LTTE: Where next?

As the war in Sri Lanka draws to a close, a new chapter opens for the Liberation Tigers of Tamil Eelam. Their struggle will evolve from one fighting for a Tamil homeland to something different, but they are unlikely to disappear, even if the government of Sri Lanka succeeds in re-taking all of the rebel’s territory.

Take Tuesday’s attack: the LTTE will likely continue to use terrorism as a tactic, and may in fact evolve into an entirely terrorist organization, instead of the ethno-nationalist separatist group that some describe them as.

The one thing that the LTTE has not done (for the most part) is execute terrorist attacks on foreign soil. However, as the situation gets more dire for them, they may in fact be motivated to start executing international terrorist attacks in order to gain support for their cause. Likely targets? India, Sri Lanka, and major supporting nations – among which Canada could be ranked.

Short-term fixes for long-term pain

The bill passed in the HoR bans the purchase of most foreign steel and iron used in infrastructure projects. The US will be investing in major infrastructure projects once the next phase of the stimulus package is released. What will this mean for the US and for its trading partners, and for the international economy?

For the US, it will mean an increase in US steel and iron purchased, but it won’t be in a competitive market. As a result, US iron & steel companies will have a significant market advantage. For many economists, this means that those companies will become structurally uncompetitive, as they won’t have to undergo the same rigorous competition as others. When the US eventually opens its market again (as it most likely will), those companies will be seriously disadvantaged, even if they’ve survived in the short-to-medium term, something many other companies will not have. (US infrastructure projects may also become more expensive, since the projects won’t be paying competitive, market-rates for their raw goods.)

In terms of international prices for steel and iron, we can expect them to decrease, making other countries’ infrastructure projects more affordable. While many companies will suffer because of the lack access to the US market, many will survive. These companies will be efficient, having weathered a very tough time, and very competitive.

In the long run, preferential treatment to US companies will create inefficiencies in the system, and delay the US’ transition to the new economy.

Coalition Drama

It’s fitting that the first real post on here is about Canada’s constitutional crisis.  Today, the Governor General granted Prime Minister Harper’s request to prorogue Parliament, meaning that there will be no new business until Parliament resumes on the 26th of January. 

In the meantime, Harper will be busy.  His first order of business will be to sow dissent in the ranks of the proposed coalition between the Liberals, NDP and Bloc Quebecois.  This will not be hard to do.  Already cracks are beginning to show in the coalition, which is precarious at best. 

The real victim here will be the Canadian economy.  Granted, it is in a better position than most, but it still requires a stimulous package, if only to make it competitive in a global economy where banks are supported by governments, and entire industries may receive bailout packages.  Instead, nothing will be done for the next six weeks.  If the coalition survives the inevitable onslaught of attack ads, then it will still have to take some time to look at the finances of a country on the verge of recession before deciding on a course of action.  At best, the Conservative government will propose a stimulous package that passes on the 27th.  At worst, Canadians have to wait at least another month for something from a coalition government, and it could well take longer than that. 

Regardless, Canadians are heading into a time of serious uncertainty.  If the coalition falls apart, there is no guarantee that the opposition won’t bring the house down and force an election.  If it holds together, Canadians are still going to be waiting longer than they ought to for a stimulous package.  The blame game is pretty broad: the PM was irresponsible with his proposed legislation, and the Governor General didn’t do Canadians any favour by postponing these decisions.  

Fundamentally, the Canadian political system will recover, as will the Canadian economy. However, some of the political parties may not.  Harper seriously miscalculated, and may have lost the confidence of not only the house, but his party.  If the coalition succeeds, Mr. Harper may be out of a job as leader of the Conservative party, and the party itself will suffer the consequences of his irresponsible actions.  If the coalition fails, the Liberal party, already at one of the lowest points in its history, may well face its end of days.  And people say Canadian politics are boring.