertaken by the Government and its security forces to counter the brutal threat of terrorism that confronts us, the evolution of the political process designed to address the concerns of our minorities, particularly the Tamil minority, the APRC process, measures taken to consolidate and advance our democratic institutions, in particular, holding elections in the Eastern Province after a lapse of 14 years, the subsequent elections in four other provinces and measures undertaken to address the economic and social needs of our people. The achievements of our country in recent times, including our success in substantially attaining the Millennium Development Goals, our high ranking in the UN Human Development Index, in initiating vast development programmes, building extensive new infrastructure, including roads, three power plants and two harbours and in creating opportunities for industrial and services expansion, have been highlighted. In addition, these visits have contributed towards encouraging inward investments and foreign tourist arrivals, particularly from new sources. I am certain that these have contributed to energizing our economic activity and bringing more benefits to our people. We will keep trying.

It is important to note that despite the adverse publicity and the determined efforts to denigrate the country, even from within, Sri Lanka received a record level of FDI in excess of US$ 800 million in 2007 and tourist arrivals though unsteady, recorded increases from the Middle East, Eastern Europe and Asia. New and more lucrative sources of tourism continue to be tapped. The global economic downturn will have implications for our tourist intake, but we hope that the new markets that we are exploring will reintroduce some equilibrium.

It is evident that Sri Lanka’s proactive engagement in the world stage has brought tangible benefits, in particular, the Government’s active diplomacy has clearly resulted in increased development assistance flows to this country. Japan has increased its bilateral assistance to Sri Lanka to US$ 618 million. China has emerged as a major development partner and is funding projects to the value of over one billion dollars. The contribution of Iran to our development efforts exceeds US$ 1.9 billion. India is also emerging as a major participant in our development projects, with over US$ 500 million. The Republic of Korea contributes in the region of US$ 117 million. The Asian Development Bank and the World Bank are also major collaborators in our development efforts. Countries such as the US, Germany France, Spain, Australia, the Czech Republic, Austria and Hungary, are also important partners. The European Union is especially significant with its contribution of over Euros 129 million. At a time when global development assistance levels have dropped, Sri Lanka, seeking to provide a better economic future for its people in a democratic framework, has succeeded in increasing assistance to itself. These development projects create opportunities for business, and of course, increased prosperity for the people.

In this context, I would also like to spend a little time looking at Sri Lanka’s economic performance. Trade is an important element in our economic advancement and our prosperity. Historically, Sri Lanka benefited enormously from international trade and there was a time when this country was a major emporium in East-West trade relations. Then Sri Lanka featured in an exaggerated manner, in the imagination of Western cartographers. This can only be explained in terms of our impressive trade links. In more recent times, traders from afar, came to Sri Lanka looking for valuable commodities such as cinnamon, gems and elephants. Things are not too different today, and it is very important for us to maintain our trade relations unaffected by extraneous factors. We must continue to deploy our energies to advance our economic and trade relations. There is much in the statement that “the business of today’s diplomats, is business”. Our Free Trade Agreement with India has opened up vast new opportunities. The potential under the free trade agreement with Pakistan is still to be exploited fully.

As you know, Sri Lanka’s per capita income has now surpassed US$ 1600 a year. We are now a middle income country, albeit at the lower end. Our economic growth rate has been around 6%. Our industrial exports increased by over 8%, while agricultural exports increased by about 6%. Unemployment is at a historic low, although inflation is a problem. With the global economic downturn, unemployment could become a challenge. Inflation, which is afflicting a broad range of countries worldwide, appears to be unavoidable, given Sri Lanka’s deep dependency on imports. It is hoped that global conditions would improve and help us to deal with our problems better. Sri Lanka continues to be a major supplier of labour to international markets. Our goal is to focus more on the export of skilled labour in the future.

The question has been asked whether Sri Lanka could satisfy the conditions related to the extension of the GSP + facility. We will continue our efforts to convince our partners that we will be able to meet the conditions underlying the granting of the GSP + concession. I note that Sri Lanka is a party to the key conventions that underpin the GSP + facility in the areas of human rights, the environment, labour and good governance. Sri Lanka has performed exceptionally well and been commended in the areas of the environment and labour enabling us to market our clothing under the slogan “Garments without guilt”. We chair the Conference of the Parties under the Montreal Protocol to the Convention on the Ozone Layer. Many comments have been made concerning Sri Lanka’s compliance with the commitments undertaken under the different human rights conventions, in particular, the ICCPR. I note that the Supreme Court has held that the ICCPR is justiciable under the law of Sri Lanka and the Convention has been adequately given effect under our law. While the wider struggle against the brutal terrorist challenge continues, in parallel, the Government has taken a range of measures to ensure that global human rights standards are met within the country. The One-Judge-Commission on Disappearances (the Tilakaratna Commission) was appointed to investigate alleged disappearances. An Independent Commission of Inquiry is investigating a number of high-profile incidents. Its work has been observed by a French Judge and has received favourable comment. Sri Lanka’s military has been provided extensive human rights training by the ICRC. Sri Lanka has also continuously interacted with high-level UN officials responsible for different aspects of human rights and has not hesitated to invite them to Sri Lanka. We have entertained a number of high-level visitors from the United Nations.

It is also unfortunate to observe the cynical willingness of some to accept allegations made by organizations overtly sympathetic to the LTTE and some NGOs, who have a vested interest in continuing their operations in this tourist haven. I wish that the current tendency to preach from an exalted pulpit, would, at least, be limited to those who could boast of a gentler past. We are ready to listen, but our critics must also take note of the good things that we are doing.

Ladies and Gentlemen, in a globalized world, it is not unexpected that everything that we do and do not, get highlighted, sometimes disproportionately. Unfortunately, given the sophistication of the propaganda machine of the LTTE, many real and perceived actions in our performance get flashed across the world in real-time. Some of this material gets picked up by the media, the NGOs and even governments. There is a tendency to see only the negative side of this country too readily. It is for us to deal with these barrages of propaganda as effectively as possible.

There is much that we are doing to ensure a safe, healthy and prosperous future for our people. We have achieved much. But much remains to be achieved. As our soldiers continue to advance at great sacrifice to themselves and the scourge of terrorism recedes, we have larger challenges looming ahead. Reconstruction, rehabilitation and re-integration come to mind. We will need to re-build the infrastructure of the North, which has been neglected for over 25 years. We have to restore the economic options of the people. In the process, we should re-establish the confidence of the people in the North in an undivided Sri Lanka which treats all its sons and daughters equally, and provides equal opportunity to all. This is our greatest challenge!

(The speech delivered by Dr. Palitha Kohona, Secretary Foreign Affairs at the Rotary Club Conference held at the Mt. Lavinia Hotel on Saturday, 21st February 2009.)

-Sri Lanka Guardian