US embassy cable - 03COLOMBO1801

C O N F I D E N T I A L SECTION 01 OF 02 COLOMBO 001801 
 
SIPDIS 
 
DEPT PLEASE PASS TO E, EB, SA/INS, SA/RA, DRL 
DEPT ALSO FOR USAID FOR BERNADETTE BUNDY - ANE/SA 
DEPT ALSO PLEASE PASS TO USTR FOR AUSTR WILLS 
TREASURY FOR JERRY ADKINS 
DOL FOR SUDHA HALEY 
NSC FOR ELIZABETH MILLARD 
COMMERCE FOR ARIADNE BENAISSA 
 
E.O. 12958:  DECL:  9/30/13 
TAGS: ECON, ETRD, EFIN, EAID, PREL, IZ, CE 
SUBJECT:  AMBASSADOR'S COURTESY CALL ON FINANCE MINISTER 
CHOKSY 
 
REF:  A) STATE 287999, B) STATE 287995 
 
1.  (U) Classified by Ambassador Jeffrey J. Lunstead. 
Reasons 1.5 B and D. 
 
2.  (C) Summary:  During his initial courtesy call with 
Finance Minister Choksy on October 10, the Ambassador 
raised TDA technical assistance, aid utilization, 
government procurement problems, and the Iraq Donors 
Conference in Madrid.  Choksy was enthusiastic and engaging 
on TDA assistance, aid utilization efforts and the Iraq 
conference.  Government procurement problems and US 
advocacy seemed to fall outside either his comfort zone or 
area of interest.  Choksy indicated the GSL is preparing 
legislation to create a new agency to coordinate 
assistance, is ready and willing to continue full-bore with 
the Treasury advisor program, and would look into what they 
might offer for the Iraq conference.  End Summary 
 
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Technical Assistance Programs 
----------------------------- 
3.  (C) Choksy raised USG technical assistance, from both 
TDA and the Treasury Department, noting that the current 
Treasury Advisor on budgeting had been very helpful and 
effective.  The GSL looks forward to working with the new 
TA on debt management, due to start sometime in November. 
Choksy thought debt management would be particularly 
important as the GSL considers a sovereign credit rating. 
 
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FDI and the Peace Process 
------------------------- 
4.  (C) On the issue of a sovereign rating, Choksy expressed 
some concern that the lack of momentum on the peace process 
could push a GSL rating down. The Ambassador commented that 
during recent discussions with the American Chamber of 
Commerce in Singapore he found significant interest in Sri 
Lanka.  Singapore based US businesses needed to be educated 
about the peace process, particularly the unique reality of 
Sri Lanka, where peace could hold, despite the long process 
toward an agreement.  Choksy noted that local investment 
was also sidelined and waiting for more movement on the 
peace front.  Finance Secretary Charitha Ratwatte commented 
that "investors who get in early could reap greater 
rewards."  Ratwatte thought a good showing through the 
tourist season would bolster confidence and improve Sri 
Lanka's image as well. 
 
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AID Utilization 
--------------- 
5.  (C) Regarding aid utilization, Choksy said that the GSL 
had prepared legislation authorizing the formation of a new 
agency (located under the PM's Policy Development Ministry) 
that would serve as a coordinating body for all assistance, 
especially that slated to come in as a result of the Tokyo 
conference.  With regard to current disbursements, Choksy 
said a decision had been taken to fast track certain 
incomplete projects and get them finished.  New projects 
would be funneled through the new coordinating agency.  At 
least one of the current coordinating bodies, the Donor 
Assistance Coordinating Committee, would be subsumed into 
the new agency. 
 
6.  (C) The Ambassador noted the value in a coordinating 
body, but raised concerns about what seems to be a 
proliferation of coordinating groups (Note: the Embassy has 
received three different letters from three different 
bodies in recent days.  End note).  Choksy, who 
acknowledged that he was unfamiliar with the other bodies, 
suggested that there might be some division with regard to 
aid for the north and east, and aid for the rest of Sri 
Lanka. The new agency he had described would control aid in 
the GSL controlled areas.  Coordination of aid to other 
areas would be a point of negotiation for the new Interim 
Administration.  The Ambassador noted that the donors had 
emphasized at the recent Tokyo follow-up conference that 
they would move forward with aid projects in the south to 
send a political message to the LTTE: "you cannot hold 
development of the entire country hostage." 
 
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Iraq Donors Conference 
---------------------- 
7.  (C) The Ambassador took advantage of the meeting with 
Choksy to raise the Iraqi Donor Conference invitation from 
Spain (Ref A).  Choksy had not heard about the invitation, 
but said he would query the Foreign Ministry.  The 
Ambassador acknowledged the GSL's fiscal realities, but 
suggested there may be some creative ways the GSL could 
support the process.  He further noted that the Spanish 
were convening a conference for CEOs, (Ref B) and, though 
Sri Lanka had not been one of the original invitees, 
perhaps it could offer to send some of its talented 
business people (who also have significant commercial 
experience in Iraq) to that conference. 
 
8.  (C) At first Choksy and his staff seemed non-plussed by 
the suggestion of a donor conference, but after hearing 
some of the Ambassador's ideas, they clearly became more 
enthused.  Choksy offered to pursue the invitation and see 
what they might be able to do. 
 
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Comment 
------- 
9.  (C) Choksy was cordial, a bit reserved, but fairly 
enthusiastic in support of our technical assistance 
programs, particularly through TDA and the Treasury 
Advisors program.  It appears the GSL is flailing about 
with regard to aid coordination, and the Finance Ministry 
seems to be supporting the notion of the new development 
agency under the Policy Development Ministry.  Choksy did 
not show much interest during the discussion on government 
procurement and corruption problems.  Overall, it appears 
he will continue to be a force for positive economic reform 
and clearly is interested in pursuing additional assistance 
from the USG.  End comment. 
 
LUNSTEAD