Colombo Weather and the South Asian Economic Summit

Galle Face (and a shameless plug for my Instagram)

Washed out streets and a clean Colombo welcome the start of SAES2013. A literary metaphor for a fresh beginning? Perhaps. But also an ominous symbol of one the themes of the conference. The weather in Colombo hasn’t been normal for years now. When I was a kid, the monsoon was like clockwork, April was always hot, August was rainy, and December offered slight relief from the repressive humidity.

Over the last year mostly, and the year before that somewhat, Colombo has felt more like a mildly warmer version of the Central Hills. Not that I’m complaining. I hate the humidity, and now I just need some mosquito repellent to grab a good night’s sleep on most nights. The reprieve gave way to a month or two of absolute scorchers, but that is a price I’m willing to pay. I like the new Colombo weather.

However, this post is not about weather, at least not in the conventional, hi-how-are-you-doing-its-very-hot-no? kind of way. Climate change, the likely culprit of Colombo’s newfound coolness (a very relative term still), is a major problem for the region. And a topic that the South Asian Economic Summit (SAES 2013) where I’m sitting at right now, is quite concerned about.

The unpredictability of monsoons, while mildly inconveniencing the city’s cubicle warriors with cumbersome umbrellas, plays havoc in the region’s agricultural sector, the rise in sea level threatens low lying islands, the melting of ice caps in the Himalayas threatens norms of water flow and while Colombo may have been benefitted with a welcome bout of cooler weather other parts of the region have feced extended spells of debilitating heat. Besides, of the sea level rises that stroll along Galle Face could soon turn into a wade. All these changes affect millions of lives and threaten the already struggling development processes of the region.

The carbon neutral conference happening in Colombo right now is talking about how to address this and many other problems. It’s easy to be cynical in adventurous discussions like the ones taking place today, especially being in a region bogged down by political corruption and policy blindness. Economists and policy wonks can talk and talk but you and I know that when it comes to implementation it always boils down to what the politicians stand to gain on the ground.

But ideas are important. Ideas, if powerful, can eventually trickle through the political processes, even those as mired as the ones in S. Asia, and create some change down the line. People here are talking about regional integration, investment promotion, collective agricultural initiatives, regional transportation and energy management etc. All very adventurous stuff for countries with long histories that are used to justify enmity just as much as to justify friendship.

The conference live streams here. Join the discussion on Twitter on #saes2013.

Azath Salley’s Arrest and the BBS ‘Distraction’

Azath Salley was arrested yesterday. One of the allegations made against him is making comments that incite religious hatred.  Azath Salley in recent months has built a reputation of of sorts of being pretty much the only Muslim politician with the courage to go up against the BBS in public.

This affidavit penned by the General Secretary and Leader of the Nava Sama Samaja Party (NSSP) Dr. Vickramabahu Karunarathne, gives a bit of broader context to what Salley was up to in the run up to his arrest. The NSSP, Salley’s NUA and several other parties were part of a “Movement for Unity with Power Sharing” with a mandate that involved tackling racism.

According to the Defense Ministry, Salley has apparently said that Muslims must start an armed struggle like the LTTE, and that they are actually ready and waiting to be armed. Salley is also suspected of having links with the LTTE. No evidence has been brought forth to prove these allegations as yet.

After some heavy drama where he was denied medical care and had to resort to a hunger strike he was admitted to hospital on Friday afternoon. Where his case will proceed is still not clear. Hopefully we will see a fair and transparent legal process. Anything else could be a serious setback to perceptions of government support for ethnic harmony.

But double standards are not nice. For instance, the Bodu Bala Sena has clearly engaged in hate speech and incitement of ethnic hatred. Yet the BBS has only been allowed to grow and prosper. They seem to have quietened down lately, and rumors of anti-BBS foreign pressure have been heard on the grapevine, but there is no telling if the BBS is now a thing of the past; a mere spike in the long line chart of public distractions giving away to the next (Duminda perhaps?); or in fact a sleeping dragon.

The BBS bias though, begins to make clear sense in the murky twilight of Sri Lanka’s realpolitik. Sinhala Buddhist supremacy is nothing new to the country. It has always been there and maybe it always will.

What is worrying to me is not that the government is responsible for unleashing the BBS, because that would imply that it was actually capable of controlling it. What is worrying is that the government, if those that allege that it is behind the BBS are right, is only trying to appease it. Because it plainly poses fatalistic threats to near term stability in Sri Lanka.

From an economic angle, Sri Lanka has a consistent savings to investment gap, so the only way to seriously grow the economy is to attract solid foreign direct investment (or to borrow, but that way lies disaster). But foreigners are notoriously sensitive to political instability; and ethnic strife along with human rights allegations, the Chief Justice fiasco and sudden price hikes just add to the list of cons when it comes to investing in Sri Lanka, especially given enough safer options in the region like the Philippines, Vietnam, Indonesia etc.

So the argument that this is merely another ‘distraction’ pre-supposes an extremely short-termist, even stupid government. Because for it to invent ethnic disharmony out of thin air as a distraction from a flagging economy, a tactic that can only worsen the economy’s prospects would be a very stupid thing indeed.

But I don’t think the Rajapakse’s are short termist, in fact, they could just be one of the most long termist entities in power we’ve had. But they are still playing a balancing act, despite their outward show of power. Mark Juergensmeyer has a few great passages on Sri Lanka in his “The New Religious State” (the whole of it is well worth read). This was written in ’95 but still sounds coldly relevant today.

The present rulers in Sri Lanka face the same dilemma as their predecessors: they need Sinhalese support, but they feel they can not go so far as to alienate the Tamils and other minority groups. They have been attacked viciously by Sinhalese Buddhist nationalists for attempting to achieve what might be impossible: a national entity that is both Buddhist and secular. The use of Buddhist symbols is meant to appeal to the Sinhalese, and the adoption of a secular political ideology is supposed to mollify everyone else.

With elections approaching and Sarath Fonseka back on the campaign trail, powers are converging against the status quo. To take Juergensmeyer’s view, this rise of extremist nationalist forces could be the Rajapakse’s first ‘attack’ at the hands of  “Sinhalese Buddhist nationalists” for trying to achieve a “national entity that is both Buddhist and secular”.

I still think that the Rajapakse model of government, while far from ‘good’, is the best we can have in our current context. We can help improve it, but if it is toppled we would probably descend into disarray. From a policy and historical perspective, and in line with examples of East Asian success stories, a ‘benevolent autocracy’ is probably the only model of government capable of giving Sri Lanka the stability it needs to grow in the longer term. Maybe what John Kotelawala said in 1974 is still largely relevant.

Sri Lanka is not ready for democracy. In a country like Sri Lanka democracy becomes government by bloody mugs and idiots.

But how benevolent is this autocracy? Evidence so far has proven that it can be quite belligerent and reactionary. But is that due to this balancing act, this need to keep all sides happy? And now, how autocratic is it? With movements like the BBS emerging, the stranglehold the Rs have on power is beginning to be questioned as well.

Yesterday’s #RallyforUnity (with photos)

Some of the placards attested to food being the greatest unifier. I agree.

Yesterday’s Rally For Unity, I think, was a resounding success. There was a fair bit of commotion in the run-up to it with various would be social media saboteurs attempting to close the event down. But the turnout was a testament to its reach. By my estimates, around 500-700 people were present, but I could be wrong, being notoriously bad at guessing at this sort of thing.

Some alien flyers (there’s a translation up) invaded the rally as well. Claiming that it was an NGO/foreign funded operation. Now where have we heard that story before? It certainly rings a bell. The Police soon dealt with the trouble makers however, telling them to ‘samakamiwa yanna putha’ (walk away in peace, son) before they slunk off into the inner reaches of Viharamahadevi Park. Volunteers reported being tailed by unknown vehicles after the rally ended as well, but no other disturbances were heard of.

An expanding list of politicians and dignitaries were coming out in support of it as the rally drew near, I think this helped build the credibility of the group involved, which is denying any organizational affiliations, projecting itself only as a loose group of individuals committed to fighting hate speech in Sri Lanka, unaffiliated to the BQBBS which organized the Candlelit Vigil on 12 April.

But the experience of the Vigil appears to have taught some lessons. Police permissions were obtained, and legal loopholes looked into. The role of the Police as a matter of fact, took a 180 degree turn in terms of how they reacted to peaceful protesters, I’m sure everyone appreciated this.

Endorsements by the presence of people like Dayan Jayatilleke (who was interviewed by Charles Haviland for the BBC) and others; and Imtiaz Bakeer Markar and Baddegama Samitha Thero who spoke at the event cemented a sense of officialism.

More than anything though, it was the people that turned up, after everything that happened after the Vigil, that made the Rally work. Families turned up with kids, students came, passers by, random uncles and aunties, clergy, activists, executives, business people, government servants, it was truly an urban motley crowd. Kudos to them.

Photos:

The rogue leaflet

Imtiaz Bakeer Markar and Samitha Thero

Dayan Jayatilleke

Update: More pictures here and on Indi’s flickr

The Disruption of Sri Lanka’s First Anti-BBS Protest

image from the Colombo Gazette

Tonight’s protest against the BBS (well, actually a vigil to promote the ‘true values’ of Buddhism which the BBS are going against) was an eye opener in many ways.

Number one, injustice

And this MUST be mentioned first and foremost. It was an eye opener to be on the wrong side of injustice, assuming there is a right side to it of course.

The protesters turned up for a peaceful vigil. They had candles and were preparing to light them. However the police, based on some trumped up claim that the gathering was to promote a change to the national anthem, promptly arrested two of them. Later, around four more were arrested. All were subsequently released. Apparently they merely got a free tour of a couple of police stations and got to see what it looked like inside a police jeep; prisoner’s perspective.

The point though is that the cops appeared to be completely on the side of the Bodu Bala Sena on this. They dispersed the protest, claiming that it was to ‘avoid a kalabala (problems, trouble)’ but it was only the BBS that were causing the problems. Yelling, screaming and making false accusations. False accusations which the police, and apparently Swarnawahini, seem to have had no problem propagating with complete lack of evidence.

This video shows the appalling site of a poor protester being manhandled by cops for lighting a candle. While a BBS  guy, clearly trying to instigate some sort of violence from those present, was only being gently and respectfully shoved aside.

Number two, the media.

I think Swarnawahini is the best example, the footage of their protest coverage (linked above) showed a clear bias to the BBS, on no occasion did the supposedly objective news broadcaster think to show BOTH sides of the story, because that would completely defeat their purpose of being a vehicle for the BBS to propagate their extremist ideology. Sirasa/MTV gave an unbiased coverage, and so did Hiru News, in the ten seconds or so they dedicated to it. Kudos to them.

It is a concern that media sources that actually reach the people at large, the Sinhala newspapers, the state TV channels appear to still have a clear bias against showing the anti-BBS view. For example, by entertaining BBS claims that average Sri Lankans that turned up for a peaceful candle lit vigil were ‘NGO funded’, while ignoring clear evidence to the fact that the BBS could have far more substantiatable links with foreign funding. A case can easily be made that they are a disruptive mechanism funded by foreign sources given their alleged unscrupulus-to the-patriotic-eye involvement with Norway, Israel and its latest proselytising in the US, if anything, ‘patriotic’ media should be investigating this.

Number three, the protesters themselves.

I expected the vigil to be left alone, ignored and typecast as an elitist operation that deserved to be merely humored, as these things usually are. But the angry reaction by the BBS and belligerence of police changed all that. You could tell that many were perturbed.

Still others left as soon as they turned up, perhaps alarmed at the news of the arrests, and perhaps disillusioned. The BBS can, and will fight dirty, they will intimidate, and as was so clearly demonstrated, will use state apparatus like law enforcement for added effect. In light of this, how should protests continue and how will they reconcile their significant interests (jobs, family backgrounds, social standing) with the danger of getting arrested, beaten up and losing it all? (BBS agents, presumably, were busy taking pictures of all present).

Everyone present tonight acted admirably today. And I am proud to have been among them. Question is, will we come back, and risk really getting arrested again next time? How many of us have family connections that will bust us out? The movement needs lawyers (there were few on hand today btw, thankfully), funding and more organization.

The crowd was diverse; academics, theater and arts, media, civil society, corporate, intellectual and just young people concerned with the state of affairs. But excuse me for saying this, it was also homogeneous. Privileged, mostly English speaking and well off compared to average Sri Lanka. This is where the BBS has the advantage.

First they’ve got the ear of the people via the media. Second, they LOOK like and SPEAK like the people, while being nothing like them and having interests that are completely contrary to theirs. They are here to con the people, and as far as confidence trickery goes, the BBS is very effective.

How do you mobilize ‘the rest’ to participate? how do you turn this into a ‘people’s movement’? Tonight, many who were there were there because their interests were directly threatened. To ‘the rest; it must still seem like the BBS is fighting against someone else, that their interests are safe. That ‘someone else’ right now are minorities such as Muslims, ‘Night Club’ Buddhists, the NGO and peacenik crowd and the list goes on. All of these elements have been at some point or the other the traditional enemy of the standard-model Sri Lankan patriot. It seems to me that propaganda has created complexes deep in the public psyche that will not be easy to break through.

I don’t have answers, just questions. And in the meanwhile I am wholly in support of acting within the range of what we know. Kudos to those who organized tonight’s event and those who supported it. The challenge now is to keep going. A few of us have organized a petition, and some others are organizing a peace rally soon. Numerous other efforts are going on in social media. Whatever your capacity, there is always some way in which you can contribute.

Part 1 of News First footage. Continued below.

Mobitel’s Ridiculous Response

After stewing about it for more than two days ‘Team Mobitel’ appears to have finally come up with a response.

It’s actually quite ridiculous. They apologize for any ‘inconvenience or pain of mind’ caused but reiterate that the racist ringtone will remain on their site on a ‘revenue share basis’. Apparently they still care about upholding the ‘true values of unity and ethnic harmony’ by allowing an organization that stands for just the opposite to make money off its site, and on a revenue sharing basis too.

The image is accompanied by an expanding thread of comments of largely unimpressed people. Mobitel’s social media team and at least one fake account is also feebly attempting to respond, but are only succeeding in digging itself deeper into this hole.

Many are asking if Mobitel would allow an LTTE song to be put up to fund the terrorist group on a ‘revenue sharing’ basis too. The answer, even though it has not been articulated yet, is obviously no. Why in the world would Mobitel do that? Therefore Mobitel definitely does NOT consider the Bodu Bala Sena to be a hate group or a group with any negative social connotations at all.

The utter chutzpah of this response is rather hard to digest, I will say that at my next tea party. The lyrics of the BBS song call for a “Holy War” to destroy the “rallying cry of the unrighteous” and “the heathens” “who have all united into one camp”. Yup, practically dripping with peace and harmony there.

Actually if this song came from any other group, or was just a song released by an individual artist. Its message could have been construed as one meant purely to inspire and provoke steadfastness on a personal level or whatever (the lyrics are actually quite well written). But the BBS has made its intentions clear through its actions, they possibly really do want a holy war. In denouncing imaginary Islamic terrorism in Sri Lanka and countless other made up threats, the BBS is fast mirroring its non-existent worst enemy.

Therefore by allowing the BBS to make money from its ring back tone services (and sharing in the moolah no less) Mobitel is sending a strong message that they support, or at least are indifferent, to its extremist standpoint.

Here’s a poster being shared around on Facebook, which carries the full lyrics of the song and calls for a boycott of all Mobitel products.

The Pax Rajapakse

image from JDS Lanka

The Pax Rajapakse is almost four years old. In that time I’ve gone from being a relative tortoise in my own country to having a degree of freedom that I never imagined possible. I’ve traveled now to virtually every place formerly torn up by the war. And can travel anywhere else I please should I wish to do so.

But the Pax Rajapakse is just that, peace. It has no moral identity. It has no moral pretensions even though it likes to pretend otherwise. Dreadful things are done to preserve the peace. But in all objectivity some might say that the end justifies the means. Peace is its own reason.

But a once universal peace is now fragmenting into varying degrees of peace; different categories of peace now exist. There is a lesser peace and a greater peace. The greater peace is being able to move around your country with freedom, the lesser peace is demarcated by invisible lines drawn through society with labels saying things like ‘Do Not Cross’, ‘Trespassers Will Be Shot’ and  ‘Sycophants Only’.

The country, as it strains under the forces of development, churns society like the roiling Indian Ocean and casts up new oppressed classes and facilitates the surge of new elite. Apparently there is ‘good’ corruption and ‘bad’ corruption. So say some, justifying the regime’s steamroller approach to progress with a substantial personal cut. But where is the line, I say?

While people leave on boats, and put up with heavy abuse for want of jobs and are kicked out of their homes to make way for high rises in the midst of Colombo; a whole new class of wealthy and powerful Sri Lankan is emerging. Closely connected to the country’s powerbrokers, they wield high influence that cuts through social and legal infrastructure like butter. Any justice is we have here is highly skewed in the favor of these elites.

All this has not gone unnoticed. The people are restless and feeling the brunt of ever increasing cost of livingn. Straight talking journalists are still in danger. And the briefly stable peace is now crumbling at the edges with this latest drive of racism. The people are hungry for something to blame. A few decades ago it was the Tamils, and now it is the Muslims. 

But peace is profitable, war is not. And the last thing the government needs is another conflict. And therein lies the problem. Sri Lanka is a corrupt animal. This corruption is like a cancer, but it can still grow within it. Most forecasts still place our economy with prospects of around 6-7% of GDP growth per annum. On a global scale this is huge. This means we double every ten years or so. And if we’re patient enough and do not over reach, we can still become a rich country in our own time.

There are however, serious glitches that can ruin everything. Since Sri Lanka stopped being a low income country, it has stopped receiving aid which basically allowed us to spend more than we earned without worry. And over the years a strong parasitic class developed that benefited and prospered from this surplus, the result; a bloated state sector, crazy inefficiency and high levels of corruption. And now it is this transition from being aid dependent that is really killing us.

Finding itself forced to cover up its various deficits (budget and current account) by taking loans, Sri Lanka is realizing (I hope) that it is mixing a recipe for disaster. We need solid foreign investments to replace these loans and they will not come in until the political, and by extension business, environment is made investor friendly; until budget gaps are sorted out sustainably;  until capital expenditure is focused on projects with long term benefits like education, infrastructure and health.

Currently the government is trying to cover its behind by putting the burden on the public. It should be cutting dead weight and increasing its efficiency by turning state corporations (like the cash bleeding CPC and CEB) profitable, instead it is reducing much needed public expenditure and increasing prices of essential goods and utilities. This burden on the public, ever increasing with the latest round of fuel price hikes, is what is contributing to unrest. There is a continuing laxity in addressing post war issues, and fiascos like the Expropriation Bill and the impeachment of the Chief Justice are poorly handled and reflect very badly internationally.

The Rajapakse regime still has my support. Most East Asian giants grew up under pseudo democracies; Indonesia, Malaysia and Singapore. And the fact that we lack a better alternative has never been more obvious in the light of the UNP’s recent feeble opportunism in attempting to capitalize on racist propaganda. The Rajapakse’s have huge potential to bring something the country has not had for a long time; political stability and long term growth. But they cannot do this by cultivating a parasitic social sub-strata of sycophants and dependents.

Hidden agenda lurks behind this fresh wave of racism, trying to distract from pressing issues at hand. What we should be doing is figuring out the real problems and then campaign for reform, especially with the limitations of our reality in mind. This is undoubtedly hard to do in the current context; the corruption is the cancer and it is within all of us, if you will permit me a bit of drama. If the Rajapakse regime had a big role to play in creating the pax, average Sri Lankans have an even bigger role to play in keeping it.

Krrish; Getting Crushed? (Infographic)

The Krrish project has been making waves, if only for its absurd proportions. The complex’s tallest tower is going to be the third tallest residential tower, are you ready for this? In_the_world. I hear three quick bangs on a bell; the crowd goes wild as the fighter in the right corner shrugs off his glittering robe. All hail the Krrish project, destroyer of third world woes.

But seriously. I snooped around a bit (and by now this is relatively common knowledge) and found that Krrish doesn’t really have any completed real estate projects anywhere in the world. Closest thing they have is a few projects underway in Guragon, India. As a company laying claim to such a massive venture, Krrish has virtually no media mentions in India, and its only ties to solid listed corporate are a claim to own a stake in Cobra Beer. And in fact Krrish is better known for its brewery business than anything else.

It’s projected to bring about $560mn into the country. But that number exists only on paper. In reality these projects bring a fraction of that amount, usually 10%, and try to source the rest locally. Krrish, which hasn’t started building yet, is rumored to only have brought in $5mn, as a 10% down payment for the value of the land. The completed project will have some 750 apartments plus equal amount of office spaces, each of the apartments are priced at roughly a million dollars.

The plan is to pre-sell them to raise money to build.  But as you can see from the chart below, demand for apartments hasn’t exactly been booming. If demand does not meet supply, the project will have to be abandoned. Far worse though, is the prospect of the project being bankrolled by a country eager for any kind of investment (especially something with a result so grandiose) ending up with the local banking system owning roughly $500mn of bad loans. And this will probably at the very least result in a major banking/debt crisis for the country. Just putting some thoughts out there. What does everyone else think?

How Can Sri Lanka Grow?

What Growth is Good Growth?

Standard Chartered’s 2010 report titled ‘The 7% Club’, examined how merging nations can achieve sustained 7% growth levels. Any economy growing at 7% a year on average stands to double its economy in roughly ten years. And if your domestic economic mix is good enough to hit 7% on a sustained basis, you’re on the path to the big time.

Since the second world war, all countries known for outstandingly rapid development like China, Hong Kong, Indonesia, Japan, Korea, Malaysia, Singapore and Thailand have recorded growth levels of 7% or more for 25 years. Botswana and Vietnam have growth at 7% for more than 15 years.

Before we start slavering at the prospect let’s start by looking at how Sri Lanka can get this ‘mix’ right. There are four ways an emerging market can reach growth levels of 7%, based on historical evidence.

One is through a commodity boom, Angolia, Tajikistan and Azerbaijan are examples of countries that joined the 7% club this way. But reliance on commodity exports can often cause negative effects on other parts of the economy. Although rumors that Sri Lanka could hit oil next year are beginning to excite certain circles, the discovery of oil could just as easily become a curse as a blessing if it is badly managed (and similar experiences in other countries, most famously in Africa, show that it doesn’t really take much to badly manage a resource windfall).

The other is through a ‘Recovery Bounce‘.Basically coming off a ‘low base’ from a very bad situation. Take Sri Lanka’s growth over the last two years; above 8%. That was a recovery bounce. Emerging solely from the end of the war, increased optimism in investment and productivity gains from the North and East. However, that kind of growth is largely a thing of the past. Most predictions put Sri Lanka’s growth in 2012 around the 6-7% mark, our ‘Recovery Bounce’ might keep us afloat for a little while longer, but unless we enact the measures needed for serious sustained growth, it’s only going to be a temporary bubble.

That brings us to the next two methods of growth,‘Overheating Booms’ are purely debt and spending driven nightmares, guaranteed to crash and burn and bring about Apocalypse Now.

However, what Sri Lanka can aim for is a model based on ‘Industrialization oriented for exports‘. That is, fast growth based on mobilizing savings towards manufacturing and exports. The idea is to start off with basic products and then gradually move up the value chain. At the high end of the value chain you have industries like electronics, shipbuilding and cars. Japan, the Asian Tigers and more recently China and Vietnam have followed this model with great success. But Sri Lanka’s manufacturing share of GDP is just 16% and the sector is plagued by high protectionism, dominant State Owned Enterprises and ranks behind regional competitors in ‘technological readiness’ for FDI and technology transfer.

How Does Sri Lanka Get There?

Standard Chartered’s October 2012 report ‘Economic Reform: The Unfinished Agenda’ highlights a few key areas for Sri Lanka to improve on. However, it’s rather positive on Sri Lanka’s reform trend so far and actually says that with speedier reform Sri Lanka will grow at 8%, as opposed to the 7% growth it is already forecasting for us.

A lot of this has to do with a stable government. Say what you like about the autocracy of the Rajapakse’s, but they’ve bought one thing that Sri Lanka has been lacking for ages; political stability. By effectively converting the Sri Lankan government from a faux public owned entity to a privately owned entity it is setting itself up for the long term. And so is less likely to use up current resources at the expense of their long term benefit. And hopefully, its degree of economic exploitation will tend to be much less than that displayed by the several short termist Sri Lankan governments seen over the few decades after the war.

Though Sri Lanka’s economy continues towards greater freedom (Sri Lanka is the 97th freest out of 179 countries) taxation (both rates and regulation), inflation, bureaucracy, transparency and policy instability, corruption, lack of sufficient infrastructure, access to financing and labor issues are still a major problem. The government is making clear progress on some of these issues, but is stagnant on others.

Anyway, we still have a few worrying areas to fix. The primary factor is trade and domestic investments. Trade has been on a declining trend as a share of GDP and domestic investments which are at roughly 29% need to increase to at least 35%. The biggest hindrance here is high state involvement in the business sector, painstaking bureaucracy and corruption is turning away many domestic and foreign investors who would otherwise be contributing to long term growth.

Though Sri Lanka’s economy continues towards greater freedom (Sri Lanka is the 97th freest out of 179 countries) taxation (both rates and regulation), inflation, bureaucracy, transparency and policy instability, corruption, lack of sufficient infrastructure, access to financing and labor issues are still a major problem. The government is making clear progress on some of these issues, but is stagnant on others.

How the government approaches these problems in the next few years will be key in determining Sri Lanka’s growth.

The Sri Lankan North: A Quiet Riot

It’s been nearly a year since I last went to Jaffna. And things have changed. A lot of things are happening all over the North beneath a veneer of stillness. The people progress doggedly, shouldering responsibilities, not waiting for freebees and generally making good for themselves. Military presence is ubiquitous, but toned down. Instead of standing around in uniform and with weapons, soldiers wear shorts and tank tops and tend to corner shops, and are mostly enclosed in their barracks when they’re not.

Railway lines are being built steadily, I hear. Though the pace has been incredibly slow, the track has been only extended up to Omanthai for as long as I can remember. A few months ago there was even a fundraiser and tickets for the inaugural train journey were sold in advance for a thousand rupees. Many people bought these as a symbol of a brighter future and a promise of better times to come. Right now however the most convenient way to commute to Jaffna is via the overnight bus. It is passable, but is prevented from being comfortable by very bad customer service.

Ancient automobiles like these are still a common sight. Having been cut off from the supply of durables during the war, new vehicles are just beginning to arrive in the peninsula.

And when I say bad, I mean bad. There’s loud Tamil music blasting the speakers all night long, without stop. The drivers are belligerent and rude. On my way back the bus was suddenly stopped in the middle of nowhere for an hour, no explanation was given; the driver and conductor simply disappeared. The passengers were locked in the back with no way of getting out, the AC on full blast so that we were all freezing. If you ask me, the overnight bus service to Jaffna is simply itching for some creative destruction.

The roads are being built at a pace, perhaps not as fast as in the South, but since I came there last; an additional 80 kilometers or so of road has been freshly carpeted. Now there’s good road right until you pass Chavakaccheri, whilst previously it ended at Omanthai. Roads in and around Jaffna are also being built. Places like Nainathivu, Kayts, Nallur have vastly improved access.

Our driver Suda escaped abroad during the war in Jaffna to avoid getting drafted by the LTTE. Eleven of his classmates from Mullaitivu weren’t so lucky. They are all presumed dead. In the background: The vehicle graveyard stretching south from Puthukkudiyirippu enroute to Mullaitivu. Casualties of war piled in dead heaps for some unknown purpose.

There aren’t many opportunities for youth in Jaffna still. A lot of them will come to Colombo to look for work, or try to start their own businesses. Transport, agriculture and retail seem popular. The community is tight, but perhaps a little disturbingly there is a strong sense of racial segregation within Jaffna. The Tamils and Muslims generally work separately, that is not to say that they’re mutually hostile, just that they like to keep to their own.

The Muslims still remember horror stories from the early nineties. In Moor Street (actually refers to a whole quarter in the Jaffna town) people talk about how they had to leave everything they owned one fine day in the early nineties and walk to Killinocchi, one woman told me that it took them three days to get there. Many have now returned to their broken down homes and have begun rebuilding their lives. Still many others have preferred to stay in their new homes in Negombo, Puttlam and various other areas in the South.

Muslims are gradually returning to Moor Street and Jaffna. Though a lot of them are also changing their minds and selling their houses. Their long standing status as IDPs have complicated their lives sufficiently enough to render the act of coming back home after twenty years full of difficulties. 

These ‘old IDPs’ mainly consist of Muslims evicted in the exoduses of ‘91 from Jaffna and Mannar. They complain that aid has been slow in coming, if it comes at all. And that they have been largely left to fend for themselves. Livelihood opportunities in Jaffna aren’t easily available, and according to them, discrimination leaves them out of the more lucrative businesses. They don’t blame the Tamils alone; there is also huge dissatisfaction with the Muslim leadership both in the provincial council and above. The former is painted out to be self serving and inefficient, holding back the community.

Elsewhere in the North, war tourism is on the boom. We drove down to Puthukudiyiruppu, on the new Paranthan-Mulaitivu highway. When I say new I mean new, the road has just been cut out of the Vanni jungles, the dirt flat and dusty. Rollers and building crews are just beginning the rudiments of laying tar. All along this area, the devastation of the war is still naked and exposed. Houses are shot through with bullets, bombed out vehicles and rusted metal piled along the roadside for hundreds of meters.

The Puthukudiyirippu War Museum displays LTTE gun boats, ships and submarines. The Torpedoes, RPGs, pistols, rocket launchers and missiles are all home made, apparently reverse engineered. Members of the military function as guides.

Highlights of this wasteland include a new war museum in Puthukudiyirippu, featuring a large amount of LTTE arms, gunboats, submarines and other weaponry. The main attraction in the area is obviously the house of Prabhakaran. His pad is a five story monstrosity, with four of those stories underground. The whole place is left in the condition in which it has been found, more or less. Doors lie blasted open, debris scattered in certain places. A skylight at the bottom-most layer opens into a secret passage with a ladder leading out in case anyone got trapped. Significantly, none of the war tourism sites bothered with Tamil language signs. Signboards are only in English and Sinhala. To me, this oversight speaks ugly volumes.

Soosay’s house is also close by. An inscription above the entrance reads; “our enemies are our best teachers”. A nondescript bedroom inside has a nondescript wardrobe that opens up into a secret escape tunnel dug into the ground. Crowds flock through Soosay’s door reading his inscription and flock back out through his secret escape route. Soosay is dead, and now his enemies are learning from him.

Inside the Jaffna fort. Repairs are underway. But a lot of it is still in ruins. Visitors apparently have the run of the place. Crawl through broken walls and discover dank holes and passages, at your own risk.

Jaffna is just beginning to find its bearings when it comes to tourism. The many war monuments and simple curiosity attract the crowds, but Jaffna has little in the way of developed attractions. Casuarina beach is increasingly frequented by local tourists; Nallur Kovil, the Library and the Rio ice cream parlor are musts for any Jaffna visit. The famous Jaffna fort is being rebuilt. After enduring untold ravages during the war and seeing a lot of blood spilt beneath its walls, the huge gallows once again welcome visitors motivated only by leisurely pursuits.

Jaffna is a very friendly peninsula. Tamils, Muslims and Sinhalese soldiers alike all greet you with smiles. They are always eager for a chat. Some want news, some are nosy and some just want to share their lives. Walking around bumping into people and simply absorbing the atmosphere is a pleasure. The markets are colorful and people happy. Things are moving in Jaffna and they’re moving largely under the peoples’ own steam. People too busy to really worry about the patches of darkness that occasionally threaten to overwhelm their infant peace.

More pictures here

Democracy is Too Nice

image from the brilliant Wisdom on Wheels

Democracy is too nice. Everyone has a say and everyone has a in on how to handle things. This, generally, is a very good thing. But when things hit a rut, and quick decisions are needed, democracy can fail spectacularly. Just take whats going on in the Euro zone right now. No one can foresee a proper decision coming out of the region in time to avoid an economic crisis of massive proportions. Cronyism in Europe was helped along by the state. The imbalances created by the Euro zone’s formation coupled with a free spending, free borrowing approach has landed some of its less well off countries like Italy and Greece in hot water.

If they (the Euro officials) had acted fast they could have maybe stemmed everything at the start. They had several options on what to do and arguably any one of them would have worked, the climate at the time just required any action, just something to bring back investor confidence, but instead its powers started bickering. And the Euro-bickering is still going on, with no end in sight. This has led Paul Krugman to predict a massive scale bank run and plenty of other apocalyptic financial predictions from virtually every corner of economic thought.

Or, if you think the Euro example does not quite relate, think back a few months to when people were on pins about the US debt ceiling. From the beginning it was obvious that the ceiling was going to be raised. The US could take no other possible route. But parliamentary opposition from the Republicans created a heavy battle over tax cuts and entitlement reductions. The conditions were ultimately agreed to and the debt ceiling was raised. But the political opportunism probably didn’t help the US one bit when it comes to planning out a viable future strategy to recover its economy from the doldrums.

Poor, third world, developing (you pick the name) countries on the other hand, are always in a rut. They continuously face challenges and opportunities that require quick and intelligent action to mitigate or make use of. They are mostly desperate for hand holds to grow and if properly motivated and managed can become powerhouses very fast. Cases in point are Singapore and Malaysia who rose to stratospheric success in a very short time. Both of the above had intelligent, strategic but autocratic regimes. China is currently a pseudo autocracy (meaning it’s an autocracy but you can’t say it out loud) and it has so far managed its economy remarkably well.

What Do The People Want?

Democracy encourages countries to do what the people want. but in countries urgently in need of development, what the people want and what the country needs can be entirely different. Take Sri Lanka for instance. What do people want? Ideally they want free education, easy subjects and a guaranteed government job. Oh and free food stamps, low transport costs and cheap fuel. They also want no taxes, more subsidies and higher pensions. All this of course cannot happen at the same time.

For the country to develop, conversely, everyone must work hard, and everyone must sacrifice a few things. French-style decadence can come later. When your parent’s generations have become fat on economic riches and you can afford to work just 30 hours a week if you feel like it, or spend your time in roadside cafe’s smoking and drinking coffee on a government dole if you don’t.

In Sri Lanka political parties basically do what people want and skim off the top. At least, this is what they’ve been doing for a while now. If they’re not reducing bread/fuel/fertilizer prices before the election they’re promising more government jobs or cutting taxes. In fact it can be argued that our model of democracy has actually held back progress, by people getting the politicians they deserve. If the people have no long term vision for growth, then it is hardly likely that politicians with a long term vision for growth will arise out of a democracy consisting of these people.

A more centrally powerful government can ignore the short term wants and needs of people and give them what is really needed for long term growth. It can cut government jobs, privatize, cut taxes and increase investment. It can invest more in education, training, transport infrastructure and gross domestic capital.

A strong state is a strong state whatever model it uses to get there. Going by the above hypothesis, stronger states in lesser developed countries are generally autocratic, meaning there is a trade-off between development and liberty. But this doesn’t mean people are necessarily oppressed. All states, even autocratic states, desperately need majority corporation to actually develop, provided development is a strong objective and so will try to please as many people as they can while they work around the ones they can’t please. To paraphrase Bob Marley ‘you can please some of the people some of the time, but you can’t please all the people all of the time.’

Democracy is an ideal. It is never really completely achieved, always remaining in its purest form unreachable. But the world remains fascinated by its appeal and the very word is taken to be synonymous with freedom and development. But history has shown that not to be the case and a careful look at past experiences and current events tells us that maybe it’s time we started looking at and accepting the presence of more mixed forms of government that are geared for development, inclusive in their own way but constantly changing and adapting to conditions on the ground.