In May 18 meeting, Ambassador and

C O N F I D E N T I A L SECTION 01 OF 02 COLOMBO 000827

SIPDIS

DEPARTMENT FOR SA, SA/INS; NSC FOR E. MILLARD

PLEASE PASS TOPEC

E.O. 12958: DECL: 05-19-14
TAGS: PREL PGOV EAID PINR CE ECONOMICS LTTE
SUBJECT: In May 18 meeting, Ambassador and
FM Kadirgamar discuss MCA, peace process

Refs: (A) Colombo 809
- (B) State 109791
- (C) State 108895

(U) Classified by Ambassador Jeffrey J. Lunstead.
Reasons 1.5 (b,d).


1. (C) SUMMARY: Ambassador clarified for Foreign
Minister that selection as an MCA candidate country is
no guarantee of funding, and that much hard work
remained before an MCA compact could be signed. On
peace process, Foreign Minister admitted that interim
arrangements will be the only agenda item in upcoming
talks, but hoped that final settlement issues could also
be addressed soon. END SUMMARY.


2. (U) Ambassador met with Foreign Minister Lakshman
Kadirgamar May 18 following Kadirgamar's return from his
trip to Washington. Kadirgamar was very happy about the
trip and the numerous meetings he was able to have while
in the U.S. He mentioned that he was very pleased that
Sri Lanka had been selected as a candidate country for
the Millennium Challenge Account (MCA),and that he had
discussed MCA with both Deputy USTR Josette Shiner and
with Secretary Powell.

MCA NOT SET YET
--------------


3. (C) Ambassador said that he had wanted to discuss
MCA with the Minister. He noted that we were aware that
the Sri Lankan press often printed inaccurate stories,
and pointed to a Washington-datelined story from May 13
which was headlined "US 100 million dollar outright
grant for development." The story implied that MCA
funding for Sri Lanka was assured, and that Sri Lanka
simply had to "come up with proposals." Ambassador said
that Sri Lanka's selection as a candidate was indeed an
honor, but was not a guarantee of funding, and that no
level of funding for Sri Lanka had been set. In ensuing
discussion, it became clear that Kadirgamar thought that
conclusion of an MCA compact was essentially a
boilerplate process. Ambassador told Kadirgamar that
this was not so. He outlined a number of details about
MCA and told Kadirgamar that a Millennium Challenge
Corporation (MCC) team would be arriving in Colombo in
early June to conduct initial discussions.


4. (C) Kadirgamar said that he understood. He also
said that he was so excited about MCA that he had just
sent a note on MCA for the following day's Cabinet
meeting proposing that a Cabinet Sub-Committee be set up
to deal with MCA. He added that he might chair that
Subcommittee.

NEXT STEPS ON PEACE PROCESS
--------------


5. (C) Ambassador said that Assistant Secretary Rocca's
visit, which had occurred while Kadirgamar was in
Washington, had gone very well. He said that he wanted
to clarify an issue, however. In Assistant Secretary
Rocca's discuss with President Kumaratunga (Ref A),the
President had stated unequivocally that the GSL had
agreed that the only subject of initial discussion
during resumed peace talks would be that of an interim
arrangement for administration of the North and East.
This was despite Kumaratunga's preference that the two
sides discuss at the same time parameters of a final
settlement. In Washington, however, the Foreign
Minister had implied that the GSL was still trying to
have final settlement issues included in the initial
discussions (Refs B and C). Perhaps there had been a
change while the Foreign Minister had been in
Washington.


6. (C) Kadirgamar conceded, after some more discussion,
that in fact the GSL had agreed that the initial topic
of discussion would be limited to interim arrangements.
He continued, however, that the GSL was still trying to
come to some agreement with the LTTE on discussion on
final settlement issues. "It could be at some point
while we are discussing interim arrangements, or it
could be after the interim arrangement discussions are
concluded," he said. (Norwegian Ambassador Brattskar
told Ambassador May 19 that Norway was not involved in
such discussions, although there could be other
channels.)

COMMENT
--------------


7. (C) Kadirgamar has a habit of speaking his mind
publicly, often without clearing his remarks with others
in the government. In the case of his MCA comments, it
appears that he may have genuinely misunderstood the
situation. In addition to the discussion on May 18,
Ambassador sent him a letter and packet of information
on MCA the following day. Kadirgamar certainly
recognizes the significance of MCA, even if he has been
fuzzy on the details. We suspect, however, that Finance
Minister Amunugama will want to be in charge of any
process related to MCA. With regard to the peace
process, we suspect that Kadirgamar while in Washington
was relaying -- and perhaps trying to find support for -
- his own strongly felt position that negotiations
should deal immediately with final settlement issues.
From all indications, he has lost that battle within the
GSL, however. END COMMENT.


8. (U) Minimize considered.

LUNSTEAD