US embassy cable - 05COLOMBO868

UNCLAS SECTION 01 OF 03 COLOMBO 000868 
 
SIPDIS 
 
DEPT FOR EB A/S ANTHONY WAYNE; SA/INS FOR J. BRENNIG, N. 
DEAN; PLEASE PASS TO TSUNAMI RECONSTRUCTION TASK FORCE; 
TREASURY FOR C. CARNES 
 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: EAID, ECON, PGOV, CE, MV, Tsunami 
SUBJECT: SRI LANKAN POST-TSUNAMI RECONSTRUCTION UPDATE (MAY 
11, 2005) 
 
Ref: Colombo 833 
 
This cable is for participants in the May 11 Tsunami IAWG 
Meeting. 
 
Reconstruction Progress 
----------------------- 
1. (U) In Sri Lanka, reconstruction progress continues at a 
measured pace.  The Government seems to be feeling less 
pressure on the transitional housing front and has announced 
that they have surpassed 22,000 transitional shelters and 
will achieve their goal of 30,000 shelters in place by June 
30.  NGOs and private sector entities continue to experience 
constraints in land allocation in the East and poor 
logistical coordination in other areas.  The 100 meter 
setback continues to be an issue and post intends to proceed 
with the digital video conference as outlined in reftel. 
 
 
May 12 Private Sector Conference 
--------------------------------- 
2. (U) Post recommends representatives from IAWG agencies 
use the May 12 private sector conference as an opportunity 
to engage with senior Government and private sector 
representatives from Sri Lanka and Maldives.  Both countries 
are sending top-flight representatives who are prepared to 
engage on potential projects and partnerships.  Each 
country's participants were listed in reftel. 
 
May 16-17 Kandy Development Forum 
--------------------------------- 
3. (SBU) The May 16 and 17 development forum remains an 
uncertain exercise, with no poverty reduction strategy draft 
yet available and increasingly pessimistic assessments about 
whether a joint mechanism will be in place (see below). 
Ambassador, USAID and ECON will represent US.  Ambassador is 
planning to meet with World Bank ResRep before Friday to 
discuss potential outcomes. 
 
4. (SBU) Post is looking carefully at a potential rollout of 
the supplemental, as we want to avoid either 1) the story 
being buried by the development forum coverage, or 2) the 
story being linked with the development forum, making it 
appear as though the forum was our preferred mechanism for 
pledging our assistance. 
 
Joint Mechanism 
--------------- 
5. (SBU) Finalization of a joint mechanism for the delivery 
assistance in the north and east continues to elude the 
Government and the rebels.  The President met with some 
donors on May 10 (the Ambassador is scheduled to meet the 
President today) and told them she needs a few more weeks to 
bring her coalition partner, the Marxist-Nationalist Janatha 
Vimukthi Peramuna (JVP) on board.  The JVP had announced 
that it would reveal its alternative to the joint mechanism 
during a rally on May 10.  However reports from the rally 
indicate that no alternatives were presented, only anti-LTTE 
and anti-joint mechanism slogans.  It is possible that the 
JVP alternative would be to substitute Tamil National 
Alliance representatives for the LTTE, something they have 
proposed in meetings with donor representatives.  The JVP 
views the joint mechanism as a potential tool for the LTTE 
to gain additional sovereignty and concessions in the 
ongoing peace process. 
 
USAID Pre-Bid Conference 
------------------------ 
6. (U) USAID Colombo hosted a "pre-bid" conference on May 10 
for potential contractors to hear more about USG signature 
infrastructure projects and learn about USAID contracting 
procedures.  The conference was well attended and should 
allow for a more rapid start to USAID tsunami infrastructure 
projects once the supplemental is passed. 
 
Value Added Tax Conundrum 
------------------------- 
7. (SBU) We continue to be stymied in our effort to find a 
simple solution to VAT exemption for USG contractors 
performing US assistance projects in Sri Lanka.  The Finance 
Ministry has developed a rather convoluted system that would 
require all purchases to be registered roughly a month in 
advance (while the Government has not laid out this 
timeframe, the process they envision would be 2-3 weeks at a 
minimum).  We hope that part of the problem is simply a lack 
of institutional memory in the Finance Ministry, as many of 
the Fiscal Policy officers are fairly new in the last couple 
months.  Nonetheless, if we are unable to secure a quick 
resolution to this issue, it could impede progress on USG 
assistance projects in Sri Lanka. 
 
All-Hazards Warning 
------------------- 
8. (U) Post notes with interest the various plans for all- 
hazards warning systems, the USTDA/NOAA conference in 
Hawaii, the IOC meetings in Paris and Mauritius and the 
supplemental funding.  We would appreciate some more 
perspective, however, on how the global and regional systems 
are to be linked with national systems.  In particular, we 
would like to have a sense as to whether funding will be 
available for country-specific all hazards warning systems. 
 
Tourism "Bounce Back" Initiative 
-------------------------------- 
9. (SBU) The USAID-sponsored Competitiveness Program will 
launch a joint project on May 11 with representatives from 
its tourism cluster, to collaborate with the Sri Lanka 
Tourism Board and Sri Lanka airlines to promote vacation 
travel to Sri Lanka.  The strategy is to reassure and 
attract European and Indian visitors.  The campaign will 
combine television advertisements and press events with 
trade shows and will also include targeted invitations to 
noted travel professionals and personalities.  While overall 
arrivals of foreigner visitors remain fairly high, much of 
this is the result of foreign disaster assistance workers 
and volunteers.  Numbers of vacationers remains low, and 
vacation-dependent businesses continue to struggle. 
 
Post-Tsunami Analysis by Leading Sri Lankan Think Tank 
--------------------------------------------- --------- 
10. (U) One of Sri Lanka's leading policy think tanks, the 
Institute for Policy Studies, released a study of the post- 
tsunami rebuilding situation, which made the following 
 
SIPDIS 
points (many of which are longstanding issues): 
 
--The disaster had uneven impacts.  13 of the country's 25 
districts were affected, but the North and East were 
particularly hard hit accounting for over two thirds of the 
deaths and almost 60 per cent of the displacement (as of 
January, 2005). 
 
--There is a need to place the tsunami within the broader 
debate over policy choices facing Sri Lanka. For example, 
public sector problems and shortcomings in the context of 
the tsunami highlight many well known and long running 
challenges to the public service, including lack of a 
service culture or consultation, weak procurement and hiring 
and firing policies, politicization, limited Ministerial 
coordination, unclear relationship between the center and 
local levels and weak oversight of public funds. 
 
--The primary reconstruction priority is not raising 
additional funds, but the process of using existing funds to 
rapidly and equitably restores tsunami-affected areas. 
 
--The reconstruction process must build on the existing 
capacities and strengths of the poor, affected people e.g., 
building roads and houses with local skills, constructing 
fishing craft with local boat builders, and rehabilitation 
of the destitute through community-level centers. 
 
--The reconstruction must avoid the impression of a two-tier 
situation developing between tsunami survivors and other 
poor groups such as those displaced by the conflict and 
other low-income households. 
 
--Regarding the most pressing issue of permanent housing, 
there is an urgent need to start a dialogue with 
beneficiaries about house design, land selection and 
priorities to allocate land to beneficiaries 
 
INGO Meeting 
------------ 
11. (U) Foreign Minister Kadirgamar and TAFREN Chairman Mano 
Tittawella (who is leading Sri Lanka's delegation to the May 
12 private sector forum) attended a Red Cross sponsored 
meeting with INGO representatives in Geneva on May 7. 
During this meeting, Kadirgamar reportedly discussed the 
following themes: 
--Need for INGOs to work as development partners of the 
Government to ensure that assistance reaches those in need. 
--Need for NGOs to register with the Center for the Non- 
Governmental Sector (CNGS) in the Finance Ministry for post 
tsunami reconstruction work, which would enable the 
 
SIPDIS 
Government to easily integrate their activities and programs 
in the overall reconstruction plan. 
--Need to build local capacities particularly of the 
district level administrative units, and local NGOs. 
--INGOs to develop their own 'guiding principles' for their 
operations parallel to those developed by TAFREN for the 
Government of Sri Lanka. 
--Need for clearer understanding among the partners involved 
i.e. Donor countries, Multilateral funding agencies, INGOs, 
NGOs and the Private Sector and the Government, on the 
reconstruction activities undertaken in order to fill the 
gaps on funds available and project needs as well as to 
avoid duplication. 
--In view of the availability of substantial funds, need to 
consider reaching out to the wider community along with the 
tsunami victims. This will also help to avoid creating new 
 
SIPDIS 
inequities. 
--Need to maintain quality standards in all reconstruction 
work; rebuild better and environmentally sustainable. 
--Need for transparent reporting mechanisms and to keep the 
public informed of the outcome of contributions made. 
LUNSTEAD