EMBASSY OF SRI LANKA

WASHINGTON — The situation in Sri Lanka continues to improve dramatically as the nation approaches the three-month anniversary of its defeat over the Liberation Tigers of Tamil Eelam terrorist group.

Sri Lankan government figures now show that 248,813 displaced people are living in government-run welfare centers, a number that is down about 51,000 from several months ago as more and more residents return to their homes.

During the last several weeks, 10,000 of those displaced civilians returned to their homes in the northern cities of Jaffna and Mannar. Another 10,000 senior citizens have been moved from the government centers to the home of relatives or appropriate elder care centers. More than 5,000 families separated during the fighting have been re-united.

The disbursement of IDPs is expected to continue on a regular basis, and the government expects to resettle thousands more displaced people in the coming weeks. The government has expressed a goal of returning most of the IDPs to their homes by yearƒÆ’†’ƒ”š‚¢ƒÆ’‚¢ƒ¢¢”š¬…¡ƒ”š‚¬ƒÆ’‚¢ƒ¢¢”š¬…¾ƒ”š‚¢s end.

Government officials said last week that resettlement of civilians in the Jaffna District will definitely be completed under the ƒÆ’†’ƒ”š‚¢ƒÆ’‚¢ƒ¢¢”š¬…¡ƒ”š‚¬ƒÆ’-¦ƒ¢¢”š¬…”Uthuru WasanthayaƒÆ’†’ƒ”š‚¢ƒÆ’‚¢ƒ¢¢”š¬…¡ƒ”š‚¬ƒÆ’-¡ƒ”š‚ 180-day accelerated programme, according to ITN television (see the ITN story below).

While government and international attention continues to focus on the resettlement of those displaced by the conflict, other hopeful signs of a peaceful transition to unity continue to emerge.

The Aug. 8 regional elections in Jaffna, Vavuniya and Uva were carried out successfully and without violence. The election result validated that the governmentƒÆ’†’ƒ”š‚¢ƒÆ’‚¢ƒ¢¢”š¬…¡ƒ”š‚¬ƒÆ’‚¢ƒ¢¢”š¬…¾ƒ”š‚¢s goal of giving the northern Tamil population a new voice in local and national government.

In Vavuniya, the Tamil National Alliance’s Ilanghai Tamil Arasu Kachchi (ITAK) party won five of 11 seats on the municipal council, giving it majority control. A party of a former Tamil militant faction that opposed the LTTE won three seats, and the ruling coalition United People’s Freedom Alliance (UPFA) won two.

In Jaffna, the UPFA won 13 seats on the council there and ITAK took eight.

The LTTEƒÆ’†’ƒ”š‚¢ƒÆ’‚¢ƒ¢¢”š¬…¡ƒ”š‚¬ƒÆ’‚¢ƒ¢¢”š¬…¾ƒ”š‚¢s former presence in those areas meant that elections hadnƒÆ’†’ƒ”š‚¢ƒÆ’‚¢ƒ¢¢”š¬…¡ƒ”š‚¬ƒÆ’‚¢ƒ¢¢”š¬…¾ƒ”š‚¢t been held in Jaffna since 1999 and in Vavuniya since 1994.

Serving as a reminder of just how dangerous the LTTE had been, the military last week, acting on a tip from a captured LTTE suspect, seized a truck-bomb near Mannar. The van was loaded with 25 5-Kg claymore antipersonnel mines.

At the same time, police uncovered one ton of concealed weapons, including C4 plastic explosive hidden in six boats, in the Vellamullivaikal and Puthukudiripu area. Acting on a tip, police found the six boats, six suicide kits, 114 RPG rounds, 1000 T-56 bullets and one T-56 rifle.

The capture of the LTTEƒÆ’†’ƒ”š‚¢ƒÆ’‚¢ƒ¢¢”š¬…¡ƒ”š‚¬ƒÆ’‚¢ƒ¢¢”š¬…¾ƒ”š‚¢s newly appointed leader, Kumaran Pathmanadan, or KP, has produced more information about the groupƒÆ’†’ƒ”š‚¢ƒÆ’‚¢ƒ¢¢”š¬…¡ƒ”š‚¬ƒÆ’‚¢ƒ¢¢”š¬…¾ƒ”š‚¢s planned attacks in Sri Lanka and its activities abroad. Following the arrest, Prime Minister Ratnasiri Wickremanayake told a function in Kalutara that while the biggest threat had been eradicated, the public should be on guard for LTTE explosive devices, especially in Colombo and its suburbs

In that vein, Reuters reported recently that, ƒÆ’†’ƒ”š‚¢ƒÆ’‚¢ƒ¢¢”š¬…¡ƒ”š‚¬ƒÆ’-¦ƒ¢¢”š¬…”The military this week even put up wanted posters and public announcements to track down a suspected female suicide bomber in her 20s, believed to be in hiding in Colombo.ƒÆ’†’ƒ”š‚¢ƒÆ’‚¢ƒ¢¢”š¬…¡ƒ”š‚¬ƒÆ’-¡ƒ”š‚

(See the full Reuters report below).

Those concerns, however, have not slowed the growth of Sri LankaƒÆ’†’ƒ”š‚¢ƒÆ’‚¢ƒ¢¢”š¬…¡ƒ”š‚¬ƒÆ’‚¢ƒ¢¢”š¬…¾ƒ”š‚¢s post-conflict economy. Stocks are up substantially since the end of the conflict with the LTTE, reaching a 14-month high in mid-August.

Prospects for expansion were buoyed recently by the approval of a $2.6 billion loan/standby facility from the International Monetary Fund.

Sri Lanka, in its letter of intent to the IMF, agreed to a number measures that should further boost investor confidence. They include a limit on foreign borrowing, a commitment to bring down the budget deficit, an improved cost structure in the electricity and petroleum sectors, reduced military spending and resettlement of internally displaced people.

With maritime security restrictions on coastal fishing lifted, the nationƒÆ’†’ƒ”š‚¢ƒÆ’‚¢ƒ¢¢”š¬…¡ƒ”š‚¬ƒÆ’‚¢ƒ¢¢”š¬…¾ƒ”š‚¢s fisherman have been able to get fully back to work. And the governmentƒÆ’†’ƒ”š‚¢ƒÆ’‚¢ƒ¢¢”š¬…¡ƒ”š‚¬ƒÆ’‚¢ƒ¢¢”š¬…¾ƒ”š‚¢s tourism board reported last week that tourist arrivals were up 28 percent in July, sustaining increases since the conflict with the LTTE was concluded in May. The July report reflects the second straight increase in arrivals.

Government efforts to attract outside investment are also showing promise. Response to recent Sri Lanka investment conferences in Los Angeles, New York and Washington was enthusiastic, with many two dozen companies and investors already planning projects for the coming year.

Last week the U.S. government also issued an announcement encouraging American businesses to ƒÆ’†’ƒ”š‚¢ƒÆ’‚¢ƒ¢¢”š¬…¡ƒ”š‚¬ƒÆ’-¦ƒ¢¢”š¬…”Make Sri Lanka Your Next Business Stop.ƒÆ’†’ƒ”š‚¢ƒÆ’‚¢ƒ¢¢”š¬…¡ƒ”š‚¬ƒÆ’-¡ƒ”š‚ The announcement was made to promote an Oct. 13-14 private-public business conference in Sri Lanka.

The conference will be based on the Trade Investment Framework Agreement that Sri Lanka and the U.S. signed in 2002.

Foreign investment for infrastructure continues to flow into Sri Lanka. The government and China last week announced a deal worth $350 million to build a highway and an oil bunkering facility. The planned highway will stretch from Colombo to the international airport in Katunayaka. The oil facility will be built at the Hambantota port on the southern coast, where China has already pledged $360 million toward port facility construction.

U.S. humanitarian aid to Sri Lanka has jumped to about $59 million, according to the U.S. Agency for International Development. Included in that amount, U.S. AID announced Aug. 10, is a new donation of $15 million in food aid to support the early return of people displaced by the conflict in the North. Consisting of wheat, lentils and vegetable oil, the shipments will be consigned to the United Nations World Food Program and will fulfill the essential food needs of 300,000 people for four months.

More international aid is in stream, especially those funds that will go toward de-mining efforts in the north.

That effort is vital to returning displaced persons to their homes, since many villages and fields were heavily mined by the retreating LTTE. Besides the U.S., Sri Lanka has received pledges of technical and financial de-mining assistance from India, Norway, Denmark, Switzerland, Australia and the U.K.

Much forward progress has occurred since the May 18 conclusion of the conflict with the LTTE, and all signs suggest that public and private efforts to transform Sri Lanka into a unified, peaceful nation are growing.