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Ahilan Kadirgamar: The failure of reconstruction
May 22, 2014
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What happens to a society and an economy after three decades of war? Over a hundred thousand people dead or disappeared, a displaced population, deteriorating social institutions and disrupted production was the starting point of reconstruction when the war came to an end in Sri Lanka in May 2009. Reconstructing such a society is a task of tremendous political, social and economic proportions. Five years after the war, there is visible rebuilding of infrastructure, a ubiquitous consumer goods market and the bold presence of banks and finance companies across the countryside. Reconstruction, however, has undoubtedly failed.

The post-war impasse is meanwhile being debated inside the country and at international forums. These debates are rightly raising the problems of continuing militarisation, lacking accountability for the deaths and disappeared during the war, increasing centralisation of authoritarian state power and a stalled search for a political solution with little progress on devolving power to the minorities in the North and East. But they have little to say about the social and economic crisis in the war-torn regions.

The response in Sri Lanka to the landslide election victory of Narendra Modi is characterised by euphoric claims by the Rajapaksa government and the Tamil National Alliance (TNA) that the new regime in India will be politically favourable to the interests of the Sri Lankan government and the Tamil minority respectively. The impact of the economic shift in India with deepening neoliberal policies on investment and trade in Sri Lanka or support for reconstruction of its war-torn regions are hardly discussed. Indeed, the post-war political debate which has increasingly descended into hyper nationalist rhetoric — both in Sri Lanka and Tamil Nadu — rarely touches on the challenges of reconstruction.

As with any other society devastated by war, decades of disruption of production in the North and East curtailed capital accumulation. Consequently, there has been little investment in the region to upgrade existing production facilities and new productive ventures. The integration of these war-torn regions into the national and international market in recent years has led to further disruption of local production by market competition. The outcome is a depletion of production and employment.

At the end of the war, the North and East urgently needed capital for reconstruction. The state, with the support of donors, claims it poured billions of dollars in investment and facilitated the flow of considerable private finance. But this form of capital has neither stimulated local production nor mobilised local labour. Rather, it facilitated outside contractors who often arrived with external labour and extractive financial and commercial interests.

Over the last five years, policies aimed at reconstruction focussed primarily on re-building road infrastructure, enhancing connectivity to the market for consumer goods and vehicles, and expanding credit with financialisation. Indeed, financialisation has also determined the path and failure of reconstruction. Banks and finance companies expanded credit through loans and lease hire purchasing, and pawning flourished with the rise in global gold prices. Jaffna society, historically known for its frugality, fast became an indebted society. Even fishers and landless wage labour are indebted on the order of two to four lakhs rupees (INR one to two lakhs) per household in most villages in Jaffna. Herein lies the failure of reconstruction, there is the shell of infrastructure and the circulation of consumer goods, but the economic structures of production necessary to engage labour are hollow even as widespread indebtedness is tearing apart society. It is not that there have been no positive gains: electrification of the countryside, tarring of village roads and rebuilding of small tanks have revitalised rural infrastructure. But these gains are overshadowed by the faltering incomes in agriculture, in part affected by bad rains and drought. In fisheries, encroaching Indian trawlers have crippled fishing. There is much that could have been done to support the local economy such as investing in appropriate rural infrastructure, controlling market price fluctuations, and supporting measures to strengthen co-operatives. Having survived the war, farmers’ organisations are now facing severe pressure from the liberalised market economy.

The response of the state to this has been denial. The Central Bank claims that in 2012 the Northern and Eastern Provinces had the highest provincial GDP growth rates of 26 per cent and 25 per cent respectively. In reality, this was due to the onetime boost of the construction sector and the growth of banking and finance. Donor engagement is also complicated by ground realities. The northern railroad, first built over a century ago by the British, is being rebuilt by India. After disruption of services for over three decades, trains are about to reach Jaffna. Railway connectivity is opening up the North and may contribute to strengthening local exports. However, the faltering incomes, stagnant production and rising indebtedness undermine these positive initiatives.

The social and economic consequences of the failure of reconstruction are devastating. There are rising reports of suicides and attempted suicides linked to indebtedness. In Jaffna district, medical sources claim 31 reported cases of suicide attempts related to debt in April 2014. Women, increasingly burdened with providing for the entire family, find themselves vulnerable to abuse and violence. The Muslim community, evicted from the Northern Province during the war, remains isolated. And the caste structure is fast reconsolidating in the post-war era, with the oppressed castes being socially excluded from education and avenues of employment. This period of reconstruction is not a “transition” towards normalcy (as it is termed in policy circles), much less a better future, but rather a failure of planning that has led to dispossession. This dispossession is characterised by a loss of assets, declining livelihoods, exclusion from avenues for social mobility and widespread insecurity.

The political economy of this flawed reconstruction process is an accelerated version of neoliberal development in the rest of the country, where accumulation by dispossession by finance capital siphons off local assets and creates massive indebtedness. The reaction in the North and East is out migration, with monthly remittances on the order of Rs 20,000 (INR 10,000) sent by workers from the Middle East. However, those remittances are in part transferred as debt payments contributing to the accumulation of global finance capital and national financiers.

As the trauma of war is augmented by the trauma of post-war reconstruction, there is a need for critical rethinking within Tamil society. However, middle class Jaffna is counting on their children joining the Tamil diaspora, and are therefore, less committed to rebuilding a devastated society. The Tamil elite in the country and the diaspora are complicit in the continuing deterioration of Tamil society by their disregard for the social and economic predicament.

The TNA-led Northern Provincial Council elected last year, albeit with limited powers and undermined by the Rajapaksa government, has done little by way of even analysis and advocacy to address the social and economic predicament in the North. If a progressive Tamil political leadership is serious about charting a different path, it should first advocate solutions. The priority now is to reverse the process of financialisation, address indebtedness and generate incomes.

The Hindu

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