by R. M. B. Senanayake
The Donor Conference went ahead without the LTTE and 4.5 billion dollars were pledged for the country’s development. But it would seem to be some extent at least conditional on the resumption of the Peace Process.

The LTTE walked out of the peace process stating that the government had failed to carry out the commitments made in earlier talks. A particularly sore point with them is the large area of land demarcated as part of the High Security Zone, which prevents internally displaced people from returning and re-establishing themselves in their previous homes. The grouse of the Tamils in the north and east is that while the South is enjoying the peace dividend by way of free movement of people and goods after the removal of security checks, there are no such benefits of peace for the people in the north. They continue to live in refugee camps and with no new sources of income. Agriculture and fishing which was the mainstay of the economy of the north have still not returned to normalcy. Houses, schools and hospitals, which were destroyed during the war, have still not been rebuilt. The material costs of war damage are high according to the needs assessment carried out by the multi-lateral agencies.

There are politicians in the South who talk of how duplicitous the LTTE is and urge the government to get ready for war. The JVP and the Sinhala Urumaya are campaigning against UNP peace process. The PA has been waxing both hot and cold. The people are confused. They know in their heads that some political change to the structure of the state is inevitable if peace is to prevail but their hearts tend to prefer little or no change. They know that change must come about but don’t understand how or in what way such change will come about. The conspiracy theorists sow much suspicion among the people as regards the ultimate designs of the LTTE.

The reasons that wars take place are that one side or the other is over-confident. If both sides agreed on the expected action there would be no need to fight a war. The famous economist Paul Krugman used to argue that World War II was fought inefficiently. The British bombed the Germans and the Germans bombed the British. Consider said Krugman, how efficient it would be from an economic point of view if both sides bombed their own countries. There would have been many savings like for example in the airline fuel used to fly the bombs in both directions. But such things don’t happen because both sides cannot agree on how much damage each should cause the other. One side is over-confident and think that it can impose greater damage on the other. So war is fought to find who can do the greater damage and the side that is over-confident of winning initiates it.

Sri Lanka would never think of fighting a war with India for example because there is no chance of winning such a war. The LTTE thought that they could win and escalated the war from its original ad hoc attacks to full-scale war. Consider the American Civil War fought 200 years or so ago. If Lincoln had foreseen the cost of the war would he have chosen to fight or allowed the South to walk away? We don’t know but he certainly under-estimated the cost of the war, which took much longer and was more painful than originally envisaged. The Northerners fought because they believed they could win at an acceptable cost.

Can the Sri Lankan economy in the South stand the cost of a renewed war? The Institute of Policy Studies, a government think tank, estimated that the cost of the war was a loss in GDP of about 2%, a reduction in growth rate. But this was before the bomb attack on the airport by the LTTE. The airport attack led to a severe crisis in the economy War surcharges were clamped on both freight and insurance and ships sought to by-pass the country’s ports. Ours is an import-export economy depending on the export of tea and garments and importing many goods including our food requirements. The airport attack also showed that foreign investment would dry up and nobody abroad would lend to us on concessionary foreign aid or even commercial terms. So the costs of resuming war are mind-boggling.

At present our Foreign Exchange Reserves are high but not because we have earned them but because of borrowings from the International Monetary Fund. If there is a resumption of war the IMF loans which come in instalments or tranches would dry up and given our huge and expanding deficits in the current account of the Balance of Payments, we would very soon run out of foreign exchange required to buy arms and armaments. We may be able to buy on tick for a time but we would then be tied in the sources of supply and subject to high corruption as we witnessed during the previous stages of the war. We may be able to mobilise the youth what with the high youth unemployment in the south. But modern wars are won or lost on technology and superiority in armaments. Hence the reason why both sides acquire sophisticated weapons.

But even if there is no outbreak of war how can the LTTE be induced to resume the peace talks? The bone of contention seems to be the need for an Interim Administration. Is the demand for such an interim administration to handle the foreign aid? That would only require a special agency to be set up. The corporate form of organisation is the best for effective implementation. Didn’t we have the Mahaweli Authority to handle the Accelerated Mahaweli Scheme? Wasn’t it an effective administrative organisation for the purpose? Would a special Authority to deal with Foreign Aid for the reconstruction of the north and east be sufficient? Will it be acceptable to the LTTE? Committees are most unsuitable for effective executive action and this fact is well recognised in the literature of Public Administration.

One of the pioneers of the theory of Public Administration, L. Urwick, wrote a chapter on "The Disadvantages of Committees" in his book "The Elements of Administration". He said, "For purposes of management, boards and commissions have turned out to be failures. Their mechanism is inevitably slow, cumbersome, wasteful and ineffective and does not lend itself readily to co-operation with other agencies. - The conspicuously well managed administrative units in the government are almost without exception headed by single administrators."

The common saying is that the best committee is a committee of one. Committees have certain structural peculiarities. They are discontinuous; they cease to exist each time that the committee rises, unless they are incorporated as legal personalities. The Chairman must either lead the committee or some other member will. Committees encourage irresponsibility among members and hence the cabinet must never take upon individual executive decision-making but only policy making. For certain forms of activity committees are definitely unsuitable. It is unsuitable for organisation work. It can only execute within narrow limits. Hence a Chief Executive Officer who reports to the Board and is accountable for policy balances the corporate form. It is a useful form for evaluating results and discussing policy. It is not good for command and control purposes.

"A committee is brought into being not to do something but to cover up the fact that those responsible have not decided what to do" — Urwick. Executive authority must be assigned to individuals. So the suggestion to set up Committees may not be the best for implementing foreign aid projects.

What about the utilisation of foreign aid in the South. The private sector in the South has to put up with all sorts of costs, explicit and implicit, legitimate and illegitimate. Public employees in more and more departments are demanding gratifications to do the service they are paid to do. So the economy wide costs of operating the public institutions and public infrastructure are huge. Consider the congested roads which cause huge costs to commuters, their employers and to the whole economy, by way of the loss in man-hours, the excessive consumption of fuel and so on. Not only are public institutions bloated with excessive staff they do much less work than they are paid for. There are the excessive holidays and the large amount of leave available. While in the workplace they also have short leave, which gives them the pretext to scoot away from the office. No costs go unpaid for some one has to pay all these costs. It is always the customer who pays.

Consider the doctors strike. Equal pay for equal work is an accepted maxim in wage fixing. But doctors who are graduates want a higher payment because they are graduates. The real question is whether the graduate doctors and the so-called special grade of registered Medical Practitioners perform the same work. If not their relative duties and responsibilities must be evaluated. What happened to the disciplines of job evaluation and Work Study? Have they disappeared from the public service? How much should be the differential between the two grades of employees if they are not doing the same work.

The doctors want some previous differential restored. Why? Why not a bigger or lesser differential? On what basis do they justify the particular differential? Could it not be a historical accident? Don’t the registered medical practitioners who have worked for 25 years be entitled to a narrowing of the differential? Anyway who bears the cost of the doctors’ strike? Not the affluent segments of the population but the poor. Who bore the cost of educating the doctors? It is wrong to say it is the government. It is the mass of people the majority of whom can never hope to draw the level of income that doctors enjoy.

The same economic argument applies to the courts of law and other institutions like the Provincial Councils or the Pradeshiya Sabhas. They impose unnecessary costs on households and businesses. If they fail to deliver at all as during a strike the public face incalculable costs.
Readers may contact the writer at raja_mb@sltnet.lk