Fonseka’s resignation letter

* Political Leadership brought the victory: Govt.

* Political Leadership brought the victory: Govt.
* During my command of 3 years and 7 months, the Sri Lanka Army managed to eradicate the terrorist movement having apprehended an unbelievable stock of arms and munitions and decisively defeating the LTTE and its murderous leadership. which Your Excellency is obviously aware of. I would not be exaggerating to state that I was instrumental in leading the Army to this historic victory, of course with Your Excellency’s political support, which helped to materialize this heroic action. Though the field commanders, men and all members of the Army worked towards this common goal, it is with my vision, command and leadership that this yeomen task was achieved. General G S C Fonseka
* Fonseka’s resignation letter
* Coup fears led to crisis: Sri Lanka's top general
* President promptly accepts Fonseka’s resignation
Read More
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Fonseka’s resignation letter
Friday, November 13, 2009 Leave a Comment
Gen. Fonseka Gives 16 Points For Resignation

(November 13, Colombo, Sri Lanka Guardian) Sri Lanka’s Chief of Defence Staff (CDS) Sarath Fonseka, who led the war against the LTTE as Army Chief, on yesterday ( ov. 12) Thursday afternoon sent his resignation letter to President Mahinda Rajapaksa possibly to join politics.

Here full text of the resignation letter from the General Sarath Fonseka.

His Excellency the President
Through the Secretary, Ministry of Defence,
Public Security, Law and Order
Presidential Secretariat
COLOMBO
12 November 2009

Your Excellency

REQUEST TO RETIRE FROM THE REGULAR FORCE OF THE SRI LANKA ARMY
—————————————————

1. I, General G S C Fonseka RWP RSP VSV USP rcds psc presently serving as the Chief of Defence Staff, was enlisted to the Ceylon Army on 05th Feb 1970 and was commissioned on the 01st June 1971. On the 6th Dec 2005 due to the trust and confident placed on me, Your Excellency was kind enough to promote me to the rank of Lieutenant General and appoint me as the Commander of the Sri Lanka Army in an era when the Country was embroiled with the menace of a bloody terrorism and was in a stalemate state after having toiled for a solution politically or otherwise for over 25 years without a success.

2. During my command of 3 years and 7 months, the Sri Lanka Army managed to eradicate the terrorist movement having apprehended an unbelievable stock of arms and munitions and decisively defeating the LTTE and its murderous leadership. which Your Excellency is obviously aware of. I would not be exaggerating to state that I was instrumental in leading the Army to this historic victory, of course with Your Excellency’s political support, which helped to materialize this heroic action. Though the field commanders, men and all members of the Army worked towards this common goal, it is with my vision, command and leadership that this yeomen task was achieved.

3. I do appreciate the fact that the Country and Your Excellency did recognize my services which led to me being promoted to the first ever serving four star general to command the Army, nevertheless the courses of action which initiated subsequently greatly depressed me which I have enumerated in the Annex hereto.

4. Considering the facts mentioned in the Annex and more, which I am privy to withhold, I am compelled to believe that Your Excellency and the Government has lost your trust and faith bestowed upon me for reasons best known to Your Excellency. Hence as the senior most serving military officer in the Country with 40 years of service, such a situation does not warrant a continuation of my duties any longer, thereby I have the honour to request that I be permitted to terminate my services and retire from the Regular Force of the Army with effect from 01st December 2009.

5. Furthermore I have the honour to request that on retirement Your Excellency would be kind enough to grant me sufficient security which includes trained combat soldiers, a suitable vehicle with sufficient protection (Bullet proof) and escort vehicles for my conveyances due to the fact that I am considered as one of the highest priority targets by the LTTE, which they are yet capable of achieving. Also, I wish to bring to Your Excellency’s kind notice that over 100 men, six escort vehicles and a bullet proof vehicle have been placed at the convenience of the former Commander of the Navy, Admiral WKJ Karannagoda. I presume that such arrangements would be made available to me, considering the threat factor I am facing, which Your Excellency is well aware of.

6. I would also wish to quote an example in the case of the former Indian Chief of Army Staff General A S Vadiya, instrumental in leading the Indian Army in Operation Blue Star against the Sheiks at the Golden Temple, Amristar in 1984, was assassinated whilst on retirement in 1986 purely in revenge of his victories achieved. I do not wish to experience a similar incident as I have already sustained serious injuries after the attempt on my life by a suicide cadre of the LTTE. Thereby, I am compelled to entrust you with my security which is requested for life.

7. Furthermore, I would like to emphasis on a statement made by me during my tenure as the Commander of the Army. In that, I mentioned my dislike to be in command forever and also I would ensure that my successor would not be burden with the task of war fighting, which I abided with. Hence, as I have already overstayed my retirement date by 4 years, I wish to proceed on retirement without further delays.

8. Forwarded for Your Excellency’s kind consideration please.

I have the honour to be
Your Excellency’s
Obedient Servant

G S C FONSEKA RWP RSP VSV USP rcds psc
General
Chief of Defence Staff
CONFIDENTIAL
Annex A
12 November 2009

FACTORS AFFECTING MY RETIREMENT FROM THE REGULAR FORCE OF THE ARMY

1. Various agencies misleading Your Excellency by stating a possible coup immediately after the victory over the LTTE which obviously led to a change of command in spite of my request to be in command until the Army celebrated its 60th Anniversary. This fear psychosis of a coup is well known among the defence circle.

2. Appointing an officer pending a disciplinary inquiry who performed duties only as a holding formation commander in the final battle as my successor, disregarding my recommendations to appoint Major General G A Chandrasiri as the Commander of the Army who was the then Chief of Staff and an officer with an exemplary service as the Security Forces Commander in Jaffna for over 3 years. This has already led to a deterioration of the high standards I was capable of introducing to the Army, to my bitter disappointment.

3. Appointing me as the Chief of Defence Staff, though a senior appointment to that of a service commander, with basically no authority, except for mere coordinating responsibilities in a manner which mislead the general public of the country and most members of the Armed Forces. In that the Secretary Defence pushing me to vacate the post of the Commander in just two weeks after the victory and Your Excellency insisting me to hand over duties in less than two months depriving me of my morel obligations in revamping the welfare and providing a sound administration to the men who fought a gallant battle.

4. Further, prior to my appointment I was mislead on the authority vested with the CDS. I was made to understand that the appointment carried more command responsibilities and authority than earlier, but subsequent to my appointment a letter by the Strategic Affairs Adviser to the Secretary Defence indicated that my appointment was purely to coordinate the services and not that of overall command. The letter is attached herewith for Your Excellency’s information. Such actions clearly defines Your Excellency’s and the Governments unwillingness to grant me with command responsibilities which leads to believe in a strong mistrust in me, which is most depressing after all what was performed to achieve war victory.

5. During a subsequent Service Commanders Meeting, the Secretary Defence was bold enough to state an unethical and uncalled statement by mentioning that “if operational control of all three services is granted to the CDS it would be very dangerous”, which indeed was a loss of face to me in the presences of subordinate services commanders.

6. Your Excellency, you too made a statement at the very first security council soon after the 18th of May 09 when the battled was declared over, “that no further recruitment would be necessary” and “a strong public opinion is in the making stating that the Country is in possession of a too powerful army.” It was surprising to hear such a comment from Your Excellency in spite of your repeated praise and boast of the war victory. I personally felt that Your Excellency has commenced mistrusting your own loyal Army which attained the unimaginable victory just a week ago. You again repeated the same statement even after I handed over the command. Over these comments I felt disgusted as we even insulted those who made the supreme sacrifice by such comments.

7. The present Army Commander immediately on assuming duties commenced transferring senior officers who immensely contributed to the war effort during my command tenure including those junior officers working with my wife at the Seva Vanitha Army Branch which was clearly to challenge the loyalty of officers and most discouraging to the officer corps of the Army, with a wrong signal being transmitted on my authority.

8. With a pain of mind it was noted that the same Army which gained victory for the Nation was suspected of staging a coupe and thereby alerting the Government of India once again on the 15th of October 2009, unnecessarily placing the Indian Troops on high alert. This action did tarnish the image and reputation gained by the Sri Lanka Army as a competent and professional organization who was capable of defeating a terrorist group after the Malayan Emergency, in the eyes of the World. This suspicion would have been due to the loyalty of the Sri Lanka Army towards me as its past Commander who led the Army to the historic victory.

9. During my absences from the Country (23 Oct 2009 to 5 Nov 2009) being on overseas leave, the Army Headquarters was bold enough to change the security personnel deployed at the AHQ Main Entrance and the Ministry of Defence emphasizing the withdrawal of the Sinha Regiment troops who were attached to me, as you are aware is my parent regiment and supplementing them with other regimental personnel. The Sinha Regiment troops were good enough to provide security to the Ministry of Defence for 4 years and it is surprising to note how the combat efficiency of the said troops supposed to have dropped overnight as per Secretary Defence’s opinion. Further the Sinha Regiment troops numbering a mere 4, non combatants, deployed for vehicle checking duties at the AHQ Main Entrance, were replaced by 14 armed Armoured Corps personnel, whilst a further two platoons were brought in to prevent the 4 non combat Sinha Regiment personnel performing duties, creating a mockery to the general public including to some foreign missions. This clearly indicates a questionable loyalty of troops good enough for duties for over four years purely due to the fact that the troops were from my Regiment. This also indirectly reflects mistrust on me or an indication that the persons concern wish to keep a tab on my movements and visitors to my HQ/residence which is a clear display of suspicion created on me.

10. Further on instructions of the Secretary Defence, troops from the Gajaba Regiment was brought in to the MOD complex which indicated a divide loyalty within the Army and reasons to believe that the Army now being politicized. This is being encouraged by the Army Commander too who thinks that the Armoured Corp troops should over power Sinha Regiment troops.

11. Instigating malicious and detrimental news items and rumors by interested parties including several senior government politicians which led to identify me as a traitor in spite of my personal contribution of the government to change the history of our country.

12. During my absence from the Country, an acting CDS or an officer to overlook duties was not appointed which indicates that the much spoken appointment of the CDS is unimportant to the Government and the National Security Council. If the appointment was of significant important as stated by most, it should have been imperative to appoint somebody to oversee the duties and thereby I am convinced that I have being granted with an unimportant appointment in spite of all the work done.

13. It is with sadness that I note that the ordinary Army which I toiled to transform into a highly professional outfit is now loosing its way. Increased desertions, lack of enthusiasm to enlist (A drop in enlistment rate by 50% is recorded), disciplinary problems on advocating divided commands indicates an unprofessional organization in the offing. During the last two months the members deserted are higher than the recruitment.

14.The plight of the IDPs is also a point of great concern to me. Thousands of valiant soldiers sacrificed their valuable lives to liberate these unfortunate civilians from the brutality and tyranny of the LTTE in order that they could live in an environment of freedom and democracy. Yet, today many of them are continuing to live in appalling conditions due to the lack of proper planning on the part of the government and the IDPs who have friends and relatives elsewhere in the country must be given the choice to live with them until proper demining has been done in their areas.

15.Your Excellency’s government has yet to win the peace in spite of the fact that the Army under my leadership won the war. There is no clear policy to win the hearts and minds of the Tamil people, which will surely ruin the victory, attained paving the way for yet another uprising in the future.

16. The peace dividend the whole country expected at the conclusion of the war has yet to materialize. The economic hardships faced by the people have increased while waste and corruption have reached endemic proportions; media freedom and other democratic rights continue to be curtailed. The many sacrifices the army made to end the war would not have been in vain, if we can usher in a new era of peace and prosperity to our motherland.
=====
Coup fears led to crisis: Sri Lanka's top general
Colombo, on November 12. … .by Amal Jayasinghe
Amal Jayasinghe – Fri Nov 13, 3:10 am ET
COLOMBO (AFP) – Sri Lanka's government sidelined top general Sarath Fonseka because of fears he would launch a coup, he wrote in a bitter resignation letter ahead of an expected election battle with the president.

The letter, seen by AFP on Friday, criticises the government for a host of failings, including its inability to "win the peace" after the end of a 37-year separatist war here in May.

It gives a rare insight into events following the conflict, which claimed an estimated 80,000-100,000 lives, and shows the total breakdown in trust between Fonseka and his civilian bosses.

Considered a war hero at home for his role in the army's victory, Fonseka said the government had asked neighbouring India on October 15 to prepare its troops to be deployed in the event of a military coup here.

"This action did tarnish the image and reputation gained by the Sri Lanka army as a competent and professional organisation which was capable of defeating a terrorist group," he said in his letter, written in English.

Fonseka quit on Thursday as chief of defence staff -- a ceremonial position he was given after the military campaign and is now widely tipped to challenge President Mahinda Rajapakse in polls slated for April 2010 at the latest.

Sri Lanka's army, led by Fonseka, wiped out the Liberation Tigers of Tamil Eelam (LTTE) rebel group in May, ending the decades-long conflict but prompting allegations of gross human rights violations.

The United Nations reported that more than 7,000 civilians may have perished in fighting this year, though this is denied by the Sri Lankan government.

Fonseka, the country's only four-star general, sidestepped questions on his retirement plans, but associates and analysts expect him to stand against Rajapakse as an opposition candidate.

"He is certainly entering politics. It is an irreversible process for him now," Sumanasiri Liyanage, a political science professor at the University of Peradeniya, told AFP.

"In the short term it is good because he is helping to mobilise the main opposition. A stronger opposition is good for democracy," Liyanage said.

Fonseka, from the majority Sinhalese ethnic group and known as a nationalist, criticised Rajapakse for failing to make peace with the Tamil minority on whose behalf the LTTE rebels launched their separatist fight.

"Your excellency?s government has yet to win the peace in spite of the fact that the army under my leadership won the war," he said.

"There is no clear policy to win the hearts and minds of the Tamil people, which will surely ruin the victory attained, paving the way for yet another uprising in the future."

He said he opposed holding tens of thousands of Tamil civilians who survived the final stages of the fighting in internment camps and wanted them re-settled at the earliest opportunity -- a call repeated by the international community.

He also accused the Rajapakse administration of corruption and waste and said media freedom and personal liberties had been curtailed

"The many sacrifices the army made to end the war would not have been in vain, if we can usher in a new era of peace and prosperity to our motherland."

He also made it clear in his resignation letter that the government feared his power after the end of the war, which was the reason for his new ceremonial position.

"The government's unwillingness to grant me with command responsibilities which leads to believe in a strong mistrust in me, which is most depressing after all what was performed to achieve (the) war victory," he said.

He said he had wanted to remain as army chief until the organisation's 60th anniversary in October, but was promoted to the more senior but less powerful post of chief of defence staff in July.

"Various agencies misleading your excellency by stating a possible coup immediately after the victory over the LTTE obviously led to a change of command in spite of my request to be in command until the army celebrated its 60th anniversary.

"This fear psychosis of a coup is well known among the defence circles," he wrote to the president.

Sri Lanka has no history of a military coup except an abortive attempt in the early 1960s.

There was no immediate comment from the government.
================
President promptly accepts Fonseka’s resignation
by Shamindra Ferdinando and Norman Palihawadana
Daily Mirror
President Mahinda Rajapaksa yesterday accepted Chief of Defence Staff General Sarath Fonseka’s resignation letter. Accordingly, Gen. Fonseka will cease to be CDS with effect from Dec. 01, 2009.

Gen. Fonseka informed the President of his desire to resign at a one-to-one meeting on Wednesday, where they were expected to iron out their differences. Cordial as the meeting was, President Rajapaksa said he had no objections to Gen. Fonseka’s resignation or his decision to enter politics. "I have instructed my Secretary to accept you resignation letter immediately, should you tender it," the President told Gen. Fonseka.

After the meeting while Gen. Fonseka was walking towards the door, according to highly placed sources, a smiling President Rajapaksa said, "Sarath, you can always come back to me after your defeat in politics."

Sources said Gen. Fonseka had smiled and proceeded.

Gen. Fonseka’s resignation came hot on the heels of the UNP-led Opposition’s call that the CDS should wait till the President announced a snap presidential election at the SLFP Convention on Sunday (Nov. 15), to resign.

Gen. Fonseka’s letter is said to contain 17 reasons for his decision to call it quits.

A senior spokesman for the President’s Office confirmed that the President had accepted General Fonseka’s resignation. He told The Island that General had indicated that he would like to leave his uniform within the next few weeks.

General Fonseka told The Island yesterday evening that copies of his letter of resignation had been handed over to Secretary to the President Lalith Weeratunga and Secretary to the Defence Ministry Gotabhaya Rajapaksa. Declining to comment on the possibility of his immediate entry into politics, General Fonseka said that he expected the President to accept his resignation.

During a recent visit to the Washington Buddhist Viharaya, the General said that he was ready to shed his uniform to do ‘what was required in a post-LTTE era’. A section of the Buddhist clergy urged him to remain in uniform and not to enter politics.

A senior government official told The Island that the CDS wanted his resignation effective December 1, 2009. He said that as long as General Fonseka held the post, the government expected him not to engage in politics.

Responding to our queries, government sources said that the President could appoint one of the service commanders, in this case Air Force Commander Air Marshal Roshan Goonetilike, to act as the CDS during the period originally given to General Fonseka.

The first Sinha Regiment officer to command the Army, Gen. Fonseka spearheaded Sri Lanka’s successful war against the LTTE before being promoted to the rank General and appointed CDS. The army waged its final battle on the banks of the Nanthikadal lagoon, where troops killed LTTE leader Velupillai Prabhakaran and his top commanders on May 18.

Gen. Fonseka’s resignation came in the wake of a spat over who should be in charge of security at the army headquarters. There had been a dispute among some of the top brass regarding the deployment of the Armoured Corps in place of the Sinha Regiment, though it was customary for the serving commander’s unit to be in charge of security.

Although it was expected initially that theUNP-led United National Front (UNF) would unconditionally accept Gen. Fonseka as the Opposition’s common candidate, UNP and Opposition Leader Ranil Wickremesinghe put forth several conditions for endorsing his candidature on Nov. 09. The UNP’s conditions as spelt out by Wickremesinghe in an interview with the Tamil publication, the Sudar Oli. He called for the appointment of a caretaker government with him( Wickremesinghe) as the Prime Minister in the event of his (Fonseka’s) election.

Wickremesinghe said the United National Front, the JVP and the Tamil National Alliance should be agreeable to Gen. Fonseka’s candidature. He said he expected Gen. Fonseka to clarify certain issues concerning the Tamil people and the Tamil National Alliance should endorse that General Fonseka’s clarifications were acceptable to the Tamils.

The UNP leader said that he expected the common candidate to fulfil certain other obligations and make some pledges in public regarding the abolition of the executive presidency and the resettlement of IDPs.

Wickremesinghe demanded that General Fonseka make a prior announcement that he would assign important portfolios to the JVP and TNA in the proposed caretaker government. Fonseka should pledge that he would do away with the Emergency Regulations and ensure the full implementation of the 17th Amendment.
==============
Political Leadership brought the victory: Govt.
By Sandun A. Jayasekera
The government yesterday insisted it was the political leadership that brought about the victory against the LTTE.

Cabinet spokesman and Minister Anura Priyadharshana Yapa said the blame for the defeat or praise on the victory of a war went to the political leadership and even history would highlight only the performance of the political leadership. The responsibility to lead the country to victory or disaster lies in the hands of the political leadership, Minister Yapa said.

“No war could be won without proper political leadership. The Second World War was fought and won by the allied forces on the political leadership provided by Winston Churchill and Franklin D. Roosevelt. The Nazis were led by Hitler and Mussolini,” he said.

Responding to a media query at the weekly cabinet news briefing, the Minister said Chief of Defence Staff General Sarath Fonseka was the top military officer serving under the government and he would remain in that position until he retired or resigned on his own will.

“He is free to arrive at any decision but there are certain limitations when he arrives at that decision. I cannot comment on speculations. General Fonseka has not indicated about any premature retirement or on any other plan. What I can merely say is that General Fonseka is a serving military officer,” Minister Yapa said.

Commenting on the suggestions that Sri Lanka Administrative Service and Foreign Service officials were not happy about the appointment of military officers to key posts in the public and Foreign service, he said the government appointed them with good intentions.

“Almost all other governments have appointed security forces personnel to administrative or civil posts. The government appointed security forces personnel to diplomatic positions and key civil posts to appreciate their service,” he said.

“Controversial UPFA Southern Province councillor Nishantha Muthuhettigama was the darling of the media during and after the PC polls creating all kinds of sensational news for about a month. Now he has ended up in remand custody. Nobody talks about him now. This is a good lesson for all who dream big,” Minister Yapa pointed out.

Fuel crisis, other vital sectors face strike

Commotion outside a Colombo filling station

++++++++++++++++++++++++++++++++++++++++++++++++++++++
* “This payment was due from January, but we decided not to carry out any our trade union action due to the war situation in the country. Now that the war is over, we cannot accept excuses any more,” a CPC trade union leader said.
* Fuel shortages arose due to a “go slow” campaign by a JVP-backed joint front of trade unions in the Ceylon Petroleum Corporation (CPC) in support of a wage increase.
+++++++++++++++++++++++++++++++++++++++++++++++++++++++
Fuel crisis, other vital sectors face strike
By Chris Kamalendran and Damith Wickremasekera, Pic by Lakshman Gunathilake
Disruption of the fuel distribution network compelled filling stations countrywide to shut down yesterday as fears grew of strikes in other vital sectors such as electricity, water supply and the ports.
Workers in these sectors complain that the absence of budget proposals next month showed that the government will not fulfil assurances given to them over wage hikes. Instead the government will table a vote on account on November 3.
Fuel shortages arose due to a “go slow” campaign by a JVP-backed joint front of trade unions in the Ceylon Petroleum Corporation (CPC) in support of a wage increase. Trade unions in other sectors will join immediately if talks to win CPC demands fail, JVP’s trade union wing leader K.D. Lalkantha said yesterday.
The CPC unions, which are demanding a much-overdue interim allowance of Rs 5,000, are due to hold talks tomorrow with President Mahinda Rajapaksa.
Many of the fuel stations in the country were either forced to close down or limit the sale of fuel in the aftermath of a short supply since Thursday. Motorists in vehicles were forced to stay in long queues or curtail their movements.
The bus services were among the worst affected with many buses remaining off the road. The situation is likely to remain the same today. 'At least 40 percent of buses were forced to pull out by yesterday and this is likely to increase to 60 percent,” All Island Private Bus owners Association leader Gemunu Wijeratne said yesterday.
He said that even if the fuel distribution was restored to some sort of normalcy by tomorrow, the bus services were likely to be disrupted tomorrow also. Lanka Indian Oil Corporation (LIOC) workers, showing solidarity with CPC unions, refrained from working, though they usually work over time.
Petroleum Minister A.H.M. Fowzie has promised CPC Unions that he would arrange a meeting with President Rajapaksa tomorrow after he returned from Vietnam. There main demand of the unions is a salary revision which was due early this year after a period of three years or an interim allowance of Rs. 5,000 a month.

“If these talks fail we will be organizing a joint trade union action including strikes,” Mr. Lalkantha saidThe 6,700 CPC work force was promised the interim allowance of Rs. 5,000 earlier this year and the payment was due be given on September 30, but was deferred on the grounds that the Treasury did not have sufficient funds.“This payment was due from January, but we decided not to carry out any our trade union action due to the war situation in the country. Now that the war is over, we cannot accept excuses any more,” a CPC trade union leader said.
He said that though the government had claimed it did not have money to pay the salary increases, state bank employees had been given a salary hike.
CEB Lanka Viduli Sevaka Sangamaya leader Ranjan Lal said they would be meeting soon to decide on a three-day strike because of the failure to grant the salary increase. Trade union leaders at the National Water Supply and Drainage Board and the Ports Authority also said they were demanding salary increases which were long over due to them.
Ports Authority joint trade union leader Chandrasiri Mahagamage said yesterday the management had told them it was not able to increase salaries due to a drop in revenue. But unions were not accepting that explanation and would take joint trade union action soon.
Water Board union leader Upali Ratnayaka said yesterday they would be holding a protest campaign on Tuesday in Matara as a prelude to further trade union action in support of demands for salary hikes.

Source: The Sunday Times (25-October-2009)

Unions reject JHU request to give up agitations

Unions reject JHU request to give up agitations
The Jathika Hela Urumaya yesterday requested all trade unions and undergrad organizations to shelve their agitations, strikes and campaigns for rights for one year in
support of ongoing war effort. But this was rejected by the unions. Unions reject JHU request to give up agitations
The Jathika Hela Urumaya yesterday requested all trade unions and undergrad organizations to shelve their agitations, strikes and campaigns for rights for one year in
support of ongoing war effort. But this was rejected by the unions. Targeted export income is US$ 8.6 bn for 2008
In the year 2008, the Ministry of Export Development and International Trade will concentrate its efforts on an export development and promotion programme of
achieving an export income of US$ 13 billion by 2011 for Sri Lanka. The targeted income for the year 2008 has been placed at US$ 8.6 billion. SL Rupee -US Dollar exchange rate defies adverse expectationsThe Sri Lanka Rupee to the United States Dollar (USD) exchange rate closed at 108.72 as at the end of 2007, when compared with the exchange rate of 107.71
per USD which prevailed as at the end of 2006, thus reflecting a depreciation of less than 1%, during the year.

Bodies of two infants found in sea

Bodies of two infants found in sea
Suranjith PERERA
The bodies of two female infants were found by fishermen in the sea off Ratmalana yesterday.The discovery was made about 150 metres from the 57th Garden Block settlement near Bellangala in Ratmalana.
The first body was detected around 8.30 a.m. and the other around 5.30 p.m.
Fishermen reported the discovery to Mount Lavinia Police. Police said it was certain that the infants were thrown into the sea as soon as they were given birth since the umbilical cords of both infants were crudely mutilated.
The bodies are lying at the Kalubowila Hospital Mortuary

Three killed, 80 injured in Sri Lanka road
2007-12-21 19:22:23 Print COLOMBO, Dec. 21 (Xinhua)

At least three people were killed and 80 others injured in road accidents in different parts of Sri Lanka during the last 24 hours, police said Friday.
Two people were killed when a privately owned passenger vehicle went down to a 20-meter precipice at Takawakelle-Nawalapitiya road in the central hill district of Kandy at around 7:15 p.m. on Thursday (1345 GMT).
Forty passengers were injured in the incident and they have been rushed to hospitals in Nawalapitiya, about 114 km northeast of Colombo.
Failure in breaks was identified as the reason for the bus to veer off the road, the police said.
In the early hours of Friday, one people was killed in a road accident at Tangalle in the deep south, police added.
Also in the Southern Province a bus plying from Galle to Mataracrashed into another vehicle, injuring 12 passengers on Friday.
In addition, at least 28 people were injured when a passenger van carrying garment industry workers clashed with a lorry at Kahawatta, about 125 km southeast of Colombo also on Friday morning.
Sri Lanka, with a population of about 20 million, has an average of 2,000 fatal accidents every year mainly because of negligence, poor quality roads and overcrowded public buses. Editor: Song Shutao

30 Agriculture officers arrested

30 Agriculture officers arrested
Wednesday, December 19,2007 COLOMBO:
Over 30 Agriculture and Agrarian officers were remanded yesterday in connection with the Rs 150 million fraud that took place in the distribution of fertilizer. The Agriculture Development and Secretary to Ministry of Agrarian Services T. M. Abeywickrama said several provincial officers, research officers and distribution agents were involved in the fraud. It is reported that there are two distribution agents among those arrested. According to reports one agent is involved in selling Rs 50 million worth of fertilizer at higher prices after purchasing it at a subsidized rate.

A person cannot be remanded on terrorist label - court
[19-12-2007 5.10pm]

“A citizen of Sri Lanka has the right to move freely and engage in the profession of his/her choice. The court cannot remand a person merely because the police arrested and labeled him/her as a terrorist,” Colombo Chief Magistrate Mackey Mohamed says. He was taking up a case in which a man identified as Meera Mohideen Abdul of Samanthurai is accused of gathering information for terrorist activities.
The police may have the ability to arrest a person on terrorism charges and detain him/her, but the court cannot do that, the Chief Magistrate said.
Appearing for the suspect, lawyer Paranthaka Perera said that his client was employed in Colombo.
After considering the submissions, the court released him on two Rs. 50,000 sureties and fixed January 11th as the date for the next hearing.
This Muslim national was arrested at an army roadblock near Rupavahini Corporation in Colombo and handed over to the Cinnamon Gardens Police.

ENB Lanka News 11122007

400 new Homeguards recruited to defend border villages in Thanthirimale against Tamil Tigers
Monday, December 10, 2007, 17:42 GMT, ColomboPage News Desk, Sri Lanka.

Dec 10, Colombo: Civil Defence Force formerly known as Homeguards have recruited 400 youth to defend villages bordering Wilpattu National Park against the
ethnic cleansing attacks by the Tamil Tigers.
According to the police sources 200 of these Homeguards are presently being trained by the Army and will be appointed to the villages before 15 Dec.
The Homeguards are to be deployed at hamlets located from Aluthgama to Bogamuwa along the border of the Wilpattu National Park. Tamil Tigers launched several
attacks at the villages in the Thanthirimale area killing few villagers during the last couple of weeks.
Potato farmers in Matale worry over lower prices offered for their harvest
Monday, December 10, 2007, 17:51 GMT, ColomboPage News Desk, Sri Lanka.

Dec 10, Colombo: Potato farmers in Matale district have become helpless due to the lower prices offered for their harvest.
The farmers in Mahawela, Pallepola, Yatawatte, and Dorakumbura areas cultivated potato for this year and said to have a relatively rich harvest this time than
previous years.
The farmers told media that the present prices have come down to Rs. 10 per kilo. They further told that if they sell their products at this price they would not be able
to recover the costs. To get a reasonable profit the price should be kept at least at Rs. 25 per kilo, the farmers added.

Sri Lanka maid's "forced confession" may still be used in death penalty appeal: AHRC11
December, 2007 10:53:00 Lanka Rates Writer Font size: An Asian human rights body expressed concern Tuesday that an allegedly coerced confession by a Sri Lankan domestic worker sentenced to death for murder in
Saudi Arabia may still be used against her in an appeal of the verdict to a higher court.
Teenager Rizana Nafeek, accused of murdering a four-month old baby while working in a Saudi Arabian home, was sentenced to death by Saudi Arabia’s Dawadani
court even though she protested her innocence.
The verdict was appealed to the country’s Appellate Court which began hearing her case on December 8.
“While the appeal is being heard there is still reason for concern as Saudi Arabian law places high value on confessions and whether the confession is obtained
through duress does not become the subject matter of a separate inquiry,” said the Asian Human Rights Commission (AHRC) in a statement.
The Hong-Kong based organization said a confession obtained through duress is not regarded as inadmissible evidence under Saudi Arabian law.
Nafeek, who was 17 at the time of the alleged crime, was tortured by police to obtain a confession, the rights group charged.“Therefore there is still the possibility that this legal principle may be applied even at the appeal stage despite of there being no collaborative evidence of any sort to
indicate that there was any intentional murder,” the organization said in its statement.
“There are many persons in Saudi Arabia itself who have made representation in favour of Rizana Nafeek in this case and have stated many principles within Shariah
Law to the effect that under the circumstances of the present case there is good reason not to attach undue weight to the confession but that all the circumstances
should be taken in their totality in dealing with the case,” it added.
Nafeek claims the death was accidental.
“She claimed that while she was trying to bottle feed the infant without any assistance from any adult, the child choked which resulted in the death,” the AHRC said.
“There was no intentional killing and she had only been working in the household for just a few days before the incident happened,” it added.
AHRC, which is helping finance her appeal, called on people to appeal to Saudi Arabian King Abdullah bin Abdul Aziz Al Saud for clemency and pardon.

'' THEART TO SECURITY ''

Hundreds of students of the Sabaragamuwa University picketed opposite the University Grants Commission at Ward Place yesterday demanding that the Applied Science Faculty be shifted to the main campus at Belihuloya from Buttala. Police tear gassed and used water cannon to dispurse them. Later, as seen in the picture, they squatted opposite the Vihara Maha Devi Park and engaged in a satyagraha. Nearly ten students were hospitalized due to injuries sustained while fleeing the tear gas attack. Six were arrested for disobeying Police orders.(Photo-Chandrasiri Weerasinghe)

658 Illegal abortions are performed daily in Lanka

658 Illegal abortions are performed daily in Lanka
Written by Daily Mirror Jul 08, 2007 at 06:21 PM

In a country where abortions are illegal 658 abortions are performed daily on an average. More than 240,000 abortions are done annually in Sri Lanka in contrast to 360,000 births an year, it was revealed. Obstetrician, Gynaecologist L.A.W. Sirisena, in a presentation at the Health Education Bureau said that majority of women who seek to terminate their pregnancies through illegal abortions came from semi urban and rural areas.
He was speaking at a seminar for media personnel titled ‘Men as partners in maternal health’ held last week to mark the World Population Day which fell on July 1. Dr. Sirisena making his presentation on how men could support maternal health in hospitals said mothers who were compelled to take the risk of going through an illegal abortion belonged mainly to the 25-39 age group
In a country where abortions are illegal 658 abortions are performed daily on an average. More than 240,000 abortions are done annually in Sri Lanka in contrast to 360,000 births an year, it was revealed.
Obstetrician, Gynaecologist L.A.W. Sirisena, in a presentation at the Health Education Bureau said that majority of women who seek to terminate their pregnancies through illegal abortions came from semi urban and rural areas.
He was speaking at a seminar for media personnel titled ‘Men as partners in maternal health’ held last week to mark the World Population Day which fell on July 1. Dr. Sirisena making his presentation on how men could support maternal health in hospitals said mothers who were compelled to take the risk of going through an illegal abortion belonged mainly to the 25-39 age group.
“There are many reasons for a mother to take that hard, life threatening and sad decision. They say it is because the first child is too small or the family is completed. Many do abortions for economic constraints or to go overseas for employment. Then there are those who have been raped and got unwanted pregnancies,” Dr. Sirisena said.
In Sri Lanka abortion is illegal. However an abortion could be legally performed on medical grounds if and when the pregnancy posed a threat to the life of the mother within the first 18 weeks of the pregnancy, he said.
Colombo University’s Obstetric Medicine and Endocrinology Department Head Chandrika Wijeratne said a healthy mother contributed to make a healthier family, healthier community and a healthier nation.
Prof. Wijeratna said according to UNFPA, every minute a mother dies during child birth in the world. Root causes to maternal deaths and ill health were unwanted pregnancies, lack of quality skilled care provisions and access to facilities, he said.
Consultant Psychiatrist Neil Fernando said mutual understanding, respect and cooperation between the husband and wife lead to a happy and healthier family.
Consultant Community Physician Loshan Moonesinghe said due to the lack of proper education on contraceptives or prejudices on sexual relationships and birth controls there had been many incidences of unwanted pregnancies.
Scientific education on family planning and contraceptive methods among younger generation were a sine qua non for a quality life, he said.
Last Updated ( Jul 09, 2007 at 07:22 AM )

Dar Al Sharq launches Lankadeepa Weekly

Dar Al Sharq launches Lankadeepa Weekly
Web posted at: 12/5/2007 3:35:53Source ::: The Peninsula Doha • Lankadeepa Weekly, Qatar’s first

Sinhala-language newspaper launched by Dar Al Sharq, publishers of The Peninsula and Al Sharq dailies, has hit the stands. “Lankadeepa’s launch reaffirms Dar Al Sharq’s commitment to provide information on various subjects to a cross section of readers in Qatar,” said Abdul Latif Al Mahmoud, the General Manager of Dar Al Sharq.
“Lankadeepa Weekly will certainly endeavour to match and uphold the fair and just standards of journalism that are practised by our publications. I wish the management and jou-rnalists of Lanka-deepa success in this new venture.”
Congratulating Lankadeepa, A GAbeysekara Charge d’Affaires at the Sri Lankan embassy said: “As an independent community newspaper focusing on local issues, it can make a significant contribution to the Sri Lankan community in Qatar and Middle East. I congratulate Lankadeepa for providing a channel for communication within the community and on behalf H E S BAtugoda and the Staff of the Sri Lankan Embassy, I wish them success in the future with all their ventures.”
Dar Al Sharq Foreign Publications also publishes the International Herald Tribune, Varthamanam, Rajdhani Weekly and New Era

Lanka News -''New price index'' shows 19.3% inflation!

Wed, 5 December 2007 0:00:40 LBO >> Economy New Index 04 December 2007 19:20:34

Sri Lanka new price index shows 19.3-pct inflation

Dec 04, 2007 (LBO) – A new index to measure inflation in Sri Lanka's capital Colombo, showed that prices had risen by 19.3 percent in the past 12 months, a tad lower than the 19.6 percent measured by the existing index. The government's statistics office which computes price indices says the Colombo Consumer Price Index (CCPI) was not a "true measure" of inflation because its base is counted on the consumption pattern of a working class household 50 years ago.
All Inclusive
The new index called the CCPI(N) is based on the 2002 consumption patterns of all urban households in Colombo.
Data is collected from 12 urban centres in Pettah, Maradana, Wellawatte, Dematagoda, Grandpass, Borella, Kirulapone, Dehiwala, Kotte, Nugegoda, Kolonnawa and Ratmalana compared to seven centres earlier.
Authorities have been unhappy with the CCPI index as it showed high levels of inflation. The index responds quickly to money printing by the government to bridge the budget deficit.
The criticism that the CCPI index is "wrong" came while a country-wide index, the Sri Lanka Consumer Price Index (SLCPI) showed even higher levels of inflation.
In September inflation measured by the SLCPI was 22.1 percent compared to 17.2 percent for the old Colombo index. The new Colombo index showed 16.10 percent.
Though the trend was the same, the new index showed about a two percent lower inflation than the earlier Colombo index in some months, and sharply lower amounts at other times. But the index changes seemed smoother.
Why Understate?
Economic analysts say using an index that understates inflation would have several advantages to the government.
The main advantage would be that the government would be able to overstate economic growth with an index that understates inflation if it is made the official index for national accounts.

If it is used for monetary policy, the central bank would be able to print more money (have lower interest rates) without its negative effects being discovered by the public.
The government would also be able to underpay savers and provident funds, if the new index is used to index interest rates of inflation-linked bonds.
The government (and firms) would also be able to underpay workers, if the index is used to index wages. However indices using all households are not used to index wages of workers.
An index based on the consumption patterns of blue collar workers is needed to index wages. Such people spend a higher proportion of their income on items such as food.
Locally produced foods such as vegetables, meat and fish which monetary economists call 'non tradables' respond quickly to money printing because they cannot be readily imported when domestic demand pressure rises.
As a result blue collar workers need cost of living allowances quickly.
Even in the so-called capitalist countries such as the United States workers wages' are indexed to CPI-W which is based on the spending patterns of the bottom 32 percent of the urban citizens.
Sri Lanka's old CCPI index had a high proportion of food in it.
Techniques of understating inflation
In addition to using relatively blunt methods such as reducing the weight of items that go up the fastest, countries with central banking regimes use other sophisticated techniques to understate inflation so that more money could be printed;
= Hedonic regression - Discounting a price increase on the pretext that a qualitative increase has taken place which gives more 'pleasure'. The percentage of discount is usually arbitrary.
= Substitution effect - Substituting a rapidly rising product for a cheaper alternative on the pretext that a consumer would switch to a lower priced substitute.
= Increasing the weights of items that change slowly - Such as using rents in place of changes in actual house prices.
= Core-inflation – A controversial concept where the most important but volatile items are dropped altogether from an index. This allows a central bank to avoid tightening monetary policy. But when items such as food are dropped from core-inflation, the index no longer reflects the real world.
Core Inflation
"The Central Bank of Sri Lanka, in particular, has repeatedly highlighted the need for an accurate measure of inflation, which is crucial for the conduct of monetary policy," the statistics office said in a statement on the release of the new CCPI(N) index.
The census department has also developed a core-inflation index. Core inflation is not used in well managed countries to actually target inflation, as it is out of touch with reality.
Sri Lanka's core inflation index would drop prices under government price control, which analysts say is not necessarily a negative feature unless new items are brought under control, the statistics office said.
But using core-inflation for monetary policy purposes can result in frequent asset price bubbles as happens in the United States.
Most countries with inflation targeting frameworks use basic consumer prices with minor adjustments for interest rate changes or taxes. This because a legislative inflation target has no meaning unless it can positively impact the daily lives of ordinary people.
Economic analysts say Sri Lanka may be using a relatively unsophisticated method to understate inflation, which seems to centre around reducing non-trable products and increasing the weight of services in the index.
House rents, fees charged for services take time to adjust and can slow the growth of an index, but they do not necessarily understate inflation over the longer term, as most services are also largely 'non-tradable', meaning they cannot be readily imported.
New Zealand, the country that 'invented' inflation targeting, uses a special non-tradables index to base monetary policy decisions. However the target inflation is the CPI that affects ordinary people with an adjustment for value added tax.

SRI LANKA Policewomen Urged To Use Maternal Instincts In Dealing With Child Labor, Trafficking

CHILAW, Sri Lanka (UCAN) -- Children packing fish with ice or laying out the catch to dry are common sights along the coast of Chilaw diocese. Parents in this Catholic-majority area see child labor as a way to cope with poverty, even if it means a bleak future for the children, who typically have to work long hours under bad conditions. Sri Lanka's child-labor and related child-trafficking problems were the focus of a Nov. 7 workshop in Chilaw town, a little more than 100 kilometers north of Colombo, for newly recruited female police officers. The diocesan office of the Social and Economic Development Centre (SEDEC), the Church's social service organization, also known as Caritas Sri Lanka, organized the workshop, which appealed to policewomen's maternal instincts in addressing these problems. Neluka Perera, the program organizer, told participants most of the children come from poor fishing families. She called on the policewomen to stop child labor using "motherly compassion," strict law enforcement and "courage." The local child-labor situation is acute. According to Ruwan Manjula, a program officer with the SEDEC women's development unit, children as young as 10 can be seen in the wadiya, fish packaging centers, despite the legal minimum working age being 18. Mudalali, or boat owners, put children to work "under the pretense that it is helping poor families," she said. "The reality is that children are abused for minimum income and are virtual slaves," she reported. The issue is a tough one to deal with. One newspaper recently claimed this country of 20 million people has a "million child labor slaves." The workshop encouraged the policewomen to be more sympathetic in dealing with child laborers or children and women arrested on prostitution charges. As Perera made clear, children in fishing families live in poverty, often in troubled families with alcoholic fathers. Many families cannot afford education. In this diocese, children are "easy fodder" for human traffickers and sexual abuse at the hands of foreigners, she said. The western coast of the country lures foreign men who pay for sex with boys. British charity Christian Aid says information it has gathered indicates that up to 10,000 children between the ages of 6 and 14 are forced to work as prostitutes in brothels that cater mostly to foreigners. Gnanawathie, a deputy officer with the police Women and Children Bureau, told the workshop, "Although we arrest the people abusing children, the next moment we receive a call from a politician to release the culprit." The workshop organizers suggested that the policewomen contact priests or rights groups if they faced problems with influential people, such as politicians or businessmen, who block child-labor or child-trafficking cases because they make money off the children. The officers also were encouraged to help parents approach NGOs for help if they have trouble supporting their children. As Manjula said, cracking down on agents involved in child labor is difficult. "Here not only mudalali but sometimes our relative or friend could be the agent," she said. The policewomen talked about their own experiences. Kumuduni Perera, a police constable, said one mother complained that her child was trafficked by a mudalali to a wadiya for forced labor. "There was another incident in which parents gave their young child to a foreigner" for sexual purposes, she said. "Now this young child, not much more than 5 years old, is with the foreigner." One participant thought women police officers would be more compassionate than men in dealing with children and women victims, while their motherly instincts would provide the courage to act against culprits. SEDEC official Asoka Kumar said it was not only a state duty, but also a "religious duty" to deal with this problem. He said children are also suffering from the worsening economy and civil war. Thousands of child soldiers are reportedly fighting or working with the Liberation Tigers of Tamil Eelam, which launched an armed struggle for a separate state for the Tamil minority in Sinhalese-majority Sri Lanka since 1983. The Church worker expressed his conviction the Church could offer leadership in tackling the "horror" of child slavery. END

SRI LANKAPost-tsunami situation in Sri Lanka “shameful”

Melani Manel PereraThe World Forum of Fisher People denounces after having visited fishing villages hit by the killer wave. Three years on from the tragedy, survivors still live in tents and barely make ends meet. An appeal to the government to commit itself to rebuilding homes and the local economy.
Colombo (AsiaNews) – Almost three years on from the tsunami, fishermen and their families still live in makeshift tents in Sri Lanka as rebuilding and economic recovery is delayed. That is the warning launched by the fourth assembly of the World Forum of Fisher People (WFFP) held between November 29 and December 3rd in Kochchikade, north of Colombo. In 68, delegates from fishing communities throughout the world visited villages hit by the tsunami and expressed their “concern” for the living conditions of survivors.

The newly elected Coordinator of the WFFP, South African Naseegh Jaffar, said “we as the WFFP extend our sadness over the post Tsunami situation which we witnessed in Sri Lanka and the sad situation of the Tsunami victims, specially the victims of fisher sector are still suffering in the camps”. In a press briefing yesterday, Jaffar further added “we regret because these victims have lost their dignity, lost their basic human rights. Not only their property. We believe that the Sri Lankan government has a big responsibility to rehabilitate them”.

Among delegates who visited the camps, Joyce Oruko of Kenya and Marie Ademar of Europe told AsiaNews “the whole world helped Sri Lanka when the Tsunami hit but it is very sad to see the innocent fisher victims are still in camps and struggling with their day to day lives. It is very hard to believe that there are still Tsunami camps”.

Born in 1997 in New Delhi, the WFFP unites small fishing communities and those involved in the fishing industry in coastal zones and on islands in 25 countries throughout the world. The WFFP aims to make the voice of this category of workers heard and bring their demands to the attention of governments and international organisations

The Budget 2008

The Budget 2008:
A Critical Analysis
By Muttukrishna Sarvananthan

There appear to be shortcomings both on the expenditure as well as the revenue sides of the public finances of the country. The public expenditure programme of the
government seems to be welfare oriented than workfare oriented. On the revenue side of the budget, government’s tax policy appears to be regressive because of its
over dependence on indirect taxes. Nevertheless, there are some positive proposals made in the budget to stimulate the economies of the periphery, particularly the
Eastern Province.
The overall public expenditure will increase by 15% to LKR.925 billion in 2008 from LKR.805 billion earmarked for 2007. Similarly, the defence expenditure would
increase by 19% to LKR.166.5 billion (USD.1.5 billion) in 2008 from LKR.140 billion (USD.1.4 billion) earmarked for 2007. The actual expenditures would be
greater than the foregoing earmarked figures going by the past experience (for example, although the earmarked defence expenditure for 2007 was LKR.140 billion,
the actual expenditure is expected to be LKR.156 billion). Besides, the total public expenditure for 2007 and 2008 does not include public debt repayments, which is
huge. Public debt repayment was 41% of the annual total public expenditure in 2005 and 45% in 2006.
The twelve ministries account for about 90% of the total public expenditure based on the actual expenditures incurred in 2005 and 2006. There are 58 ministries at
present. Three largest spending ministries are Finance, Defence and Provincial Councils & Local Government, which in total accounted for over 67% of the total
public expenditure in 2005 and 2006. Finance ministry is the largest spender because of huge public debt repayments, accounting for 50% of the total public
expenditure incurred in 2006. Public administration, at the central, provincial and local government, consumed 15% of the total public expenditure in 2005 and 2006
(see Table 2). Hence, finance, public administration and defence gobble up almost 75% of the total public expenditure. Further, public debt repayments, public
administration and defence together consume two-thirds of the annual public expenditure. Moreover, three ministries (Finance, Defence and Samurdhi & Nation
Building) that come under the President accounted for over 60% of the total public expenditure incurred in 2005 and 2006, which is set to further increase in 2007
and 2008.
Four key messages emerge out of the foregoing figures. Firstly, the fact that over 40% of the annual public expenditure is spent on public debt repayments means that
the government is spending more for the past than for the future. This does not augur well for the future of the country. Secondly, there is concentration of financial
resources within a few ministries that have very little to do with human welfare. This reflects the wasteful nature of public expenditure in Sri Lanka. Thirdly, public
expenditures on social sectors (education and health) and economic infrastructure (power, roads, transport and railways) were just 11% of the total in 2005 and
2006. This means the government has got its priorities wrong. Fourthly, the President, who is not accountable or answerable to the Parliament and has blanket
immunity from the laws of country, is the custodian of over 60% of the public money, which is a matter of concern to the citizens of this country. Whereas the
Constitution of the country claims that the Parliament is supreme on matters of public finance, how come 60% of the public money entrusted to a person who is
neither accountable nor answerable to the Parliament? This is a serious lapse in the economic governance of the country.
The highest increases in public expenditure for 2008 are in the three ministries under the President, namely, defence, finance and nation building & poverty alleviation.
Thus, defence expenditure is increased by 19%, finance ministry expenditure is increased by 88% and nation building & poverty alleviation expenditure is increased
by 200% compared to the allocation for 2007 . The increase in budgetary allocation for defence is understandable given the security situation of the country.
However, what is the need for such huge increases in the other two ministries under the President?
It is also noteworthy that all the increases in ministerial allocations are less than the rate of inflation, except the three ministries under the President. In other words,
there have been declines in individual ministerial allocations for 2008 in real terms, except just three ministries. The increase in defence allocation in real terms is only
marginally higher than 2007. However, finance and nation building and poverty alleviation ministerial allocations are several fold higher in real terms compared to
2007.
In 2008, the government expects to spend LKR.456 million (USD.4 million) per day on defence and public security, which is huge for a lower middle-income
country. Besides, this figure is an underestimation, because lot of the armament purchases are made on hire purchase (instalment) basis and therefore the payments
are spread for a number of years in the future (perhaps with accrued interest). Further, since most of this expenditure is going to be financed by domestic and external
borrowings the cost of interest payments in the future years has to be added to the foregoing figure. Therefore, the compounded cost of defence expenditures would
be significantly greater than that shown in the annual budget outlays, which applies to other public expenditures as well.
The experiences of many countries have shown that higher military expenditures do not necessarily win wars, internal or external. While the United States has spent
over a trillion dollars on the Iraq war in the past five years there is no end in sight. The government has allocated LKR.8,536 per person for defence in 2008. This is
in contrast to LKR.2,974 per person allocated for health and LKR.2,359 per person allocated for education for the whole year.
It is also important to note that, according to the summary of estimated public expenditure for 2008 presented to Parliament on November 07th, out of the total
public expenditure earmarked for 2008 (LKR.1,516.3 billion), LKR.515.6 billion is for recurrent expenditure (34.0%), LKR.209.8 billion is for interest payments on
public debt (13.8%), LKR.417.6 billion is for capital expenditure (27.5%) and LKR.373.3 billion is for public debt amortisation (repayment of capital of public debt)
(24.6%). Thus, almost 38.5% of the total public expenditure is earmarked for public debt repayments (both capital and interest). On the revenue side, the
government continues to depend heavily on indirect taxes. In 2008, eighty four percent of the government revenue is expected to accrue from tax revenue (LKR.653
billion out of LKR.775 billion). Out of the total tax revenue 78% is expected from indirect taxes (LKR.512 billion out of LKR.653 billion) and 22% from direct taxes
(LKR.141 billion out of LKR.653 billion). Although the share of indirect taxes in the total tax revenue has been declining in recent years (from 85% in 2005 to 79%
in 2007) it is still too high.
In fiscal theory direct taxes (income/dividend tax, corporate tax, economic service charge, PAYE (Pay As You Earn) tax, etc) are deemed to be progressive and
indirect taxes (import/export duties/cess, regional infrastructure development levy VAT (Value Added Tax), excise duty, stamp duty, debit tax, motor vehicle tax,
social responsibility levy, etc) regressive, because direct taxes are on income but indirect taxes are on consumption / expenditure. Higher income earners pay greater
direct taxes and therefore progressive, but indirect taxes are the same irrespective of the income level of the consumer and therefore regressive. However, the other
side of the argument is that, marginal propensity to save is greater among higher income earners and therefore lesser direct taxes would increase savings, which in turn
would increase investments and thereby stimulate economic growth.
Indirect taxes are one of the main causes of inflation, because these taxes are passed on to the consumers by way of increasing the price of goods and services.
Therefore, attempts should be made to increase the share of direct taxes in the total tax revnue in order to contain the rising cost of living. In addition there is an urgent
need to decentralise the tax administration (levying and collection) in the country. The provincial and local governments should be given authority to levy direct and
indirect taxes at the provincial and local levels, instead of the central government levying and collecting direct and indirect taxes and then redistributing to the provinces
and local authorities through transfers.
For example, we cannot understand why the regional infrastructure development levy should be levied by the central government. Instead, the provincial councils
should levy this tax in order to pay for infrastructure development within their provinces. There is no evidence to show that the regional infrastructure development
levy collected by the central government in the past couple of years has been spent on infrastructure development in the provinces.
We would argue that the central government should levy only the taxes on international trade, and the provincial governments/councils should levy the direct and
indirect taxes from citizens and businesses within their respective provinces. By this way the provincial governments will be able to pay for public services provided
and development activities carried out within their provinces and there would be no need for transfers from the central government/ministries to the provinces. The
central government should be a regulator of economic and political affairs among the provinces within the confines of the laws of the country. The tax revenue
collected from international trade by the central government should be expended for defence (three armed forces and not the police) and external relations of the
country. The police force should be decentralised and paid for by respective provincial governments. The Central Bank should become independent of the central
and provincial governments and take on the role of regulator of the financial system, monetary policies and the currency.
This kind of innovative decentralised tax model would promote competition among provinces and stimulate regional economic growth and development. The
provincial governments should be able to compete in terms of fiscal, investment, business and public policies, with the central government being the arbitrator and
facilitator.
The government has presented the budget for 2008 amidst declining economic growth rate and rising cost of living. The growth of GDP is expected to decline to 6%
in 2007 from 7.4% in 2006. However, the anticipated 6% growth rate is remarkable in the context of a high intensity civil war. Moreover, inflation is expected to be
18% at the end of 2007, more or less the same as at the end of 2006. There is very little in the budget to indicate any deceleration of the raging conflict, which is one
of the prerequisites for acceleration of economic growth. However, five-year tax holiday for investors in the Eastern Province proposed in the budget has the potential
to stimulate regional economic growth and thereby contribute to national growth. The success of this proposal depends on return to democratic rule in the province.
Government’s public expenditure outlays, heavy reliance on indirect taxes and borrowing plan do not indicate any potential for abatement in the inflation. The external
factors are not conducive either for reduction in inflation. World crude oil price is fast approaching USD.100 per barrel and world prices of wheat and milk powder
are on the rise. Oil and wheat are entirely imported and over 80% of the milk powder is imported. Therefore, domestic and external factors are not favourable for
reduction in inflation. The tight monetary policy pursued by the Central Bank since the beginning of 2007 seems to have negatively affected economic growth whilst
not reducing inflation.
The writer is Principal Researcher, Point Pedro Institute of Development, Point Pedro.

Lanka News 04122007-Health strike on despite court order

Health strike on despite court order
Tuesday, December 04,2007 COLOMBO:

Sri Lanka's health workers said Monday they would go ahead with the planned strike despite a court order banning the industrial action. After considering a Fundamental Rights (FR) petition, the Supreme Court on Monday banned the planned strike as patients would face difficulties. The Health Workers' Trade Union Alliance (HWTUA) said its members will stop working on Tuesday and Wednesday unless the authorities implement their pledges.President, HWTUA, Saman Ratnapriya, said President Mahinda Rajapaksa pledged to implement some demands by the health workers.The trade unions met President Rajapaksa at Temple Trees on Monday."However, the authorities are yet to give us a written guarantee on our demands," Ratnapriaya said, adding that the trade unions would not consider the court ruling as
they are yet to receive the written notice of the ruling.The International Labour Organisation (ILO) has expressed concern that Sri Lanka's judiciary restricting workers' right to fight for their rights.:The Colombo District Court Monday issued an enjoining order preventing 44 health sector trade unions from carrying out trade union action scheduled for today and
Wednesday. Thirteen trade unions of the Health Services Trade Union Joint Front (HSTUJF)consisting of 80,000 paramedical staff in Government managed
hospitals had planned to launch a two-day sick note campaign and threatened to extend it to other hospitals managed by the Provincial Councils as well, if their
demands are not met.District Judge Sisira Ratnayake made the order following a plaint filed by a diabetic patient H. Ruwan Dhammika who is undergoing treatment at the National
Hospital. He cited trade unions including Saukya Seva Wirthiya Samithi Sandhanaya, Paripuraka Waidya Seva Wurthiya Samithi Ekabadda Peramuna, Samastha
Lanka Suwa Seva Sangamaya and other trade unions under them as defendants. Supporting the plaint Faiszer Musthapha said it was illegal to resort to trade union action based on the introduction of finger print machines to the health sector for
marking attendance. The counsel said in view of the weaknesses in the system of attendance registers, which gave rise to corrupt and irregular practices on the part of public servants in
1989 the government introduced time recording machines to all the government institutions. Time recording machines also proved to be failure as the public servants
started forging signatures of other employees and defrauding the state by claiming overtime payments for which they did not work. In the circumstances, the government introduced the “finger print machines’ to several government department and offices. In September 2006 the Health Ministry
too installed finger print machines at the ministry office. The counsel said that after the introduction of the machine there was a 30% reduction of overtime payments
which proved that the public servants were abusing the attendance registers and time recordings. However the trade unions objected to the introduction of finger print machines without any basis. From September 31 members of some of the defendant trade
unions started trade union action causing a break down in the health services resulting in members of the armed forces being called to carry out duties and functions of
the health service. The Union also demanded immediate withdrawal of the circular containing an order cancelling overtime payments to some employees who worked during the months
of September, October and November.Health Minister Nimal Siripala de Silva said overtime would be paid only to employees who used the finger print machine to mark their attendance and not others.The Union Convenor Gamini Kumarasinghe said that Health Minister Nimal Siripala de Silva wants only 16 grades of employees to use the finger print machines
creating discrimination among the entire hospital staff. Of the 606 hospitals managed by the Health Ministry and provincial councils only 19 hospitals are instructed to
use finger print machines. Minister de Silva has not held a single discussion with the unions, despite informing him of the trade union action.Health Minister had already asked security personnel to provide health services during the strike, but the services of qualified personnel are required to maintain better
health service in hospitals, the Union said.According to the Union the Minister’s intention is to eliminate trade unions in the Health Ministry. HSTUJF would expect that President Mahinda Rajapaksa will be
able to do justice by intervening in the problem. Minister Nimal Siripala de Silva when contacted said that all trade unions earlier agreed to adhere to the finger print machine registration, but some unions had
disagreed with the move later. He had asked the Health Ministry Secretary Dr.Athula Kahadaliyanage to issue a circular informing that employees who have not been
using the finger print machines to register their attendance will not be paid overtime.De Silva said that the implementation of the finger print machines was not initiated by the Health Ministry. The Treasury had instructed Public Administration Ministry
to issue a circular that all State organisations must implement the finger print registration gradually. Employees of Public Administration, Central Bank and RMV were
already implementing the finger print machine registration. Even President Rajapaksa making the budget speech said that Cabinet Ministers, high officials in
administrative positions would also have to use finger print machines for attendance registration.He further said the Health Ministry was well-prepared to face the sick note campaign of trade unions. Arrangements had already been taken to provide normal health
services.The order issued by the District Court yesterday has barred the unions from the trade union actions. The District Judge stopped the unions from carrying out any
strike for a period of 14 days.Faiszer Musthapha with Sanjeewa Kaluarachchi and Shantha Jayawardena instructed by Upeksha Wijetunga appeared for the plaintiff.

Herbal Remedies
04 December 2007 17:32:14

Sri Lankan herbal products exporters in plea for land Dec 04, 2007 (LBO) – Sri Lankan exporters of ayurveda and herbal products are asking the government for land to cultivate plants they need as a ban on raw
material exports by India is affecting their prospects. The ban by Indian on the export to Sri Lanka of raw plants used in ayurveda and herbal products could threaten the island's own exports of such products, a top
herbal products exporter has warned.
Availability of raw materials is a growing problem for exporters of ayurvedic and herbal products, said Asoka Hettigoda, managing director of Hettigoda Group.
The company makes and sells ayurvedic and herbal products and cosmeceuticals under the Siddhalepa brand as well as operates a hospital and tourist wellness
resorts.
Hettigoda told an exporters' forum Monday that manufacturers and exporters of herbal products were in urgent need of expanding their production.
"We need land to grow herbs," he said.
The industry was asking the government to allocate land, he said, noting that increased cultivation would benefit rural communities.
India has banned the export of herbs like sandalwood as raw material to Sri Lanka as it does not want exporters in other countries to do value addition and make
money from its raw materials, exporters said.
Responding to the request for land at the forum, Minister of Export Development and International Trade G L Peiris said the government had already identified land in
the Mahaweli river irrigation project area.
"Our export earnings can increase considerably if we can address this one critical requirement."
But he noted that some ayurveda and herbal products exporters need land at higher altitude because of the nature of their crops.
Peiris said the export of value added ayurveda and herbal products has been identified as an industry that has a lot of potential given the booming demand in western
markets for such products.

Mother used 8 year old son to steal jewellery
by Jayantha de Silva -The Island

A shocking case of an eight year old boy who was allegedly employed by his mother to steal from jewellery shops came to light at the Mt.Lavinia Magistrate’s court.
The boy who was produced before Magistrate Ayeshani Jayasena in connection with the theft of gold jewellery to the value of Rs. 520,000 was ordered to be
handed over to the custody of the Sucharithodaya Children’s Home.
In this case, Wellawatte Police investigating a complaint of theft from a person named Welusamy Krishnan owner of New Ganesha Jewellery shop took into custody
the minor. Probation Officer Sujatha Ganegoda submitted that the boy was earlier with his father who was residing in the South before the woman brought him
without his knowledge to live with her in Moratuwa.
The boy said that his mother is a hardcore heroin addict and forced him to unlawful acts. The modus operandi was to send the boy with a woman called Deepika to
Jewellery shops. In the pretext of examining the jewellery the woman stealthily passed a piece of jewellery to the boy before both came out of the shop. However, the
video footage of the shop had captured the episode. Police are in search of another suspect in this connection.

More Lankan male migrant workers have AIDS
Nadira GUNATILLEKE
Chinese Children pose to raise a red ribbon symbol during an AIDS awareness activity at a kindergarten in Hefei, Anhui Province. Today is World AIDS Day.Reuters The number of HIV positive Sri Lankan women is on the rise (21% in 1992 and 42% in 2006) and most of them have contracted the virus from their husbands or
male partners.
More Sri Lankan males employed abroad have contracted HIV than female migrant workers, Director, National STD/AIDS Control Programme, Dr. Nimal
Edirisinghe said. Dr. Edirisinghe requested expectant mothers to come for a HIV test if they are not sure about the sexual behaviour of their husbands.
The spread of HIV from mother to child can be prevented by this, he said.
Steps have been taken to ensure the confidentiality of all who turn up for HIV tests, Dr. Edirisinghe said. The lives of infected persons and their loved ones can be
protected only if detected, he said.
The non-existence of private blood banks has become a blessing for Sri Lanka and only four persons have contracted HIV through blood transfusions so far which is
very low. Some countries do not test blood for HIV prior to blood transfusions.
“The first AIDS patient was discovered in Sri Lanka in 1987 but we were ready to face the challenge even in 1985 when the National STD/AIDS Control
Programme commenced, he said.
Dr. Edirisinghe stressed that sexually transmitted diseases in Sri Lanka are on the decrease and the main reasons for this are the strong political leadership, very high
literacy rate (High education level), high quality free health service, rich cultural heritage and religious background.
Sri Lanka has all risk factors for an increasing HIV/AIDS prevalence rate such as a large population of youth, 1.5 million migrant workers, IDPs, social change, etc.,
and has very successfully maintained one of the lowest HIV/AIDS prevalence rates in the world because of the above factors, he said.
According to the information received by him some urban adolescent schoolboys seek the services of prostitutes and when the prostitutes demand them to wear a
condom they look confused because they do not know what a condom is and how to use it.
This shows the risk they are facing, he added.
---- There are 930 new HIV infected persons in Sri Lanka since 1987 and 58 per cent are males and 42 per cent females. Two hundred and twenty eight have developed
AIDS and 164 have died.
Sri Lanka is among the four lowest HIV/AIDS prevalence countries which is less than 0.1 per cent. There is no increase in the HIV/AIDS cases in Sri Lanka and
only the detection rate has increased.

Increase of Foreign Investment in Government Treasury Bonds
As a measure of further enhancing the freedom of capital account transactions, the Government has decided to increase the foreign investment in rupee denominated
Treasury bond market from the existing limit of five per cent of the outstanding Treasury bond stock to 10 per cent level from November 30, 2007, the Central Bank
of Sri Lanka said.
Foreign investors including foreign country funds, mutual funds or regional funds approved by the Securities and Exchange Commission (SEC) of Sri Lanka,
corporate bodies incorporated outside Sri Lanka and citizens of foreign states are now eligible to make investments up to 10 per cent of the outstanding Treasury
Bonds.
This measure will enhance the development of the capital market by broadening the investor base and increasing the competition in the bond market.
Foreign investors can purchase Treasury bonds at any time from the secondary market through participating agents, i.e. Licensed Commercial Banks (LCBs) and
Primary Dealers (PDs).
In addition, foreign investors are permitted also to bid at primary auctions of Treasury bonds through Primary dealers.
Foreign investors have to advise their own banks to open a special rupee account, i.e., Treasury Bond Investment External Rupee Account (TIERA) in a LCB in Sri
Lanka Foreign exchange brought in to the country for the purchase of Treasury bonds and all proceeds received by sale or transfer or maturity of Treasury bonds and
interest income of Treasury bonds are routed through this TIERA account.
Participating agents (LCBs and PDs) will open a security account for foreign investors in the Central Depository System (CDS) maintained by the Public Debt
Department (PDD) of Central Bank. This account is debited/credited simultaneously based on foreign investors trading in the market.
Operating instructions issued to authorised dealers by the Exchange Control Department of the Central Bank of Sri Lanka, Guidelines issued to participating agents
and foreign investors, and Investors Guide are also available on the Central Bank website.
Details on currently available Treasury bonds and prevailing market rates can be obtained from Licensed Commercial Banks (LCBs), Primary Dealers (PDs) and the
CBSL website

Transformer blown up in Matale

An unidentified group has blown up a transformer near the handloom textile factory at Kalalpitiya in Matale.
Police say that investigations have revealed that the transformer had been blasted at around 3.15 am yesterday (November 27th).
Police have also discovered a wire, which lead from the transformer into the nearby jungle area.
A senior Police officer said that he believed this to be the work of the LTTE cadres who have infiltrated the upcountry plantation areas.
A government analyst report is expected regarding the incident.

WHY?

Why?

Planners warn hill country not safe

Planners warn hill country not safe~ Continuous resettlement endangering ecosystem
By Nadia Fazlulhaq
The glorious hill country of Sri Lanka famed for its beauty and unique climate would not be healthy to settle in, with heavy rain, landslides and earthquakes likely to
continue in the future, the Town Planners Association warns. Town Planners Association past president Lakshman Jayasekara said town planners have re-identified
these fragile areas and urge all parties to be more vigilant, take measures to protect these areas and conserve them.
“We can’t tell the people living in Kandy, Matale, Nuwara Eliya and Badulla to re-locate immediately but there is a risk in living in some areas. We have to put into
their minds the reality and remind them those beautiful areas would disappear if continuous resettlement take place,” he said.
Central fragile Areas Explaining the causes of destruction Mr. Jayasekara said that heavy rainfall which encourages earthslips and minor earthquakes although not felt by people have an
adverse affect on mountains. “Rains and earthquakes are the main reasons which could cause the collapse of mountains. Sri Lanka is experiencing heavy rain
compared to the past. There is a huge atmospheric change in Bangladesh, India and Sri Lanka and our country is in the earthquake zone so a series of minor
earthquakes are having an effect on loosening of the earth” he added.
He said constructing houses and commercial buildings on the tops of mountains is dangerous and advised that such constructions be minimised. According to Mr.
Jayasekara settlements, cultivations and plantations in the central areas have taken place by clearing forests thus making the soil more vulnerable to earthslips.
“All water resources are blocked because houses are built over natural water producing areas. There were many waterfalls in Nuwara Eliya, which do not exist at
present. There were 103 river and major water canals in the hill country a hundred years ago but now only a few exist. The main reason is that plantations had come
up close to the waterfalls and lands were cleared by cutting down trees, so when it rains the waterfall route is blocked,” he said.
Mr. Jayasekara said history records that the hill country provided water right up to Jaffna and ancient kings planted trees in the hill country hiding themselves in
fortresses built in thick forests, away from the Portuguese. But with plantations introduced by the British and settlement staking place, it was the beginning of the
destruction of the water and land resources in the hill country.
“We have to consider moving people from upcountry. For instance, we see that the poverty line is highest in Nuwara Eliya and around 30-40 per cent of the youth
there come to work in the towns and suburbs where most of them would settle. There is also a significant number of people leaving vulnerable areas in the hill
country,” he said.
He said although national planners took up the position that Peradeniya should be re-located they were opposed by other parties. “National planners have the ability
to study present day signs and changes and determine future changes. The hill country is a protected area and it is scientifically proven that in the next 10-15 years
living there would be highly dangerous,” he said.