US embassy cable - 02COLOMBO1434

C O N F I D E N T I A L SECTION 01 OF 03 COLOMBO 001434 
 
SIPDIS 
 
FOR THE DEPUTY SECRETARY FROM AMBASSADOR WILLS 
 
E.O. 12958: DECL:  08/06/12 
TAGS: PREL, PGOV, PTER, ECON, CE, LTTE - Peace Process, Political Parties 
SUBJECT:  Scenesetter for your upcoming visit to 
Sri Lanka 
 
(U) Classified by Ambassador E. Ashley Wills:  Reasons: 
1.5 (b,d). 
 
1. (U) I want to extend a very warm welcome to you on 
your August 22-23 visit to Sri Lanka.  The Country Team 
and the entire Mission community eagerly look forward to 
your visit. 
 
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Summary 
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2. (C) Your visit to Sri Lanka comes at an exciting 
time.  The ongoing ceasefire is the longest break that 
Sri Lankans have had from the ethnic conflict since it 
began in 1983.  There are hopeful signs that the 
government and the Tamil Tigers may sit down for 
negotiations at some point later this year.  The 
situation remains fluid, however, with Tiger intentions 
unclear.  The peace process could also be undermined by 
foes in the south, possibly working in tandem with 
President Kumaratunga, who has increasingly tense 
cohabitation relations with the government.  The 
government is also working hard on economic reforms. 
Overall, this is a period of tremendous opportunity and 
volatility in Sri Lanka.  It is also a time of 
significant U.S. influence.  Prime Minister 
Wickremesinghe wants to work closely with the U.S., as 
he made clear during his recent visit to Washington. 
Your visit will help cement the gains made in U.S.-Sri 
Lankan relations, while underscoring our strong support 
for the peace process.  As events in coming days could 
be consequential regarding cohabitation ties, I may 
update you with another message before your arrival. 
End Summary. 
 
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Status of the Peace Process 
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3.  (C) The election of a new government in 
December 2001 heralded in an exciting period in 
Sri Lanka.  The United National Front (UNF) government 
headed by Prime Minister Ranil Wickremasinghe has taken 
an activist posture, particularly regarding the peace 
process.  In short order, the government and the 
Liberation Tigers of Tamil Eelam (LTTE) re-initiated the 
stalled Norwegian government facilitation effort and put 
unilateral ceasefires into effect in December 2001.  The 
government also took rapid steps to ease tensions by 
lifting roadblocks and checkpoints, and ending bans on 
medicine and other items entering LTTE-controlled 
territories.  Continuing the trend of the past several 
years, the government's performance on human rights 
issues has also been a strong one, with many fewer 
Tamils complaining of mistreatment at the hands of the 
security forces.  (Note:  There is still an appearance 
of impunity in some cases that the GSL needs to deal 
with, however.) 
 
4.  (C) In a benchmark event, the GSL and the LTTE 
concluded a formal ceasefire accord in February.  The 
accord led to the reopening of a key road link 
connecting Jaffna to the south in April.  The LTTE, 
however, has complained that the GSL has not done enough 
to implement the accord in other areas, such as by 
vacating temples and public buildings in the north and 
east.  The government says (accurately) that it is 
trying hard to comply with the terms of the accord.  The 
accord is being monitored by the Norwegian-run Sri Lanka 
Monitoring Mission (SLMM), which has performed capably, 
but is thin on the ground (roughly 50 personnel total). 
 
5.  (C) All of these steps have had a dramatic effect in 
decreasing tensions in the country, bringing relief to a 
war weary populace.  Already, the ongoing ceasefire is 
the longest break that Sri Lankans have had from the 
ethnic conflict since it began in 1983.  This new spirit 
was symbolized by PM Wickremesinghe's visit to Jaffna in 
March, the first such visit by a GSL leader in years. 
Assistant Secretary Rocca joined Wickeremesinghe for 
part of this visit, underscoring U.S. support for the 
peace process.  A/S Rocca's visit also led to the 
arrival of a demining team sponsored by the U.S., which 
has been clearing mines in Jaffna since April. 
 
6.  (C) At this time, the focus of the peace process is 
"talks on talks," i.e., trying to reach agreement on 
modalities for face-to-face negotiations on a permanent 
settlement of the conflict.  The GSL has indicated its 
readiness for talks for some months now, but the LTTE 
has been holding back its agreement to a date certain 
for starting them.  In a positive sign, senior Minister 
Milinda Moragoda held talks with LTTE spokesman Anton 
Balasingham in London on July 27.  The talks were 
constructive, and Moragoda believes that high-level 
negotiations could begin at some point in September or 
October.  (Note:  The two sides have already agreed that 
the venue of the talks will be Thailand.)  Balasingham 
is due to visit LTTE-controlled areas in the north in 
late August, around the same time that Norwegian Deputy 
Foreign Minister Helgesen is scheduled to visit Colombo. 
 
7.  (C) Despite so much progress in so short a time, GSL 
interlocutors will be the first to tell you that the 
situation is fluid.  One key reason for this is lack of 
confidence in the LTTE.  While it is clear that the LTTE 
is worried about further international isolation in the 
aftermath of September 11, it is not clear whether the 
organization is simply looking for a hiatus to wait out 
the storm.  Some of the LTTE's activities raise 
questions about its commitment to peace, including 
forced recruitment for its military (some of it of 
children), and the widespread extortion of money from 
Tamils and Muslims.  The LTTE also remains authoritarian 
in structure and has not renounced terrorism. 
Nonetheless, the GSL -- fully realizing it is taking a 
big risk -- has made the decision that it wants to test 
the LTTE to determine whether it is for real. 
 
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Cohabitation Friction 
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8.  (C) Another factor that could unravel the peace 
process is domestic opposition in the south.  The 
radical, Sinhalese chauvinist Janantha Vimukthi Peramuna 
(JVP) has engaged in rallies and demonstrations against 
the ceasefire accord.  A potentially more ominous threat 
to the peace process is President Kumaratunga and her 
party, who have sent mixed signals, at times 
constructive, at times critical.  Kumaratunga's attitude 
seems largely bound up in the cohabitation tensions that 
flare between her and Prime Minister Wickremasinghe's 
government.  Of late, these tensions have only climbed 
higher, and the GSL is threatening to call snap 
elections if the president does not back down.  At the 
same time, there is talk that the president may try to 
force the government out, suspend Parliament, and call 
for elections.  None of these rumblings is good for the 
peace process, especially during this sensitive period 
when the modalities of negotiations are being debated 
with the LTTE. 
 
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Economic Issues 
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9. (SBU) Turning to economic issues, Sri Lanka has the 
most open economy in South Asia and a relatively high 
per capita income (USD 837).  Still, economic growth in 
Sri Lanka has been uneven and is mostly confined to the 
greater Colombo region, while the conflict areas in the 
north and the east suffer severe economic degradation. 
A litany of problems in 2001 conspired to produce the 
country's first year of GDP contraction since 
independence (minus 1.4 percent).  The new UNF 
government appears committed to putting the right 
policies in place to re-ignite economic growth.  The 
main test of this commitment came in its 2002 budget, 
presented in March.  This budget contained many 
substantive reform measures and was key to restarting 
the suspended payments of the IMF's Standby Arrangement. 
The government is now implementing many of these 
reforms, while trying to minimize the burden of 
increased prices on the population.  We expect 2002 to 
be a rebuilding year, with growth of 1-2 percent. 
 
10.  (SBU) On the commercial side, Sri Lanka has 
historically had a large trade imbalance with the 
U.S. (10:1 in recent years).  The recently signed Trade 
and Investment Framework Agreement will formalize 
discussions on opportunities and problems in bilateral 
trade.  The Prime Minister is planning a trip to New 
York in September that will focus, in part, on 
attracting investors and stimulating U.S. interest in 
doing business in Sri Lanka.  You may hear from GSL 
contacts about Sri Lanka's interest in negotiating a 
Free Trade Agreement with the U.S.  We are encouraged by 
the signals from Washington that Sri Lanka may be on the 
list for a FTA in the future, but are aware, as is the 
GSL, that this will not happen in the near-term.  Sri 
Lanka is also very interested in the Millennium 
Challenge Account. 
 
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Conclusion 
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11.  (C) This exciting period in Sri Lanka provides many 
opportunities for the U.S.  Per the recent policy 
review, USG teams are due to visit Sri Lanka soon to 
review enhanced defense cooperation, economic and 
commercial issues, and the possible return of the Peace 
Corps.  As he made clear during his recent visit to 
Washington, Prime Minister Wickremesinghe wants to work 
closely with the U.S.  Your visit will help cement U.S.- 
Sri Lankan relations and underscore our strong support 
for the peace process. 
 
12.  (SBU) We suggest that you make the following key 
points in your meetings with GSL and other 
interlocutors: 
 
-- Express U.S. support for the peace process and 
Norwegian facilitation.  GSL needs to be bold; keep up 
momentum.  Sri Lanka is a vital symbol of movement 
toward peace and stability in a troubled region. 
 
-- Stress that U.S. wants to assist GSL on both peace 
and economic fronts in concrete ways.  U.S. demining 
assistance continues in Jaffna, for example, and Peace 
Corps is assessing possible return. 
 
-- All parties should work in national interest on peace 
process and on economic reform.  It is important that 
peace process not falter because of political 
infighting. 
 
-- Human rights issues important; GSL has shown 
significant improvement; need to work to end appearance 
of impunity. 
 
-- Would like to see increased opportunities for U.S. 
exports and investment; GSL needs to follow through on 
economic reform agenda in order to foster a competitive 
environment and create growth. 
 
13.  (SBU) As events in coming days could be 
consequential regarding cohabitation ties, I may update 
you with another message before your arrival. 
 
WILLS