MCC DECISION NOT TO RE-SELECT SRI LANKA FOR COMPACT

UNCLAS COLOMBO 001687

SIPDIS

SENSITIVE

SIPDIS

STATE FOR SCA/INS AND EEB/IFD/ODF
MCC FOR S. GROFF, D. TETER, D. NASSIRY AND E. BURKE

E.O. 12958: N/A
TAGS: EAID KMCA PREL CE
SUBJECT: MCC DECISION NOT TO RE-SELECT SRI LANKA FOR COMPACT
ELIGIBILITY EXPLAINED TO FOCAL POINT

REF: A. SECSTATE 168510 B. GABOR-NASSIRY 10-30-07 EMAIL


1. (SBU) Sri Lanka's national focal point for Millennium Challenge
Account issues, Secretary of Ministry of Plan Implementation Dhara
Wijayatilake, contacted Econoff December 20 to seek clarification
regarding the MCC board's December 12 decision regarding Sri Lanka.
Wijayatilake had seen a local media report about the MCC decision,
but had not heard anything from Sri Lanka's Embassy in Washington
(which post understands MCC immediately informed of the board's
decision.) Wijayatilake was concerned that the local media reports
seemed to indicate that Sri Lanka had been found ineligible for the
MCC program based on its performance on MCC's policy indicators.


2. (SBU) Wijayatilake was relieved when Econoff clarified that Sri
Lanka had been eligible for MCC consideration on the basis of the
indicators, but that the MCC board had decided not to re-select Sri
Lanka for FY 2008 Compact eligibility (ref A). She found this
understandable, given that there had been no significant change in
the status of the conflict and the human rights and governance
concerns that had led the MCC in April to defer work on Sri Lanka's
proposed compact.


3. (U) Wijayatilake was reacting to this report in the
English-language "Daily Mirror" newspaper, under the headline "US
deselects Sri Lanka from 2008 funding": "At a December 12 meeting,
the Board of Directors of the MCC deselected Sri Lanka, based on the
country's performance on 17 indicators in three areas -- ruling
justly, investing in people and encouraging economic freedom...Sri
Lanka's de-selection implies that it has not demonstrated commitment
to policies that promote political and economic freedom, investments
in education and health care, control of corruption, and respect for
civil liberties and the rule of law."


4. (SBU) Comment: Wijayatilake was seeking to understand whether the
MCC board decision in any way indicated that Sri Lanka had slipped
in terms of the MCC's criteria for assessing countries, so that she
could explain the development to the Minister of Plan
Implementation. She wanted to be sure that she had correctly
understood, when post delivered Sri Lanka's scorecard in October,
that Sri Lanka had "passed" on the basis of the indicators (ref B).
She clearly felt that she could account for the MCC decision not to
re-select Sri Lanka for compact eligibility, but that it would have
been hard to explain if Sri Lanka had been judged ineligible on the
basis of its performance on the MCC's 17 policy indicators. Her
reaction shows how seriously her very technocratic ministry cares
about how Sri Lanka performs on the policy indicators; she has,
however, never disputed the MCC view that the Sri Lanka's conflict
and recent governance problems are inconsistent with the goals of
the MCC program.
BLAKE