US embassy cable - 05COLOMBO914

UNCLAS COLOMBO 000914 
 
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 
18, 2005) 
 
REF A) Colombo 890 B) State 91524 
 
1.  This cable provides updated information from Sri Lanka 
for the May 18 post-Tsunami IAWG meeting. 
 
Value Added Tax 
--------------- 
 
2.  (U) The Value Added Tax issue may be resolved. 
Ambassador received a letter from Finance Secretary P.B. 
Jayasundera over the weekend that provides a streamlined 
solution for USAID and other USG contractors.  Econchief and 
Acting USAID Director will meet with Treasury officials next 
week to try to finalize procedures and clarify a few points, 
but we are cautiously optimistic. 
 
Kandy Development Forum Tsunami Highlights 
------------------------------------------ 
 
3.  (SBU) We will report on the development forum septel, 
but thought the following points would be useful for IAWG 
consideration: 
 
--Discussion of the 100m/200m coastal exclusion zone 
highlighted both confusion within the government and 
possible areas of flexibility.  TAFREN Chief Mano Tittawella 
indicated that flexibility could be shown in areas where 
insufficient land was available, but Science and Technology 
Minister Tissa Vitharana noted that the exclusion zone was a 
temporary measure, until a more comprehensive coastal survey 
can be completed.  Ambassador asked how something could be 
considered temporary once 50,000 families had been moved 
into permanent shelter someplace else.  No answer was given. 
On the margins of the meeting, the Ambassador and Econchief 
discussed the June 19 DVC with various participants and 
believe there is keen interest in having discussions with 
the USG on this issue. 
 
--There was universal support among the donor community for 
the President's efforts to conclude a joint mechanism for 
providing relief and rehabilitation services in the north 
and east.  We will report on the President's opening speech 
septel, but she gave a determined, and somewhat emotional, 
commitment to move forward with the mechanism in the near 
future (points were similar to those made during her May 13 
meeting with the Ambassador and DCM, reported Ref A).  A 
member of the all Buddhist monk party, the Jathaka Hela 
Uramaya (JHU), interrupted proceedings for a brief moment 
following the President's speech, calling on the government 
to "destroy the LTTE airfield" and criticizing the 
Government's willingness to deal with terrorists.  During 
donor representative interventions, all spoke about the need 
for conclusion of a joint mechanism, both in practical terms 
for facilitating the delivery of assistance, and for its 
value as a concrete step that could help revive peace 
negotiations. 
 
--We had an initial discussion with the Central Bank on debt 
relief during the forum, and they remain interested, but we 
will need to review with them the points in ref b. 
 
LUNSTEAD