SRI LANKA: SCENESETTER FOR ASSISTANT SECRETARY

C O N F I D E N T I A L SECTION 01 OF 05 COLOMBO 000631

SIPDIS

SIPDIS

DEPARTMENT FOR SCA/INS
MCC FOR S GROFF, D NASSIRY, E BURKE AND F REID

E.O. 12958: DECL: 04/26/2017
TAGS: PGOV PREL PTER PHUM MOPS ECON EAID SL
SUBJECT: SRI LANKA: SCENESETTER FOR ASSISTANT SECRETARY
BOUCHER'S VISIT TO SRI LANKA

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Classified By: Ambassador Robert O. Blake, Jr., for reasons 1.4(b,d).


1. (C) INTRODUCTION: Your visit comes at a time when the
environment for human rights, civil liberties, and media
freedom is declining broadly as the conflict escalates. Our
top priority is to press the government to put forward a
serious power-sharing proposal that can help it win back the
sympathy of Sri Lanka's minorities, especially Tamils. We
should urge the government to exercise military restraint and
to develop a political strategy for resolving the conflict -
whether or not this ultimately means returning to
negotiations with the Tigers. Your visit can also help us
reinforce the message that Sri Lanka must improve its human
rights performance and cooperate with the international
community on helping people - nearly all Tamils - displaced
by the conflict.

GOVERNMENT'S INTERNAL POLL SHOWS DECLINING POPULARITY
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2. (C) An island-wide survey, conducted every 6 months under
the direction of Presidential Adviser Sunimal Fernando,
indicates that the Government's popularity is slipping. The
government's popularity has dropped from 56 percent to around
40 percent in the last six months, mainly due to corruption
and misappropriation of state funds. Sixty percent of those
surveyed said the government was corrupt. The personal
popularity of the President, however, has declined by only
about 5 percent. This decline was attributed to the
President's decision to accept 18 UNP defectors in January:
around 90 percent of the people interviewed did not approve.
Nonetheless, eighty percent of those surveyed were opposed to
the idea of a general election before 2010. The main
opposition UNP has not been able to capitalize on government
failings: its popularity has only risen from 36.5 percent to
40 percent.


3. (C) Over 60 percent of the people interviewed endorsed
the war. Responders indicated that the LTTE must be
militarily crushed before starting any new negotiations.
Around 25 percent said the government should not negotiate
with the LTTE at all. In the survey team's assessment, the
military actions taken against the LTTE have maintained the
popularity of the President. However, people blame the
government for the rising cost of living. Less than 20
percent agree that it is difficult to reduce the cost of
living until the war is over. Combined, these results
suggest that the Sri Lankan public generally supports the
government's military approach to the conflict, but is
unhappy with government performance on other fronts. An
updated attitude survey conducted by the Center for Policy
Alternatives also confirms the Sinhalese majority's strong
support for the government's military actions.

NO CLEAR GOVERNMENT STRATEGY
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4. (C) The government is still divided between hardliners
who favor a military solution and those, such as
representatives of minority parties, SLFP moderates, and the
UNP "crossovers," who favor a negotiated settlement.
However, the GSL's current strategy appears weighted heavily
in favor of pressing forward to achieve military objectives,
at least until the devolution proposal is ready to be tabled.
GSL officials profess to hope that pressure on the LTTE will
lead to political reconciliation in the future. But they
remain divided on whether to negotiate with the LTTE at all,
and if so under what auspices since Norwegian mediation has
been subjected to savage and unfair criticism for being
biased in favor of the LTTE.

CONSENSUS ON DEVOLUTION: WHAT WILL GOVERNING PARTY DO?
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5. (C) Work on the All-Party Representative Committee (APRC)
to draft a devolution proposal has been stalled because the
governing Sri Lanka Freedom Party (SLFP) has not yet

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submitted its inputs. On April 25, an SLFP minister told
emboff the party's central committee, chaired by President
Rajapaksa, had met that day and finalized its proposals for
the APRC. According to the Minister, the SLFP is proposing
to replace provincial councils with district councils. That
suggestion marks a major difference with positions put forth
by several other parties and outlined in a compromise
document by APRC chairman Minister Tissa Vitharana. We
should not underestimate the political challenges the
President faces. No previous President has ever tabled
far-reaching proposals. But the President does enjoy the
support of his Prime Minister (unlike Kumaratunga) and strong
support among the Sinhala majority. He therefore has a big
opportunity should he choose to exercise it. It is not too
late to salvage the APRC process but the President himself
must embrace it, which he has been reluctant thus far to do.


6. (C) In a recent conversation with the Ambassador, APRC
chair Tissa Vitharana reported that once the SLFP's proposals
are in, his Committee will take approximately two months to
negotiate and produce a single, comprehensive devolution
proposal. Ideally, that proposal will include constitutional
changes to allow for greater devolution. If so, it would go
first to the Supreme Court to ascertain legality, then to
parliament, where it would need a two-thirds majority to
pass, and finally, to a national referendum. Only after that
exhaustive process would the proposal be ready for the
government to present to the Liberation Tigers of Tamil Eelam
in a negotiation, if the Government decides to go that route.
Thereafter, it is questionable how much leeway the
government would have to make any further concessions to the
Tigers, since the proposal will have been through such an
exhaustive consensus-building process. But insiders have
told us they are prepared to allow some negotiating room.

HUMAN RIGHTS: PROMISES, BUT LITTLE PROGRESS
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7. (C) Currently, human rights conditions in Sri Lanka are
mixed, with most indicators showing negative trends. The GSL
has taken some steps to address international criticism,
including formation of an interagency committee chaired by
Foreign Secretary Kohona that meets weekly to discuss human
rights problems. On April 24 the Ministry of Defense
re-released Presidential directives that establish procedures
for arrests and detentions, as we had urged them to do.
President Rajapaksa has tasked a "One-Man Commission,"
Mahanama Tilakaratne, with following up on the list of 347
abductees Ambassador presented to Presidential Chief of Staff
Lalith Weeratunga on March 20. The number of reported
abductions in the Colombo area in April is far lower than the
average number of abductions for the first three months of

2007. After Ambassador's repeated interventions, a shipment
of newsprint finally reacted Jaffna, which should allow Tamil
papers to operate for approximately three months before they
will need to be resupplied.


8. (C) However, there are still significant human rights
problems that will require more than cosmetic fixes.
Abductions continue unabated in the North, East and parts of
the Western province. Some of these may simply be
kidnappings for ransom by criminal syndicates, but the
majority of these abductions are likely conducted by
paramilitaries operating with at least tacit government
approval. Many abductees never reappear, even after ransom
is paid. Embassy sources also allege that the Defense
Ministry has given paramilitary groups a green light to
extort money from businessmen, especially in the Vavuniya
area, which is increasingly lawless. Media freedom continues
to be a problem area. There are recent, credible allegations
that Defense Secretary Gothabaya Rajapaksa personally
threatened the safety of some journalists for publishing
unflattering reports. The recent killing of another Tamil
journalist brought the total to eight since the conflict
began to re-escalate in April 2006. Journalists report
exercising self-censorship, drastically curtailing their
reporting after receiving death threats.

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9. (C) There has been a disappointing lack of progress by
the Commission of Inquiry (CoI) and the International Group
of Imminent Persons (IIGEP). One of the biggest hurdles has
been the lack of witness protection capacity. The CoI, with
IIGEP and UN OHCHR assistance, is in the process of
constituting a Victim Witness Protection Unit (VWPU). For
lack of witnesses, the CoI has yet to convene any formal
hearings. On March 21, the Secretary of the CoI informed
IIGEP in writing that public hearings will be held for 5 days
in May, 6 days in June, and 8 days in July -- but failed to
specify which dates. So far, IIGEP has received only two
incomplete police case files (concerning the August slaying
of NGO workers in Muttur and 5 students killed in
Trincomalee) from the CoI. The Defense Ministry canceled a
planned CoI/IIGEP trip to Trincomalee and Muttur, citing
security reasons; it has been rescheduled for April 27-29.


10. (C) Key messages:
-- Reiterate that failure to improve human rights conditions
in Sri Lanka will cause us to consider supporting action in
the UNHRC and potentially Louise Arbour's call for deployment
of international human rights monitors.
-- Welcome the publication of arrest guidelines but stress
that these must be implemented.
-- The Media must be free to serve as a check on the
government.
-- The CoI and IIGEP must have the scope to fulfill their
mandates. This must bring meaningful progress towards
investigation, arrest and prosecution of serious offenders.

HUMANITARIAN SITUATION REMAINS SERIOUS
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11. (U) The International Crisis Group lists Sri Lanka among
the top seven complex emergencies in the world. Sri Lanka
has one of the largest IDP populations in Asia, with an
estimated 684,461 persons displaced. This number includes
312,712 long-term (average of 10 years) IDPs (UNHCR May
2006),301,879 displaced by fighting since April of 2006
(UNHCR April 2007),and an estimated 69,870 persons (13,974
families) still displaced from the 2004 tsunami (GSL January
2007). (Note: the GSL disputes many of these figures, even
though most are arrived at through consultation with local
government agents.) International relief groups including
ICRC and UNHCR have expressed concern that an additional
170,000 people would become displaced in the event of GSL
offensive ground operations against the northern LTTE
stronghold in the Vanni. 660,000 residents of the Jaffna
Peninsula are not displaced, but are effectively cut off from
the rest of the country since August 2006 due to fighting and
the closure of the A9 highway. UNHCR also reports that
17,755 people have fled Sri Lanka as refugees to Tamil Nadu
in India since January 2006.


12. (U) The escalation of the conflict in the last 12 months
has resulted in an estimated 4000 deaths, one-third of those
civilian. Aid workers in the East have reported an
escalation in murders, human rights abuses, disappearances,
and public intimidation by all parties to the conflict, in a
general atmosphere of impunity. The operations of armed
non-state actors such as the Karuna Faction have increased
the levels of fear and insecurity for the civilian population.


13. (U) The international community has responded with
political interventions and with emergency aid to the
affected. Ambassador Blake has represented the Co-Chairs in
discussing humanitarian issues with Defense Secretary
Gothabaya Rajapaksa and Minister for Human Rights
Samarasinghe and the heads of UN agencies in the monthly
Coordinating Committee on Humanitarian Affairs (CCHA). The
U.S. Government also has been a leader in providing
humanitarian assistance. Since our disaster declaration on
August 11, 2006, the USG has provided $6,869,922 in relief
assistance, channeled through UN Agencies, International NGOs
and the International Red Cross.


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14. (C) Key messages:
-- Welcome the opportunity to work with the government in the
CCHA to address problems in humanitarian access.
-- These meetings with UNHCR, Red Cross and other agencies
are critical to improving conditions for the IDPs.
-- Very important to rein in the activities of the Karuna
Group and assert GSL control over law and order in the East.

WAITING FOR THE OFFENSIVE IN THE NORTH
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15. (C) Probing attacks in the northwest, in the Madhu area
between Omanthai and Mannar, do not appear to have gone
especially well for the Sri Lankan Army (SLA). We have
learned that an incursion in that area in late March was much
larger than publicly known, with perhaps 3,000 Sri Lankan
troops committed to the action. A former top general (and
Ambassador to Australia and Indonesia),Janaka Perera
(strictly protect),told Ambassador that SLA casualties in
that operation had also been much higher than reported - 51
dead and 171 wounded. The GSL has downplayed the importance
of another such operation in the last few days. Again, we
have reports that it may be a more significant engagement, in
which the SLA may be trying to locate and destroy the LTTE's
light planes.


16. (C) Perera did not think the GSL could sustain a long
campaign in the north, especially if becomes clear that the
offensive stalls and casualties mount. We agree that support
for a government offensive operation in the Vanni is based on
the Sinhalese majority's belief that the government is on
track to defeat the Tigers. If these expectations are
disappointed, the public mood could turn quickly.

GOVERNMENT WANTS HELP ON AIR DEFENSE
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17. (C) The somewhat successful LTTE air raid against
Katunayake air base, adjacent to Colombo's international
airport, and a less successful foray against the base at
Palaly on the Jaffna peninsula, have created a sense of
urgency for help on air defenses. Gothabaya Rajapaksa
reiterated the GSL request for support from the U.S. in a
meeting with Ambassador, ODC and DATT on April 26. Gothabaya
welcomes the prospect of eliminating the threat from the
nascent Tiger air force before it becomes as capable as the
"Sea Tigers."
Economic Outlook
Conflict Yields Inflation, Suboptimal Growth
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18. (SBU) Sri Lanka's gross domestic product grew by over 7
percent in 2006 to about $25.8 billion, or about $1,355 per
capita. The telecommunications, garments, ports, and
agriculture sectors are all healthy. This growth was
accompanied by 20 percent inflation and a 10 percent
depreciation of the Sri Lankan Rupee, however, as the
government borrowed heavily to finance military spending,
salaries and pensions. Inflation is likely to become a
liability for President Rajapaksa. He has instructed the
Central Bank to tighten up considerably, but this has not yet
succeeded in reining in inflationary pressures.


19. (SBU) Both the government and major businesses in
Colombo are counting on Sri Lanka's "resilience" to insulate
the economy from the conflict. Historically, this has been
true, but if the LTTE were to successfully attack a major
economic target, as they did with the airport in 2001, this
could drag the economy down significantly.


20. (C) With this in mind, Embassy has been quietly
encouraging business leaders to press actively for a peaceful
solution to the conflict. Businesspeople agree with us that
a resolution must be political, not military, but they have
been timid about saying so publicly, fearing repercussions.
Elements of the government view such statements as
unwarranted criticism, with ultranationalists characterizing

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them as unpatriotic, or even treasonous. Key message:
-- Emphasize to the government and the media that peaceful
resolution of the conflict could unlock significant economic
growth potential in the north and the east, which would
contribute greatly to the government's goal of reducing
poverty and speeding development.

Millennium Challenge Compact
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21. (C) We have requested an appointment to deliver the MCC's
letter informing the GSL of MCC would defer work on the
proposed compact "until the security situation, and Sri
Lanka's performance on MCC's indicators affecting political
right and civil liberties improves." As you know, the GSL is
pushing hard to reverse this decision, and is sure to raise
it during your visit. We have emphasized that this will
require concrete actions to improve human rights, not just
new processes. Some of government's recent steps described
above may be intended to demonstrate the kind of action we
have called for. Key message:
-- Explain that Congress and the MCC will be watching for
sustained improvements in areas like respect for press
freedom, handling of detainees, and improving security
conditions on the ground before being receptive to resuming
compact negotiations.


22. (U) Our whole team looks forward to ensuring a
productive visit for you.
BLAKE