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PP RUEHLMC
DE RUEHLM #1821/01 3070634
ZNR UUUUU ZZH
P 030634Z NOV 06
FM AMEMBASSY COLOMBO
TO RUEHC/SECSTATE WASHDC PRIORITY 4607
RUEHLMC/MILLENNIUM CHALLENGE CORPORATION PRIORITY

UNCLAS SECTION 01 OF 02 COLOMBO 001821 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
DEPARTMENT FOR EB/IDF/ODF AND SCA/INS 
STATE PLEASE PASS MCC FOR D NASSIRY AND E BURKE 
 
E.O. 12958: N/A 
TAGS: EAID MCC KMCA CE
SUBJECT: SRI LANKA: INFORMATION FOR MCC NOVEMBER 8 MEETING 
 
 
 ¶1. (SBU) Summary: Post recommends that Sri Lanka continue to 
be considered MCC-eligible.  MCC projects would increase 
overall prosperity and support our main objective of helping 
Sri Lanka attain a lasting peace.  Violence between 
Government of Sri Lanka forces and the Liberation Tigers of 
Tamil Eelam (LTTE) heightened in the first two weeks of 
October.  October 28-29 peace talks between the two sides in 
Geneva ended in deadlock without a date for a future round. 
On the other hand, the two major southern political parties 
have signed a Memorandum of Understanding to work together on 
the peace process, giving rise to guarded optimism that a 
"southern consensus" can move the process forward.  The 
government has taken steps to address the international 
community's concerns about human rights and NGO access within 
Sri Lanka.    End summary. 
 
TALKS FOUNDER AMID RISING VIOLENCE 
----------------------------------- 
 
¶2. (SBU) In the first two weeks of October, Sri Lanka saw 
continued serious violence.  Since June, both the number and 
scale of violent confrontations between the Government of Sri 
Lanka (GSL) and the Liberation Tigers of Tamil Eelam (LTTE) 
increased drastically.  In July, the LTTE provoked an 
overreaction by security forces at the Mavilaru irrigation 
gates between Batticaloa and Trincomalee.  A military 
engagement ensued in the predominantly Muslim area of Muttur. 
On September 1, after the LTTE withdrew security guarantees, 
monitors from EU member states left the Sri Lanka Monitoring 
Mission (SLMM).  This reduced the number of monitors from 65 
to 32, even as complaints of Cease Fire Agreement (CFA) 
violations multiplied. 
 
¶3. (SBU) On October 28-29, Norwegian-facilitated peace talks 
in Geneva between the government and the LTTE ended without 
any significant breakthrough, failing to produce even an 
agreement on dates for a next round.  The government focused 
on broad issues such as democratic governance, administration 
of justice, and devolution of power sharing.  The LTTE called 
for action on more immediate concerns, including full 
implementation of the Ceasefire Agreement (CFA) and 
strengthening of the Sri Lanka Monitoring Mission (SLMM). 
Talks deadlocked on the second day over the LTTE demand that 
the A-9 highway to Jaffna be reopened. 
 
THE TWO MAJOR PARTIES CONVERGE 
------------------------------- 
 
¶4. (SBU) One bright spot in the internal political situation 
is the recent agreement between the two major parties, the 
opposition United National party (UNP) and the governing Sri 
Lankan Freedom Party (SLFP), to work together on a common 
program.  The SLFP and UNP signed a Memorandum of 
Understanding (MoU) on October 23 setting out a Common 
Minimum Program to resolve the conflict in the north and east 
and to address other national issues.  Most significantly, 
the MoU reaffirmed the 2002 Ceasefire Agreement with Norway 
as facilitator, provoking predictable outrage from Sinhalese 
chauvinist parties who supported President Rajapaksa in the 
November 2005 election.  The Co-chairs and other Western 
diplomats view the agreement as a positive contribution 
toward reaching a "southern consensus" on a viable peace 
proposal the Tigers would have to consider seriously. 
Important details of the agreement have not become public, 
however.  Implementing it will not be easy for either the 
ruling party or the opposition UNP - but there is no other 
clear way forward. 
 
HUMAN RIGHTS 
------------- 
 
¶5. (SBU) Credible allegations of serious human rights 
violations by both sides have mounted.  The August 5 
execution-style killing of 17 local staff members of the 
French NGO Alliance Contre la Faim, 16 Tamils and one Muslim, 
has attracted the most attention.  The Sri Lanka Monitoring 
Mission accused Sri Lankan security forces of involvement in 
the murders, a charge the government vehemently denied.  An 
investigation by a team of Australian forensic experts has 
yet to produce conclusive evidence regarding the authorship 
of the crime.  The government now appears to be paying 
attention to the international outcry against the 
deteriorating human rights situation.  In September, 
President Rajapaksa agreed to work with the Co-chairs, other 
countries, and the United Nations to set up a panel of 
international observers to assist a national Commission of 
Inquiry on Human Rights. 
 
NGO ACCESS 
 
COLOMBO 00001821  002 OF 002 
 
 
----------- 
 
¶6. (SBU) International humanitarian organizations such as 
Medecins sans Frontieres and others have come under fire from 
Sinhalese hardliners for alleged Tiger sympathies - or even 
giving assistance to the LTTE.  While such charges appear to 
have minimal basis in fact, the government has cracked down 
on work permits for the international NGOs and ordered some 
to leave the country.  Coordinated pressure from the 
international community, including the Embassy, got the GSL 
to backtrack on the expulsions.  The GSL has also initiated a 
high-level working group to address NGO access problems.  The 
third such meeting took place on November 3. 
 
RECOMMENDATION FOR SRI LANKA'S MCC STATUS 
------------------------------------------ 
 
¶7. (SBU) Post urges that Sri Lanka continue as an 
MCC-eligible country.  Development assistance that MCC 
provides is needed to help Sri Lanka in its ongoing efforts 
to promote greater prosperity, especially in the rural areas 
where poverty is greater.  As we have consistently reported, 
the uneven distribution of wealth in Sri Lanka is one of the 
root causes of the conflict.  Increased prosperity can only 
bolster Sri Lanka's ability to achieve a lasting peace.  The 
US, as a Co-Chair, is deeply engaged in the search for a 
negotiated political settlement to the conflict.  An MCC 
Compact will bring a "peace dividend" that can help prevent 
Sri Lanka's long-running ethnic strife from flaring up anew. 
BLAKE