SRI LANKA: SCENESETTER FOR CODEL ENZI

UNCLAS COLOMBO 000581

SIPDIS

SENSITIVE
SIPDIS

PLEASE PASS TO SENATOR ENZI AND CODEL FROM AMBASSADOR
LUNSTEAD

E.O. 12958: N/A
TAGS: OREP PREL PGOV PTER EAID ECON CE
SUBJECT: SRI LANKA: SCENESETTER FOR CODEL ENZI


--------------
BILATERAL RELATIONS
--------------


1. (SBU) Senator Enzi, your delegation's April 14 visit to
Sri Lanka offers a valuable opportunity to highlight our warm
bilateral ties, re-emphasize our commitment to support the
peace process and review progress on key elements of our
humanitarian assistance program. Bilateral relations with
the Government of Sri Lanka (GSL) are cordial and strong,
underpinned by our shared democratic values and our mutual
support in the Global War on Terror. These ties were further
bolstered by the swift U.S. response to the December 2004
tsunami, which killed more than 35,000 people and devastated

SIPDIS
70 percent of the Sri Lankan coastline. Overall, U.S.
relations with Sri Lanka continue to improve, with trade,
investment and military cooperation on the upswing. The U.S.
is one of four Co-chairs, along with Japan, Norway, and the
EU to the peace process. The GSL appreciates the firm stand
the U.S. has taken by proscribing the Liberation Tigers of
Tamil Eelam (LTTE) as a Foreign Terrorist Organization (FTO)
in 1997. We have repeatedly emphasized that the LTTE listing
could be reviewed if the LTTE renounces terror in word and
deed--which the Tigers so far have not done.

--------------
PEACE PROCESS
--------------


2. (SBU) Your visit comes on the eve of the second round of
ceasefire talks, scheduled to be held April 19-21 in Geneva,
between the Government and the LTTE. Since the last round of
talks (February 22-23),in which the LTTE said it would halt
attacks on GSL security forces and the GSL pledged to curb
the activities of "armed groups" in Government-controlled
territory, the two parties have repeatedly accused each other
in public of failing to uphold their respective commitments.
In addition to the war of words, confrontations between GSL
security forces, the LTTE and "armed groups," most notably
the dissident Karuna faction of the LTTE, have led to nearly
30 deaths in the north and east since the last round of talks
concluded on February 23. Although GSL security forces have
shown great restraint in the face of repeated provocations
from the LTTE, the Karuna faction, which many people suspect
enjoys some degree of GSL support, continues to operate with
apparent impunity. The recent uptick in violence has raised
concern that the LTTE, which unilaterally walked out of
negotiations with the GSL in 2003, may decide not to attend
the meeting in Geneva. GSL behavior, on the other hand, has
also given cause for concern. Members of President Mahinda
Rajapaksa's government have openly criticized Norwegian
government facilitators to the peace process and the
Nordic-sponsored ceasefire monitoring organization, the Sri
Lanka Monitoring Mission (SLMM),for purported partiality
toward the LTTE.


3. (SBU) In your meeting with GSL interlocutors, you may
wish to commend GSL efforts to re-engage with the LTTE across
the table, underscore the importance of strengthening the
ceasefire and urge the GSL not to give the Tigers any pretext
to break off talks. While expressing concern about the
continued violence, you may also wish to reaffirm U.S.
support for Norewegian facilitators and SLMM monitors, noting
the important work the SLMM has done in documenting LTTE
child recruitment practices. You might also probe GSL
strategy on how to move the talks past focusing on the
ceasefire toward a political resolution of the 23-year
conflict.

--------------
ECONOMIC RELATIONS
--------------


4. (SBU) As the Ambassador noted in a speech to the American
Chamber of Commerce earlier this year, in order to achieve
better economic progress, "peace is paramount." The
continuing uncertainty surrounding the peace process has
raised concerns among current and potential investors. While
Sri Lanka suffered over USD 1 billion in damage as a result
of the tsunami, most rebuilding costs will be borne by NGOs
and the donor community. Sri Lanka's economic growth rate
did not suffer noticeably, largely because of the relatively
low contribution of the tourism and fishing sectors (the two
most heavily affected industries) to GDP, and because of the
offsetting growth in the construction industry.


5. (SBU) Sri Lanka is a Millennium Challenge Account
eligible country, and has submitted a compact proposal
focusing on rural development, including rural irrigation
projects, rural roads, rural electrification and small and
medium enterprise development. Millennium Challenge
Corporation is currently conducting its due diligence of the
proposal and negotiating the contract terms. The government
acknowledges the need for an open economy, but retains some
statist leanings. The President's Marxist/nationalist allies
are opposed to the privatization of state-owned enterprises,
despite their poor track record and significant, and the most
recent budget was full of give-aways, particularly to rural
communities.

--------------
MILITARY-TO-MILITARY RELATIONS
--------------


6. (SBU) A review of the 2002 US Pacific Command (PACOM)
assessment of the Armed Forces of Sri Lanka shows that some
progress has been made but much remains to be done to meet
our goal of a stronger Sri Lankan military capable of
deterring an LTTE return to war. Some of the positive steps
included: great strides in humanitarian demining; Sri Lankan
participation in joint exercises with US and other friendly
forces; strengthening of maritime surveillance/interdiction
capabilities through delivery of an ex-U.S. Coast Guard
cutter; several high-level visits, including by former Deputy
Secretary of Defense Wolfowitz early last year; and Sri

SIPDIS
Lankan hosting of a Peacekeeping Operations training center
and participation in the UN Peacekeeping Operation in Haiti.
FY 06 funding for Foreign Military Financing is projected at
USD 1 million, while FY 06 spending on International Military
Education and Training (IMET) programs is projected at USD
500,000.

--------------
USAID PROGRAMS
--------------


7. (SBU) USAID/Sri Lanka's Country Strategic Plan supports
three major programs and one special activity in the
following areas: Democracy and Governance (DG); Humanitarian
Assistance (HA); Economic Growth (EG); and a special small
grants program, via the Office of Transition Initiatives
(OTI),to support the peace process. The December 2004
tsunami caused major implementation delays in the bilateral

SIPDIS
program while partners switched gears very quickly to address
the emergency. Total USAID spending on tsunami-related
programs is USD 134.6 million, which, over the next two
years, will include major infrastructure projects, such as
the rebuilding of a large coastal bridge, the restoration of
three fishing harbors, and the rebuilding of tsunami-affected
vocational/technical schools. During your visit, you will
have the opportunity to visit a playground constructed by
USAID in a tsunami-affected community in southwestern Sri
Lanka.


8. (SBU) The DG program support the peace process and the
promotion of transparent and accountable local government.
There are three streams of intervention--with the national
government and political parties; civil society; and with
community groups. The HA program improves social services to
targeted vulnerable populations, particularly people with
mobility disabilities and to children affected by armed
conflict and violence, as well as torture survivors and their
families. New activities beginning this year include an
HIV/AIDS program and interventions to assist the GSL to
improve detection of the Avian Influenza virus. The EG
program strengthens the role of the private sector in the
economy by providing expert assistance to increase
productivity and exports of key commodities and improves the
ability of the Sri Lankan workforce to compete in domestic
and world markets. The OTI program increases public support
for a negotiated settlement to the conflict through
short-term, high-impact small-grant activities that increase
awareness of key transition issues and promote collaboration
among diverse groups to set and address local priorities.
The OTI/Sri Lanka program takes a bottom-up approach to
peacebuilding by working predominantly at the village level
and often with informal groups.

--------------
HUMANITARIAN DEMINING
--------------


9. (SBU) The U.S. began training the Sri Lanka Army
engineering battalion in humanitarian demining operations in
August 2003. Since late 2003 the Sri Lanka Army has received
equipment and training in all disciplines of humanitarian
mine action. To date, U.S.-trained Sri Lanka Army demining
units have cleared more than two million square meters.
Approximately 570 deminers have been trained, equipped and
fielded, with over half of them working in Jaffna and the
rest divided between Vavuniya and Trincomalee. The Mine
Detecting Dog program began in February 2004 with six dogs
delivered from Marshall Legacy Institute through private
donations and the Department of State providing equipment,
supplies, facilities, training, health care and associated
support costs for the dogs. During your visit you will have
the opportunity to visit the Sri Lanka Army engineering
battalion in Embilipitiya to hear a briefing on demining
activities and to observe Army deminers--as well as four mine
detecting dogs--in action.
LUNSTEAD