War-torn North Has Little to Show as Peace Dividend

Feizal Samath

COLOMBO, Jul 31 (IPS) - When Tamil rebels and the Sri Lankan government reached a ceasefire pact in February 2001, dozens of businessmen from the south rushed to the war-ravaged northern town of Jaffna, seeking business and commercial links and raising the hopes of residents.

They came in large numbers, promising industry and jobs. ''There was unusually heavy traffic in our town for some weeks,'' recalled a small-time trader who has a shop on the road to Jaffna town from the city's military airfield.

More than a year later, the euphoria has ended on two key fronts -- economic prosperity and a permanent peace, as the rebels and the government to struggle to return to talks that broke down in April and have remained suspended since then.

Apart from that initial burst of enthusiasm, Jaffna, just about the worst affected by the two-decade-old ethnic conflict in Sri Lanka, has yet to see any tangible state or private sector investment from the mainly Sinhalese south.

Markadu Ramadasan, president of the Yarlpanam Chamber of Commerce and Industry in Jaffna, said that despite numerous visits by businessmen and chamber officials from the south since the peace process started, they have yet to set up a single industry in the region.

According to S Kuganathan, a journalist working for a local newspaper, just three small industries have come up in the northern city -- all by Jaffna-based businessmen. ''There were 200 to 300 businessmen from the south who came with hopes of new industries,'' he said. ''People are also worried that there would be a return to war.''

The Jaffna peninsula of about than half a million people desperately needs to revive its once-thriving industry and create jobs if the peace process is to work.

But the only visible signs of activity in Jaffna is an expansion in trading as Colombo-based companies fill shops with fast moving consumer goods like Coca-Cola, refrigerators, processed food, clothes, washing machines, gas cookers, televisions, radios videocassette recorders.

Tthe demand for mobile phones has soared from virtually nothing. Supermarkets owned by Colombo-based chains have sprung up overnight.

But despite rising levels of consumerism due to remittances from thousands of overseas Tamils, the economy of the war-damaged region has not been turned around.

''There has been a surge in trading but no real investment that can create industries and raise jobs,'' noted Kethesh Loganathan, head of the peace and conflict analysis section at the Centre for Policy Alternatives (CPA), a local think tank.

Heavy taxes by the rebels in addition to government taxes, also deter investment. What hurts Jaffna residents most is that southern industry, mainly from the majority Sinhalese community, gave false hopes to the region of predominantly minority Tamils.

''For the first time in 20 years, we saw a silver lining in the clouds. We thought development would come rapidly. Alas, that is not the case,'' said a retired civil servant, who declined to be named.

Last week marked the twentieth anniversary of the massacre of some 400 Tamils in the Sri Lankan capital and in areas outside it, an event that changed the course of history.

As the rebellion grew, partly fueled by anger over these riots, Jaffna, once the stronghold of Tamil Tiger guerrillas, became the scene of many bloody battles between the rebels and government troops.

Its economy, a major contributor to Sri Lanka's gross domestic product (GDP), has been in tatters since the Tamil campaign for their homeland began.

The region had large industries like a gigantic cement facility, and dozens of power loom factories, caustic soda units, glass, aluminium, ice and the entire small and medium industry, which were ruined by war and conflict.

It once accounted for 40 percent of the fishing needs of the south, while its rice, vegetables and mangoes went in bulk quantities to the rest of the island.

Agriculture and fishing has picked up in the past year. Ironically, these -- the only two sectors to be active in recent months -- received scant attention at the donors' conference in Tokyo in June, which yielded 3 billion U.S. dollars in pledges

''There was a heavy concentration on infrastructure and focus on big investment aimed at generating jobs and alleviating poverty, but little attention was given to traditional livelihoods,'' said Nimalka Fernando, a Colombo-based human rights campaigner.

Jaffna is not the only region in Sri Lanka to suffer from a lack of investment. Last week, Prime Minister Ranil Wickremesinghe lashed out at the country's business community for not investing enough, increasing economic activity and creating jobs despite generous tax breaks and incentives to trigger investment.

Political uncertainty has been the key towards a general reluctance to invest - and this has taken a turn for the worse after the rebels suspended peace talks.

On Wednesday, Ceylon Chamber of Commerce chairman Tilak de Zoysa told a chamber meeting in Colombo that the peace process is doomed if both sides do not get back to the negotiating table.

But Ramadasan rejects the argument of political uncertainty, saying that taking risks is always part of business strategy. ''Businessmen always take risks,'' he said. ''We don't want big investments, but southern support to revive small and medium scale industries.''

Ramadasan said Colombo's private sector did not have a proper plan for investment, but just visited the region in a euphoric state and made vague announcements about future plans. ''They should have conducted a proper study of the situation and prepared a report. In the past 20 years, we don't have any information about resources and labour availability (in the north). This needs to be studied before investment plans are made,'' he added.

Loganathan added that what may be required now is to promote collaborative investments between Sinhalese and Tamils. ''This would ensure some sustainability and continuance (because of Tamil involvement) even if the conflict is resumed and (becomes) of a low-intensity nature,'' he said. (END/2003)