US embassy cable - 05COLOMBO1158

UNCLAS SECTION 01 OF 02 COLOMBO 001158 
 
SIPDIS 
 
DEPT FOR SA/INS: JBRENNIG; NDEAN 
 
E.O. 12958: N/A 
TAGS: ECON, PREL, ETRD, SENV, CE, External Relations, ECONOMICS 
SUBJECT: SRI LANKA NOT OPPOSED TO SETHUSAMUDRAM SHIP CANAL 
PROJECT 
 
1.  Summary: The Government of Sri Lanka (GSL) is reconciled 
to the implementation of the Sethusamudram project as it is 
within the territorial waters of Sri Lanka.  This project 
proposes the linking of the Arabian sea with the Bay of Bengal 
by dredging shallow waters to the north of Sri Lanka, thereby 
creating a navigable canal across the Indian Peninsula.  The GSL 
does not currently oppose the project but is awaiting further 
environmental studies to make a determination 
regarding its impact on Sri Lanka.  While no major economic 
implications for the shipping industry are anticipated by the 
GSL or the private sector, environmental implications have not 
been fully examined, according to officials at Ministry of 
Foreign Affairs (MFA) and Secretary of Environment.  End 
Summary. 
 
2. The Sethusamudram Project is aimed at creating a continuous 
navigation channel connecting the west and east coasts of India. 
Currently, domestic ships from the west coast of India as well 
as ships from western countries have to traverse around Sri 
Lanka to reach the east coast, due to the existing shallow 
waterway between the countries, which is not sufficient for 
movement of ships. 
 
3. The Managing Director (MD) of the Sri Lanka Ports Authority 
(SLPA) informed EconFSN that although some shipping business 
could be affected, it would not be significant.  Transshipment 
and large container vessels are not likely to be impacted due to 
the proposed draft of the canal (draft is the depth of water a 
ship draws when fully loaded).  The initial estimate of the 
draft of the proposed canal is approximately 10 meters with 
provision for subsequent expansion up to 12 meters according to 
the MD of SLPA.  Therefore, large ship traffic to Colombo will 
not be affected, unless the draft of the canal is increased to 
14.5 meters.  At a later period, if the draft of the canal is 
extended over 14.5 meters, the GSL would consider converting 
regional ports located in the northeast parts of the country for 
container traffic. 
 
4. Current expansion plans for the ports of Hambantota and 
Colombo will not change due to this project and will proceed as 
planned.   Existing plans call for Hambantota Port in southern 
Sri Lanka to be converted to a container port, while a port 
extension project in Colombo is being designed to accommodate 
more ships and larger ships. 
 
5.  A Ministry of Foreign Affairs (MFA) source has informed Post 
that the External Affairs Minister of India has assured the GSL 
that India will ensure bi-lateral ties are not affected due to 
implementation of this project.  The Secretary to the MFA has 
been appointed chairman of an inter-ministerial committee to 
oversee the project. The MFA says that its immediate concern on 
Sethusumadram is that discussions between the joint India/Sri 
Lanka technical committee that was appointed to study 
environmental impact of the project continue.  The committee met 
in January 2005 and is scheduled to meet again in July. 
According to MFA, no conclusive research has been done that has 
allowed Sri Lanka to formulate a position either for or against 
the project.  MFA is waiting for baseline reports by GSL 
environmental agencies to make further determinations.  The 
Chairman of the Natural Aquatic Resources Agency (NARA) informed 
EconFSN that a Rapid Assessment Report has been submitted to the 
MFA on this project. 
 
6. Local environmentalists charge that this project could have 
several implications detrimental to Sri Lanka's ecosystem. Some 
of the concerns put forward include, change of currents that 
could cause varying water temperature, increased salinity, a 
rise in sea level, disturbance of sea beds -- having 
considerable negative consequences for fisheries industry, oil 
spills and pollution, dispersion of invasive species into 
currently protected seas, adverse affects of dredging, changes 
to currents and coastal erosion/depositions.  All of these 
problems pose risks to the marine ecosystem in the region, 
especially the western and south western coastal region of Sri 
Lanka -- one of the most valuable in terms of biodiversity in 
the Indian subcontinent. 
 
7.  NARA, on the other hand, claims that there is a dearth of 
data on existing ecosystems, which has to be established in 
order to evaluate the effects of the proposed project and 
evaluate proposed measures to mitigate negative impact.  A lack 
of information about areas such as coral reefs, aquatic plants, 
endangered fish, water exchanges and effect of extreme changes 
in ecosystems hampers proper review of the possible 
environmental impact.  NRA advocates a joint Sri Lanka/India 
Environmental Impact Assessment on the project. 
 
6. Senior private-sector shipping officials are of the view that 
this project was never intended to draw shipping business away 
from Sri Lanka, but rather for Indian security-related purposes. 
An MFA official also endorsed this view and stated that an 
increased Naval presence in the area could have a positive 
outcome for Sri Lanka.  The private sector claims the canal 
would save ships no more than 24-hour in travel time (by 
avoiding the more southerly route around Sri Lanka) and that 
ships will not be able to sail at maximum speed through the 
canal.  When combined with the probable need for pilots to 
navigate the canal, major international ship owners will likely 
not have much interest in using the proposed canal.  Domestic 
Indian shipping from east to west, however, will benefit from 
the project. 
 
7. Comment: While environmental groups have raised some concerns 
about Sethusamudram, there is not much apprehension on the part 
of the GSL or the shipping community regarding the 
implementation of the project. Unless subsequent studies reveal 
severe environmental impacts for the country, Sri Lanka is not 
likely to object to its implementation. 
 
LUNSTEAD