Category: Foreign Affairs

By Jehan Perera &#8211

President Maithripala Sirisena has announced his intention to seek the passage of the 20th Amendment to the constitution as a priority. The reforms envisage an electoral technique in which the majority of parliamentary seats will be obtained on the initial-previous-the post system, even though maintaining to an general proportional outcome. The expertise at elections held below the present proportional method with a preferential voting alternative has been a damaging 1. It has been marked by heavy expenditures by candidates who have to contest considerably larger district-sized electorates and has also led to in-fighting by candidates inside the identical political party for the preferential votes that will get them elected.

The promise of a adjust in the electoral program was one particular of the key promises in the election manifesto of President Sirisena in the course of the presidential election campaign. In terms of constitutional reforms, it was alongside the promises to minimize the direct powers of the presidency on the one hand, and to establish a non-partisan constitutional council to oversee non-partisan appointments becoming made to crucial institutions of the state, such as the judiciary, police, public service and elections commission. The government has received considerably commendation for having passed the 19th Amendment within the 1st 100 days of President Sirisena’s election victory.

However, the passage of the 19th Amendment was not easy. There were several opinions and vested interests involved in the approach of decision generating. At occasions it seemed that the 2/3 majority necessary for constitutional adjust would not be located. The passage of the 19th Amendment was only created feasible by the cohabitation of Prime Minister Ranil Wickremesinghe who heads the present UNP government with President Sirisena who heads the SLFP opposition who had been capable to persuade their respective party members to give their assistance to the constitutional amendment. This identical political configuration exists today and offers the hope that it can be utilized to offer a equivalent effective outcome in the case of the 20th Amendment.

Unfortunately, with the passage of time the spirit of rivalry between the two principal political parties in the country has elevated, and not decreased, which tends to make the passage of the 20th Amendment much less probably. The UNP is concerned that the 20th Amendment will be utilised to delay the speedy dissolution of Parliament which was part of the President’s election manifesto. It is in the interests of the opposition to continue with the present parliamentary configuration for as long as achievable, and till April 2016 when the term of the present parliament lapses. This is on account of each their worry that they will not be a component of Parliament once more, and their hope that the present government becomes significantly less common with the passage of time. Their interest lies in obtaining the basic elections later rather than sooner.

Slowing Down 

The election manifesto of the alliance of political parties that supported the candidacy of President Maithripala Sirisena highlighted a 100 day plan soon after which Parliament would be dissolved and fresh elections would be referred to as. Following the passage of 150 days because the election of President Sirisena the government formed by Prime Minister Ranil Wickremesinghe appears to be operating out of steam. The imbalance among a ruling celebration with a mere 43 seats in a Parliament of 225 members in which the biggest opposition party has 126 seats has begun to take its toll. The engine of the government, it is clear, is too small, and can’t pull the load any a lot more specifically when the terrain is receiving uphill.

The problem faced by the government was evident in the fiasco over the appointment of the Constitutional Council which was to be set up below the 19th Amendment. This body will be the most prestigious and critical institution of state, vested with the power to pick those who would make certain that other institutions of state, such as the judiciary, police, public service and elections commission are non-partisan and would preserve the independence of these key institutions. According to the 19th Amendment the appointments to the Constitutional Council would be mostly the duty of the President, Prime Minister and Leader of the Opposition with the leaders of the smaller sized parties also obtaining an input.

A fortnight ago it seemed that the appointments to the Constitutional Council were on track, with the names of those who had been to be members announced. Nonetheless, the choice of the President, Prime Minister and Leader of the Opposition has not been ratified by Parliament. As a outcome there is a deadlock exactly where it concerns appointments to crucial state institutions. An example is the Bribery Commission which has been in the news over the past a number of months as it has received a plethora of complaints against members of the former government who are now in the opposition. 1 of the Bribery Commissioners has resigned but can not be replaced due to the fact the Constitutional Council is not however constituted. As a result the Bribery Commission as well remains with no a Commissioner and unable to take up new cases.

Constructive Change 

The lacuna that has beset governance is not limited to institutions of state. It also has implications for government policy. The government which has a ruling party of only 43 members in a parliament of 225 can’t pass legislation in parliament unless the much larger opposition in parliament agrees. The parliamentary opposition has tiny or no incentive to cooperate with the government as is interest lies in weakening the ruling party and showing it to be ineffective. This has a damaging effect on all areas of governance, not least the economy. The financial dividend that was anticipated after the replacement of the former government has however to materialize.

The present stalemate in governance has mobilized sections of civil society to issue a contact for the quick dissolution of parliament. They noted that “there is a rising perception of crisis and instability, which cannot be permitted to take root. The economy cannot afford this lack of political direction for a lot longer, and as importantly, the hope and aspiration produced by the modify of government in January demands both clarity in promises being kept and further progress in reforms, particularly with regard to devolution and energy-sharing. The time is ripe as a result for fresh parliamentary elections which would let the folks of Sri Lanka to have their say on reforms already enacted and to mandate the path of the government for the subsequent five years.”

A considerable quantity of work and compromise has gone into the preparation of the new electoral method. Most of the parties, such as the small and ethnic minority parties have expressed their willingness to go along with it. The ideal that can be hoped for is that the 20th Amendment is finalized without any much more delay and placed before Parliament. Nevertheless, the overriding priority is for the country to have an effective government that is primarily based on the present political realities, and not those that existed 5 years ago in 2010, when the present parliament was elected. The pursuit of consensus to receive a two/three majority to pass the 20th Amendment need to not stand in the way of elections for a new parliament. The overriding value of elections and new government leadership was noticed greatest at the presidential election that took location on January eight this year, which has transformed life in the nation.

By Dayan Jayatilleka – 

“Practically nothing contained in the present Charter shall authorize the United Nations to intervene in matters which are basically within the domestic jurisdiction of any state or shall need the Members to submit such matters to settlement below the present Charter but this principle shall not prejudice the application of enforcement measures under Chapter Vll.”- UN Charter Chapter 1, Post two

Did you consider that as a unitary state, there is only a single, single Government in Sri Lanka, though there are a quantity of Provincial Councils to which a measure of power has been devolved by that one single government? Effectively, not according to the United Nations and the current (unelected) Sri Lankan Government of Prime Minister Ranil Wickremesinghe! Did you know that there is a “Northern Provincial Government” in Sri Lanka, and not merely a Northern Provincial Council and its administration/Cabinet? Did you know that the United Nations will be assisting that “Northern Provincial Government”? Have you ever heard of a Southern Provincial Government or a Wayamba or Western Provincial Government in Sri Lanka&#8211 and if not, why (only) a Northern Provincial Government?

When Varadarajaperumal’s administration placed an advertisement in the newspapers and signed as the North Eastern Provincial Government, a furious President President Premadasa and Minister Ranjan Wijeratne exclaimed that “there is only one particular government in Sri Lanka!” It is the self-perception of itself as a “Government” that led the NEPC to its threat of a UDI, and President Premadasa to dissolve it. What is worse today is that the UN refers to a “Northern Provincial Government” and the Government of Sri Lanka has gone along, not minding in the least!

If the United Nations refers to and assists a Northern Provincial “Government”, how long will it be just before the latter regards itself as a proto state, and the former recognizes the latter as 1?

The proof comes not from a supply hostile to this government, these processes or to Sri Lanka but from an official statement by an affable friend of this nation, UNDP Resident Representative Subinay Nandy, who says: “…Third, to give technical assistance to the Northern Provincial Government to far better strategy and undertake improvement applications, create revenue and reach out to communities, for consultation and feedback. This component is to be implemented by UNDP.”

Sri Lanka beneath ‘Yahapalanaya’ is a penetrated state.

The UN is now engaged in the deep and sensitive internal political processes of this country processes which are not only deep but have the most wide ranging legal, constitutional, security and strategic implications. It is hugely unlikely that President Sirisena is aware of this and it is practically certain that the Cabinet does not know or has not granted its assent. Surely the parliament has neither been informed and nonetheless much less has endorsed this hazardous new shift.

If the readers consider that I am overdrawing the image of UN involvement in Sri Lanka, let me merely quote from the UN Resident Representatives statement as authoritatively reproduced in the state’s flagship newspaper the Every day News:

“The UN is therefore engaging comprehensively with the Government, by delivering technical assistance and monetary support to advance reconciliation and create sustainable peace. In particular, we are operating with our counterparts &#8211 coordinated by the Ministry of Foreign Affairs &#8211 and finalizing an initiative for assistance from the UN Peacebuilding Fund. The Peacebuilding Fund will help Sri Lanka, initially with $ three million, to establish and operationalize processes for constructing peace through reconciliation and accountability by addressing the vital core grievances of minorities in an inclusive and consultative manner. In particular, with the assistance of the Fund, the UN is searching at supporting the Government in 4 locations:

*First, technical support to establish an inclusive and credible domestic mechanism to address human rights violations and accountability and provide redress to victims and conflict affected groups, including families of the missing, in line with international standards. This element will be led by OHCHR.

*Second, to initiate inclusive, broad-primarily based mechanisms for inter-ethnic trust constructing, reconciliation and social cohesion working with the recently established Workplace for National Unity and Reconciliation. This component will be implemented by UNDP with technical tips from the Reconciliation and Development Adviser primarily based at the UN Resident Coordinator&#8217s Workplace.

*Third, to offer technical help to the Northern Provincial Government to far better strategy and undertake improvement programs, produce revenue and reach out to communities, for consultation and feedback. This component is to be implemented by UNDP.

*And finally, to implement fast influence resettlement initiatives strategically targeting conflict affected and vulnerable internally displaced persons in the North and the East. This early implementation component will be done by UNHCR and UNICEF.

On this final point, support for resettlement of internally displaced persons, the UN will companion with the Ministry of Resettlement providing catalytic support to the return processes in Jaffna and Trincomalee, by way of a $ 1.2 million project.”

So the United Nations will play a part, through UN’s Peacebuilding Fund, which will initially allocate $ three million, “to establish and operationalize processes for developing peace through reconciliation and accountability by addressing the essential core grievances of minorities in an inclusive and consultative manner.”

Furthermore, the so-referred to as ‘domestic inquiry’ into accountability will be according to unspecified ‘international standards’ (decided by whom?) and have unspecified technical help from the UN, led by the OHCHR, i.e. the very Office of the Higher Commissioner of Human Rights, which is spearheading the international inquiry into Sri Lanka!

The UN is becoming drawn in to the search for a resolution to the core troubles of majority-minority relations on the island as well as the search for accountability and reconciliation.

This has deadly critical implications. If it can aid it, no country makes it possible for the UN a role in such sensitive domestic processes. For instance India wouldn’t hear of any UN involvement in the Kashmir question.

UN involvement in domestic politico-legal processes in two exceptional sets of situations: the country concerned is a failed state or has been defeated in war and is put beneath de facto UN trusteeship or there has been a negotiated end to a civil war in which the UN has played a role or a UN part has been agreed upon as component of the peace settlement.

Sri Lanka fits neither of these categories.

If the UN gets involved in such domestic processes, specifically in an ethno-lingual or ethno-regional context, it generally ends with a single side making use of the UN as leverage to move towards independence or the West employing the UN to do so. Kosovo is a case in point.

Our finest Foreign Minister Lakshman Kadirgamar famously quipped that the only role for the UN in Sri Lanka was to aid in the eradication of Malaria by the spraying of DDT. As his parliamentary speech slicing and dicing Ranil Wickremesinghe’s Ceasefire Agreement (published in the Sunday Instances) showed, the cornerstone of Kadirgamar’s foreign policy was a strenuous recommitment to national sovereignty. He was eliminated by an LTTE sniper ten years ago this August. Had he been buried rather than cremated he would have been rolling in his grave at the dangerously intrusive role that his successor and former cabinet colleague Mangala Samaraweera has arranged for the UN to play.

Although we now know what to anticipate in terms of a UN function in Sri Lanka if Ranil Wickremesinghe is elected PM and Mangala Samaraweera and Chandrika Kumaratunga continue to hold essential roles, we also know with no significantly less clarity what we can anticipate from on the Northern and Eastern ethnic front. The TNA agenda has been laid bare in an interview given to the Daily Mirror, by Mr. Sumanthiran M.P. It has three points: (A) the quick release of those he calls political prisoners, (B) the promulgation of a new Constitution to resolve the ethnic concern along the lines his party sees fit and (C) the recognition that genocide of some selection took spot against Sri Lanka’s Tamils. Let Mr. Sumanthiran do the speaking:

“The second situation of course is of the political prisoners. Some measures have been taken to release political prisoners but nobody has been released as however. So we know that those steps have been taken. But we want to see the actual release taking spot. The President recently stated that there was no political prisoner and nobody would be named a political prisoner. That is unfortunate that he says that. The phrase political prisoner has a distinct meaning. Those are the people who are involved in crimes probably, but not for their own advantage but to accomplish political objectives. It is accurate that they are held beneath particular laws. All of these people are held beneath the Prevention of Terrorism Act. And all of them had been accused or suspected of obtaining to have committed offences in achieving political objectives. So the President and the government must realise that they are political prisoners and the phrase has a meaning globe over. Nelson Mandela was a political prisoner. If you had asked the white South African rulers, they would have stated that there are no political prisoners. He was convicted beneath a section of that Act. But the planet recognises that he was a political prisoner. So there are political prisoners and these are political associated detentions. And the President also should use the correct phrase and admit that there are political prisoners and release them now.”

Here Mr. Sumanthiran is engaging, as his party – and Tamil nationalism in general&#8211usually does, in trickery and dishonesty. In his advocacy of the instant release of hardcore Tigers, he shamelessly invokes the name of Nelson Mandela, who by no means consciously targeted or authorized the targeting of a single unarmed, innocent civilian in the liberation struggle—which incidentally was against a minority regime and for democratic majority rule (just the opposite of the LTTE’s struggle). By contrast the tigers engaged in the savage butchery of unarmed civilians of innocents.

Mr. Sumanthiran cannot be unaware that Nelson Mandela was convicted by the courts of a regime internationally condemned as illegitimate an apartheid regime of a white minority state, not a democratic State which represented the majority of its citizens as was and is the case in Sri Lanka.

Sumanthiran’s definition is characteristically deceitful. Even a Nazi fascist war criminal or a butcher of Pol Pot’s Khmer Rouge perpetrated his savagery, not for “their personal benefit” but precisely for collective political objective! That did not make them mere “political prisoners’ who need to be released!

If there is any individual in a Sri Lankan jail, not because of an act of violence but due to the fact of his or her political views, then such a person is indubitably a political prisoner and ought to be released.

But if a particular person has been convicted by a duly constituted court of law, particularly in an elected democracy, for lethally violent offenses, then they can not be regarded as ‘political prisoners’ who need to be instantly released!

Sri Lankan can, nevertheless, expect precisely such persons to be released back into society, if Ranil Wickremesinghe’s UNP wins the upcoming election.

That is not the only factor we can expect. Mr. Sumanthiran discloses that the UNP has promised a new constitution if elected one that will ultimately resolve the ethnic issue.

“…But at the exact same time, there is a large national issue that we are concerned about and that wants to be addressed. We agreed with this government that it want not be fully addressed till the basic elections are more than, but thereafter that situation must be provided priority. The government has currently spoken about the passage of 19th Amendment. The Prime Minister said it in Parliament, the Foreign Minister and Minister of Justice as well had voiced that a new constitution would be enacted and the next Parliament must be converted in to a Constitutional Assembly. And the Foreign Minister specifically mentioned in his speech that in that constitution the ethnic situation also would lastly be resolved…”

Mr. Sumanthiran is disclosed at a ‘Managers meeting’ in Jaffna, a report of which appeared in the Thinakkural of May possibly 18th, that there is currently an agreement with the UNP, according to which a new Constitution which is non-unitary in character will be promulgated right away soon after the election.

Finally, Mr. Sumanthiran seeks to legitimize and spin the term “genocide” and seeks recognition for its use. He says:

“The genocide concern is a political slogan. What I said that about NPC resolution was that it was an expression of the individuals. It doesn’t mean the crime of genocide is proved for the international crime of genocide. There must be a tribunal and there should be numerous ingredients of that offence that have to be proved. Now I don’t think that is what the NPC had mentioned. The NPC says that from  1947 these issues had happened and these all are intended to diminish the Tamil people’s states and Tamil people’s lives in this country either by driving them out of the nation, killing a group of individuals, a periodic violence against the Tamil and so on, and they known as it genocide. That may possibly not match with the international crime of genocide, it is not. In truth at the finish of the resolution says the international neighborhood has not accepted this sort of events as genocide. Now you need to recognize that this is also as genocide. So it have to be noticed in total context of people saying that the Tamil people have been suffering for 60 years of protracted violence. And they are saying that is genocide.”

Provided all these public disclosures, it appears to me that the single most important factor about the upcoming parliamentary election is the opportunity it offers to unplug the insidious project of the Ranil-Chandrika-Mangala troika and flush out the trio, thereby halting the massive long term damage they are undertaking to the sovereignty, unity and territorial integrity of Sri Lanka to its future as a strong, independent, united nation.

The Monetary Crimes Investigation Division (FCID) dismissed a statement from former Secretary to the Ministry of Defence Gotabaya Rajapaksa to “white wash” the MiG-27 fighter jet scandal by saying all documents were submitted in a case to the District Court Mount Lavinia.

An FCID spokesman said those documents have been provided when Rajapaksa was fighting a libel action against The Sunday Leader newspaper. They had exposed information of the corrupt MiG deal. “We are not concerned about his defence there. We are conducting a probe. All I can say is we have identified some startling findings. I cannot say anything further due to the fact the probe is still under way,” the spokesman stated.

This week Gotabaya Rajapaksa has been upset more than the Colombo Telegraph revelations. He has been telephoning police larger ups and government leaders and asking them not to proceed with the investigations. He has told them that all the details can be discovered in the case he filed against The Sunday Leader. Why the former Defence Secretary is so worried and attempting to take cover below his own defence in a court case is quite apparent – he does not want the Police to continue further investigations. The after potent official in Sri Lanka kept the media out when the case was heard in the Mount Lavinia Courts. No one particular was allowed to be present in the courthouse and he now desires the Police and the Sri Lankan public to think what he has said. Right here is his statement:

Final Sunday, it was reported in a single Sunday newspaper and 1 news internet site that the FCID which was carrying out an investigation into the obtain and overhaul of a number of MiG-27 aircraft in 2006 in the course of my tenure as defence secretary had found a secret bank account in the name of Bellimissa Holdings Ltd which had been opened in the British Virgin Islands just just before the deal. This is hardly the 1st time that this so referred to as ‘MiG deal’ has featured in the press. This topic has been discussed in the media on an off for the previous nine years. Because the alter of government, interest in this matter has been revived by our political opponents and I believe this is an opportune moment to explain to the public what this problem is about. All the documents described in this press release have been submitted the District Court of Mt Lavinia.

1. When the Chandrika Kumaratunga government purchased two MiG-27 ground attack aircraft and a single MiG-23 trainer aircraft in the year 2000, the contract for the provide of the planes was signed on 24 October 2000 with 1 T.S.Lee of DS Alliance of Singapore. Absolutely everyone knows that MiG aircraft are not manufactured in Singapore. The policy of our government was that arms would be purchased directly from the companies so as to get rid of middlemen.

2. When our government decided in 2006 to obtain four MiG-27 aircraft and to get the three existing MiG-27 planes and one MiG-23 overhauled, we straight approached UKRINMASH the makers of MiG planes in Ukraine. In the ‘letter of offer’ sent by UKRINMASH to the Ministry of Defence on 6 February 2006, it was specifically stated that this supply was being made in conjunction with a financier providing financing to the manufacturer and that the beneficiary of the letter of credit will be the financier. This formal letter of supply further stated that they will inform us of the name of the beneficiary organization within 3 days of signing the contract.

3. The UNP government of 2001-2004 had also created overtures to UKRINMASH for the supply of four MiG- 27 aircraft and in the letter of provide they had sent to the then Defence Minister Tilak Marapone on 22 April 2003, UKRINMASH had specified that the payment ought to be produced to a finance organization and that they will inform Sri Lanka of the name of the beneficiary business within three days of signing the contract. The approach of payment laid out in the supply made to Mr Marapone is word to word the exact same as made to us in 2006.

four. Mr D.A.Peregudov a Director of UKRINMASH has written to the Sri Lanka Defence Ministry explaining that UKRINMASH is a completely state owned enterprise and that according to Ukrainian law, his establishment does not have the appropriate to trade on credit terms and that they cannot offer you credit facilities for two years as requested by us. Hence a financier by the name of Bellimissa Holdings Ltd would give financing for the transaction.

five. When the contract was signed on 26 July 2006 for the provide of four MiG-27 aircraft and the overhaul of 4 other MiG aircraft, there were three signatories &#8211 the Commander of the Sri Lanka Air Force as the purchaser, UKRINMASH as the seller and Bellimissa Holdings Ltd as the designated party which was to acquire the payment. This is a legally binding contract beneath Ukrainian and international law amongst two government agencies in Sri Lanka and Ukraine.

6. Section 23.1 of this contract specified that the buyer and the seller are aware that Bellimissa Holdings Ltd shall be involved to give financing to facilitate the transaction and that all payments beneath this contract including freight charges shall be paid to Bellimissa Holdings Ltd.

7. When the Invoice for the purchase and overhaul of the MiG aircraft was sent by UKRINMASH to the commander of the air force on 31 July 2006, it was after once again specified that the Bank of Ceylon need to open letters of credit in favour of Bellimissa Holdings Ltd. When a state owned enterprise in a foreign nation enters into a legally binding contract for the provide of aircraft, the buyer has to make the payment as the seller specifies.

There was absolutely nothing secret about the payment getting produced to Bellimissa Holdings Ltd, because they too were a signatory to the legal contract. We purchased these MiG aircraft directly from the companies in Ukraine, the payment was made, the aircraft was delivered, they had been employed in the war which was won and those aircraft are nonetheless in service. This puerile try by particular interested parties to establish the impression amongst the public that there was one thing ‘secret’ and underhand about the purchase of these MiG aircraft is a component of a extended standing attempt to sully my name and to cast doubt on my integrity. Behind all this is also the project of attempting to tarnish the war victory itself. I call upon the people of Sri Lanka not to be misled by the propaganda of interested parties who are trying to turn a lie into a truth constantly repeating the lie.

Gotabaya Rajapaksa

Associated stories

Academic Exposing Corrupt War Procurement Tender Process Threatened By Rajapaksa Government

Media Not Allowed To Cover Sumanthiran Cross-Examining Gotabaya

Press Barred Again From Covering Gotabaya’s Cross Examination In Court

Apology To Gotabaya By The Sunday Leader

Rajapaksa First Cousin’s Illegal Arms Bargains: Sri Lanka To Send Investigation Team To Ukraine

Rajapaksas Siphon Off 18 Billion Dollars: Foreign Minister Mangala Samaraweera

Exclusive: Navy Report Reveals Shocking Particulars Of Yoshitha Rajapaksa’s Rise – Ukraine Paid The Bills

MiG Deal: Rajapaksas Paid US$ 10 Million To A Ghost Business: “No Business Referred to as Bellimissa” – Interpol Confirmed

A Trembling Gotabaya Seems Before FCID

Gota’s MiG Deal: Investigation Finds Secret Bank Account In British Virgin Islands

The Sunday Leader journalist who researched the MiG deal had to leave the nation soon after following getting intimidated, according to a leaked cable from the US Embassy Colombo

&#8220In the overheated climate engendered by the officials&#8217 comments, numerous journalists and members of media organizations expressed to Embassy officers heightened concerns for their private security. On May possibly 26, Ruan Pethiyagoda of the Sunday Leader communicated to Emboffs that he was becoming followed and had gone into hiding. Pethiyagoda had received threats recently right after Sri Lankan Government officials learned he was researching a story that involved allegations of corruption on the component of Defense Secretary Gotabaya Rajapaksa in big armed forces procurement transactions. Pethiyagoda worked closely with Lasantha Wickrematunge, editor of the Sunday Leader, who was slain in January 2009. As Pethiyagoda is an Australian dual national, Emboffs contacted an Australian High Commission officer about the case, who accompanied Pethiyagoda to the airport on May 27. He is now safely outside of Sri Lanka.&#8221 the US Embassy Colombo informed Washington.

The Colombo Telegraph located the related leaked cable from the WikiLeaks database dated June 05, 2009. The cable is classified as “CONFIDENTIAL” and written by the US embassy Charge d’Affaires James R. Moore.

US embassy Charge d’Affaires wrote &#8220Military affairs analyst Iqbal Athas ceased writing his typical column for the Sunday Occasions (Colombo) several months ago simply because of fears of reprisals. He had sought secure haven abroad on numerous previous occasions, but returned to Sri Lanka and lived in hiding. Athas became fearful soon after the attack on Poddala Jayantha, telling told Pol Chief that he was becoming followed by males on motorcycles. On June 2, Athas once more fled abroad.

&#8220The GSL&#8217s victory has emboldened Sinhalese nationalists. As the most recent intemperate statements against journalists indicate, it seems that the Government intends to continue chauvinistic rhetoric it believes will keep its assistance amongst this important constituency. Post expects the media will continue to feel threatened and inclined toward self-censorship. Newspapers such as the Daily Mirror that previously supported the political opposition in their editorial stance, have increasingly grow to be echoes of the government-owned press. Even the outspoken Sunday Leader has muted it anti-government stance and has muted its crusading tone, shying away from the aggressive investigative journalism that was its hallmark. We count on that an growing quantity of journalists will come to the Embassy and other foreign missions for help and protection. For numerous of them, there seem to be handful of viable options to fleeing the country, at least temporarily. These who return may possibly find that the threat against them has not diminished, as Jayantha&#8217s case shows.&#8221 James Moore further said.

Associated stories

Academic Exposing Corrupt War Procurement Tender Process Threatened By Rajapaksa Government

Media Not Allowed To Cover Sumanthiran Cross-Examining Gotabaya

Press Barred Once more From Covering Gotabaya’s Cross Examination In Court

Apology To Gotabaya By The Sunday Leader

Rajapaksa Initial Cousin’s Illegal Arms Deals: Sri Lanka To Send Investigation Team To Ukraine

Rajapaksas Siphon Off 18 Billion Dollars: Foreign Minister Mangala Samaraweera

Exclusive: Navy Report Reveals Shocking Particulars Of Yoshitha Rajapaksa’s Rise – Ukraine Paid The Bills

MiG Deal: Rajapaksas Paid US$ ten Million To A Ghost Company: “No Organization Referred to as Bellimissa” – Interpol Confirmed

A Trembling Gotabaya Seems Just before FCID

Gota’s MiG Deal: Investigation Finds Secret Bank Account In British Virgin Islands

Wikileaks: Athas Fears Retaliation For Essential Articles On Gota’s MiG Deal

&#8220Defense Correspondent Iqbal Athas is preparing to temporarily leave Sri Lanka with his household following a barrage of threats and intimidation apparently orchestrated by the Government of Sri Lanka (GSL). On August 12, he wrote an write-up for the Sunday Occasions about the Ukrainian Government&#8217s inquiry into &#8216irregularities&#8217 in the sale of 4 MIG-27 aircraft to Sri Lanka. On August 14, a Sinhala version of the write-up was published in a neighborhood paper. The subsequent day, the government withdrew Athas&#8217s safety detail. Since then, demonstrators have gathered to protest in front of his house, a man claiming to be a retired Air Force officer threatened to kill his translator, and he has received warnings that he might be kidnapped and questioned about his sources. Athas&#8217s scenario has received in depth coverage in each regional and international media. One of Athas&#8217s employers, CNN, and the Committee to Defend Journalists (CPJ) have championed his case. Ambassador Blake telephoned the Defense Secretary Gotabaya Rajapaksa on August 24 and told him that it would be bad for Sri Lanka if anything have been to happen to Athas. Embassy believes the widespread publicity this case has received, and its personal efforts, will give some measure of protection to Athas and his loved ones. Post will continue to keep in close touch with Athas and intervene further if required.&#8221 the US Embassy Colombo informed Washington.

The Colombo Telegraph identified the related leaked cable from the WikiLeaks database dated August 30, 2007. The cable is classified as “CONFIDENTIAL” and written by the US Ambassador to Colombo Robert O. Blake. 

The ambassador wrote &#8220Defense Correspondent Iqbal Athas is preparing to temporarily leave Sri Lanka with his household following a barrage of threats and intimidation from the GSL. Athas writes often for the Sunday Times, a nearby English-language newspaper, and also regularly contributes to CNN, Jane&#8217s Defense Weekly and the Occasions of London. On August 12, he wrote an report for the Sunday Occasions about the Ukrainian Government&#8217s inquiry into &#8220irregularities&#8221 in the sale of 4 MIG-27 aircraft to Sri Lanka. In his report, he noted that the third-party facilitating company, Bellimissa Holdings, seemed to exist only on paper, while the GSL claimed the deal was handled directly in between the two states. Athas published comprehensive information on the transaction, even reprinting the letter of credit issued by a GSL-owned bank for the planes.&#8221

Ambassador Blake telephoned Defence Secretary Gotabaya Rajapaksa on August 24 and told him the U.S. was concerned about Athas&#8217s security and that it would be bad for Sri Lanka if something have been to take place to such a prominent columnist.

&#8220Gothabaya mentioned &#8216Iqbal need to not worry&#8230 there ought to not be any dilemma at all.&#8217 He noted that other journalists had written much more damning articles and survived.&#8221 Blake further wrote.

Placing a comment ambassador Blake wrote &#8220The GSL&#8217s proffered explanation for the withdrawal of Athas&#8217s safety &#8212 that it was carried out right after a routine assessment showed no further threat to him &#8212 will not bear scrutiny. Clearly the articles have struck a raw nerve. The Government is specifically sensitive to criticism in the Sinhala papers well-liked among its nationalist help base. Embassy believes that international interventions, coupled with the glare of publicity surrounding the case, will probably afford Athas and his family members some measure of protection. Athas is a extended-time Embassy get in touch with. We have been in continuous touch with Athas because his predicament became precarious and are prepared to intervene once more on an urgent basis if essential.&#8221

Study the cable beneath for additional information

VZCZCXRO4412
OO RUEHBI RUEHLMC
DE RUEHLM #1187/01 2421231
ZNR UUUUU ZZH
O 301231Z AUG 07
FM AMEMBASSY COLOMBO
TO RUEHC/SECSTATE WASHDC Immediate 6694
Info RUEHRL/AMEMBASSY BERLIN PRIORITY 0526
RUEHKA/AMEMBASSY DHAKA PRIORITY 0371
RUEHIL/AMEMBASSY ISLAMABAD PRIORITY 7357
RUEHKT/AMEMBASSY KATHMANDU PRIORITY 5472
RUEHLO/AMEMBASSY LONDON PRIORITY 3988
RUEHNE/AMEMBASSY NEW DELHI PRIORITY 1299
RUEHNY/AMEMBASSY OSLO PRIORITY 4057
RUEHKO/AMEMBASSY TOKYO PRIORITY 3143
RUEHCG/AMCONSUL CHENNAI PRIORITY 7950
RUEHBI/AMCONSUL MUMBAI PRIORITY 5596
RUEHON/AMCONSUL TORONTO PRIORITY 0379
RUEHGV/USMISSION GENEVA PRIORITY 2284
RHHMUNA/HQ USPACOM HONOLULU HI PRIORITY
RHEFDIA/DIA WASHINGTON DC PRIORITY
RHEHAAA/NATIONAL Safety COUNCIL WASHINGTON DC PRIORITY
RUEHBS/USEU BRUSSELS PRIORITY
RUEHLMC/MILLENNIUM CHALLENGE CORPORATION PRIORITY
UNCLAS SECTION 01 OF 02 COLOMBO 001187

SIPDIS

SIPDIS

Department FOR SCA/INS
MCC FOR D NASSIRY AND E BURKE

E.O. 12958: N/A
TAGS: PGOV PREL PTER PHUM MOPS CE
Topic: SRI LANKA: DEFENSE CORRESPONDENT FEARS RETALIATION
FOR Essential ARTICLES ON MIG DEAL

REF: EMBASSY COLOMBO E-MAILS TO SCA/INS (NOTAL)

¶1. (SBU) SUMMARY: Defense Correspondent Iqbal Athas is
preparing to temporarily leave Sri Lanka with his household
following a barrage of threats and intimidation apparently
orchestrated by the Government of Sri Lanka (GSL). On August
12, he wrote an post for the Sunday Times about the
Ukrainian Government&#8217s inquiry into &#8220irregularities&#8221 in the
sale of 4 MIG-27 aircraft to Sri Lanka. On August 14, a
Sinhala version of the report was published in a regional
paper. The next day, the government withdrew Athas&#8217s
safety detail. Since then, demonstrators have gathered to
protest in front of his property, a man claiming to be a retired
Air Force officer threatened to kill his translator, and he
has received warnings that he may be kidnapped and questioned
about his sources. Athas&#8217s predicament has received comprehensive
coverage in each local and international media. 1 of
Athas&#8217s employers, CNN, and the Committee to Shield
Journalists (CPJ) have championed his case. Ambassador Blake
telephoned the Defense Secretary Gothabaya Rajapaksa on
August 24 and told him that it would be undesirable for Sri Lanka if
anything were to occur to Athas. Embassy believes the
widespread publicity this case has received, and its personal
efforts, will give some measure of protection to Athas and
his family members. Post will continue to keep in close touch with
Athas and intervene additional if needed. Finish Summary.

¶2. (U) Defense Correspondent Iqbal Athas is preparing to
temporarily leave Sri Lanka with his loved ones following a
barrage of threats and intimidation from the GSL. Athas
writes routinely for the Sunday Times, a neighborhood
English-language newspaper, and also often contributes
to CNN, Jane&#8217s Defense Weekly and the Instances of London. On
August 12, he wrote an report for the Sunday Instances about the
Ukrainian Government&#8217s inquiry into &#8220irregularities&#8221 in the
sale of 4 MIG-27 aircraft to Sri Lanka. In his article, he
noted that the third-party facilitating business, Bellimissa
Holdings, seemed to exist only on paper, while the GSL
claimed the deal was handled straight between the two states.
Athas published extensive specifics on the transaction, even
reprinting the letter of credit issued by a GSL-owned bank
for the planes.

Government Harassment and Intimidation Mount
&#8212&#8212&#8212&#8212&#8212&#8212&#8212&#8212&#8212&#8212&#8212&#8212&#8212&#8212&#8211

¶3. (SBU) On August 14, a translation of the post
appeared in the biggest-circulation Sinhala language
newspaper, owned by the exact same firm as the Sunday Times and
Everyday Mirror and normally sympathetic to the opposition.
The subsequent day, Athas&#8217s safety detail was withdrawn by the
Government. (Note: Athas has had a government-offered
security detail for several years simply because of threats against
him stemming from articles critical of former President
Kumaratunga&#8217s government.) On August 18, the police guard
stationed at his property outside of Colombo was also withdrawn.
Athas claims that these actions were taken on the explicit
instructions of Defense Secretary Gothabaya Rajapaksa.

¶4. (SBU) On August 26, an post appeared in a Sinhala
paper distributed in the Colombo suburb where Athas lives,
which accused Athas of becoming an LTTE agent who has betrayed
crucial national security details. On August 27,
demonstrators, like a local politician of the governing
Sri Lanka Freedom Party, gathered to protest in front of
Athas&#8217s property. According to Athas, a man claiming to be a
retired Air Force officer entered the workplace of the Sunday
Instances&#8217 publisher the same day, sought out the
English-to-Sinhala translator, and, in a private
conversation, threatened him with death if he continued to
translate Athas&#8217s articles. He also reportedly stated Athas

COLOMBO 00001187 002 OF 002

himself would be killed if he did not quit writing and leave
the nation inside 90 days. The translator, nonetheless, has
because recanted his story, saying that the man did not
threaten him, but merely wanted to discuss the translation of
a book he was operating on. Athas also reports that he has
been followed by males on motor bikes and that suspicious
individuals have been hovering about his home. He has received
warnings from his sources that he might be kidnapped and
questioned about how he obtains his info.

Concerned Parties Attempt to Intercede
&#8212&#8212&#8212&#8212&#8212&#8212&#8212&#8212&#8212&#8212&#8212&#8212&#8211

¶5. (SBU) Athas&#8217s predicament has received substantial coverage
in both local and international media. CNN is reportedly
thinking about contacting President Rajapaksa on his behalf.
The Committee to Defend Journalists has already sent a
strongly-worded letter to the President, which has received
broad dissemination on the Web. The Sri Lankan Free of charge
Media Movement issued a statement condemning the withdrawal
of Athas&#8217s safety. Opposition Leader Ranil Wickremesinghe
warned at a press conference that if Athas was harmed, the
Government would be held accountable.

¶6. (SBU) Ambassador Blake telephoned Defense Secretary
Gothabaya Rajapaksa on August 24 and told him the U.S. was
concerned about Athas&#8217s safety and that it would be negative for
Sri Lanka if anything were to happen to such a prominent
columnist. Gothabaya stated &#8220Iqbal ought to not be concerned&#8230 there
need to not be any difficulty at all.&#8221 He noted that other
journalists had written more damning articles and survived.

¶7. (SBU) COMMENT: The GSL&#8217s proffered explanation for the
withdrawal of Athas&#8217s security &#8212 that it was carried out right after a
routine assessment showed no additional threat to him &#8212 will
not bear scrutiny. Clearly the articles have struck a raw
nerve. The Government is specifically sensitive to criticism
in the Sinhala papers well-known among its nationalist assistance
base. Embassy believes that international interventions,
coupled with the glare of publicity surrounding the case,
will probably afford Athas and his loved ones some measure of
protection. Athas is a extended-time Embassy get in touch with. We have
been in continuous touch with Athas since his scenario
became precarious and are prepared to intervene again on an
urgent basis if needed.
BLAKE

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By Veluppillai Thangavelu –

Isaac Newton third law says for each action there is an equal and opposite re-action. What that implies is  that for each force there is a reaction force that is equal in size, but opposite in direction. 

Isaac Newton law of motion not only applies to the physical planet, it equally applies to the spiritual world. In common parlance, the word karma describes the complete chain of moral cause and effect wherein the sum of a particular person&#8217s actions in this and earlier states of existence, viewed as deciding their fate in future existences. This principle of spiritual causation is discovered in most religions. The principle is also identified in Western society embedded in maxims like “what comes about, goes around” and in Biblical scriptures such as “A particular person reaps what he sows.”

Men and women who are in high and responsible positions, if they go against righteousness, righteousness itself will get transformed into a destroyer. Whoever deviates from righteousness, whether or not they are person or states, they are accountable for their own actions.

The Rajapaksa loved ones which strode the political stage like a colossus unchallenged and unquestioned before January 09 have been dethroned and reduced to the status of Alibaba and forty  thieves who robbed the treasury at their whims and fancies. No a single anticipated the collapse of Rajapaksa’s empire to fall this soon and in this inglorious fashion. Undoubtedly not Rajapaksa and his astrologer.

Everyday we now  hear news stories   about Rajapaksa family’s unbridled corruption, bribery, nepotism, waste of public funds, selective law enforcement and authoritarianism.  Beneath Mahinda Rajapaksa the white van culture flourished and death squads hunted down and murdered rich businessmen for ransom. A lot of fled the country to save their lives although others disappeared with out a trace.  An air of nauseating fear gripped Thamils and Muslims businessmen in Colombo. Even if the accusations against Rajapaksa only half correct, it is nonetheless an unprecedented disaster for good governance.

The most recent to be hauled up ahead of the Monetary Crimes Investigation Division (FCID) is Shiranthi Rajapaksa, the former first lady.  One does not know the precise charges against her, but Namal Rajapaksa claims “My mother has always stayed away from politics. Does she deserve this harassment? ‘Yahapalanaya’ seems just a facade for this government. Vengeance is not ‘good governance.’

Namal makes use of the word vengeance forgetting how the Rajapaksa family members treated Sarath Fonseka. Right after hailing him as a war hero and the greatest army commander in the globe, Mahinda Rajapaksa and Gotabaya Rajapaksa went following him like hungry wolves. Sarath Fonseka was arrested as component of a political vendetta after he unsuccessfully challenged Mahinda Rajapaksa at the presidential election in 2010.

He was held incommunicado at the navy headquarters amid lurid allegations by the government that he was plotting to overthrow the president. He was court marshalled before two Military Courts on trumped up charges and sent to jail exactly where he wore prison uniform, ate kiri bath on tin plates and carried water can to the toilet like any other prisoner. To his credit he never asked for any special privileges from his tormentors.  He was stripped of his rank, medals, uniform, pension and his name was erased from all military records.

Today, due to twist of fate, Sarath Fonseka is a decorated field marshal while his tormentor Mahinda Rajapaksa is just an ordinary citizen, not even a Member of Parliament and facing corruption charges!

I am no fan of Sarath Fonseka who is accused of committing war crimes, but I resent the uncivilized way he was treated by Mahinda Rajapaksa. So Namal must be cautious to talk about political vengeance for the arrest of his mother.

There is also news of another member of the Rajapaksa royal household Pushpa Rajapaksa, spouse of Economic Development minister Basil Rajapaksa, receiving a deposit of Rs. 500 million to the foundation run by her from the Colombo International Container Terminal, a Chinese building firm. This firm has obtained a contract to construct buildings in the Colombo Port City.

Since January 09, there has been a spate of arrests of Ministers, MPs and stooges of Mahinda Rajapaksa on charges of fraud, corruption and theft of government property. Prominent amongst them is the high profile Basil Rajapaksa, the former Minister of Economic Improvement on suspicion of misappropriating Rs.70m from the Divi Neguma rural development funds to hold a conference. Yet another Rs. 70 m was misappropriated for his brother&#8217s election campaign he was in charge. He is also accused of printing and distributing 15,000 Divi Neguma almanacs to promote former president’s campaign.

As minister in charge of Economic Development and reconstruction efforts in the northern and eastern provinces, he wielded enormous powers. His Ministry was placed beyond the reach of the Auditor Common anything unprecedented in the annals of history. It was a legal ruse to escape audit of monetary transactions and accountability.
Basil Rajapaksa was arrested on April 23, 2015 along with the second suspect, Secretary of Divi Neguma Ministry Dr. Nihal Jayathilaka and former of Divi Neguma Project Manager Gen. R.A.A.K. Ranawaka.

Gotabaya Rajapaksa is accused of supplying the wherewithal for Garde Maritime Solutions (Pvt) Ltd a subsidiary of Avant Garde Safety Services (Pvt) Ltd, and incorporated on the 24th June 2011 below the Firms Act (reference: NO.7 of 2007) of Sri Lanka.

Avant Garde Maritime Solutions (Pvt) Ltd entered into a joint venture with Government Owned Company Undertaking (GOBU) of Rakna Arakshaka Lanka Ltd (RALL) of Sri Lanka to provide infrastructure facilities for international maritime safety services.

The Parent Organization Avant Garde Safety Services (Pvt0 Ltd is the biggest security organization in Sri Lanka employing over 6,500 personnel. It has an unblemished record of more than 17 years of service and delivering land based safety to numerous organizations such as key blue chip businesses, most of the banks and economic institutions, which includes Central Bank of Sri Lanka.

 Avant Garde Maritime Services (Pvt) Restricted provides extensive range of total risk mitigation solutions to the global maritime industry and also engaged in the company of supplying of total logistical assistance to vessels transiting the Indian Ocean.

 Avant Garde Maritime Services has developed a network of facilities in strategic locations to ensure maritime security businesses are assured of obtaining weapons and related things for passage by way of piracy danger area and handing more than them to be under the handle of AGMS / RALL officers at the relevant location ports before repatriation of sea marshals.

AGMS is a Signatory Organization of the ICoC (International Code of Conduct), secured SAMI (Safety Association Maritime Industry) membership and in the procedure of acquiring affiliated to international maritime agencies.

Police launched investigations following data received by Deputy Inspector Basic of Police, Southern Range, and D. J. S. Gunawardhana about news on the discovery of a floating armoury at the Galle Port.  The armoury belonged to a private safety business by the name Avant-garde. A total of three,154 firearms and 770,059 rounds of ammunition have been recovered from seven containers on the ship named Maha Nuwara. The police unearthed proof linking Gotabaya to Avant Garde Maritime Solutions (Pvt) Limited.

On March 6, Pivithuru Hela Urumaya leader Udaya Gammanpila stated that there was a conspiracy to arrest Gotabhaya Rajapaksa and former president Mahinda Rajapaksa.

Gotabaya Rajapaksa&#8217s name is also coupled with the foul murder of Sunday Leader newspaper chief editor Lasantha Wickrematunga on 8th January,2009 on his way to workplace in Colombo.

Lasantha Wickrematunge left a posthumous letter that claimed both he and Mahinda Rajapaksa knew who will be behind his death. For the benefit of posterity let me quote excerpts from his letter.

&#8220In the wake of my death I know you will make all the usual sanctimonious noises and get in touch with upon the police to hold a swift and thorough inquiry. But, like all the inquiries you have ordered in the previous, absolutely nothing will come of this a single, too. For truth be told, we each know who will be behind my death, but dare not call his name. Not just my life, but yours also, depends on it.

Sadly, for all the dreams you had for our nation in your younger days, in just 3 years you have reduced it to rubble. In the name of patriotism you have trampled on human rights, nurtured unbridled corruption and squandered public money like no other President just before you. Indeed, your conduct has been like a little child abruptly let loose in a toyshop. That analogy is perhaps inapt since no child could have caused so a lot blood to be spilled on this land as you have, or trampled on the rights of its citizens as you do. Even though you are now so drunk with power that you can not see it, you will come to regret your sons possessing so rich an inheritance of blood. It can only bring tragedy. As for me, it is with a clear conscience that I go to meet my Maker. I wish, when your time ultimately comes, you could do the same.&#8221

Wickrematunge’s prediction from the grave remains correct as no one particular has been arrested or charged with his murder. A journalist with the Canberra Occasions reported that the particular person referenced at “dare not contact his name” is Mahindra’s younger brother, Gotabaya Rajapaksa, ex defense secretary.

When the BBC reporter interviewed Gotabaya Rajapaksa in February, 1999 and questioned him about Wickrematunge’s premature death the former went berserk. He behaved like a possessed person with eyes bugging, hands shaking, voice pitch increasing and casting suspicion on all the former presidents. He derided Wickrematunge as a “tabloid writer” who had many enemies and mentioned anyone could have killed him. He stated it was “just another murder.” He ends the interview by calling all dissent and criticism of the government as ‘treason.’

One more prominent minister of the deposed Rajapaksa regime and parliamentarian, Johnston Fernando was arrested on May 05 by FCID on charges of misappropriating state sources. Police Media Spokesperson ASP Ruwan Gunasekera said that the former minister of Co-operatives and Internal Trade has been arrested after getting summoned to the FCID to acquire a statement in with regard to the alleged misappropriation of Rupees 5.two million at Lanka Sathosa. According to the police spokesman, former minister Fernando has been arrested under the Public Home Act.

On May possibly 11 Sajin Vass Gunawardena, MP was arrested by the CID for the alleged misuse of public vehicles belonging to the President Secretariat Office. A total of 120 vehicles belonging to the President Secretariat Office have gone missing and Sajin Vass Gunawardena admitted the offence of transferring 22 automobiles belonging to the presidential secretariat for the use of his private firm. The month-to-month lease payments for these vehicles have been paid by the ex President Mahinda Rajapaksa’s presidential secretariat!

Sajin Vass Gunawardena, a head line news maker, was hand picked by Mahinda Rajapaksa as the Monitoring Minister of the Foreign Ministry. Sajin has been accused of involving in a number of controversies ranging from fraud, crime, remand time, fraud bureau investigations, unpaid loans, spying and unfulfilled promises. He was extensively criticized for his function as CEO of Mihin Lanka and faced several fraud allegations against him.

In September 2014, at a dinner party held in New York, Sajin Vass reputedly dealt a blow to the head of Dr. Chris Nonis, the Sri Lanka&#8217s High Commissioner for Sri Lanka in Britain. The blow to Dr. Noni head almost broke his ear drum!

Mahinda Rajapaksa took below his wing politician like Sajin Vass, other beneath globe characters, murderers and drug smugglers to strengthen his voter help.
Mahinda Rajapaksa for the duration of his tenure wasted government funds in forming jumbo cabinet, oversized delegations to UNO, UNHRC and other foreign capitals at state expense. He built the fancy Mattala Rajapaksa International Airport exactly where no planes are landing. He built the Magampura Mahinda Rajapaksa Port (also known as the Port of Hambatotta) exactly where only a single ship per month is docking.  In spite of all the corruption charges against him, he is planning to return to power by contesting the upcoming parliamentary polls as the prime ministerial candidate.

As I have stated before, Mahinda Rajapaksa is out, but not down. He still enjoys assistance from extreme Sinhala nationalists who claim he is connected to Lord Buddha and King Dutugemunu.

If the Rajapaksa brothers succeed in staging a come back to politics, once once more there will be a throw back to the dark era of repressive and dictatorial rule. Democracy will be place on hold for decades.

&#8220Ambassador opened by noting his surprise that the Central Bank Governor had gone public so soon (March 3) about the Government&#8217s intention to negotiate an agreement with the IMF. Cabraal responded that he had information that the Opposition UNP Party was about to leak the data with a hugely unfavorable spin, so the President had authorized him to clarify the Government&#8217s motives for in search of IMF assistance. Cabraal stated the choice had been correct, and opposition criticism therefore far had been a lot more muted than expected&#8221 the US Embassy Colombo informed Washington.

The Colombo Telegraph discovered the connected leaked cable from the WikiLeaks database. The unclassified cable discusesSri Lanka’s debut sovereign bond problem. The cable was written by the Ambassador Robert O. Blake on march 12, 2009.

The US Embassy wrote &#8220Ambassador observed that the IMF apparently would be looking for to support Sri Lanka strengthen and stabilize its reserves and reduce its spending budget deficit. Cabraal agreed those would be essential ambitions. With respect to the foreign exchange picture, Cabraal stated existing reserves are adequate to cover six weeks of imports, but the Government wants money flow. Therefore it is negotiating currency swaps with Malaysia and probably other nations. Cabraal stated Sri Lankan exports had declined by 10 percent in January 2009, but imports had dropped by 30 percent in worth due to lower oil rates. Asked about remittances, a traditionally strong source of foreign exchange for the government, Cabraal did not consider remittance revenues would drop substantially. He stated that his counterparts from India, Pakistan, and Nepal had all told him not too long ago that they also were not experiencing substantial drops in remittances. Moreover, far more of Sri Lanka remittances were coming by means of the banking system than informal means such as hawalas. Asked about the Central Bank&#8217s efforts to raise foreign exchange by way of sovereign bonds, Cabraal mentioned there had been a &#8216good&#8217 response from the Sri Lankan Diaspora in Europe. He estimated that the Government had raised &#8216tens of millions&#8217 of US dollars as a result far towards its 2009 goal of 500 million dollars.&#8221

&#8220Cabraal stated the Government would address its fiscal deficit, both by raising revenues and cutting spending. He declined to specify what particular revenue measures Sri Lanka has in thoughts, noting only that new taxes on imports are beneath consideration, even though such taxes would adversely impact inflation, which recently had come down to 7 %. He also predicted the Government would comprehend savings from declines in defense spending as the war in northern Sri Lanka winds down. Cabraal told Ambassador that he expects the IMF group to come back to Sri Lanka in the really close to future with a view to negotiating an agreement in as tiny as one month&#8217s time.&#8221 Blake additional write.

A member of the Unique Presidential Activity Force for the recovery of illegally acquired state assets, Jagath Wijeweera has resigned from his post as Director General of Sri Lanka Customs.

The Finance Minister Ravi Karunanayake has announced his resignation final evening. He stated the exact reason for Wijeweera’s resignation has not yet been revealed, but the minister stated that Wijeweera may possibly have resigned due to ongoing investigations to decide the factors for the considerable loss that had been reported in the Customs Division in the recent past.

Director General of Customs had allegedly involved in multi-million rupee scams under Rajapaksa regime, was appointed by President Maithripala Sirisena to the Particular Presidential Process Force for the recovery of illegally acquired state assets. The other members are former Solicitor Basic Bimba Tillakaratne Pc, H.M.L.T. Mudalige, H. Amaratunga, C.A.H.M. Wijeratna, Senior Assistant Secretary to the Justice Ministry A.K.D.D. Arandara, L.S. Pathinayake, Director Common of the Commission to Investigate Bribery or Corruption Dilrukshi Dias Wickramasinghe, Commissioner Basic of Inland Income Division Kalyani Dahanayake, D.G.N. Jayawardena, C.A. Premashantha, Extra Solicitor General Yasantha Kodagoda Computer and senior lawyer J.C. Weliamuna.

The Presidential Job Force is empowered to “investigate, identify, trace, seize and transfer to Sri Lanka, state assets and income which are due to the government that have been illegally or unlawfully acquired or procured by Sri Lankan nationals and other persons acting on behalf of Sri Lankan nationals or otherwise, and are being concealed or kept outside the territory of Sri Lanka by such persons and other folks acting on their behalf, and take successful steps to result in their seizure and transfer or return to Sri Lanka to be confiscated and vested in the Common Treasury.”

The recovery of stolen state assets was a main slogan in the election platform of President Maithripala Sirisena at the last Presidential poll. &#8220Wijeweera has no moral proper to remain on as a member of the Unique Presidential Activity Force for the recovery of illegally acquired state asset&#8221 a very good governance activist told Colombo Telegraph.

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Lawlessness In Customs Costs Govt Dearly: Tyre Importer Says

Customs DG’s Collusion To Embezzle Hundreds Of Millions Tax Income Reported To President Sirisena

Exposed: Rajapaksa’s Blood Ivory Robbery: Justice Rohini Lies Internationally

“The CEO of HSBC in Sri Lanka discounted the UNP threat as ‘silly… political tub-thumping.’ He said there was no way a future UNP government would voluntarily default, and was confident that international markets would be unconcerned by the UNP position. Other international bank and credit rating agency reps gave Econoff the same assessment.” the US Embassy Colombo informed Washington.

The Colombo Telegraph found the related leaked cable from the WikiLeaks database. The unclassified cable discusesSri Lanka’s debut sovereign bond issue. The cable was written by the Ambassador Robert O. Blake on September 05, 2007.

The ambassador wrote; “The Government of Sri Lanka plans to issue the country’s first international sovereign bond, in hopes of raising $ 500 million to fund infrastructure projects. However, the main opposition United National Party has announced that a future UNP government would not honor the bonds, which it claims the country cannot afford. UNP reps told us that their effort to sink the bond issue is primarily political though — an effort to keep the government from being able to buy the continued loyalty of former UNP MPs who joined the government as ministers last January. While markets will likely correctly view the UNP threat as a political move that would never materialize, the timing of the pending bond issue appears to be as bad or worse as sixteen months ago, when the government shelved an earlier plan for a $ 1 billion sovereign bond issue. Sri Lanka has had little good news to reassure currently skittish international debt markets. Nevertheless, market watchers say that the relatively small bond issue will probably appeal to a sufficient number of international investors who remain interested in diversifying their holdings of high-yielding emerging market debt.

“The Central Bank of Sri Lanka, which will float the bond on behalf of the Government, has selected JP Morgan, Barclays Capital and HSBC as joint lead managers of the issue, from among twelve local and international banks that bid on the role. According to a senior Central Banker, the bank plans an October road show to financial centers like New York, London, Frankfurt, Singapore, and Hong Kong to publicize the planned bond issue.”

“The opposition United National Party has challenged the government’s plan to issue the bonds. UNP leader Ranil Wickremesinghe wrote to JP Morgan, Barclays, and HSBC August 24, stating that ‘the bond issue is in violation of the law’ and that the ‘a future Government formed by the United National Party will not be able to honour the repayment obligations under this bond issue.’ In the letters, Wickremesinghe charges that the government has not informed Parliament of its plans to issue the bonds; that interest payments on the bonds ‘will hamper the sustainability of Sri Lanka’s long-term programme for servicing its existing public debt repayments’; and that the bonds may contribute to corruption, since planned ‘major infrastructure projects… have all been funded by bilateral and multilateral’ lenders. Wickremesinghe sent similar letters to U.S. Securities and Exchange Commission Chairman Christopher Cox and to Cox’s UK equivalent, urging them to ‘consult with the banks concerned and bring to a halt the issuance of this sovereign bond.’” Ambassador Blake further wrote.

Read the cable below for further details;

UNCLAS SECTION 01 OF 03 COLOMBO 001218

SIPDIS

SENSITIVE

SIPDIS

STATE FOR SCA/INS AND EEB/IFD/ODF
MCC FOR S. GROFF, D. TETER, D. NASSIRY AND E. BURKE
TREASURY FOR LESLIE HULL

E.O 12958: N/A
TAGS: ECON EINV EFIN KMCA CE

SUBJECT: SRI LANKA: GOVERNMENT REVIVES SOVEREIGN BOND ISSUE PLANS;
OPPOSITION SEEKS TO BLOCK

REF: A. 06 Colombo 550 B. Colombo 170

¶1. (SBU) Summary: The Government of Sri Lanka plans to issue the
country’s first international sovereign bond, in hopes of raising
$ 500 million to fund infrastructure projects. However, the main
opposition United National Party has announced that a future UNP
government would not honor the bonds, which it claims the country
cannot afford. UNP reps told us that their effort to sink the bond
issue is primarily political though — an effort to keep the
government from being able to buy the continued loyalty of former
UNP MPs who joined the government as ministers last January. While
markets will likely correctly view the UNP threat as a political
move that would never materialize, the timing of the pending bond
issue appears to be as bad or worse as sixteen months ago, when the
government shelved an earlier plan for a $ 1 billion sovereign bond
issue. Sri Lanka has had little good news to reassure currently
skittish international debt markets. Nevertheless, market watchers
say that the relatively small bond issue will probably appeal to a
sufficient number of international investors who remain interested
in diversifying their holdings of high-yielding emerging market
debt. End Summary.

$ 500 MILLION BOND TO FUND
INFRASTRUCTURE, “SET A BENCHMARK”
———————————

¶2. (U) The Government of Sri Lanka has revived plans for the
country’s first international sovereign bond issue. The government
seeks to raise $ 500 million, or more if demand is strong. The
government says it intends to invest the cash it raises in
infrastructure projects. It also expects the bonds to provide an
interest rate benchmark for private Sri Lankan companies seeking to
borrow in international capital markets. This is the second time
the government has prepared to tap international markets for a large
bond issue (ref A). In mid-2006 the government abandoned plans to
raise $ 1 billion when advisor Citibank judged that the resumption of
civil war made the timing inopportune.

¶3. (SBU) The Central Bank of Sri Lanka, which will float the bond on
behalf of the Government, has selected JP Morgan, Barclays Capital
and HSBC as joint lead managers of the issue, from among twelve
local and international banks that bid on the role. According to a
senior Central Banker, the bank plans an October road show to
financial centers like New York, London, Frankfurt, Singapore, and
Hong Kong to publicize the planned bond issue.

OPPOSITION SEEKS TO BLOCK THE BOND ISSUE
—————————————-

¶4. (U) The opposition United National Party has challenged the
government’s plan to issue the bonds. UNP leader Ranil
Wickremesinghe wrote to JP Morgan, Barclays, and HSBC August 24,
stating that “the bond issue is in violation of the law” and that
the “a future Government formed by the United National Party will
not be able to honour the repayment obligations under this bond
issue.” In the letters, Wickremesinghe charges that the government
has not informed Parliament of its plans to issue the bonds; that
interest payments on the bonds “will hamper the sustainability of
Sri Lanka’s long-term programme for servicing its existing public
debt repayments”; and that the bonds may contribute to corruption,
since planned “major infrastructure projects… have all been funded
by bilateral and multilateral” lenders. Wickremesinghe sent similar
letters to U.S. Securities and Exchange Commission Chairman
Christopher Cox and to Cox’s UK equivalent, urging them to “consult
with the banks concerned and bring to a halt the issuance of this
sovereign bond.”

¶5. (SBU) A UNP economic advisor told Econoff, however, that if given
the opportunity to do so in a future government, the party does not

COLOMBO 00001218 002 OF 003

in fact intend to default on the bonds. The move, he said, is
rather a political tactic in the UNP’s strategy to bring down the
Rajapaksa government. The UNP believes that, if it can block the
bond issue, it will be able to lure back former UNP members of
parliament who joined the Rajapaksa government as ministers in
January (ref B). Conversely, the UNP believes that if the bond goes
through, the government will be able to buy the continued support of
those MPs by allocating much of the cash to the ministries they
control. The advisor stuck with the UNP’s charge that the bond
issue would violate the law, saying that it would cause the
government’s total outstanding debt to exceed a maximum established
by Parliament. One of the UNP ministers who joined the SLFP in
January likewise told Ambassador that the UNP had made, but not
followed through on, a similar threat to block the partial
privatization of the national airline in the 1990s.

¶6. (SBU) The CEO of HSBC in Sri Lanka discounted the UNP threat as
“silly… political tub-thumping.” He said there was no way a
future UNP government would voluntarily default, and was confident
that international markets would be unconcerned by the UNP position.
Other international bank and credit rating agency reps gave Econoff
the same assessment. (The Colombo-based JP Morgan representative
told Econoff he could not comment on the impact of the UNP’s letter
to JP Morgan while his firm conducted due diligence preparations for
the bond issue.)

¶7. (SBU) As for the government’s legal right to proceed with the
bonds, the senior Central Banker told Econoff that in fact the
government had notified Parliament, in its November 2006 budget
proposal for 2007, that it planned “foreign borrowings up to one
billion dollars.” Finance Ministry and Central Bank officials told
EconFSN that Foreign Loans are covered under Sri Lanka’s Foreign
Loans Act and therefore do not need special parliamentary approval
and that debt levels under the Fiscal Management Responsibility Act
are only targets to improve transparency and accountability, not
binding limits.

S&P SAYS SRI LANKA CREDIT OUTLOOK “STABLE”
——————————————

¶8. (U) On August 9, Standard & Poor’s Ratings Services upgraded its
outlook on Sri Lanka’s credit ratings from “negative” to “stable.”
(According to S&P, a negative outlook is used to signal that the
rating may be lowered in the near future, whereas stable signals the
rating is unlikely to change.) S&P kept Sri Lanka’s long-term
foreign currency rating unchanged at B+, or four tiers below
investment grade. S&P attributed the improved outlook to “higher
tax collections, strengthening of fiscal and macroeconomic
coordination, elimination of fuel subsidies and revision of
electricity prices” and “the limited impact on the economy from the
renewed fighting.”

¶9. (SBU) The senior Central Banker told Econoff that JP Morgan had
been influential in the S&P outlook decision, both by helping the
Bank prepare for the S&P assessment and by convincing S&P during its
deliberations that the Sri Lankan economy was in fact holding
stable. According to the Central Banker, Citibank had not been as
helpful in preparing the bank for the April 2007 Fitch Ratings
assessment, which ended with Fitch keeping its outlook at
“negative.” The new local Citibank head acknowledged to Econoff
that JP Morgan had beaten Citibank on “customer service,” but
maintained that Citi would have been a better choice than JP Morgan,
Barclay’s or HSBC to lead the bond issue.

COMMENT: POLITICS ASIDE, TIMING FAR FROM OPTIMAL
——————————————— —

¶10. (SBU) Aside from its political agenda, the opposition seeks to
block this bond issue because it doubts the government will

COLOMBO 00001218 003 OF 003

productively invest the proceeds in infrastructure projects. This
is a valid concern on three levels. First, as the opposition fears,
the government may well use the funds to retain the loyalty of
ex-UNP ministers by permitting them to pursue pork-barrel projects.
Second, the government has said it intends to build infrastructure
even where there is not currently a market demand (like the
Weerawila airport), or which could be built more efficiently by the
private sector (like an expanded oil refinery at Sapagaskunda).
Third, the government is showing signs of being short on cash to
bridge an apparently growing fiscal deficit, so it will likely use
some of the bond funds for current, rather than capital,
expenditures.

¶11. (SBU) While markets will likely correctly view the UNP threat as
a political move that would never materialize, the timing of the
pending bond issue appears to be as bad or worse as sixteen months
ago, when the government shelved its earlier sovereign bond issue
plan. Aside from the S&P outlook returning to stable, Sri Lanka has
had little good news to reassure currently skittish international
debt markets. Nevertheless, market watchers say that the relatively
small bond issue will probably appeal to a sufficient number of
international investors who remain interested in diversifying their
holdings of high-yielding emerging market debt.
BLAKE

“The CEO of HSBC in Sri Lanka discounted the UNP threat as ‘silly… political tub-thumping.’ He said there was no way a future UNP government would voluntarily default, and was confident that international markets would be unconcerned by the UNP position. Other international bank and credit rating agency reps gave Econoff the same assessment.” the US Embassy Colombo informed Washington.

The Colombo Telegraph found the related leaked cable from the WikiLeaks database. The unclassified cable discusesSri Lanka’s debut sovereign bond issue. The cable was written by the Ambassador Robert O. Blake on September 05, 2007.

The ambassador wrote; “The Government of Sri Lanka plans to issue the country’s first international sovereign bond, in hopes of raising $ 500 million to fund infrastructure projects. However, the main opposition United National Party has announced that a future UNP government would not honor the bonds, which it claims the country cannot afford. UNP reps told us that their effort to sink the bond issue is primarily political though — an effort to keep the government from being able to buy the continued loyalty of former UNP MPs who joined the government as ministers last January. While markets will likely correctly view the UNP threat as a political move that would never materialize, the timing of the pending bond issue appears to be as bad or worse as sixteen months ago, when the government shelved an earlier plan for a $ 1 billion sovereign bond issue. Sri Lanka has had little good news to reassure currently skittish international debt markets. Nevertheless, market watchers say that the relatively small bond issue will probably appeal to a sufficient number of international investors who remain interested in diversifying their holdings of high-yielding emerging market debt.

“The Central Bank of Sri Lanka, which will float the bond on behalf of the Government, has selected JP Morgan, Barclays Capital and HSBC as joint lead managers of the issue, from among twelve local and international banks that bid on the role. According to a senior Central Banker, the bank plans an October road show to financial centers like New York, London, Frankfurt, Singapore, and Hong Kong to publicize the planned bond issue.”

“The opposition United National Party has challenged the government’s plan to issue the bonds. UNP leader Ranil Wickremesinghe wrote to JP Morgan, Barclays, and HSBC August 24, stating that ‘the bond issue is in violation of the law’ and that the ‘a future Government formed by the United National Party will not be able to honour the repayment obligations under this bond issue.’ In the letters, Wickremesinghe charges that the government has not informed Parliament of its plans to issue the bonds; that interest payments on the bonds ‘will hamper the sustainability of Sri Lanka’s long-term programme for servicing its existing public debt repayments’; and that the bonds may contribute to corruption, since planned ‘major infrastructure projects… have all been funded by bilateral and multilateral’ lenders. Wickremesinghe sent similar letters to U.S. Securities and Exchange Commission Chairman Christopher Cox and to Cox’s UK equivalent, urging them to ‘consult with the banks concerned and bring to a halt the issuance of this sovereign bond.’” Ambassador Blake further wrote.

Read the cable below for further details;

UNCLAS SECTION 01 OF 03 COLOMBO 001218

SIPDIS

SENSITIVE

SIPDIS

STATE FOR SCA/INS AND EEB/IFD/ODF
MCC FOR S. GROFF, D. TETER, D. NASSIRY AND E. BURKE
TREASURY FOR LESLIE HULL

E.O 12958: N/A
TAGS: ECON EINV EFIN KMCA CE

SUBJECT: SRI LANKA: GOVERNMENT REVIVES SOVEREIGN BOND ISSUE PLANS;
OPPOSITION SEEKS TO BLOCK

REF: A. 06 Colombo 550 B. Colombo 170

¶1. (SBU) Summary: The Government of Sri Lanka plans to issue the
country’s first international sovereign bond, in hopes of raising
$ 500 million to fund infrastructure projects. However, the main
opposition United National Party has announced that a future UNP
government would not honor the bonds, which it claims the country
cannot afford. UNP reps told us that their effort to sink the bond
issue is primarily political though — an effort to keep the
government from being able to buy the continued loyalty of former
UNP MPs who joined the government as ministers last January. While
markets will likely correctly view the UNP threat as a political
move that would never materialize, the timing of the pending bond
issue appears to be as bad or worse as sixteen months ago, when the
government shelved an earlier plan for a $ 1 billion sovereign bond
issue. Sri Lanka has had little good news to reassure currently
skittish international debt markets. Nevertheless, market watchers
say that the relatively small bond issue will probably appeal to a
sufficient number of international investors who remain interested
in diversifying their holdings of high-yielding emerging market
debt. End Summary.

$ 500 MILLION BOND TO FUND
INFRASTRUCTURE, “SET A BENCHMARK”
———————————

¶2. (U) The Government of Sri Lanka has revived plans for the
country’s first international sovereign bond issue. The government
seeks to raise $ 500 million, or more if demand is strong. The
government says it intends to invest the cash it raises in
infrastructure projects. It also expects the bonds to provide an
interest rate benchmark for private Sri Lankan companies seeking to
borrow in international capital markets. This is the second time
the government has prepared to tap international markets for a large
bond issue (ref A). In mid-2006 the government abandoned plans to
raise $ 1 billion when advisor Citibank judged that the resumption of
civil war made the timing inopportune.

¶3. (SBU) The Central Bank of Sri Lanka, which will float the bond on
behalf of the Government, has selected JP Morgan, Barclays Capital
and HSBC as joint lead managers of the issue, from among twelve
local and international banks that bid on the role. According to a
senior Central Banker, the bank plans an October road show to
financial centers like New York, London, Frankfurt, Singapore, and
Hong Kong to publicize the planned bond issue.

OPPOSITION SEEKS TO BLOCK THE BOND ISSUE
—————————————-

¶4. (U) The opposition United National Party has challenged the
government’s plan to issue the bonds. UNP leader Ranil
Wickremesinghe wrote to JP Morgan, Barclays, and HSBC August 24,
stating that “the bond issue is in violation of the law” and that
the “a future Government formed by the United National Party will
not be able to honour the repayment obligations under this bond
issue.” In the letters, Wickremesinghe charges that the government
has not informed Parliament of its plans to issue the bonds; that
interest payments on the bonds “will hamper the sustainability of
Sri Lanka’s long-term programme for servicing its existing public
debt repayments”; and that the bonds may contribute to corruption,
since planned “major infrastructure projects… have all been funded
by bilateral and multilateral” lenders. Wickremesinghe sent similar
letters to U.S. Securities and Exchange Commission Chairman
Christopher Cox and to Cox’s UK equivalent, urging them to “consult
with the banks concerned and bring to a halt the issuance of this
sovereign bond.”

¶5. (SBU) A UNP economic advisor told Econoff, however, that if given
the opportunity to do so in a future government, the party does not

COLOMBO 00001218 002 OF 003

in fact intend to default on the bonds. The move, he said, is
rather a political tactic in the UNP’s strategy to bring down the
Rajapaksa government. The UNP believes that, if it can block the
bond issue, it will be able to lure back former UNP members of
parliament who joined the Rajapaksa government as ministers in
January (ref B). Conversely, the UNP believes that if the bond goes
through, the government will be able to buy the continued support of
those MPs by allocating much of the cash to the ministries they
control. The advisor stuck with the UNP’s charge that the bond
issue would violate the law, saying that it would cause the
government’s total outstanding debt to exceed a maximum established
by Parliament. One of the UNP ministers who joined the SLFP in
January likewise told Ambassador that the UNP had made, but not
followed through on, a similar threat to block the partial
privatization of the national airline in the 1990s.

¶6. (SBU) The CEO of HSBC in Sri Lanka discounted the UNP threat as
“silly… political tub-thumping.” He said there was no way a
future UNP government would voluntarily default, and was confident
that international markets would be unconcerned by the UNP position.
Other international bank and credit rating agency reps gave Econoff
the same assessment. (The Colombo-based JP Morgan representative
told Econoff he could not comment on the impact of the UNP’s letter
to JP Morgan while his firm conducted due diligence preparations for
the bond issue.)

¶7. (SBU) As for the government’s legal right to proceed with the
bonds, the senior Central Banker told Econoff that in fact the
government had notified Parliament, in its November 2006 budget
proposal for 2007, that it planned “foreign borrowings up to one
billion dollars.” Finance Ministry and Central Bank officials told
EconFSN that Foreign Loans are covered under Sri Lanka’s Foreign
Loans Act and therefore do not need special parliamentary approval
and that debt levels under the Fiscal Management Responsibility Act
are only targets to improve transparency and accountability, not
binding limits.

S&P SAYS SRI LANKA CREDIT OUTLOOK “STABLE”
——————————————

¶8. (U) On August 9, Standard & Poor’s Ratings Services upgraded its
outlook on Sri Lanka’s credit ratings from “negative” to “stable.”
(According to S&P, a negative outlook is used to signal that the
rating may be lowered in the near future, whereas stable signals the
rating is unlikely to change.) S&P kept Sri Lanka’s long-term
foreign currency rating unchanged at B+, or four tiers below
investment grade. S&P attributed the improved outlook to “higher
tax collections, strengthening of fiscal and macroeconomic
coordination, elimination of fuel subsidies and revision of
electricity prices” and “the limited impact on the economy from the
renewed fighting.”

¶9. (SBU) The senior Central Banker told Econoff that JP Morgan had
been influential in the S&P outlook decision, both by helping the
Bank prepare for the S&P assessment and by convincing S&P during its
deliberations that the Sri Lankan economy was in fact holding
stable. According to the Central Banker, Citibank had not been as
helpful in preparing the bank for the April 2007 Fitch Ratings
assessment, which ended with Fitch keeping its outlook at
“negative.” The new local Citibank head acknowledged to Econoff
that JP Morgan had beaten Citibank on “customer service,” but
maintained that Citi would have been a better choice than JP Morgan,
Barclay’s or HSBC to lead the bond issue.

COMMENT: POLITICS ASIDE, TIMING FAR FROM OPTIMAL
——————————————— —

¶10. (SBU) Aside from its political agenda, the opposition seeks to
block this bond issue because it doubts the government will

COLOMBO 00001218 003 OF 003

productively invest the proceeds in infrastructure projects. This
is a valid concern on three levels. First, as the opposition fears,
the government may well use the funds to retain the loyalty of
ex-UNP ministers by permitting them to pursue pork-barrel projects.
Second, the government has said it intends to build infrastructure
even where there is not currently a market demand (like the
Weerawila airport), or which could be built more efficiently by the
private sector (like an expanded oil refinery at Sapagaskunda).
Third, the government is showing signs of being short on cash to
bridge an apparently growing fiscal deficit, so it will likely use
some of the bond funds for current, rather than capital,
expenditures.

¶11. (SBU) While markets will likely correctly view the UNP threat as
a political move that would never materialize, the timing of the
pending bond issue appears to be as bad or worse as sixteen months
ago, when the government shelved its earlier sovereign bond issue
plan. Aside from the S&P outlook returning to stable, Sri Lanka has
had little good news to reassure currently skittish international
debt markets. Nevertheless, market watchers say that the relatively
small bond issue will probably appeal to a sufficient number of
international investors who remain interested in diversifying their
holdings of high-yielding emerging market debt.
BLAKE