Who wins the
Neo-liberal Peace? The World Bank,
Information Asymmetries and the Economics of Peace in Sri Lanka
Would it not be simpler, if the
government could dissolve the people and elect another?
Bertol Brecht
Knaves will tell you that it is
because you have no property that you are un-represented. I tell you, on the
contrary, that it is because you are unrepresented that you have no property.
(English Chartist, Bonterre O’
Brien, 1846, quoted in Elizabeth Wood, Forging Democracy from Below: Insurgent
transitions in South Africa and El Salvador, CUP, 2000)
Wars, including struggles for ethno-national self-determination are
fought to change the power-property status quo. If a peace process fails to
adequately acknowledge and address issues of economic and social inequality
that structure a conflict and balance changes wrought in the war years against
return to the pre-war power-property status quo, it may result in an
unsustainable peace that becomes a blue print for renewed violence, years or
decades later.
In a recent book published by the Washington-based United States
Institute for Peace, titled, “Effects of Violence on Peace Processes” John
Darby notes: “Of the thirty-eight formal peace accords signed between January
1988 and December 1998, thirty one failed to last more than three years”. Darby suggests that the reason for this
state of affairs is that stopping wars is far more difficult than starting
them, and that “when political violence is ended by a ceasefire it reappears in
other forms to threaten the peace process”. He suggests that a peace process
must be forward looking and potential spoilers of the peace must be on board,
for if not they may destabilize the peace process. In Sri Lanka this would
include potential spoilers who may use local conflicts and social and economic
inequality that are not directly related to the macro armed conflict between
the LTTE and GoSL.
A number of studies of the 2 decades long armed conflict in Sri Lanka
have noted that the war was not simply an “ethnic” affair but rather a “complex
emergency”. The war dynamic was sustained and fuelled by a range of global and
local actors and factors including rural poverty, unemployment, caste
marginalization (particularly in northern Tamil society and in the deep
south). The majority of those who
fought, died, and were disabled on both sides were drawn from the rural poor.
Additionally, in the last decade a ‘war economy’ that developed self-sustaining
momentum emerged, as a number of trans-national actors and networks, from the
diaspora to the military, humanitarian and development industry stabilized and
sustained the conflict dynamic as the economy structured into a ‘war economy’.
While a range of political actors and elites made profits through corruption,
terror and taxation the military became the leading employer of a class of
marginalized youth from low-caste communities in the north and south alike.
Simultaneously, as Professor Tudor Silva of the Centre for Poverty Analysis has
noted, economic inequality and poverty cleavages tended to be ethnicized and
politicised due to the circular dynamic of poverty and ethnic conflict (cf. Mayer, Rajasingham- Senanayake,
Thangaraja: 2003).
The connection between rural poverty and the sustainability of peace has
been made in other studies of peace settlements. In “Forging Democracy from Below: Insurgent Transitions in South
Africa and El Salvador”, Elizabeth Wood suggests that peace processes that
address economic re-distribution including land reform have a better chance of long-term success.
Wood’s arguments are relevant for Sri Lanka. Yet in the current post/conflict
settlement discussion while the issue of power redistribution via a devolved
and federated system has received high priority, issues of social and economic
inequality is not being addressed in any systematic fashion
The presumption on faith propounded by the Minister for Economic Reforms
seems to be that the free market would take care of social and economic justice
issues that fuelled the conflict a la the Washington Consensus (World Bank and
IMF). There has been relatively little discussion of the political economic
transformation to society that 20 years of war had generated. Debate on
post-conflict reconstruction policy is largely framed by legal-bureaucratic
considerations at the national level as to how power vested in a highly
centralised state may be devolved to the regions? The public debate
considerably influenced by global recipes for post conflict reconstruction focussed
on (neo-liberal) institution building and constitution design and the need for
“good governance”. In the context, it is not hard to see how economic hardship
and social disaffection caused by spiralling costs of living, unemployment
exacerbated by layoffs, a sealing on public sector hiring for structural
adjustment programs (SAPs), and privatisation of essential services including
public utilities (the standoff between
the multinational gas duopoly Shell and Laufs and the Consumer Protection
Authority being exemplary), may be used by peace spoilers who have significant
constituencies among those who bare the brunt of the current phase of economic restructuring which in most parts
of the world had demonstrably increased socio-economic disparities and cleavages.
(Cf. UNDP Human Development Report 2000)
In this context, the question may be raised as to why the GoSL and the
LTTE have chosen or been impelled to chose the World Bank to be the custodian
of the post/conflict fund? And on what basis? Historically, the United Nations
is the international organization charged with and experienced in dealing with
post/conflict reconstruction (East Timor being a recent example). Moreover the
UN agencies despite numerous critics have a relatively open attitude to
human security, local voices, priorities and knowledge systems, than has the
World Bank since it is not so closely allied to international finance and
corporate interests, and in the grip of what Joseph Stiglitz, Nobel prize
winning economist and ex-Vice President of the World Bank, terms ‘market
fundamentalism’ in his book Globalization and its Discontents. Is the
World Bank then a more or less neutral actor or will it ensure that the peace
is structured to suit the agendas of international finance and corporate
capital while making Sri Lanka vulnerable to fluctuating global financial
markets as the world economy goes into recession (as occurred in Argentina)? As
conflict, security and development are increasingly linked will it disburse
funds to projects that have a less capital friendly and more social justice
focus.
This question must be asked by the Sri Lankan public who support the
peace process and wish to ensure its sustainability: There are other reasons
for concern. A range of social conflicts have escalated in Latin American
countries that undertook uncritical structural adjustment programs (SAPs) that
made them vulnerable to fluctuations in global financial markets at the behest
of the World Bank and IMF (riots in Argentina being a recent dramatic case).
Likewise, historically, international finance capital, dictators and military
huntas have been allied to safe guard their interests and deflect social
justice issues embedded in complex conflicts. In this respect, the
controversial analysis of violent conflict coming out of the World Bank
research project led by Paul Collier on “the Economics of Civil War, Crime and
Violence” is not encouraging. Collier claims that it is ‘greed’ rather than
‘grievance’, (as if these are not
relational terms). He suggests that the profits made by war lords and armed
groups explains violence. He thus rules out economic grievance as a cause of
violence. While this kind of analysis may explain the proposed Bush-Blair
resource war on Iraq, it is telling in its misguidedness and ignorance of local
issues, international political economic and global power/knowledge hierarchies
that structure complex conflicts in the global south, and does not augur well
for a sensibly theorised post/conflict reconstruction programme supervised by
the Bank in Sri Lanka.
If the World bank is to be the custodian of the post/conflict fund the
question arises: will the peace dividend become available to those marginal
communities and social groups that were most brutalized and instrumentalized by
the war economy? In short, would a neo- liberal post conflict peace that
exacerbates socio-economic disparities as SAPs and sector adjustment programs
are pushed though along with post/conflict reconstruction, and the questionable
promise of long-term economic growth despite the growing global recession
enable a sustainable peace? Is this constellation of actors and
interests a recipe for a new cycle of violence that may destabilize the peace
process in Sri Lanka? To answer this question it may be relevant to look back
on how almost two decades of armed conflict was re-presented and analysed in
the World Development discourse in Sri Lanka.
Representing
Development: ‘Growth with War’ and other Sustainable Myths
During the Second and Third Eelam wars (1990-2001), a public myth
existed in the south of Sri Lanka that relatively high levels of economic
growth could be sustained in the island while an expensive armed conflict was
waged in the North-East provinces.[1]
As the Peoples Alliance government went ahead with structural adjustment
programs (SAPs) and privatisation of various profitable and debt ridden
government holdings just as the previous UNP govt. had done, the numbers of
BMWs and Alfa Romeos that cruised the highways and bi-lanes of Colombo, the
southern capital were on the rise. Signs of a growing economy and a market for
luxury goods were apparent in the larger cities and in the display of
sophisticated weapons to and communications technology in the security sector.
The Central Bank projected national growth figures of five percent, a figure
that helped the ruling party to win local and national elections and attract
foreign investment. International development organizations such as the World
Bank, IMF, and UNDP projected similar growth figures.
The late nineties were years of converging national
statistical percentages in Sri Lanka. While defence spending was 5 percent of
GDP, donor assistance also hovered at around 5 percent GDP. That international
aid might subsidize the armed conflict given fungibility of aid was not missed
by a number of commentators. Yet if research staff in leading national
institutions of higher education such as the University of Colombo could not
use the internet because the Ministry of Higher Education could not pay its
telephone bills and the library could not buy books and journals due to the
toll of the war economy on the education sector that was being restructured,
the international financial institutions turned a blind eye to military
spending despite widely known and rumoured corruption in military sector the
defence ministry. While structural adjustments to education, health etc.,
sometimes bringing long over due reform to these sectors were on the cards,
structural adjustments of the military and state’s coercive apparatus was not
on the cards.
Indeed, the IMF appeared to systematically
underestimate the Sri Lanka government’s underestimation of its own military
expenses (Discussion with IMF representative at ICES – August 2001) while the
Sri Lanka government seemed to practice home grown military Keynseanism.[2]
The continuing failure of the international development industry to address
military budgets of governments at war with segments of their populations
remains the scandal of international development industry. In Sri Lanka the
growth rate of about 5 percent in the late nineties despite the war seems to
have been used to bolster the argument that neo-economic liberal structural
adjustments works – even in conflict situations. What was ignored was that
after almost 2 decades of armed conflict the rural economy seemed to be
substantially and increasingly dependent on non-productive activity. i.e. war
making (cf. Dunham 2000).
Of course, statistics and information on the conflict
zones were highly politicised, particularly given claims and counter-claims
regarding human rights violations, numbers of displaced people, and food aid to
be sent to the war zones. During the years of the third Eelam war that started
in 1995 with the collapse of the peace process that had commenced when
Chandrika Bandaranaiyake-Kumaratunge became President, the military frequently
and possible correctly argued that the LTTE was inflating figures and skimming
excess aid.
The information lacuna arising from the politicisation
of information and the difficulties of information gathering in the war zones
was compounded by the censorship on media and reporting from the northeast.
Because of difficulties of information gathering in the conflict zones “national” data on health, education and
literacy excluded the war-deprived and traumatised regions of the island.
International evaluations along with national statistics on many social and
economic matters provided impressionistic and often grossly misleading and
optimistic scenarios of the life and livelihood in the conflict zones. It was
rarely mentioned that transport was literally by bullock cart in the
“uncleared” or LTTE held areas, given the fuel and fertilizer embargo, while
the economy and market had been bombed into the dark ages, and food security
eroded.[3]
The information lacuna in turn perpetuated a number of
myths that sustained the conflict, both at the level of policy as well as in
popular discourse. As the conflict escalated in the nineties, the notion
that ‘growth with war’ is possible
appeared to be the operative fiction in policy circles. Meanwhile the conflict
generated a war economy with military service becoming the leading income
generation project for young men from rural areas even as it generated new
forms of social and economic inequality and marginalization (eg. Muslim-Tamil conflicts in the east coast).
That Sri Lanka, the South Asian leader in social indicators may be slipping in
health and education, and mortgaging its future as the numbers of disabled
increased, and the economy structured into a war economy, with the rural sector
increasingly dependent on soldiers wages was not mentioned. Of course a second
scenario of Sri Lanka’s conflict-development nexus that focused on the social
costs of war, was captured in popular films, other critical media, and by
various studies by NGOs but with little impact.[4]
Squaring the circle – an analysis of which sectors benefited from the war
economy and SAPs and which did not remains to be done.
On the other hand, the devastation of war in the north
and east, grave credence to LTTE claims that they had nothing more to loose and
hence must fight an opponent intent on decimating them to the end. The war
years made clear the domestic economic policy is increasingly a global affair.
As the country became increasingly dependent on aid for fight the war the
international financial institutions and successive governments pursued a
neo-liberal policy of economic restructuring. As privatisation appeared to
sustain the myth of growth with war, a number of other local and
micro-conflicts were displaced upon the over determined war between the
military and the LTTE. The myth of growth with war was rudely shattered by the
LTTE attack on the airport and the manner in which the economic growth entered
a negative for the first time in its post/colonial history.
References
Collier, Paul
Greed and
Grievance in Civil Wars.
http:/www.worldbank.org
Darby, John
2002 The Effects of Violence in Peace Processes.
Washington DC. United States Institute for Peace
Fine, Ben
2001 Social Capital Versus Social Theory. London.
Routledge
Mayer, M, Rajasingham-Senanayake, Thangaraja. Eds.
2003 Building Local Capacities for Peace: New Delhi.
Macmillan.
Silva, Tudor
2003 in Mayer et al. Eds
Stiglitz, Joseph
2002 Globalization and Its Discontents New York.
Norton and Co.
Wade, Robert
2000 Showdown at the World Bank. New Left Review
Wood, Elizabeth
2000 Forging Democracy from Below: Insurgent
Transitions in South Africa and El Salvador. Cambridge University Press.
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Darini
Rajasingham-Senanayake
is an anthropologist and Senior Fellow at the Social Scientist’s Association
and ICES and a Fulbright New Century scholar, 2003 at New York University’s
International Center for Advanced Studies.
[1]
The previous UNP government had managed to sustain growth and wage war, but by
following a strategy of containing the conflict, and limited war.
[2]
It was noted that the Govt.’s estimate was an
underestimate of total defense expenditure, after the various military service
sectors were accounted.
[3]
See “Voices of the Poor” ADB Poverty Study 2000.
[4]
Pura Handa Kaluwara (Death on a full moon night) directed by Prasanna
Vithanage, a film that commented critically on the futility of war and it
social costs, was banned by the authorities and then unbanned following a
prolonged legal battle and the Supreme Court ruling that the ban violated the
freedom of artistic expression.