OPINIONS

Ensure aid gets to the Tamil areas

As international aid money begins to flow into Sri Lanka once again, Muruges Arumugam highlights the need to ensure that development assistance gets to where it is needed the most - the Northeast.

The ceasefire agreement between Liberation Tigers and Sri Lanka's United National Front (UNF) government offers a considerable opportunity for the reconstruction and development of the island, especially the war-ravaged North-east. The international community has been quick to respond to these opportunities by increasing its support for a number of key humanitarian and development projects.

Over the past few weeks multilateral agencies and donor governments have agreed to sponsor projects such as de-mining, rehabilitation, and reconstruction in Sri Lanka. This is certainly a welcome step considering how much help will be needed to get the Northeast functioning normally again. However, if we go on Sri Lanka's past experience with aid, it is vital that enough is done to make sure the money goes to where it is needed the most.

In this light, recent discussions between the Asian Development Bank (ADB) and the Liberation Tigers about rebuilding the Kandy-Jaffna A9 highway are a promising sign that this is being kept in mind. The ADB has reportedly pledged funds to improve the road and is in negotiations with the Liberation Tigers about who will carry out the work.

The cessation of hostilities and the lifting of many of the restrictions on that Northeast has given relief and development agencies much better access to the population of the Northeast. Only recently foreign donors were banned by the Sri Lankan government from running programmes in the "uncleared" areas - i.e. those controlled by the Liberation Tigers. The 1999 ban on NORAD, the Norwegian government's aid agency, from working in the Batticaloa hinterland was a case in point.

Indeed, if we look at the bigger picture, aid inflows to Sri Lanka fell steadily over the course of the 1990s. The nadir came in December 2000 when foreign donors meeting at the Sri Lanka Development Forum (SLDF) - which had previously been known as the "Paris Group" - refused to pledge any new assistance to the Sri Lankan government.

On that occasion, donors called on President Chandrika Kumaratunga's People's Alliance (PA) government to take concrete steps to end the island's protracted civil war, reduce military spending, and speed up restructuring of the public sector. Donors also called for better accounting for aid and a reduction in political interference in development initiatives. Little was done, but the PA's crushing defeat in the December 2001 polls makes this of little consequence.

Sri Lanka has traditionally relied heavily on aid receipts and this slap in the face by donors hurt the Kumaratunga government badly in financial and public relations terms. Donor pressure to end the war also played a part in forcing the new UNF regime to seek a ceasefire with the Liberation Tigers. Strapped for foreign exchange and facing a shrinking economy, the newly elected Prime Minister was well aware of the need to restore former levels of foreign aid.

This "peace dividend" sought by Prime Minister Wickremasinghe has begun to materialise in recent months as Colombo has become a virtual turnstile for foreign dignitaries dropping in to pledge their support. New money has been allocated by multilateral agencies and governments. Previously suspended credit lines have been re-opened by the International Monetary Fund (IMF). In fact, the IMF's Deputy Managing Director will arrive in Colombo next week. The SLDF is also scheduled to be reconvened in June.

Only last week, the head of a visiting United Nations (UN) delegation that had spent two weeks on the island suggested that areas such as demining, resttlement, irrigation and food will continue to be the UN's first priority.

Mr Edouard Wattez pointed out that the "UN feels that the international community can play a role in supporting peace moves by starting rehabilitation work immediately."

However, the resident UN co-ordinator in Sri Lanka, Miguel Bermeo, also warned that donors should be wary of investing in large-scale reconstruction projects too soon. "Until there are clearer signs that the peace process is going on very strongly," he noted, "donors will be cautious."

This advice, amidst a frenzy of donor activity in Sri Lanka, should not be taken lightly. In the coming months, donors will no doubt begin to consider long-term assistance projects, eager to make up for lost time. The Sri Lanka Development Forum will also soon be reconvened to allow governments and agencies to pledge and coordinate development activities.

During this period, donors will need to ensure that their assistance goes where it is needed the most - the Northeast. As the UN delegation has recognised, after years of war and embargo, the people of the Northeast need immediate humanitarian assistance. In the longer term, however, assistance will need to be well thought-out.

Donors will have to overcome several recent problems encountered when has been allocated to the Sri Lankan government - notably, high levels of local political interference on where the money goes, significant corruption in the ranks of the bureaucracy which dispenses it and unclear accounting systems. Another problem has been the degree of under-utilization of aid money given to the Sri Lankan government - perhaps a sign of the inefficiency of the state in carrying out development activities.

Taken in the context of the politically-charged nature of the project of developing the Northeast - particularly the growing protests by Sinhala chauvinists that too much attention is being paid to Tamil areas - these are signs that donors may need to do more than simply pledge money. They will need to take two critical steps: first, to identify exactly where the money should go and, secondly, create sufficient checks and balances to make sure the money is spent appropriately.

Recognising that the overwhelming development priority in Sri Lanka is the reconstruction of the Northeast, this will mean setting up mechanisms to channel aid there effectively, without political interference from Colombo. The recent efforts by the ADB to deal directly with Liberation Tigers with regards development work to done in areas the movement controls are a step in the right direction. At the end of the day, despite the pressing needs
of the Northeast, taking the time to ensure that aid programmes reach their targets - the needy Tamil population - will pay dividends in the longer term.

Global democracy: an increasingly distant dream?

Thanks to globalization, dominant nations now have a variety of tools with which to influence other countries and encroach on their sovereignty, short of war, writes Kaushik Basu, professor of economics at Cornell University.

A nasty, unintended side-effect of globalization is its corrosive effect on democracy. Even if individual countries are becoming more democratic, it seems, the sum of global democracy is shrinking thanks in no small part to globalization.

Democracy means many things, but at its core it re-quires that people choose their rulers and that votes be weighted equally. But globalization means that nations and peoples can exert an asymmetric influence. The US can cut off trade with Cuba not only by curtailing its own trade but by threatening punitive action against others who trade or invest in Cuba. Cuba, however, can do little to hurt the US economy. Likewise, China can injure Taiwan in ways that Taiwan cannot reciprocate.

Of course, the powerful have always encroached on the sovereignty of others. Take the story, perhaps apocryphal, of an Indian diplomat showing a map of South Asia to Stalin. "India is a very big country," Stalin observed, and then pointing to Sri Lanka said, "What is the name of this little Indian island?" "That is not an Indian island, sir," the diplomat replied, "it is a sovereign nation." "Why?" Stalin asked.

Thanks to globalization, however, dominant nations have a variety of new tools with which to influence other countries short of war. Foremost is money. Instantaneous electronic links and an improving system of global guarantees allow capital to flow across national boundaries as never before. Rapid withdrawal of such capital can have devastating effects, as we saw in 1997 when Asia's super-performing economies succumbed to financial crisis.

In 1998, during the Asian crisis, the rescue package offered by several industrialized nations -- prominently Japan and the US -- required South Korea to lift bans on imports of certain Japanese products and to open up its banking sector to foreign banks (which is what the US wanted). People in vulnerable nations have very little say in the imposition of these policies. Trade sanctions for political/security ends also serve the same function.

Another consequence of the freer flow of capital is a greater intertwining of different markets. A fall in the Thai housing market can cause the Thai baht to collapse in ways that could not have happened before; a fall in the Indian rupee can cause a meltdown of the Indian stock market in ways inconceivable ten years ago.

The large presence of overseas investors is the cause here. Suppose a New Yorker buys shares in the Mumbai stock market. For that, dollars are converted into rupees, which are used to buy shares. The aim is not to hold rupees but to make money and eventually re-convert to dollars. Suppose, then, that the rupee's exchange rate begins to fall. The foreign investor will naturally want to sell off Indian stocks. While a fall in the exchange rate with no decline in stock prices gives Indian investors no reason to flee the stock market, if sufficient numbers of foreign investors begin to sell, stock prices will decline so that Indian investors, too, sell their stocks.

What can be done about the erosion of global democracy and accountability? Utopian schemes such as a global government or a global bank answerable to all nations are a distant dream. What is needed is a system in which the poor have a voice alongside the rich in the organizations (the IMF, WTO, World Bank and UN) that mediate in world economics and international relations.

Today, equity is violated in most international organizations through at least two routes. First, there is the open channel, which gives a larger share of votes to the nations contributing more to organizations such as the IMF and the World Bank.

The second route is the lack of transparency in decision-making. In domestic democratic politics, if the decision-making process is visible to all, it becomes difficult for any group to hijack the agenda. Big business and the military are able to push through their interests much more in Pakistan than in India because India's government is more open to scrutiny.

The same goes for international organizations. Powerful nations, by virtue of contributing senior personnel and money, gain greater access. Decisions taken behind opaque walls are more likely to be diverted to their interests. Take the WTO. While it does subscribe to the principle of one-country one-vote, it is widely perceived as a preserve of rich nations. This is because of what can be called the "green room" effect, that is, what goes on behind the scenes. If the WTO is to be a democratic institution, it must not allow its green room to be hijacked by a few.

This problem is most ob-vious when drafting international labor standards. Although supposedly designed in the interests of the workers in developing countries, the biggest opposition to them comes from poor countries, and rightly so. The form that these standards take - and the increasing talk of using trade sanctions to impose them - is close to what protectionist lobbies in industrial nations seek. This is not surprising given the greater access of rich countries.

The fact that questioning the practices of rich nations (who contribute more funds) exercising more voting power in these organizations sounds outrageous, shows how far away we remain from global democracy. After all, it does not seem outrageous that Microsoft chief Bill Gates does not have multiple votes in the US elections on the ground that he contributes more to government coffers. Indeed, the suggestion that Gates should have more votes sounds outrageous.

This is because democracy within a nation is a settled idea. Now it is time to provide more equal voting power to nations irrespective of their wealth, because one of the basic tenets of democracy is that the advantages of wealth should not be compounded by giving the rich extra voting power.

When the idea of "one-person one-vote" arose, feudal landlords predicted chaos in the decision-making process. How wrong they were.

For the sake of global stability, economic efficiency and also the fight against terrorism we must instill greater democracy within our international organizations. This may not be in the immediate individual interest of every state, especially big and powerful ones, but is, in the long run, in the enlightened interest of all of humanity collectively.

Courtesy Project Syndicate.