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Can Ranil convert the `feel-good factor' into economic benefit?

Rasheeda Bhagat

COLOMBO, May 4

THE international goodwill that the Wickremesinghe Government has generated for its peace initiative is palpable in Colombo. While there is disappointment at the strong reaction in India to the LTTE chief's press conference on April 10, and renewal from some quarters of the demand for his extradition, on Friday the peace initiative got a shot in the arm with the US asking the LTTE to behave and not "undermine the peace confidence."

Responding to journalists' queries, the US Ambassador in Sri Lanka, Mr Ashley Wills, urged LTTE to refrain from recent incidents of its boats carrying arms having to be intercepted, with one of them exploding off the coast of Batticaloa. Hoping that such incidents would not be repeated, and saying that a separate Eelam was "unattainable and unwise" he added, "If it turns that the LTTE is using this period to import arms, then it would be most disappointing. I call upon the LTTE not to undermine the confidence of the people in the peace process. It's time for this war to end."

This appeal to the LTTE is significant because the Americans have clearly said that even if the LTTE is de-proscribed in Sri Lanka, the ban on it in the US will stay. In Sri Lanka itself, despite some scepticism in the peace process and anger in some quarters that the Tigers are getting away with murder, the optimism that peace is within sight, is growing and leaders of civil society, including a section of the media, is doing their bit to nurture the peace process.

On Saturday morning the island's popular newspaper Daily News invited its readers to send in contributions - "constructive comments and views" - for its full page `Peace Quest' feature. Also, `peace optimism', as measured by the latest Peace Confidence Index study, has surged from 10.6 per cent in June 2001 to 24.8 per cent in March 2002. The perception that war is a means of achieving peace has declined from 16.8 per cent to 2.7 per cent in the same period. The confidence in the Government's commitment to peace has gone up from 44 per cent in November to 61.8 per cent in March.

The study claims to have given an opportunity to the "silent majority" to voice their opinion. Despite the reservations of the Sinhalese on the LTTE's sincerity, 82.6 per cent approve of a Government-LTTE dialogue. So the "feel-good factor" is very much there in Sri Lanka.

Even though the Government has not been able to wave a magic wand to make the bankrupt economy - the Prime Minister, Mr Ranil Wickremesinghe, said recently in Parliament that the Government is bankrupt - but some of the measures taken by it have boosted sentiment. The roads in Colombo have been thrown open, the barricades are gone and so are grim faced soldiers intercepting visitors and demanding to see their passports; the Vavuniya-Trincomalee road has been opened and so is the highway to Killinochchi.

With the weather gods too smiling and the inter-monsoon rains coming to the rescue of a country reeling under drought, the power cuts have shrunk, with the promise from the Energy Ministry that they would be soon be done away with totally. Incidentally the Power Minister, Mr Karu Jayasuriya, had put his job on the line on this issue, while assuming charge with the promise that if he was not able to sort out the mess by June, he would quit.

But has this feel-good factor improved investor confidence and the mood of the business community? Yes, says the Board of Investment Chairman, Mr Arjunna Mahendran, who finds a "huge outpouring of goodwill, especially among foreign investors and the expat business community."

Even domestically, he points out, the removal of the National Security Levy, earlier called the defence levy and "a very punitive tax on business at 7.5 per cent on the turnover, has brought a great sense of relief." Add to this the tag on the UNP of being a business-friendly community; there is hope that it will have the political will to push in economic reforms.

Business sectors find it ridiculous that half of Sri Lanka's population is covered by all kinds of subsidy. A World Bank study had said that only a quarter is qualified for it. But taking a decision on subsidy cuts can be a hugely unpopular exercise as we have seen in our country.

Underlining the Government's seriousness in putting the economy back on track, Mr Mahendran says that Mr Wickremesinghe has appointed a policy development committee in his Ministry of Policy Development, an apex ministry in Sri Lanka's scheme of things. This committee comprises people from the private sector who directly advise him on issues related to economic development in the broader sense.

"This committee has been set up by the cabinet and is officially recognised. So it has brought private sector into the policy-making process and that is a very positive signal from the Government," he said.

For the moment the business community has rallied very strongly behind the Government. But when it starts taking some tough measures to pull back the economy - the country is in the unenviable position of having a debt which is 100 per cent in excess of its total GDP and 50 per cent of its revenues go towards servicing and repayment of that debt - that is the time the politicians will start hollering.

After all even at home wasn't the BJP supposed to be a business and trade-friendly party, but then what happened to some of the tougher measures in the Budget?

Response can be sent to rasheeda@thehindu.co.in

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