City Life - Colombo

Peace would be a better business plan for the island of a hundred ministers...

Eric Ellis

Flying into Colombo’s civil war on tourist-less Sri Lankan Airlines, my eye was caught by three plugs in the in-flight magazine from the country’s investment board: ‘Generous Fiscal Incentives’, ‘Transparent Legal System’, and ‘One of the Most Livable Countries in Asia’.

The 70,000 who have died since 1983 in the former Ceylon’s intractable conflict between Tamils and Sinhalese would clearly disagree with the last one.

But the praise for Sri Lanka’s rule of law provided pause for thought, since I had been summoned to a rural court deliberating the ownership of a property I bought here in 2003, a happier time when a fourth plug, ‘Liberal Business Environment’, was briefly true. It’s a gorgeous plot that two fishermen now claim is theirs. Our titles prove conclusively otherwise — but I’ve had to instruct two lawyers, the second to shadow the treacherous first who we suspect of colluding with the fishermen. He was ‘too busy’ to brief me when our case inexplicably flared in April, but not too busy to bank the retainer I stupidly paid him, 50 times what he charges Sri Lankans, before his chicanery was rumbled and the matter sorted.

‘Generous Fiscal Incentives’ seems an apt advertisement for public service here, for Sri Lankans bewail that their government is for sale. Police posts along Colombo’s locked-down corniche are sponsored by a leasing company. A steelmaker advertises on the checkpoint to the besieged military HQ, occasionally infiltrated by Tamil Tiger separatists intent on suicide-bombing. And President Mahinda Rajapakse’s cult of personality is plastered over state-owned banks, though the central bank governor insists he is independent.

The statistics tell their own story: interest rates over 18 per cent, inflation at 16 per cent and a money supply that grew by 17 per cent in April to finance an unwinnable war. Sri Lanka has an infrastructure Atlee would recognise, its inefficiencies costing business plenty. A corporate leader laments: ‘It seems that each motley crew 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.’

The term ‘backbencher’ is virtually unknown here. There is a 52-strong cabinet, plus 33 ‘non-cabinet’ ministers and 20 ‘deputy ministers’. With a million-plus of the 21 million population employed by the state, Sri Lanka has one of the world’s biggest public payrolls. Official posts mean perks: cars, drivers, houses, air-conditioning. But what precisely does the Minister of Plan Implementation do? The five Ministers of Nation Building? The politicians that matter to businessmen aren’t in the cabinet, but the president’s family — two of his brothers have been appointed ‘presidential advisers’ and have become the hardline locus of power to confront the appalling Tiger leader, Prabhakaran, bunkered in his de facto state in the island’s north-east.

One brother used to run a 7-Eleven convenience store. Now he runs the military, which is rounding up and roughing up Colombo Tamils as the capital is ethnically cleansed. In the island’s east last week, the army wrested a strategic base from the Tigers for the first time in 13 years. Prabhakaran still controls a quarter of the island and vows to further cripple its economy, but a win is a win and the Rajapakses decreed, perhaps prematurely, a massive victory parade in the capital. A bookshop makes its own commentary, placing Mein Kampf and The Godfather on display in its window. This is, says my businessman friend, ‘an amazing country being manhandled on both sides by some very stupid people’.

When last here in April, I saw the war up frighteningly close. While Sri Lankans watched their cricketing heroes on television jousting with Australia in the cricket World Cup final they would lose in Barbados, the Tigers’ jerry-built ‘air force’ launched a raid on the capital. The government ordered the power supply cut to deny the Tigers visibility. But home generators are de rigueur here, so when the power went off, Colombo was immediately bathed in light. A gun tower barked into action 50 metres from my room in the rococo Galle Face Hotel.

I watched trigger-happy grunts blaze Rambo-like at nothing in particular: here was an opportunity to loose off a few rounds, when the most exciting thing they usually do is perv on bikini-ed foreigners in the hotel pool below. They even fired at a fully illuminated Malaysian commercial liner approaching from the Maldives. Colombo’s hotel managers were told not to tell guests what had happened or why, lest they leave and choose coup-ridden Thailand for their next holiday. 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’, my article dealing ‘a severe blow to Colombo’s efforts to position itself as an attractive air hub in South Asia’. All of which flattered Lanka's status in global aviation, and doubtless a relief to Dubai and Singapore airport officials, though it did overstate media authority. Making peace would be a better business plan.

The raid devastated the already war-shattered tourist industry. The Hilton, the only big hotel chain braving Sri Lanka, shut eight of its 19 guest floors ‘for renovation’. Back in the GFH, I’m paying $US65 a night for a suite of a standard I would pay $US250 for in India. Sri Lanka’s idyllic coastline is studded with shuttered hotels, and the unemployment is tragic. The Tiger tactics have also spooked shippers, many of whom have abandoned Sri Lanka out of fear their vessels will be attacked. The April raid took out a couple of fuel dumps. Freight costs out of Colombo for the tea and garment exports on which the island relies for foreign exchange are now as much as 50 per cent higher, for space on the fewer ships chancing Sri Lankan waters. The economy - and the war - is being kept afloat by remittances from workers offshore.

All that may be helpful to know when you notice your Christmas tea, knickers and negligées are a bit dearer this Yule.

Eric Ellis is South-East Asia Correspondent for Fortune magazine

(see also An island sinking under its burden)