This record is a partial extract of the original cable. The full text of the original cable is not available.

C O N F I D E N T I A L SECTION 01 OF 02 COLOMBO 000827 
 
SIPDIS 
 
DEPARTMENT FOR SA, SA/INS; NSC FOR E. MILLARD 
 
PLEASE PASS TOPEC 
 
E.O. 12958:    DECL:  05-19-14 
TAGS: PREL PGOV EAID PINR CE ECONOMICS LTTE
SUBJECT:  In May 18 meeting, Ambassador and 
FM Kadirgamar discuss MCA, peace process 
 
Refs:  (A) Colombo 809 
-      (B) State 109791 
-      (C) State 108895 
 
(U) Classified by Ambassador Jeffrey J. Lunstead. 
Reasons 1.5 (b,d). 
 
¶1.  (C) SUMMARY:  Ambassador clarified for Foreign 
Minister that selection as an MCA candidate country is 
no guarantee of funding, and that much hard work 
remained before an MCA compact could be signed.  On 
peace process, Foreign Minister admitted that interim 
arrangements will be the only agenda item in upcoming 
talks, but hoped that final settlement issues could also 
be addressed soon.  END SUMMARY. 
 
¶2.  (U) Ambassador met with Foreign Minister Lakshman 
Kadirgamar May 18 following Kadirgamar's return from his 
trip to Washington.  Kadirgamar was very happy about the 
trip and the numerous meetings he was able to have while 
in the U.S.  He mentioned that he was very pleased that 
Sri Lanka had been selected as a candidate country for 
the Millennium Challenge Account (MCA), and that he had 
discussed MCA with both Deputy USTR Josette Shiner and 
with Secretary Powell. 
 
MCA NOT SET YET 
--------------- 
 
¶3.  (C) Ambassador said that he had wanted to discuss 
MCA with the Minister.  He noted that we were aware that 
the Sri Lankan press often printed inaccurate stories, 
and pointed to a Washington-datelined story from May 13 
which was headlined "US 100 million dollar outright 
grant for development."  The story implied that MCA 
funding for Sri Lanka was assured, and that Sri Lanka 
simply had to "come up with proposals."  Ambassador said 
that Sri Lanka's selection as a candidate was indeed an 
honor, but was not a guarantee of funding, and that no 
level of funding for Sri Lanka had been set.  In ensuing 
discussion, it became clear that Kadirgamar thought that 
conclusion of an MCA compact was essentially a 
boilerplate process.  Ambassador told Kadirgamar that 
this was not so.  He outlined a number of details about 
MCA and told Kadirgamar that a Millennium Challenge 
Corporation (MCC) team would be arriving in Colombo in 
early June to conduct initial discussions. 
 
¶4.  (C) Kadirgamar said that he understood.  He also 
said that he was so excited about MCA that he had just 
sent a note on MCA for the following day's Cabinet 
meeting proposing that a Cabinet Sub-Committee be set up 
to deal with MCA.  He added that he might chair that 
Subcommittee. 
 
NEXT STEPS ON PEACE PROCESS 
--------------------------- 
 
¶5.  (C) Ambassador said that Assistant Secretary Rocca's 
visit, which had occurred while Kadirgamar was in 
Washington, had gone very well.  He said that he wanted 
to clarify an issue, however.  In Assistant Secretary 
Rocca's discuss with President Kumaratunga (Ref A), the 
President had stated unequivocally that the GSL had 
agreed that the only subject of initial discussion 
during resumed peace talks would be that of an interim 
arrangement for administration of the North and East. 
This was despite Kumaratunga's preference that the two 
sides discuss at the same time parameters of a final 
settlement.  In Washington, however, the Foreign 
Minister had implied that the GSL was still trying to 
have final settlement issues included in the initial 
discussions (Refs B and C).  Perhaps there had been a 
change while the Foreign Minister had been in 
Washington. 
 
¶6.  (C) Kadirgamar conceded, after some more discussion, 
that in fact the GSL had agreed that the initial topic 
of discussion would be limited to interim arrangements. 
He continued, however, that the GSL was still trying to 
come to some agreement with the LTTE on discussion on 
final settlement issues.  "It could be at some point 
while we are discussing interim arrangements, or it 
could be after the interim arrangement discussions are 
concluded," he said.  (Norwegian Ambassador Brattskar 
told Ambassador May 19 that Norway was not involved in 
such discussions, although there could be other 
channels.) 
 
COMMENT 
------- 
 
¶7.  (C) Kadirgamar has a habit of speaking his mind 
publicly, often without clearing his remarks with others 
in the government.  In the case of his MCA comments, it 
appears that he may have genuinely misunderstood the 
situation.  In addition to the discussion on May 18, 
Ambassador sent him a letter and packet of information 
on MCA the following day.  Kadirgamar certainly 
recognizes the significance of MCA, even if he has been 
fuzzy on the details.  We suspect, however, that Finance 
Minister Amunugama will want to be in charge of any 
process related to MCA.  With regard to the peace 
process, we suspect that Kadirgamar while in Washington 
was relaying -- and perhaps trying to find support for - 
- his own strongly felt position that negotiations 
should deal immediately with final settlement issues. 
From all indications, he has lost that battle within the 
GSL, however.  END COMMENT. 
 
¶8.  (U) Minimize considered. 
 
LUNSTEAD