US embassy cable - 04COLOMBO662

C O N F I D E N T I A L SECTION 01 OF 02 COLOMBO 000662 
 
SIPDIS 
 
DEPARTMENT FOR SA, SA/INS, S/CT 
DEPARTMENT PLEASE ALSO PASS TOPEC 
NSC FOR E. MILLARD 
 
E.O. 12958:  DECL:  04-19-14 
TAGS: PREL, PGOV, ECON, CE, Political Parties 
SUBJECT:  Former PM sees economy as key factor in 
electoral defeat, expects the winning coalition to find 
tough sledding 
 
Refs:  Colombo 647, and previous 
 
(U) Classified by Ambassador Jeffrey J. Lunstead. 
Reasons 1.5 (b, d). 
 
1.  (C) SUMMARY.  Former PM Ranil Wickremesinghe told the 
Ambassador that perceptions of economic well-being (or, 
rather, the opposite) had been key in his parliamentary 
defeat on April 2.  He is skeptical the winners will be 
able to get back to the peace table with the LTTE 
anytime soon.  Wickremesinghe plans to watch the winners 
stumble over the inherent contradictions in their 
coalition and profit from the disarray, perhaps 
beginning with the selection of a Speaker when 
Parliament opens this Thursday.  The Ambassador 
expressed thanks for the excellent cooperation received 
from the PM's office while he was in power. 
We recommend a call to Wickremesinghe from the Deputy 
Secretary making similar points.  END SUMMARY. 
 
SIPDIS 
 
2.  (C) The Ambassador, accompanied by DCM, called on 
former Prime Minister Ranil Wickremesinghe April 19 to 
thank him for the excellent cooperation in the U.S.-Sri 
Lankan relationship which occurred under his tenure as 
PM and to get the now-Opposition Leader's views on what 
went wrong in the election and how the victors will fare 
in the months ahead. 
 
It's the Economy, Stupid 
------------------------ 
 
3.  (C) Wickremesinghe agreed with the Ambassador that 
economic issues had been paramount in the election, as 
heralded in the run-up to April 2 in a series of polls 
which made clear that many Sri Lankans saw themselves as 
worse off than two years before.  He noted, however, 
that while it was true that many consumer good prices 
had gone up, there was a much greater array of consumer 
goods available than two years ago.  "They can buy CD 
players now if they want."  Wickremesinghe said the new 
government will be hard-pressed to fill all of the 
economic promises made during the campaign, like 60,000 
new jobs and higher subsidies, especially for fertilizer 
and other agricultural imports.  If they press forward, 
Wickremesinghe predicted, interest rates will rise, the 
rupee will fall and the "international community" will 
become concerned.  The Opposition Leader chuckled, "They 
think we left a surplus when in fact we left a deficit 
of seven million!" 
 
Back to the Peace Table Quickly? 
-------------------------------- 
 
4.  (C) Asked by the Ambassador if President 
Kumaratunga's public statements about a quick return to 
the peace table with the LTTE were realistic, 
Wickremesinghe said they were not.  "First they must 
decide what their core principles are and the JVP will 
pull them strongly in an unhelpful direction." 
Moreover, Wickremesinghe said, it is not clear who could 
lead a delegation for this government.  Neither the 
President nor Foreign Minister Lakshman Kadirgamar would 
be acceptable to the LTTE.  Asked if the UNP would 
participate in the next round of talks if asked to 
contribute team members by the President, Wickremesinghe 
said it would not.  The government, in his view, should 
handle negotiations, with other political parties only 
becoming involved once a draft deal has been hammered 
out. 
 
Parliamentary Machinations 
-------------------------- 
 
5.  (C) Wickremesinghe confirmed that parliamentary 
infighting and jockeying will begin the moment 
Parliament reconvenes this Thursday (April 22). 
The first issue will be selection of a Speaker. 
Wickremesinghe seemed confident that the UNP would 
prevail in this first skirmish and confirmed that former 
Minister of Justice and Buddhist Affairs W.J.M. 
Lokubandara would be the opposition candidate. 
Beyond that, Wickremesinghe said he will wait for the 
inevitable contradictions in the winning coalition to 
play out and look for opportunities to hurry the process 
along.  He told the Ambassador that he is confident the 
Sri Lankan Muslim Congress (SLMC) and the Ceylon Workers 
Congress (CWC) will stay with the UNP -- at least for a 
while.  If the other side is unable to get a majority, 
the coalition can limp along but "it will become 
increasingly difficult for them to sustain in the months 
ahead."  Wickremesinghe also appeared confident that his 
side could block any effort to convene a constituent 
assembly. 
 
6.  (C) The new Opposition Leader said the JVP wants to 
be "the second party in Sri Lanka."  If President 
Kumaratunga's Sri Lanka Freedom Party (SLFP) continues 
to be "run by Bandaranaikes," there is a good chance 
that in ten years it will disintegrate with many members 
coming over to the UNP.  Wickremesinghe admitted that 
his party is taking stock of what went wrong (indeed a 
meeting of party luminaries was breaking up as the 
Ambassador arrived) but had reached no conclusions yet. 
 
Comment 
------- 
 
7.  (C) Receiving the Ambassador in the bare-walled, 
spartanly-furnished offices of the Opposition Leader for 
twenty minutes, the former PM seemed tired and was his 
usual terse self.  He clearly appreciated and 
reciprocated the Ambassador's thanks for the close 
working relationship the U.S. and Sri Lanka had during 
his tenure as PM but nodded in agreement when the 
Ambassador underlined that we hope to have a similarly 
fruitful relationship with the new government. 
We recommend that the Deputy Secretary call the former 
PM to make the same points. 
 
8.  (U) Minimize considered. 
 
LUNSTEAD