HOW does a civil war wreck an economy? The eerie streets of Colombo's Fort district tell the miserable tale. Once a South Asian Wall Street, Fort today is a ghost town. It was relentlessly suicide-bombed by the Tamil Tigers during their 25-year conflict with Colombo, Asia's longest civil war. Colombo responded by locking Fort down, book-ending it with impenetrable security. Few bothered approaching anyway because there's no point — there's no commerce or jobs to go to on the other side.
The country's tallest building, the twin towers of the World Trade Centre and its attached shopping mall, soars over it all but its name has become a sad joke. The 12-year-old ensemble is a massive white elephant — there's very little world trade going inside here.
As thrusting Asian metropolises go — it wouldn't do to dub Sri Lanka a "tiger" economy — Colombo is more Kabul than Kuala Lumpur. Decay lines Fort's broad avenues, its once-grand banking halls long neglected, dilapidated and without value.
But Sri Lanka's comparison to Malaysia is deeper than simply comparing capitals. The two former British colonies are of similar population — 27 million Malaysians to 21 million Sri Lankans. And they have a broadly equal cultural mix; Malaysia with its majority Bumiputra community, and significant Chinese and Tamil minorities; Sri Lanka its Sinhalese majority, and prominent Tamil, Muslim and Burgher minorities. But that's about where the happy comparisons end.
Malaysia's $US230 billion ($A283 billion) economy is today almost eight times larger than Sri Lanka's. Where educated Malaysians export cutting-edge gadgets for the world's tech titans, and need millions of migrant workers to help, Sri Lankans export tea, bras, undies and, most eloquently of all, its people, often to abusive households and building sites in the Middle East.
Malaysians rush themselves and their goods around on a national network of spruce freeways; Sri Lanka has just 11 kilometres of carriageway one would charitably describe as a freeway.
Malaysia is one of the world's most touristed countries; Sri Lanka still sells itself as Ceylon, to the few that brave its shores, because it sounds safer. Malaysia last had divisive civil strife in 1969, its crippling Sino-Malay race riots. Sri Lanka has suffered it for more than 50 years, since the 1956 "Sinhala Only" act that many Tamils interpreted as the Sinhalese majority trying to abolish their culture. Where Malaysians define themselves as Malaysians first, Sri Lankans mostly see themselves as Sinhalese or Tamils first, in a country where Muslims are the moderates.
Strategically-sited Sri Lanka missed myriad opportunities to fix the country and become a focused economic powerhouse, the Singapore of the region it believed was its destiny. But now, with the apparent end of the war, maybe there's a second chance — or a 10th chance, given the ability of Sri Lanka's leaders to talk a good game on national unity but fall woefully short on delivery.
In Colombo's salons, a self-absorbed city that's never been much good at feeling the nation's pain, the post-war talk is of cheap beachside plots up north, and new bridges, roads and schools for their business. Plans are also being made to renew Fort, perhaps turning those grand banking chambers into funky hotels.
With the Tigers' third of the island again in government hands, bombastic comparisons are being made to Germany's re-unification, except at least West Germany had the money to take over the collapsed East.
Sri Lanka is broke. It has only enough reserves to cover two to three months of imports. Much of its money — and possibly a fair swag of yours too, given the vast distance between pledged tsunami donations and evident rebuilding — went on winning the war. Sri Lanka allocated a North Korean-like round 20 per cent — almost $US2 billion — of last year's budget to defence.
Now it feels like it has led the world in actually winning a war on terror, and it wants the world to reward it. It is seeking a $US1.9 billion strings-free loan from the International Monetary Fund. But that loan has become a political football. The IMF wants to link the money to political and economic reform, whereas the triumphant Rajapakse Government refuses to accept "odious" terms as a point of national honour.
The war's violent endgame has complicated talks with the IMF. The US has delayed loan negotiations and is pressing Colombo to make good promises not to brutalise the 200,000 Tamil refugees trapped in what international aid observers have described as "concentration camps" in the north.
No problem, says Colombo, we'll just ignore the West, which it was suspicious about being Tiger sympathisers anyway. The Rajapakse regime is now cosying up anew to countries like Iran and China, to cock collective snooks at the US, the EU and India, the elephant in the regional room.
Wherever the money comes from, Colombo's bankers are primed for a bonanza at the prospect of $US5 billion in redevelopment of the vanquished north. Pan Asia Bank chief executive Kimarli Fernando is a member of the prominent Fernando family of Dilmah Tea fame. Fernando believes that just six months after the peace is secured, "it will be like email … we as Sri Lankans all over the island will unite and be wondering how we coped without it".
Sinhalese bankers are keen to plug into the Tamil community's famous thrift and business skills.
Tamils were the island's business mainstay before the war, skills now very much needed in an economy so run down.