Dilrook Kannangara

Having read an interesting article by Garvin Karunaratne prompted me to write this to bring to attention real issues of today that were disregarded in it. In short, if a separate state or states are declared in the northern and eastern provinces, they will be rich and developed countries in a generation thanks to the sheer investment potential of their sponsors abroad!

Agriculture is Not the Engine of Growth Today

The article focused only on agricultural produce. However, agriculture is not the engine of modern economic growth which is based on industry, services, IT, AI, financial markets, mining, defence and shipping. It is true the two provinces seriously lag behind in these but not the rest of the world. Sri Lanka tried extremely hard to bring these investments into the two provinces but failed. None of this can be done by the government. They must be made by private and corporate investors. This will be discussed later.

On the subject of agriculture, the two provinces still do not have developed ports for international trade. If they were independent nations, they will have ports that engage in international trade. Their produce can be exported for dollars. Earnings will be far more lucrative than selling them for Sri Lankan rupees. Similarly, they can directly import from foreign nations with massive savings in import duties and VAT charged by the Sri Lankan government (which may go to their own governments), savings in intermediary costs and transport costs. Once again, a better deal for the people in the north and the east.

Investments

The biggest challenge of all developing nations is investments. Despite various attempts, Sri Lanka failed to attract investments in modern industries.

If the two provinces turn into one or two independent nations, Tamil Diaspora, Tamil Nadu and the Organisation of Islamic Countries (OIC) will generously invest billions of dollars annually and turn them into the next economic miracle.

The total dollar earning of the Tamil Diaspora is higher than the total earnings of Sri Lankans converted to dollars! This is due to the fact that the Sri Lankan Tamil Diaspora lives in some of the richest nations on earth and their sheer number. Also, Sri Lanka’s currency has steadily lost its value. This means, Tamil Diaspora has billions of dollars to invest. However, they are unwilling to play by the rules of what they call Sinhala” governments. They are also totally unwilling to invest in the island if their investments benefit Sinhala people. If a separate nation is created for Tamils, their blood relatives in the Diaspora will invest billions of dollars in new industries.

Tamil Nadu is the second largest Indian state economy. They too will invest in billions in a separate Tamil nation in the island which will be indirectly ruled by Tamil Nadu influence in terms of policy, taxation, defence matters, governance, border security (or lack of it), fishing rights, etc. This is not possible at the moment as the Sri Lankan government makes all these decisions.

If Muslims get their own nation to run on Islamic laws, most importantly in compliance with Sharia principles, ultra-rich Islamic nations will help the Islamic republic with billions of dollars of investments, heavily discounted fuel and gas, preferential export status and many other benefits. At the moment this is not possible as not the entire legal and economic system of Sri Lanka is Sharia compliant.

The Islamic nation in the east will be the next Dubai or Maldives (the richest South Asian nation today in terms of per capita income).

Choice of Government Investments

In addition to business investments, there is government investment.

Until now, the Sri Lankan government decided on the choice of government investment in the north and the east. People in these areas were never consulted. For instance, defence expenditure the government spends in the north and the east is close to a billion dollars annually! People in these two provinces would prefer that money to comes to them instead. That cannot be done without allowing them a separate nation as the moment the military is weakened in the two provinces violent separatism will begin.

Sri Lankan government has also invested heavily in building houses for the displaced, roads, etc. in the north and the east. However, if the two provinces were independent, they would not have invested so much in these. Instead, they would have invested in income-generating and export-oriented activities. From the earnings, they would have built houses, etc.

The governments in separate states in the north and the east will have an extremely attractive and new financing source – their Diaspora and sponsors abroad. They would raise bonds with ultra-low interest rates with a term of over 25 years which will be sold to the Tamil Diaspora, Tamil Nadu, etc. For them it is a low price to pay for a nation of their own. Israel does this very successfully. This will be a cheap financing source the Sri Lankan government will never have.

Cultural and Spiritual Resurgence

At the moment all Tamil cultural works are imported from India. Sri Lanka produces next to no Tamil cultural works. This will totally change when a separate nation/s is/are created in the north and the east for Tamils (and for Muslims too). Locally produced original Tamil artworks will reach a starving global Tamil audience. The same goes for Tamil, mostly Hindu, spiritual activities too. Instead of importing from India, the Tamil nation within the island will be an exporter of these.

Implications for the Rest of the Island

Implications for the rest of the island depends on the arrangement. Resources and opportunities in the rest of the island may be divided among a smaller number of people than now which will make them richer. However, this depends on the arrangements.

At the moment a disproportionately larger tax revenue is earned from the seven provinces outside the north and the east and the two provinces consume a disproportionately larger government spend in education, defence, healthcare, administration, sea patrol, border control, narcotics control, etc. This will be saved which can be invested in the seven provinces. Imports, especially legal and illegal gold imports, fuel imports (travel and transport between the north and Colombo consumes a significant amount of fuel), foreign currency spent on foreign education, etc. can be saved. These savings will run into billions of dollars each year.

Provincial councils can be discontinued as only Tamils ever wanted them, saving dozens of million dollars each year and reducing layers of governance and associated waste and corruption.

Caution

However, this does not mean a division of the island as demanded by Tamil voters in the north and the east and their political parties throughout the island is the solution. It is not. Over 50% of total Tamils and over 60% of total Muslims live outside the north and the east. The north and the east make up a massive 28% of the island. Therefore, allowing independence to the north and east is inequitable and unfair by the people in the seven provinces. An equitable arrangement must be made for a fair exchange before division (if at all).

However, the northern and eastern areas will certainly not suffer poverty and destitution if they become one or more separate nations.