Asia Times: India/Pakistan


	June 25, 2002	atimes.com

India/Pakistan

Sri Lanka's ceasefire encourages investors
By Feizal Samath

TRINCOMALEE, Sri Lanka - With the guns of war stilled and the prospects for peace bright, investor interest is again being drawn to the deep, calm waters of Trincomalee, one of the world's greatest natural harbors, on Sri Lanka's east coast.

"In the last six months, after the ceasefire came into effect, there's been a lot of interest in Trincomalee," says Gamini Chandrasekera, resident manager of the Sri Lanka Ports Authority (SLPA).

Most of the interest in the picturesque port, a former British base that protected the Royal Navy's Indian Ocean fleet during World War II, comes from India. Some of the investments that are in the pipeline would guarantee a permanent Indian presence in the area - and protect the Sri Lankan government's interests against Liberation Tigers of Tamil Eelam (LTTE) separatists using the port as a future base.

The inner harbor, surrounded by ridges and low hills atop which some of the fortifications built by the British can still be seen, once provided safe anchorage for merchant ships laid up and waiting charters before the outbreak of the ethnic conflict in 1983. The inner port has been neglected since then, largely because of the Tamil separatist war. But now that a truce is in place, the Sri Lankan government wants to make best use of the port's potential.

Peace talks between the government and the Tamil rebels, originally set to start this month in Thailand, are likely to get off the ground in July or August as both sides hurl accusations of ceasefire violations. Despite this, though, no shots have been fired by either side since December, making it the longest truce ever in the history of the 19-year-long conflict that has claimed the lives of more than 60,000 people.

The sheltered waters of the main harbor, home of the Sri Lankan Navy's biggest base and headquarters of its eastern command, eliminate the need to build expensive breakwaters. "The most distinct advantage of this harbor is that there's no need for dredging. We have the natural depth," points out SLPA's Chandrasekera.

The commander of the Eastern Naval Area, Rear Admiral Sarath Ratnakeerthi, agrees that there is a lot of potential to develop the harbor. "But first we need peace," he says while wary of the intentions of the Tigers, who have opened six offices in the town since the formal truce. Tamil Tiger guerrillas, he says, have been infiltrating cadres into the town under the pretext of doing political work while also studying military installations.

With peace in the air, potential foreign investors have been scouting around the area in recent months. There's plenty of land available in and around the harbor, with some 2,000 hectares of state land vested with the SLPA. The SLPA, which acts as the guardian of the land, is to release about 300 hectares for an industrial zone in Kappalturai, near the town's highway.

Dr Bandula Perera, chairman of the Industrial Development Board, said the IDB planned to set up an industrial estate on 40 hectares that have been allocated in Kappalturai. However, there are concerns from minority Tamil politicians about the speed with which the government is proceeding to attract foreign investment to Trincomalee.

R Sambandan, senior Tamil United Liberation Front member of parliament from the area, rejects government plans, saying that whatever was being done should be initiated by the people of the area and that no big investments should come in until the peace process had moved forward. "Tamils who have suffered several decades of discrimination and unequal treatment are not prepared to trust anyone in a hurry," he said. "We want to decide our destiny, including our economic future, within the framework of a united country."

In the past, he pointed out, the beneficiaries of economic development, whether it be in agriculture, industries or fisheries, were not the Tamils but people from outside the region. "Trincomalee has great potential in port development, agriculture, fisheries, industries, tourism," Sambandan said. "But the present industrialization effort is totally ill-conceived. Development must be done in consultation with representatives of the region. We don't want this to be foisted on us from Colombo."

Trincomalee has a slightly higher percentage of Tamils than Sinhalese (the national majority community) or Muslims. Tamils, who mostly live in the north and the east of the country, claim that they have been discriminated against in job allocation, land use and education by governments run by the majority community.

Arjuna Mahendran, chairman of the state-run Board of Investment, also conceded that disputes could emerge if investment - decided by Colombo - proceeded before the planned interim administration was set up. The government has said it would like to create an interim administration with help from the LTTE to administer the north and east for about two years as an interim measure before a political solution was found to the long-running conflict.

"As far as the oil-tank farm is concerned, that is not a problem because it involves two parties with land in Trincomalee owned by the Ceylon Petroleum Corp [CPC]. The problems could arise if state land is demarcated for various investment before the interim administration is established," said Mahendran.

He was referring to the biggest recent development in Trincomalee - an agreement to lease part of the CPC's 99 oil tanks, each with a capacity of 100,000 tonnes, to the Indian Oil Corp. The deal, signed in New Delhi this month, gives effect to some of the provisions of the 1987 Indian-Lanka peace accord that denied the use of Trincomalee to any power inimical to India and which gave India first choice in the use of the oil-tank farm.

The other major commercial establishments already in city include a flour mill owned by Prima Ceylon, a subsidiary of Prima Singapore, and the Tokyo Cement Co plant, a subsidiary of Japan's Mitsui. Among the new industries coming up in Trincomalee is a coal-processing plant that will produce coking coal for use in Indian steel mills.

During much of Sri Lanka's conflict, Trincomalee has played a key role in keeping troops and civilians in Jaffna farther north supplied with essential commodities and other requirements. Just like foreign investors, the rebels are also eyeing the city and its natural harbor as the capital of Tamil Eelam, the name of the Tamil nation for which the rebels have been battling for so many years. But the possible presence of the Indian Army to protect Indian interests may serve as a deterrent.

(Inter Press Services)