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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, October 01, 2005

Some policy and management issues in post-tsunami reconstruction and redevelopment

Daily Mirror: 24/09/2005" By Prof. Ashley L. S. Perera

The tsunami catastrophe was a national calamity witnessed in the country in recent times. The management of such a disaster undoubtedly required a massive effort on the part of the government in power. Disasters of such a magnitude not, only lead to the loss of valuable human lives but force the affected people on to the streets as their house and property are ravaged by the fury of such an assault. Very many of those who were fortunate to survive the disaster comprised a traumatic society who needed not only material assistance but medical care for both physical and mental health problems. Although natural disasters are not always predictable some degree of disaster preparedness on the part of the state has become essential. If a disaster of this magnitude couldn't be prevented for obvious reasons then at least the relief, rehabilitation, reconstruction and redevelopment phases of the disaster should be handled efficiently through a team of hand-picked personnel noted for their integrity, efficiency and pragmatic approach. Needless to say that officers handling such a devastated and traumatic society should be imaginative, dynamic, creative and humane to handle the issues with the efficiency and speed it deserves.

Can this government genuinely claim to have accomplished this task to a satisfactory degree? An examination of the post tsunami issues suggest that the government has dismally failed to solve most of the issues and created more problems to the affected people in the process of attempting to tackle those problems. Initially the government seems to have been in a deep slumber noted by its notorious state of inactivity. It was the private individuals, societies and other voluntary organisations that came to the rescue by providing the basic needs of the affected people. When the government eventually stepped in it did so with an unfocused and meandering state bureaucracy which was to cause more distress to an already traumatized people.

One of the first acts of the government was to hastily introduce a coastal buffer zone to mitigate the ill effects of a second tsunami as if one were to follow immediately after the first. The government went on to introduce a 100 metre buffer zone in the South and a 200 metre buffer zone in the North East without any-meaningful study. What was even more amusing was that it got the state bureaucracy to extol the virtues of the buffer zone merely because the opposition (United National Party) protested against this amateurish move The false tsunami 'scare that followed within weeks not only exposed the unscientific basis of the buffer zone but forced the government to contradict its own ruling by asking the coastal people to move a distance of two km, from the coast line causing utter misery to an already battered population. In fact the government, merely scared the people on to the roads without any organised effort to help them to safety. The obvious reaction of the people who had once experienced the deadly impact of a tsunami to run helter- skelter in the false scare was construed by the government as a moral victory to the buffer zone ruling. What it didn't realise however was that if the 100 metre buffer zone ruling was rational then the people only needed to move beyond 100 metres of the coast and not 2 km as directed by the government. It is indeed an irony that in that the government or its advisers did not realise that there were other factors apart from the distance from the coast line that determine the impact of a tsunami. Even the lessons of experience do not seem to have deterred the unresponsive and stubborn government to reconsider its repressive stand in relation to the buffer zone.

Consequently the reconstruction and redevelopment phases of the tsunami devastated areas are lagging behind for want of land beyond the so called buffer zone. The government by its insistence of an illogical buffer zone has thereby contributed to a shortage of land for housing to replace the houses destroyed by the tsunami. Many donors who wanted to construct houses for the affected people have found it extremely difficult to find land for housing construction. On the other hand the government has failed to provide alternative sites for house construction. Strangely though, the only resource adequately available for tsunami assistance appears to be money from donors. All other Resources are difficult to come by primarily due to the political blundering, bureaucratic lethargy and inefficiency.

The slow progress in the reconstruction phase is a reflection of government policy which constrains not only government funded projects but also those initiated by NGOs and other private organisations and individuals. Construction activities have been further hampered by proposals to relocate some of the tsunami affected townships. These town development proposals are apparently held in secrecy and not made known to the public for reasons best known to the government and state bureaucracy.

Moreover town planning requires the involvement of the community in every stage of the town planning process. In Sri Lanka there appears to be a completely different approach where the community is kept blissfully ignorant of some of the planning proposals. Ideally planning proposals should be widely publicized to generate public discussion and debate. This is because town development affects all residents of the town and requires the consensus of at least a majority of the community.

Planning a town is not a mere physical planning exercise where the planning of an area's physical structure i.e. land use, communication utilities etc. are undertaken. This ancient approach has far outlived its usefulness. Modem planning is multi disciplinary and entails the integrated planning of the socio-economic, physical and environmental aspects of an area. The mere concentration on the physical aspects alone as pursued by ancient architects will leave the job ill done. This is because a town is not a mere physical object. It is a dynamic entity. It has an active population, a viable economic base, an established role, a functional magnitude and a historical and cultural background among other things. The mechanical approach of attempting to uproot such towns for relocation without adequate consideration and devoid of public debate could result in a costly blunder with irreparable damage.A government in power is not necessarily required to be competent in both decision making and technical decision making. It is quite adequate if it could take appropriate decisions on the basis of sound advice of a competent state bureaucracy. However, if bureaucrats are selected only on the basis of personal friendship or party loyalty, that would be reflected in their decision making: Management is basically how to get things done and the politicians should have the capacity to choose people who could deliver the goods.

The state intervention in the post-tsunami relief, rehabilitation, reconstruction and redevelopment phases have been amateurish, tentative, experimental, and has caused further misery to the affected people. Its buffer zone rule has led to confusion worse confounded in the sphere of reconstruction and town redevelopment. The proposed relocation of townships has met with widespread protests from a cross section of the affected people. The uncertainties associated with the building and planning regulations due to the buffer zone and the consequent scarcity of land for house construction beyond the buffer zone have scared away would-be foreign donors who intended to construct houses for the affected people. It would therefore seem pertinent to seriously re-think the post tsunami reconstruction and redevelopment phases and develop appropriate strategies which could address problems faced by the affected people.

(The writer is the former Head/Department of Town & Country Planning, University of Moratuwa, Director of Post-Graduate Studies and Senior Professor of Town Planning)

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Friday, September 30, 2005

IMF Policies Thwart Poverty Goals - Report

IPS News: WASHINGTON, Sep 19 (IPS) - If U.S. President George W. Bush is serious about his enthusiastic embrace last week at the United Nations of democracy and the Millennium Development Goals (MDGs) to slash global poverty, he will press his treasury secretary and other members of the governing board of the International Monetary Fund (IMF) meeting here this week to stop imposing strict spending limits on poor-country governments.

That is the message of two new reports by ActionAid International (AAI), which charges that IMF anti-inflation policies and the World Bank, which is bound by them, are making it impossible for Third World governments to make much progress either in achieving MDG targets or in promoting democratic institutions.

The MDGs include achieving universal primary education, cutting hunger and poverty in half, and sharply reducing maternal and infant mortality by 2015.

"What the IMF and World Bank are doing is effectively tearing the heart out of democracy," said Rick Rowden, (AAI's) senior policy analyst. "Holding periodic elections doesn't mean much when a nation's economic direction is hammered out between the IMF, the central banks, and the finance ministries behind doors that are closed to voters."

The two reports, based on case studies in 13 developing countries, conclude that the indirect control exercised by the IMF over recipient governments' macroeconomic policies is straitjacketing their ability to deal with urgent social, health, and economic issues, such as the HIV/AIDS pandemic, and likewise the ability of their electorates to influence those policies.

Voters in most transitional and democratic governments, according to AAI, strongly favour greater efforts to improve the health and welfare of their poor population, if only because the poor make up the vast majority of their constituents, particularly in Africa, South Asia, and much of Latin America.

But even as democratically elected governments struggle to respond to these demands, they are effectively unable to do so given the IMF's policies and power.

This, indeed, has been noted by democratically elected developing country leaders themselves at various times. "We are caught between a rock and a hard place in terms of managing IMF requirements and then dealing with the demands of our electorate," Tanzanian President Benjamin Mkapa asserted last year.

AAI also cited a Kenyan education official as complaining that, "The general feeling among the citizenry is that government decisions are subordinate to the IMF rules and directions, and that the country is held captive by these decisions without much recourse."

The first report, "Square Pegs, Round Holes", notes a "fundamental contradiction between the need to greatly scale-up social spending to fight HIV/AIDS and what can actually be spent under the IMF's current low-inflation monetary policy", which traditionally aims to keep annual inflation rates to under five percent.

"How can significantly more money be spent in these economies without producing higher levels of inflation than the IMF's low-inflation policy permits?"

Because donor governments and other financial agencies, including the World Bank, treat compliance with IMF targets as the Seal of Good Housekeeping, failure by borrowing governments to meet those targets risks a cut-off of external credit.

"The IMF can effectively 'switch off' foreign aid flows to any country that it feels is not satisfactorily adhering to the agreed macroeconomic framework," according to AAI, citing recent examples of such actions in Zambia and Honduras.

The second report, "Contradicting Commitments: How the Achievement of Education for All is Being Undermined by the International Monetary Fund", argues that the MDG target of providing universal primary education by the year 2015 is also threatened by the IMF's imposition of budget targets.

To meet the MDG target, according to the report, poor countries must sharply increase their investment in building schools, training and employing teachers, and in making education more accessible to poor and other disadvantaged children by, for example, eliminating school fees.

But in most cases, they cannot do so without exceeding spending limits imposed by the IMF, thus making it effectively impossible for them to meet their MDG commitments and the demands of their electorates.

The problem described in the two reports is not new. Indeed, last year AAI and a number of other development and health non-governmental organisations (NGOs) published a major report, entitled "Blocking Progress". It asserted that the IMF's policies in southern Africa, which has the world's highest HIV infection rates, were having a disastrous impact on the ability of governments there to both curb the spread of the disease and treat its victims.

But the constraints faced by governments dependent on the IMF's Seal of Approval have become ever more obvious since the MDGs were first adopted at the Millennium Summit by global leaders in 2000 and now that they have been re-affirmed at last week's World Summit.

Indeed, with multilateral agencies, including the IMF's sister organisation, the World Bank, warning that progress in achieving most of the eight MDGs is lagging badly, the IMF's insistence on maintaining stringent budget limits appears increasingly anomalous, particularly in light of the endorsement by leaders of the Group of Eight (G8), including U.S. Pres. George W. Bush, which exercise a preponderant influence on IMF policies.

AAI and other groups have also argued that the five percent inflation ceiling is based on shaky economics and that there is little agreement among economists on the rate that begins to undermine economic growth.

"Current IMF monetary policies may have seemed appropriate for combating the crisis of hyperinflation in many developing countries during the late 1970s and early 1980s," according to the first report, "but its tactic of tightly constraining public spending in order to get inflation down and keep it down is at odds with what is needed today: new monetary policies that allow for a major increase in public spending."

The historical record indicates that Latin American in the 1950s and 1960s and East Asia in the 1960s and 1970s experienced very high economic growth rates despite inflation levels that averaged 20 percent per year, the report asserted.

As noted by the UNAIDS 2004 Report on the Global Epidemic: "The short-term inflationary effects of increased and additional resources applied towards tackling the HIV epidemic pale in comparison with what will be the long-term effects of half-hearted responses on the economies of hard hit countries. AIDS is an exceptional disease; it requires an exceptional response."

Meanwhile, the fact that the elected governments were effectively boxed in by the IMF is doing nothing to promote confidence in democratic institutions throughout the developing world, according to the AAI.

"What this all comes down to is that the IMF acts like a school bully, taking power away from publicly elected officials, particularly in the poorest and weakest countries," said David Archer, the group's director for education. "This is not a recipe for working democracy; instead, it could spell democracy's death knell." (END/2005)

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Thursday, September 29, 2005

Sri Lanka: TAFREN Chairman underscores the importance of transparency and reporting in the tsunami reconstruction process

ReliefWeb: 07/09/2005"

Speaking at the launch of the Development Assistance Database (DAD), a web-based application providing key information with regard to tsunami reconstruction projects, on September 2nd, TAFREN Chairman Mano Tittawella appealed to all donors and stakeholders in the reconstruction effort to share information of their contributions as well as the progress of their work through the DAD website (http://dad.tafren.gov.lk).

"This system will accurately portray the work you are doing not only to the international sponsors, but also to the people in Sri Lanka, and other stakeholders in the process," he said, addressing a large gathering that included donor representatives from the multi-lateral & bi-lateral agencies, NGOs and INGOs, Government officials and other stakeholders.

Highlighting the need to maintain complete transparency at all levels in the Sri Lankan tsunami reconstruction effort, Mr. Tittawella also noted that, DAD Sri Lanka was not only an instrument for transparency, but was also a method to show how Governments and other stakeholders could work together. "This is a good start. But the success of the project will depend on how much we keep this active, current and reliable. The DAD project must not be forgotten after today's launch," Mr. Tittawella emphasized.

UNDP Country Director Abu Salim, read a congratulatory note sent by UN Special Envoy Bill Clinton to the Sri Lankan Government and TAFREN on the launch of DAD Sri Lanka. Mr. Clinton in his note had stressed that this endeavor has reflected the Government's commitment and its desire for complete transparency in the entire process.

TAFREN CEO Rohini Nanayakkara announced that the website could be accessed by anyone. She pointed out that 214 projects had been entered into the system by the inaugural day showing a commitment totalling US $ 1.2 billion, with over 50 implementing partners and 55 donors providing their updates directly to the site. The figure is expected to rise once the remaining donors have done their part in putting their information on the database.

TAFREN's Programme Director for Donor Coordination Rachel Perera and UNDP's Regional Advisor for Aid Coordination Aidan Cox demonstrated the many useful features and formats of the information database.

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Wednesday, September 28, 2005

From bombs to booming business, Sri Lanka's war-torn Jaffna rebuilds

Yahoo! News: Tue Sep 20, 2:10 AM ET
JAFFNA, Sri Lanka (AFP) - Jaffna was the scene of the bloodiest fighting in Sri Lanka's drawn-out ethnic conflict, but war has given way to business after three years of ceasefire and locals hope it continues.

Bullet-riddled buildings and bombed-out offices have disappeared, replaced by air-conditioned shops selling mobile phones in an area that had no electricity a decade ago.

"I have just spent a lot of money to do up this place," says N. Balendran, the owner of Atlas Telecom which holds a franchise for Mobitel cellular phones. "There is a lot of demand, but we can sell more if we have better network coverage."

Before the ceasefire between government forces and Tamil Tiger rebels in February 2002, it was an offence to use even a satellite phone here without prior approval from the defence ministry.

As trade thrives, even the air here has changed.

Jaffna's trademark cooking-oil smell has also disappeared from the roads as trucks and buses now run on diesel instead of a concoction of vegetable oil and kerosene used during an embargo which was lifted in 2002 after nearly 15 years.

However, security forces, which retook the town in 1995, still occupy a large number of private homes, though there are fewer armed troops as traffic police take their place.

The rebels held Jaffna between 1990 and 1995 until a 50-day military offensive code-named Riviresa, or Sunshine, which according to the army killed 500 soldiers and 2,500 rebels.

The entire population of 500,000 left the peninsula with about half returning by mid-1996. The rebels say a large number of civilians perished in the military's heavy bombing of the 900-square-mile (2,340-square-kilometre) peninsula which drove residents out.

The arid peninsula, at the northern top of the tear-drop shaped island of Sri Lanka, sits on a bed of limestone and is also known for its palmyrah trees and white-sand beaches.

But the scars of battle are still visible as the palms had tops blown off during the fighting amd others were cut down to build bunkers.

Residents however have largely recovered from the devastation and hope renewed strains on the truce after the August 12 assassination of Foreign Minister Lakshman Kadirgamar will not lead to renewed fighting.

The government has blamed the killing on the rebels, who deny the claim.

M. Kulasingham, the owner of Varathan Learners, is one of those who came back to Jaffna. He teaches driving lessons and now has about 100 car, truck and bus-driver students every month, a four- to five-fold increase since the ceasefire.

"We want the casefire to continue," Kulasingham. "Business is good and we are looking to the future. When there was an economic embargo I had closed down my school. But now I have a lot of work."

Travelling to Jaffna, 400 kilometres north of the capital Colombo, is still tedious, going through de facto frontier posts while crossing a 100-kilometre (60 mile) stretch of highway through rebel-held territory.

Sri Lanka's Central Bank says relaxing some of the tight trade restrictions has resulted in sharp price declines in the city. The central bank, however, has not quantified the gains.

Locals though complain that seafood which was cheap and bountiful before the ceasefire has disappeared from their dining tables to fetch better prices in the capital Colombo.

"The tiger prawns and the squid no longer appear in the market here," said a military officer who has served here for three years. "The fishermen get a better deal if they send the catch to Colombo. Some of it is also exported."

Muslim trader Mohamed Sanoon who left here in 1989, just before the Tigers ordered all minority Muslims to leave as part of an ethnic cleansing program, returned after the truce. The Tigers later apologised to the Muslims.

"We have no problems now, business is good," Sanoon said while hawking caps at the main bus station. "We will have more business if there is a permanent peace agreement."

An elderly Tamil bus passenger, T. Thriruvanakarasu, said she has rebuilt her bomb-damaged house and does not want war to start again.

"We don't want any trouble," she said.

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Exports grow by 10.7% to US $ 560 mn, Imports growth shrinks in July

Sri Lanka BUSINESS:: Thursday, 8 September 2005 - 2:12 AM SL Time
Export earnings grew by 10.7 per cent to US dollars 560 million in July 2005 outperforming the 2.5 per cent growth recorded in July 2004. Cumulative exports for the first seven months of 2005 recorded a growth of 11.4 per cent from US dollars 3,112 million in 2004 to US dollars 3,466 million in 2005.

Imports grew at a relatively lower rate of 8.5 per cent in July 2005 to reach US dollars 721 million in July 2005 from US dollars 664 million recorded in July 2004. Overall imports for the first seven months grew by 10.1 per cent to US dollars 4,838 million in 2005 from US dollars 4, 396 million in 2004.

The higher growth in exports was instrumental in limiting the trade deficit only to a marginal widening in July 2005. Thus the deficit increased only by 1.6 per cent to US dollars 161 million in July 2005. The trade deficit for the first seven month was US dollars 1,372 million compared with a deficit of US dollars 1,285 million in the comparable period in 2004. Despite this, the overall balance of payments position turned around from a deficit of US dollars 223 million to a surplus of US dollars 134 million by the end of July 2005, reflecting the benefits of private remittances, which grew by 23 per cent in the first seven months, official inflows to the government and the benefits from the debt relief. Consequently, official international reserves increased from US dollars 2,196 million in December 2004 to US dollars 2,213 million in July 2005.

Trade Performance in July 2005

The high export growth in July 2005 arose from high performance in agricultural and industrial exports. Agricultural exports, which contributed 18 per cent to total exports grew by 11.9 per cent. Industrial exports which accounted for 77 per cent of total exports grew by 7.3 per cent. Tea exports reached US dollars 70 million in 2005 recording a growth of 11.4 per cent. Coconut exports grew by 5.9 per cent. Other agricultural products increased by 22.4 per cent in 2005, supported by higher performance in all sub categories except not processed tobacco,. However, despite an increase in the rubber production in the second quarter of 2005, rubber exports declined by 8.7 per cent due to greater utilisation by domestic industries.

Industrial exports were led by higher exports of food and beverages, rubber products, chemical products, non metallic mineral products and petroleum products. Food, beverages and tobacco products, non metallic mineral products and petroleum products. Food, beverage and tobacco products showed a significant growth of 130 per cent as exports reached US dollars 30 million compared with US dollars 13 million in July 2004. Exports of rubber based products grew by 17.9 per cent to US dollars 27 million in July 2005 compared with US dollars 23 million in July 2004. However, exports of textiles and garments, which accounted for 47 per cent of overall exports, declined marginally by 2 per cent to US dollars 263 million in July 2005.

Expenditure on imports increased by 8.5 per cent due to higher imports of investment goods and intermediate goods, which increased by 25.2 per cent and 6.4 per cent, respectively in July 2005. Imports of consumer goods remained unchanged. Imports of intermediate goods increased by 6.4 per cent to US dollars 424 million compared with US dollars 398 million in July 2004.

Petroleum imports grew at 10.2 per cent to US dollars 103 million from US dollars 93 million in July 2004. Imports of textiles and clothing declined marginally by 3 per cent from US dollars 136 million in July 2004 to US dollars 132 million in July 2005.

Investment goods recorded a 25 per cent growth reaching US dollars 158 million compared to US dollars 126 million in July 2004. Both building materials and transport equipment increased nearly two fold. Building material imports reached US dollars 51 million, a rapid increasing from US dollars 24 million in July 2004. Transport equipment imports increased from US dollars 16 million in July 2004 to US dollars 31 million in July 2005.

Trade Performance in the First Seven Months of 2005

Exports grew at 11.4 per cent during the first seven months of 2005. The growth in agricultural exports was supported by higher performance in tea and other agricultural products, which offset the effects of a lackluster production in rubber and coconut in the first half of 2005. Tea exports during this period were US dollars 444 million, an 8.6 per cent increase over US dollars 409 million recorded during the first seven months of 2004. Other agricultural products also grew by 19 per cent to US dollars 101 million. Rubber exports declined by 30.5 per cent to US dollars 24 million in the first seven months of 2005 from US dollars 35 million in the corresponding of 2004. Coconut exports also declined by 9.4 per cent to US dollars 57 million from US dollars 63 million in 2004.

Industrial exports grew by 10.7 per cent driven by improved performance in food, beverages and tobacco, textiles and garments and rubber products. The food, beverages and tobacco sector grew by 62.2 per cent to US dollars 157 million in 2005 from US dollars 97 million last year. Despite the stagnated prices textile and garment exports grew at 6.4 per cent in the first seven months of 2005. Rubber based products, which emerged as a major contributor to export growth increased by 30.2 per cent to US dollars 191 million compared with US dollars 146 million during the corresponding period of 2004. Mineral amounted to US dollars 80 million, a growth of 12.3 per cent, due to increases in the exports of gems and other minerals.

Imports in the first seven months of 2005 grew by 10 per cent to US dollars, 4,838 million. Consumer good imports grew at 7.0 per cent due to increases in the imports of rice and wheat flour during the early months in 2005. Intermediate good imports grew by 12.5 per cent to Us dollars 2, 862 million in 2005 from US dollars 2,543 million in 2004. Value of imports of petroleum grew by 32.8 per cent to US dollars 840 million in 2005 reflecting the escalation of international oil prices. Fertilizer and chemical imports grew by 63 per cent and 30 per cent respectively. Textiles and clothing, however, declined marginally by 1.1 per cent to US dollars 845 million in the first seven months of 2005 from US dollars 854 million in the same period of 2004.

Investment good increased by 6.1 per cent on reflecting higher imports of transport equipment and building material. The transport equipment and building material grew by 21.6 per cent and 30.8 per cent respectively in the first seven months of 2005.

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Tuesday, September 27, 2005

Refugee voices: A Sri Lankan boat maker

ReliefWeb: 20/09/2005"

At the Lake House Welfare Center on the grounds of a school in Matara in southern Sri Lanka, M.K. Darmadasa seems marooned. He is a fisherman and boatmaker by trade, but finds himself still displaced from the seaside by the December 26 tsunami. The Sri Lankan government has imposed a 100 meter "buffer zone" along the coast in which construction is forbidden, and although the restriction is being ignored by hotel owners and other private businessmen along the southern coast, displaced Sri Lankan fishermen are languishing in camps several kilomters from the sea, awaiting a government decision about where their permanent homes will be built.

Mr. Darmadasa is a vigorous 54 years old and exudes energy. Although he is unable to fish regularly, he has re-started his boat building business on the camp grounds. He lost his grinders and drills in the tsunami, but has been able to buy some basic tools. His boats are elegant --- made from fiberglass, very narrow, shaped like a thin canoe, with "double hulls," enclosed hollow spaces at either end that keep the boats afloat. He jumps into the boat he is currently working on and shows his visitors from Refugees International how easy the boat is to bail.

With so many boats having been washed away in the tsunami, demand for Mr. Darmadasa's services is brisk. Materials for a single boat cost about $200 and a boat sells for $350. It takes 10 days to build each boat. He does the work himself.

Mr. Darmadasa's entire family --- his wife, two daughters, and two sons --- survived the tsunami. When asked if his children would continue the trade, he was emphatic: "My oldest son should do something else, not be a boatmaker. It's a hard job. It's painful at the end of the day. I usually have some 'arrack' (coconut liquor) at the end of the day to ease the pain."

Mr. Darmadasa would benefit from a loan to buy new machine tools, and Sewa Lanka, the local non-governmental organization working at Lake House Welfare Center, is considering the possibility of initiating a small loan program that might include him. Apart from the question of assuring his livelihood, the main issue facing his family is where their permanent home will be located. If it is too far from the sea, even Mr. Darmadasa's boat building business will be in jeopardy.

Vice President for Policy Joel Charny and Advocate Sarah Martin are in Sri Lanka assessing the situation for conflict and tsunami displaced.

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Equity enhances power of growth to reduce poverty

Daily Mirror: 21/09/2005"

WASHINGTON, September 20, 2005 — Equity, defined primarily as equality of opportunities among people, should be an integral part of a successful poverty reduction strategy anywhere in the developing world, says the World Bank’s annual 2006 World Development Report.

“Equity is complementary to the pursuit of long-term prosperity,” said François Bourguignon, the Bank’s Chief Economist and Senior Vice President for Development Economics, who guided the team that produced the report. “Greater equity is doubly good for poverty reduction. It tends to favor sustained overall development, and it delivers increased opportunities to the poorest groups in a society.”

Equity and Development, produced by an eight-member team of authors led by economists Francisco Ferreira and Michael Walton, makes the case for equity, not just as an end in itself, but because it often stimulates greater and more productive investment, which leads to faster growth. The report shows how wide gulfs of inequality in wealth and opportunity, both within and among nations, contribute to the persistence of extreme deprivation, often for a large proportion of the population. This wastes human potential and, in many cases, can slow the pace of sustained economic growth.

Pro-equity policies can bridge these gulfs, the authors conclude. The objective is not equality of incomes, but rather to expand access by the poor to health care, education, jobs, capital, and secure land rights. Crucially, equity requires greater equality of access to political freedoms and political power. It also means breaking down stereotyping and discrimination, and improving access to justice systems and infrastructure.

“Public action should seek to expand the set of opportunities of those who have the least voice and fewest resources and capabilities,” World Bank President Paul Wolfowitz says in the foreword to the report. “It should do so in a manner that respects and enhances individual freedoms, as well as the role of markets in allocating resources.”

To increase equity within developing countries, the report calls specifically for policies that correct for persistent inequalities in opportunity, by leveling the economic and political playing fields. Many such policies will also increase economic effiiency and correct market failures. These policies include:

Investing in people, by expanding access to quality health and education services, and providing safety nets for vulnerable groups;

Expanding access to justice, land, and economic infrastructure such as roads, power, water, sanitation and telecommunications;

Promoting fairness in financial, labor, and product markets, so that poor people have easier access to credit and jobs, and are not discriminated against in any market.

Examples of pro-equity policy changes include land reform. In the Indian state of West Bengal, for example, a land tenancy reform increased security of tenure for sharecroppers, while also guaranteeing them at least 75 percent of output. Land productivity rose by 62 percent as a result. Increasing poor people’s access to credit and insurance has proven to be another effective way of leveling opportunities to increase prosperity. Studies in India, Kenya and Zimbabwe, among other developing countries, show that the poor must pay much higher interest rates than the rich. “We would thus expect the poor to under-invest, certainly relative to the rich, but also relative to what would happen if markets functioned properly,” the report concludes.

In addition to domestic reforms, the report also calls on nations to promote greater equity in the global arena, notably in the international markets for labor, goods, ideas and capital. To achieve this, it urges rich countries to allow greater migration for unskilled workers from developing countries, to press ahead with trade liberalization under the Doha Round at the WTO, to allow poor countries to use generic drugs, and to develop financial standards appropriate to developing countries. It also reiterates the importance of increased and more effective development aid.

A mix of these policies, applied with close attention to specific conditions in different countries, can help give poor people more equal opportunities, at once increasing their economic contribution to their societies, and reducing their own poverty.While pointing out the negative consequences of extreme inequality, the WDR draws a clear distinction between equality and equity. Equity, the authors say, is not the same as equality in incomes, or health status, or any other specific outcome. Rather, it is the quest for a situation in which opportunities are equal, that is, where personal effort, preferences and initiative—and not family background, caste, race, or gender—account for the differences between people’s economic achievements.

Elite capture of institutions undermines equity

The report makes the case that equity and prosperity are complementary, citing examples in which high levels of economic and political inequality lead to economic institutions and social arrangements that systematically favor the interests of those with more influence. Such institutions, it argues, undermine a country's potential for growth and poverty reduction.

“Inequitable institutions impose economic costs,” said Francisco Ferreira, a lead author of the report. “They tend to protect the interests of politically influential and wealthy people, often to the detriment of the majority. This makes society as a whole more inefficient. If the middle and poorer groups are not able to exploit their talent, society loses opportunities for innovation and investment.” One example of inequitable institutions emerges from a study of women farmers in Ghana, who do not have secure rights to their land. Because their access to it is uncertain, the women cultivate their land every growing season, failing to leave it fallow during some seasons, as they should in order to maintain its fertility. They do this because of fear that the land would be taken from them by higher-status individuals, usually men, on the pretext that the women are not putting the land to use. The productivity of their land declines as a result, creating a vicious circle of low productivity and widening inequality.

Breaking out of inequality traps

Inequality traps emerge when inequalities between individuals and groups are perpetuated over time, within and across generations. These traps are marked by high child mortality rates and low school completion rates, unemployment and low incomes repeated over generations. Opportunities, large or small, are passed on from father to son, mother to daughter.

This persistence reduces the incentives for individual investment and innovation, and weakens the development process. They are perpetuated, the report says, by interlocking economic, political and socio-cultural mechanisms, such as discriminatory attitudes and practices relating to race, ethnicity, gender and social class.

To help societies escape these inequality traps, the World Bank report stresses the importance of strengthening the “agency” of poor and excluded groups, that is, their ability to press for stronger mechanisms of voice and political accountability. By insisting on more checks and balances on the abuse of economic and political power by elites, the poor and excluded—often including women as a group—can build alliances with middle classes in support of strategies for equitable change. Such strategies would serve to undermine oligarchic dominance and level the playing field in the political arena, without resorting to the kind of unsustainable populist policies that have failed in the past. Equity and Development’s prescriptions complement the conclusions of the Bank’s World Development Reports for 2004 and 2005, which focused on enhancing access to services for the poor and improving the investment climate.

“We argue that an approach to development that is deeply informed by equity is consistent with the frameworks in the last two World Development Reports,” said Michael Walton, another lead author of the report. “Indeed, equity is a fundamental part of the package needed to achieve empowerment and a better investment climate. It is also essensial to achieving the Millennium Development Goals.”

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Monday, September 26, 2005

AG exposes huge misdeeds

Only 13.5% of total foreign funds utilised for reconstruction of key sectors

Daily Mirror: 24/09/2005" By Gihan de Chickera and Yohan Perera

The Auditor General’s Department in a shocking report on post tsunami reconstruction and rehabilitation, has exposed massive irregularities and misdeeds in the management of foreign funds as well as corruption and inconsistencies in the government’s handling of tsunami aid.

The interim report for losses and damages by the tsunami disaster between December 26 and June 30 was compiled by the Auditor General and presented to Parliament this week. It highlights among other things immense deficiencies in both local and foreign fund management, irregular clearance of tsunami aid from the Airport and Harbour, disappearances in aid material and flaws in housing construction. Information for the report was gathered from Government Ministries, Departments, Public Corporations, Provincial Councils and Local Authorities

The report revealed that only 13.5 percent of the total foreign funds had been used for the reconstruction of key sectors affected by the disaster. Of the total agreed US dollars 1168.8 million in foreign funding, only 158.34 million US dollars has been spent for reconstruction in fisheries (8.2%), water and sanitation (12.3%), housing and urban development (11.2%), life support (24.5%), health (13.7%) and education (12.8%), the report said.

Locally collected funds totalled Rs 4,277,999,449 by August 17 but only Rs 1,576,318,448 or 37% of this money had been spent the report said. The Government has not maintained records on collections made by individuals and institutions and therefore the money has not been utilized for a national plan.

The report also noted that most of the money was being retained in General Deposit Accounts without being used for the intended purposes. Irregular collection of funds by Ministries, Departments and Public Corporations was also noted.

In addition to such financial irregularities, the reports also point out that no action has yet been taken to establish the National Disaster Management Council and the Disaster Management Centre.

Regarding NGO activities, the report states that even though 384 NGOs had agreed to provide funds worth US dollars 1,321 million for rebuilding work, there were instances where work had not started because MoUs had not been signed. Even in cases where MoUs had been signed, certain organizations had not started work the report stressed.

Goods worth Rs 1,010,950 issued to the Kalmunai Divisional Secretariat had disappeared, and 65 electric generators, 78 water tanks, 88 tents and a water motor issued to the same Divisional Secretariat had not been confirmed by the parties concerned, the report said. Also Rs 1,350,000 worth of dry rations allowance had been given to individuals who are not entitled to such allowance in a Divisional Secretariat in the Ampara District.

Goods received at the Bandaranaike International Airport from the date of the tsunami up to 28 December 2004 had been issued without the intervention of the Customs Department and up-to-date records of goods cleared had not been maintained by the Customs. Clearance of goods, free of duty by NGOs and various individuals, was done without supervision by the District Secretaries or the Social Services Department.

686 containers received by NGOs had been abandoned at the Colombo Port the report revealed. Further, the non availability of storage facilities at the Social Services Department and the Ministry of Relief, Rehabilitation and Reconstruction had caused delays in the clearances.

506 vehicles had been imported with duty concessions for a period of 3 months for tsunami work. Nevertheless that period had been extended up to 2008 after the expiry of that period, contrary to the provisions in the Customs Ordinance and without passing a resolution in Parliament the report stated. Also the General Treasury did not have the particulars of institutions or individuals to whom the 506 vehicles had been released, even though 207 were released to Government institutions, 290 to NGOs and 9 to other institutions.

In housing construction, only 2 percent of houses or 1055 houses of a total 48,974 damaged houses had been completed by 4 August 2005. MoUs had been signed only for 34,558 units representing 71 percent of the total requirement. Also payments for house repairs had been made without identifying the value of the damage, thus resulting in heavy expenditure for the Government. For example a sum of Rs 250,000 had been paid for the total destruction of a temporary house valued at Rs 10,000 the report stated. There were also many other weaknesses in the supply of financial assistance for damaged houses cited in the report.

The payment of the Rs 5000 allowance for daily needs of families was severely affected by the disaster because the basis of which it was made had undergone several changes. The report showed that from January to May 2005 six different circulars were released for the payment of allowance of Rs 5000.

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Liberalisation of agricultural trade: challenges

Daily News: 20/09/2005" by Dr. Mangala de Zoysa, Department of Agricultural Economics, University of Ruhuna

During the last several decades many multilateral trading systems with the participation of developed and developing countries have been promoted in the General Agreement on Tariffs and Trade (GATT) and subsequently in the World Trade Organization (WTO).

The trends influenced the rules and commitments embodied in the Uruguay Round (UR) and encouraged governments to move further toward free trade. Progressive liberalization of agricultural trade has increased participation of developing countries in international trade in agricultural products.

Bio-security in food and agriculture has been demonstrated in the WTO agreement on the application of Sanitary and Phytosanitary (SPS) measures. The measures protect animal and plant health from pests and diseases, and protect human and animal health from risks in foodstuffs as well as protect humans from animal-carried diseases. However, the developing countries face both opportunities and challenges emerged from the SPS agreement.

The UR in September 1986 called for increased disciplines in market access and SPS measures in agricultural trade. The UR in December 1988, agreed the priority areas of SPS as: international harmonization on the basis of the standards developed by the international organizations; development of an effective notification process for national regulations; setting-up of a system for the bilateral resolution of disputes; improvement of the dispute settlement process; and provision of the necessary input of scientific expertise and judgment, relying on relevant international organizations.

The agreement on SPS measures of WTO allows countries to restrict trade in order to protect human, animal, or plant life without disguised restriction on trade. The agreement recognizes the rights of importing countries to implement these measures providing scientific justification or risk assessment to avoid the use of SPS measures for protection of domestic industries.

Disputes in standards
The international standards of SPS measures are developed and approved with very limited participation of developing countries. Therefore, the international standards are often inappropriate for use as a basis for domestic regulations in developing countries.

The standards formulation procedures vary among international standards setting organizations. It is therefore difficult for most developing countries to have their standards accepted as equivalent by developed countries. Failure to recognize equivalence of measures is a major problem confronting developing countries at the international agricultural trade. SPS measures are based on principles of international science and risk assessments in order to minimize trade distortions.

Therefore, lack of harmonization of standards for setting regulation to meet national needs developing country agricultural exporters are at a disadvantage. There is no agreement whether and under what circumstances, countries could implement domestic measures other than international standards. It is not clear whether economic considerations or consumer concerns other than health-related concerns should be taken into account in the risk assessment.

Developing countries face difficulties when requested to meet SPS measures in foreign markets based on international standards, as they are unable to effectively participate in the international standard-setting process. They have to demonstrate the scientific soundness of their own SPS measures through risk assessments even these measures differ from international standards. The Mutual Recognition Agreements (MRAs) are not feasible due to the lack of modern facilities for risk assessment in many developing countries.

Although the certification and accreditation of laboratory testing has serious implications for MRAs developing countries have a limited capacity to carry out those functions. The SPS agreement encourages accepting equivalent SPS measures achieve the importing member's appropriate level of SPS protection.

However, the importing countries are looking for sameness instead of equivalency of measures. The adoption of standards is more complex, time consuming and become non-scientific nature with the involvement of a large number of stakeholders and politicizing the process of international standards setting.

Trade restrictions
Expansion of agricultural trade has a direct relationship to poverty reduction and accelerated economic growth in developing countries. Further, reduction of existing trade barriers will provide increased opportunities for developing countries to take advantage of gains through international trade.

However, despite the UR having made progress in restraining tariff escalation, a number of serious trade barriers still remain particularly on imports of processed foods from developing countries.

Tariffs on foods particularly processed food exported from developing countries are subjected to high rates of protection. If the protection via tariffs and subsidies were lowered developing countries would successfully expand their exports of fruits, vegetables, and cut flowers.

However, many countries are expected to continue the resistance in the UR to opening their agricultural sectors to international competition. Lowering the level of protection provided by tariffs and non-tariff barriers increase the importance of SPS measures as border protection instruments for agriculture sector.

Imposing costly, time-consuming and unnecessary tests or duplicative conformity assessment procedures can act as powerful non-tariff barriers in agricultural trade. Therefore, it is very difficult to demarcate the boundary between legitimate measures and measures aimed at discouraging imports and protecting domestic producers by developed countries.

Strengthening domestic capacities
Strengthening domestic capacities implies building up knowledge, skills and capabilities in the SPS domain. Strong domestic capacities would help developing countries to identify agricultural products they could import or export and also its potential negative impact on people's health, animal health or the environment.

Developing countries should be able to respond to urgent needs emerging in their target markets and to the wishes and expectations of final consumers, by providing good quality and safe products. It is necessary for all developing countries to cooperate with one another to formulate effective mechanisms capable of devising, and enforcing appropriate SPS requirements.

Developing countries require modern facilities to test and certify agricultural commodities based on MRAs. They have to promote scientific research, testing, conformity assessment and equivalency to avoid the unfair SPS measures. Developing countries have to train competent personnel and provide them with resources to enable them to effectively participate in the international standard-setting process for SPS measures.

WTO members have suggested that mandatory provision of technical assistance should be included in Special and Differential (S and D) treatment for developing countries under the SPS agreement. Several international organizations and developed countries provide technical cooperation.

Therefore, better co-ordination among these institutions would ensure the full benefit from their efforts. It has been agreed to provide assistance in the form of credits, donations and grants bilaterally or through the appropriate international organizations.

The technical co-operation would up grade the technical skill of personnel working in laboratories, certification bodies and accreditation institutions in developing countries. They will be able to issue internationally acceptable certificates, effectively participate in the international standard-setting process and represent in the mutually recognized agreements on SPS measures.

Reviewing standards and regulations of SPS measures can promote agricultural trade and economic development of the developing countries. Establishment of regional collaborative laboratories, certification bodies and accreditation institutions could alleviate the problem of non-recognition of developing country certificates.

The WTO agreements to develop domestic policies by national authorities encourage the developing countries to promote the harmonization of SPS regulations on an international basis. Covering conformity assessment certificates, MARs can improve the market access for the agricultural products of developing countries by avoiding duplicative testing and the related costs, reducing possible discrimination, and eliminating delays.

Dispute Settlement provisions significantly advance the negotiating agenda with SPS agreement under WTO agreements in 1995. A certification program provides a means to settle the dispute. However, it is not certain that consensus on labeling, harmonized conformity assessment mechanisms or the need for regulation can be achieved within the context of WTO negotiations. The SPS Committee in 2001 agreed on guidelines on recognizing the equivalence of differing SPS measures.

The guidelines clarify the type of information importing and exporting countries should provide and factors that importing countries need to consider. Further it emphasizes methods to facilitate transparent regulatory measures. It is suggested that the burden of justification of an acceptable level of SPS risk are placed upon the importing country dispute settlement provisions.

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Sunday, September 25, 2005

Human Development Index Report - Sri Lanka ranks best performer in South Asia

Sri Lanka BUSINESS: Friday, 9 September 2005 - 2:45 AM SL Time
Sri Lanka ranks best performer in South Asia scoring above average in the Human Development Index Report 2005, the UNDP report said. The Sri Lankan HDI score of 0.751 is above the average for medium human development countries (0.718) and quite significantly higher than the average for South Asia (0.628).

In the 2005 report, Sri Lanka is ranked 93rd out of a total of 177 countries, with a total HDI score of 0.751 (out of a maximum of 1). In 2004, Sri Lanka`s position was 96 and it had a HDI score of 0.740. However using comparisons between years may not accurately reflect why ranking changes have occurred, as quite often they are due to revisions in the methodology for collecting the relevant data.

In 2005, relative to Sri Lanka`s economic wealth, it has performed well in improving the key areas of life expectancy and adult literacy. If countries were ranked purely on average individual income (based on GDP per capita adjusted for Purchasing Power Parity), Sri Lanka would be ranked 110 out of 177 countries.

The HD Report 2005 focuses on three dimensions of human development: living a long and healthy life, being educated, and having a decent standard of living. It combines the measures of life expectancy, school enrolment, literacy and income to allow a broader view of a country`s development than does income alone.

Asia`s emerging giants lag in health and child survival, as other smaller neighbours show impressive gains, according to the report. Viet Nam has now overtaken China in improvement in child mortality, and Bangladesh has overtaken India.

Had India matched Bangladesh`s rate of reduction in child mortality over the past decade, more than 730,000 fewer children would die this year, says the Report. Had China matched Viet Nam`s, 276,000 lives could be saved.

The report says that 18 of the world`s poorest countries, with a total population of 460 million, are `doing worse on most key human development indicators than they were in 1990. The Index of 177 countries, published in the report, shows that under current trends these countries have little chance of achieving the Millennium Development Goals, said Kevin Watkins, head of UNDP`s Human Development Report Office.

Twelve of the 18 countries are in sub-Saharan Africa-meaning that one out of three people in sub-Saharan Africa live in a country whose HDI is lower now than it was in 1990. South Africa has fallen 35 places in the HDI ranking since 1990 and Botswana 2 1 -stark declines precipitated mainly by the HIV/AIDS pandemic. The other six countries that suffered reversals since 1990 belong to the Commonwealth of Independent States (CIS) that are successors to the Soviet Union. Since 1990, Tajikistan has fallen 21 places in the HDI rankings, Ukraine 17, and the Russian Federation 15. Declining life expectancy, combined with economic disruption after the fall of the Soviet Union, are the main factors, the Report states.

Globally, Norway tops the Index, while Niger is last.

The HDI data however demonstrates that overall global trends are positive, with substantial overall progress registered in most developing regions of the world since the release of the first report in 1990. Bangladesh, China and Uganda have increased their ranking by about 20 percent since 1990, the 2005 Index shows.

The Report also cites several human development success stories, such as Viet Nam, which has cut income poverty in half, from 60 percent in 1990 to 32 percent in 2000 and has reduced child mortality rates from 58 per 1,000 live births to 42 over the same period.

Bangladesh has shown that it is possible for even the world`s poorest countries to accelerate human development, making gains in education, income and life expectancy.

The Report says that unequal access to healthcare has a powerful effect on health inequalities. Malaysia and Sri Lanka have achieved steep declines in neonatal deaths through simple, home-based, district-level health care.

Finally, the Report noted that the risk of conflict could be related to a low ranking in the HDI. For example, countries with a per capita income of US$600 are half as likely to experience civil war as countries with a per capita income of $250. Some war-ravaged countries like Afghanistan, Iraq and Liberia are not included in the Index tables at all, due to the lack of reliable recent statistical information on key human development indicators.

`Violent conflict is one of the surest and fastest routes to the bottom of the HDI table,` the authors wrote, `and a strong indicator for a protracted stay there.` Of the 32 countries at the bottom of the HDI, 22 have experienced conflict at some point since 1990 and five have suffered from reversals in their HDI ranking.

Every year since 1990, the UNDP has commissioned the Human Development Report by an independent team of experts to explore major issues of global concern. A worldwide advisory network of leaders in academia, government and civil society contribute data, ideas, and best practices to support the analysis and proposals published in the Report. The concept of Human Development looks beyond per capita income, human resource development, and basic needs as a measure of human progress and also assesses such factors as human freedom, dignity and human agency, that is, the role of people in development. The Human Development

Report 2005 argues that development is ultimately `a process of enlarging people`s choices,` not just raising national incomes. The Human Development Report 2005 is published in English by Oxford University Press.

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A Guide to Energy's Role in Reducing Poverty

Poverty Development Gateway:
The Millennium Development Goals (MDGs), endorsed by all the Member States of the United Nations in September of 2000, represent the international development community’s commitment to reducing poverty in the world’s poorest countries by 2015. The MDGs advocate for an integral vision of development, encompassing areas such as poverty, hunger, illiteracy, gender equality, disease, and environmental degradation.While there is no MDG specifically on energy, improved access to energy services—including modern cooking fuels, expanded access to electricity and mechanical power—is necessary for meeting all eight MDGs. Failure to include energy considerations in national MDG strategies and development planning frameworks will severely limit the ability to achieve the MDGs. Conversely, if approached as an integrated part of MDG strategies and broader national development frameworks, access to energy services can be an important instrument in helping promote economic growth, social equality and environmental sustainability. This publication by the United Nations Development Programme (UNDP) entitled, “Energizing the Millennium Development Goals: A Guide to Energy’s Role in Reducing Poverty” offers an overview of some of the most pertinent issues regarding development and energy and provides case studies to illustrate the linkages between energy and the MDGs.

The Energy Challenge of Achieving the Millennium Development Goals
Achieving the Millennium Development Goals: The Role of Energy Services
Gender & Energy for Sustainable Development: A Toolkit and Resource Guide
Generating Opportunities: Case Studies on Energy & Women
Energy for Sustainable Development in Asia and the Pacific Region: Challenges and Lessons from UNDP Projects
World Energy Assessment: Overview 2004 Update

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