While the history of the current process of Sri
Lanka’s globalisation goes back to the colonial
period, the opening up of the country’s economy
40 years ago worked to intensify it. The civil
war that has plagued the island nation for more
than two decades has done almost nothing to
undermine this dynamic. Rather, the conflict has
brought the international system into affairs
that had hitherto been protected on the basis of
the nation’s sovereignty. Today Sri Lanka is
indeed a fragmented state, part of which is
controlled by the LTTE, but all of which is now
inextricably linked to the global
politico-economic system.

Unfortunately, it is largely the contradictions
of the global system that have exerted such
influence on Sri Lanka, leading to pessimism in
the context of the breakdown of the peace
process. The dynamic today is relatively
straightforward: on one side, violence and
conflict; on the other, a framework for the peace
process, dominated by international actors, that
is not working. Even when the war was being
fought at its highest intensity in the past, this
had not been the case. For example, at the time
of the People’s Alliance regime’s ’war for peace’
strategy, war was a reality, but the space for
peace was still open and available. Today that
space is closed, given a procedural structure
that seems ineffectual, while the violence
continues.

Within Sri Lanka there have been diverse
responses to the intervention of international
actors in the country’s peace process. The
Sinhala nationalists and old-style leftists have
been uncomfortable with it, and some have
actively opposed it. Some liberal
internationalists, on the other hand, view the
world community as a bunch of do-gooders, eager
to deliver peace to the island. They ignore the
politics and power-play that are part and parcel
of these interventions in a globalised world. The
construction of the term ’international
community’ itself is a ploy to hide the politics
inherent in this dynamic. What Sri Lanka needs
today is an analysis that can highlight the
politics of power in these interventions, so that
its citizens can spot the contradictions, as well
as the opportunities available to promote the
cause of peace.

 Growth in conflict

The liberalisation of the Sri Lankan economy in
1977 was a turning point in the expansion of the
involvement of international actors in the
country’s affairs. Sri Lanka was the first
country in Southasia to liberalise, and the
process generated a tremendous response from the
aid agencies. At one time, Sri Lanka received one
of the highest per capita levels of international
aid in the world, both bilateral and
multilateral. While the civil war has forced some
donors to rethink their policies, Sri Lanka has
consistently enjoyed the commitment of key
donors, including Japan, the World Bank, the
Asian Development Bank and the International
Monetary Fund. From around the mid-1980s, the
latter three accounted for about 75 percent of
foreign aid to the country.

Meanwhile, the implementation of Sri Lanka’s
economic-reform process has always been more
important to these key donors than concerns over
the civil war. Aid from them has regularly been
reduced, adjusted or diverted to new projects
depending on how successful the Colombo
government has been in carrying out the
economic-reform agenda towards the further
development of liberal capitalism on the island.
The war was for a long time only of concern to
these organisations to the extent that it
impacted on the economic agenda. But the Sri
Lankan economy has been performing reasonably
well despite the conflict, with an average of
four to five percent annual growth. This has not
been the eight percent growth that mainstream
economists have been hoping for in order to equal
the East Asian miracle, and certainly Sri Lanka
would have performed better had there been no
civil war. But the fact remains that the conflict
has not significantly affected the country’s
economy, which in turn has allowed donors to view
the country as relatively ’stable’.

According to international indicators, Sri Lanka
is no longer a ’poor’ country, but rather a ’low
middle income’ one, with an annual per capita
income of more than USD 1000. The economy has
diversified from its agricultural base, and a
significant portion of people now earn an income
in sectors linked to the global economy. A large
number also make use of global labour markets.
Although Sri Lanka has a heavy burden of foreign
debt, many believe that the debt-service ratio,
meaning the proportion of export earnings spent
on servicing foreign debt, is still at a
manageable level. In addition, there is no danger
of Sri Lanka defaulting on debt-service payments.
Of course, this relative success does not mean
that the country has solved its development
problems. Both the economy and society show the
usual social contradictions of a capitalist
economy. Nonetheless, it is crucial to note the
fact that, seen through the logic of capital, Sri
Lanka has performed reasonably well in the midst
of the civil war.

A number of factors explain this peculiar
picture. First, the core of economic production
has been confined to areas surrounding the
capital. Close to 50 percent of the gross
domestic product is now within the Western
Province, close to Colombo. So long as the war is
confined to the north and east - which were never
particularly important economically, even before
the conflict began - the economy can function
perfectly well. Many sectors in Sri Lanka, not to
mention the incomes of more and more of its
people, depend on the health of the global
economy. Hence, if the global economy performs
better, so too does Sri Lanka’s - regardless of
the war. Finally, several other factors have
helped Sri Lanka to achieve economic gains while
simultaneously waging an expensive war: generous
donor support, the reduction of the burden on the
state coffers by getting rid of loss-making state
enterprises, and the relative degree of autonomy
that the central bank has maintained.

The entry of the Norwegians as mediators in the
peace process coincided with the breakdown of
this order. This took place during 2000 and 2001,
years of a global economic recession. Then, in
2001, the same year that a severe drought struck
the island, the LTTE carried out a devastating
attack on the country’s only international
airport - the nerve centre for an economy that
depends on global linkages. These factors
combined to produce a negative economic growth in
2001 for the first time since Independence. The
International Monetary fund came up with a rescue
loan package, and the People’s Alliance
government of Chandrika Kumaratunga requested the
Norwegians to act as mediators in negotiations
with the LTTE.

However, it was the United National Front (UNF)
government, elected in December 2001, that made
use of the Norwegians’ entry to sign a Ceasefire
Agreement, embark on an extensive programme of
economic reforms, consciously expand the
internationalisation process, and include the US,
EU and Japan as co-chairs of the peace process.
The political objectives of the UNF strategy -
led by Ranil Wickramasinghe, the nephew of former
President Junius Jayawardene, the architect of
Sri Lankan liberalisation - included not just
peace, but also the pushing of the
economic-reform agenda begun by President
Jayawardene. This agenda, which developed
independently of the peace process, had its
sights on an extensive reform programme covering
all aspects of the economy. The Wickramasinghe
government consciously sought international
support for both of these agendas. This strategy
lasted for a very short period, however, and its
neo-liberal peace was defeated by both Sinhala
and Tamil nationalism, working side by side.

 Two-sided stranglehold

The current situation is thus one wherein a war
is being fought and fuelled by nationalist forces
on both sides. At the same time, contradictions
of the international set-up inherited from the
Wickremasinghe period are not only complicating
matters, but do not allow much hope for securing
a long-term settlement.

The Norwegians, who are very much wedded to the
Ceasefire Agreement (CFA) secured during the UNF
period, are working with a framework much more
suited to an inter-state conflict based on a
two-actor model. Hence, the CFA recognises only
two sides, the LTTE and the Colombo government.
There is an acceptance of the presence of two
armies, rules of engagement and no-go areas
between these two armies, and rules dictating how
either side can withdraw from the agreement.

This set-up entirely ignores the complexities of
conflicts that build on the basis of identity
politics. It legitimises the demands of the LTTE
as the sole representative of the Tamils, and
undermines space for democracy within the Tamil
population. It also forgets that there have
always been struggles for political supremacy
among Tamils, even while simultaneously fighting
the Sri Lankan state. The LTTE has taken care of
this issue by eliminating its opponents.
Meanwhile, the rights of the Muslim population
have not been given due importance, thus
pandering to a position among Tamil nationalists
that has deliberately ignored Muslim rights by
creating a notion of a Tamil-speaking people.

The two-actor structure of the CFA also cannot
take into account the complexities of politics
among the Sinhalese, which is fought through a
problematic multi-party system. The Norwegian
approach gives the impression of being based on
’primordialist’ interpretations of identity
conflict, where a monolithic group of Sinhalese,
represented by the Colombo government, is
fighting a monolithic group of Tamils,
represented by the LTTE. As such, the Norwegians
are involved as impartial mediators between these
two ’underdeveloped’ communities, to find a
’rational’ solution that only Europeans can
provide.

The formation of the ’co-chairs’ group came about
due to initiatives of the UNF government, and not
the other way around. In order to understand the
positions of the co-chairs, it is important first
to focus on the individual policies of each of
these countries. The fundamental objective of the
Japanese, US and EU policies is one of security
and stability, in order to continue work on the
economic agenda, and promote capitalism in the
island. At the very beginning of the peace
process there were divergences from this
position, mainly among EU countries. Pressure
from the global ’war on terror’, however, has
pushed these countries into uniform alignment.
The recent ban on the LTTE by the EU as a
’terror’ group is a reflection of this policy
convergence, made with the objective of
establishing stability.

This position is strengthened by support given by
multilateral agencies such as the World Bank and
the Asian Development Bank, which work on the
basis of a similar policy perspective. Of course,
promoting negotiations is an important element in
this strategy, with the aim of ensuring security.
But the fundamental motivation of supporting
negotiations is very different from the
objectives behind the Norwegian two-actor,
impartial-negotiator model. Suddenly what becomes
more important is not balancing between warring
parties, but rather the stability of an
established state in order to promote capitalism.

Despite the presence of this fundamental
position, it is not one that the ruling classes
of Sri Lanka can take for granted. Continuation
of this policy, after all, will depend on the
good behaviour of those elites. Developments such
as a stepped-up military strategy could worsen
the humanitarian crisis, increase human-rights
violations, instigate a greater flow of refugees
and destabilise the core areas of the economy -
evolutions that would clearly go against the
policy objectives of the co-chair countries.
Similarly, any significant reversal of the
economic agenda, or any move to undermine the
influence of the co-chairs by courting other
international actors, could also bring about a
change in the international approach.

As much as the two-actor model reveals
contradictions that undermine the chance for
long-term peace in Sri Lanka, the policies of the
co-chairs have their own inconsistencies. For
example, even while calling for negotiations, two
of these actors - the EU and the US - have banned
the LTTE as a ’terrorist’ organisation. Though
prescriptive statements are made about human
rights, humanitarian crises and the like, there
remains a continuous flow of foreign aid from
these key donors, so long as the reform agenda is
maintained by the Colombo authorities. Promotion
of the private sector likewise continues
unabated, with the support of many agencies.
Finally, although security and stability are the
underlying motives of this approach, there is
very little commitment to actually support Sri
Lanka through military means.

The contradictions of this international
conundrum create complicated problems for those
who accept that working with international actors
is essential in the current context of global
capitalism. This is relevant not only for Sri
Lanka, but for other countries in Southasia as
well - particularly in the situations of internal
conflict that have become such an integral part
of the region’s socio-politics. Unfortunately,
our dominant response to these complicated issues
is generally one of two. We either remain within
a framework of liberal internationalism that
naively believes in the goodness of an
’international community’; or our response
originates among nationalists of various guises,
who believe in an ahistorical notion of
sovereignty.

The time has come for us in the global south to
break through this conceptual trap, which does
not provide us a framework with which to deal
with these international interventions. All our
societies are now already a part of globalised
capitalism. Our belief in the sovereignty of the
nation-state will not isolate us from it. Neither
can we afford to go along with liberal
internationalism naively. Globalisation, while
integrating the world, also brings out
differences more sharply. How global factors
affect South Asia will thus be a result of our
own histories and social conditions. Only a much
closer look at our specific historical situations
will help us to identify spaces within global
capitalism that we can make use of for our own
purposes. And only in this lies the foundation
for a new politics with which to deal with
international intervention.