With a death toll of about 350 thousand, the Indian Ocean tsunami caused by the deep-sea earthquake near northern Sumatra on 26 December 2004 is by far the worst natural disaster of that kind in the recoded human history. Quite apart from the sheer number of deaths, the Indian Ocean tsunami has at least two unique features, which make it a valuable laboratory for the study of disaster management issues in the new millennium.

First, it is the world’s first truly global disaster, with lives shattered in a dozen of countries in two different continents. Second, the response to the disaster has also been global in a way rarely seen before, with tens of millions of ordinary citizens reaching into their pockets to send aid, in addition to donor governments and agencies. In some donor nations such as the UK, USA, Italy and Germany private donations surpassed the sizable government aid commitments and for the first time corporate donors figured prominently among private donors.

The first feature, the vast geographic spread of the disaster, produced a huge logistic challenge for international organizations and aid agencies. It also rekindled international interest is in setting up a global disaster monitoring system and other cooperative initiatives to increasing public awareness of calamities of this nature at the global and regional level.

The second feature, massive tsunami aid flows, has drawn attention to a number of new issues of international aid operations, including avoiding duplication of tasks, setting up procedures for translating aid pledges into actual aid flows and finding ways and means of avoiding untoward effects of massive aid inflows in an unplanned fashion to the affected countries. The unprecedented preference shown by individual donors to informal private channels has thrown into sharper relief the veining public confidence in aid organizations and receiving-country governments.

In addition, the devastation caused by the tsunami has begun to reveal a close connection between the magnitude of the damage caused by the killer waves and the violation of environmental regulations in the affected countries. Although the height of the waves and their global spread were purely the work of nature, there is clear evidence that the sheer number of losses of human lives was partly a result of modern progress, ruthless destruction of natural defenses such as coral forests and mangrove swamps, and building oceanfront hotels and villas in violation of coastal conservation legislation.

The purpose this paper is to document the nature and extent of the disaster, and to undertake a preliminary analysis of the economic impact and disaster management process in the immediate aftermaths of the disaster, in order to set the stage for deeper analysis of these and related issues. The paper is arranged in three main sections. It begins with a broad-brush picture of the tsunami disaster the nature and extent of the calamity and the international donor response from a comparative perspective.

The next two sections contain case studies of the two worst affected countries Indonesia (Aceh province) and Sri Lanka. The case studies follow a common format, focusing in turn on the history of natural dissenters and the preparedness (or rather lack of it) for facing them, the economic impact of the tsunami and the crisis management experience to date. The final section summarizes the key findings and policy lessons.

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