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Last Updated: Friday, 17 February 2006, 15:41 GMT
Shadow hangs over Sri Lanka tourism

By Roland Buerk
BBC News, Hikkaduwa, Sri Lanka

Sri Lanka's government is due to hold talks with the Tamil Tiger rebels in Geneva next week. The aim is to revive the island's peace process, which was all but destroyed by a series of killings in recent months. The threat of a return to war has led to uncertainty in Sri Lanka's tourism industry.

A surfer on the beach at Hikkaduwa
A Canadian surfer walks along the beach at Hikkaduwa

Upali Koralage is a worried man.

He sits in his restaurant and hopes this will be a better day.

But as lunchtime begins almost all of his 100 tables are empty.

"Each year we are expecting a lot of tourists then something happens. Unfortunately we had a tsunami so last year was washed out. Now this killing is starting again and people are afraid to come to Sri Lanka," he says.

Mr Koralage was hit hard by the tsunami.

His restaurant in the resort of Hikkaduwa in the south west of Sri Lanka is right next to the beach.

On the wall inside there is a mark in blue chalk.

Underneath is written "Water level, tsunami, 26 December 2004".

It is well above the height of a man's head.

"The damage was really bad. All the furniture and equipment was washed out. Some of it went to the sea and some as far as the railway line," says Mr Koralage.

It cost 10 million rupees ($100,000) to get back in business.

The beach at Hikkaduwa is achingly beautiful, but it is all but empty.

At 11am just one woman sunbathes on the golden sand.

As far as tourists are concerned they have various destinations they can choose for their holiday. No tourist will come to a country where violence is taking place
Seenivasagham Kaliselvam
Sri Lanka Tourist Board

The palm trees sway in the light breeze coming off the crystal clear sea providing shade for the disconsolate hawkers, sitting around chatting.

"There's no one here and lots of hotels are cheap," said Cameron McCrae, a Canadian who works in India.

He says: "In Trincomalee [a disputed town in the east] there were three other tourists on the entire one mile stretch of beach. It was perfect."

Dramatic fall

Seenivasagham Kaliselvam, the director-general of the Sri Lankan Tourist Board, can see the problem in the figures.

Despite the tsunami, the number of tourists arriving in Sri Lanka went down by just 3% in 2005 compared to the previous year.

A Tamil student cycles past Sri Lankan soldiers
A Tamil student cycles past Sri Lankan soldiers on patrol in Jaffna

But in December the numbers fell dramatically, from around 60-65,000 a month to 50,000.

November's presidential elections, which saw Mahinda Rajapakse win, were followed by violence in the north and east that left at least 120 people dead - around 80 of them Sri Lankan soldiers and sailors.

Mr Kaliselvam says: "Peace is paramount if we have to get tourists to this country.

"As far as tourists are concerned they have various destinations they can choose for their holiday. No tourist will come to a country where violence is taking place.

"So we are very certain we have got to have peace in the country to go forward in tourism."

There has been a lull in the killing since January when the government and the Tiger rebels agreed to meet for talks in Geneva in Switzerland on 22 and 23 February.

But the tourism industry, Sri Lanka's fourth largest foreign exchange earner, needs a long term peace to achieve its target of nearly doubling visitor numbers.

The industry exemplifies the problem with Sri Lanka's economy - it is doing well but could do better.

Since a ceasefire was agreed between the government and the Tiger rebels in 2002 there has been economic growth of between 4% and 6% a year.

Nervous

The government wants 8% in 2006.

If Geneva sets us on a path to a permanent peace that could indeed be the single most important factor towards raising the long term growth rate
Peter Harold
World Bank
But to do it they will need investment and at the Colombo Stock Exchange the money men are nervous.

Investors stand looking at the prices of stocks in red and green on the giant electronic board, stroking their chins and wondering when to buy.

The market fell by around 27% on news of the killings but then rallied when ceasefire talks were announced.

"It came down drastically," says one private investor, who did not want to give his name.

"I know several people, even several of my friends, they lost badly because they were panicked and due to this panic they sold at losses," he adds.

The World Bank's Sri Lanka director, Peter Harold, says peace is the key: "If Geneva sets us on a path to a permanent peace that could indeed be the single most important factor towards raising the long term growth rate.

"But just one round of talks is not going to convince the world and all of Sri Lanka's private investors to start investing. They will need some assurance that this is going to be a process that's going to lead towards that elusive sustainable peace."

Back at his restaurant in Hikkaduwa, Mr Koralage can only hope for the best.

"We are praying to our Buddha to have very good talks, and to get a good solution," he says.




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