TFIZ01: SRI LANKA PROPOSES TO SELL THE U.S. TEA FOR

UNCLAS COLOMBO 000561 SIPDIS FOR D, A/S ROCCA, USAID/AA/ANE WENDY CHAMBERLIN AND IRAQ TASK FORCE SENSITIVE E.O. 12958: N/A TAGS: EAID ECON EAGR IZ CE UN SUBJECT: TFIZ01: SRI LANKA PROPOSES TO SELL THE U.S. TEA FOR HUMANITARIAN AID TO IRAQ ¶1. (U) This is an action request, please see para. 8. ¶2. (U) The government of Sri Lanka (GSL) has proposed selling the USG about USD 2 million in tea to include in US humanitarian aid to the people of Iraq. Minister of Plantation Industries Lakshman Kiriella made the pitch to the Ambassador on April 2, outlining GSL's rationale for the proposal. Sri Lanka, he said, has traditionally supplied tea to Iraq, most recently under the UN's Oil for Food program. When conflict broke out two weeks ago, Sri Lankan tea sales to Iraq halted, with a devastating effect on the local tea industry - particularly on the "low-grown" teas traditionally sold to Iraq. Large quantities of "low-grown" went unsold at the March 25 tea auction, prompting the GSL make this request. Kiriella made the pitch for the U.S. to make this USD 2 million purchase at the next scheduled tea auction on April 8. ¶3. (SBU) Kiriella emphasized that "low-grown" tea is typically farmed by small landholders (about 260,000 people working one acre or so each),who are more susceptible to market disruptions than large plantation companies. Furthermore, "low-grown" tea is farmed mainly in regions of Sri Lanka's south where the left-wing JVP party is active. GSL is particularly worried that a prolonged downturn in "low-grown" tea sales will increase JVP support in the region. A large US tea purchase now, Kiriella said, would help dampen this effect. ¶4. (U) The Ambassador listened politely, but cautioned Kiriella that his proposal was not likely to be a winning one, particularly on short notice. ¶5. (U) Kiriella added that GSL intends to make its own humanitarian grant of tea to Iraq. But the amount GSL can afford to give (about USD 50,000) will neither meet Iraqi demand nor bring an appreciable benefit to affected farmers. GSL therefore is requesting US assistance to buy a much larger amount of tea, about USD 2 million worth. Comment -------------- ¶6. (SBU) Post is, of course, not recommending that the U.S. purchase Sri Lankan tea in order to neutralize an upswing in support for the opposition JVP. Still, it is true that a large-scale surge in support for the JVP could threaten a delicate peace process. Post believes the GSL is right to be concerned about the effect of the war in Iraq on its economy and, by implication, the nation's prospects for peace. ¶7. (U) Post further recognizes that the Department is consumed with pressing humanitarian concerns in Iraq, and that consumption of tea is not a matter of life and death for the people of Iraq. Nonetheless, the GSL proposal does present an opportunity to offer comfort food to the people of Iraq, while addressing a critical threat to the Sri Lankan economy. Post presents the proposal for the Department's consideration as what would be a very small part of the overall humanitarian assistance package for Iraq. If the Department is interested in this unconventional idea, then it is true that a salutary effect could be achieved by purchasing the tea at the April 8 auction. Action Request -------------- ¶8. (U) Post requests the Department to examine whether a USD 2 million tea purchase from Sri Lanka fits into our overall humanitarian assistance strategy for Iraq. Please advise. WILLS