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Serving Sri Lanka

This web log is a news and views blog. The primary aim is to provide an avenue for the expression and collection of ideas on sustainable, fair, and just, grassroot level development. Some of the topics that the blog will specifically address are: poverty reduction, rural development, educational issues, social empowerment, post-Tsunami relief and reconstruction, livelihood development, environmental conservation and bio-diversity. 

Saturday, February 11, 2006

Pressure mounts to resurrect CC

SAMN: 05/02/2006"

A Sri Lankan lawyer who is also an international human rights activist, a former judicial officer and a domestic civil rights activist have now added their voices to the public call demanding that the Constitutional Council be immediately constituted in terms of the 17th Amendment.

Basil Fernando, (presently executive director of the Asian Human Rights Commission), Samith de Silva (former High Court judge, Panadura) and Jayanthi Dandeniya (head of Families of the Disappeared, Katunayake) have written to President Mahinda Rajapaksa, requesting him to forthwith make the appointments to the CC, once the nominations have been received by him, as he is constitutionally required to do.
The CC comprises the Speaker (as Chairman), the Prime Minister, the Leader of the Opposition, one person appointed by the President, five persons appointed by the President on the nomination of both the Prime Minister and the Leader of the Opposition and one person appointed upon agreement by the majority of parliamentarians belonging to the political parties and/or independent groups not belonging to the respective political parties of the Government or the Leader of the Opposition.

Once the nominations are made, they have to be communicated in writing to the President who is then forthwith required to make the respective appointments in terms of Article 41A(5) of the 17th Amendment. Last week, the public was informed that the five joint nominations needed to be sent by the Leader of the Opposition and the Prime Minister had finally been sent to President Rajapaksa. The nominations had been pending for over eight months after the term of the first Constitutional Council ended early last year.

However, the remaining nominee is yet to be named by the political parties and/or independent groups not belonging to the respective political parties of the Government or the Leader of the Opposition.

This process has become complicated reportedly as a result of controversy as to who exactly falls into this category out of the political parties represented in Parliament with the JVP arguing that it is also included in this grouping and consequently has a right to participate in the decision making.

This controversy is likely to delay the constitution of the CC yet further.
In their letters sent to President Rajapaksa, the Leader of the Opposition and the Prime Minister, Mr Fernando, Mr de Silva and Ms Dandeniya have pointed out that a disturbing hiatus in constitutional governance had arisen as a result of the non-constitution of the CC due to the ‘highly regrettable” delay on the part of those who had the constitutional duty to make the required nominations.

Consequently, even though the terms of office of key commissions such as the National Police Commission and the Public Service Commission lapsed in November 2005, new members to the said commissions could not be nominated. In addition, appointments to the higher judiciary have been left pending.

In particular, insofar as the NPC mission and the PSC are concerned, the Cabinet has recently decided to allow the Inspector General of Police and heads of ministries/departments to respectively exercise the powers of these two Commissions in the interim period till they are re-constituted. This has been stated to have led to tremendous public concern in regard to the nullification of the provisions of the 17th Amendment.

Similar letters have also been written to the leaders of political parties and/or independent groups not belonging to the respective political parties of the Government or the Opposition, including the JVP, urging them to reach a consensus as to who belongs into this category and thereafter, to make the required nomination speedily.

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Friday, February 10, 2006

Post Tsunami relief and reconstruction: Info out soon on who did what, where, at what cost?

Daily MIrror: 06/02/2006" By Nisthar Cassim

Vital information on who did what and where on the post tsunami relief and reconstruction is likely to be made public by the Government shortly.

Since the December 26, 2004 tsunami devastation, millions of dollars and other currencies (totaling to billions of rupees) have poured into the country but to date there is no accurate or proper data base of what has been done, how much money spent, by whom and where.

There is also no official data compiled on the total funds received in relation to post tsunami specific activities. The Central Bank last week disclosed that Rs. 25.48 billion was received as at December 31, 2005 by the Government, non-Governmental Organizations and others in Sri Lanka as private foreign and local donations through banking channels towards tsunami disaster relief. This figure includes Rs. 3.35 billion received by the Government mainly through the Central Bank of Sri Lanka and two state commercial banks. Various multilateral donor agencies as well as countries have made official contributions, pledges and commitments too.

Tsunami tidal waves killed nearly 40,000 people and directly affected more than 800,000 people apart from destroying nearly 100,000 houses, damaging other socio-economic infrastructure such as schools, hospitals, roads etc in 12 coastal districts of Sri Lanka. The medium term post tsunami reconstruction and rehabilitation plan envisaged a cost of US$ 3 billion.

Secretary to the Treasury Dr. P.B. Jayasundera noted that a fair amount of work has been done post tsunami however there is no clear indication of how much money has been spent.

“At present there are over 500 tsunami related projects on going. At the regular donor coordination meetings the issue of how much spent and how much work has been completed are discussed. We are in the process of putting together all the available information and should have a clear idea in the next few weeks,” he said.

Dr. Jayasundera said that donors to various tsunami related projects are also keen to find out whether their contributions are properly utilized while agencies are also under pressure for accountability from their financiers.

The Government has been largely focusing on the national and district level infrastructure rehabilitation as well as cash payments with donor assistance. The bulk of the immediate post tsunami relief and reconstruction work has been undertaken by private sector, local and international NGOs. However there is consensus that most of the tsunami survivors are still languishing and the overall speed of rehabilitation and reconstruction is slow due to various reasons.

Last a week an expert panel commissioned by the UN Commission on Human Rights painted a bleak picture for Asian tsunami survivors one year after.

“Ninety per cent of the people are still living in sub-standard housing,” said Miloon Kothari, the Commission’s Special Rapporteur on adequate housing, referring to the 1.8 million to 2.5 million people displaced when the tsunami hit on 26 December 2004.

He said many people still did not have access to basic services such as water and sanitation. Mr. Kothari wrote a forward to the 64-page report, titled “Tsunami Response: A Human Rights Assessment,” that was sent to the Secretary-General Kofi Annan’s Special Envoy for Tsunami-affected Countries, former United States President Bill Clinton.

The Parliament late last year was told that the Government spent Rs. 8.3 billion on health and funeral expenses, provision of basic needs as well as start up allowance of Rs. 5,000 per month post tsunami. Several millions had been spent on restoring basic infrastructure as well.

The donor funded housing program is estimated to cost Rs. 13 billion. Over Rs. 4 billion had been disbursed to tsunami hit SMEs as well through banks.

WB, ADB to update today
Two of the biggest financiers of the post tsunami reconstruction, the World Bank and the Asian Development Bank will today make public their assessment on the current status of tsunami and post conflict reconstruction and rehabilitation.

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Thursday, February 09, 2006

Need for effective communication and transparency during tsunami reconstruction highlighted

Asian Tribune: 02/02/2006" By Munza Mushtaq

The need for more effective communication, widespread transparency and robust monitoring came out strongly at a workshop that discussed the eight "Guiding Principles" for tsunami reconstruction.

At the workshop, it was wholly agreed that people's participation is key to the entire process of reconstruction and this aspect has been generally ignored by the key players at all levels. The workshop participants agreed that people should not be mere passive recipients but actual owners of the process and the funds that have been raised to address their plight.

The one-day workshop titled "Building Back Better- are we on track?" that brought together government, non-government, international, donor agencies from tsunami affected districts to the BMICH in Colombo, sought to present clear recommendations on implementing the guiding principles. These principles, dealing with equity, transparency, coordination, subsidiary, accountability among others, were introduced to guide the process of reconstruction and minimize discrimination, corruption and inequity in relief and rehabilitation.

At the workshop, it was strongly recommended to share information and improve communication. For example, government circulars to the districts or divisions should be issued in Sinhala and Tamil, and not just in English. Communication between national-level players, whether government or donor, and the people is necessary in order for grassroots views to be incorporated in development plans. People also lack access to basic information about relief, aid or their entitlements. It was questioned whether people are aware of the guiding principles and a public information campaign was suggested.

The need to use existing decentralized government mechanism was reiterated.

At village level there is a need to strengthen community-based organizations and other village committees set up for this specific purpose- so that they can not only participate in the planning and implementation, the reconstruction but also, importantly, in monitoring and evaluating the progress.

The problem with a multiplicity of organizations, players and policies at national levels has to be clarified in order to streamline the process of tsunami reconstruction.

The roles of different sections of government, ministries, local bodies and the policies that affect the resettlement process have to be cleared up for more effective administration. One issue that was discussed in this light was the status of the buffer zone and the ability of people to live and work within its boundaries. In order to ensure transparency, accountability and reduce the chances of corrupt practices it is essential that institutions like the Auditor General's Department and Bribery Commission be strengthened by the central government.

There is an urgent need to clearly state the role, mandate and jurisdiction of the newly established RADA (Reconstruction and Development Agency) that is the successor to TAFREN. The RADA already has a well established role in coordinating and sharing information on tsunami victims, aid disbursement, land allocation etc, but its new and further roles will have to be clearly defined that they do not conflict with the functions of existing institutions and line Ministries.

The workshop was organized by Practical Action (formerly Intermediate Technology Development Group) and the DRMU (Disaster Relief Monitoring Unit) of the Human Rights Commission

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Wednesday, February 08, 2006

Government blamed

BBC: 02/02/2006" The united nations have called on governments including Sri lanka to look in to the immediate humanitarian needs of Tsunami victims.

Speaking at a press conference to launch a report entitled Tsunami Response: A Human Rights Assessment, Miloon Kothari, independent Special Rapporteur on adequate housing for the United Nations Commission on Human Rights, said the report demonstrated clearly that, in the face of such an overwhelming tragedy, Governments had failed to uphold the human rights to food, health, housing and livelihood of their most vulnerable citizens.

The report is based on a country case study that was carried out in Tsunami affected countries including Sri lanka

Focusing on Sri lanka the report says that the buffer zone issue which prevents displaced people rebuilding close to the sea shore has been confusing and inconsistent.

This has increased the hardships and anxiety of families living in temporary shelter points out the study.

Commenting on the situation of the Eastern province the study reveals that people have received very little information on alternative sites for relocation.

According to the study lack of a clear policy or mechanism for land acquisitions remains one of the greatest impediments for providing permanent housing for the displaced.

Discrimination

The report also says that there has been discrimination towards the poorer communities in paying out compensation.

For instance owners of bigger boats have received disproportionate compensations than the poorer fisherman who lost there small wooden boats, says the report.

Judy De Vadawason, representative of a tsunami-affected community in Trincomalee, said the tsunami had displaced some people several times, especially women and children, who were the most marginalized. She was referring to those who haven effected the tsunami as well as the conflict situation.

According to a news relese issued by the UN Vadawason has told the audience at UN headquarters that while households headed by single women were entitled to about $150 in compensation for a child killed by the tsunami, each such mother had to bring in the dead child’s father, even if he had left his wife to raise the child on her own.

The compensation money was then given to the former husband.

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Tuesday, February 07, 2006

Budget, Trade Deficits, Interest and Exchange Rates - Lessons to learn

Daily Mirror: 02/02/2006" “The Thought Leadership Forum” By Ranel T Wijesinha

During the time of the Mexican Currency crisis, which was discussed in this “Thought Leadership Forum” two weeks ago, Canada was often referred to as the Western Hemisphere’s equivalent of Sweden. Sweden, a well-known welfare state, experienced a long recession in the early 1990s, with unemployment rising to unprecedented levels. Canada earned this accolade as it were, since the public sector controlled over half of the economy. Public sector costs were increasing. However, the economic base could no longer support these costs. This in turn led to large budget deficits, government borrowing and a significant national debt. The national debt in Canada soared even higher than that of Sweden.

Canadian National Debt
By 1995 close to 50 percent of every dollar spent by the Canadian government serviced interest payments. 40 percent of that national debt was falling due by 1996. A key concern was that the Canadian government’s borrowings were not restricted to domestic capital markets. As debt mounted, Canada had raised needed funds abroad. By early 1995, 30% of Canada’s huge national debt was in foreign hands. Of course “foreign” meant mostly American. When the media surfaced this in February 1995, comparing the Canadian situation with that of Mexico, people naturally became insecure about anything in Canadian dollars.

The question in the minds of banking and financial circles then was that, if Canada went the way of Mexico, the United States will bail it out as well. If Mexico had cost America $20 billion, how much would Canada cost? If Canada went, how far behind could Brazil and Argentina be? What would their bailouts cost the United States?

United States and the Reagan Presidency
During the eight years of the two-term presidency of Ronald Reagan America’s national debt tripled, from under $1 trillion before he assumed the presidency to well over $3 trillion when he left. They say Ronald Reagan accumulated far more national debt than all of his predecessors, starting with George Washington combined. By February 1995, the grand total was $4.5 trillion dollars. The issue was not only budgetary deficits of hundreds of billions of dollars each year. Over 13 years the USA had international trade deficits, which by the mid 1990’s was in excess of $150 billion. Foreigners had been accumulating dollar holdings, which were then invested back in the United States. The “recycling process” apparently seemed to work well. The Japanese, who had the world’s largest trade surplus, were the biggest accumulators of dollars and thus the biggest exporters of capital to the United States.

The dollar Yen Crisis
When the US economy was believed to have recovered and reached a GDP growth rate of 7% Alan Greenspan, the Chairman of Federal Reserve, not wanting the economy to heat up increased the Federal funds rate by ¼ percent. During the next twelve months, Greenspan raised rates six times. There was a large-scale sell off of bonds. The Japanese, the Swiss, and Germans began to move out of US investments. By 1995, foreigners had invested over a trillion dollars in the US. By February 1995, triggered by the Mexican crisis; concerns about Canada and the related implications, there was an unprecedented run on the dollar. The Dollar/Yen crisis had begun.

Japanese investments in the USA
A few examples of Japanese investments in the United States particularly in real estate, and in major direct investments, such as Mitsubishi’s purchase of the Bank of California, or the purchase of the Hollywood studio MCA by Matsushita are useful real life situations. These will prompt us to learn that a foreign investor does not always profit in even developed nations, unless there is sound macro economic management of these nations.

Matsushita
In December 1990, Matsushita paid $6.1 billion for MCA. In 1995, it sold 80 percent of its stake in the studio to Seagram’s a Canadian company for $5.7 billion. On the face of it, we may think it made a small profit. However when Matsushita repatriated the sale proceeds, it realized a foreign exchange loss of $ 1 .9 billion (Y 165 billion).

Mitsubishi Bank - Mitsubishi Bank bought the Bank of California in 1984 for $800 million, when the rate of exchange was approximately 250 yen to the dollar. Post acquisition it found out that it had to write off large amounts of bad loans, bulk of it relating to California real estate. To offset the impact of these write offs it invested a further half billion dollars.

Thus their total investment was now $1 .3 billion. The exchange rate sank below 100 yen to the dollar in 1995 and Mitsubishi had a reported loss equivalent to over half of its original investment.

Rockefeller Centre
Mitsubishi Real Estate in 1989 had achieved an 80 percent stake in the company that owned this New York landmark for a cumulative cost of $ 1 .4 billion. The dollar exchanged for 150 yen at this time. When this sale to “foreigners” as it were was revealed, there was an enormous public outcry. The question was-How can the USA allow Japanese to acquire American landmarks? The protestors were unaware that Mitsubishi had also acquired the $ 1 .3 billion mortgage that had been outstanding against Rockefeller Centre. With surplus office space in New York, Mitsubishi’s mortgage payments exceeded its rental income. By 1995, Rockefeller Centre had drawn in a further $500 million of cash. With the change in the yen/dollar exchange rate, the loss was $1 billion. In May 1995, Mitsubishi Real Estate declared bankruptcy.

Conclusion
There are several thoughts here. At a time when we are endeavouring to introduce many desirable and long outstanding pro-poor strategies, coupled with populist and some-times only politically motivated welfare measures and subsidies, simultaneously with investment in much needed rural infrastructure, we must be cautious in achieving the right balance. Macro-economic management requires deep thinking, sound science and experience. Innovation is essential but learning from the lessons of economic heavyweights would be nothing less than a prudent and responsible way forward.

It is also useful for key political players, to recognize (as it turned out in the recently kick started “peace process” which I think requires blessings rather than a premature “standing ovation” given that it has only just re-started) that inciting sentiment, which is anti-multinational, anti- multilateral, anti foreign investor, anti USA (our largest market for the apparel sector-our major employer) or anti western or European, is simply out of style and out of tune.

President Clinton bailed out Mexico by contributing US $ 20 billion by dipping into a Fund meant to stabilize the US dollar (not the Peso- even though we are not naïve to the relationship between these currencies, more so since NAFTA was in place then) even without referring to Congress, and the IMF and the Bank for International Settlements contributed US$ 32 billion. Quite simply, politicians, rather than only being vocal and critical, must add value to the thinking of the poor and sunshine into their innocent lives. That, then, would be a pro-poor strategy.

Ranel Wijesinha., FCA (Sri Lanka), MBA (USA), is a Past President of the Institute of Chartered Accountants of Sri Lanka and Past President of the Confederation of Asian and Pacific Accountants. He has served as Director, Business Development for the John Keells Holdings Group and has worked overseas with Deloitte Touche Thomatsu International. Until 2001, he was Partner and Head of Consulting of PricewaterhouseCoopers, Sri Lanka and is currently in Independent Consulting, serving overseas and local clients.

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Monday, February 06, 2006

Research on 600 local paddy varieties

Daily News: 31/01/2006"

The Bathalagoda Paddy Research and Development Institute has successfully conducted research on 600 local paddy varieties out of approximately 2000 to 3000 traditional varieties produced locally.

These varieties known as Suduru Samba, Suvanda Samba, Pachcha Perumal, Kalu Heenati, Kalu Baala Wee, Rath-el, Suvandel, etc. have been identified as special varieties capable of withstanding environmental disabilities and insect borne diseases while being superior in hygienic qualities and consumer taste.

With the expansion of chemical fertilizer usage, the paddy plants tended to be taller unproportionately resulting in a decrease in harvest. Some times, the plants lost resistance to changing weather conditions.

Research work conducted by the Bathalagoda Paddy Research Institute recently has found remedies to overcome disadvantages of this nature and bring back the normal resilience and normal height of the plants. Further research work are in progress to promote a healthy cultivation of the traditional paddy varieties, states a media release by the Central Information and Media Unit of the Department of Government Information.

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Sunday, February 05, 2006

1 year after, private tsunami donations tops Rs. 25 b

Daily Mirror: 01/02/2006"

One year after the devastating tsunami Sri Lanka had received Rs. 25.4 billion in private donations for relief and rehabilitation work.

Central Bank said yesterday that the figure of Rs. 25.48 billion was received as at December 31, 2005 by the Government, non-Governmental Organizations and others in Sri Lanka as private foreign and local donations through banking channels towards tsunami disaster relief. This figure includes Rs. 3.35 billion received by the Government mainly through the Central Bank of Sri Lanka and two state commercial banks.

The Central Bank will continue to update this information monthly.

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