US embassy cable - 04COLOMBO545

C O N F I D E N T I A L SECTION 01 OF 03 COLOMBO 000545 
 
SIPDIS 
 
DEPARTMENT FOR SA, SA/INS, S/CT 
DEPARTMENT PLEASE ALSO PASS TOPEC 
NSC FOR E. MILLARD 
 
E.O. 12958:  DECL:  03-26-14 
TAGS: PGOV, PREL, ECON, PTER, CE, LTTE - Peace Process, Elections, ECONOMICS 
SUBJECT:  In visit to Sri Lanka, SA DAS Patterson 
discusses April 2 elections, plus peace and economy 
 
Refs:  Colombo 515, and previous 
 
(U) Classified by Ambassador Jeffrey J. Lunstead. 
Reasons 1.5 (b, d). 
 
1.  (C) SUMMARY:  SA DAS Torkel Patterson visited 
Colombo, March 21-23.  Highlights of the visit included 
meetings at the MFA, with a key adviser to President 
Kumaratunga, with local diplomats, and with local 
business leaders, including the American Chamber of 
Commerce.  Key issues discussed included the April 2 
parliamentary elections, the peace process, and the 
economic situation.  The visit served to underscore 
continued high-level USG engagement with Sri Lanka 
during this sensitive timeframe.  END SUMMARY. 
 
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MFA Meetings 
------------ 
 
2.  (C) Deputy Assistant Secretary for South Asian 
Affairs Torkel Patterson visited Colombo, March 21-23. 
On March 22, DAS Patterson and Ambassador Lunstead held 
separate meetings with Foreign Minister Tyronne Fernando 
and Foreign Secretary Bernard Goonetilleke.  Patterson 
and the Ambassador used both meetings to review CHR 
priorities, including the Cuba and China draft 
resolutions, and the Iraq situation (see Reftels).  In a 
brief discussion regarding Sri Lanka's April 2 
parliamentary elections, Goonetilleke remarked that he 
felt that voter turnout might be lower this time around 
due to voter dissatisfaction with the two major parties. 
Foreign Minister Fernando claimed that the campaign of 
his United National Party (UNP) was getting a good 
response among younger voters, but admitted that 
confidence in the UNP on economic issues among "the 
average voter" was low. 
 
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Meeting with Key Presidential Adviser 
------------------------------------- 
 
3.  (C) On March 22, DAS Patterson and Ambassador also 
met with Lakshman Kadirgamar, former foreign minister 
and a key adviser to President Kumaratunga.  Asked for 
his views on the election campaign, Kadirgamar seemed 
confident that Kumaratunga's "United People's Freedom 
Alliance" (UPFA) would do well.  There had not been much 
violence so far in the campaign, he related.  He 
thought, however, that there could be some post-election 
violence.  President Kumaratunga was prepared to deal 
with any such incidents, he said.  Queried re the split 
in the Liberation Tigers of Tamil Eelam (LTTE) (see 
Reftels), Kadirgamar thought there was some prospect of 
reconciliation between breakaway eastern rebel leader 
Karuna and Tiger leader V. Prabhakaran.  That said, any 
possible reconciliation would likely take place after 
the April 2 election, as would any possible armed 
conflict between the two sides.  DAS Patterson noted the 
degree of control the GSL had over Sri Lanka's media. 
Kadirgamar, who is currently the Minister of Media and 
Communications, agreed that the state-run media outlets 
were quite influential.  There had been attempts to 
reform the situation in the past, but they had all 
failed.  (Per Reftels, the Ambassador also raised the 
issue of the fabrication of results of a poll in 
government-controlled newspapers on March 20.  The poll 
had been partially financed by USAID.  Kadirgamar said 
he would look into the matter.) 
 
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Dinner with Local Diplomats 
--------------------------- 
 
4.  (C) DAS Patterson also attended a March 22 dinner at 
the Ambassador's residence with local diplomats, 
including those from Norway, the UK, the EU, 
Netherlands, and Canada.  The natural focus of 
conversation was the upcoming parliamentary election. 
The overall feeling at the dinner was that it was not 
precisely clear how the political situation was playing 
out.  That said, most agreed that the President's UPFA 
grouping had gotten off to a fast start and was probably 
ahead at this point in the race.  Prime Minister 
Wickremesinghe's UNP had gotten off to a very slow 
start, but its campaign was getting more active. 
Norwegian Ambassador Brattskar noted that the anti-peace 
process JHU party -- in an unprecedented move -- was 
running an all-Buddhist monk candidate slate, and might 
pick up between 2-5 seats in Parliament.  It was not 
clear whether the JHU's support would come from voters 
who might have supported the UPFA, or would come from 
voters who were dissatisfied with the two major parties 
and were looking for other alternatives.  Regarding the 
LTTE split, there was widespread agreement that the main 
LTTE organization would probably wait until after the 
April 2 election to try to displace Karuna via an armed 
attack or by trying to entice Karuna's supporters away 
from him. 
 
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Commerce Ministry Meeting 
------------------------- 
 
5.  (C) Secretary of Commerce and Consumer Affairs 
Harsha Wickramasinghe and Director General of Trade K.J. 
Weerasinghe updated DAS Patterson March 22 on current 
political activities, GSL positions in the WTO, and 
progress in BIMST-EC (Bangladesh, India, Myanmar, Sri 
Lanka and Thailand Economic Cooperation) and SAFTA 
(South Asia Free Trade Agreement) talks.  Wickramasinghe 
discussed UNP election tactics designed to discredit the 
JVP's stance that it is a credible political party, by 
highlighting its brutal past actions.  He also noted 
that the pro-LTTE Tamil National Alliance (TNA) had said 
they would not ally with the United People's Freedom 
Alliance (UPFA), but would hold out for as much as they 
could get from the UNP. 
 
6.  (C) On WTO issues, Weerasinghe promised that the GSL 
Representative in Geneva would support USG positions on 
UNCTAD and on food aid issues.  The GSL is now busy 
finalizing its proposals for accession to the 
Information Technology Agreement, fulfilling a 
commitment made during the last round of TIFA talks. 
Wickramasinghe mentioned that he saw BIMST-EC as an 
important bridge between SAARC and ASEAN, and as a tool 
to open up Myanmar's trade regime.  Weerasinghe bemoaned 
the multiplicity of bi- and multi-lateral trade regimes, 
and noted the need for convergence. 
 
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AMCHAM Roundtable 
----------------- 
 
7.  (U) During a March 22 meeting with members of the 
American Chamber of Commerce, DAS Patterson outlined USG 
views on regional developments of the past two years and 
asked for insights into the current domestic political 
situation and business climate.  IBM Managing Director 
and former Amcham President, Kavan Ratnayaka described 
IBM efforts to support open source software development, 
noting that Sri Lanka has become an internationally 
recognized "brand" in the open source community. 
 
8.  (SBU) Amcham Director Graetian Gunawardene, whose 
company manufactures Samsonite luggage, noted that the 
export sector has been driving growth and employment. 
He asked specifically for DAS Patterson's support in 
pushing for a U.S.-Sri Lanka Free Trade Agreement (FTA) 
and in returning U.S. visa validity to 5 years.  (Note: 
We are discussing possible changes in our visa 
reciprocity schedule with the GSL.)  Noting that Sri 
Lanka has a long democratic tradition, even through some 
very difficult times, Gunawardene suggested there should 
be closer U.S.-Sri Lanka commercial ties to match their 
shared democratic ideals.  Patterson promised to review 
FTA issues when he got back to  Washington, and urged 
the Amcham to consult with the GSL's Ministry of Foreign 
Affairs to promote a review of the reciprocity issues 
that have led to the limited validity of U.S. visas for 
Sri Lankans. 
 
9.  (C) On the current political situation, optimism 
about the future mixed with concerns about short-term 
political realities.  Ratnayaka (a longtime UNP 
supporter whose family is close to the Prime Minister) 
raised concerns about the opposition's ability to move 
forward on the peace process due to the LTTE's lack of 
trust in the President.  Others in the group, including 
Citibank CEO Kapila Jayawardena, thought the LTTE would 
look closely at who wins the April 2 election and would 
be willing to deal with whichever party wins, assuming 
that party has the intention of negotiating a workable 
solution.  Outgoing Energizer Managing Director Sunil de 
Alwis commented that Sri Lanka remains an attractive 
place to do business.  He mentioned Energizer's new USD 
2 million investment, which upgraded its manufacturing 
facility and improved Energizer's ability to meet 
increased domestic demand and a potential export market 
into India as well.  Citibank and Energizer reps said 
their Sri Lankan operations are leading performers in 
their respective companies.  Jayawardene noted that 
American companies tend to do well in Sri Lanka. 
Citibank's own return-on-equity in Sri Lanka is over 50 
percent, the best in Asia. 
 
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COMMENT 
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10.  (C) As the many threads laid out above indicate, 
this is a very sensitive timeframe for Sri Lankans, who 
have deep worries about the future of the peace process 
and the economy.  These overall concerns are fed by 
specific worries over the unstable pre- and post- 
election period, over what the radical JVP might due in 
power if the UPFA wins, over what the LTTE split means 
for the peace process, etc.  Given this complex, fluid, 
situation, DAS Patterson's visit was reassuring to Sri 
Lankans, who deeply appreciate continued high-level USG 
engagement in support of the peace process.   END 
COMMENT. 
 
11.  (U) DAS Patterson was not able to clear on this 
message before departing Post. 
 
12.  (U) Minimize considered. 
 
LUNSTEAD