Like others, we were heartened by the early progress made in the peace process, and particularly by the agreement, announced at Oslo, to pursue a political solution to the conflict through a federal governance structure, within a united Sri Lanka.

This was a major achievement. Both sides – and the Norwegian Government facilitators – should be congratulated on the progress made.

It has however been difficult to translate the broad agreements reached at the high level Talks into practical action. The commitment to partnership and joint working made in Oslo has not been realised, and this has contributed to the current hiatus in the negotiations.

To move the peace process forward and to implement decisions made at the Peace Talks, both sides need to agree effective joint mechanisms, which reflect the commitment to a federal Sri Lanka. This will be necessary both to meet humanitarian and development requirements, and to work on the challenging political and institutional issues that will have to be addressed under a federal structure. Progress in this crucial area will be dependent on a resumption of dialogue between the two parties.

The international community can play an important role in helping to nurture and support these joint mechanisms. We can provide neutral technical advice, or facilitation to help resolve difficult and contentious issues. Such assistance should help ensure that dialogue, and thus the peace process, is sustained.

This might be an appropriate role for the smaller bilateral donors, like ourselves, to play, complementing the substantial resources that the International Financial Institutions and Japan can provide for infrastructure and public service delivery.

We also believe it is important that political progress made at the peace talks, once they restart, is coordinated with development activities. Development assistance should support, and reflect, progress in implementing a political settlement. Unless properly calibrated and coordinated, it risks destabilising the peace process. The experience from the Emergency Reconstruction and Rehabilitation Project (ERRP) a decade ago is clear evidence of development efforts wasted because this relationship was not assured.

With this in mind, donors have been considering some principles, and a related set of benchmarks, which can govern the release of donor funds. We believe that this approach will help to ensure a regular and incremental release of donor finance. Neither we nor the government nor the LTTE want us to be turning the flow of funds on and off like a tap.

The principles reflect internationally accepted norms. We encourage the Government and the LTTE to join the donors in defining relevant and realistic benchmarks.

The UK welcomes the development of the Needs Assessments and will help implement them, provided that this is within the framework of a fully joint approach and the principles and benchmarks previously mentioned. We stand ready to provide support to help empower and to build technical and institutional capacity in any joint structure that is set up. We would envisage our focus, at least initially, being on the governance issues described in the Needs Assessments.

We have substantially increased our funds available for Sri Lanka over the last 18 months, reflecting our commitment to a sustained peace. In 2002/3 our programme was worth only £5m pa. For the three year period from 2003/4 to 2005/6 we envisage that our funds will total £43 million, or about $70 million. While these are modest amounts compared to the funds available from Japan and the International Financial Institutions, the level of increase is an indication of our sustained commitment to a peaceful resolution of the conflict.

We hope that the flexibility of our programme will provide a useful and effective lubricant to the process of peace, reconciliation and future development. I should emphasise however that these funds will only be usable if there is a return to the peace process and joint agreement on accountable and transparent administrative and management mechanisms.

So the overall pre-requisite is that the Peace Talks are revived. We hope that both sides will be able to find a route back to enable this to happen while the attention of the international community remains focused on Sri Lanka. If there is anything further we can do to help with this process, we stand ready to be asked.