Japan steps up Sri Lanka aid

A lasting peace deal would transform Sri Lanka's economy

Sri Lanka is getting a $270m loan from Japan, already its biggest aid donor, to help it rebuild an economy ravaged by 19 years of civil war.

The loan was unveiled by Yasushi Akashi, Japan's peace envoy to Sri Lanka, during a visit ahead of a donor conference due to take place in Tokyo in June and a round of peace talks - hitherto hosted by Norway - in Japan in March.

Japan already gives about $300m a year to Sri Lanka, almost half its total annual aid inflow, but much of it is under-used.

The new money is intended to be used to kick-start rebuilding of the tea and rubber industries, to help develop the rural economy, and repair infrastructure in the form of roads and power plants.

"Japan recognises that we have to heal the wounds which virtually all parts of the country have suffered from the conflict," said the Japanese embassy in a statement.

Peace at last?

Aside from an increase in tourism, Sri Lanka has yet to see much practical benefit from the year of (relative) peace since a ceasefire was signed last year.

Till then, peace talks had repeatedly stalled, leaving the Tamil Tigers - as the northern rebel forces are popularly known - to rely on terrorism to try to force through its case for an independent homeland for the Tamil minority.

But after 11 September 2001, US and other Western diplomats made it abundantly clear to the Tigers' negotiators that the days of turning a blind eye were over.

Within months, the Tigers were back at the negotiating table, helped by a change of government in Colombo.

A year later, the government hopes the donor conference will signal a return to normality.