SRI LANKA: SCENESETTER FOR DAS FEIGENBAUM'S VISIT

C O N F I D E N T I A L SECTION 01 OF 08 COLOMBO 000620

SIPDIS

DEPARTMENT FOR SCA/INS

E.O. 12958: DECL: 06/23/2018
TAGS: PGOV PREL PTER PHUM MOPS CE MV
SUBJECT: SRI LANKA: SCENESETTER FOR DAS FEIGENBAUM'S VISIT
TO SRI LANKA AND MALDIVES

Classified By: Charge d'Affaires James R. Moore, for reasons 1.4(b,d).

Introduction
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1. (C) Sri Lanka: Your visit comes at a time when our
relations with Sri Lanka are showing signs of strain from the
increasing pressure we have applied on key issues,
particularly human rights. Nonetheless, we continue to have
access at the highest levels of the GSL and to play an
important and predominant role on most issues. Our
priorities remain encouraging the development of a political
solution to the conflict and a de-escalation of hostilities,
which bring with them a deterioration in human rights, civil
liberties, and media freedom. Our task is made more
difficult by the GSL's decision to address the conflict
through military means. We anticipate that the conflict,
including terrorism and human rights abuses, will get worse
before it gets better. The GSL has demonstrated that it is
not willing to make major concessions to international
community demands, even at a cost. Your visit can help us
reinforce the message that improvement on human rights and
progress toward a negotiated solution will allow us to
increase engagement and provide additional assistance. Your
visit also provides an opportunity to emphasize the
importance of further releases by the TMVP of child soldiers
and results by the GSL in combating trafficking in persons.


2. (C) Maldives: Excitement and expectations are building
for what Maldivians hope will be their country's first ever
multi-party presidential elections in fall 2008. Our
priority in Maldives is encouraging the progress of
democratic reform. Your visit can help us emphasize the
importance of establishing appropriate institutions and laws
to ensure the election is free and fair.

Sri Lanka: Few Prospects for a Political Solution
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3. (C) Our most important goals remain the development of a
political solution that meets the aspirations of all Sri
Lankans, including Tamils and Muslims, and an end to
hostilities. This is complicated by the GSL's commitment to
pursuing a military solution to the conflict and defeating
the Liberation Tigers of Tamil Eelam (LTTE) in the North,
just as it "cleared" the East. Although the GSL currently
has the upper hand, and has seen some success, its efforts
are being hampered by stiffer resistance than expected in the
North. We expect that as the LTTE comes under increasing
pressure, it will resort to more frequent terrorist attacks
on political and economic targets in the South. Since
January, we have seen an increase in attacks on political and
civilian targets, including public transport.


4. (C) The GSL says it is prepared for talks, but has shown
little interest developing a political proposal. The All
Parties Representative Committee (APRC) process is stalled.
In January, the GSL diluted the APRC process by insisting
that the committee focus its report on recommendations for
implementing the 13th Amendment, passed in 1987 but never
implemented, which provides for limited devolution. The 13th
Amendment, although a good first step and confidence-building
measure, cannot be an end in itself or a substitute for a
negotiated political solution.


New Provincial Council in the East
--------------


5. (C) The government pushed forward with local and
provincial level elections in the East as a way of
demonstrating government control over the area and the GSL's
ability to deliver democracy to the recently liberated East.
On March 10, the paramilitary TMVP, in alliance with the
ruling United People's Freedom Alliance (UPFA),swept local

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council elections in Batticaloa District. The ruling UPFA,
again in partnership with the TMVP (formerly "Karuna group"),
won the May 10 Eastern Provincial Council elections amidst
criticism by opposition parties and observer groups of
significant electoral malpractices. A climate of fear and
intimidation by armed groups, primarily the TMVP, marred the
overall process. The UPFA-TMVP won 18 seats plus the two
bonus seats that go to the winning party or coalition; the
UNP won 15 seats, while the JVP and a coalition of minor
Tamil parties each took one seat.


6. (C) President Rajapaksa swore in TMVP leader
Sivanesathurai Chandrakanthan (Pillaiyan) as Chief Minister
of the Eastern Provincial Council on May 16. The TMVP
remains armed, and its credentials as a political party are
unproven. Newly named advisors to Pillaiyan bring substantial
international development and Sri Lankan political
experience, yet the CM will face challenges in regularizing
his armed cadres, resolving the issue of child soldiers, and
alleviating Muslim-Tamil tensions while seeking to bring
tangible improvements to the lives of the Eastern population.
The Ambassador has informed the GSL that Pillaiyan will be
judged on the basis of his ability to work with the
government to ensure security and development for all ethnic
communities in the East, but has cautioned that the
international community can not acquiesce to the dual and
contradictory role of Pillaiyan as Chief Minister and leader
of an armed paramilitary. Defense Secretary Rajapaksa has
confirmed that the government is moving ahead to regularize
TMVP cadres by creating two battalions of TMVP cadres within
the Army. Embassy contacts, however, emphasize that
Pillaiyan wants full control of police in the East, and hopes
to integrate most TMVP cadre into the police force,
maintaining direct control over them.


7. (C) A Tamil/Muslim ethnic rift has opened in the East in
the wake of the dispute over the chief ministership between
Pillaiyan and Muslim candidate M.L.A.M. Hisbullah. Since the
announcement of Chief Minister Pillaiyan's appointment,
tensions have remained high between the Muslim and Tamil
communities in the East with targeted political
assassinations and communal violence accounting for at least
12 confirmed deaths around Batticaloa. However, Pillaiyan
and Hisbullah have achieved an accommodation, at least
publicly, in recent weeks.

More Provincial Council Elections
--------------


8. (C) On June 10, the government dissolved the
Sabaragamuwa and North Central Provincial Councils, both of
which were scheduled to continue until August 2009.
Elections will now be held this August. The UNP and JVP
strongly objected to the dissolution, claiming it was
unconstitutional for the government to dissolve a council in
which it did not have a majority. The Supreme Court,
however, has dismissed all legal challenges to the
dissolutions. The government apparently wants to build on
its win in the East, in part to further undermine the
opposition, and in part to create a diversion from Sri
Lanka's accelerating inflation and sow progress on the
military front in the North. We expect the UPFA to face a
tougher battle in the North Central and Sabaragamuwa
provinces than it did in the East, primarily because they
will not have the powerful armed group TMVP to partner with.

Human Rights Problems Persist
--------------


9. (C) Despite our best efforts, and those of several other
countries, we have seen little improvement in the human
rights situation over the past year. The GSL has done little
to rein in abuses by security forces and allied paramilitary
groups. The overall numbers of abductions and disappearances
rose from the fourth quarter of 2007 to the first quarter of

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2008.


10. (C) However, the GSL is recognizing the consequences of
its failure to address human rights, including a reduction in
US military assistance, the withdrawal of IIGEP, denials of
US-funded training through the Leahy vetting process, tough
questions and criticism during the Human Rights Council's
Universal Periodic Review of Sri Lanka in May, and the loss
of Sri Lanka's seat on the UN Human Rights Council. The GSL
reacted strongly to the release of the 2007 Human Rights
Report, claiming it contained egregious inaccuracies and
unfounded allegations. The MFA has designated, at our
suggestion, a working level point of contact to engage
directly with our POL section on human rights.

Small Progress on Child Soldiers
--------------


11. (C) There is currently a window of opportunity for
progress on the release of child soldiers as the TMVP seeks
to establish itself as a legitimate political party.
Following pressure by the U.S. and by UNICEF, there have been
two recent releases totaling 39 child soldiers by the TMVP.
UNICEF reports 74 child soldiers are still held by TMVP, with
21 new recruits since the beginning of the year.


12. (C) Minister of Disaster Management and Human Rights
Mahinda Samarasinghe and Justice Secretary Suhada Gamalath
continue to engage closely on this issue and predict further
releases in the near future. At a dinner on June 10, Defense
Secretary Rajapaksa, Gamalath and UNICEF Country
Representative Duamelle agreed to a joint verification plan
in which UNICEF officials and Justice Ministry staff would
seek to identify the whereabouts of the remaining child
soldiers. This verification process would be accompanied by
a public information campaign that would communicate the
GSL's zero tolerance policy for child soldiers.
Implementation of a robust joint monitoring mechanism,
coupled with a significant decline in UNICEF's numbers and a
public education campaign, would go a long way to convince us
that the GSL is taking "effective measures" to demobilize
child soldiers and prevent their recruitment in the future,
as required by U.S. law. We are pushing hard on the GSL for
more releases and "effective measures" as required by Section
699c of the FY-08 foreign operations bill.

IIGEP Withdraws After One Year
--------------


13. (C) The International Independent Group of Eminent
Persons (IIGEP) ended its work in country and released its
final public statement on April 15. The statement concluded
that the Commission of Inquiry's (COI) work has not met
international standards and that the GSL lacked the political
will to pursue the cases under review. COI proceedings have
continued. However, the government recently ordered the
suspension of video testimony from key witnesses abroad in
the cases of 17 Action Contre La Faim workers and the killing
of 5 young men in Trincomalee until a controversial victim
assistance and witness protection bill passes in Parliament.
Most experts agree that the bill will effectively deter any
witnesses from testifying in the future. Our impression is
that the GSL is actively attempting to shut down further
testimony because it knows the testimony could implicate the
security forces.


14. (C) The Presidential Secretary asked COI member
Devanesan Nesiah to step down from the COI on June 10, citing
Nesiah's link to the think tank Center for Policy
Alternatives. Nesiah officially resigned from the Commission
on June 24. The suspension of video testimony and pressure on
Nesiah increase our concern about the government's intentions
with regard to the COI and whether we will see a credible
outcome of the inquiry into the Trinco 5 and AF cases.
However, repeated demarches at the most senior levels of the

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GSL by the US and several other western embassies have not
succeeded in modifying the GSL's stance.

Sri Lanka's Media Under Increasing Pressure
--------------


15. (C) Sri Lanka's media is facing growing government
pressure not to publish material critical of the GSL,
especially its war effort. On May 23, Nation defense
journalist Keith Noyahr was abducted and brutally assaulted,
possibly for an article he wrote which was critical of Army
Commander Sarath Fonseka. On May 26, the Defense Secretary
Gothabaya Rajapaksa summoned two media workers from the
government-owned publishing house and harangued them for
participating in a rally to protest Noyahr's abduction.
Gothabaya told them that "groups that revere Army Commander
Fonseka" would kill them if they persisted in their campaign
for media freedom. Several other journalists have reported
surveillance, harassment and intimidation by shadowy groups
likely linked to the Defense Ministry. President Rajapaksa
called in the heads of Sri Lanka's major media outlets on
June 6 to criticize their coverage of the war and instructed
them to avoid publishing any sensitive or derogatory military
information. The President implied that unless the press
cooperated, the government would pass strict war censorship
and defamation legislation. He is clearly concerned that if
the media is allowed to report on the war freely, it could
contradict the government's narrative of steady progress
against the Tigers and erode the foundation of his
popularity. We will carefully watch for results from the
ministerial committee on media intimidation that was
inaugurated on June 25.


16. (C) Tamil columnist for the Sunday Times and two-time
IVP grantee J.S. Tissainayagam has been detained since March
as a suspected terrorist under the emergency regulations. The
GSL maintains that he is under investigation for unspecified
terrorist links, but no charges have been filed. His hearing
before the Supreme Court for his fundamental rights petition
was put off until September. Ambassador has repeatedly
intervened on this case, and DRL DAS Barks-Ruggles raised the
issue with the GSL during her visit in May.

Military Relations Strained
--------------


17. (C) Military to military relations are showing signs of
strain due to the impact of recent US legislation restricting
military assistance as a result of poor performance on human
rights and support for a paramilitary group, the TMVP, that
retains child soldiers. Recent refusals of candidates for
training, based on Leahy vetting requirements, have also
created tensions. This friction has the potential to further
impact broader bilateral relations.

GSL Seeking Non-Western Partners
--------------


18. (C) As tensions build between Sri Lanka and the West
over human rights, the GSL is showing increasing interest in
cultivating relationships with non-western partners. The GSL
has successfully sought assistance from China and Pakistan,
and Japan remains an important partner. Ties with Iran
continue to grow. During President Rajapaska's visit to
Tehran in November 2007, he signed eight MOUs to increase
cooperation on several fronts. They included pledges from
Iran for the construction of an irrigation development
project at Umaoya and the expansion of an oil refinery in
Colombo, the latter at the expense of a US company that had
already been selected to complete a refinery feasibility
study. Commercial ties and government-to-government
interactions are also increasing. Iranian Minister of
Commerce Masud Mirkazemi opened an Iranian goods expo in
Colombo in January, the Government of Iran is looking at the
possibility of civil servant exchanges, and President

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Ahmedinejad is expected to visit Colombo at the end of April.
Despite the deepening relationship, the GSL appears
committed, so far, to staying on the right side of UN
sanctions on Iran. The GSL is also actively improving
relations with Israel; Prime Minister Wickremanayake made a
four-day working visit to Jerusalem in March.

Economy Resilient Despite Conflict
--------------


19. (SBU) The economy is resilient despite the conflict.
In 2007, Sri Lanka continued its healthy economic growth,
reporting a 6.8% increase in real GDP. (Note: Actual growth
may have been closer to 6%). Total GDP was $32 billion,
yielding a per capita income of about $1,600. The GSL is
proud of this performance, even though it falls short of the
"Mahinda Chintana" goal of 8% annual growth as the means to
rapidly reduce poverty. That missing 2% demonstrates the
consequence of the GSL's pursuit of a military solution to
the conflict, as the World Bank and others estimate that the
conflict has cost Sri Lanka about 2% in forgone GDP growth
annually.


20. (SBU) Military spending contributes significantly to
the government deficit (7.7% of GDP in 2007) that is driving
high inflation -- over 26% in May. The government downplays
the impact of deficit spending by pointing to the high prices
of imported commodities -- mainly oil and food -- in driving
inflation. The government controls and subsidizes fuel and
energy prices, but has raised both recently in order to limit
its losses. Rice prices have more than doubled in the past
year, as production fell following flooding in March and
April. The rising cost of living is a political concern to
the government, but has not yet produced any serious
protests. This may be because both civil service and private
sector wages have also risen by 20% or more in the last two
years.


21. (SBU) Microsoft, Citibank, Coca-Cola, AIG, and power
producer AES are among the relatively few U.S. companies
operating in Sri Lanka; many other brands are represented by
local agents. The conflict, tender transparency issues, and
investment obstacles contine to deter greater U.S.
investment.

Engaging he GSL on TIP
--------------


22. (BU) This year's Trafficking in Persons report plaed
Sri Lanka on the Tier 2 Watchlist for the secnd year in a
row. Continued engagement of Embass officers with the GSL
on this issue has resulte in some small progress, including
setting up a SL working group on the issue, securing the
relese of child soldiers, and repatriating trafficking
victims abroad. We continue to stress the importnce of this
issue to the GSL and the potential cnsequences of being
downgraded to Tier 3. This ear, we hope to see the GSL make
progress on traning law enforcement officers in
anti-traffickin, providing services to trafficking victims,
maintaining a database on trafficking incidents and cases,
and investigating and prosecuting traffickers. We continue
to stress the importance achieving actual convictions for
trafficking offenses.

USAID Focused on the East
--------------


23. (SBU) In light of the renewed conflict, the
deteriorating human rights situation, and the clearing of the
LTTE from Sri Lanka,s East, USAID has reassessed its
priorities and developed a new strategy for 2008-2012. The
strategy, called Economic and Social Transition (EAST),will
promote the transformation of Sri Lanka,s Eastern Province
by contributing to the development of the regional economy,
strengthening local governance, and increasing citizen

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participation. The strategy is based on the premise that
economic growth can contribute to building social and
economic security and help establish conditions conducive to
a political solution through focusing on regional needs while
also working at the national level, from which many of the
most critical democracy, governance and conflict mitigation
issues emanate. The strategy addresses the regional economic
disparity between the Western Province and the rest of Sri
Lanka by expanding economic and democracy-building activities
in and around the conflicted-affected areas in Sri Lanka,s
East and in the poorest districts in the country on the
border of conflict-affected areas.


24. (SBU) With field offices in the East, USAID,s economic
growth contractor will focus on private sector
competitiveness, workforce development, economic
revitalization via micro-enterprise, and financial sector
services in order to improve the competitiveness of the most
strategic value chains, especially in agriculture. Meanwhile
a second contractor will implement a governance program that
trains officials in newly elected local government bodies,
increases citizen engagement with government, improves the
reporting capacity of human rights organizations, and trains
journalists to improve the flow of information about key
governance issues. The strategy avoids activities that might
serve to legitimize government bodies with compromised
constitutional status or a questionable adherence to
democratic principles.


25. (SBU) The Embassy anticipates approval of $8 million in
funding under Section 1207 of the National Defense
Authorization Act that would help the GSL re-establish
civilian authority and build trust by providing equitable
rehabilitation and development assistance to the multi-ethnic
East. Activities under 1207 will focus on enhancing the
technical skills of provincial and municipal officials,
technical assistance, and small-scale infrastructure
projects. Other key components include the reintegration of
ex-combatants and the strengthening of decentralized
government and the democratic process. USAID also
anticipates $2.6 million in DOD humanitarian assistance
funding from PACOM to build and rehabilitate schools, rural
health clinics and other community infrastructure in areas of
the Trincomalee and Batticaloa districts where internally
displaced persons have recently returned home.

Bridge Opening at Arugam Bay
--------------


27. (SBU) The construction of the $10.6 million Arugam Bay
Bridge is the largest single project in USAID,s $134.5
million Tsunami Reconstruction Program, which aimed to
support recovery and spur economic growth in Sri Lanka.
Other projects under this program included reconstruction or
rehabilitation of 10 vocational schools, installation of
improved water supply systems, and reconstruction and
upgrades of three damaged fishing harbors. USAID will
complete the Tsunami Reconstruction Program by the end of

2008. You will participate, along with President Rajapaksa,
in the inauguration of the Arugam Bay Bridge on July 1.

Humanitarian Access Limited
--------------


28. (C) Sri Lanka continues to be a challenging environment
for NGOs, UN agencies, and international organizations due to
GSL restrictions on work visas, the increase of income tax
levies on expatriate staff, and the requirement of access
permits for travel to the North. Their work is constrained
by what is perceived as an deliberate effort by the GSL to
reduce the number of international humanitarian assistance
workers in Sri Lanka. We have played a leading role in the
Consultative Committee on Humanitarian Assistance, a
coordination body comprised of high-level GSL officials and
representatives from humanitarian organizations and

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embassies, and it has proven to be a valuable mechanism for
addressing obstacles in the delivery of humanitarian
assistance.


29. (C) In sum, your visit comes at a sensitive time for
US-Sri Lanka relations. You will have the opportunity to
emphasize that progress on human rights will allow us to
increase engagement and assistance. It is important that the
pressure we are rightly putting on Sri Lanka results in
improvements and progress rather than frustration and
disengagement on the part of the GSL.

Maldives Prepares for First Multi-Party Elections
-------------- --------------


30. (C) Maldives is now in the midst of final frenetic
preparations to ratify its new constitution and then hold the
first truly free presidential elections in the country's
history. The final chapter of Maldives' new constitution
passed in the Special Majlis (constitutional assembly) on May

4. At the President's request, the draft was reviewed by the
Attorney General's office, which identified over 200
"inconsistencies" that must be addressed by the Special
Majlis. Nonetheless, the government hopes to ratify the
constitution in the next few weeks. The completion of the
draft constitution is a significant accomplishment.
Unfortunately, the delay in completion has shortened the
timeline for election preparation. GORM now says is plans
to hold elections in October rather than August, followed by
parliamentary elections before March 31, 2009 and local
elections before July 2009. However, the government has not
officially lifted the October 10 deadline for completing all
rounds of the election, nor has it made moves to lift the
November 10 deadline for the swearing in of the new
President. Since the Government is under no pressure from
the international community or its own public to keep to the
October/November deadlines, we expect these might slip.


31. (C) A recent UN Assessment Mission noted concern about
the tight timetable to first ratify the new constitution and
then create the new institutions, such as an elections
commission and Supreme Court, that will supervise the
presidential elections. Maldivian High Commissioner Didi
told Ambassador the government is well aware of the
challenges it faces, including the limited timeframe to
prepare for elections, the heavy load of legislation that
remains to be passed, human, financial and technical resource
constraints, the need to create awareness of the process
among the public, and the need to develop independent
institutions. Nonetheless, he said, the government is
committed to timely progress on these issues and looks
forward to continued engagement with the international
community on the process of reform. President Gayoom told
Ambassador in late May that he would ratify the Constitution
quickly and would welcome international observers for the
election.


32. (C) Opposition parties have failed to agree on a single
"Alliance" candidate to contest against the presumptive
ruling DRP party candidate President Gayoom. They have
expressed concern about the very short timetable that remains
to prepare for elections, and have attached particular
importance to the creation of an independent election
commission, an independent judiciary, and guidelines to
ensure equal access to the media for all Presidential
candidates.


33. (SBU) The UN does not plan to observe the presidential
elections, but has sent a set of recommendations to the
President. The Commonwealth expects to field a small
observation mission. The EU has decided to send an election
preparation team of three experts to Maldives for two months.
Another three experts will arrive just before the election
to train and coordinate a small group of observers from
several diplomatic missions in Colombo. The EU Presidency

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will issue a statement on election day, based on the
observations of the team. We plan to contribute at least one
staff member to this observer mission.

Maldivian Economy Strong on Tourism
and Government Investment
--------------


34. (SBU) Maldives' GDP continues to grow by 7-8% a year on
the strength of the booming tourism sector. Resorts are full
for much of the year, not just in the August and winter high
seasons. Tourism and related services like transportation,
communications, and construction account for about
three-fourths of GDP. As a result, per capita income has
become the highest in South Asia, at about $3000. That
income is most evident in Male', where flashy sports cars are
joining the hundreds of basic models and thousands of
motorcycles on the narrow streets. Life is still simple and
quiet on Maldives' many small residential islands, but many
islanders can now afford to install air conditioners.


35. (SBU) In addition to this private income filtering down
from the resorts, the government is spending heavily on
infrastructure. Some of this is still tsunami
reconstruction, but much is for improved infrastructure -- a
conference center, bridges, breakwaters, regional airports,
and so forth -- around the capital and on the residential
islands. The Gayoom government apparently wants to deliver
plenty of visible projects ahead of the upcoming national
election. The government is confident that this spending,
despite producing a budget deficit of over 20% of GDP, is
sustainable against future tourism revenue. The IMF and
World Bank have urged restraint, but neither has raised
serious alarms. Overall, the government's investment
spending seems well targeted and free of corruption.


36. (SBU) The United States provided Maldives about $12
million in relief and reconstruction funds following the 2004
Indian Ocean tsunami. USAID recently completed post-tsunami
water desalination projects on two islands, but otherwise is
not engaged in Maldives. Embassy Colombo's Economic Section
administers another 11 tsunami reconstruction projects
involving power, sewerage, and harbors. A few of these have
recently been completed; the rest will be done within the
next 18 months. Our other major economic engagement involves
the annual American Pavilion at Maldives' largest trade show.
Our exhibitors include computer, windpower, food, and
furniture exporters. Most exciting, in early 2008,
Ambassador Blake joined President Gayoom for the opening of a
pilot wind- and solar-power project on the far northern
residential island of Uligam. The project's success is
likely to soon translate into a $100 million contract from
the Maldives government to install this American technology
on dozens more residential islands.


37. (C) Your trip to Maldives comes at an exciting time in
Maldivian history. You will have the opportunity to stress
that it is better to get the democratic reform process right
than to get it done quickly. You can encourage the
government to ensure that appropriate institutions and
legislation are in place to ensure a free and fair election.


38. (C) We look forward to ensuring a productive visit for
you.
MOORE