US embassy cable - 05COLOMBO1180

UNCLAS SECTION 01 OF 03 COLOMBO 001180 
 
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; MCC FOR D.NASSIRY 
 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: EAID, ECON, PGOV, CE, MV, Tsunami 
SUBJECT: SRI LANKAN POST-TSUNAMI RECONSTRUCTION UPDATE (JULY 
7, 2005) 
 
1.  (U) This cable provides information for the July 7, 2005 
post-Tsunami IAWG meeting. 
 
Maldives Update 
--------------- 
2.  (SBU) Fathmath Nuzuha, Assistant Undersecretary of 
External Resources Management at the Ministry of Finance and 
Treasury has informed the embassy that the GORM wants to use 
30% of US assistance for improving sanitation and the water 
supply, 30% for building harbors, 15% for strengthening the 
public accounting system of the Tsunami Relief and 
Rehabilitation fund, and 25% for rebuilding the power 
sector.  However, we are still waiting for the Government of 
Maldives (GORM) Planning Department to provide more detailed 
feedback for potential projects.  The embassy has requested 
that the Maldives now provide specific details on the type 
of projects it plans on implementing instead of general 
concepts as previously proposed to the GORM. 
 
3.  (SBU) This change is due to concerns that the General 
Accounting Office will want more details explaining how the 
embassy is monitoring US government funds.  Econoff has 
requested that the GORM provides a list of programs, purpose 
of programs, a justification for the need of the programs, 
program budgets and benchmarks for what GORM hopes to 
accomplish with USG assistance.  Nuzuha notified Econoff 
today that they could not provide detailed information on 
proposed projects until Monday.  Econoff will forward all 
details to Washington as soon as possible. 
 
4.  (U) Embassy proposes that some of the US assistance be 
reserved to pay for administration and travel costs for 
monitoring the implementation of projects.  The embassy is 
assessing what amount will be required. 
 
Sri Lanka: Follow-up on PAFFREL "malnutrition" assessment 
--------------------------------------------- ------------ 
 
5.  (SBU) The People's Action for Free and Fair Elections 
(PAFFREL), an organization founded to monitor elections, 
cited the malnourishment of children in tsunami relief camps 
as a serious problem in its May 2005 report.  However, in a 
June 30 meeting with Poloff, PAFFREL Representatives Rohan 
Hettiarachchi and Thusitha Aluthpataberdig, stated that 
children in the tsunami relief camps are receiving adequate 
nutrition.  Aluthpataberdig says that PAFFREL based its 
report on representatives' personal observations without 
reference to any scientific guidelines to measure the 
nutritional level of a child.  The United Nations Children's 
Fund (UNICEF) Health Unit Doctor, Aberra Bekele, told Poloff 
on July 1 that malnourishment was already a problem in many 
tsunami-affected areas prior to the natural disaster, and 
 
SIPDIS 
that UNICEF has not received any reports of severe 
malnutrition in tsunami relief camps.  UNICEF will release 
another report in early August concerning the diet of 
tsunami-affected youth, in which Dr. Bekele said she expects 
 
SIPDIS 
to find improvements in children's access to essential 
nutrients. 
 
Housing Update 
-------------- 
6.  (SBU) According to TAFREN (Task Force for Rebuilding the 
Nation), as of July 03, 2005, 41,009 transitional 
accommodation units have been completed.  In addition, by 
July 15, TAFOR expects all families living in emergency 
shelters to move to transitional houses.  The Government of 
Sri Lanka (GSL) confirms that the transitional homes are 
only for temporary living and therefore may not conform to 
the best practices in building construction. TAFOR and TAP 
(Transitional Accommodation Project) have tried to ensure 
that construction of units meets a given criteria, e.g., a 
minimum area of 400 square feet, and one toilet and shower 
per 20 persons.  However, some of the transitional units are 
smaller than the agreed area, built with inferior material 
and not suited to climatic conditions.  NGOs are upgrading 
some of these shelters to higher standards.  In a June 23 
TAFREN and limited Donor meeting, Mano Tittawella, Chairman 
of TAFREN, told participants that he has heard the most 
complaints about inadequate transitional shelters from 
people with housing provided by World Vision, an American 
NGO.  These houses were not/not built with USG funds and 
USAID Mission Director Carol Becker confirms that the houses 
she inspected were made entirely of metal sheeting, making 
the houses hot and uninhabitable. 
 
Tsunami Consultation 
 
SIPDIS 
-------------------- 
7.  (SBU) In a July 05, 2005 meeting, Ambassador Lionel 
Fernando, Chairman of the Disaster Management Relief unit of 
the Human Rights Commission informed Poloff that his 
organization just started conducting a comprehensive survey 
of Tsunami victims from 1,142 villages in 5 provinces and 13 
districts.  The goal of this research is to determine the 
people's perception of reconstruction progress, to study the 
ethnic dimension of tsunami reconstruction, and to measure 
the equity of the distribution of funds.  Fernando said that 
this is the first time since the tsunami that the government 
has formally consulted victims.  Ambassador Fernando 
promised Poloff a copy of the results when the Human Rights 
Commission completes its research in mid-August. 
 
100m/200m Buffer Zone Follow-up 
----------------------- 
8.  (SBU) The GSL currently is working to resolve the 
continued controversy over building restrictions that 
prohibit people from living and rebuilding within a pre- 
determined 100 to 200 meters of the coast.  Pressure to 
increase flexibility or remove the buffer zone has increased 
over the last couple weeks and the government has appointed 
a 13-person committee to investigate whether this 
requirement is necessary.  The opposition United National 
Party (UNP) has pledged to immediately remove the buffer 
zone within its first day in office if elected.  The embassy 
is still seeking experts in the US to help analyze the 
buffer zone issue.  However, the time to offer any useful 
input on the process is running out.  Immediate action is 
required if there is serious interest in shaping GSL's 
buffer zone policy. 
 
VAT Update 
---------- 
9. (SBU) A recent meeting between Econoff, USAID staff and 
GSL Ministry of Finance officials led to a more streamlined 
process for getting VAT exemptions for contractors and 
grantees.  USAID is in the process of assembling the details 
requested for each contractor/sub-contractor and 
grantee/subgrantee for submission to the Ministry of Finance 
so tax-exempt letters can be issued.  USG will only have to 
document individual purchases greater than 100,000 Sri 
Lankan Rupees (approximately $1,000) rather than every item 
purchased. 
 
The Joint Mechanism and the Regional Fund 
--------------------------------------------- - 
10.  (SBU) The recent signing of a Post-Tsunami Operational 
Management Structure (P-TOMS) also known as the Joint 
Mechanism (JM) has increased political tension within the 
country as well as created new institutions for the 
rebuilding process.  Besides creating a new High-Level 
Committee and a Regional Reconstruction Committee (Regional 
Committee) staffed by the LTTE, the GSL and representatives 
from the Muslim community, the P-TOMS calls for the creation 
of the Post-Tsunami Coastal Fund (the Regional Fund) for the 
six districts funded by donors.  The "Fund's" purpose is to 
facilitate and accelerate relief, rehabilitation, 
reconstruction in the tsunami-affected areas of the North 
and East.  It will not fund large infrastructure projects. 
Although the Regional Committee is responsible for review 
and recommendations of projects and implementing mechanisms, 
the World Bank as custodian of the Fund will ensure that the 
projects fall within the parameters of the "Fund" before 
approving the release of monies.  On behalf of the donors 
who invest in the Fund, the World Bank will hire a 
Management Agent to monitor projects and ensure adherence to 
procurement and financial standards and practices. 
 
11.  (SBU) USAID Mission Director Carol Becker, Poloff, and 
other major donors and multilateral reps attended a June 29 
World Bank meeting to discuss how the Sri Lanka Tsunami 
Reconstruction Fund would operate. (n.b., the US will not 
contribute to the Fund)  The discussion revealed that many 
practical details of the Fund remain unresolved.  Among such 
details is what mechanism the World Bank will use to 
transfer funds to implementing agencies and whether the High 
Level Committee has the authority to veto proposals endorsed 
by the Regional Committee.  World Bank Country Director 
Peter Harrold told the group that he would be having back-to- 
back meetings with the Treasury and the LTTE in Kilinochcci 
in coming days in an effort to resolve these issues. 
Harrold also reported that that the Regional Committee, 
which will be chaired by the LTTE, would have to be informed 
of all reconstruction activities occurring in the north and 
east, regardless of the source of funding.  Also, results of 
an impromptu poll conducted among participants at the 
meeting revealed that most donors supported the EU as the 
bilateral observer.  [Note:  In separate discussions, it was 
agreed that Japan, whose representative did not attend the 
meeting, will likely share the bilateral observer chair with 
the EU.  End note.]  USAID Mission Director Carol Becker - 
reiterated U.S. inability to contribute to the fund due to 
the LTTE's participation. 
 
12.  (SBU) Harrold described the proposed Multi-Donor Trust 
fund as the same type of trust fund as had been previously 
set up by the World Bank and as previously envisioned under 
the unimplemented North-East Reconstruction Fund (NERF). 
The Trust Fund will feed the Regional Fund described in P- 
TOMS, but the World Bank must still work out the process by 
which money gets from the World Bank account in Washington 
to the GSL Treasury to implementing agencies in the field. 
 
--Harrold suggested one possible scenario:  Money will go to 
an account either in name of the GSL Treasury or the Relief, 
Reconstruction and Rehabilitation Ministry (3R Ministry) 
into the regional fund.  Once the Regional Committee 
receives and approves project proposals, the World Bank will 
verify that the proposals appear to be effective uses of the 
money for the agreed upon purposes.  The World Bank will 
still have to satisfy the donors that the funds are being 
used for the intended purposes.  If so verified, there will 
be an agreement between the World Bank and the implementing 
agency, and funds will go to the implementing agency.  How 
exactly funds get to the implementing agency, as noted 
above, must still be worked out.  Harrold underscored LTTE 
insistence that, whatever the routing or format used, the 
World Bank must "sign the checks." 
 
13.  (SBU) Comment: There are still many unresolved issues 
surrounding the implementation of the P-TOMS such as Muslim 
representation, locations of committee meetings and the role 
of the international observers.  The Regional and High Level 
committees will likely try to shape the rebuilding effort, 
which raises concerns since the USG will have a very limited 
ability to steer or influence these new institutions due to 
our inability to work with the LTTE.  However, it is 
unlikely that these committees can influence the large-scale 
infrastructure projects since most donors already have MOU's 
with the GSL.  The most likely scenario is that they will 
influence where the small-scale projects go and to whom. 
 
LUNSTEAD