THE Asian tsunami disaster could trigger a wave of extremism and violence in the region and have a severe impact on its economic recovery, experts warned this weekend.

While a massive international relief operation is under way, deep-seated problems within some of the worst-hit countries may worsen as a result of the tragedy.

Bob Broadfoot, managing director of Political and Economic Risk Consultancy, a firm that advises multinational companies on investing in Asia, said that while the relief effort offers a chance for Sri Lanka to build enduring international relationships, if the aid plans do not include the Tamil rebels who control the north of the island, western firms will not be long-term investors in the country’s recovery.

Sri Lanka has only recently re-established itself as a tourist destination since the ceasefire two years ago between the government and the Tamil Tigers. There are signs that the disaster is reinforcing old divisions.

Jennifer Harbinson, South Asia political analyst with Risk Control in London said: “The signs since the disaster have not been good. There are reports on the ground of low level Sinhalese (government) officials turning aid trucks away from Tamil areas that have been affected.”

Broadfoot fears extremism could also rise in Indonesia as a result of the disaster. Former general Susilo Bambang Yudhoyono was elected president last October, after campaigning on a reputation for efficiency. Broadfoot said his election had brought stability.

“Indonesia has been torn between the military and insurgents. Now they have been pushed to the side, but they won’t stay there,” said Broadfoot. “The international community needs to take a very long term view of this situation.”

But it is not everyone foresees such a gloomy future for the region.

Although regional airline stocks, for instance, have slumped since the catastrophe analysts believe this is a knee-jerk reaction and that recovery will be swift.

Air Asia, the regions’s biggest low-cost carrier co-founded by Conor McCarthy, the former Ryanair operations manager, said it had no intention of halting its $5 billion (€3.7 billion) expansion plan.

McCarthy acknowledged the enormity of the tragedy, but emphasised the airline’s relative lack of exposure. “Our main resort areas such as Langkawi, Penang and Malaysian Borneo have been largely unaffected and our exposure to the western tourist market is quite small. Having said that, I would hate to sound like ‘we’re okay’ as this has hurt us all on a personal level.”

McCarthy said it was still too early to predict the likely fallout for business in the region generally, but felt confident it would not stunt growth in airline travel.

Only two weeks ago Air Asia reserved 80 new aeroplanes for significant regional expansion next year, including flights into Indonesia and China. The company has placed a $2.5 billion order for 40 new Airbus 320s and taken an option on another 40.

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