SRI LANKA: SCENESETTER FOR THE FEBRUARY 20-21

UNCLAS SECTION 01 OF 03 COLOMBO 000327

SIPDIS

SENSITIVE

STATE FOR SA/INS
NSC FOR DORMANDY
USPACOM FOR FPA

E.O. 12958: N/A
TAGS: OVIP PREL PGOV EAID PTER CE LTTE
SUBJECT: SRI LANKA: SCENESETTER FOR THE FEBRUARY 20-21
VISIT OF FORMER PRESIDENTS BUSH AND CLINTON

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SUMMARY
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1. (SBU) The December 26 tsunami, in spite of its cruel
humanitarian toll and staggering financial costs, has
provided the Government of Sri Lanka (GSL) and the Liberation
Tigers of Tamil Eelam (LTTE) a chance to re-engage after a
near two-year hiatus in negotiations. The tragedy has
mitigated, at least temporarily, the vitriol typical of
domestic politics here, and the GSL should move quickly to
capitalize on this respite. Any perception--whether valid or
not--that disaster aid is not being distributed equitably to
affected communities could exacerbate ethnic tensions and
further embitter existing political rivalries. The visit of
former Presidents Bush and Clinton offers an opportunity to
reiterate our appreciation for GSL assistance to American
citizen victims of the disaster; to underscore our commitment
to helping Sri Lanka rebuild; and to encourage GSL/LTTE
cooperation in reconstruction as a way to resume progress
toward a negotiated settlement of the conflict. End summary.

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POST-DISASTER:
PICKING UP THE PIECES
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2. (U) Sri Lanka is beginning to pick up the pieces after
emerging from the greatest natural disaster in its recorded
history. The December 26 tidal wave that devastated
two-thirds of this island's coastline killed approximately
31,000 people (another 5,000-plus remain missing),displaced
nearly 400,000, and caused an estimated $930 million in
damage. Unprepared for a disaster of such magnitude, the
Government of Sri Lanka (GSL) response to the catastrophe was
initially somewhat halting and chaotic, but has since
improved. Responsibility for implementing the GSL's
ambitious reconstruction plan has been assigned to three task
forces, headed by senior civil servants and prominent members
of the private sector, to ensure coordination with foreign
and local NGOs, bilateral and multilateral donors, and
private and corporate donors. By late January the GSL
Central Bank had reported receiving nearly $35 million in
direct contributions from foreign and local sources. Actual
damage to infrastructure proved less than initially feared.
The greatest costs imposed by the tsunami appear related to
housing (nearly 80,000 houses were completely destroyed in
the disaster; about half that number were partially
destroyed) and in livelihoods (nearly 400,000 jobs were lost,
according to World Bank estimates).


3. (SBU) The tsunami had its most dramatic impact on the
fishing and tourism industries. Tourism (which brought in
more than $400 million in revenues in 2004) is a key foreign
exchange earner. The damage to livelihoods will have lasting
social and economic impact in the affected areas. As
reconstruction picks up, some donors have expressed concern
at the lack of appropriate mechanisms to coordinate
rebuilding efforts and ongoing relief activities. The World
Bank, Asian Development Bank and Japan Bank for International
Cooperation are undertaking a joint needs assessment, the
first draft of which has been released. The second phase of
the assessment is just getting under way.

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U.S. ASSISTANCE
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4. (SBU) The Sri Lankan government and its people have
warmly welcomed U.S. government and private assistance. To
date, USAID has provided $57.6 million in emergency food
assistance, relief supplies, shelter, water and sanitation,
health, livelihoods recovery, psychological and social
support, protection and anti-trafficking, logistics and
coordination, and cleanup and rehabilitation activities for
affected communities in Sri Lanka. Cash-for-work and
micro-finance programs are fully operational. USAID is now
focusing on program monitoring and evaluation, ongoing
situational assessments and planning for longer-term
reconstruction. USAID is exploring options for anticipated
supplemental funding for tsunami reconstruction, including
rehabilitation and/or reconstruction of harbor facilities,
bridges, water and sanitation systems, and damaged and/or
destroyed vocational technical schools. Along with
infrastructure contributions, USAID plans to expand
assistance for internally displaced persons, especially women
and children; work with local micro-finance institutions and
industry associations to restore livelihoods; assist
provincial and local governments in building capacity to
improve service delivery in tsunami-affected districts;
expand anti-trafficking in persons efforts; assist the GSL in
the creation of an emergency response organization and plan;
and expand rehabilitation and/or reconstruction of
small-scale community infrastructure, targeting
labor-intensive projects. More than 1,000 U.S. military
personnel from the Combined Support Group Sri Lanka helped
clear heavy debris, rebuild schools, provide medical care and
distribute emergency rations before their departure in early
February. Media coverage of the U.S. effort has consistently
been highly favorable.


5. (SBU) The U.S. is working with other donors and INGOs to
ensure the equitable distribution of our assistance,
including in the north and east. In keeping with
long-standing policy, however, USG personnel are not deployed
in LTTE-controlled areas.


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U.S. CASUALTIES
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6. (U) Seven American citizens were confirmed killed in the
tsunami; an eighth remains missing and is presumed dead. The

SIPDIS
GSL responded quickly to assist U.S. and other foreign
tsunami victims. Despite resource and manpower constraints,

SIPDIS
the GSL worked rapidly to move foreigners, including
Americans, to safety, often according them first priority in
limited aircraft seats. Immigration authorities worked
closely with the Embassy to determine the number of Americans
in country at the time of the catastrophe.


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POLITICAL IMPLICATIONS
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7. (SBU) Before the tsunami struck, prospects for resumed
negotiations between the GSL and the Liberation Tigers of
Tamil Eelam (LTTE) were lackluster. Both sides had adopted
rigid positions (the LTTE insisting on its controversial
proposal for an interim administration as the sole basis for
talks; the GSL, citing the objections of its chief coalition
partner, insisting on a broader agenda) that appeared to
offer little ground for compromise. The protracted impasse
gave chauvinist Sinhalese elements, including GSL coalition
partner Janatha Vimukthi Peramuna (JVP),ample space to
mobilize opposition to the peace process, while the LTTE
continued to violate the terms of the ceasefire agreement by
murdering political opponents and recruiting child soldiers.
Efforts by the Norwegian facilitators of the peace process to
revive talks, on hold since the LTTE's April 2003 walk-out,
were further complicated by President Chandrika Kumaratunga's
preoccupation with extending her political career (in late
2005 she runs up against a two-term limit as president) by
engineering a referendum to amend the Constitution.

8. (SBU) Cooperation on post-tsunami reconstruction efforts
has provided the GSL and the LTTE fresh opportunities for
re-engagement. (Note: The tsunami wrought substantial
damage in six of the eight districts claimed by the LTTE as a
Tamil "homeland," in addition to another four districts in
the predominantly Sinhalese south.) In the first few days
after the disaster, President Kumaratunga issued a public
statement noting the need for all communities to work
together; LTTE leader Prabhakaran followed up with an
unprecedented expression of condolences for the "Sinhala
brethren" killed in the tragedy. Since then, according to
INGO and other foreign diplomatic sources, cooperation
between the two parties on the ground, especially at the
local level, remains good, despite the occasional broadside
in the media accusing one or the other of obstructionism.
The "co-chairs" of the peace process (the U.S., EU, Japan and
Norway) are encouraging both sides to develop appropriate
mechanisms to coordinate relief/reconstruction at all levels.
Unfortunately, an apparent moratorium on tit-for-tat
assassinations by the LTTE and a rival faction ended on
February 7 with the killings of an LTTE political leader and
a pro-LTTE ex-parliamentarian in GSL-controlled territory in
the east. LTTE suspicions that the rival faction is
supported by GSL security forces--along with the proximity of
the ambush to several Sri Lankan Army installations--have
raised concerns that the incident could undermine these
promising first steps toward building confidence between the
two parties.


9. (SBU) The tsunami has also given President Kumaratunga
some respite from the bitter partisan in-fighting that
characterizes mainstream Sri Lankan politics. At least for
now, the opposition United National Party (UNP) has suspended
its sniping at her and, in a commendable show of subsuming
partisan benefit to the national good, has committed to
working with her government in rebuilding the nation.
Despite occasional threats to withdraw from the government,
the JVP, the President's contrarian coalition partner, has
muted its typically vociferous opposition to the peace
process.


10. (SBU) While the disaster may provide Kumaratunga some
welcome breathing space from LTTE ultimatums and partisan
intrigue, we suspect the window is narrow and will not remain
open long. The operation of the Sri Lankan bureaucracy,
which was never a model of speed and agility under the best
of circumstances, has not been improved by the tremendous
logistical challenges imposed by this unprecedented disaster.
Any inefficiency/inequity/non-transparency in the
distribution of assistance will likely be quickly capitalized
upon by Kumaratunga's political rivals. Most important, any
perceived discrimination in the allotment of aid
resources--whether valid or not--could aggravate underlying
ethnic tensions, worsening prospects for a negotiated
settlement to the conflict. The GSL must move quickly to
ensure that assistance reaches all affected populations in an
equitable and timely fashion or risk exacerbating partisan
animosities and re-igniting ethnic grievances.




LUNSTEAD