US embassy cable - 03COLOMBO1917

C O N F I D E N T I A L SECTION 01 OF 03 COLOMBO 001917 
 
SIPDIS 
 
DEPARTMENT FOR D, SA, SA/INS, S/CT, DS/DSS/ITA, DS/IP/NEA/SA 
DEPARTMENT ALSO PLEASE PASS TOPEC 
NSC FOR E. MILLARD 
 
E.O. 12958:  DECL:  11-05-13 
TAGS: PGOV, PINS, PTER, ASEC, MOPS, ECON, CASC, CE, NO, Political Parties, LTTE - Peace Process 
SUBJECT:  In further move, President declares state of 
emergency 
 
Refs:  (A) Colombo-Ops Center 11/05/2003 telecons 
 
-      (B) Colombo-SA/INS 11/04/2003 fax 
-      (C) Colombo 1902, and previous 
 
(U) Classified by Charge' d'Affaires James F. Entwistle. 
Reasons 1.5 (b, d). 
 
1.  (C) SUMMARY:  Adding further to her sudden actions 
on November 4, the President declared a state of 
emergency on November 5.  She told the Charge' (Septel) 
that, despite reports to the contrary, she had not 
sacked the finance minister.  On the evening of November 
4, President Kumaratunga read a brief statement on 
national TV asserting that she had had to take over 
several ministries and suspend Parliament earlier that 
day in order to "ensure national security."  In response 
to her actions, a key government minister sharply 
criticized the President at a briefing for diplomatic 
missions.  The LTTE has said it is concerned about the 
President's actions.  Amid a dive in the stock market, 
the President's moves also have serious economic 
implications.  The situation in Colombo remains quiet. 
Septel analyzes the sharp deepening of cohabitation 
divisions and their possible impact on the peace 
process.  END SUMMARY. 
 
======================== 
President's Latest Steps 
======================== 
 
2.  (SBU) Further to her dramatic actions on November 4 
(see Ref C), President Kumaratunga declared a state of 
emergency on November 5.  One key effect of this 
declaration will be the prohibition without permission 
of public campaigning, public gatherings, and the use of 
public address systems. 
 
3.  (C) Despite many reports that she had taken over the 
Finance Ministry, the President told the Charge' point 
blank late November 5 that she had not/not taken any 
steps against the finance minister.  Per her November 4 
actions, however, she has fired the interior, defense, 
and mass communications ministers and retained the 
portfolios of each ministry for herself.  Personnel 
changes, especially within the media, also continue. 
The President has replaced the officials in charge of 
the government-run ITN television station, the Sri Lanka 
Broadcasting Corporation radio station, and Lake House, 
the government-owned newspaper house.  On the evening of 
November 4, she also ordered the government printer to 
publish the gazette notifications making official her 
ministerial changes and her suspension of Parliament. 
The government printer was reportedly forced by the 
police to take these steps, but he was later released. 
 
======================= 
November 4 TV Statement 
======================= 
 
4.  (U) By way of publicly explaining her actions, 
President Kumaratunga read a brief statement on national 
television late November 4.  (Note:  A copy of the 
statement was faxed to SA/INS -- see Ref B.)  Speaking 
both in Sinhala and later in English, the President said 
her "urgent corrective action" was meant to remedy the 
GSL's "ineffective steps...to ensure national security." 
She went on to assert that she was "committed to the 
preservation of a pluralist, democratic society." 
Commenting on the peace process, the President expressed 
her "willingness to discuss with the LTTE a just and 
balanced solution of the national problem, within the 
parameters of the unity, territorial integrity and 
sovereignty of Sri Lanka."  She closed by appealing to 
all citizens to remain calm and maintain law and order. 
 
============================================ 
Key Minister criticizes President's actions 
=========================================== 
 
5.  (C) With the Prime Minister and many of his key 
aides in Washington, the reaction of the United National 
Party (UNP) governing coalition to the President's moves 
continues to be halting.  Late November 4, a brief 
statement in the PM's name was issued.  The statement 
strongly condemned the President's actions (see Ref C). 
On November 5, G.L. Peiris, a key GSL minister in charge 
of peace process issues, gave a briefing to members of 
the diplomatic corps and heads of international 
agencies.  Karu Jayasuriya, Deputy UNP leader and 
Minister of Power, was also present.  While the briefing 
started out as a pre-arranged review of the peace 
process, it quickly turned to the GSL's views on 
President Kumaratunga's recent moves.  Peiris 
characterized her actions as a "usurpation of power," 
and said they had been "fundamentally repugnant and 
contrary to the norms of democratic government."  Peiris 
also criticized the timing of the President's actions, 
claiming that they were designed to mar Prime Minister 
Wickremesinghe's ongoing visit to the U.S. and 
interrupted the budget process in Parliament (see 
Para 9). 
 
6.  (C) Peiris also repeatedly asserted that the UNP 
government continued to enjoy the support of a majority 
of the Parliament and that a motion of confidence in the 
PM was being drafted.  Peiris went on to note that if 
the President felt she had the political support to take 
over control of Parliament then she should do so, but 
that he believed the President did not have the 
necessary backing. 
 
7.  (C) In other developments, a formal impeachment 
motion on Supreme Court Chief Justice Sarath Silva was 
handed over to Speaker of Parliament Joseph Perera by 
UNP MPs hours before the President suspended Parliament 
on November 4.  Given the suspension of Parliament, 
however, no action can be taken on the impeachment 
motion until it reconvenes.  The move to impeach the 
Chief Justice has sparked a protest in the judiciary, 
with a work stoppage by judges and court staff taking 
place on November 5.  In the meantime, Gayantha 
Karunatilleke, a UNP Spokesman, told Pol FSN that UNP 
party members were "sitting tight" until the Prime 
Minister returned from Washington and issued 
instructions on what they should do. 
 
====================== 
Tigers express Concern 
====================== 
 
8.  (C) The Liberation Tigers of Tamil Eelam (LTTE) have 
expressed concern about the situation.  In a November 4 
article on the pro-LTTE website "TamilNet," under the 
headline "Future of Sri Lanka's peace hangs in balance," 
Tiger spokesman Daya Master stated that the group is 
"carefully monitoring and studying developments" before 
taking any decisions.  The article goes on to 
characterize the status of the GSL-LTTE ceasefire 
agreement as "uncertain."  In a November 5 press report, 
Master was also quoted as stating that "these sudden 
decisions of the President have jeopardized the peace 
process."  In the meantime, there are reliable reports 
that the LTTE appears to be pulling its political cadre 
from their offices in government-controlled areas of the 
north and east, and bringing them back to LTTE- 
controlled areas. 
 
===================== 
Economic implications 
===================== 
 
9.  (C) President Kumaratunga's steps seem set to have a 
serious economic impact.  The budget was to be presented 
to Parliament on November 12 for its first reading, with 
a third and final reading scheduled for December 14. 
According to Faiz Mohideen, Deputy Secretary of Finance, 
the government cannot spend any money after January 1 if 
the budget has not been passed.  The only relief to that 
situation is the ability to extend, only twice, the 
previous year's budget for a quarter.  That measure, 
however, must be voted on by Parliament, which is 
currently suspended by order of the President. 
 
10.  (SBU) Following the President's actions, Colombo's 
stock market, which had been the second best performing 
market in Asia in 2003 (and was perhaps slightly 
overheated) also took a sharp blow.  Already down from 
uncertainties surrounding the LTTE's counterproposal to 
the GSL, the market fell by 5 percent on November 4 (its 
largest one-day drop to that point) and declined by an 
additional 15 percent on November 5.  It is down more 
than 18 percent from its historic high in mid-October. 
While some analysts had predicted a "slight" correction, 
nothing of this magnitude was forecast. 
 
11.  (C) The continued swirl of rumors and confirmed 
moves by the President (including the apparently 
erroneous reports about a takeover of the Finance 
Ministry) are likely to have a further negative effect 
on the economy.  The rupee, which had appreciated 
slightly, and remained stable for several months, has 
depreciated against the dollar.  The Board of Investment 
(BOI) issued a statement to try to calm investors, 
noting that the "BOI of Sri Lanka will not detract from 
our general commitment to improving our level of 
service."   Nonetheless, econoff heard from 
representatives of MAS Holdings, a major apparel 
manufacturer in Sri Lanka, that Lands End -- a major new 
buyer -- was thinking about canceling an imminent visit. 
Tilak de Zoysa, Chairman of the Ceylon Chamber of 
Commerce, told poloff on November 5 that he and other 
business leaders were "very disturbed" at what he 
characterized as "serious" implications for the 
recovering economy. 
 
==================== 
Colombo remains Calm 
==================== 
 
12.  (SBU) The situation in Colombo has remained quiet 
throughout the crisis.  Although military troops have 
been lightly deployed around some government press and 
media installations, security has not increased 
otherwise and people are moving freely about the city. 
The Consular Section has received some queries from 
Amcits about the situation.  In response, Mission plans 
to issue a brief consular message. 
 
13.  (U) Minimize considered. 
 
ENTWISTLE