Sri Lanka Donors Wary of Increasing Conflict

tsunami house

A house destroyed by the tsunami. Photo: Zoë Chafe

Last week, international donors convened in the tsunami-hit city of Galle for the Sri Lanka Development Forum 2007, which focused on future development assistance for the country, once again wracked by violence between the government and the Tamil Tigers (LTTE).

The Development Forum comes at a difficult time: two buses filled with civilians were bombed during the first week of January, and an attempted attack on Colombo’s harbor was averted just days before the conference began. The government has increased military spending to $1.28 billion in 2007. A tentative resurgence in tourist visits last year—and the lucrative in-country spending that comes along with this—seems to have been quashed by the recent violence.

By the close of the conference, the Sri Lanka government announced that it expected $4.5 billion of new international aid between 2007-2009, doubling the amount already pledged to $9 billion. Reactions to the conference and its outcomes were mixed:

  • Praful Patel, Vice President in the South Asia Region of the World Bank, tempered his remarks about positive economic growth with a stern reminder of the current country’s context: “…[T] he past year has not been good at all for the families of the more than 3,500 Sri Lankans killed as a result of the increased hostilities. Nor has it been a good year for the additional 200,000 persons displaced by the conflict. It has not been a good year for the whole population of the North and East who have gone through serious difficulties and distress…It is against this backdrop that we gather here.”
  • New US Ambassador to Sri Lanka, Robert Blake, focused on the two countries’ common fight against terrorism. However, one specific point that he made garnered much press attention: “We remain unwavering in our conviction that there can be no military solution to this terrible conflict.”
  • Despite positive media coverage of the conference within Sri Lanka, international representatives may be more hesitant to call the Forum a success. Reuters quoted one foreign development representative as saying the following: “It was definitely not a pledging conference. No one has pledged anything.”
  • And a diplomat from a Western embassy further linked war concerns to donor hesitance: “We want to ensure that the money provided by the donors does not fuel the war. There will be less cash if there is no progress on the peace front.”

One of the most interesting documents to come out of the Forum is a World Bank synopsis of Sri Lanka’s development statistics and trends. It includes a chart on “The Economic Impact of the Tsunami in 2005-2006,” which says that the overall economic impact of the disaster was relatively minimal, given that fisheries and tourism apparently account for only a small part of the overall GDP. Real GDP growth reached 6.0% in 2005 and was estimated at 8.0% through the first half of 2006.

Finally, the document—titled “Sri Lanka Development Forum: The Economy, Regional Disparities, and Global Opportunities”—contains an interesting analysis of the growth rates on a provincial, rather than national scale. It is immediately apparent that economic growth experienced by the Western Province, and to some degree the South coast, are masking stagnant or backwards trends in the North and East. While 92% of households in the Western Province have electricity, for example, only 66% do in the North Central region. And while 46% of those living in the Western Province attend secondary school, that number has fallen to 31% in the East.

It is clear that the conflict has affected—and will continue to affect—both national economic growth and social development. The Sri Lanka Development Forum 2007 makes it clear that the international community is watching how the Sri Lankan government balances its humanitarian and military priorities.