South Asia Citizens Web, April 13, 2003

Peace Dividend, Development and the Distributional Problem in Sri Lanka

by N. Shanmugaratnam

In mainstream analytical literature, ëpeace dividendí is generally interpreted rather narrowly in terms of the impact of cuts in military spending on economic growth performance. The analysts are generally concerned as to how the surplus freed by reductions in military spending is being used. There can be differences among them on ranking the alternative uses to which the saved resources can be put, i.e. the conversion of the surplus. Some may argue in favour of returning the surplus to the private sector through reduced fiscal deficit and lower taxes. They may justify this by reasoning that such use of the ëpeace dividendí would encourage private investment while helping to get the ëmacroeconomic indicatorsí right. Others may agree with those who advocate that at least a part of the money saved should be invested in reintegration of the demobilised soldiers, human development and peacebuilding.
Peace dividend in this sense has yet to materialise in Sri Lanka, although the term has gained wider currency.

Military spending by the government and the LTTE remains high. Our peace process has not reached the stage of decommissioning and demobilisation. The controversies over the High Security Zones in Jaffna and the occasional confrontations between the two armed forces are strong reminders of this reality. They also reveal once again that military considerations continue to enjoy top priority on both sides. Military spending is not likely to be reduced until a lasting political solution is found, and not before its implementation has progressed beyond ëthe point of no return to warí and a programme of reintegration of ex-combatants (government and LTTE) is instituted. Let us also bear in mind that demobilisation of combatants and dismantling of the war economy have their cost as they would involve loss of employment and income for many. Peace dividend in the sense of savings on military spending and their impact on growth may take a long time to be produced in Sri Lanka, and it is not easy to predict at this point how big the savings are likely to be, when they come.

It may be recalled that this conception of peace dividend gained wide currency in the post-cold war era when expectations were raised that the USA and its Western allies would reduce military spending quite dramatically and the savings would be invested in non-military sectors and social development. Some groups and organisations also demanded that the post-cold war peace dividend be shared with the poorer developing countries. In fact these sentiments were strongly articulated at the Copenhagen World Social Summit in March 1995. However, the peace dividend that materialised was not anywhere near the high expectations raised in the euphoric days that marked the end of the cold war. The ëmilitary industrial complexí is as intact as ever and now it is deep into the violent business of disarming ërogue statesí.

A broader conception of the peace dividend

Narrow economic conceptions of the peace dividend such as the above do not seem to have much operational value in todayís Sri Lanka. No realist would chase after an illusory ëpeace dividendí in the form of reduced military spending or its positive economic impact in this country at present. It is not rational to expect quick cuts in military spending when the protagonists are still trying to find a political solution to end a war bitterly and ruthlessly fought for twenty years. But it is possible to create a peace dividend in a broader sense by utilising the opportunities offered by the emerging environment. In popular discourse, ëpeace dividendí has acquired a broader, though often somewhat loose, meaning to include economic as well as social, political and psychological benefits that accrue as a result of an ongoing peace process with or without significant cuts in military spending.

For instance, the improvements in human security and freer human mobility gained due to the removal of repressive controls and the successful implementation of a permanent ceasefire can contribute towards a peace dividend in the broader sense. These gains along with the progressive removal of sources of uncertainty created by war go a long way in enabling households to rebuild their livelihoods, which were disrupted or destroyed by war. They can promote economic revival in general even where military expenditure is not significantly reduced. Further, even without a major cut in military spending, it is possible to make the armed forces contribute to the peace dividend if they can be redeployed for non-military activities that generate or promote economic revival and enhance social security.

Peace, Development and Distributional Conflicts

It would seem that such a broader notion of the peace dividend underpins the public discourse on the subject in Sri Lanka. However, there is a need to more explicitly articulate this position and relate it to the larger debate on peace and development. A basic lesson of history is that peace may be development friendly but development is not necessarily peace friendly. Capitalist development has an inherent, universal tendency to be socially and spatially uneven, and to generate distributional conflicts and create winners and losers as a result. Social peace is threatened where distributional conflicts and deprivation are serious and ignored or mishandled by policy makers. Class, though a defining feature of inequality in modern society, is not the only basis of distributional conflicts. Gender, race, ethnicity, caste and religion are among the key variables that interact with class in distributional conflicts. However, the history of capitalist development also shows that countries that consciously chose a social contract framed with due consideration to some agreed principles of democratisation, distribution and non-discrimination have been able to avoid major violent turns of internal conflicts. It follows that, in a post-war situation, peacebuilding and development have to be seen as interrelated processes, and this relationship has to be governed in a politically enlightened way to achieve equitable socio-economic advancement.

In Lanka, we find ourselves in a context that is both promising and challenging in this regard. The peace process is promising but taking it to fruition in the form of a political solution is a major challenge. It cannot be denied that the ethnic conflict in Lanka is rooted to a great extent in conflicts over distribution of resources, opportunities and political power ó in what analysts regard as horizontal inequalities. These conflicts became progressively communalised on the basis of ethnic divisions, which were politically defined in colonial times and subsequently modified and redefined as communalisation advanced into structures of the state and the polity at large. Here, it is not my intention to go in-depth into the political economy of communalisation and the latterís enduring institutionalised presence in the phase of economic liberalisation that began with the change of government in August 1977. I hasten to repeat that there are distributional conflicts outside the ethnic conflict and to stress that they have been growing under the regime of economic liberalisation. The point I want to make here is that development can contribute to durable peace if it can be so governed as to make it socially, ethnically and spatially as even as possible. This should be the main premise of a broader conception of the peace dividend. Further, such a development process is a necessary condition for the decommunalisation of the Lankan polity.

Lankaís record on both peacebuilding and development in the past quarter of a century leaves much to be desired. The destructive effects of the war are well known. The failure of the neoliberal economic policy to generate sufficient jobs and promote human development qualitatively and the accompanying suppression of the rights of workers by all governments are also well known. However, the government and the defenders of the neoliberal policy have pointed at the war as the cause of the failure of the economy. There is no doubt the war has had a devastating effect on the national economy and its growth prospects. It drove investors away and encouraged unproductive quick profit making (including socially undesirable) activities while distorting the allocation of public resources. It caused disinvestments, market failures in many sectors and major economic contractions and mass deprivation in the North-East. However, the war alone cannot explain everything that went wrong with the economy from a social perspective. It would seem reasonable to assume that without war the countryís economy would have grown at higher rates. But one cannot proceed from there and assume that the higher growth would have automatically been accompanied by an equitable distribution which in turn would have led to all round human development. It does not make sense to causally link the adverse effects of deregulation and privatisation on employment, wages and the cost of quality health care and education and the resultant social exclusion found in Lanka to the war. The unfair exploitation and the privations suffered by the workers in the Free Trade Zones have practically nothing to do with the war. These and other problems such as the highly skewed spatial distribution of the GDP and the high incidence of deprivation and poverty in areas such as Moneragala are consequences of the neoliberal economic policies so enthusiastically followed by successive governments.

Paradoxically, the war has helped make a dent on rural poverty and unemployment in the South as hundreds of thousands of youths, mostly rural, found employment in the stateís armed forces. As the war became protracted, the war economy expanded and absorbed a considerable number of people. The non-liberal militarisation opened up job opportunities for many who were excluded from the liberalised economy as unemployable! However, needless to labour the point that making war is not a desirable means of employment generation. On the other hand, the dismantling of the war economy would throw many people out of employment, and if the past record of the liberalised economy is any guide, most of these unemployed are not likely to be absorbed by it. Thousands of them may end up unemployed and many, like their colleagues who deserted in the past, may join underworld gangs. Such turn of events could precipitate unintended social consequences. Further, after more than a year of ceasefire, the vast majority of the people are more concerned about the rising cost of living, unemployment and social insecurity, as revealed by surveys and protests.

Such concerns become even more serious when we turn to the North-East where the challenges of rebuilding and developing the war-torn society and economy are daunting. The war has redrawn the political economic and demographic landscape of this region. It is widely recognised that, at the aggregate inter-regional level, there is a major development gap between the North-East and the rest of the country and that this has to be bridged in the shortest possible time in order to re-integrate this region into the larger economy and polity. A fundamental concern, however, is how to achieve this without reproducing the uneven spatial patterns of development, deprivation and exclusion experienced in the south of the country. The government has yet to show how it hopes to bring about a transformation of the social geographies of exclusion in the south, and the LTTE too has not explicitly articulated its own vision of development. Of course, developing countries are subject to a global imperial authoritarianism when it comes to choosing national economic policies. Yet an enlightened political class cannot afford to disregard the crosscutting questions of legitimacy, stability and social reproduction. The LTTE, which is an equal partner in the peace process, which runs a de facto state in the North-East, and which is expected to be the dominant actor in a future regional government, has yet to make known its views on the Lankan experience with the neoliberal project. I think it is time we raised the question as to how the LTTE sees the future development of the North-East in the current global-regional context.

Return to New collection at South Asia Citizens Web

Return to South Asia Citizens Web