US embassy cable - 04COLOMBO606

S E C R E T SECTION 01 OF 02 COLOMBO 000606 
 
SIPDIS 
 
NOFORN 
 
OFFICIAL INFORMAL 
 
FOR SA/INS 
 
E.O. 12958:  DECL:  04/07/14 
TAGS: AMGT, CE, MV, LTTE - Peace Process, Elections 
SUBJECT:  OFFICIAL INFORMAL NUMBER 054 (04/07/04) 
 
Classified by Ambassador Jeffrey J. Lunstead for reasons 
1.5 (b) and (d). 
 
CONTENTS: NEW PRIME MINISTER 
-         CODEL DREIER 
-         DCM OUT 
-         CO-CHAIR/IFI MEETING 
-         HELGESEN CONTACT 
-         POST-ELECTION TIDBITS 
 
 
NEW PRIME MINISTER 
------------------ 
 
1.  (C) The Ambassador will call on new Prime Minister 
Mahinda Rajapakse at 9 am Thurday morning.  We assume 
that the POTUS-Prime Minister congratulatory letter 
referred to in the D memo you e-mailed us is in the 
works?  Let us know if you need language from us. 
Depending on how long the meeting goes, we'll sound out 
Rajapakse on peace process, economic policy, etc.  Ops 
Center called POL yesterday to get Rajapakse's telephone 
coordinates.  Is an S call to either the PM or the 
President in the works?  (DCM) 
 
CODEL DREIER 
------------ 
 
2.  (SBU) Seems to be falling into place.  We have 
indications the new PM may receive them.  No word yet on 
a CBK meeting for them.  (DCM) 
 
DCM OUT 
------- 
 
3.  (U)  Jim will be down in Embilipitya all day 
Thursday carrying the flag at a graduation ceremony for 
U.S.-funded deminers.  (DCM) 
 
CO-CHAIR/IFI MEETING 
-------------------- 
 
4.  (C) Ambassador lunched today with other Co-chair Chiefs 
of Mission (Norway, EU, Netherlands for EU Presidency, 
Japan) plus international financial institution heads (World 
Bank, IMF, ADB) to discuss post-election scenario.  On 
financial/economic issues, IMF said there are many decisions 
to be made, but no specific choke points.  One of the steps 
needed in order for the next tranche in the IMF's PRGF to be 
released would be for the government to pass a number of 
pieces of fiscal legislation that stalled in the last 
parliament. More broadly, however, the new Government will 
need to enunciate an economic/fiscal policy.  The current 
PRGF is predicated on the last government's "Regaining Sri 
Lanka" (RSL) program.  The new government will either have 
to reconfirm RSL (unlikely) or come up with a program of its 
own. An IMF team will probably come out in mid-May to assess 
the situation. 
 
5. (C) This has a follow-on effect, as World Bank budgetary 
support (though not project financing) is based on an 
approved IMF PRGF. So, no PRGF means no budgetary support. 
World Bank head noted that Government will also need to 
decide if it wants to go ahead with Consultative Group 
meeting June. If it wanted to do so, the government would 
need to come up with a statement of its fiscal and economic 
strategy.  It was noted also that in election campaign UPFA 
promised a number of expensive items: increased fertilizer 
subsidy, employment for 35,000 recent graduates, and 70 
percent raise for military and government workers. 
Implementing all of these could mean increased interest 
rates, decline in value of rupee, and decrease in 
remittances. BOTTOM LINE: New government needs to make some 
decisions quickly on financial issues. 
 
6. (C) On the political side, all agreed that the new 
government would need to make clear what its attitude was 
toward the Tokyo Process and the Co-chair's role. This was 
particularly so in light of comments new PM Rajapakse made 
yesterday that India should take on larger role in peace 
process. Ambassador will raise issue with Rajapakse in his 
call on Wednesday (para 1 above.) 
 
Helgesen Message, Co-chairs Meeting 
----------------------------------- 
 
7. (C) Later that day Norwegian Ambassador Brattsker called 
to say that he had spoken to Helgesen, who said that he 
wanted to talk to Deputy Secretary Armitage and other co- 
chairs in coming days, but that he thought it would be best 
to do this in a series of bilateral calls, not in a 
conference call, to avoid the appearance that the Co-chairs 
were colluding. Brattsker also said that Helgesen is in 
Sweden making preparations for his wedding, but that he can 
be contacted on his cell phone. With regard to a possible Co- 
chairs meeting, Japanese Ambassador Suda said at the meeting 
mentioned above that the proposed date of May 18 for a 
meeting was not good for Mr. Akashi. 
 
POST-ELECTION TIDBITS 
--------------------- 
 
8. (C) FYI.  We want to flag the following post-election 
tidbits: 
 
-- We have heard that the formation of the new cabinet 
has been delayed and that it may be announced late this 
week.  (See below re news about a possible FM-designate, 
Lakshman Kadirgamar.) 
 
-- There continues to be little definitive word on which 
parties the UPFA political grouping might be able to 
link up with in order to form a majority in Parliament. 
(The UPFA can count on 106 seats now, but needs to get 
to 113.)  Reports indicate that the UPFA continues to 
sound out the all-monk Janatha Hela Urumaya (JHU) party, 
with its nine seats, and there are conflicting reports 
regarding UPFA overtures to the tea estate Tamil Ceylon 
Worker's Congress (CWC), which has seven seats. 
 
-- There are also press reports that we have been unable 
to confirm indicating that President Kumaratunga is 
scheduled to meet later today with UNP leader Ranil 
Wickremesinghe. 
 
9.  (S/NF) Also, the DCM met April 7 with Indian DCM 
Mohan Kumar, who noted that Indian High Commissioner 
Nirupam Sen had called on presidential adviser Lakshman 
Kadirgamar earlier today.  According to Kumar, 
Kadirgamar had referred to himself as the "foreign 
minister-designate" in front of a crowd of journalists. 
Kumar also noted that PM Rajapakse's remarks after his 
swearing-in regarding increased Indian involvement in 
the peace process were "nothing new" and that it did not 
mean "boots on the ground."  Turning to the Indians' 
opinion of Rajapakse, Kumar said that the GoI thought 
highly of Rajapakse but did not see him as globally- 
focused, rather as "rustic" and totally focused on 
domestic issues. (POL) 
 
LUNSTEAD