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Cablegate: Mixed Record Confronts Sri Lanka, Maldives And

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

UNCLAS SECTION 01 OF 06 COLOMBO 002145

SIPDIS

DEPT FOR EB A/S ANTHONY WAYNE; SA/INS FOR M.GOWER, C.SIM;
TREASURY FOR S.CHUN; MCC FOR D.NASSIRY AND E.BURKE

SENSITIVE

E.O. 12958: N/A
TAGS: EAID ECON PGOV CE MV ECONOMICS
SUBJECT: MIXED RECORD CONFRONTS SRI LANKA, MALDIVES AND
DONORS AS TSUNAMI ONE YEAR ANNIVERSARY APPROACHES

Ref: Colombo 2099

1. (SBU) Summary: As we approach the one year anniversary
of the December 26, 2004 tsunami, Sri Lanka has avoided the
mass outbreak of disease and unrest that some feared early
on, established a network of transitional shelters, begun
to build permanent housing, elected a new President,
established and now re-structured the agencies responsible
for tsunami relief and reconstruction, established but are
perhaps rethinking a 100 meter coastal "buffer zone," and
begun to restore livelihoods, particularly in the hard-hit
tourism and fisheries sectors. As we look back on one
year, there are examples of much that was right and much
that was wrong with both Sri Lanka's and the international
community's approach. Nonetheless, for having absorbed the
loss of 35,000 fellow countrymen, and weathered over USD
1.5 billion in damage, Sri Lanka has emerged relatively
strong, committed to disaster preparedness and somewhat
wiser, beginning to adapt from some lessons learned during
the first months immediately after the crisis. Maldives
ends the year scrambling for funding to fill a significant
financing gap and to finance a major budget deficit.
Having started the post-tsunami phase strong, Maldives'
small size and obvious resource constraints have turned its
impressive "sprint" at the outset of the disaster into a
tougher slog. Increasing tourist arrivals, however, should
help Maldives through. End Summary

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2. (SBU) On December 26, 2004 the Asian tsunami struck Sri
Lanka and Maldives, killing approximately 35,000 Sri
Lankans and 100 Maldivians. While Sri Lanka absorbed
approximately USD 1.5 billion (or 5 percent of GDP) in
damage, Maldives faced USD 400 million in damage - a
whopping 60 percent of GDP. For perspective, in the case
of Maldives, it would be as if Hurricane Katrina had killed
over 100,000 people and caused USD 6 Trillion in damage.
For Sri Lanka, it was the proportional equivalent of 250
September 11 attacks happening simultaneously. Neither
country was prepared, neither had the capacity to absorb
such a hit, yet both performed, in hindsight, with a fair
degree of competence and success.

Sri Lanka
----------
The US Response
---------------
3. (SBU) USG humanitarian assistance for Sri Lanka in the
aftermath of the December 2004 tsunami disaster was
spearheaded by USAID/OFDA with the immediate deployment of
a DART team and rapid funding of a portfolio of emergency
projects. Now largely completed, the projects were
instrumental in setting the framework for a successful
international and national relief effort. Against a
disaster scenario of 35,322 dead, 516,150 displaced, and
over a million affected in the country?s coastal
communities, there were no deaths due to starvation, lack
of medical care, or epidemics. The government of Sri Lanka
has reported that the majority of children are back in
school; at least half of the tsunami-displaced population
has been accommodated in more than 50,000 transitional
shelters (while others have been taken in by relatives);
and a combination of short-term and longer-term cash and
employment interventions have assured at least some income
to the families of the 200,000 persons who lost their
livelihoods.

4. (SBU) In coordination with USAID activities, the US
military response was swift and effective. In all, 1,700
Marine, 150 Air Force and US Navy personnel provided
immediate clean-up, logistics and relief support to
affected communities on the ground. US Marines cleared
tsunami affected areas and rebuilt a school in southern Sri

SIPDIS
Lanka. Air Force personnel, via "Operation Winn-Dixie"
provided fresh produce from central Sri Lanka to affected
communities in the North and East and conducted medical
operations in the very northernmost part of the island.
Merchant Marine ships provided fresh water to both Sri
Lanka and Maldives. The US military presence and
cooperation with the USAID/OFDA DART teams was impressive,
effective, and proved an amazingly popular goodwill gesture
during a time of severe need.

5. (U) In addition to OFDA activities (about USD 43
million), USAID obligated USD 53.6 million into
livelihoods, small-scale infrastructure, urban planning,
and good governance activities and another USD 35 million
in a large-scale infrastructure reconstruction program.
USAID's livelihood support program includes assistance for
the GSL's tourism "Bounce Back" campaign, cash for work and
vocational training, small grants to restore the
livelihoods of small business owners, and projects to
support livelihood development in multi-ethnic areas in or
adjacent to tsunami affected areas. Peace Corps' Crisis
Corps program has provided short-term volunteers to support
capacity building projects and the delivery of livelihood
assistance to affected groups. Crisis Corps works with
international, national and local partner organizations in
the South and East to strengthen the ability to manage
information, gain access to resources, replace productive
assets and rebuild communities.

6. (U) The infrastructure reconstruction projects will
include rebuilding the bridge over Arugam Bay in the east,
the reconstruction of three fisheries harbors and the
reconstruction and redevelopment of up to 14
vocational/technical schools. Further, the US Trade and
Development (USTDA) agency has provided assistance to the
newly formed National Disaster Management Council (now the
Ministry for Disaster Management), water and sanitation
pilot projects and transportation improvement. The US also
agreed to provide two years of debt deferral and
restructured payments to help provide "breathing space" for
the Ministry of Finance.

Accomplishments and Challenges
------------------------------
7. (SBU) As we enter the second post-tsunami year, we find
that approximately 53,000 transitional shelters have been
built with funding from various donors, enough for roughly
half of the 500,000 who were displaced. The rest are living
with friends and family, and efforts are underway to
identify needed resources and services to help restore
these families to their former lifestyle. NGOs and the GSL
have coordinated relatively well on the transitional
housing program, and as we come out of the monsoon season,
we find that while there were certainly some transitional
shelter residents who were displaced temporarily a second
time, concerns about a second wave of humanitarian crises
have not been borne out.

--Buffer Zone

8. (SBU) Perhaps the biggest mistake on the part of the
GSL post-tsunami was setting unrealistic permanent housing
goals, and then hamstringing their ability to deliver
through the imposition of a 100m/200m coastal conservation
?buffer zone? in the west and east of the island
respectively. Within weeks of the disaster, then President
Kumaratunga announced that the Government would rebuild all
damaged housing within 3 months. While few took this
particular promise literally, it had the effect of setting
expectations that reconstruction could be done within a
year. In fact, an entire year has been needed to provide
transitional shelter, coordinate efforts to begin building
permanent shelter and work through how to operate with the
100m/200m buffer zone. Ultimately, the buffer zone has
proven largely unworkable, given the constraint of land
availability, particularly in the East. We were able to
bring out coastal experts from several agencies (USGS,
FEMA) to provide much-needed expertise and advice on how to
deal with coastal conservation issues. Their input was a
significant factor in the GSL?s decision to modify the
buffer zone.

9. (SBU) Following the November 18 election of President
Rajapakse, an announcement was made that the buffer zone
would be rescinded and people would be allowed to build
back on their previous sites. This decision has not yet
been finalized, but it should have the effect of moving
thousands of people from what appears to be a seriously
constrained donor-driven housing program into the "owner-
driven" housing program, which has enjoyed far more success
(see para 9 below).

--Former Killing Zone

10. (SBU) Complicating Government reconstruction efforts
was the fact that a majority of the tsunami-affected area
lay in territory controlled or heavily influenced by the
Liberation Tigers of Tamil Eelam (LTTE), a US-designated
foreign terrorist organization, which has waged a violent
insurgency against the Government since 1983. Although an
uneasy ceasefire has been in effect since early 2002, low-
level violence persists. After several months of
negotiations following the tsunami, the Government signed
an aid-sharing agreement with the LTTE in June. However,
soon thereafter concerted opposition from nationalist
political parties in the south, including one of the
Government's own coalition partners, Muslim groups, and a
court challenge rendered the agreement inoperable. The
Government acknowledges that Tsunami reconstruction has
lagged behind in LTTE-held areas and is considering ways to
move forward with assistance to these areas.

Rebuilding: Owner versus Donor Driven Housing Programs
--------------------------------------------- ---------
11. (SBU) Sri Lanka established two options for people
whose homes were damaged or destroyed by the tsunami. For
those whose homes were not in the buffer zone, an "owner-
driven" program was created, which provided direct grants
to homeowners, who then have the responsibility for
repairing or building their own homes. As of November
2005, all participants in the owner-driven program had
received the first payment (out of four payment tranches),
and the GSL, through participating banks, was in the
process of making second payments. This program currently
involves approximately 53,000 homeowners. While the first
payments had been made, a dearth of qualified Government
technical officers in the affected areas slowed the
verification process, which was required to release the
second payments. Following the release of additional
technical officers from other regions, progress has picked
up and some participants have even received their third and
fourth (final) payments.

12. (SBU) The "donor-driven" permanent housing program
for those whose homes were within the buffer zone has not
proceeded quite as quickly. Rebuilding for these families
required identifying new land, a process that proved
enormously slow and fraught with problems, particularly
with regard to livelihood (for example, fisherman in Sri
Lanka prefer to live near the sea and their equipment;
Government ideas about building multi-story communities
three kilometers inland, away from the coast and equipment,
proved impractical). Hundreds of NGOs stepped in to offer
to build housing and, as of November, of the roughly 50,000
houses in the donor built program, MOUs had been signed
between the GSL and rebuilding entities (mostly NGOs) for
just over 29,000. Construction had begun on approximately
25,000 units (Note: these figures could be slightly
misleading, as the Government reportedly counts the
beginning of work on a multi-tract housing project as the
commencement for all houses. Therefore, in a 200-house
project, if the ground has been broken on the first unit,
the GSL counts it as 200 units under construction. End
Note).

13. (SBU) The recent decision to eliminate the 100m/200m
buffer zone could have a dramatic effect on the donor-
driven and owner-driven programs, since allowing people who
were previously barred from returning to their damaged
homes or lots to return could significantly increase the
participation in the owner-driven program. Moreover, the
US and other donors have urged the Government to allow NGOs
to be involved in that process, to assist homeowners in
assuring that their homes are sound, and constructed in a
manner consistent with the needs of living near the coast.
This transition is still very much a work in progress and
will be monitored closely by all participating groups and
agencies to ensure that a maximum number of people benefit
from any relaxation of the rules.

From TAFREN/TAFOR/TAP to RADA
-----------------------------
14. (SBU) In the immediate aftermath of the tsunami it
became clear that a Colombo-centric approach to the
response would emerge, and that it would revolve around the
Presidency. Out of this model came several organizations
that led the primary relief and reconstruction efforts,
with authority from the President's office and with her as
the ultimate decision-maker. The Task Force for Relief
(TAFOR), the Task Force for Rebuilding the Nation (TAFREN)
and The Transitional Accommodation Project (TAP) were just
a sample of the organizations that came about, headed by
confidants of the President and responsible for a top-down
approach to implementing relief and reconstruction
programs.

15. (SBU) While these organizations were staffed with
capable and determined individuals, the Colombo-centered
focus led to delays, indecision and, ultimately, poorer
decisions than otherwise might have been taken in the
field. Following his election as President in late-
November, President Rajapakse decided to amalgamate all
reconstruction entities, both for tsunami and war-affected
areas, into one overarching body, the Relief and
Development Agency (RADA). Reftel provides additional
information on RADA and its direction based on discussions
with its leadership. RADA Chief Operating Officer, Saliya
Wickramasuriya, currently in the process of evaluating
personnel and resources, told Econchief that he will not
likely make many changes to structures until he get a full
handle on the complete set of responsibilities and
requirements of the new agency. He is also working on
drafting legislation that will give the agency "authority"
status, which in Sri Lanka conveys a significant amount of
power, allowing organizations to bypass existing
structures, statutes and processes. One of the key focuses
of the agency, according to Wickramasuriya, will be to push
decision-making down to the local levels, and provide
capacity building for the village and district level
leaders who are necessarily the "first responders" to all
of the relief and reconstruction requirements.

Donor Coordination
------------------
16. (SBU) While donor coordination appears to have led to a
closer working relationship among members of the donor
community, particularly the International Financial
Institutions (IFIs), and the Government, there was also
evidence of competition among donors, and efforts to
"elbow" others out for projects (Note: Post faced this
phenomenon directly when Germany's GTZ sought to take some
of the vocational schools projects for which the US had
already signed an agreement with the GSL. End Note). There
were also cases early on of oversupply of NGOs and relief
in certain areas, and gaps in harder to reach, or less
prominent areas of the country.

17. (SBU) In the immediate aftermath of the tsunami, the
World Bank, Asian Development Bank and Japanese Bank for
International Reconstruction (JBIC) embarked on a multi-
pronged damage assessment, drawing on expertise from
existing donors (including USAID) and the GSL. These
working groups then created the work plans for moving
forward with the reconstruction process. While the GSL
struggled with its Colombo-centered approach, the donor
coordination group served as a strong voice for the
affected communities, insisting on consultation and
coordination. As the reconstruction process went forward,
the IFIs continued to coordinate with other donors and the
GSL, by establishing a donor working group with rotating
membership and regular meetings with senior-GSL officials.
Livelihoods
-----------
18. (SBU) With the damage and loss of life, a secondary,
but no less important, concern has been the restoration of
livelihoods, both to mitigate the economic damage of the
tsunami and to provide necessary psychological support to

SIPDIS
those who have seen their lives uprooted and members of
their family killed. The tourism and fishing industries
were the two economic sectors most heavily affected by the
tsunami. While tourism numbers fell precipitously, the

SIPDIS
overall numbers for temporary visitors in 2005 has been
remarkably high. The figures remain low in tourist
hotspots, however, and resorts are still not at pre-tsunami
occupancy levels.

19. (SBU) The fishing sector is not a major component of
GDP in Sri Lanka, but it represents the largest employer
and economic activity in the coastal areas. Fishing
communities have slowly returned to the sea as boats and
fishing kits have become available. An initial concern
about an oversupply of single day fishing boats has led to
an increased focus on multi-day boats, in order to promote
sustainable fishing practices. Muslims are also heavily
represented in the fishing population, adding ethnic
sensitivities to the mix. Agricultural land that was
inundated will take years to return to a useful state.
Small businesses affected by the tsunami have been targeted
by a Central Bank-sponsored lending program, designed to
provide an additional USD 500 million into the affected
communities' economies.

Maldives
---------
20. (SBU) The past twelve months in Maldives have been a
whirlwind of post-tsunami operations, political upheaval
and lurching toward reform. In the immediate aftermath of
the tsunami, the GORM elected to hold parliamentary
elections that were hotly contested and deemed likely to
move the country toward much anticipated political reform.
The GORM made a lot of headway early on, presenting a
highly competent and well developed financing plan to
donors in various international fora. As the months wore
on, however, the lack of depth in GORM Ministries began to
show and performance dropped considerably. In recent
months we have had representations from various GORM
officials concerned about both a significant financing gap
for tsunami reconstruction (approximately USD 90 million)
as well as a looming budget deficit (most recently reported
at USD 25 million).

21. (SBU) The World Bank and ADB have established local
offices in Maldives to work through these issues and advise
the GORM on these financing needs. UNDP has increased
operations significantly and taken a lead role in tsunami
relief and reconstruction activities.

22. (U) The US has just concluded a bilateral agreement to
support reconstruction in the Maldives. The agreement
commits USD 8.6 million for the reconstruction of harbors,
power plants, water and sanitation systems and for
equipment and capacity building for the Ministry of Finance
to assist with Maldives? absorption capacity.

Comment
-------
23. (SBU) Aware that the international spotlight has
returned to Sri Lanka around the one-year anniversary of
the disaster, Post has counseled the GSL to take an open
and honest approach with the international media and high-
level visitors. In Sri Lanka, some things have gone well,
some things have gone poorly, but on the whole, Sri Lanka
has a largely positive story to tell. It also has a long
way to go, and should use the one year mark as a means of
making people aware of exactly what additional help will be
required. From the US Mission perspective, we are pleased
with the performance to date of US programs and look
forward to continuing our reconstruction projects,
implementing our capacity building projects and working
with the GSL and Maldives as they move forward in the years
ahead. For two countries that could not have foreseen
disasters of this magnitude, both Sri Lanka and Maldives
have responded with professionalism and compassion to the
needs of their citizens. Both adapted and
institutionalized some of the lessons learned and the
response of the two Governments to future challenges
(hopefully none of this magnitude) should be improved. End
Comment.

LUNSTEAD

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