Cablegate: Sri Lanka Not Opposed to Sethusamudram Ship Canal

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

UNCLAS SECTION 01 OF 02 COLOMBO 001158

SIPDIS

DEPT FOR SA/INS: JBRENNIG; NDEAN

E.O. 12958: N/A
TAGS: ECON PREL ETRD SENV CE ECONOMICS
SUBJECT: SRI LANKA NOT OPPOSED TO SETHUSAMUDRAM SHIP CANAL
PROJECT

1. Summary: The Government of Sri Lanka (GSL) is reconciled
to the implementation of the Sethusamudram project as it is
within the territorial waters of Sri Lanka. This project
proposes the linking of the Arabian sea with the Bay of Bengal
by dredging shallow waters to the north of Sri Lanka, thereby
creating a navigable canal across the Indian Peninsula. The GSL
does not currently oppose the project but is awaiting further
environmental studies to make a determination
regarding its impact on Sri Lanka. While no major economic
implications for the shipping industry are anticipated by the
GSL or the private sector, environmental implications have not
been fully examined, according to officials at Ministry of
Foreign Affairs (MFA) and Secretary of Environment. End
Summary.

2. The Sethusamudram Project is aimed at creating a continuous
navigation channel connecting the west and east coasts of India.
Currently, domestic ships from the west coast of India as well
as ships from western countries have to traverse around Sri
Lanka to reach the east coast, due to the existing shallow
waterway between the countries, which is not sufficient for
movement of ships.

3. The Managing Director (MD) of the Sri Lanka Ports Authority
(SLPA) informed EconFSN that although some shipping business
could be affected, it would not be significant. Transshipment
and large container vessels are not likely to be impacted due to
the proposed draft of the canal (draft is the depth of water a
ship draws when fully loaded). The initial estimate of the
draft of the proposed canal is approximately 10 meters with
provision for subsequent expansion up to 12 meters according to
the MD of SLPA. Therefore, large ship traffic to Colombo will
not be affected, unless the draft of the canal is increased to
14.5 meters. At a later period, if the draft of the canal is
extended over 14.5 meters, the GSL would consider converting
regional ports located in the northeast parts of the country for
container traffic.

4. Current expansion plans for the ports of Hambantota and
Colombo will not change due to this project and will proceed as
planned. Existing plans call for Hambantota Port in southern
Sri Lanka to be converted to a container port, while a port
extension project in Colombo is being designed to accommodate
more ships and larger ships.

5. A Ministry of Foreign Affairs (MFA) source has informed Post
that the External Affairs Minister of India has assured the GSL
that India will ensure bi-lateral ties are not affected due to
implementation of this project. The Secretary to the MFA has
been appointed chairman of an inter-ministerial committee to
oversee the project. The MFA says that its immediate concern on
Sethusumadram is that discussions between the joint India/Sri
Lanka technical committee that was appointed to study
environmental impact of the project continue. The committee met
in January 2005 and is scheduled to meet again in July.
According to MFA, no conclusive research has been done that has
allowed Sri Lanka to formulate a position either for or against
the project. MFA is waiting for baseline reports by GSL
environmental agencies to make further determinations. The
Chairman of the Natural Aquatic Resources Agency (NARA) informed
EconFSN that a Rapid Assessment Report has been submitted to the
MFA on this project.

6. Local environmentalists charge that this project could have
several implications detrimental to Sri Lanka's ecosystem. Some
of the concerns put forward include, change of currents that
could cause varying water temperature, increased salinity, a
rise in sea level, disturbance of sea beds -- having
considerable negative consequences for fisheries industry, oil
spills and pollution, dispersion of invasive species into
currently protected seas, adverse affects of dredging, changes
to currents and coastal erosion/depositions. All of these
problems pose risks to the marine ecosystem in the region,
especially the western and south western coastal region of Sri
Lanka -- one of the most valuable in terms of biodiversity in
the Indian subcontinent.

7. NARA, on the other hand, claims that there is a dearth of
data on existing ecosystems, which has to be established in
order to evaluate the effects of the proposed project and
evaluate proposed measures to mitigate negative impact. A lack
of information about areas such as coral reefs, aquatic plants,
endangered fish, water exchanges and effect of extreme changes
in ecosystems hampers proper review of the possible
environmental impact. NRA advocates a joint Sri Lanka/India
Environmental Impact Assessment on the project.

6. Senior private-sector shipping officials are of the view that
this project was never intended to draw shipping business away
from Sri Lanka, but rather for Indian security-related purposes.
An MFA official also endorsed this view and stated that an
increased Naval presence in the area could have a positive
outcome for Sri Lanka. The private sector claims the canal
would save ships no more than 24-hour in travel time (by
avoiding the more southerly route around Sri Lanka) and that
ships will not be able to sail at maximum speed through the
canal. When combined with the probable need for pilots to
navigate the canal, major international ship owners will likely
not have much interest in using the proposed canal. Domestic
Indian shipping from east to west, however, will benefit from
the project.

7. Comment: While environmental groups have raised some concerns
about Sethusamudram, there is not much apprehension on the part
of the GSL or the shipping community regarding the
implementation of the project. Unless subsequent studies reveal
severe environmental impacts for the country, Sri Lanka is not
likely to object to its implementation.

LUNSTEAD

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