September 22, 2007

More chaos than calm in eye of the Tigers

Eric Ellis

Fruits of their labour … a Sri Lankan soldier stands guard in the capital, Colombo, where little has changed

FLYING into Colombo's civil war on a tourist-less Sri Lankan Airlines flight, three plugs in the inflight magazine from the country's investment board extolling the island's corporate virtues were arresting, if not amusing: "generous fiscal incentives", "transparent legal system" and "one of the most liveable countries in Asia".

The 70,000 who have died since 1983 in the former Ceylon's intractable conflict between Tamils and Sinhalese would disagree on the last. But the self-serving praise of Sri Lanka's rule of law provided pause, as I had been summoned to a rural court deliberating a property I had bought in 2003, a happier time when the fourth plug - "liberal business environment" - was briefly true and we had had plans to build a beach retreat.

It is a gorgeous plot that two fishermen now claim is theirs. Our titles prove conclusively that is nonsense, but I have had to instruct two lawyers in the matter; engaging a second advocate to shadow a treacherous first, who we suspected was colluding with the fishermen, while acting for us.

The first lawyer had made a handsome living transferring deeds to sudos (whites) when Lanka's livability was more bucolic. But when the war was rejoined, and with nationalisation-happy Marxist xenophobes brokering Colombo's government, the money spigot dried up. Which might explain why he was "too busy" to brief me when the property matter inexplicably flared in April. But not so busy that he did not bank the retainer I had stupidly paid him - 50 times what he charges Lankans - before the chicanery was rumbled.

"Generous fiscal incentives" seems an apt advertisement for Sri Lanka's public service, for this seems a government for sale. Police posts along Colombo's locked-down corniche are sponsored by a leasing company. A steelmaker advertises on the checkpoint to the city's besieged military HQ, which is frequently infiltrated by Tamil Tiger separatists intent on blowing up the brass.

The growing cult of personality of the President, Mahinda Rajapaksa, is plastered all over the central bank's offices, though its governor insists he and the bank are unflinchingly independent. The statistics tell their own story: interest rates at 18.3 per cent, inflation at 16 per cent and a money supply that grew by 17 per cent in April to finance the escalation of an unwinnable war. Lanka has just eight kilometres of motorway, and infrastructure Churchill would recognise as new.

A business leader says: "It seems that each motley crew of 'leaders' that come into government want to keep the conflict going for just a little while longer so that they and the next five generations of their offspring can make enough to secure their comfort."

Rajapaksa's is a government where the term backbencher is almost unknown. He presides over a 52-strong cabinet. There are another 33 "non-cabinet" ministers and a further 20 "deputy ministers". With a million-plus out of a 21-million population employed in the civil service, Sri Lanka has one of the world's biggest public payrolls. Official posts mean perks: cars, drivers, houses, staff, budgets and air-conditioning.

But what precisely does the minister of plan implementation do? The five ministers of nation building? The pollies who matter to businessmen here are not in the cabinet but in the President's family: two brothers have been appointed "presidential advisers" and have quickly become the locus of power. Lankans call them the Rajapaksa Brotherhood. One Colombo bookshop makes its own subtle commentary, placing Mein Kampf and The Godfather on prominent display in its window, among the military histories and self-help manuals.

But as politicians continually swap parties, rendering ideology irrelevant and administration impossible, my businessman friend laments his "severe frustration at watching an amazing country being manhandled by some very stupid people".

When last here, in April, I saw the war frighteningly up close. With Lankans in front of TVs, gripped by their cricketing heroes jousting with Gilchrist in the cricket world cup final they would lose in Barbados, the Tigers' jerry-built "air force" staged a raid on the capital. The Government ordered the power supply cut, to deny the Tigers visibility. But Lankans have long known that the Ceylon Electricity Board cannot service the national grid, so home generators are de rigueur.

When the board switched off the power, Colombo was immediately bathed in light, and the HQ of the National Intelligence Board, Sri Lanka's MI5 and "high-value target", blazed brighter than most. A gun tower barked into action 50 metres from my room in the Galle Face hotel. Its ack-ack lit the night, as excitable grunts on the tower blazed away Rambo-like at nothing in particular, including the hotel.

Who knows what their superiors ordered, if anything; here was a long-coveted opportunity to let off a few, when the most exciting thing they usually do is perv on bikinied foreigners lazily stroking away their holidays in the Galle Face hotel pool below. They shot into the street below and then above at a fully illuminated Malaysian commercial plane approaching south from the Maldives. Subsequently, angry pilots boycotted night-time flights to the island, cutting traffic by a third.

The Kafka-isms continued into Sunday breakfast on the hotel terrace, where huge crows like to snack on the buffet. Bearers, in ironic counterpoint to the previous night's fireworks, shot slingshots at the sky-borne invaders. Colombo's hotel managers were told not to tell guests what had happened and why, lest they leave and choose coup-ridden Thailand for their next holiday instead.

I penned an eyewitness piece, causing a minor ruffle among Colombo's chattering classes (and prompting a death threat or two). Colombo's Daily Mirror noted how "unfortunate" it was that a correspondent from the famous Fortune happened to be in town during the Tiger raid.

"The adverse publicity globally has spread like wild fire," it said, with my article dealing "a severe blow to Colombo's efforts to position itself as an attractive air hub in South Asia".

All of which was flattering, and doubtless a relief to Dubai and Singapore aviation officials, though it did overstate the media's authority. Making peace would be a better business plan.

The raid devastated the already war-shattered tourist industry. The Hilton, the only big international brand name operating in Lanka, shut eight of its 19 guest floors "for renovation". Now back in the Galle Face, I'm paying $65 a night for a suite of a standard I've paid $US250 ($289) for in India. Lanka's idyllic coastline is studded with shuttered hotels foreclosed out of existence, and the unemployment is tragic. The Tigers have also spooked shippers, many of whom have abandoned Sri Lanka out of fear that their vessels will be attacked as the Tigers target economic assets such as the port. The April raid took out a couple of fuel dumps. Freight costs out of Colombo for the tea and garment exports the island relies on for foreign exchange are now 50 per cent higher for space on the fewer ships braving Sri Lankan waters - helpful to know when you notice your Victoria's Secret Christmas knickers and negligees are a bit dearer this coming Yule.

Eric Ellis is South-East Asia correspondent for Fortune