US embassy cable - 02COLOMBO1750

C O N F I D E N T I A L SECTION 01 OF 04 COLOMBO 001750 
 
SIPDIS 
 
FOR AMBASSADOR TAYLOR IN S/CT FROM CHARGE AMSELEM; ALSO 
PASS SA/INS DIRECTOR GOOD 
 
E.O. 12958:  DECL:  09/17/12 
TAGS: PREL, PGOV, PTER, ECON, CE 
SUBJECT:  Scenesetter for your upcoming visit to 
Sri Lanka 
 
(U) Classified by W. Lewis Amselem, Charge d'Affaires. 
Reasons 1.5 (b, d). 
 
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Summary 
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1.  (C) I want to extend a warm welcome to you on your 
September 28-30 visit to Sri Lanka.  Your visit comes at 
an exciting time.  A ceasefire has been in place since 
December 2001, and the government and the Tamil Tigers 
just sat down for constructive face-to-face talks, which 
are due to continue later this year.  The situation 
remains fluid, however, with the intentions of the 
Tigers -- a FTO-listed organization -- still unclear. 
The peace process could also be undermined by domestic 
fissures, such as "cohabitation" stresses between the PM 
and the President, and tensions between the Muslim 
community and the LTTE.  The government is also dealing 
with a delicate economic situation. 
 
2.  (C) This period of tremendous opportunity and 
volatility in Sri Lanka is also a time of significant 
U.S. influence.  Prime Minister Wickremesinghe wants to 
work closely with the U.S.  Your visit will help cement 
the gains made in U.S.-Sri Lankan relations by 
underscoring our strong support for the peace process, 
and by providing a forum to brief the GSL on the global 
campaign against terrorism.  In addition, your visit 
provides an opportunity to underscore our continuing 
commitment to assisting the government in 
counterterrorism training.  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 -- and potentially 
momentous -- 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. 
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 do more to 
grapple with, however.) 
 
4.  (C) Continuing the positive trend, the GSL and the 
LTTE went on to conclude a formal ceasefire accord in 
February.  The accord is being monitored by the 
Norwegian-run Sri Lanka Monitoring Mission (SLMM), which 
has performed capably, but is thin on the ground.  In a 
benchmark event, the two sides met face-to-face in 
Thailand, September 16-18.  Before the talks took place, 
the GSL met the longtime demand of the LTTE and lifted 
its ban on the organization, effectively legalizing the 
LTTE as a political entity in Sri Lanka.  The talks -- 
though preliminary -- were constructive, and set the 
stage for further talks slated to take place later this 
year.  In a press conference held at the end of the 
talks, the chief LTTE negotiator also made remarks that 
seem to have edged away from an outright demand for a 
separate state for Tamils. 
 
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. 
SA 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.  The 
Deputy Secretary also made a highly successful visit to 
war-ravaged Jaffna during his August visit to Sri Lanka. 
 
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LTTE Intentions not clear 
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6.  (C) Despite so much progress in so short a time, GSL 
interlocutors will be the first to tell you that the 
situation is potentially fluid.  One key reason for this 
is lack of confidence in the LTTE (which has been listed 
on our Foreign Terrorist Organization list since 1997). 
While it is clear that the LTTE is worried about further 
international isolation in the aftermath of September 11 
(there are indications that intensified international 
pressure has decreased its funding, for example), 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 (although there have been no reported LTTE- 
sponsored terrorist attacks this year).  With full 
knowledge of these risks, the GSL has made the decision 
that it wants to test the LTTE to determine whether it 
is for real and, so far, this policy is generating 
favorable results. 
 
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Cohabitation Stresses and Muslim issue 
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7.  (C) Another factor that could unravel the peace 
process is domestic opposition in the south.  The 
radical, Sinhalese chauvinist Janantha Vimukthi Peramuna 
(JVP) party has engaged in rallies and demonstrations 
against the ceasefire accord.  A potentially more 
ominous threat 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. 
 
8.  (C) Another level of tension involves the Muslim 
community and the LTTE.  The two sides have long been at 
loggerheads, particularly in the ethnically mixed 
Eastern Province.  Based on first-hand observation by 
Mission personnel and other reports, some Muslims are so 
angered at efforts by the LTTE to marginalize their 
community that the possible growth of Islamic extremism 
needs to be closely monitored.   Taken together, all of 
these tensions are not positive for the peace process, 
especially during this sensitive period when the 
negotiation track with the LTTE is just starting up. 
 
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Economic Issues 
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9. (SBU) Turning briefly to economic issues, Sri Lanka's 
situation is delicate.  While it has the most open 
economy in South Asia and a relatively high per capita 
income (USD 837), economic growth has been uneven and is 
mostly confined to the greater Colombo region.  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 2-3 
percent. 
 
10.  (SBU) Our trade relationship with Sri Lanka entered 
a new phase with the signing of a bilateral Trade and 
Investment Framework Agreement (TIFA) in July.  The TIFA 
sets up a council, jointly chaired by USTR and the Sri 
Lankan Ministry of Commerce, to discuss trade and 
investment issues.  The first council meeting is to take 
place in November with the visit to Sri Lanka of Deputy 
USTR Ambassador Huntsman.  The U.S. intends to use the 
TIFA process to improve the investment climate in Sri 
Lanka and win greater business here for American firms. 
 
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Counterterrorism training 
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11.  (C) One area of particular interest to the GSL will 
be counterterrorism training.  The U.S. has engaged Sri 
Lanka quite actively in this key area.  In addition to 
military-to-military training, the ATA and INL programs 
in Sri Lanka continue very successfully.  In FY-02, the 
ATA program conducted five courses and spent 
approximately USD 1.2 million to equip 80 police and 
government of Sri Lanka officials with various anti- 
terrorist skills.  In addition, INL, in conjunction with 
the Department of Justice trained an additional 50 
criminal justice sector officials in investigation and 
prosecution. 
 
12.  (C) The government of Sri Lanka has responded 
positively to the training.  Unlike some countries, Sri 
Lanka takes pride in incorporating the training material 
and pedagogy into its budding police training 
curriculum.  But much work remains to be done -- and Sri 
Lankans know it.  On the heels of the most recent ATA 
counterterrorism legislation seminar, Sri Lanka has 
identified areas where it needs further assistance. 
From material assistance with creation of a national 
criminal database to assistance with financial crimes 
investigation skills, Sri Lanka awaits much needed -- 
and appreciated -- ATA training.  As Ambassador Wills 
noted in a recent message to you, we believe that Sri 
Lanka should remain a priority country for such 
training. 
 
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Conclusion 
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13.  (C) This exciting period in Sri Lanka provides many 
opportunities for the U.S.  Per the recent policy 
review, USG agencies are in the process of visiting Sri 
Lanka to assess possible enhanced defense 
cooperation, review economic and commercial issues, and 
study the possible return of the Peace Corps.  As he 
made clear to President Bush during their meeting in 
Washington in July and to the Deputy Secretary in 
Colombo in August, Prime Minister Wickremesinghe wants 
to work closely with the U.S.  Your visit will further 
help cement U.S.-Sri Lankan relations by underscoring 
our strong support for the peace process and by 
providing a forum to brief the GSL on the global 
campaign against terrorism.  In addition, your visit 
provides an opportunity to underscore our continuing 
commitment to assisting the government in 
counterterrorism training. 
 
14.  (SBU) We suggest that you make the following key 
points in your meetings with Sri Lankan officials: 
 
-- Express strong U.S. support for the peace process and 
Norwegian facilitation.  GSL needs to keep up momentum; 
Sri Lanka is a vital symbol of movement toward peace and 
stability in a troubled South Asian region. 
 
-- 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. 
 
-- Express appreciation to Sri Lanka for its support of 
the global campaign against terrorism.  Review with GSL 
interlocutors the status of the global campaign. 
 
-- Review opportunities for additional U.S.-sponsored 
counterterrorism training. 
-- Human rights issues important; GSL has shown 
significant improvement; need to work to end appearance 
of impunity. 
AMSELEM