April 2, 2011

With Tamil Tigers slain, booming Sri Lanka makes up for lost time

What to call the emerging Sri Lanka? The country seems like a construction zone, with ports, highways and airports sprouting and former rebel strongholds blossoming, writes Eric Ellis in Colombo.

SO TINY Sri Lanka has made it to today's Cricket World Cup final, to face mighty India in Mumbai in the first all-south Asian final.

With India emerging as an economic superpower and relations with Pakistan, also a semi-finalist, thawing, it's a symbolic triumph for this fast-rising region and for Sri Lanka, in particular, just two years after the end of its 25-year civil war with Tamil Tiger insurgents.

The talented team from Colombo may well start favourite to triumph over its behemoth of a neighbour, whose progression to the final has been far less emphatic.

So it's party time in Colombo, a city as buzzy as it has been for decades, where Sri Lankans are spending a delayed peace dividend.

During long years of siege, the island was abandoned by foreign investors and by locals, too, who sought their fortunes overseas.

Colombo became sleepy and dilapidated, a place that had seen its best days when London's Raj ruled here. The once grand banking halls of Fort, Colombo's financial district, were sad places, off limits to visitors who needed to pass airport-style security gantries to get in. They found a ghost town pock-marked by Tamil Tiger suicide bombers.

A pariah to Western investors, Colombo's best business friends became Iran, Libya and China.

Today's perkiness is also a long way from this same week four years ago when Ricky Ponting's Australia walloped Sri Lanka in the 2007 World Cup final in Barbados. Sri Lanka's President, Mahinda Rajapaksa, had journeyed to Bridgetown hopeful of victory, only to be embarrassed by a Tamil Tiger air raid on Colombo as the match got under way.

The raid was designed to humiliate the Rajapaksa regime, then a wobbly two years in power, and it did. I was in Colombo that night of high farce. The government cut Colombo's power supply to deny Tiger pilots visibility. But it made little difference, because Sri Lankans knew that the state utility has always been a boondoggle for fat-cat bureaucrats with snouts in the trough, so many people rely on diesel generators. No sooner had the power been switched off and Colombo was again bathed in light.

Hotel managers were told not to tell guests what was happening, as anti-aircraft towers blazed away, at one point imagining a Malaysian flight landing from Kuala Lumpur to be a Tiger plane.

Four years on, the Tigers have been vanquished. An embarrassed Rajapaksa told me last year he was furious about the raid. He accelerated the war from that night and by May 2009, he had won. Rajapaksa faces many claims of human rights abuses - but the majority Sinhalese have handed him unprecedented power, expecting him to deliver the prosperous peace he promised.

Two years later, he's probably Asia's most secure strongman. His sprawling family make hay in business as democratic opponents and possibly democracy itself is neutralised, the Rajapaksa model being autocratic Singapore.

But weary of war and sick of being poor, Sri Lankans seem prepared to give the Rajapaksas free rein, so long as the prosperity their family enjoys is shared by them, too.

So far that seems to be happening. Playing China off against India Inc against the West looking again for greenfields entry to emerging markets, Sri Lanka seems like a construction zone, with new ports, highways and airports sprouting island-wide. The former Tiger strongholds of the Tamil north are also going ahead and Sri Lanka feels very pleased with itself.

Last year, the island's economy grew a China-like 8 per cent and is slated to expand at least that again this year, and outstrip it next year. Share prices on the Colombo stock exchange - long little more than a sleepy luncheon club of local plutocrats - have doubled over the past year, after doubling in the first year of peace. Likewise property prices. Credit has expanded by a third on last year as Sri Lankans borrow to fund investment.

It is no longer intimidating to visit Sri Lanka. For the first time in this correspondent's 20 years of visiting Sri Lanka, there were no military checkpoints on a recent trip into Colombo from the airport; there used to be up to 10 at the twitchy height of the war.

Tourists are flooding back, up by 50 per cent this past year, and hotel tariffs are three times what they were during wartime. Back then, the only foreign hotel chain in Colombo was a tired old Hilton, a ratty Taj from India and a poor excuse for a Holiday Inn. Now the luxury Shangri-La chain is developing the downtown military barracks as well as a south-coast resort in Rajapaksa's hometown, Hambantota, which has been redeveloped by $2 billion in aid from China. Marriott and Hyatt also want to build there.

The island's long-neglected south is becoming the place to invest, partly to cosy up to the Rajapaksas. The area is where Sri Lankan leaders have long raised their armies. But since Rajapaksa and his clan came to office, their hold cemented by their war triumph, their home region has seen China developing the area as an alternative trans-shipment centre for finished mainland goods and oil from the Middle East to US-allied Singapore, several expensive day's sail further east.

All of this is leading to a dilemma - what to call this emerging Sri Lanka?

Given its tragic recent past, calling it a tiger economy like its similarly booming neighbours would seem to be out.