MIXED RECORD CONFRONTS SRI LANKA, MALDIVES AND

UNCLAS SECTION 01 OF 06 COLOMBO 002145 SIPDIS DEPT FOR EB A/S ANTHONY WAYNE; SA/INS FOR M.GOWER, C.SIM; TREASURY FOR S.CHUN; MCC FOR D.NASSIRY AND E.BURKE SENSITIVE E.O. 12958: N/A TAGS: EAID ECON PGOV CE MV ECONOMICS SUBJECT: MIXED RECORD CONFRONTS SRI LANKA, MALDIVES AND DONORS AS TSUNAMI ONE YEAR ANNIVERSARY APPROACHES Ref: Colombo 2099 ¶1. (SBU) Summary: As we approach the one year anniversary of the December 26, 2004 tsunami, Sri Lanka has avoided the mass outbreak of disease and unrest that some feared early on, established a network of transitional shelters, begun to build permanent housing, elected a new President, established and now re-structured the agencies responsible for tsunami relief and reconstruction, established but are perhaps rethinking a 100 meter coastal "buffer zone," and begun to restore livelihoods, particularly in the hard-hit tourism and fisheries sectors. As we look back on one year, there are examples of much that was right and much that was wrong with both Sri Lanka's and the international community's approach. Nonetheless, for having absorbed the loss of 35,000 fellow countrymen, and weathered over USD 1.5 billion in damage, Sri Lanka has emerged relatively strong, committed to disaster preparedness and somewhat wiser, beginning to adapt from some lessons learned during the first months immediately after the crisis. Maldives ends the year scrambling for funding to fill a significant financing gap and to finance a major budget deficit. Having started the post-tsunami phase strong, Maldives' small size and obvious resource constraints have turned its impressive "sprint" at the outset of the disaster into a tougher slog. Increasing tourist arrivals, however, should help Maldives through. End Summary ¶2. (SBU) On December 26, 2004 the Asian tsunami struck Sri Lanka and Maldives, killing approximately 35,000 Sri Lankans and 100 Maldivians. While Sri Lanka absorbed approximately USD 1.5 billion (or 5 percent of GDP) in damage, Maldives faced USD 400 million in damage - a whopping 60 percent of GDP. For perspective, in the case of Maldives, it would be as if Hurricane Katrina had killed over 100,000 people and caused USD 6 Trillion in damage. For Sri Lanka, it was the proportional equivalent of 250 September 11 attacks happening simultaneously. Neither country was prepared, neither had the capacity to absorb such a hit, yet both performed, in hindsight, with a fair degree of competence and success. Sri Lanka -------------- The US Response 
 -------------- ¶3. (SBU) USG humanitarian assistance for Sri Lanka in the aftermath of the December 2004 tsunami disaster was spearheaded by USAID/OFDA with the immediate deployment of a DART team and rapid funding of a portfolio of emergency projects. Now largely completed, the projects were instrumental in setting the framework for a successful international and national relief effort. Against a disaster scenario of 35,322 dead, 516,150 displaced, and over a million affected in the country?s coastal communities, there were no deaths due to starvation, lack of medical care, or epidemics. The government of Sri Lanka has reported that the majority of children are back in school; at least half of the tsunami-displaced population has been accommodated in more than 50,000 transitional shelters (while others have been taken in by relatives); and a combination of short-term and longer-term cash and employment interventions have assured at least some income to the families of the 200,000 persons who lost their livelihoods. ¶4. (SBU) In coordination with USAID activities, the US military response was swift and effective. In all, 1,700 Marine, 150 Air Force and US Navy personnel provided immediate clean-up, logistics and relief support to affected communities on the ground. US Marines cleared tsunami affected areas and rebuilt a school in southern Sri SIPDIS Lanka. Air Force personnel, via "Operation Winn-Dixie" provided fresh produce from central Sri Lanka to affected communities in the North and East and conducted medical operations in the very northernmost part of the island. Merchant Marine ships provided fresh water to both Sri Lanka and Maldives. The US military presence and cooperation with the USAID/OFDA DART teams was impressive, effective, and proved an amazingly popular goodwill gesture during a time of severe need. ¶5. (U) In addition to OFDA activities (about USD 43 million),USAID obligated USD 53.6 million into livelihoods, small-scale infrastructure, urban planning, and good governance activities and another USD 35 million in a large-scale infrastructure reconstruction program. USAID's livelihood support program includes assistance for the GSL's tourism "Bounce Back" campaign, cash for work and vocational training, small grants to restore the livelihoods of small business owners, and projects to support livelihood development in multi-ethnic areas in or adjacent to tsunami affected areas. Peace Corps' Crisis Corps program has provided short-term volunteers to support capacity building projects and the delivery of livelihood assistance to affected groups. Crisis Corps works with international, national and local partner organizations in the South and East to strengthen the ability to manage information, gain access to resources, replace productive assets and rebuild communities. ¶6. (U) The infrastructure reconstruction projects will include rebuilding the bridge over Arugam Bay in the east, the reconstruction of three fisheries harbors and the reconstruction and redevelopment of up to 14 vocational/technical schools. Further, the US Trade and Development (USTDA) agency has provided assistance to the newly formed National Disaster Management Council (now the Ministry for Disaster Management),water and sanitation pilot projects and transportation improvement. The US also agreed to provide two years of debt deferral and restructured payments to help provide "breathing space" for the Ministry of Finance. Accomplishments and Challenges -------------- ¶7. (SBU) As we enter the second post-tsunami year, we find that approximately 53,000 transitional shelters have been built with funding from various donors, enough for roughly half of the 500,000 who were displaced. The rest are living with friends and family, and efforts are underway to identify needed resources and services to help restore these families to their former lifestyle. NGOs and the GSL have coordinated relatively well on the transitional housing program, and as we come out of the monsoon season, we find that while there were certainly some transitional shelter residents who were displaced temporarily a second time, concerns about a second wave of humanitarian crises have not been borne out. --Buffer Zone ¶8. (SBU) Perhaps the biggest mistake on the part of the GSL post-tsunami was setting unrealistic permanent housing goals, and then hamstringing their ability to deliver through the imposition of a 100m/200m coastal conservation ?buffer zone? in the west and east of the island respectively. Within weeks of the disaster, then President Kumaratunga announced that the Government would rebuild all damaged housing within 3 months. While few took this particular promise literally, it had the effect of setting expectations that reconstruction could be done within a year. In fact, an entire year has been needed to provide transitional shelter, coordinate efforts to begin building permanent shelter and work through how to operate with the 100m/200m buffer zone. Ultimately, the buffer zone has proven largely unworkable, given the constraint of land availability, particularly in the East. We were able to bring out coastal experts from several agencies (USGS, FEMA) to provide much-needed expertise and advice on how to deal with coastal conservation issues. Their input was a significant factor in the GSL?s decision to modify the buffer zone. ¶9. (SBU) Following the November 18 election of President Rajapakse, an announcement was made that the buffer zone would be rescinded and people would be allowed to build back on their previous sites. This decision has not yet been finalized, but it should have the effect of moving thousands of people from what appears to be a seriously constrained donor-driven housing program into the "owner- driven" housing program, which has enjoyed far more success (see para 9 below). --Former Killing Zone ¶10. (SBU) Complicating Government reconstruction efforts was the fact that a majority of the tsunami-affected area lay in territory controlled or heavily influenced by the Liberation Tigers of Tamil Eelam (LTTE),a US-designated foreign terrorist organization, which has waged a violent insurgency against the Government since 1983. Although an uneasy ceasefire has been in effect since early 2002, low- level violence persists. After several months of negotiations following the tsunami, the Government signed an aid-sharing agreement with the LTTE in June. However, soon thereafter concerted opposition from nationalist political parties in the south, including one of the Government's own coalition partners, Muslim groups, and a court challenge rendered the agreement inoperable. The Government acknowledges that Tsunami reconstruction has lagged behind in LTTE-held areas and is considering ways to move forward with assistance to these areas. Rebuilding: Owner versus Donor Driven Housing Programs -------------- -------------- ¶11. (SBU) Sri Lanka established two options for people whose homes were damaged or destroyed by the tsunami. For those whose homes were not in the buffer zone, an "owner- driven" program was created, which provided direct grants to homeowners, who then have the responsibility for repairing or building their own homes. As of November 2005, all participants in the owner-driven program had received the first payment (out of four payment tranches), and the GSL, through participating banks, was in the process of making second payments. This program currently involves approximately 53,000 homeowners. While the first payments had been made, a dearth of qualified Government technical officers in the affected areas slowed the verification process, which was required to release the second payments. Following the release of additional technical officers from other regions, progress has picked up and some participants have even received their third and fourth (final) payments. ¶12. (SBU) The "donor-driven" permanent housing program for those whose homes were within the buffer zone has not proceeded quite as quickly. Rebuilding for these families required identifying new land, a process that proved enormously slow and fraught with problems, particularly with regard to livelihood (for example, fisherman in Sri Lanka prefer to live near the sea and their equipment; Government ideas about building multi-story communities three kilometers inland, away from the coast and equipment, proved impractical). Hundreds of NGOs stepped in to offer to build housing and, as of November, of the roughly 50,000 houses in the donor built program, MOUs had been signed between the GSL and rebuilding entities (mostly NGOs) for just over 29,000. Construction had begun on approximately 25,000 units (Note: these figures could be slightly misleading, as the Government reportedly counts the beginning of work on a multi-tract housing project as the commencement for all houses. Therefore, in a 200-house project, if the ground has been broken on the first unit, the GSL counts it as 200 units under construction. End Note). ¶13. (SBU) The recent decision to eliminate the 100m/200m buffer zone could have a dramatic effect on the donor- driven and owner-driven programs, since allowing people who were previously barred from returning to their damaged homes or lots to return could significantly increase the participation in the owner-driven program. Moreover, the US and other donors have urged the Government to allow NGOs to be involved in that process, to assist homeowners in assuring that their homes are sound, and constructed in a manner consistent with the needs of living near the coast. This transition is still very much a work in progress and will be monitored closely by all participating groups and agencies to ensure that a maximum number of people benefit from any relaxation of the rules. From TAFREN/TAFOR/TAP to RADA -------------- ¶14. (SBU) In the immediate aftermath of the tsunami it became clear that a Colombo-centric approach to the response would emerge, and that it would revolve around the Presidency. Out of this model came several organizations that led the primary relief and reconstruction efforts, with authority from the President's office and with her as the ultimate decision-maker. The Task Force for Relief (TAFOR),the Task Force for Rebuilding the Nation (TAFREN) and The Transitional Accommodation Project (TAP) were just a sample of the organizations that came about, headed by confidants of the President and responsible for a top-down approach to implementing relief and reconstruction programs. ¶15. (SBU) While these organizations were staffed with capable and determined individuals, the Colombo-centered focus led to delays, indecision and, ultimately, poorer decisions than otherwise might have been taken in the field. Following his election as President in late- November, President Rajapakse decided to amalgamate all reconstruction entities, both for tsunami and war-affected areas, into one overarching body, the Relief and Development Agency (RADA). Reftel provides additional information on RADA and its direction based on discussions with its leadership. RADA Chief Operating Officer, Saliya Wickramasuriya, currently in the process of evaluating personnel and resources, told Econchief that he will not likely make many changes to structures until he get a full handle on the complete set of responsibilities and requirements of the new agency. He is also working on drafting legislation that will give the agency "authority" status, which in Sri Lanka conveys a significant amount of power, allowing organizations to bypass existing structures, statutes and processes. One of the key focuses of the agency, according to Wickramasuriya, will be to push decision-making down to the local levels, and provide capacity building for the village and district level leaders who are necessarily the "first responders" to all of the relief and reconstruction requirements. Donor Coordination -------------- ¶16. (SBU) While donor coordination appears to have led to a closer working relationship among members of the donor community, particularly the International Financial Institutions (IFIs),and the Government, there was also evidence of competition among donors, and efforts to "elbow" others out for projects (Note: Post faced this phenomenon directly when Germany's GTZ sought to take some of the vocational schools projects for which the US had already signed an agreement with the GSL. End Note). There were also cases early on of oversupply of NGOs and relief in certain areas, and gaps in harder to reach, or less prominent areas of the country. ¶17. (SBU) In the immediate aftermath of the tsunami, the World Bank, Asian Development Bank and Japanese Bank for International Reconstruction (JBIC) embarked on a multi- pronged damage assessment, drawing on expertise from existing donors (including USAID) and the GSL. These working groups then created the work plans for moving forward with the reconstruction process. While the GSL struggled with its Colombo-centered approach, the donor coordination group served as a strong voice for the affected communities, insisting on consultation and coordination. As the reconstruction process went forward, the IFIs continued to coordinate with other donors and the GSL, by establishing a donor working group with rotating membership and regular meetings with senior-GSL officials. Livelihoods -------------- ¶18. (SBU) With the damage and loss of life, a secondary, but no less important, concern has been the restoration of livelihoods, both to mitigate the economic damage of the tsunami and to provide necessary psychological support to SIPDIS those who have seen their lives uprooted and members of their family killed. The tourism and fishing industries were the two economic sectors most heavily affected by the tsunami. While tourism numbers fell precipitously, the SIPDIS overall numbers for temporary visitors in 2005 has been remarkably high. The figures remain low in tourist hotspots, however, and resorts are still not at pre-tsunami occupancy levels. ¶19. (SBU) The fishing sector is not a major component of GDP in Sri Lanka, but it represents the largest employer and economic activity in the coastal areas. Fishing communities have slowly returned to the sea as boats and fishing kits have become available. An initial concern about an oversupply of single day fishing boats has led to an increased focus on multi-day boats, in order to promote sustainable fishing practices. Muslims are also heavily represented in the fishing population, adding ethnic sensitivities to the mix. Agricultural land that was inundated will take years to return to a useful state. Small businesses affected by the tsunami have been targeted by a Central Bank-sponsored lending program, designed to provide an additional USD 500 million into the affected communities' economies. Maldives -------------- ¶20. (SBU) The past twelve months in Maldives have been a whirlwind of post-tsunami operations, political upheaval and lurching toward reform. In the immediate aftermath of the tsunami, the GORM elected to hold parliamentary elections that were hotly contested and deemed likely to move the country toward much anticipated political reform. The GORM made a lot of headway early on, presenting a highly competent and well developed financing plan to donors in various international fora. As the months wore on, however, the lack of depth in GORM Ministries began to show and performance dropped considerably. In recent months we have had representations from various GORM officials concerned about both a significant financing gap for tsunami reconstruction (approximately USD 90 million) as well as a looming budget deficit (most recently reported at USD 25 million). ¶21. (SBU) The World Bank and ADB have established local offices in Maldives to work through these issues and advise the GORM on these financing needs. UNDP has increased operations significantly and taken a lead role in tsunami relief and reconstruction activities. ¶22. (U) The US has just concluded a bilateral agreement to support reconstruction in the Maldives. The agreement commits USD 8.6 million for the reconstruction of harbors, power plants, water and sanitation systems and for equipment and capacity building for the Ministry of Finance to assist with Maldives? absorption capacity. Comment -------------- ¶23. (SBU) Aware that the international spotlight has returned to Sri Lanka around the one-year anniversary of the disaster, Post has counseled the GSL to take an open and honest approach with the international media and high- level visitors. In Sri Lanka, some things have gone well, some things have gone poorly, but on the whole, Sri Lanka has a largely positive story to tell. It also has a long way to go, and should use the one year mark as a means of making people aware of exactly what additional help will be required. From the US Mission perspective, we are pleased with the performance to date of US programs and look forward to continuing our reconstruction projects, implementing our capacity building projects and working with the GSL and Maldives as they move forward in the years ahead. For two countries that could not have foreseen disasters of this magnitude, both Sri Lanka and Maldives have responded with professionalism and compassion to the needs of their citizens. Both adapted and institutionalized some of the lessons learned and the response of the two Governments to future challenges (hopefully none of this magnitude) should be improved. End Comment. LUNSTEAD