Sri Lanka Insurance buys into Blue Diamonds

I had heard rumours in the stock market that Sri Lanka Insurance (SLIC) was buying into Blue Diamonds (BD) but had dismissed them as being false. The market is full of such wild stories, the object in spreading them being to unload the shares on retail investors. I was therefore quite shocked to discover that this was indeed true.

The rescue of Sri Lanka Insurance from a botched privatisation is regarded as one of the triumphs of the regime. It is profitable, has pots of cash and is therefore now automatically seen as the vehicle of choice through which state investment can take place. It has its own funds and requires only board approval to buy into assets rather than the complicated process of cabinet papers and other procedures necessary for a Government department. There is also no delay in waiting for funds to be released from the Treasury, which is forever short.

Therefore it is not surprising to learn that SLIC is "aggressively looking for companies to turn around". SLIC has already participated in the bail out of Seylan Bank, bought control of Shell Gas and is now set to run restaurants on the new Southern highway.

The question this raises is whether conglomerate diversification adds too much risk to an insurance business. I don't have a clear answer and the regulatory guidelines overseas are a mess to wade through, but my initial instinct is that it does.

Quite apart from the more fundamental question, BD itself is, to put it mildly, rather a mess. A glance at the auditors report in the latest annual report reveals that:

1. A loan of Rs.203.5m that was obtained on the security of jewellery was written back to income in 2005, on the basis that the bank had taken over the security. The company has now been presented with a claim for US$4.32m, on account of this unpaid loan, which is not accounted in the books. If accounted for at face value it would wipe out half the equity of the company.

2. Th balances payable to related parties could not be verified, which means that further possible liabilities could exist.

3. Sales in the financial year 2010 were Rs.46m but the company had to recover Rs.39m worth of unsold stock from its overseas distributor, a related party. It seems that much of that years sales had simply been lying in stock.

When selling through distributors it is vitally important to monitor the off-take of stock from a distributor, this is what the consumer is actually buying. Crafty salesmen often attempt to dump stock on distributors when they need to meet their sales target, this is very common towards the end of the month/quarter/year depending on when the sales incentives are paid and is a source of dispute between the Sales and the Finance departments.

Looking at the balance sheet, trade receivables are equivalent to about half a years sales and stocks are over a years worth of sales, all of which indicate that the product does not seem to be selling well.

SLIC says they want to turn Blue Diamonds around, I think they will have their work cut out.

Contaminated petrol - beware

A couple of people at the company I work for have been affected by contaminated petrol. The fuel pump in the car has been damaged and needs replacement. So far it seems that only petrol cars have been affected, particularly those pumping 90 octane fuel, there are no reports of problems with diesel or 95 octane petrol.

Rumours of substandard or contaminated fuel have been circulating this week. True to form, they were immediately dismissed as vile propaganda by the Government, notwithstanding the long queues of vehicles that were being brought into garages. There was hardly any press coverage either, apart from some brief reports carrying the denial.

When it became absolutely impossible to deny, the Government backtracked a bit and blamed rainwater for the problems. The first proper story emerged only today. It appears that dregs, possibly mixed with rainwater, may have caused the problem.

According to reports from friends and associates, the contaminated petrol contains a dense tar-like substance that clogs up the fuel pump in the vehicle. The fuel pump is lubricated by the fuel circulating inside so when the tar-like substance enters the whole pump seizes and needs replacement.

I called the owner of my garage today to inform him of the widespread reports and he said that he was already attending to one damaged fuel pump. Being a rather innovative character, he had managed to clean the pump and it seems to be working, at least on the repair bench. He has not yet put it into the vehicle, so there is no saying that the pump can work properly enough with a full load of fuel.

It would be advisable for motorists to wait a week or so before filling up or to use 95 octane fuel, if they must fill up immediately.

Looking at the bigger picture, if rainwater or dregs were indeed the problem it seems strange that diesel and 95 octane petrol have not been affected. Rumours of a price increase last week saw queues at filling stations, so it is possible that the tanks ran low resulting in contaminated dregs of fuel being pumped, but this does not explain why diesel and 95 octane were not affected.

The knee-jerk reaction of the Government to any problem is to deny everything and blame it on a conspiracy. This would be laughable if it were not so serious. The lack of transparency, together with a growing culture of impunity are at root of this.

Transparency sounds like a rather woolly, fanciful idea, but it is the basic necessity if a Government is to be held to account. If the public do not know anything, they can hardly ask questions, so if Government is to be held accountable, then information must be freely available and widely disseminated, hence the importance of the media. In this instance, after days of rumours and denials, it is only now that we see some information emerging, and for the poor motorists, little advice on what the problem is or how to cope with it. As for recovery of costs, forget it. The defeat of the freedom of information bill is symptomatic of this malaise (an analysis of it s importance is available here).

There is also the (possibly related problem) of corruption. There were (unverified) reports on the web that the Acting Chairman had imported substandard fuel from Singapore, implying that he had done it to enrich himself. Too often, people are ready to dismiss corruption saying it is everywhere or that a little bit will not hurt. If this is indeed the result of corruption, then it would serve as a good example of how its true cost is borne by society-at-large.

Parliamentary questions

The workings of parliament are sometimes obscure, but I think people should make the effort to try and and understand what goes on.

Last week the chief government whip refused to answer a question on the basis of national security. Why should an MP refuse to answer questions? Does parliamentary procedure allow questions to go unanswered?

Reading the Parliamentary procedure in the UK relating to questions it appears to me that an MP cannot refuse to answer. Parliamentary questions are but one way by which the Government is held to account. Accountability to its citizens is what makes a democracy a democracy so refusing to answer a question is simply 'not on'.

Even more intriguing was the question which he refused to answer. He had refused to reveal the findings of a commission set up to look into alleged irregularities committed in the procurement of arms and ammunition for the military.

As this was a commission set up by the Government to look into alleged irregularities, it seems very strange that its results cannot be made public. “The President and relevant officials will take the necessary action based on the findings of the report,” Minister Gunawardena said, which does not seem very convincing since the overriding aim seems to be to sweep things under the carpet.

This reaction seems especially odd in contrast to the conviction of Sarath Fonseka on charges of corruption in arms procurement. Sauce for the goose is apparently not sauce for the gander, so while enemies of the republic will be persecuted its friends will be protected.

There is also another question: on the quality of internal mechanisms. The Government has repeatedly boasted that the country, being a democracy, has the necessary mechanisms and processes to deal with all problems. The reaction to the findings of this commission seem to demonstrate the opposite.

Of pensions and pensioners

The Government has barely had time to withdraw the pensions bill when a pensioner has stepped into the limelight, threatening to ignite the controversy all over again.

Sanath Jayasuriya had been put out to pasture a long time ago. Following his entry to a geriatric day care centre (otherwise known as parliament) he was expected to spend long hours ruminating and peacefully chewing the cud, but no, he has vaulted over the parliament walls and is back playing cricket.

The life force obviously flows freely in the swamps and lakes that surround the parliament and sustains the life forms within that august building. Perhaps its denizens are all imbibing the Vivificus Iunvenesco Potion. Either way, the ordinary forces of time do not seem to operate within that building.

Under the controversial pension bill, a worker was paid a pension after the age of 60 and was expected to retire at the age of 55. In contrast, the Prime Minister, now 80, is by the standard of wine, of an old and rare vintage that is only available through specialist shops. Hale and hearty, he shows no inclination to retire. A founding member of the SLFP he has spent half a century in parliament.

Ranil Wickremesinghe, current leader of the opposition is 62. He has already shown keen intent on holding this position for the rest of his life, which should be long, given his considerable skills in hanging on by the skin of his teeth. Le Roi, already 65 will be 73 by the time his second term expires.

Perhaps what we need is a pension bill for parliamentarians? Perhaps someone should also drain the swamp? There is life emerging from it all right (and crawling inside the parliament), but in the words of Scotty "not as we know it".

It may even be of an everlasting type, last seen in the Doctor Who series. Who wants MP's who last forever? The whole building may be a giant TARDIS for all we know, defying the laws of time and space and lasting forever. There are certainly enough Doctors in it.

Wikileaks

Java Jones had written something on the last round of Wikileaks revelations. He felt that the leaks were helpful, I disagreed and wrote a reply that kept growing longer so I decided to post it on my own blog instead.

I had not read his blog for some time, so this reply is almost six months late but I think the point is still valid.

What the last round of Wikileaks revelations has done is damage diplomacy, which is a danger to all concerned.

Previous leaks, such as the footage of helicopters shooting civilians was in the public interest. Action needed to be taken and making the news public was necessary.

Releasing diplomatic cables revealing the opinions of diplomats on meetings, personalities and other routine matters was grossly irresponsible and highly damaging.

The fact that diplomats felt they could not trust certain Saudi ministers or their thoughts on Chinese and North Korean officials do not further anyone's interests. It is not necessary to talk to ones friends but one must always talk to ones enemies. The alternative to not talking is misunderstanding, conflict and worse.

It is not possible for leaders of countries to talk to each other face-to-face on a regular basis, so their representatives - diplomats must do do so on their behalf. They then need to make as frank an assessment of the people they meet and the situations they encounter and report these to their superiors.

They need to be polite to people they meet but they also need to be frank in their assessments. This is not double dealing or hypocrisy, this is simply good manners and necessary. We do this all the time; when we deal with unpleasant neighbours, co-workers and the like, diplomats are no different. Nothing that has been leaked is completely unknown or unexpected but it does embarrass all concerned.

Wikileaks needs to edit and release information on the basis of public interest, their last revelations have been anything but.

Food prices

People from overseas are often shocked at the price of food in Sri Lanka, visitors from as far away as England and Australia have been muttering darkly after a visit to the local supermarket. We usually reply that this due to inflation but think no more of it.

A friend of mine recently told me that the reasons for high prices are due to taxes and poor policy. Imported food is taxed (a lot of our food is imported) and this results in high prices in the local market. He gave me the example of coconut.

The Government has imposed heavy import duties on vegetable oils (soy, corn etc) thus driving up the prices of imported cooking oil. Local coconut producers thus find it more profitable to channel coconuts to oil production leading to a shortage of fresh nuts in the market resulting in coconut prices shooting up to Rs.60/- Will anybody with a coconut oil mill confirm this? The supermarket prices for coconut oil were between Rs.470-505 per litre (N'Joy and Cooks Joy) while vegetable oil ranged from Rs.425 upwards.

In the meantime, coconut producers seem to be doing fairly well, but not as spectacularly well as the nut prices suggest. One smallholder manages to still make a loss, but his holding (5 acres) is probably uneconomic and suffers from a high level of theft. Someone with a much larger holding (about 90 acres) says he is doing reasonably well, but I am not close enough to him to dig up detailed figures. again, anyone who can supply further information is welcome to do so.

Fish prices are supposed to be high due to tax imposed on canned Mackeral. The tax is supposed to be around Rs.100/- per can, a 450g can retails for Rs.215. People try to buy fresh fish instead and this pushes the fresh fish prices up. The customs website has some details of taxes, but is not detailed enough. Taxes on potatoes, onions and sugar have been revised a number of times.

The Gutterflower very kindly assisted me by compiling the prices of a few common foodstuffs in Delhi.

Indian Prices (converted to LKR @ 2.45 LKR = 1 INR)

Normal Rice 80.86
Long grain basmati 161.73
Yellow lentils 68.61
Red lentils 134.77
Potato 28.79
Tomatoes 54.64
Onion 30.63
Chicken (whole chicken, approx) 367.57
Bread 31.10 (780g sliced bread INR 22, converted to a 450g price to make comparison easier)

Local Prices

Red Raw rice 56
White Raw 58
Basmati 286
Mysore Dhal (small reddish grains) 168
Mysore Dhal (larger yellowish grains) 139
Potato 120
Tomatoes 70.7
Bombay onions 74
Small onions 173
Chicken] 350
Bread 102.75

In terms of basic cheap rice, currently local prices are lower, although there was a time a few months back when they shot up to around Rs.100/- a kilo. In almost every other item the Indian prices are far lower than in Sri Lanka. Why this should be so is the question to which I have yet to find an answer.

What is especially interesting are the prices of onions and bread. Locally produced red onions are more than double the price of imported Bombay onions. The price of bread, thrice the Indian level is inexplicable, unless wheat is heavily subsidised in India. India does indeed subsidise wheat, the extent of which on a per kg basis I need to try and work out.

Surprisingly enough chicken prices are comparable although production in Sri Lanka should be more inefficient. Chickens are fattened on grain, it takes roughly 3.5kg of feed to produce a kilo of chicken, since this country does not produce enough grain, the bulk of the feed ingredients are imported. Therefore a producer of grain such as India should have an inherent advantage that should translate to lower prices. Many years ago when someone checked on the possibility of imported frozen chicken from India, selling prices in India were around 60% of the local cost of production.

These are just a few thoughts and I would appreciate any feedback that could explain some of these questions.

Update 13-6-2011

LBO has an interesting article on the revenue raised by food taxes, see here.

Haputale

Driving up the hills from Ratnapura.



Further along the drive



Adisham, in the afternoon light



Dawn breaks on the forest









The road up to Lipton's Seat



The view of the valley, partway along the route to Lipton's Seat.



Adisham, in the afternoon light.



The headstone on W.S. Senior's grave

Haputale has some stunning scenery, about the best there is in the country, equalled only by the scenery in the Knuckles mountain range. Fortunately it to too far off the main tourist trail to become as despoiled as Nuwara Eliya. It has deteriorated in the twelve years since I first visited, especially on the road up to Adisham where part of the forest has been felled and two ugly hotels and a number of small guest houses have mushroomed.

The ruthlessness with which any opportunity for a quick profit will be exploited by Sri Lankan's needs to be seen to be believed. Endemic corruption ensures that the few building, environmental and safety regulations can be ignored and one finds spindly, ugly buildings clinging to hillsides offering board and lodging or refreshments. Why this entrepreneurial spirit cannot be channelled more productively is a mystery. Some of the hills were being logged heavily, with backhoes and other equipment leaving great bare patches on the hills. It is no wonder that with the heavy rains there are frequent landslides in the hill country.

Despite the best efforts of the rent-seekers, there is much beauty to behold and it is easy to see what captivated Sir Thomas Villiers, who built Adisham at a particularly stunning spot and Walter Stanley Senior.

Senior's love of the place was such that although he retired to England his ashes were interred at the churchyard of St Andrews, Haputale. The inscription on the headstone, taken from his own poem Lanka from Pidurutalagala reads:

Here I stand in spirit,
as in body once I stood Long years ago,
in love with all the land,
This peerless land of beauty’s plenitude

Followed by the words:

He Loved Ceylon

A fitting tribute to the craggy, smoky mountains and deep valleys. The rolling mist, which descends suddenly, together with the sparkling sunshine is a photographers (or painters) delight, possibly even worthy of Turner.

There is little do do in Haputale except breathe the crisp clean air and enjoy the magnificent scenery. An ideal place for solitude, which is probably why the Benedictine Monks turned Adisham into a monastery.

Large groups of noisy tourists please go away.

Servants, a perspective from the Raj

I am in the midst of reading Charles Allen's Plain Tales from the Raj, an author I discovered at this years literary festival.

It is about the experiences of the Anglo-Indians - used in the original sense of the term: the British who lived in India. An Anglo-Indian himself, born into a family six generations in India, he worked on a BBC programme in 1973 to record the memories of the last surviving Anglo-Indians. The book grew out of the series of recordings made and broadcast in 1974.

I found the attitude towards servants rather interesting, particularly:

The question of how to address servants varied with status. 'It was a point of honour with us in the established civil service never to talk to the servants in anything but their own language,' states John Cotton, the result was that he who spoke the language had a much better type of servant. In much the same way Iris Portal was taught that 'you must never have an English-speaking servant. My father's attitude was that if you, an educated woman can't speak the language of a man who's illiterate you really aren't fit to employ him.'............

And a few lines later

Wives who knew the customs and languages of India 'would never think of asking a servant to do a thing that was beneath him or was in any way contrary to his religion'. The pukka memsahib was never 'tactless enough to bring back Bacon from the Club and hand it to a bearer who was a very strict Mohommedan. One put it upon a table and a sweeper would come and take it away, because he was a Hindu and did'nt mind touching bacon.'

I think this is interesting because it reveals a relatively progressive, or at least pragmatic attitude towards the ruled. I suppose it is not possible to rule for any length of time riding roughshod over the sensibilities of the people.

Reconciliation: A lesson from Nigeria?

I recently finished reading The State of Africa by Martin Meredith. Subtitled 'A History of fifty years of Independence' it is just that - a broad survey of the continent and a book for anyone who believes that useful lessons can be learned from the failure of others.

Well written albeit in simple straightforward prose, the litany of the continents woes is sometimes a little overwhelming; names, places, dates tend to swim into one another, so it is best to read a chapter or two at a time. There are one or two bright patches such as the process of reconciliation in Nigeria following the Biafran war.

Meredith notes that:

The aftermath of the war was notable for its compassion and mercy; and the way in which the memories of Biafra [the secessionist state in south-eastern Nigeria] faded. Quoting Lincoln, Gowon [Head of the Federal Military Government of Nigeria] talked of binding up the nations wounds. No medals for services in the war were awarded, no reparations were demanded; Biafran rebels were reabsorbed in the Federal Army; civil servants [who served the secessionists] returned to their posts in the federal government; and property belonging to Igbos [the people from the rebel areas in the South East] in the North and other Federal areas was restored to them. In this war, said Gowon, there had been 'no victors and no vanquished'.

Bin Laden and human rights

The United Nations High Commissioner for Human Rights Navi Pillay has called for a full disclosure of the facts surrounding the killing of Bin Laden to determine legality of the operation. This call has been echoed by both Amnesty International and Human Rights Watch.

This underlines an important principle: human rights are fundamental and even people like Bin Laden should expect due process.

No doubt Bin Laden was a thoroughly nasty character who has claimed responsibility for the death of thousands, I have no sympathy for either his cause or his methods, but basic principles of justice need to be respected. Ideally, the team should have attempted to capture Bin Laden alive and then put him on trial. If he was killed accidentally in a shootout, then it is acceptable but the assassination, which is another term for extra-judicial killing should not be condoned. This is why the UNHCR needs to investigate the circumstances of his death.

It is easy to say that terrorists, or for that matter, criminals have no rights. The question is who determines if someone is innocent or guilty? If the authorities start prejudging guilt, what starts to happen is that suspects, rather than criminals start getting punished and a suspect could be anybody: anyone could make a false complaint that so-and-so was responsible for such-and-such a crime.

In order to ensure justice is available to everybody, certain principles need to be observed at all times. William Blackstone's formulation "better that ten guilty persons escape than that one innocent suffer" is what law should be based on. It is, as Soli Sorabjee, former Attorney-General of India remarked during a debate on this subject, what marks a civilised nation.

The killing of Bin Laden- implications for Sri Lanka

There are serious issues that are raised by the circumstances of Bin Laden's death and they concern Pakistan, a country regarded as a friend by the Sri Lankan regime. The relevant facts are:

1. He was killed in Abbottabad, pretty little town in North East Pakistan that is also home to the Pakistan Military Academy.

2. He was living in a large semi-fortified compound that to some observers resembled an ISI safehouse. Neighbours claimed that the current occupants moved in some five years ago.

3. Bin Laden suffered from kidney failure and required regular dialysis. There was no dialysis equipment in the house he occupied so he had to receive regular treatment from outside. Although the city boasts of 21 hospitals (it was a centre for treating casualties from the Kashmiri earthquake) the fact that he was not noticed raises the possibility that he received treatment at the military hospital located in the town.

The awkward questions raised by these facts are:

1. Bin Laden was being sheltered by the Pakistani military or some rogue elements within the military. Given the long period during which he has held there whoever did so had have at least a few fairly senior people involved.
2. The political leadership (and the military) claims they were unaware of Bin Laden's whereabouts. If the political leadership was indeed unaware then the question needs to be raised as to whether the political leadership has control over the military. If the military leadership were also unaware this raises the possibility of rogue elements within the military at a fairly senior level.

Pakistan was supposedly a strong US ally helping them in the Afghan campaign, it now looks that they were either helping the enemy all along or that the state has no effective control over its military, either possibility being equally disturbing.

Pakistan's economy is in shambles and large amounts of US aid help things along. The US is under internal pressure to cut aid and if this happens then the state may be weakened further.

India has long accused Pakistan of assisting guerrillas and insurgents in Kashmir and elesewhere. They were also accused of complicity in the Bombay train bombings and in the later Bombay hotel attacks. The suspicious circumstances of Bin Laden's hideout will only strengthen the view that Pakistan is a sponsor of terror in India. The two countries have already fought three wars, the last in 1971.

To make matters more complicated, both countries now have nuclear weapons and the fallout from such a conflict will affect all its neighbours. Sri Lanka's relations with India are frigid, India is already suspicious of the cosy relationship with China, taking a line seen as pro-Pakistan now would be the worst thing we could do. Attempting to pay a 'Pakistan' card to try and gain leverage over India, on say the Darusman Report, would be disastrous.

Countries where the Great Game was played out generally ended up hosting proxy battles between the protagonists. This was the fate of Afghanistan, having toyed with India and China Sri Lanka should tread carefully to avoid a similar fate.


Update: NDTV just reported at 18.05 local time that there was firing at an Indian border post and that Indian forces have retaliated.

Port Sunlight

I am an unashamed Anglophone and an unrepentant capitalist, both tendencies being happily united in my admiration for the Victorian Robber Baron. Make no mistake, I am no Scrooge McDuck, rather it is the paternalistic Victorian that I aspire to, one of whom, William Hesketh Lever, built Port Sunlight.

I was reading through Engels' criticism of the cottage system, where workers in factories were provided with housing. Engels says this started harmlessly enough, to provide cheap housing for workmen but was later used as a tool to keep them restive, the threat of ejection from the cottage (and the awful state of alternative housing) sufficing to prevent excessive wage demands. Engels' also faults the industrialist for charging the normal or market rent for the property, which he feels is excessive since (in Engels view) the principal risk with property; difficulties in collecting rent and the possibility of the property lying vacant are both absent in the Cottage system. (ie As the industrialist fills his cottages with his own workers he is always sure of a tenant and since he deducts the rent from their wages he is certain of receiving payment).

Port Sunlight however was a triumph. Lever wanted to provide a healthy and pleasant environment for his workers, with schools, library, institutes and public buildings. A whole village in fact. An interest in architecture drove him to employ some 30
architects including an unknown Edwin Lutyens to design the 900 buildings. No two houses are alike.

The critics claimed that he was a despot, controlling and dominating people, the whole village being effused by the "spirit of soap".

I think he did his workers much good and built a quaint little village (now quite a tourist attraction, all buildings being Grade II listed) in the process. Have a look at the pictures and judge for yourself.

The Chinese Connexion

I have borrowed the title for this post from a book I read as a schoolboy. I have only hazy recollections of the book , but the Rice-Rubber pact with China surely featured prominently.

It is rather hard to imagine today that the world's second largest economy would enter into the most cumbersome and primitive form of trade: barter, with a tiny country like Ceylon but post-revolutionary China was a poor, chaotic, almost anarchic state. Some news reports from the time, though partial, are amusing to read.

Today things are rather different. China, a rising power seeking to dominate trade and wield its influence in the world. Sri Lanka is one of the countries that seems to be locked into the Chinese embrace, no longer an equal partner as in 1952 but a minnow, in a position familiar to many an African nation. And it is the African experience that is interesting, how the Chinese first welcome so eagerly now seem to inspire suspicion, fear and anger. The Economist has an analysis that is well worth reading.

I do apologise for the frequent links to The Economist in my recent writings. It is just that they have many interesting ideas and I am one who is stimulated by ideas. An attractive idea is absorbed, then bounced around like a rubber ball, ricocheting around the mind, stimulating thought in distant areas, reappearing in different forms and repeating the whole process all over again leaving the mind a-whirl in heady intoxication.

Rehabilitating the war zone

The Economist has suggested that one way to rehabilitate the tsunami hit region would be to turn the area into a special economic zone. Could this approach be used in the war zone? I think so.

The Government can declare several special investment zones in the North and the East. Private infrastructure developers can be invited to set up the basic infrastructure (power, water, roads drainage etc) in the zone in return for the right to lease out blocks of land to other investors (who build the factories or offices).

The market that should be targeted is South India, Indian bureaucracy is notorious and Indian investors would be quite happy to set up shop, provided duty free access were available to the Indian market. This is something the Government would need to negotiate with India but given that that India is keen to see progress on rehabilitation this should not be too difficult.

The harbour and airport would need to be brought up to standard to enable the goods to flow out and raw materials to flow in, this alone will create some jobs. This will also open up the possibility of catering to tourists, particularly pilgrims from India. It is only by catering to the Indian market, particularly pilgrims, can a reasonable tourist industry be built up in the North.

The North is too far from Colombo, the climate to dusty, hot and dry to attract anything other than intrepid backpackers and even for them the principal attraction - the Fort, is now partly destroyed. Even in the 1970's and 1980's the North was not on the package tourism trail and I don't think it will ever get on to that, even with the benefit of better roads and air-conditioned cars.

There would need to be other support infrastructure; particularly education and training institutes to ensure that people have the necessary skills in addition to things like transport, telecommunications and power.

All this must go in parallel with meeting the basic needs of the people especially housing. The Government lacks the funds but if properly managed the private sector can handle much of the investment and donors should be quite willing to pay for much of the social infrastructure.

Why so much black?

Black is a colour that seems to be in fashion now, especially amongst women. It is not unusual to find women setting out to work dressed entirely in black, something I find odd.

Not that black is a bad colour. Black is sophisticated, smart but it is an evening colour. Black in daytime is only for mourning, which implies that it should be used with a degree of sobriety. No one should mistake someone in mourning for someone heading out to a smart evening party.

Dark colours, navy or grey, are acceptable if one likes darker hues but leave black for the evening. Little black cocktail dresses are best left for cocktails.

Taxes on vehicles increased

According to a news report, the Government has raised vehicle taxes. It was only in the middle of last year that the taxes were reduced, so why the sudden reversal?

There are three factors that could be the causes:

1. There are too many vehicles on the road, there is a need to restrict the number being imported.
2. The Government is short of tax revenue.
3. Possible problems with the balance of payments.

The most likely scenario is a combination of items two and three.

Taxes on household appliances and cars were cut in the middle of last year and further cuts to VAT and income tax were announced in November. People were generally pleased and there was a marked increase in economic activity.

There was however a flaw in the budget - there was no reduction in state expenditure. Thus although the rates of some taxes were cut there could be no reduction in the overall tax collected if the budget deficit was to be met. In more simple terms the same amount of tax would be collected by different means.

In fact the Government was expecting to collect more taxes (151 billion rupees more, total tax revenue was targeted at 963.5 billion rupees, up from 828.2 billion rupees in 2010). The higher tax collection was necessary to finance increased expenditure (total current expenditure will go up to 1,017 billion rupees from 926.0 billion in 2010, the largest part of the increase - 49 billion rupees, being spent on salaries).

Therefor the Government was hoping to collect more in taxes, but at the same time tax rates were cut. How does one square this particular circle?

This is workable provided growth in volumes offsets the reduction in rates. It is likely that this has not happened. Recent price increases in fuel, gas, bread and electricity indicate a need for increased revenue, which is consistent with the increase in car duties.

Is there an issue with the balance of payments as well? The surge in imports of vehicles has undoubtedly put this under pressure, but as there are no figures available it is difficult to be certain. The recent IMF review did note that the forex reserve target was missed, although this was blamed on an early repayment of a loan from Iran.

The increase in traffic is partly due to the increase in economic activity and while this is a problem, I don't think it is enough to have caused a rethink in policy.

The increase in taxes will dampen activity and will cause worries about policy. Businesses do not like to see constant changes in tax rates, it adds to uncertainty and what changes take place should be within a clearly discernible policy framework.

People were pleasantly surprised when taxes were cut and one only needs to witness the spurt in activity in the last five months to see its benefits.

In order to reap maximum benefit the lower taxes need to stay, but to do this the Government must tighten its belt and cut its spending.

One of Them

First one, then another friend,
calls from overseas, asking for news,
of UN reports and other serious matters.

I am confounded and reply,
with trite gossip of cricket scores,
the team and the IPL.

Realisation dawns. The mind is benumbed,
critical faculties suspended,
trapped in the mundane monotony,
of everyday existence,

I have become one of Them,
the obedient, unthinking automation,
another Zombie.

Tales of the jungles

My grandfather was a sportsman, a good shot and a frequent traveler to the jungles. It is politically incorrect to even talk of shooting (other than with a camera) these days, but well up to the middle of the last century it was perfectly acceptable.

In his defence I venture that like most sportsmen, in later life he turned conservationist. After all, Yala was originally conceived as a shooting reserve, it was only later and with the support of former sportsmen was it turned into a wildlife sanctuary. Jim Corbett, the famed Shikari of Northern India was instrumental in creating India's first wildlife park.

Coming back to my grandfather, although he possessed no higher education he loved to read and had an extensive library. The library was in a separate room where few other people ventured and was my particular sanctuary, quiet and cool, despite the afternoon heat.

There was a long row of cupboards, the one at the centre contained his guns and fishing rod, on either side were the books. There were books on travel and of life in far of lands; I picked up quite a few books from Teak Wallah, Two Happy Years in Ceylon and The Kon Tiki Expedition to Country Life and National Geographic magazines and much else besides.

Naturally a lot of the books were on the jungles and in this genre one particular author was quite outstanding: Kenneth Anderson.

I am not sure how many have heard of him, he was not as well known as Jim Corbett but he was a far finer writer. I have never managed to finish a book by Corbett, I struggled with one once, but Kenneth Anderson was very special. His deep knowledge of the jungle and its denizens and his love of nature are vividly conveyed. Most of books deal with his adventures tracking down man eating tigers, leopards and rogue elephants and the killing that occurs at the end of each chapter is a little shocking today but the hold of the books is irresistible.

I thought I was alone in my appreciation for his skills but it turns out that he has a dedicated following in India and even a few in Sri Lanka. There is a Yahoo Group with about 500 members dedicated to him. That someone who wrote of his experiences in the 1920's and 1930's should be able to communicate to people in the 21st century (and more than a quarter century after his own death) is a powerful testament to his skills as a storyteller.

Most of his books are being printed in India and a couple are available free online. To whet people's appetite I quote the opening paragraphs of one chapter.

The Man-Eater of Jowlagiri

THOSE who have been to the tropics and to jungle places
will not need to be told of the beauties of the moonlight
over hill and valley, that picks out in vivid relief the forest
grasses and each leaf of the giant trees, and throws into
still greater mystery the dark shadows below, where the
rays of the moon cannot reach, concealing perhaps a
beast of prey, a watchful deer or a lurking reptile, all
individually and severally in search of food.

All appeared peaceful in the Jowlagiri Forest Range, yet
there was danger everywhere, and murder was afoot. For
a trio of poachers, who possessed between them two
matchlocks of ancient vintage, had decided to get them
selves some meat. They had cleverly constructed a hide on
the sloping banks of a water-hole, and had been sitting in
it since sunset, intently watchful for the deer which, sooner
or later, must come to slake their thirst.

The hours'wore on. The moon, at the full, had reached
mid-heaven and the scene was as bright as day. Suddenly,
from the thicket of ever-green saplings to their left, could
be heard the sound of violently rustling leaves and deepthroated grunts. What could be there? Wild-pig undoubtedly ! A succulent meal, and flesh in addition that could be sold ! The poachers waited, but the beasts, whatever they
were, did not break cover. Becoming impatient, Muniappa,
the marksman of the trio, decided to risk a shot. Raising his
matchlock, he waited till a dark shadow, deeper than its
surroundings, became more evident, and fired. There was a
snarling roar and a lashing of bushes, followed by a series
of coughing 'whoofs' and then silence.

Not pigs, but a tiger ! Fearfully and silently the three
poachers beat a hasty retreat to their village, there to spend
the rest of the night in anxiety as to the result of their act.
But morning revealed that all was apparently well, for a
male tiger just in his prime lay dead, the chance shot from
the ancient musket having sped straight to his heart. So
Muniappa and his friends were, for that day, the unsung
and whispered heroes of the village.

But the next night produced a different story. With sun
set came the urgent, angry call of a tigress seeking her dead
mate. For it was the mating season, and this tigress, which
had only just succeeded in finding her companion the night
before, was decidedly annoyed at his unaccountable ab
sence, which she quite rightly connected with the inter
ference of human beings.

Night after night for a week she continued her uneasy
movements, calling by day from the depths of the forest
and in darkness roaring almost at the outskirts of the
village itself.

If you appreciate the beauty of Mother Nature or simply enjoy a good yarn, try these books, I promise you will not be disappointed.

Simple pleasures

It is a quarter to twelve and I stepped out of the house a few minutes ago to find the entire landscape bathed in a brilliant moonlight. I stood savouring the scenery and the cool breeze of the night. There is something about the glow of the moonlight that lends even the most commonplace scenery an air of romance and mystery.

It brought back memories from a long time ago.

There is nothing I enjoy more than a good conversation, a rare and prized commodity in this country. A friend once said that the only conversation to be had in Colombo is about women, the latest deal or cricket. Fortunately I have a small circle of friends who I can converse with, one of whom lived with his maiden aunt down a lane on the seaside of Bambalapitiya.

It was an old rambling house that was falling to pieces with a small garden. I used to go over on the eve of the poya day carrying a bottle of Rockland Gin or Gilbey's Lemon Gin. He would generally have a kottu rotti or some other nibbles handy and we would take two chairs out to the garden and chat late into the night.

The roar of the ocean, the stiff sea breeze, the coconut trees swaying to the front of us, the gaunt outline of the old house behind us and the entire scene bathed in the ghostly glow of the moonlight; with the alcohol, flowing as freely as the conversation, those evenings had an atmosphere that I have not experienced since.

Sadly, the passage of time has taken those simple pleasures beyond reach. The Marine Drive devoured most of the garden of that old house, the house itself was later knocked down and the land sold; my friend migrated to Australia and I do not know what became of his charming old aunt.

I wish I were typing this post out in the yard under moonlight rather than in my room, I think I shall pull out a chair and spend some time outside now and ponder on the magic of mother nature.

Beat the heat

I have some advice for people like me who are stuck on the sunny, hot plains in April. It does not involve travel to Nuwara Eliya (and for those in Nuwara Eliya, I shall publish a guide on how to avoid crowds), nor the expensive business of air conditioning, which quite a few people now seem to have at home.

It is to do with the ceiling fan. Please do not turn it on.

Why?

Because the blasted thing keeps blowing hot air. I was wondering why the room feels hotter when the ceiling fan is on. The breeze, when it comes through the window, is fairly cool but the fan blows gusts of warm air.

I think the reason is that hot air rises to the top, so the ceiling fan simply blows the hot air back into the room. The trick is to have a table fan, the air that comes from that is much cooler. I also think its much quieter and probably consumes less electricity. Give it a try and see, there are some very compact models now that can sit almost anywhere.

Phew, according to the BBC the temperature will rise to a maximum of 31 centigrade, with 75% humidity, I'm off to sneak off downstairs (downstairs is always far cooler- the roof absorbs direct heat from the sun) for a quiet snooze. There is a promise of showers in the night, though. It is unusual, a continuation of the weird weather, but I'm not complaining.

Trolling around

The local blogosphere was destroyed by an infestation of Trolls. This week's Economist had an interesting article on the phenomenon.

It is the anonymity that the internet offers that brings out the base characteristics of people. There is a parallel with real life, I think it is the relative anonymity of an existence in a large city that brings out the worst in people. Crime always seem far worse in cities than in smaller communities.

When people know who everyone else is then that knowledge acts as a check on behaviour. A social check of sorts. There will always be a few incorrigible elements or black sheep but most would think twice if they knew that word would get round soon enough and their reputations and those of their family were at stake.

The holiday organisers burden

I have organised many a successful holiday for groups of friends. Everybody who travels has a good time and suggests doing another one, so the organiser, forgetting momentarily all the headache that he went through starts planning the next journey.

This must start with locating somewhere that is nice yet cheap. This is not an easy task but if one starts early enough there is a good possibility of finding something. I had a little trick up my sleeve - I would get in touch with a printing firm in November or December and get the list of holidays for the forthcoming year, before any calendars had been printed. I would pick out the long weekends and start calling around and getting rates, take a straw poll amongst potential trippers and book, paying whatever advance was necessary.

Since we are booking three to six months ahead everyone is enthusiastic and confirms.

About a month before the date I start calling people to remind them and then the trouble starts. Some people have extra work in the office that they need to finish, other people are going abroad, some people can't come because its lent (April is always a problematic month), others have weddings, some people are not speaking to each other anymore, other people's parents object to them going alone.

When organising an outing, a rough transport plan is also at the back of ones mind, a few people with company cars (hence free fuel) providing the transport but with the drop outs, the transport plan will also be thrown into turmoil. One may have people but no transport or the converse.

All the problems do not come together, its starts gradually and builds up over the weeks until a few days before the journey the organiser is left with just a couple of people, which means a last minute round of frantic calling to try and find replacements.

The last time this happened was in 2007, when I was left with two or three people for a bungalow in Nuwara Eliya booked for eight. Thanks to the kindness of the owner, we managed to postpone the booking, which eventually had to be re-postponed once again before the trip finally took place in September. A couple of times I have ended up giving away bookings to other friends-bungalows are much in demand close to the dates booked so have not really suffered financially but its the frustration of having a great place but not enough people to go with.

Traveling in a group is fun and cheap - if a bungalow can be filled to capacity the cost per head works out quite cheap. I dislike hotels and these days they are far too expensive so a bungalow is the only viable option, the problem is in finding people who can make a commitment. A commitment for a holiday, that's not too much to ask for, is it?

Reluctance to utilise leave

Has anyone noticed a strange phenomenon?

Sri Lankans hate to take leave, unless it coincides with a long weekend. At this late stage (I should have booked in December for April) I have starting looking around for somewhere to get away from the heat. Naturally, everything is full but a few places are available on weekdays. The thought of taking a few days off mid-week, is difficult, almost repulsive, I would say.

I cannot seem to work out why this is so, do other people feel the same?

The death of popular music

I have written before on the death of classical or serious music. The problem extends to popular music as well. A post by Cerebral Ramblings on the degeneration of music describes the problem.

Music of the 60's was simple and understandable, it was mostly about love. Modern music is quite incomprehensible. The problem is partly to do with the industry itself.

What is happening is that music is being made to formula. Music producers look around for what they think listeners like and then put together bands and songwriters to produce the required sound. The 'look' of the thing is often more important than how it sounds, which is why the music video is so important.

The music video can no longer be funny, it must be seen to be very sophisticated because this is what carries the song, indeed many songs do not make sense unless one sees the video, so what we really have is incidental music to a video.

For example, Lady Ga Ga is marketed on her shock impact; her dress and attitude colouring everything. There is one nice song but that is all, strip away the video and the image and what have you left? Almost nothing. Compare her to the Material Girl of the 1980's Madonna - she was a little shocking too, but I don't think it was only hype and there was a lot more to her music than Lady G's.

The musical thing (it defies description) called Barbara Streisand is the perfect example of nothing packaged as something. It has a beat that can be danced to, a scrap of melody and nothing else.

How has this state of affairs arisen? Popular music in its modern form would not exist without broadcast radio and the record industry. Before the development of radio and recording a popular music did exist but it was mostly traditional folk music, jazz (which is traditional Afro-Caribbean music) or possibly dance music that was performed live. Music circulated in the form of printed sheet music.

Broadcast radio opened music upto a vast new audience, music could spread rapidly and people could listen to at home rather than have it performed live. The recording industry, which developed alongside radio, took this even further. People could listen to music whenever they wanted, rather than waiting to hear it broadcast.

The vast new audience wanted music and this drove the development of bands and music to meet the need. Where things started to go wrong badly was in the 1990's when producers tried to create music to fit what they thought was a need - the Spice Girls were an early attempt at this, their success lead producers further down the road until they have ended up in the dead end that is today's music.

Producers did try manufacture to formula even earlier, the Monkees, were created for television and when the producer Don Kirshner, found the real actors less than malleable, went a step further and created the cartoon band, the Archies. The difference was that in the producers still worked with musicians, rather than defining everything from end to end, which is what I think happens today.

If anyone wants to brighten their Monday after the World Cup hangover try listening to this 50's song, or feel the enthusiasm of the musicians in this 60's number.

The Great Indian Rope Trick

India was the favourite to win the world cup but when Sri Lanka rattled up 274 and had India struggling at 30 for 2 with both Sehwag and Tendulkar out, I thought an upset was on the cards. It was not to be, thanks to Gambhir and above all, Dhoni, who kept his head, calmed his partners and batted steadily.

Dhoni is an Indian, with the temperament of an Australian, Mark Taylor comes to mind and this is what won India the cup.

Some very fine batting from Jayawardene, with graceful support from Sangakkara set the stage for a big total. The new faces in the middle order delivered on expectations and punched the ball all over the field in the power play.

The Indian batting lived upto its reputation and performed under pressure, but all credit to the Sri Lankan team, they fought to the end and it could have gone either way upto the last couple of overs. They played better than they had at any time in the tournament and would have made worthy winners, unlike the team who scraped it into the final and then played badly to lose in 2007.

Overall, an excellent game of cricket. I would have liked to see Tendulkar score a few more runs though, he was looking very good and would have made an excellent counterpoint to Jayawardena's. Gambir, Kholi and Dhoni did get the runs, but Tendulkar's craftsmanship is matchless.

India can be justly proud of its victory. The victory in 1983 was a fluke, an overconfident West Indies attempted to finish the match early, threw their bats at everything and gifted their wickets. The West Indian's showed their real class in their tour of India later that year, whitewashing them 5-0 in the One dayers and 3-0 in the six test series.

Cricket and tea

Since we are now quite cricket mad, there is an important question that many non-cricketers will want answered: what do cricketers eat at tea? Do they actually drink tea?

Tea is a vitally important part of the game, some clubs devote more space on their websites to the tea than anything else.

There does not seem to be a single answer but it appears that in English amateur cricket, a combination of sandwiches, rolls, cakes and tea is common. There is an enormous variety ranging from the simple to the lavish. Some can be quite spectacular.

I'm not sure what they have on the subcontinent, though.

Arab unrest and the shoe-thrower''s index

The Economist has constructed an index that attempts to predict where the next outbreak of unrest will take place.

This is a very interesting exercise. There are two aspects, one is the extent to which revolution can be predicted, the second is the assumption that a revolution will usher in democracy. The index only focuses on the first aspect.

The index "is the result of ascribing a weighting of 35% for the share of the population that is under 25; 15% for the number of years the government has been in power; 15% for both corruption and lack of democracy as measured by existing indices; 10% for GDP per person; 5% for an index of censorship and 5% for the absolute number of people younger than 25".

What the index is trying to measure is the level of dissatisfaction amongst people, hence GDP, corruption and a large youthful population. There are other factors as well and readers have suggested unemployment, inequality, the level of education, internet access, sectarian decomposition (countries where a sectarian majority is ruled by another minority), the degree of urbanisation and food prices.

All these are indisputably causes of dissatisfaction but the problem lies in their measurement and and weightage to be assigned in the index. Since these are somewhat arbitrary, the index may be regarded as an amusing intellectual exercise and perhaps a guide to wise rulers as to areas they need to work on to improve people's lives, rather than a sound predictor of revolutions. Nevertheless it is a useful reference point for someone wanting to study the issue.

One other factor that needs to be worked into this is the change in income levels and inequality over a period of time. If people have remained at the same level of poverty and there has been no change in inequality (ie the ratio between the rich and poor has not altered) then no additional dissatisfaction is likely to be caused, unless people's expectations change. The status quo has been maintained, the poor remain at the same level in both relative and absolute terms.

On the other hand, if living standards have fallen over time and/or the level of inequity has increased (the rich having grown much richer, or at least visibly richer), then dissatisfaction will grow. It is no coincidence that countries which have high levels of inequality (South Africa, Brazil) also have high levels of crime.

Assuming all of these factors are in place, the people will grow more restless and angry and a spark can set off a chain of protests that may snowball into a revolution.

Whether protest actually turns to revolution, depends on the ruthlessness with it is stifled and the extent to which the ruler retains the loyalty of the the army, ultimately the means by which a dictator's power is enforced (in a democracy power is enforced by a multitude of bodies). Therefore while a coup is a possibility, the success of peaceful protest is dependent on support from the army or from external forces except in instances where the ruler does not want a fight and flees.

Leaving aside the success of a revolution (measured in terms of ejecting its ruler) implementing democracy will be harder still.

Democracy is dependent on institutions and these need to be carefully built up over decades. There have been instances where it has taken root; Taiwan, South Korea, Portugal and Spain but in all these instances the despots were relatively enlightened and the people relatively prosperous. When the rulers saw a mountain of popular protest they decided to give in rather than murder people in the street.

In Spain, the King, who assumed temporary leadership after the death of Franco guided the introduction on democratic reforms. In Portugal's case it was a rather murky affair, a military coup followed by a series of tussles and elections, closer in spirit to the Arab revolts, that ushered in democracy.

The success rate for democracy has not been good. A series of revolutions across Africa in the late 1980's saw old-time strongmen deposed amidst great hope, only to result in a new set of of despots eventually gaining control. Only South Africa, with its established institutions avoided this fate.

I am not especially hopeful of the outcome of the current wave of revolutions, Tunisia looks the most hopeful and possibly Egypt.

Something to look forward to, after Saturday's match.

Indian model Poonam Panday has promised to strip if India win the world cup.

As if India needed any further encouragement.

Realistically, I think the odds are on an Indian win. I thought that it was their batting that Sri Lanka would need to worry about, but their bowling yesterday was very impressive. Harbhajan Singh bowled some mesmerising deliveries, including the one that took Umar Akmal's wicket, while Nehra and Khan also looked dangerous.

Anyway, we now have just cause to celebrate if India wins.

BC and AC

No, not AC/DC.

Historians use BC (before Christ) and AD (Anno Domini or the year of our lord) to refer to different eras of time.

Given the extent to which England's summer game has taken over life in Sri Lanka I think we should use AC and BC; After Cricket and Before Cricket. We can use it to measure the day, instead of AM and and PM.

BC is the few hours before noon when hangovers from the previous game are nursed and whatever shopping for drinks, snacks and other essentials for watching the next match takes place.

Offices may be visited, just to check if the boss is around before haring off to find a tout willing to sell a ticket to the match. In the event the boss is in, people will hang around impatiently, sneaking furtive glances at the clock until he leaves. Strangely, salesmen have many external meetings with clients these days so they have to be out in the field, the office staff have important meetings with bankers, auditors, the tax men and the municipal authorities. Everybody is really busy and can't even answer a phone call, although they are not in the office.

AC is when the streets are deserted and the power consumption zooms as a million television sets are switched on.

The fever has even infected even such resolutely anti-cricket creatures like myself.

Need to see if I can find a cheap ticket for the finals for a friend. Last I heard tickets were going at US$650. Does anyone know if its possible to get anything cheaper?

Friends in trouble

These are dark days, trouble has been brewing in the Near East and Maghreb for some time. The nation has many friends in the region and we are always quick to support our friends, yet we are constrained, we do not want to end up on the wrong side of history, or perhaps just the wrong side of whoever takes over. The region absorbs a lot of the migrant workers and tea exported by the nation.

Managing this balancing act is tricky. Given the rapidity with which the trouble has spread, many a ruler will sleep rather uneasily or, like Bahrain be prompted to pre-emptive action.

So what does Mother Lanka do? Banishing the topic to the back pages and making only passing reference to it in the television news works for a while but with cable television it is a little difficult to pretend all is well for long. Luckily the cricket is creating a considerable distraction.

As we cannot not show our hand openly, we must be careful and bide our time. However when that familiar villain, the bad old US of A makes and appearance on the scene we can safely move to the offensive, lo-and-behold, the press is now full of news and commentary on the evils of the US/NATO intervention. The favourite hobby horses of the columnists from double standards to on neo-colonialism and everything in-between can be dusted off and ridden in the Derby once more.

What preceded the intervention and the bigger issues can safely be ignored, while the favourite straw men can be demolished.

Rulers and resources

The rulers of a country would be expected to rule for the benefit of its people. Whether this happens or not is largely dependent on how far the rulers are held accountable.

The degree of accountability is dependent on the amount of information available to the public, the extent of the separation of powers (between legislature, executive and judiciary), the independence of its civil administration and the ability of the public to boot out bad rulers.

In a nutshell, how good a ruler is depends on how far he can be held in check, without proper control the ruler is likely to give into the temptation to enrich himself and his close associates rather than the population at large.

People used to think that wealth was dependent on resources. If one is lucky enough to be born in a resource rich nation, Australia for example, the original 'Lucky Country', then its people would prosper. Experience has taught us that unless a resource rich country has proper systems of governance its resources are likely to turn out to be a curse rather than a blessing; Nigeria, the Congo and Angola are examples of nations that have suffered the curse of natural resources.

All this is well known, but lets examine the plight of budding despot in a resource poor country. What is available for plunder?

The most obvious target is the treasury. Whatever taxes are collected from the people can be diverted to his own bank accounts. Even in poor countries this can amount to a fairly sizable sum, but this alone is unlikely to satisfy.

Looting funds received from aid agencies is possible but it is not easy because there is some attempt to assess the effectiveness of projects and nosy NGO workers asking too many questions are such a pain.

Far better then to borrow, either straightforward commercial loans or subsidised project finance, ostensibly for building infrastructure but divert the funds to the coffers of the ruler. With no particular obligation to account for the money other than repay it on time, this is an easier path to follow. Every so often debt default can be arranged, Argentina, Turkey and Russia have done so at various times which makes this even more lucrative in the long term. Ruling however is an expensive business and not even this will satiate appetites in the long term.

Once all these paths are exhausted the ruler is left with only one further option: land. Land has value and some poor countries have vast extents of it, but unlike other natural resources that can be exported to markets abroad land cannot be moved. Its value is dependent on what a developer can earn through its exploitation. Land can easily be expropriated and productive farmland or developed industrial land is a good place to start, but these will be quickly exhausted, which leaves only undeveloped land. This can also be exploited, but there is a catch.

Certain pieces of land, a location for a good harbour or airport, may derive a part of its value from its use to international trade but by and large it is the strength of the domestic economy or market that will determine the value of land, which is in turn dependent on the quality of governance. Also if the dictator has already expropriated farmland or industrial land, this is likely to give potential buyers pause for thought.

The colonial government in Hong Kong was able to balance its budget for years by selling off bits of bare land every so often to developers. Thanks to sound economic prospects, developers were quite willing to pay good prices for land. To an extent this happened in Singapore as well.

Therefore any ruler salivating at the prospect of getting rich through the sale of land would be advised to think again. The land will fetch some value but to command a premium, potential developers need to see some realistic prospect of recovering their investment, which is good news for its people, provided the despot understands the issue addresses the fundamental economic questions. Those who don't may well end up building another Burj Khalifa (Dubai, pictured above) a half mile high 'ghost' building, with many empty floors.

As for the ruled, its the governance, not the resources that count in the long run.

America's flawed democracy

I no longer spend any length of time attempting to analyse US policy. Not that there are no knotty issues: there are plenty from the high cost of healthcare, to gun control to Israel.

The issue is that it is impossible to hope for any kind of sensible action, the politicians being held hostage to various special interest groups. It is impossible to hope for proper reform of healthcare without reforming the tort laws, under which ridiculous levels of punitive damages are awarded. Medical malpractice is a favourite area, giving rise to the spectacle of ambulance chasers, lawyers who follow victims and persuade them to sue heavily in return for a share of the spoils.

My cousin is a doctor who practises in California. She pays a third of her salary as medical malpractice insurance, to ensure she is not driven bankrupt by an ambulance chaser. All doctors do this and the cost of the insurance eventually finds its way into the medical bills of patients by way of higher doctors fees.

This is just one aspect, there is a lot more but serves to illustrate the nature of the problem.

America's problems of terrorism and its alienation from the Muslim world are at least partly due to its support of Israel. Solving the problems in Palestine will go a long way easing the visceral dislike that the US tends to invoke amongst ordinary Muslims, which serves as a lightning rod for extremists. Can this ever be solved? No, as long as a minority, the Jewish lobby, controls the discussion, via influence wielded over the politicians.

The same sorry story is repeated ion the area of gun laws. The majority will support a tightening of laws but this is stymied by the power of the NRA, which is a minority.

Thus democracy in the US is not so much about the will of the people as the will of the lobby group, which often represent minority interests. The root of the rot is actually in money, the time honoured root of all evil. Special interest groups literally buy influence, by funding the election campaigns of politicians.

Therefore unless campaign funding is reformed we cannot hope for any sensible discussion. The type of reform needed is not transparency alone, what is needed to clean this Augean Stable is nothing less than a total ban on private campaign funding. Instead the State needs to allocate a fixed amount of funding to each candidate. Any overspending or raising private funding will be an automatic disqualification.

The taxpayers will need to pay for the campaign funding for each qualified candidate, but this will work out far cheaper in the long run than allowing the country to be held hostage to special interest groups.

If this ever happens the rest of the world will only applaud.

The consequences of America's gun and drug laws

An interesting comment in the Economist "As long as Latin American narco-lords find it easy to sell cocaine and buy guns in the United States, no government to south can eliminate them".

Are the real consequences of America's non-laws on gun ownership and a wrong headed drugs policy, the drug wars in Mexico?

I have argued before that the only sensible way to deal with drugs is legalise them. No drug cartel can ever hope to compete with a state that distributes the stuff free. Prohibition did not stop alcohol abuse in Chicago in the 1920's and spawned the Mafia.

Prohibition was apparently inspired by the 18th amendment to the US constitution which outlawed alcohol. Common sense eventually prevailed and the experiment was dropped in 1933. Time to revisit the second amendment?



Note: The second amendment protects the right of the people to keep and bear arms.

Just a Gigolo

Delilah's post on work reminded me of an incident that was narrated by a friend some years ago.

This was a fairly long time back, maybe about eight or nine years ago. I had a friend who was working for a certain bank at a salary of Rs.11,000 a month. He was not very junior, an assistant manager, I think, it was just that he was underpaid. Today Rs.11,000 will not buy anything but even back then it was very poor pay and he never had any money to spare.

He was looking around for another job when he met a friend of his who used to work for the Negombo branch of the same bank. The friend seemed to be doing very well, driving a new Montero. Remember, that at the time the Montero had only just been introduced to the market and it was about the most expensive vehicle around.

The rich friend knew all about the underpaid job at the bank (he had held one himself) and he told his friend that he too could get him set up in the new business, it was quite easy and he had all the contacts. He could bring along some friends as well if he liked, he would set them up as well.

The secret of his success? The rich friend had shacked up with an old German woman, in her fifties, who was semi resident in the country. She treated him very well, getting him a house as well as the Montero and paying him a very decent sum for living expenses. She was also very liberal. She was resident for around six months of the year and while she was away the friend was allowed to have a local girlfriend.

All in all a very satisfactory arrangement. He tried quite hard to convince my friend to join him, he did not succeed, but my friend did give the matter some thought before dropping the idea.

A couple of trainers from gyms I have visited in the past are rumoured to have followed a similar path.

Maybe the government should actively promote this; it provides much needed employment and pays much higher prices than those commanded by housemaids whose labour is one of the principal exports of this country.

Grass Roots development

According to the Sunday Times the government is to establish Jana Sabha's which will function under the Minister for Economic Development.

Provincial and local councils must seek approval for development work from the Jana Sabha's which will have powers to draw up their own budgets, development plans and seek financial allocations from the Central Government. This effectively renders all other bodies powerless.

We have just concluded the local government elections. If all provincial councils and local authorities need to seek the approval of the Jana Sabha before commencing any projects is there any point in these bodies?

Why not abolish the Provincial Councils and other local authorities and leave the work to be carried on by the Jana Sabha's? If nothing else we will save the cost elections and administration.

William Smith of Durham

Wedding season will be upon us shortly, so here is a suggestion for those looking for some beautiful responses to a church service.

William Smith was a 16th century organist and composer whose Preces and Responses have become well known and widely used in the United Kingdom. Their popularity is well deserved and may be included in a service, provided the choral director is willing. Listen to it here, its the second item (starts at 4'10" and end at 5'10"). Very lovely.

Uncivil Society

Malinda Seneviratne raises an interesting question in his column in the Daily News. What exactly is civil society?

He goes on to say that the term has been hijacked by a narrow group of organisations, principally the National Peace Council, the Centre for Policy Alternatives and Transparency International who claim to represent civil society as a whole.

He is right that these are the most prominent of the organisations, they are certainly amongst the most vocal.

He implies that the organisations that should carry the mantle of civil society would be 'Dayaka Sabhava associated with a Buddhist temple, a maranaadhara samithiya (funeral donation society), or a community based organization such as the hundreds setup by Sarvodaya or the thousands by SANASA'.

While such organisations do fall into the broad definition of civil society, their aims and objectives are limited primarily to helping its constituents and as such tend to be inward looking. As their concerns are narrow and local, they work quietly and have little need to go to the media, which is probably why so little is heard of them.

Perhaps, like good children, civil society should be seen and not heard? And for those who are heard, Big Brother will be watching.

In a completely unrelated matter, the Minster for Public Relations and Public Affairs Mervyn Silva has discovered a plot by the Campaign for Free and Fair Elections (CaFFE) to undermine the UPFA victory at the upcoming local government polls.

“According to information received, a representative has been appointed to each of the Local Government body area and each of them are to be paid Rs 5,000 for the two days - March 17 and 18.”

The question of dubious funding of NGO has been raised time and again and the above only serves to underline the importance of this. Why do they need to pay such vast sums and to what end? Placing monitors is very suspicious and worse, they are planning on something more:

“This organization is planning to tarnish the Government through various international networks for which they are now holding discussions with several electronic media institutions and two newspapers."

Fortunately this has been caught in time and the Elections Commissioner has been asked to "act in this regard as this media conspiracy is to be launched under the pretext of election monitoring".

This however is not the end of the story. Mano Ratwatte, writing from the U.S. of A has uncovered yet more treachery. It appears that NGO's have received funding, large funding, which needs investigation and action on the lines of US authorities.

He says, in the US, the FBI will investigate any NGO with links to muslims or the Middle East and points out that there are 'Congressional hearings (akin to the McCarthy witch hunt against communists) on the "Radicalization of Muslims in America". A most interesting turn of phrase I must say, the government should apparently leave no stone unturned (or thrown) in its quest to eliminate such sorcery.

He highlights the brave American journalist Seymour Hersh to exposed the MyLai massacre. Hersh was labeled a traitor by many leading American politicians and harassed.

Does this ring any bells? Alarm or otherwise?

About the American motives, of course.

Superbrands: is the novelty fading?

I notice that companies don't use the 'Superbrands' logo/tag in their advertisements as widely as they used to. When the concept was launched it was everywhere and I was quite confused, thinking that a company called Superbrands had bought over a few local companies.

I don't watch a lot of television or listen to the radio so I'm not sure if the advertising has migrated to the electronic media, but in the printed press the use of the term seems to have diminished. The only one that I can recall recently is the 'No Limit' board in Dehiwala.

Has the novelty faded ?

The Superbrands Sri Lanka page has the list of brands up to 2009 but nothing after that. The media page carry lists of events in 2009 but nothing thereafter.

I have been a critic of the concept of Superbrands and it would be interesting to see what benefits it has brought to those who were awarded the status of Superbrand.

Note that I have no problems with brands per se, a well established concept that has evolved from the Victorian age. I do agree that brands have value and an open ranking of brands is a worthwhile exercise.

Any comments from the marketing folk out there?

Regulating bankers bonuses and the Hilton case

I received an SMS alert a little while ago which indicated that the Central Bank was thinking of regulating the bonuses of bankers. This morning, we woke up to the fact that the Government has tightened its ownership of the Colombo Hilton.

Does this indicate that the state getting rather too large?

There have been calls for the regulation of bankers bonuses in Europe and America but this follows a banking collapse and the revelation of the sheer size of bonuses - in my limited experience the sales staff at investment banks used to take home bonuses that were measured in terms of several years of pay.

The argument for regulation is that:

a) they provided the wrong incentives, tempting traders to take very risky bets at shareholders expense (traders get a mega bonus if it works, shareholders take the loss if it fails);

b) since a number of the banks have now been bailed out by the various governments, the profits being earned are effectively subsidised by the Government (an implicit state guarantee allows for cheap borrowing, while some banks enjoyed a direct infusion of cheap/free state funds).

There is definitely a problem with bankers bonuses in Europe and America. As Roger Moffat, a former derivatives trader wrote in a letter to the Economist, "Trading isn’t hard. Computers do much of the work, and unless we break the culture of paying ridiculous bonuses for being “lucky”, the banks will continue to laugh in the face of politicians and regulators. Japanese housewife traders have led the way in showing us that frankly, it isn’t rocket science."

The question is whether this problem is prevalent in Sri Lanka. Sri Lanka has not suffered a banking crisis (although we have suffered a Finance Company crisis)and no banks were bailed out. I don't think bankers here receive huge payouts either, certainly not in terms of years of salary.

I'm told that some of the treasury bonuses are large and since at least one local bank suffered a major loss as a result of a poorly designed foreign exchange traded product, there may be a case for investigating whether the incentive scheme was at the root of the problem. However I have not seen any investigation into this (I may be wrong here) and certainly very little publicity about the incident, which, in true Sri Lankan style has been carefully covered up.

Is there a real problem with bankers bonuses? Or does this look like a case of over-regulation?

In the case of the Hilton, the owning company is supposed to have defaulted on payments of the lease and that as a result the land has been acquired by the Government. Strangely enough, according to the news report the company is controlled by the Government anyway, so why they did not push for the payment of the lease in the first place is a question.

It is also unclear as to what process was followed prior to the re-acquisition: was it as per clauses specified in the lease agreement? Was due notice given? If so why was it that the company, a listed entity did not make an announcement to the stock exchange? The news broke after Minister of Economics Development Basil Rajapaksa informed parliament that the Hilton Hotel Colombo had been taken over by the government last week.

In a society that is supposed to be governed by laws there is always a process that needs to be followed so that everyone concerned knows how things work. When the process is unclear it creates uncertainty and uncertainty is another name for risk. Investors are conditioned to expect B to follow A and C to follow B. If events suddenly arrive at E straight from A and no one knows what went on in between, then the investor will be lost.

The Hilton is a relatively well known name and a sudden change in its status will be picked up in the news and give the jitters to potential investors.

Kottu over, time for Spaghetti?

There was a time when the Kottu Blogroll was really useful, with virtually every interesting blog being listed and some pretty radical ideas being discussed. Then the nutters, the stalkers and other assorted undesirables appeared, blog wars erupted and identities were exposed.

Many bloggers left Kottu, others gave up altogether leaving very little for the conscientious reader like myself. I was always more of a reader of blogs than a writer and it was that cocktail ideas that I found stimulating. The advantage with the aggregator is that one can read interesting posts from blogs that one does not normally follow.

I have discovered that there are still a few good blogs around, but the problem is in finding them. I've also lost track of a number of blogs that I used to read. We need another aggregator, but one that filters the participants, any takers for starting one?

I Shall Not Hate: A Gaza Doctor’s Journey on the Road to Peace and Human Dignity

I just came across a review of this book , although I have not read the book the story is too good not to share.

Dr Izzeldin Abuelaish is a Palestinian doctor, a man who dedicated his life to peace and medicine. He lost three daughters in the Israeli attack on Gaza in January 2009. An Israeli tank opened fire on their house, claiming that gun shots came from their building or nearby. A frantic phone call made by the doctor to a friend in Israel, Shlomi Eldar, a journalist who relayed the conversation on live television, took the story to the world. The anchor called on the Israeli Defense Forces to allow ambulances to get to the doctor’s family.

No ambulances ever reached Dr. Abuelaish’s home, which was surrounded by Israeli tanks. He and the surviving members of his family walked a quarter of a mile carrying the dead and wounded through the streets.

Amazingly, though shaken, this did not alter his philosophy. He now lives in Canada and travels widely, speaking to promote his vision.

An interview with Dr Abuelaish is available here, more on the story here.