US embassy cable - 02COLOMBO1908

C O N F I D E N T I A L SECTION 01 OF 03 COLOMBO 001908 
 
SIPDIS 
 
FOR SOUTH ASIA BUREAU DAS CAMP FROM AMBASSADOR WILLS 
 
E.O. 12958: DECL: 10/11/2012 
TAGS: ECON, PGOV, PREL, PTER, CE, LTTE - Peace Process, Political Parties 
SUBJECT: SCENESETTER FOR DAS CAMP'S VISIT TO SRI LANKA 
 
Classified By: Ambassador E. Ashley Wills, Reasons: 1.5 (b,d) 
 
 
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EXECUTIVE SUMMARY 
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1. (C) I want to extend a warm welcome to you on your 
upcoming visit to Sri Lanka.  Your visit comes at an 
exciting time, with many of the positive trends we 
are now observing having gained increased traction 
since your December 2001 visit.  A ceasefire has been in 
place since December, 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 Tamil 
Tigers 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, 
reinforcing the same message delivered here by A/S Rocca in 
March and the Deputy Secretary in August. 
END EXECUTIVE SUMMARY. 
 
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Status of the Peace Process 
--------------------------- 
 
3.  (C) The election of a new government in 
December 2001 heralded in an exciting -- and potentially 
momentous -- period in Sri Lanka.  During your December 2001 
visit you saw Sri Lanka in the immediate aftermath of these 
tumultuous elections; now you will observe first-hand the 
many positive changes those elections sparked.  The United 
National Front (UNF) government headed by Prime Minister Ranil 
Wickremesinghe 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 long-standing 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.  In a very 
recent development, the two sides also exchanged 
prisoners for the first time since the war began. 
 
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. 
A/S 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 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), the widespread extortion of 
money from Tamils and Muslims, and a pattern of low- 
level harassment of the Sri Lankan military.  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 issues 
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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 Wickremesinghe's government.  We 
recently heard that the PM and the president plan to 
meet regularly to discuss peace process and national 
security issues, which is a positive development. 
 
8.  (C) The Muslim community and the LTTE also share a 
tense relationship.  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 
--------------- 
 
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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Conclusion 
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11.  (C) This exciting period in Sri Lanka provides many 
opportunities for the U.S.  Prime Minister 
Wickremesinghe wants to work closely with the U.S.  Per 
the recent policy review, various USG agencies are in 
the process of visiting Sri Lanka to review economic and 
commercial issues, and study the possible return of the 
Peace Corps, in addition to visits focused on enhanced 
defense cooperation.  Your visit will demonstrate the 
continued high-level U.S. interest in assisting Sri Lanka in 
its quest for lasting peace and increased prosperity. 
 
12.  (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. 
 
-- Making the tough choices now on economic reform will set 
the stage for growth throughout the decade; failing to do so 
will ensure anemic growth and threaten the peace dividend Sri 
Lankans are hoping for. 
WILLS