CONFIDENT PRESIDENT VOWS TO MOVE FORWARD ON PEACE

C O N F I D E N T I A L SECTION 01 OF 05 COLOMBO 002003

SIPDIS

E.O. 12958: DECL: 11/28/2015
TAGS: PREL PGOV ECON KIRF EAID CE LTTE
SUBJECT: CONFIDENT PRESIDENT VOWS TO MOVE FORWARD ON PEACE
AND PROSPERITY

REF: COLOMBO 1605

Classified By: Ambassador Jeffrey J. Lunstead for reason 1.4 (D).


1. (C) Summary. President Rajapakse told the
Ambassador he is committed to maintaining
historically close ties with the United States and
welcomes co-chair involvement in the peace
process. There is a role for an "independent and
balanced" Norway although they should not head the
SLMM in Rajapakse's view. The CFA needs to be
"strengthened" as Rajapakse moves forward on peace
with the LTTE. The President said there is money
for everything he proposed in his November 26
speech to Parliament but admitted that energy
costs and the expectation of continued subsidies
will make his duties as Finance Minister
challenging. Rajapakse urged rapid movement on an
MCC compact and said he is absolutely committed to
religious freedom. The new President clearly is
not a details man but he is accessible and
committed to the bilateral relationship. End
Summary

Hard to Make Everybody Happy
--------------


2. (C) The Ambassador and DCM (notetaker) called
on a relaxed and confident President Mahinda
Rajapakse the evening of November 26. Rajapakse
was unaccompanied in the hour-long conversation.
After thanking the Ambassador for his
congratulations, the President launched into a
chuckling complaint about the amount of time it
had taken him to "make everyone happy" in the
cabinet appointment process. He pointed out his
Cabinet will be much smaller than previous ones
with only twenty-five members (he did not mention
that twenty-five other ministries will be outside
the Cabinet). He referred back to his last
conversation with the Ambassador in September
(reftel) and assured him again that he will manage
his Janatha Vimukthi Peramuna (JVP) coalition
partner (and was meeting them later the same
evening). Rajapakse said that if the JVP and the
Jathika Hela Urumaya (JHU) vote with him, he has a
thin majority of 119 seats in the 225-seat
Parliament but, he said, he may dissolve
Parliament and call an early general election to
strengthen that majority. Rajapakse claimed that
a number of senior United National Party (UNP)
members had wanted to come across after the
election but said he had turned them down since
they had all wanted Cabinet positions as the price
of their defection. "That would not have been
fair to the people who supported me." Rajapakse
said it was a "surprise" that Tamils in the North
were prevented from voting by the LTTE but
expressed confidence that he would have won
anyway.

Close U.S. Ties to Continue
--------------


3. (C) The Ambassador told Rajapakse that the
U.S. had worked well historically with many
different Sri Lankan governments and hoped to do
the same now. Both countries have long democratic
traditions. U.S. goals in Sri Lanka are peace and
prosperity and we remain committed to them, the
Ambassador said. Rajapakse thanked the Ambassador
and said he agreed completely with the
Ambassador's characterization of the bilateral
relationship. "I'll be delighted to work with
you." Rajapakse emphasized that, despite some of
the rhetoric in the campaign, he and his
government were not "anti-outsider or anti-
Western." To the contrary, Sri Lanka's future
depends on collaborating with the rest of the
world.

The Tigers, Norway and the Peace Process
--------------


4. (C) Turning to the peace process, Rajapakse
said he did not know "what the Tigers are up to"
and therefore would be watching LTTE leader
Prabhakaran's November 27 Heroes' Day Speech with
great interest. The Ambassador noted that while
the LTTE is one of the most brutal terrorist
organizations in the world they are also a "fact
on the ground" that must be dealt with if real
peace is to be obtained. Rajapakse agreed: "They
are terrorists but they are also human beings."
He continued that he must find the "right
language" to use with the LTTE and that he did not
think the Tigers want to go back to war. The
Ambassador emphasized that the U.S., both
bilaterally and as one of the co-chair countries,
stood ready to help on the peace process. He
briefly reviewed U.S. military assistance, noting
to Rajapakse that it is designed to help make
clear to the LTTE that a return to the battlefield
is not an option because they would lose.


5. (C) Asked about the future of Norway in the
peace process, Rajapakse said "there is no reason
to move them out." The Norwegians need to
understand, however, that there is a strong
perception in the south of the country that they
are biased in favor of the LTTE. He agreed with
the Ambassador that this perception is erroneous
but insisted it is there nonetheless and must be
dealt with. "Norway must be more independent and
balanced." Rajapakse resurrected the argument
that the CFA had been adopted too quickly in 2003,
before Colombo could examine it in detail, due to
Norwegian pressure. The President also said it
was a mistake for Norway, in addition to being the
facilitator and a co-chair, to head the Sri Lanka
Monitoring Mission (SLMM). The Ambassador
reminded Rajapakse that Norway had been reluctant
to head the SLMM but had agreed to at government
insistence. Rajapakse replied, "Well, we have to
fix that." Rajapakse said he was comfortable with
the role of the co-chairs and looked forward to
working with them.


6. (C) Turning to his plans for the peace
process, Rajapakse said his first priority will be
to renegotiate and "strengthen" the cease-fire
agreement (CFA) so that it is not so unfavorable
to the government (he implied that one aspect of
"strengthening" will be to somehow give the SLMM
more than just a monitoring mandate while removing
the Norwegians from it). At the same time, he
will bring the JVP along on the peace process and
make them understand the Norwegian role.
Rajapakse said he will need to have a "discussion
with the South" to explain his plans and that
moving forward on a lasting peace process "is not
a sell-out." He will then begin talks with the
LTTE which will include, he hopes, a face-to-face
session with Prabhakaran "whenever he is ready,
even tomorrow." Rajapakse said that it was up to
the LTTE to take the initiative in peace talks
since they, not the government, had walked out of
them in 2003.

Tsunami Recovery Needs Improvement

SIPDIS
--------------


7. (C) Turning to tsunami recovery, Rajapakse
said that the process under President Kumaratunga
had been too centralized. Power and authority
should have been pushed down to the district level
with local officials empowered to make decisions
and move things forward. As a result, permanent
housing construction is taking too long.
Rajapakse implied that it would be better at least
in some areas to compensate people financially for
lost housing and let them build what they want
rather than expecting them to be happy with donor-
built housing. (Note: In fact, such a program is
in place for many of the tsunami-affected. End
Note) Rajapakse said Kumaratunga's Task Force for
Rebuilding the Nation (TAFREN),the coordinating
body for tsunami recovery, had spent too much
money on itself in salaries and equipment and that
the government response had been too bureaucratic
("too many clearances and studies"). "We must
decentralize," the President concluded. (Note:
we have heard that TAFREN will be folded into a
larger "relief and reconstruction" authority which
would also oversee conflict-related
reconstruction. End Note).

Finding the Money, Enthusiasm for MCC
--------------

8. (C) Referring to Rajapakse's speech in
Parliament earlier that day (septel),the
Ambassador asked if it will be possible to find
money for everything promised in the presentation.
After joking that he would look to the U.S. to pay
for it, the President said he had "checked with
the Treasury" beforehand and they had explained
that it would be possible to fund Rajapakse's
initiatives without increasing deficits. He noted
he was pleased that Finance Ministry Secretary
P.B. Jayasundera would stay on. Rajapakse said he
had decided to keep the Finance portfolio himself
because of its importance and because previous
Finance Minister Sarath Amunugama had been
"silent" during the campaign amidst speculation
that he was supporting the UNP. Rajapakse said he
faces a challenge in that "everybody wants
subsidies" and high electricity prices affect
every aspect of the economy. Finding a way to
bring more electricity generation on line will be
a priority.


9. (C) The Ambassador briefed Rajapakse on the
status of the Millennium Challenge Corporation
(MCC). He stressed that our ability to move
forward will depend heavily on the economic
performance of the Sri Lankan government and noted
that an MCC team would like to visit in December
after the revised budget is presented to continue
discussions on the MCC compact. Rajapakse was
enthusiastic about the MCC and supported the
team's visit. He took on board the Ambassador's
suggestion that he appoint a senior official to be
the point of contact with the U.S. on MCC. "We
should move forward quickly," the President
concluded.

New Foreign Minister "Balanced"
--------------


10. (C) The Ambassador told Rajapakse that when
former Foreign Minister Lakshman Kadirgamar had
met Secretary Rice in Washington, the two had
agreed that, given the democratic tradition that
Sri Lanka and the U.S. share, there should be room
for significant cooperation on international
issues. One recent example, the Ambassador noted,
was a helpful Sri Lankan position at the IAEA on
Iran. Rajapakse agreed. "There will be no
changes, no worries" although local politics will
sometimes affect Sri Lankan positions. He told
the Ambassador that he will find new Foreign
Minister Mangala Samaraweera "balanced."

Support for Religious Freedom
--------------


11. (C) The Ambassador noted that anti-conversion
legislation had not been much of an issue in the
presidential campaign and asked Rajapakse if that
meant the issue was dying down in Sri Lanka.
Rajapakse said that the anti-conversion bill is
dead and will not be brought up again. "Did you
see my cabinet?" the President continued, a
reference to the fact that separate ministries for
each religion, including one for the promotion of
Buddhism, have been eliminated. Rajapakse said he
had reassured the Buddhist clergy that the
elimination of their ministry did not mean the
government was undercutting their primacy in the
country. But, Rajapakse said, he had made clear
that all religions will be treated with respect
and that religious freedom is something he takes
seriously (and had said so in his speech to
Parliament). Rajapakse pointed out that he had
done unexpectedly well in Catholic regions of the
country which he took as a sign that all religions
are comfortable with him in office. The
Ambassador said Presidential leadership was
important on the anti-conversion issue and hoped
he would continue to set the right example. "The
(extreme) Buddhists won't start trouble,"
Rajapakse concluded.

Garment Quotas
--------------


12. (C) Asked if he had anything else to raise
with the Ambassador, Rajapakse asked about the
"quota," an apparent reference to the pending "Sri
Lanka Tsunami Temporary Relief Act of 2005" which
would grant duty-free garment entry for Sri Lankan
goods (including, most importantly for Sri Lanka,
garments) into the U.S. The Ambassador noted that
such legislation is unlikely to pass but pointed
out that Sri Lankan garment exports to the U.S.
have increased since the end of the quota system,
thus making such legislation unnecessary.
Rajapakse took the Ambassador's point but said he
was under pressure because the UNP had said on the
hustings that the "quota" would be approved
immediately if Ranil Wickremesinghe became
President because "he knows Bush." Rajapakse
commented that maybe he would send some garment
manufacturers to the U.S. "to discuss the issue."
(Note: we would appreciate an update on the
status of the legislation. End Note)

Transition Hurdles
--------------


13. (C) Asked when he would move into the
Presidential residence, Rajapakse laughed and said
he was waiting for President Kumaratunga to move
out. He noted with bemusement that she is still
signing documents and calling officials as
President which has led to some confusion ("we
have parallel Presidencies!"). Rajapakse
commented that Kumaratunga had lobbied him hard to
keep her brother Anura Bandaranaike as Foreign
Minister and Anura had lobbied as well. Rajapakse
said he had responded that since Anura had come
into the Foreign Ministry only once during his
tenure he clearly did not take his duties
seriously. He had told Anura ("we have a close
personal relationship") that if he worked hard as
Tourism Minister in the months ahead, "anything is
possible."

Comment
--------------


14. (C) It is hard to know if President
Rajapakse's affable personal style masks a deeper
understanding of the issues facing Sri Lanka or
whether what you see is what you get. Clearly not
a details man, he would seem to be oversimplifying
the difficulty of getting the Tigers back to the
peace table (although his just-announced decision
to keep former UN Under Secretary General (and Sri
Lanka's UNSYG candidate) Jayantha Dhanapala as an
"advisor" on the process is encouraging) and
restoring Sri Lanka to economic health. Much will
depend on who emerges in his inner circle since
Rajapakse is lacking personal expertise in key
areas. That said, the new President clearly
values a close relationship with the United States
and understands that engagement with the outside
world is a good thing. End Comment.
LUNSTEAD