Cablegate: Aid/Oti Officials Again Visit Kilinochchi To

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





E.O. 12958: N/A



1. (SBU) Per State guidance approving operational/working
level discussions with LTTE representatives and based on
approval from the Embassy's Front Office, on December 9 a
USAID Sri Lanka staff member had a meeting in Kilinochchi
with the Officer-in-Charge of the LTTE's Revenue Unit and
the Coordinator of the LTTE's Coordinating Office for INGOs
and UN agencies. The meeting was requested by USAID as a
follow on to a November discussion in Kilinochchi about a
recent problem with USAID's tax-free transport of goods
through LTTE-controlled territory south of the Jaffna
Peninsula ("The Vanni"). The meeting lasted for two hours,
was cordial but frank, minimally strayed from the
operational issues at hand, and ended with no LTTE
concession on the tax issue. As a result, the USAID staff
member told the LTTE representatives that USAID
reconstruction projects in Jaffna will be stopped. Emboff
has raised this issue with the LTTE - linked Tamil National
Alliance (TNA) which promised to look into it. END SUMMARY

A New LTTE "Lorry Charge" on the A9 Highway to Jaffna
--------------------------------------------- --------

2. (SBU) In line with State guidance approving
operational/working level interactions between U.S.
officials and LTTE representatives, in late November USAID
sought concurrence from the Embassy's Front Office to
arrange another operational-level meeting with the LTTE in
Kilinochchi. The meeting, the second in as many weeks, was
needed to resolve problems related to a November 1 LTTE move
to impose a "lorry charge" on trucks transporting goods on
the A9 highway through the Vanni, the LTTE-controlled area
that links the Jaffna Peninsula with government-controlled
areas to the South. In the wake of a late 2003 meeting
between USAID and the LTTE that put in place a duty-free
system along the A9, for the past one year USAID's Office of
Transition Initiatives (USAID/OTI) has been using locally-
rented trucks to transport project goods through the Vanni
to Jaffna. Once the new lorry charge was put in place in
November, the duty-free system broke down when drivers of
the USAID-rented trucks were told by the LTTE Customs Office
at the Omanthi checkpoint in Vavuniya to pay the charge. It
transpires that only UN-owned trucks are not subject to this
new levy.

The First Round of "Lorry Charge" Discussions With the LTTE
in November
--------------------------------------------- --------------

3. (SBU) On November 24 two staff from USAID/OTI met with
M. Thiyagarajah, the Coordinator for the LTTE's Coordinating
Office for INGOs and UN Agencies (Reftel). At that meeting,
the lorry charge problem was discussed, and USAID/OTI staff
walked away with the distinct impression that Mr.
Thiyagarajah's office would deal with the issue in USAID's
favor. Given that the meeting took place just a few days
before LTTE's annual Heroes Day celebration, Thiyagarajah
said he needed a few days to sort out the issue with the
LTTE's Revenue Unit and that USAID staff should call him the
following week.

4. (SBU) During the week starting November 29 USAID/OTI
staff made ten phone calls to Thiyagarajah's office to get
clarity on the lorry charge issue. Over the course of those
conversations, it became clear that Mr. Thiyagarajah had not
succeeded in getting the levy waived for USAID-rented trucks
and that another meeting in Kilinochchi would be necessary.
Given that Thiyagarajah was not able to deliver on the
issue, USAID requested a more direct line of communication
with the person best situated within the LTTE administrative
structure to make a determination on the lorry charge. In
the days leading up to the second USAID-LTTE meeting, it
became clear that the Officer-in-Charge of the LTTE's
Revenue Unit would be present at the meeting scheduled for
December 9.

The Second Meeting in Kilinochchi

5. (SBU) The USAID/OTI Sri Lanka Country Representative,
accompanied by a local staff member who handles OTI's
procurement for Jaffna, arrived in Kilinochchi at 11 AM on
December 9 in a clearly marked diplomatic vehicle. After
waiting approximately half an hour, the meeting started with
the participation of the two USAID/OTI staff, two LTTE
translators, two officials from the LTTE's Revenue Unit
(including the Officer-in-Charge who did not give his name),
and Mr. Thiyagarajah. While earlier meetings with
Thiyagarajah had been all smiles, the presence of the
Revenue Unit's Officer-in-Charge created a different, more
sober dynamic, particularly because he was clearly the most
senior level LTTE person in the room, and he maintained a
fairly severe demeanor throughout the two-hour discussion.
While he was always polite, he did not smile much and he
struck the USAID/OTI Country Representative as one of the
classic LTTE staff who as former cadres have been promoted
without much training or education into a quasi-governmental

6. (SBU) The USAID/OTI Country Representative started the
meeting with a basic description of work in Jaffna, a brief
history of the USAID-LTTE duty-free agreement, and a
statement about the problem created by the LTTE's new lorry
charge. He finished by saying that regardless of the reasons
for the levy it was absolutely impossible for USAID to pay
the charge and that USAID had not come to bargain over the
issue. Either the charge would be dropped for USAID-rented
trucks or USAID would stop transporting goods up the A9, in
effect ending much of the USAID/OTI effort in Jaffna.

7. (SBU) The Officer-in-Charge replied with an explanation
about why the charge was implemented, giving a lengthy
explanation about the need to collect money to maintain the
A9 in LTTE-controlled areas and provide security along it.
He also described the charge system in a bit more detail,
stating that Sinhalese-owned trucks traveling north to
Jaffna are charged 6,000 Rupees per vehicle while Tamil-
owned trucks traveling south from Jaffna are charged only
3,000 Rupees per vehicle. Later in the conversation and as
the air became slightly more charged he talked about the
large administrative structure maintained by the LTTE and
the need to finance it through various means including the
lorry charge. He also kept repeating that the charge was
being levied on the transport company and not directly on
USAID, emphasizing the point that in fact the USAID supplies
continue to get duty-free privileges. The USAID/OTI Country
Representative expressed some incredulousness at this line
of reasoning and essentially responded by saying that of
course it would be USAID money going to the LTTE and no
company was going to absorb this cost of doing business on
its own. He made it clear that no money directly or
indirectly can go to the LTTE and that what the Officer-in-
Charge was suggesting is that USAID turn a blind eye to what
is actually happening (confirmed by a rare smile from the

8. (SBU) The meeting went back and forth in this vein for
close to two hours and after some time it became clear that
the Officer-in-Charge was not willing to give any ground.
The only alternative suggested was that USAID buy its own
trucks, in which case the charge would be dropped in the
same way that it is waived for UN-owned vehicles. There was
some discussion about the option of using trucks leased over
the long-term by USAID but the Officer-in-Charge said the
fee would only be waived if the vehicle registration was in
USAID's name. When it was completely obvious that the LTTE
position on the lorry charge was not going to change, the
USAID/OTI Country Representative expressed his
disappointment over the situation. He ended the meeting by
stating categorically that since the USAID/OTI program is
not in a position to transport goods on the A9 any longer
the program will not be funding anymore reconstruction work
in Jaffna. He received a "so-be-it" look from the group and
left Kilinochchi.

The Real Issues at Play

9. (SBU) In the opinion of the USAID/OTI Country
Representative, there are a number of issues responsible for
the LTTE's Revenue Unit's intransigence with USAID. First
and most obviously, the LTTE controls a long stretch of the
A9 and has decided that it is going to squeeze every rupee
out of that control. It is unclear why the organization has
waited so long to impose this lorry charge on top of the
regular taxes it has been levying on almost all cargo since
the A9 was re-opened in 2002, but it is clear that they are
making a lot of money from the new charge. One LTTE
realization is that Sri Lankan transport companies
(dominated by non-Tamils) are making a tremendous amount of
money servicing Jaffna and the LTTE sees it as their right
to take a bigger slice of this pie. The point was made very
openly by the Officer-in-Charge more than once.

10. (SBU) Secondly, the USAID position is weakened by the
fact that as far as is known, with the exception of the
German government aid organization GTZ, companies and
organizations are going along with the lorry charge and
paying it. This has to include non-profit international aid
agencies and in some cases the UN. For example, in recent
weeks the UNHCR rented a certain number of trucks to move
supplies into The Vanni and these vehicles had to pay the
lorry charge. Evidently UNHCR is unhappy about that
particular incident but it appears to have made the payment.
As noted by the Officer-in-Charge, the LTTE does not
understand why USAID is pushing for an exemption when
everyone else is paying the charge. This issue leads to the
next point - no doubt the LTTE is extremely reluctant to
make any exceptions to its new policy since it is nicely
enforceable as it stands now and making an exception for any
organization simply opens the door for other groups to argue
for a special status.

11. Last, and in some ways most troubling, the Officer-in-
Charge was at times dismissive of the USAID statement about
its inability to directly or indirectly let money flow to
the LTTE. On more than one occasion he mockingly talked
about all the money the LTTE raises in the United States,
presumably "taxes" on the Tamil diaspora community there
that flows back into LTTE coffers in Sri Lanka. He seemed to
be wondering why USAID is so worried about the material
benefit issue if the U.S. government has not taken stronger
steps to stop money flows from the United States. The
USAID/OTI Country Representative made no comment on these
statements and when the point was made two or three times in
the course of the conversation each time he steered the
dialogue back to the specifics of the lorry charge problem.

Next Steps

12. (SBU) While the USAID/OTI Country Representative
suspects that the LTTE people at the meeting think that
USAID is bluffing on this issue and will eventually pay the
charge, this notion is going to be dispelled quickly. At the
moment USAID/OTI has four projects in Jaffna that need
materials, and various options are being explored to get the
supplies there. UNHCR has been helpful in transporting some
of the items in their trucks but it is clear UNHCR is not in
a position to transport all of the supplies. Shipping
options will be explored and it has been suggested that
possibly the Sri Lankan Navy might be able to help. A
USAID/OTI grantee in Jaffna is talking to local government
people to see if commercial shipping might be available. If
it does not prove possible to get the remaining items to
Jaffna, USAID/OTI will have no choice but to close the
projects without completing them. For at least the time
being, no new USAID/OTI grants will be signed for any kind
of initiative in Jaffna. Unless the LTTE requests a meeting
about the lorry charge USAID/OTI does not plan to speak to
their representatives again about the issue.

13. (SBU) On December 13 emboff raised the taxation issue
with G.G. Ponnambalam, a pro-LTTE Tamil National Alliance
(TNA) MP from Jaffna. She reiterated to Ponnambalam that
USAID/OTI will not pay the tax and warned that continued
LTTE intransigence on this issue would mean the end of
USAID/OTI assistance in Jaffna-a point that the U.S. Mission
would not hesitate to make clear in its press statements
announcing the unfortunate and premature closure of these
projects. Ponnambalam undertook to convey the message to

© Scoop Media

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