DEVELOPMENT-SRI LANKA: Think-tank Finds Ethnic Conflict Costly

By Feizal Samath Reprint | | Print |

Feizal Samath

COLOMBO, Apr 5 2000 (IPS) - A 17-year-old separatist campaign by Tamil militants and military operations against them have cost Sri Lanka nearly two years worth of its annual gross domestic product (GDP) estimates a leading think-tank.

“It is reasonable to conclude that, under even the most conservative assumptions, the country has incurred a war cost amounting to two years of annual GDP (at 1996 rates),” the Institute of Policy Studies (IPS) said in a report released this week.

The quasi-government agency warned in its report that the longer the conflict runs “the further the cost will increase, with the burden falling most heavily on the poor and the young of this country.”

Entitled “The Economic cost of the war in Sri Lanka,” the Institute’s report is the most comprehensive economic assessment of the ethnic conflict so far.

Upto 75,000 people have died in the war waged mainly in Sri Lanka’s north and east by Tamil rebels demanding a separate state in that region for the country’s minority community.

The civil war, since 1983, has wreaked havoc on the country’s economy, dissuaded foreign investors and tourists and led to thousands of Tamils fleeing to the west and seeking political asylum or staying in refugee camps.

Last week, heavy battles broke out in the northern Jaffna peninsula after the rebels launched a fresh offensive, to make a up for a failed effort to capture the strategic Elephant Pass military base.

Army troops were able to resist the latest rebel advance but suffered heavy casualties in the process, the Defence Ministry said. Up to 145 soldiers including officers were killed while rebel casualties, were close to 100.

Civilian officials in Jaffna said more than 12,500 people living near the Elephant Pass causeway were trapped in the fighting and negotiations were on with Red Cross authorities for safe passage.

Tamil parliamentarian Ananda Sangari wrote to President Chandrika Kumaratunga on Saturday, urging her to evacuate the civilians to safer ground.

The new report said estimating full costs was difficult, if not impossible. “The human and social costs, disability, dispossession and psychological trauma associated with violence and terror are not really quantifiable.”

“On the other hand, in assessing the costs of war to an economy, one would ideally calculate the destruction of production factors to determine the country’s potential output without war and then compare this information with the actual output,” it said.

The report reflects a widely held view that the consequences of the ethnic conflict have been felt in every sphere of social and economic life.

Insecurity and vulnerability is prevalent among various sections of the population in addition to a feeling of despair and hopelessness among youth and an erosion of political, legal and social rights.

The defence budget has been ballooning over the years. Sri Lanka, traditionally a low defence budget country, has seen defence expenditure rise from below half percent of GDP in the early 1970s to an estimated six percent of GDP in 1995.

“This increase took place at a time when average defence expenditure in the developing countries as a whole was falling – to three percent of GDP from 7.1 percent in the 1985-1995 period,” the report said.

This is not the first study on the economic implications of the war. Three studies have been done previously, one commissioned by the National Peace Council – a local peace agency – and two others by local and foreign researchers.

But those studies, were based on limited data, ignore the concept of value added in production and do not draw any distinction between the gross value of lost production and its net value.

The Institute found that military spending by the government between 1984 and 1996 totalled 4.1 billion dollars or was equivalent to 41 percent of Sri Lanka’s 1996 GDP while on a conservative estimate military spending by the rebels would have been around 10 percent of government costs.

The cost of dry rations and food to displaced people and losses from damage to infrastructure in war-torn areas and in Colombo, through rebel attacks, amounted to a total of 13.5 percent of the country’s 1996 GDP.

Referring to lost income since many people died during their most productive years, the report observed that though the cost in terms of mental agony suffered by widows, children and parents couldn’t be quantified, the “pure economic costs of these lost lives is not minor.”

These include not only the direct loss to the economy in terms of a reduced labour force but also because these deaths and injuries affected the productivity of others such as the families and friends of the victims.

“In our calculations, however, this effect has been ignored and it is assumed that the cost to the economy from the lost lives is solely the foregoing output due to the reduced labour force,” the authors of the report said.

Not included in the new study were reduced health stock – low weight, births and mental illnesses – and the corresponding higher health costs, general breakdown in law and order, brain drain, disruptions to the education system and infrastructure bottlenecks created due to security measures.