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Cablegate: Sri Lanka Loses Half of German Tsunami Aid

VZCZCXRO3739
OO RUEHBI RUEHLMC
DE RUEHLM #2127/01 3601206
ZNR UUUUU ZZH
O 261206Z DEC 06
FM AMEMBASSY COLOMBO
TO RUEHC/SECSTATE WASHDC IMMEDIATE 5023
INFO RUEHRL/AMEMBASSY BERLIN IMMEDIATE 0096
RUEHNE/AMEMBASSY NEW DELHI 0415
RUEHKA/AMEMBASSY DHAKA 9733
RUEHIL/AMEMBASSY ISLAMABAD 6671
RUEHKT/AMEMBASSY KATHMANDU 4737
RUEHKP/AMCONSUL KARACHI 2092
RUEHCG/AMCONSUL CHENNAI 7235
RUEHBI/AMCONSUL MUMBAI 5004
RUEHLMC/MILLENNIUM CHALLENGE CORP

UNCLAS SECTION 01 OF 02 COLOMBO 002127

SIPDIS

SENSITIVE

SIPDIS

DRL/IL FOR LAUREN HOLT

STATE FOR SCA/INS

MCC FOR S GROFF, D NASSIRY AND E BURKE


E.O 12958: N/A
TAGS: ECON PHUM SOCI EAID CE
SUBJECT: SRI LANKA LOSES HALF OF GERMAN TSUNAMI AID

REF: Colombo 2119

1. (U) SUMMARY: News of Germany's reallocation of approximately 19
million euros in tsunami reconstruction funding from Sri Lanka to
Aceh, Indonesia hit the newswires on December 23 and 24 following
remarks by the German Minister for Overseas Development during a
visit to Aceh. This funding, earmarked for the north and east of
Sri Lanka, comprises half of Germany's tsunami assistance
programming for Sri Lanka. It has not been possible to spend these
funds due to access problems in conflict-affected areas. End
Summary.

19 Million Euros Reallocated to Aceh; No New Programming
--------------------------------------------

2. (U) During her visit to Aceh, Indonesia, German Minister for
Overseas Development Heidemaire Wieczorek-Zeul told a reporter for
the German daily Tagesspiegel that 19 million euros originally
destined for Sri Lanka would be reallocated to Aceh. According to
Tagesspiegel's December 24 publication of the interview,
Wieczorek-Zeul also noted that Germany would not enter into any new
programs with Sri Lanka until the peace process between the
Liberation Tigers of Tamil Eelam (LTTE) and the Government of Sri
Lanka (GSL) resumes. She explained that due to the increased
intensity of the conflict in the northern part of Sri Lanka, it was
"too dangerous" to continue projects. She added that German
officials had "no access" to the Jaffna peninsula.

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3. (SBU) The timing of the announcement, made on the eve of the
second anniversary of the tsunami, caught the German Embassy by
surprise. Andreas Hartmann, Counselor for Economic Cooperation and
Development at the German Embassy, explained to PolChief that the 19
million euro reallocation cuts Germany's two-year 38 million euro
tsunami assistance program in half. These funds generally go

SIPDIS
directly to the GSL for reconstruction efforts. He said that the
German tsunami reconstruction programs in the south of Sri Lanka
were going well, and would continue. But the 19 million euros being
reallocated to Aceh simply cannot be spent in the north and east at
this time, due to the conflict in those areas. German Ambassador
Juergen Weerth told DCM that, at this time, no new money would be
allocated for programs beyond what has already been committed until
there is progress in resuming negotiations between the GSL and
LTTE.


Encouraging Other Nations to Freeze Tsunami Funding
--------------------------------------------- ------

4. (U) Wieczorek-Zeul also commented that it would be "nice" if
other nations would discontinue further funding of tsunami
reconstruction projects until the peace process resumes. Sri
Lanka's Disaster Management Minister Mahinda Samarasinghe dismissed
this call, saying that the GSL has already taken measures to address
Wieczorek-Zeul's concerns. Samarasinghe added that Sri Lanka still
has not yet been officially notified of the reallocation of funds.

5. (SBU) COMMENT: As the conflict increases the difficulty for
donors to implement programs in the north and east, this situation
contributes to the growing disparity between the Sinhalese south and
the north and east, where more of Sri Lanka's Tamil population
lives. Germany is foremost among the donors in showing its
displeasure with resumption of the conflict in Sri Lanka by
withholding its future aid flows, and is further reinforcing that
message with the movement of these tsunami funds from Sri Lanka to
Indonesia. Germany has taken the rational step of re-directing
funds to a tsunami-affected area where they actually can be used
(Aceh). As Germany assumes the EU presidency on January 1, the
question of whether Germany will use its position to persuade other
European countries to follow suit will bear watching.

6. (SBU) COMMENT CONTINUED: USAID currently implements programs in
the east, including Office of Transition Initiatives (OTI)
activities and the tsunami reconstruction program, but has limited
activity in the north, where its efforts are impacted by the
deteriorating security situation but do continue, albeit at a slower

COLOMBO 00002127 002 OF 002


pace of implementation. USAID assistance is programmed with
non-governmental organizations, both public and private, and is more
immune to corruption in the GSL (see ref) since the USG funding
takes place through these organizations and does not go directly to
the GSL. Meanwhile, the Embassy continues to press for greater
humanitarian access to the north and east and supports the goal of
utilizing future USAID programs to address underlying inequities in
those areas.

BLAKE

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