Milinda Moragoda
Minister for Economic Reform, Science and Technology
Sri Lanka

Ladies and Gentlemen,

At the outset, I would like to express, on behalf of Prime Minister Ranil Wickremesinghe, the Government and the people of Sri Lanka, their profound appreciation to Deputy Secretary of State Armitage, and through him, to the Government of the United States, for having convened this Seminar in preparation for our meeting in Tokyo in June. Equally, we extend our profound appreciation to the Government of Japan for acting as host to the June Conference, which will be of critical significance for the peaceful resolution of the bitter conflict that has fractured our society, and ravaged our country for two decades. No less do we thank the Governments of all the countries represented at this Seminar for their concern and support.

We are the more grateful because these meetings that concern Sri Lanka are being convened at a time when the world's attention is drawn to momentous events taking place elsewhere. It is our hope that this demonstration of friendly concern will have its own recompense in the form of satisfaction at being able to assist a process that brings peace and unity to a country and hope for 19 million people.

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Ladies and Gentlemen,

The world was a different place after the tragedy of September 11th 2001. So too was Sri Lanka. Just months before, in July, an attack by the LTTE severely damaged our only international airport. If that was our darkest hour, the dawn would not be far away. It strengthened our resolve to end a senseless conflict.

Since the Government of Prime Minister Wickremesinghe took office some 15 months ago, every effort has been made to arrive at a peaceful resolution of the conflict. With this in mind we invited the Norwegian Government to continue with the facilitation process that was initiated by President Chandrika Bandaranaike Kumaratunge. As a result of the commitment of the Norwegian Government and the sincerity and resolve of the two parties to the conflict, there is now hope for a peaceful end to the bloody hostilities that have killed more people than the United States lost in the entire Vietnam War and has spread terror throughout our country and crippled its economy.

The peace process in Sri Lanka has been a matter of learning by doing. However, our philosophy has been rooted in a principled framework that is predictable in approach, flexible when appropriate but firm and resolute when necessary. One reason why the conflict had spread over so many years was that there seemed no way out of it. Some believed that a military solution was feasible. Others, who thought that a peaceful solution could be found, were disappointed, as one negotiation after another ended in failure and renewed hostilities.

The approach of the present Government has been different. With a genuine desire to address the lingering issues that had given rise to conflict, we were willing to listen, to learn, and to be patient and inventive in our quest for peace. On the other hand, we would not close our eyes to the possibility of failure, and would be prepared to deal with its consequences. With an open but cautious approach, we can claim now to have made substantial progress toward what we believe to be our common goal.

The visionary leadership of Prime Minister Wickremesinghe and his willingness to look with fresh eyes on the complexities of the situation have resulted in agreement on a cease fire, and acceptance by both sides of the political risks necessary to carry the process forward. Most importantly, we have effectively engaged the international community in our quest. We need their concern, their assistance, and their support in our endeavours. That the international community should recognize that they, too, have a stake in the outcome of these negotiations - that, we believe, is our surest guarantee of success.

No one should expect that the issues over which thousands of our countrymen have given their lives could be resolved in a brief negotiation. Twenty years of conflict have wounded minds as well as bodies. Those wounds will take some time to heal; they have generated a climate of fear and mistrust in a country that is home to communities of different ethnic origins, of different religious persuasions, and speaking different languages; communities that must come to recognize that it is only through harmony and collaboration that prosperity for all can be achieved.

Some donors may, as a matter of policy, think it desirable to postpone granting us assistance until the current negotiations are concluded and a peace accord has been signed. We appeal to them to reconsider that approach in the circumstances of our case. There are many instances where accords have remained on paper, where beneficiaries have been denied a chance to feel the benefits of peace. There is no doubt that without donor support from the outset, economic recovery could turn out to be a distant prospect. If we are unable to demonstrate now, in a preliminary way, the dividend that peace will bring, we risk the negative effects of frustration among the parties, a breakdown of the negotiations, and the resumption of hostilities. By allowing the flow of assistance to commence now, we could begin to show to every section of our people, including the LTTE, that a peaceful accommodation of interests will bring tangible prosperity and a better quality of life for all.

In support of our appeal for the timely commencement of assistance that would speed Sri Lanka's economic recovery, we offer the progress thus far achieved under complex and volatile conditions. Whenever ceasefire violations have taken place, both parties have displayed the wisdom and maturity not to scuttle the peace process and revert to violence. Our negotiators have been able to remain focused on the common goal of a political solution. From having to deal with the demand for a separate state, they have moved to a consideration of patterns of devolution within a federal system. The atmosphere at the negotiations has progressed from mutual suspicion tinged with hatred, to mutual caution, in a continuing trend that is fostered through confidence-building measures. Moreover, we would be willing to offer such assurances as may be needed as to the proper use and accountability for the funds provided.


Urgent tasks

Funds are urgently required for both the immediate needs of reconstruction, rehabilitation and relief as well as for laying the foundations for overall economic recovery after two decades of destructive and debilitating conflict. I would like to outline first the tasks that demand our immediate attention.

  1. There are some 1 million land-mines scattered in unmarked areas, that need to be located and neutralized.

  2. Whole towns and villages need to be re-built and their basic services restored.

  3. There are an estimated 1 million internally displaced persons, currently accommodated in camps, or staying with relatives. They desperately need shelter and simple equipment to till the soil.

  4. Many schools have been destroyed or damaged in conflict-affected areas, while schools in other parts of the country have suffered severely from a chronic lack of funds. Sri Lanka is proud of its achievements in education, and its high literacy rates. Access to good schools has been of enormous significance to our people. But unless urgent action is taken to restore the quality of our schools, we shall risk squandering our achievements in this field, and having to deal with a "lost generation" of inadequately educated youth.

  5. One of the greatest challenges that we must face is getting people back to work throughout the island. In addition, it has been our experience that whenever people have remained in refugee camps for long periods without hope and regular employment, they tend to become inured to a culture of dependency. But, with very little assistance they can be encouraged to resume their livelihoods as fishermen, farmers, and small traders. The social returns on such small investments will be very large, and the rehabilitation of these sections of our population will be essential if we are to achieve a lasting peace.

"Regaining Sri Lanka": a programme to stimulate economic growth and eliminate poverty

A large percentage of our people still live below the poverty line, and the Government of Prime Minister Wickremesinghe is committed to making a determined effort to deal effectively with the problem.

Looking back over the 50 years since Sri Lanka re-gained its independence, we can see the strong commitment of successive governments to human development and welfare policies. Large investments in social development have been reflected in Sri Lanka's extraordinarily high placement from year to year in the United Nations Human Development Indices. But over the same period, we did less well in maintaining an appropriate balance between social sector expenditures and investment in creating an environment conducive to economic growth. The result has been an imbalance between the aspirations of the people on the one hand, and on the other, a lack of opportunities for their realization. That imbalance has, in turn, resulted in dramatic and destructive socio-political consequences, especially among the youth. Sri Lanka, it must be said, already possesses the human capital necessary to generate and sustain economic growth; in this, our situation may resemble more that of post-War Europe or Japan rather than that of some other developing countries.

The Government's economic programme, called "Regaining Sri Lanka" is designed to redress this imbalance between aspirations and opportunities. We recognize that efforts to alleviate poverty cannot succeed without economic growth, and the programme establishes priorities designed to move the economy to a higher growth path. We also recognize that we cannot be dependent on foreign aid indefinitely. We need to stand on our own feet. "Regaining Sri Lanka" seeks to achieve this.

I would like you to note that the "Regaining Sri Lanka" programme was developed with extensive participation by persons from a wide range of backgrounds, and is being implemented by Steering Committees that are essentially public/private sector partnerships. This endeavor has earned the strong support and endorsement of the international community.

The Tokyo appeal for timely support

In making an appeal to our friends for timely support for our efforts at reconstruction and development, we ask that you take into account the special difficulties that confront us on the way to making peace a reality: It is not feasible for us to deal with reconstruction of war-ravaged areas in isolation from the development of the rest of the country which has also suffered economic and social damage as a result of the war; nor would we succeed in our efforts if assistance were to be delayed pending conclusion of a peace agreement. The situation we face demands first that we undertake reconstruction and development activity right away in the south as well as the north on some equitable basis, looking at urgent development needs over the country as a whole; and second that we balance immediate needs against medium term investment needed for economic growth. We are convinced that unless we can significantly increase economic growth and demonstrate the prospect of a better future for all, it will not be possible to make headway in the building of a lasting peace and a united nation.

Hence, the Tokyo Donor Conference is an event of critical importance to the success of our endeavours. There we shall want to focus on reconstruction and development of the entire country. Immediate humanitarian assistance is urgently needed for undertaking the tasks I outlined earlier, such as de-mining, reconstruction of towns and villages, and assistance to internally displaced persons, including promoting their resumption of productive work. But of equal and parallel importance is the need to make substantial progress on the "Regaining Sri Lanka" programme that represents the Government's overall economic strategy for poverty alleviation and forms the basis for the financing we receive from the World Bank, the International Monetary Fund, The Asian Development Bank, other financial agencies and bilateral donors.

Elements of that programme include: (1) infrastructure development such as the building or repair of roads and the augmentation of power generation; (2) making Sri Lanka into a transport, logistic and financial hub for the region as well as the world; (3) the establishment of a strong information and communications technology sector that would facilitate the flow of information and contribute to re-integrating the country; (4) improving the delivery of all types of education, especially tertiary education, to our people, and making them more responsive to their needs; (5) strengthening our health care delivery systems - upon which the vast majority of our people depend; (6) improving the productivity of our agriculture, fisheries and small businesses so as to enhance the quality of the lives of our people; (7) preservation of our environment, even as we seek success in increasing economic growth; (8) the promotion of tourism, including eco-tourism and other non-traditional forms of tourism; (9) I mention finally one of the most complex and politically sensitive of the elements in the Prime Minister's programme, namely, reform of the public sector. The disproportionate size of Sri Lanka's public sector - greater by far than any in the Asian region - is a constraint that severely limits economic growth.


At the time we regained independence 50 years ago, our country was among the most economically advanced in Asia. Since then, political and ideological dialectics have deflected us from the task of building a prosperous, unified nation. This has weakened our economy and left us with the legacy of fratricidal conflict. With the leadership of Prime Minister Wickremesinghe, and the goodwill from our friends in the international community, we now have the chance to draw back from the brink. At last our political leadership and our people are now united in the common cause of harmony and development. Perhaps we may even offer a pattern for others on how the genius of a people can rise again out of the devastation and alienating bitterness of conflict, to regain their place as a strong and vibrant nation, sustained and enriched by the talents of all its peoples. At the Tokyo Donor Conference, we expect to demonstrate in greater detail our single-minded allegiance to that cause. Ladies and gentlemen, it is now, or perhaps never!


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