Sri Lanka unveiled its biggest ever war budget as it vowed to defeat Tamil Tigers and announced new taxes additional borrowing to plug the gap spiraling government spending and revenue.

The annual budget which increases spending on the armed forces has drawn mixed reactions.  While supporters of the government welcomed it as a budget that breaks away from dependency on foreign loans and grants, opponents say it will exacerbate economic woes.

President Mahinda Rajapakse, who is also the commander-in-chief and finance minister, sought approval for the country's largest-ever defense budget from Parliament on Thursday, November 6 as government forces continued their military offensive in the North.

Rajapakse proposed to spend 177 billion rupees ($1.6 billion) on defense for 2009, an increase of 6.4 percent from 166.4 billion rupees ($1.5 billion) allocated this year.

In his speech, Rajapakse said Sri Lankan soldiers had seized several LTTE bases and large swathes of land in the Tamil-dominated north and were close to crushing the organisation.

"It is to eradicate terrorism through this true humanitarian exercise that we spent a substantial amount of money on national security," he said.

Rajapakse also announced a one percent tax on most goods and services to "rebuild communities and infrastructure facilities affected by terrorism," and downgraded the country's economic growth.

Despite high inflation, running at 23.4 percent at the end of last month, the government's war against the Tamil Tigers is seen as highly popular among the majority Sinhalese community.

Rajapakse also announced increased taxes on imported food (from fruit and vegetables to milk powder), electrical and household goods, and raised import and export cargo duty from three percent to five percent.

Official figures showed that overall state expenses for 2009 will increase 15 percent to 15.6 billion dollars, nearly twice the expected government revenue of 7.92 billion dollars.

The government hopes to bridge the deficit with local and foreign loans.

Dayasiri Jayasekara, a lawmaker from the main opposition United Nation Party (UNP) attacked the budget and warned that resorting to external borrowing would lead to ‘dire consequences’.

“There is a bleak picture of our economy today. We have identified certain shortcomings in the Appropriation Bill for the 2009 Budget as well. The Government has been compelled to go for external borrowings at high interest rates. It will have dire consequences on the economy,” Jayasekara said.

Rajapakse's supporters disagree with the opposition’s view.

 ”This is a budget that breaks away from neo-liberal economic policies... it tries to strengthen the national economy,” said Wimal Weerawansa, an ally of President Rajapakse.

Two days prior to Rajapakse unveiled the annual budget, on Tuesday November 4, the UNP presented its 'alternative budget proposals’ pledging to increase the salary of public sector workers by Rs. 7500, and a minimum wage of Rs. 40,000 for soldiers.

UNP lawmaker Ravi Karunanayake commenting on the proposals said, a future UNP government would reduce the 'burden' of 110 ministers to 35 ministers.

"Savings will be utilised for security development,".

India Thursday formally handed over to the international Red Cross nearly 1,700 tonnes of relief material meant for civilians displaced by war in Sri Lanka’s north, but a top government official insisted that Colombo alone would distribute the aid.

Indian High Commissioner Alok Prasad handed over the gift certificate to Paul Castella, head of the International Committee of the Red Cross (ICRC) in Sri Lanka, at what the envoy said was “a simple but solemn occasion” reported IANS.

Prasad said it was for distribution among the war-hit population and hoped that the goods “would help meet the humanitarian needs of the people”.

“This (Indian) consignment consists of food, clothing and personnel hygiene items, which have been packed individually into 80,000 family packs for easy distribution and to ensure that the assistance reaches directly to the intended recipients,” he was quoted as saying.

Addressing reporters at the venue, Sri Lanka’s Commissioner General of Essential Service (CGES) S.B. Divaratne and ICRC’s Castella thanked India for its goodwill gesture, but openly contradicted each other on the issue of who will distribute the relief supply to the needy.

Claiming that “food, shelter as well as access to water, sanitation and health care are the most pressing needs that our staff in the Vanni could observe at present”, the ICRC official said his organisation intended to take the Indian donation “to the Vanni in the coming weeks”.

“The food, hygiene items and clothes donated by the Indian government will be distributed directly to civilians by the ICRC teams working in the Vanni to alleviate the suffering created by armed conflict,” he said.

“This is the first time that the Indian Government has assisted the conflict affected population of Sri Lanka through the ICRC and I would like to underline how much we appreciate the trust the Indian authorities have shown in us and its recognition of the ICRC’s work in Sri Lanka to date,” Castella said in his address to the media.

An ICRC media statement also went on to say that the ICRC would be distributing the aid provided by the Indian government ‘directly’ to the displaced people and to residents affected by the conflict in the Vanni.

“We will do so in accordance with our own independent assessment of people’s needs,” Francois Stamm who heads the ICRC’s regional delegation in New Delhi said in the statement.

However when a journalist posed a question to specify clearly as to who would handle the distribution, Divaratne maintained firmly that the goods would be distributed by the government agents and the ICRC would only facilitate them.

“No foreign organisation can directly go and distribute food (to) anybody there, bypassing the government mechanisms,” he said.

Assuring that the relief assistance would “definitely reach” the affected people, he said the government in consultation with Government Agents “will facilitate the operation with the ICRC”.

“It is the Government Agents of the districts who know where people are displaced and living. It is a joint operation,” Divaratne said.

When a clarification on the matter was sought by the ICRC head, the news conference was adjourned with ICRC officials claiming that the question and answer session had ended.

Meanwhile, a meeting between government agents in the north, other government officials and the ICRC is due to take place today to finalise the route which will be taken to transport the goods.

When asked what route would be taken, Divaratne said the government would transport the goods through the A9 passing Vavuniya, Puliyankulum, Nedunkerni and Oddusuddan.

He also said the government had identified areas where the displaced civilians resided so that it would make it easier for the government agents to distribute the goods.

Nearly 1,680 tonnes of relief materials, shipped into Sri Lanka in 100 containers, are now housed in the ICRC warehouse near Colombo, ready to be transported to the island’s north.

Thousands of civilians, almost wholly Tamils, have been displaced in fighting between the military and the Tamil Tigers.

The consignment came as a follow up to a visit to New Delhi last month by Colombo’s special envoy Basil Rajapaksa when both sides decided that India would take part in providing humanitarian relief aid.

“I am happy to note that this substantial consignment has arrived in Colombo within three weeks of the two countries taking that decision. It is a combined effort of the government of India and donations received from the people of Tamil Nadu,” the Indian envoy said.

Claiming that it “is a gesture of goodwill and is intended to bring some relief to the civilians in the conflict areas”, Prasad said that India “is committed to providing humanitarian assistance”.

“We will evaluate the situation and what the needs and requirement are and we may bring additional consignment as required,” he said.

Foreign Secretary Palitha Kohana, who was also at the handover, said there was no estimate of the displaced in the conflict zone as a census has not been conducted.

“We believe the figure of 230,000 to 300,000 estimated displaced by various agencies is grossly exaggerated. The government’s own assessment is that the figure could be around 100,000,” he said.

Amnesty International last week called on Sri Lanka's government to stop blocking humanitarian aid intended for the more than 300,000 people displaced by fighting in the north.

The human rights group urged both the government and the Tamil Tigers to allow international monitors into the northern Vanni region, which has seen intense fighting over recent weeks.

It also had other criticisms of both sides in the fighting. It accused the Tigers of using the displaced as a "deliberate buffer" against government forces.

Amnesty called on the Tamil Tigers "to ensure freedom of movement for civilians and stop preventing people from moving to safer places".

"These families must not be forgotten and left to suffer in a war zone."

Amnesty says that thousands of people displaced by the conflict are currently "in desperate need of shelter, food and sanitation".

"As the north-east monsoon season approaches, only 2,100 temporary shelters for 4,000 families have been provided, leaving at least 20,000 families in need of protection from the elements," a statement released by the group says.

"Around two-thirds of the civilian population of the Vanni region have been forced out of their homes,” the report said.

The human rights group says that unless food is distributed by aid agencies - rather than the government - "there is no way of establishing if the aid is reaching those most in need".

The Sri Lankan government responded by accusing Amnesty of publishing "outright falsehood" and charged that it was trying to show the government in an unfavourable light.

Amnesty’s account is " littered with misleading innuendo compounded by outright falsehood," the government says.

"It becomes clear that the intent of the report is to present a skewed picture unfavourable to the lawfully elected and popularly mandated government of Sri Lanka."

The government says the Amnesty report "is unfortunately yet another attempt to distort the factual situation pertaining to the conditions in which civilians in the north of Sri Lanka find themselves at present".

In September the government ordered all aid agencies to leave LTTE-controlled areas, saying that it could no longer guarantee the safety of aid workers in the area.

Since then the government has sent in food convoys to the region and the UN has been allowed to send some convoys. It argues that the United Nations believes that food supplies to the north are "satisfactory".

Among its criticisms of Amnesty, the government says its figure of 300,000 displaced people is an exaggeration and international monitoring of the situation in the north comes from international personnel who have travelled on the food convoys.

Amnesty told the BBC that it stands by its report.

Sam Zarifi, Amnesty's Asia Pacific Director, said in reply that: "The government seems to be quibbling over some of the numbers used in the report."

He told the BBC News website that the number of people at risk in the north was "staggering".

On the disputed issue of how much food is getting to the displaced, Mr Zarifi said "a quick needs assessment by international neutral monitors will establish the accuracy of the government's statements".

"We completely stand by our report," Mr Zarifi said.

"The government seems to be of the opinion that our criticisms of the Tamil Tigers are fair, but our criticisms of the government betray a bias in favour of the Tigers."

The Liberation Tigers of Tamil Eelam (LTTE) continue to be an extremely potent, most lethal and well-organised terrorist force in Sri Lanka and has strong connections in Tamil Nadu and certain pockets of southern India, a tribunal said.

The tribunal, set up under the Unlawful Activities (Prevention) Act, was upholding the ban imposed on the outfit by the Centre on May 14, 2008.

Justice Vikramajit Sen of the Delhi High Court, who was on the tribunal, agreed with the Centre’s submissions that “the LTTE continues to use Tamil Nadu as the base for carrying out smuggling of essential items like petrol and diesel, besides drugs, to Sri Lanka.”

The Centre was represented by Additional Solicitor-General P.P. Malhotra, and Tamil Nadu by counsel S. Thananjayan. The LTTE was not represented by counsel.

It was submitted that Kalpakkam and Kudankulam, where nuclear plants are in existence, were proximate to LTTE bases in Sri Lanka. “The Government of India is apprehensive that unless the ban on the LTTE continues, acts of aggression on Indian soil are likely to occur.”

The judge also noted that the LTTE leaders had been cynical of India’s policy on their organisation and action of the state machinery in curbing its activities. Further, according to the submissions, enquiries on the activities of LTTE cadres/dropouts who had recently been traced in Tamil Nadu suggested that they would ultimately be utilised by the outfit for unlawful activities.

The tribunal said stress was laid on the fact that V. Pirapaharan, leader of the LTTE, and his intelligence chief Pottu Amman, wanted in the Rajiv Gandhi assassination case, were still absconding and declared proclaimed offenders.

The tribunal took into consideration the submission that “the LTTE will continue to remain a strong terrorist movement and stimulate the secessionist sentiments to enhance its support base in Tamil Nadu as long as Sri Lanka continues to remain in a state of ethnic strife torn by the demand for Tamil Eelam which finds a strong echo in Tamil Nadu due to the linguistic, cultural, ethnic and historical affinity between the Sri Lankan Tamils and the Indian Tamils in Sri Lanka.”

The judge said: “Each of the submissions is fortified by instances and documents. Examples have also been given of the cases which were registered earlier and are still alive, and in many cases some of the LTTE cadres and members of the Tamilar Pasarai, the Tamil National Retrieval Troops and the Tamil Nadu Liberation Army, who are accused in these cases, are at large and efforts are on to secure them.”

“In the absence of any representation from the LTTE, the entire material placed by the Central government as well as the State government including deposition of their witnesses remains un-rebutted and is taken as having been proved.”

The LTTE was first banned in India following the assassination of Rajiv Gandhi.

With the Sri Lankan army closing in on Kilinochchi, the Liberation Tigers of Tamil Eelam headquarters, army officers are confident of decisive victory in the civil war. But LTTE political chief B. Nadesan does not agree. Recently, the Sri Lankan government dismissed Nadesan's statement that the LTTE "had always wanted ceasefire" and was "fighting a defensive war" as a trap and demanded that the Tigers lay down their weapons before coming forward for any talks.

In an email interview with THE WEEK from Kilinochchi, Nadesan says the LTTE is far from being defeated. Excerpts:

How is the situation in the Tamil Eelam?
The Sri Lankan government does not allow journalists-local or international-and human rights activists into our area. As a result, the massacre of Tamils by the Sri Lankan military does not reach the outside world. Aerial bombing and artillery shelling on Tamil civilians are continually taking place. Our homeland has been subjected to a severe economic blockade for many years. The current military action has displaced Tamils and many are living in forests.

The government is intent on brutally oppressing a group of people who are waging a struggle for their rights. Sadly, the media does not bring this out. I view this as a great human tragedy of the 21st century. The government and military chiefs insist on a military solution while we have been saying that a solution can be reached only through ceasefire and peace talks. The government unilaterally pulled out of the ceasefire. The world must understand this reality and recognise our struggle.

Is the 30-year-old struggle weakening?
This is a view propagated by the Sri Lankan government and military. They have the habit of making such victory declarations. During all these years, every government that came to power claimed that it was going to defeat the LTTE, but ended up facing humiliating defeats at our hands. During their Riviresa operation in 1995 and the Jeyasikuru operation in 1998 they said that 90 per cent of the LTTE strength had been wiped out. In reality, after Riviresa, we defeated the Mullaithivu military camp in a conventional war with the support of our people; and a few days after Jeyasikuru, we won back the land they took 18 months to capture.

Even now, they say that we have been weakened. The Sri Lankan military is facing heavy losses at the forward defence lines. To make up for the losses, they are bringing in men from other districts to areas surrounding Kilinochchi. Many army men are deserting their camps. A new military division, 61st Brigade, is being created with the captured deserters.

Responding to concerns raised by Prime Minister Manmohan Singh, the Sri Lankan government said it was attacking extremists, not innocent Tamils.
This is not true. Children and old people have been killed and injured in large numbers by aerial bombings and artillery shelling. The economic blockade has left our people without adequate food and medicine. We have sent news of attacks on civilians to the media with ample evidence. The expatriate representatives of the international agencies in our areas know about this situation. Now, even they have been expelled from our area by the government. This shows that the government has taken steps to block news of attacks on innocent people reaching the outside world.

How do you feel about the support rendered by the people, including the film fraternity, in Tamil Nadu?
The genocide in Tamil Eelam through indiscriminate attacks and the eviction of Tamils from their homes are the reasons for the rising support in Tamil Nadu. Whenever the people of Tamil Eelam faced great miseries at the hands of the Sri Lankan military, people of Tamil Nadu have expressed their support, beyond their political differences.

Has this increased the confidence in your struggle?
The oppressive action of the government has enraged not only the people of Tamil Nadu but also the Tamil diaspora. Sinhala political leaders, military chiefs and even Buddhist monks are emphasising a military solution. If the government continues to believe that an ethnic issue in a country can be solved by a military solution alone, it will only lead to the oppressed ethnic people achieving their aspirations with help from other countries.

The chief minister of Tamil Nadu says it is fratricidal war that has weakened the Tamil Eelam struggle. Do you agree?
He is saying this with good intentions. We, too, wish to bring Tamils together and wage our struggle as a strong force. Sadly, one or two Tamils have become traitors for trivial perks offered by the Lankan government.

Is it true that India is giving military aid to Sri Lanka?
The Sri Lankan government and military chiefs have openly claimed that the Indian government has been giving them military assistance. The Indian government is silent over this comment. This is indeed an issue that saddens the Tamils, people in Tamil Nadu, and Tamils all over the world.

What help do you expect from the Indian government?
It must stop all military assistance given to Sri Lanka, remove the ban on our movement and recognise our struggle. I like to point out that our movement and our people are true friends of India.

How do you react to comments by Sri Lankan army chief Sarath Fonseka about V. Pirapaharan's health? He said Pirapaharan would not live long.
Our leader is in excellent health and is leading the current war. This comment is an expression of the hatred he has for the Tamil people and our movement. Recently, he said the island belongs to Sinhala Buddhists. This shows that he is an irresponsible and immature military chief.

Despite a poor human rights record and even as Sri Lanka spurned advice from international monetary agencies and continued with its policy borrowing heavily to fund a dragging military offensive, Asian Development Bank announced USD 630 million to the island over the next three years.

ADB is to provide USD 630 million to Sri Lanka for commercial projects and supplemented by some direct support to the private sector for the period from 2009 to 2011 with USD 210 million per year, the state newspaper Daily News reported.

The package was announced by ADB Country Director Richard Vokes at the 18th Business for Peace Forum held at JAIC Hilton Colombo on Friday, November 20.

According to Daily News, Vokes told his audience that the ADB’s partnership approach with Sri Lanka is based on President Mahinda Rajapakse’s Mahinda Chintana, which rejects existence of a traditional Tamil Homeland in the island.

According to ADB’s Strength Weaknesses Opportunities and Threat (SWOT) analysis of Sri Lanka, its proximity to India and major shipping routes were identified as strengths whilst, high fiscal deficit, large infrastructure deficit, high regional inequality in growth of gross domestic production, relatively weak structure of public finance management, inefficient traditional agricultural systems, and complicated government structure were identified as weaknesses.

Some of the threats to the country included the conflict, difficulties in developing consensus for political reforms due to the complex political economy and vested intentions, pressure from high and volatile commodity prices and inflation, according to ADB.

Sri Lanka has appealed to "friendly countries" to buy tea to help the country weather the global financial crisis, AFP quoted officials as saying. Foreign Minister Rohitha Bogollagama and senior officials of the tea board on Friday met ambassadors and envoys of main tea-buying countries to urge their support.

The Sunday Times newspaper reports that the decline in tea prices (which have almost halved in the past two months), and the large volume of unsold tea have caused a cash-flow crisis throughout the supply chain. However, last week demand had improved at last week’s Colombo auctions, reports said.

Last year Sri Lanka, one of the world's top black tea producers, earned a record $1.02 billion from tea, the third-highest foreign exchange earner after garments and remittances, Reuters reported.

Sri Lanka had enjoyed high demand, earning $1bn in the first ten months of this year. But the global financial crisis has reduced demand in key export markets.

Russia and former Soviet republics are the largest markets for Sri Lankan tea, accounting for nearly a fifth of the total tea exports, followed by the Middle East and North Africa.

LBO quoted analysts as saying the downward trend in oil prices might reduce the buying power of big buyers like the Middle East and Russia, though the approaching winter could help prop up the tea market.

As part of shoring up the industry against falling demand, earlier this month the Sri Lanka Tea Board purchased almost 1 million kg of tea at a value of Rs.230 million, the Sunday Times reported.

The intervention came after Sri Lankan government told the Tea Board to buy stocks to inject cash into the tea sector and stabilize it after nearly 60% of the tea at the Colombo Auctions remained unsold.

Colombo, which conducts the world's biggest tea auctions, saw prices hit 4.26 dollars a kilogramme in August before sliding to 2.19 dollars a kilogramme by the end of October, tea board figures showed.

However, while the government’s intervention helped the industry, traders say plans must now be formulated to dispose of these tea stocks – without putting downward pressure on prices.

"Buyers are carrying stocks of tea at prices well above the current market, on which interest is fast accruing at phenomenal rates," the Colombo Tea Traders’ Association (CTTA) said.

Meanwhile, the Private Tea Factory Owners Association last week thanked President Mahinda Rajapakse for his government’s intervention. “The tea industry which is dominated by the rural tea small holder sector benefitted by the timely state intervention under the direction of President Mahinda Rajapaksa,” the chairman of the Private Tea Factory Owners Association, Anil Perera, said in a statement.

On Friday Ambassadors and envoys Egypt, Iran, Russia, Saudi Arabia, Iraq, Kuwait and Qatar were briefed about Sri Lanka's tea woes. A Palestinian representative was also present.

"Sri Lanka is seeking the support of friendly countries who are principal buyers of Ceylon tea to remain active in the tea market to promote tea exports and to maintain price stability," the foreign ministry said Saturday.

Russia and former Soviet republics are the largest markets for Sri Lankan tea, accounting for nearly a fifth of the total tea exports, followed by the Middle East and North Africa.

LBO quoted analysts as saying the downward trend in oil prices might reduce the buying power of big buyers like the Middle East and Russia, though the approaching winter could help prop up the tea market.

The Sri Lankan government has spoken of trying to arrange some kind of barter deal with major buying countries but the CTTA warned that it was an outdated concept.

"The avenue of barter trade between friendly countries is not available any more," the CTTA said, in reference to the liberalization of the market in keeping with ‘free trade’ principles, which ended such arrangements.

Sri Lanka’s tea pickers, who are iconic symbols for the island’s tourist trade, earn less than $2 a day and live in desperately impoverished conditions. They are mainly Upcountry Tamils.

Industry experts predicted the loss of European Union (EU) trade concessions for Sri Lankan textile exports would lead to massive closure of apparel manufacturing units and loss of at least 100,000 jobs in the Indian Ocean Island.

The loss of trade concession enjoyed by the Sri Lankan textile industry through Europe’s GSP Plus (Generalised System of Preferences) combined with the downturn in global economic conditions would bring a lot of harm to the country’s economy and exports of apparel in particular, according to industry experts.

The EU recently warned it may not renew the GSP Plus trade scheme after it expires in December because of continuing human rights abuses stemming from Sri Lanka's civil war and asked to send an investigating team to ensure Sri Lanka was complying with human rights standards.

Sri Lanka refused to allow a EU investigation into rights abuses calling it an "infringement of Sri Lanka's sovereignty, self respect and dignity', and announced plans to support the garment industry financially if existing trade concessions are not renewed by EU.

Unveiling his latest budget proposals, President Mahinda Rajapakse reiterated his government’s stand on the issue and said he was not ready to bow to foreign financial pressure.

”The European Union has adopted a new trend, wherein conditions are being attached to concessions granted by them such as GSP plus. It is unfair to engage in international trade and investment within a framework through which political objectives are tried to be achieved,” the President said, referring to a concessionary garment export programme from the EU.

According industry experts, the government move would put the women working in garment units at a big disadvantage as they would be the first to feel the heat of a drop in garment exports.

The All Party Representatives Committee (APRC) is a farce of the Sri Lanka government. It was always used to impress upon India and the International Community. The basic premise of the APRC not to go beyond unitary constitution of Sri Lanka, will not bring in any meaningful result. India and the IC know it well. Yet, if they continue to tolerate the farce, they will only be abetting the genocidal programme of Colombo, says Suresh Premachandran of the Tamil National Alliance (TNA).

In a wide-ranging interview with TamilNet, Premachandran explaines his views on the deliberations by the so-called All Party Representatives Committee (APRC) on devolution proposals, he said the committee was used by the Sri Lankan government to fool India and the International Community.

Full text of the interview follows:

TamilNet: What is your overall assessment of the discourse of the All Party Representatives Committee?

Suresh Premachandran: In the beginning there was an Experts Panel formed to support the APRC, which comprised several retired public officers, senior lawyers and academics. Even as the APRC kept delaying its deliberations, 11 members (6 Sinhalese, 4 Tamils and 1 Muslim)—a majority of the 17-member Experts Panel—came out with a document that was presented to the Sri Lankan President. This document spoke of some sort of federal system, devolution of powers and various other things. However, even before it was officially submitted to the President, this proposal was leaked to foreign media like The Hindu, published from Chennai. The infuriated President immediately scrapped the proposals and asked the APRC to come up with its own report. The APRC’s deliberations never came to an end. Finally, the APRC became a farce as it was used to suit President Mahinda Rajapaksa’s convenience. Every time he had to go to India, or he had to meet the Indian Prime Minister or prior to any visit by an Indian minister, Mr. Rajapaksa made it a point to refer to the APRC. Especially with respect to India, the APRC became an easy excuse to cite—the committee was always supposed to come up with a solution within two or four months time and so on.

Even when it seemed as though the APRC was ready to finalise its work before the Eastern Provincial Elections, Mr. Rajapaksa gave the 13th Amendment to the APRC and asked them to endorse it.

TamilNet: Was there any deliberation on the 13th Amendment in the APRC?

Premachandran: The parties, including the Muslim and Up-Country Tamils parties who were in the ruling UPFA fold, were asked to endorse the 13th Amendment only as a "first step". They were told by the President that 13th Amendment could be implemented as an immediate remedy and the deliberations would continue towards a better solution. With this promise, they were asked to extend their support and they did so. But, it became a trap. Now, this endorsement is cited out of context, as an endorsement by the parties, to be a basis for the solution. In fact, the APRC never deliberated on the 13th Amendment either as a basis for an interim or permanent solution. Mr. Rajapaksa had only asked the APRC that he wanted to implement the Amendment and asked signatures from these parties as an endorsement for his goodwill.

In reality, the APRC was used for Indian and International consumption. It was used to showcase that there was a discussion on the proposals, that there was progress towards a political solution and so on.

TamilNet: How do you view the composition of the APRC?

Premachandran: If you look at who constituted the APRC in the beginning, it was the partners of the government: JVP, JHU, SLMC and the CWC. Of course, the UNP was brought in later. But the UNP left when it became evident that the whole APRC exercise was viewed as a delaying tactic. The JVP and the JHU too left the APRC protesting the discussions on devolution. The TNA was not invited by the President.

Now, there is no point in referring to it as an All Party Representatives Committee as there is no participation by the main opposition UNP, and the TNA, not to mention the JVP. In fact, only last week in Parliament, the Chairman of the APRC, Professor Tissa Vitarana requested the UNP, JVP and the TNA to participate. Only the SLFP and its minority alliance partners are in the APRC. They only represent a minor portion of the views.

TamilNet: Does the International Community continue to place hope on the APRC?

Premachandran: There have been statements from the U.S. Ambassador Robert Blake that they were expecting the APRC to put forward proposals. There was a recent newspaper article where he expressed hope that the committee would come up with a solution on the basis of the Indo-Lanka accord. This clearly shows that the Sri Lankan Government has created a myth that this APRC would deliver a “substantial solution.”

Moreover, hardliner parties like the JVP and the JHU will oppose any proposal based on the 13th Amendment. Also, the APRC has been instructed by the Sri Lankan President to work out a solution within the framework of the Unitary Constitution. He has categorically told them not to go beyond that. The point I want to make is: there is no devolution possible at all within the Sri Lankan Unitary Constitution.

TamilNet: Do you view that devolution is possible within the Unitary Constitution of Sri Lanka?

Premachandran: Devolution is not possible if you can't go beyond the Unitary Constitution. Even the 13th Amendment was passed only after obtaining consent from a majority of Supreme Court judges who guaranteed that it would not affect the Unitary Constitution.

There can't be devolution within the Sri Lankan Unitary Constitution. There can only be a decentralisation of power. If we talk about decentralisation, the Central Government can, at any point of time and with a simple majority, take back whatever powers were decentralised.

A recent example to this is how the Government passed a Bill on the 21st of October claiming that all the roads now belong to the Central Government. Earlier, the National Highways belonged to the Central Government and the rest of the roads belonged to the provincial and local governments. This was simply taken back. In a similar manner, the agrarian services and the transport were taken back earlier. Even in future, they can take back any powers if they want to.

But, if you are having a devolution, that is some sort of a sovereignty over the de-centralisation. You can make laws and implement it in a proper manner. This is not possible in decentralisation within the unitary constitution.

Further, Article 76 of the Sri Lankan Constitution clearly states that the Parliament is the only Legislative Assembly and that it cannot devolve legislative power even to a subordinate body. This means that any provincial council does not have the power to make any statutes, they don't have any power to make laws. Even if they have to make any statues or laws, they have to be ratified by the Central Government. It is therefore not possible to have any meaningful devolution of power, whether it is based on the 13th Amendment or anything else contained in the Unitary Constitution of Sri Lanka.

At one time, former President Chandrika Kumaratunga and Prof. G. L. Peiris have also gone on record saying that devolution is not possible within the Unitary Constitution.

Therefore, it is clear that the APRC is only for “International consumption" and nothing else. Or, it is a tactic to buy time to continue waging the war.

They say that the APRC had met 82 times. For more than six months, Prof. Vitarana is saying that they have completed 90% of the deliberations. Now, he is saying that proposal would be tabled only after the war is concluded. What we can deduce from the discourse is that the APRC is a farce to buy time and to hoodwink the International Community with a myth based on wrong information. They will never come up with a meaningful solution.

TamilNet: Don't you think that the diplomats are not aware of the Sri Lankan Government’s alleged hidden motive behind the APRC?

Premachandran: Of course, in the real sense they know it very well. The EU and various Ambassadors and the concerned diplomats here in Sri Lanka know all too well that this APRC will not deliver anything. But, somehow they are made to feel that this is something they can use to keep up pressure on the Sri Lankan Government by expressing such hopes [of a solution]. Again, there is clear-cut framework given by the Sri Lankan President to the APRC: "Look, you have to come up with a proposal within a Unitary Constitution." How is this possible? There is no difference between the 13th Amendment and this stand. The International Community knows very well that they [the Sri Lankan state] will not go beyond the Unitary Constitution. The IC therefore attempts to create something like the 13th Amendment, with a different name, and push it on to the people in a bid to satisfy them. As I view it, this is not a healthy approach for conflict-resolution.

TamilNet: Why do you think the government avoided the TNA's participation in the APRC? Was there any invitation from the President to the TNA to join the deliberations?

Premachandran: This is a policy decision taken by the President. Two years back, I witnessed Mr. Sampanthan asking him about the participation of the TNA. Mr. Rajapaksa replied saying that they wanted to achieve a Sinhala consensus first before inviting the TNA. But, in practice, other parties representing Up-Country Tamils and Muslims, who were in the UPFA alliance were included in the APRC, with no regard to achieving "Sinhala consensus" first. They have invited us only now for the first time. Moreover, even that request to join has come from Prof. Tissa Vitarana and not from the President. It was a call he made in the Parliament and no official invitation was extended to us. The real issue is that we will insist upon a federal structure as the minimum requisite and they are not prepared to face it. They think there would be nothing left to bargain with the LTTE if they include us in their deliberations. That is the ground reality.

The TNA has openly and publicly reiterated its position on the APRC several times—we view it as a time-buying tactic to conduct the war and as an eyewash arrangement aimed at India and the International Community. It is not an honest attempt in solving the conflict.

TamilNet: What do you want to say to Indian policy makers at this juncture?

Premachandran: Not only the Government of India, but also political parties in Tamil Nadu should understand two facts:

Firstly, they should realise that the 13th Amendment, which arrived through the Indo-Lanka accord was only a testing ground to see whether it is possible to implement devolution within the Unitary Constitution of Sri Lanka. It has been very clearly proved that it is not possible to have any sort of meaningful devolution within the unitary constitution. It will never happen. New Delhi should therefore realise that it is meaningless to talk about the 13th Amendment or 13th Amendment plus plus.

Secondly, New Delhi needs to understand the mindset of the Sinhala polity. The Sinhala polity feels that the Sinhalese are the sons of the soil, and the rest whether Tamils or Muslims are aliens—Tamils having land in Tamil Nadu should seek their rights there, and Muslims having their land in Saudi Arabia, can go back there. This is not a new mindset; this has prevailed for 103 years, from the times of Anagarika Dharmapala onwards.

As a revivalist under the British colonialists, he not only fought against the Christian missionaries, he also said that Tamils and Malayalis were aliens, that they don't belong to this country, that they had to go back. All the subsequent Sinhala leaders have followed in his footsteps, be it S.W.R.D Bandranaike, D.S. Senanayake, J. R. Jayawardene and the rest. Before coming to power, D. S. Senanayake, the first prime minister of post-colonial Ceylon, said that he would safeguard the status quo between the Tamils and Sinhalese. But when he came to power, he disenfranchised one million Upcountry Tamils, as he viewed their existence as a threat to the Sinhalese people. They were deprived of their civic and voting rights.

The Sinhalese leaders who emerged in the latter part of the British colonisation and in the post-colonial era have been thinking that Sinhala nationalism could flourish only with the destruction of Tamils.

Even before independence, J.R. Jayewardene introduced a resolution in the State Council declaring that the Sinhala language alone would replace English as the official languge. He argued that there were 30 million Tamils across the Palk Strait and that the Tamils possessed a cultured literature, language and civilization. He argued that if both the languages become official languages in Ceylon, the Sinhala language would be destroyed. They adopted the agenda that Sinhala nationalism was to survive on the destruction of Tamil.

Instead of taking a line allowing both Sinhala nationalism and Tamil nationalism to progress positively with co-existence, they focused on the destruction of Tamil. This is what we rightfully identify as Sinhala chauvinism. Even Chandrika Kumaratunga, while addressing a South African television sometime in the 1990s as the Sri Lankan President said that Blacks in South Africa were entitled to fight for their rights because they were the sons of the soil whereas Tamils did not belong to the country and hence they cannot fight for their rights in Sri Lanka. Another President, D.B. Wijetunge compared the Sinhala 'majority race' as a tree and the Tamils and other communities as vines that can get entangled in it and grow. Sri Lanka Army Commander Sarath Fonseka in a recent interview to a Canadian paper has reiterated the same view.

The root-cause of the problem is this Sinhala mindset. Only from this mindset, the Sinhala Only Act springs out, oppressive standardisation, colonisation and so on are born out of it. For all these years, we have been talking about the side effects of this mindset, such as efforts to institutionalise Tamil also as an official language or to stop the colonisation. These are side-roots stemming from the main taproot. There is no sign of change in this 100-year-old mindset. We are witnessing this in every session of the Parliament. As long as this mindset prevails, there will be no federalism, no devolution and no solution at all.

Until New Delhi and the International Community really understand the problems of this mindset, they will continue to support the genocidal state of Sri Lanka that annihilates Tamils.

At a time of global financial crisis, Sri Lanka’s reliance on borrowing combined with plunging  foreign exchange reserves, spiraling inflation and poor fiscal policies are making Sri Lanka the most vulnerable in the region, according to international monetary experts.

In its annual report, the International Monetary Fund (IMF) directors expressed their concern on the risks of public debt distress arising from the increasing reliance on dollar-denominated, short-term commercial debt.

That risk has grown more acute since the dollar has strengthened against other currencies in the last month.  

IMF said the global financial crisis, which has drastically cut the availability of credit, had made "Sri Lanka's external accounts ...vulnerable to a reduction in international investor risk appetite."

Since October 2007, Sri Lanka has increasingly sought high-interest foreign commercial borrowings via syndicated loans and a sovereign bond issues to avoid local commercial loans that attract a rate of over 20 percent.

Rupee depreciation

IMF also said the real exchange rate of the rupee has been overvalued and the central bank's protection of it could create the risk of attracting short-term speculation and volatility.

Since mid-September, the Central Bank of Sri Lanka exhausted $ 600 million, 25 percent of its foreign reserve, to protect the local currency before it decided to allow 'limited depreciation' of the rupee.

After withdrawal of the 6-week long policy of defending the currency at 108 per dollar costing 100 million US dollars per week, the currency fell to 110 per dollar by the end of the week, its lowest level since late last year.

Bankers and currency dealers said they saw more rupee weakness and a foreign banker in Colombo said on condition of anonymity said:  “I expect we can see some more of the same, with depreciation of the rupee,"

FX reserves

In addition to the Central Bank’s attempt to peg the Sri Lankan rupees against US Dollars, Citigroup Global Markets Asia in a market commentary attributed foreigners exiting Sri Lanka T-bill and bond market for driving the decline in FX reserves.

Citigroup estimated foreign holdings to have fallen from $670 million in early October to around $380 million in bonds and bills combined by end of October.

"We also expect the FX reserves to continue to come under pressure - we think there is still more near-term pressure of foreigners liquidating their LKR bonds and bills, especially if LKR is at increased risk, thus, presenting possibly another $380m possible outflow (assuming foreign holdings could go to zero).

"How externally vulnerable is Sri Lanka? We think they are very vulnerable though how close is a bit unclear. We have repeatedly argued that Sri Lanka is the most extremely vulnerable country in the region, as highlighted in our recent report….” added Citigroup.

External borrowing

Analysts estimate the government will need external financing of between $4-$6 billion in 2009 to cover the budget deficit, short-term debt, and debt amortisation but point out the depreciating Rupee, record inflation and the global finacial downturn make it hard to raise debt.

James McCormack, Fitch Ratings' head for Asia-Pacific sovereign ratings  raised concerns about the instability of the exchange rate and said any sizeable depreciation of the rupee would impact the government's repayment capacity," said.

In addition Sri Lanka’s high inflation also had a negative impact on its capacity to borrow.

Eurasia Group analyst Maria Kuusisto in a report issued earlier this month said, with the inflation hitting 23.4 percent in October Sri Lanka would have to offer "painfully high interest rates" to raise debt.

"This would add expensive debt to Sri Lanka's already sizable foreign borrowing," she wrote.

Rating agencies blame increased government expenditure as the main reason for high inflation.

Sri Lanka sold its first sovereign bond for $500 million in October last year and on October 7 this year announced plans for two syndicated loans this year for up to $300 million each.

IMF is of the view that  the global crisis had drastically cut credit availability, making Sri Lanka's external account "vulnerable to a reduction in international investor risk appetite."

Citigroup also shared this view in its commentary saying “the recent announcement seeking proposals for a $ 300m syndicated loan looks very difficult under the current environment”.

Economic growth

In addition to increasein cost of borrowing SDri Lanka is also faced with a steep drop in revenues with its key revenue making industries facing the impact of global credit crisis.

With much of the developed world considered by economists to be in recession, analysts said Sri Lanka's exports growth will weaken this year, such as in its garment and tea sectors, the country's biggest and third-biggest export earners.

Sri Lanka’s $27 billion economy only grew 6.8 percent last year, slowing down from a two-decade high of 7.7 percent in 2006, and the IMF said it expects economic growth to slow to 6.1 percent in 2008 and drop even further to 5.8 percent in 2009.

For the past few months Sri Lankan troops have been trying to advance on three fronts in Vanni. Task Force 1, along the A-32 highway, towards Pooneryn, 57 Division towards Kilinochchi through Akkaraayan in south west of the city and towards Mullaitheevu through Naayaru in the south west region of Vanni.

As per latest reports, Task Force 1 has managed to reach Thikkuvil on the A-32 highway and is approximately 7 kilometers away from reaching Pooneryn, which is seen as a strategic milestone as it enables Sri Lankan security forces to open a land route to Jaffna peninsula.

The 57 Division in recent days has reached Akkaraayan junction following weeks of intense fighting surrounding the Akkaraayankulam bund.

The 58 Division is at Kokkaavil located west of the A-9 highway and the newly inducted Task Force 3 is west of Maankulam.

The LTTE continues to hold the A-9 highway from Omanthai to Kilinochchi and is offering stiff resistance to the Sri Lankan soldiers attempting to advance in multiple fronts.

UNP parliamentarian Ravi Karunanayake ridiculed the war expenditure of the Rajapkse administration saying that the government has spent over forty million rupees to kill one member of the LTTE since 2004.

Sri Lanka Army (SLA) commander, Lt Gen Sarath Fonseka announced on Monday that at least 13,000 Tamil Tigers were killed by the security forces.

Quoting government estimates, Karunanayake said 583 billion rupees were spent for the war since 02 April 2004.

If the Sri Lankan military chief's estimates are to be trusted, Karunananayake said, 42 million rupees were spent to kill one Tamil Tiger.

Shops and commercial establishments in Tamil Nadu shut down and the state's roads wore a deserted look as a result of the traders' bandh (shut down) Friday on the Eelam Tamils issue. According to reports in the Indian media, the bandh was total all over the state as over 25 lakh traders, owing allegiance to 5,500 trade unions, took part in the peaceful agitation to show their solidarity with the Eelam Tamils.

All political parties in Tamil Nadu had extended their support to this bandh which took place from six in the morning to six in the evening in Tamil Nadu and Puduchery (Puthuchcheari). The shutdown of the private sector has drawn more participation than the government organised human-chain, observers said.

The organisors of the shutdown said the state-wide success of the bandh, even in rural areas, reflected that sentiments among Tamil Nadu public for Eelam Tamils running high, independent of state orchestration.

T. Vellaiyan, President of the Tamil Nadu Traders Union that called for the bandh, demanded an immediate halt to the genocide of Tamils in the war-ravaged island.

The bandh had a two point agenda: to condemn the Sri Lankan military's genocide on Tamils, and to express solidarity with the Eelam Tamils who had lost their livelihood in the island.

The bandh call had a rousing reception from traders of all strata of society: roadside tea-shops and grocery stores never opened, so did some of the largest cloth stores and hotels.

Asia's largest perishable goods market at Koyambedu in Chennai, which has roughly about 2500 wholesale shops, was completely shut down from 12 midnight Friday. Consequently, about half a million fruit/vegetable shops which get their supplies from here, were also shut down. This market employs about 10,000 workers and 500 drivers.

The traders' bandh affected all cities in Tamil Nadu. The public was affected because it was impossible to locate any store that had not downed its shutters. It was difficult to even buy a packet of milk, because the distribution was wrapped up by six in the morning.

Scheduled to be held originally on 17 October, the bandh was postponed to 31 October on account of the decision taken at the All Party Meeting organized by the Government of Tamil Nadu. Over 5.500 trade unions had come together to organize this bandh – they had distributed pamphlets highlighting the sufferings of the Eelam Tamils to all affiliated traders.

Moreover, traders from other Indian states, who run some of the most successful businesses in Chennai also extended their support to the bandh and cooperated by not operating Friday.

Mr. Vellaiyan was arrested by the Tamil Nadu Police for alleged 'enforcement' of the boycott following 'politically motivated complaints', the organisers said and added that they promptly secured his release.

News papers and television channels in India labelled this bandh a hundred percent success.

The Indian government may be bereft of all guts to do anything in Sri Lanka. But at least it can render a great service by not talking about the 13th amendment as a basis to resolve the crisis. What is more dangerous than India abetting a war against Eelam Tamils by providing arms, armed personnel and intelligence to Colombo is the political sabotage of thrusting the rotten 13th amendment upon the struggling people to muffle their voice. India should rather acknowledge the decades-old Tamil voice for self-determination as a nation, to base exploration of fresh models, writes Opinion Columnist.

The fact that India, especially its Congress government was instrumental to the enactment of the 13th Amendment in the constitution of Sri Lanka doesn’t mean that India should adamantly stick to it even after seeing its failure for two decades. Individuals may care for false prestige, but not a great nation like India.

The provincial council solution facilitated by the 13th amendment in 1987, failed at the outset primarily due to its incompatibility in concept and structure to match the acuteness of the ethnic divide in Sri Lanka, than due to the opposition to it by the LTTE.

This should have become clear without any iota of doubt to India at that time itself as the Indian sponsored Chief Minister Varatharaja Perumal himself became so frustrated of the working of the solution despite the presence of the IPKF, that he decided to declare an independent Tamil country on the day he quitted. He must have received tacit assent from India to take that step, but well, there was a Janata government in power in Delhi at that time which was able to see the realities.

A fundamental, conceptual conspiracy in the 13th amendment was that it provided devolution for eight provincial councils when the question was between two ethnicities. Thus the amendment was designed to nullify the importance of regional identity by equating those who wanted it and those who never asked for it. A reputed Sinhala scholar recently pointed out at a workshop in Oslo how the model failed to arouse enthusiasm in the Sinhala provinces.

The 13th amendment was far too short in addressing the basic requirements of Tamils: recognition of their ethnic identity as a nation of self-determination which was essential for their emotional security in the context of the inherent nature of Sinhala nationalism in Sri Lanka, physical security in the context of ethnically charged and inflated armed forces of the state, integrity of land in the background of state sponsored encroachments which started even before independence and structural provisions to implement development in all sectors in the way and extent they wish without hindrance.

The advocates of the 13th amendment argue that all basic Tamil aspirations could be found in it in an implied sense. But it was a folly or perhaps a deliberate sabotage that India and Sri Lanka thought of stuffing and stressing a unitary constitution with a phenomenon that needs at least a confederation-constitution to handle.

Eelam Tamils have to be ever thankful to Mr. Mahinda Rajapaksa and the Chief Justice Mr. Sarath Silva, for aptly demonstrating to India the void of 13th Amendment by a court ruling dividing the Northern and Eastern Provinces united by the 13th Amendment.

It would have convinced even a child how so simple it is to deny the Tamils their geographical integrity. But however explicit the Sri Lankan President and Chief Justice were, they failed to convince the Indian government and some sections in Tamil Nadu for they still harp on the 13th Amendment.

When a political effort fails it is statesmanship to find improved remedies. But, what happened in the case of Eelam Tamils was the leadership in India and Sri Lanka decided on a retrogressive tactic to penalize the already suffering people by going back to zero.

Mahinda was talking of Panchayat system (local government) solution, started an aggressive war abetted by India and the West, divided North and East, truncated the 13th amendment, terrorized the Tamil population and effectively used the JVP and JHU to resist to any meaningful solution.

As the saying goes in Tamil, it was a tactic of making people say ‘let there be no alms but hold the dog’ (Pichchai vea’ndaam, naayaip pidi), so that they would agree to anything the Establishment concedes. This is a typical bureaucratic approach for we don’t have statesmen anymore in our region. They are all executives and bureaucrats of a larger system. If that says ‘terrorism’ all of them will endorse it blindfold.

It is time that the Tamils of Eelam and Tamil Nadu should tell India and the International community clearly and loudly what they have in their mind and what they want, without mincing words. It is not a matter confined only to the LTTE. Even those Tamil groups now in the Mahinda camp will need the security of an irrefutable constitutional platform for all their dealings. Otherwise they will be liquidated once their services are not required.

Other than the intertwining of Eelam Tamil nationalism with the LTTE, implicated in Rajiv assassination, and an opinion that Congress and its officials are biased due to their earlier failure in SriLanka arising from Tamil resisstance, there are many other facts or myths circulate about India’s attitude and fears towards Eelam Tamil self-determination:

'Eelam may create inspirations in Tamil Nadu and elsewhere in India. Therefore, what the maximum the Eelam Tamils can get should be less than what the Indian states have.'

'Sri Lanka may seek the help of ‘others’ who will threaten Indian security.'

'Turmoil and security threat possible due to a backlash of the Sinhalese in Sri Lanka in the event of recognizing Tamil rights.'

Often many western diplomats have hinted that it is India that is an obstacle for Eelam Tamils getting anything politically substantial.

There is a view that as events in Sri Lanka move in a way not acceptable to them, India and her strategic partners will allow only further chaos and will think of only incomplete solutions in order to facilitate space for their interests. The attitude is ‘if you don’t listen to us, go to hell; let’s grab what’s possible’.

Some political analysts also have cited a line of thinking that the easiest way for India is to allow the elimination of top LTTE leaders so that the crisis would die and no need to care what happens to the Tamils, as they can’t blackmail like the Sinhalese.

Well, now there is a situation that if India doesn’t see to it that Eelam Tamils get their autonomy or independence, she may face worse security threats.

The people’s awakening in Tamil Nadu is a serious matter. It is difficult to predict the form it may take. Besides, the behaviour of India in respect to Eelam Tamils will seriously erode the credibility of Indian establishment with its ethnicities, minorities and subalterns. They will not look at it as a lesson. Rather they will look at it as a challenge. While the Sinhalese continue with their blackmailing, the Eelam Tamils also will try to seek other avenues. Military defeat of the LTTE is not the end of the Tamil struggle.

Not that the Indian leaders don’t know that it was actually the Sinhalese polity and the average Sinhalese mentality that didn’t cooperate from the very beginning with India’s geopolitical and security concerns. Had there been an understanding and regional perception, they wouldn’t have contributed to the ethnic crisis attracting all hawks to poke their noses. Rather the Sinhalese leadership chose to exploit the Indian concerns for blackmailing India and to achieve their chauvinistic goals in Sri Lanka, which has now reached the stage of systematic genocide.

The exclusive Sinhalese polity will not stop until the Tamil identity is completely subordinated and Sinhalicised. The perception it has given to its people is that this is settling scores with a two and a half millennia old enemy. There is no immediate likelihood that the Sinhalese perception will change for pluralistic accommodation.

A concrete structural arrangement not less than a confederation, if not a separate country, can only prevent catastrophe in the island. That too will need international supervision and separation of the warring parties for some time, considering the deep divide the prolonged war has created. In extreme situations facilitation of demographic movement also may be needed.

If India can take a bold stand on this it won’t be difficult to convince its ‘strategic partners’. A noble mission will only enhance India’s prestige inside and outside and no more blackmailing.

Whether the present government at Delhi may able to carryout such a venture or not, at least it should not seal the fate of Eelam Tamils by instigating the zombie of 13th Amendment.

What Dr. Manmohan Singh should perform in Sri Lanka is a surgery, not abetting genocide.