This Conference was organized in co–operation with the German Federal Foreign Office and supported by the Global Public Policy Institute.

Introduction

The current conflict in Sri Lanka has affected mostly the Northern and Eastern Regions of the country over little less than a quarter century in varying degrees while imposing a heavy cost on the economy in respect to both resources wasted and lost opportunities. It has cost the loss of over 65, 000 lives, injuries, disappearances and displacement of people, and destruction of social and economic infrastructure.

President Mahinda Rajapaksa has released a blueprint entitled ‘ Mahinda Chintanaya: Vision for A New Sri Lanka – Discussion Paper on Development Framework 2006 – 2016’setting out his Vision and Framework for the future development of the country over a ten year period (2006 -2016). It contains both a policy framework and objectives, and a strategy for the development of conflict affected Districts, which are primarily in the North and East of Sri Lanka.

The overall objective of the Government of Sri Lanka is to develop the North and East as a hospitable and attractive place and establish an environment where people will have freedom to live and pursue livelihoods of their choice; restore peace and ethnic harmony leading to rapid social and economic development.

The discussion paper spells out Short, Medium and Long term objectives which include:

a) Relief, Re-settlement, Rehabilitation and Reconciliation aimed at displaced persons host communities,

b) Establishment of basic physical infrastructure and restoration of services to the communities

c) Establishment of sound governance administration and service delivery arrangements, and

d) Laying the groundwork for socio – economic development , rehabilitation of infrastructure and delivery of other services.

The long term goals are aimed at raising the standard of living of all the affected parties.

In Sections dealing with the Governmental strategy for the Revival of the North and Eastern Regions, Tables have been incorporated in this document clearly setting out the Priority Areas, Targets and Programmes. Though much of the development of infrastructure and services sector will be by way of public expenditure, there is nevertheless identification of programmess for private sector participation e.g. opening of new garment factories, establishment of an agricultural export zone, Trincomalee Ocean City Development Project ( includes Investment and Tourism Zones).

Development and Infrastructure Facilities in the North and the East – the Government's Seminal Role

Contrary to widely held misconceptions, the administrative machinery and infrastructure facilities in LTTE controlled areas is funded and maintained substantially by the Government. In addition, the Government meets an overwhelmingly substantial part of the humanitarian and infrastructural needs of the civilian population living in the North and the East, including the LTTE controlled areas.

For instance :

In addition, a significant number of small, medium and large scale projects have been completed with the assistance of the international community, including the World Bank and the Asian Development Bank in many cases with funds borrowed by the Government. These projects cover a wide variety of sectors.

In the latest figures on ongoing projects in the Northern and Eastern Provinces, which include both tsunami and non-tsunami projects, there has been a total allocation of US$ 1283.10 Million comprising loans US$ 673.8 Million and grants US $ 609.3 Million.

State Investment in Development and Infrastructure Activities in Northern and Eastern Provinces (2002-2006) - A Summary

Education

    • Schools - Rs.3.721 Billion

    • Universities - Rs.792 Million

    • Skills Development, Vocational and Technical Education – Rs.1.044 Billion

Healthcare

    •  Healthcare - Rs.6.020 Billion

Livelihood Assistance

    •  Relief and Livelihood Assistance - Rs.14.735 Billion

Infrastructure Development

    •  Roads and Bridges (Rs.38.674 Billion)

    •  Housing (Rs.1.582 Billion)

    •  Electricity (Rs.692 Million)

    •  Water Supply and Sanitation (Rs.21 Billion)

    •  Ports (Rs.460 Million)

    •  Telecommunication (Rs.600 Million)

    •  Irrigation (Rs.1.635 Billion)

    •  Institutional and Community Development (Rs.124 Million)

    •  Agriculture (Rs.133 Million)

    •  Fisheries (Rs.1.5 Billion)

    •  Livestock (Rs.60 Million)

Relief, Rehabilitation and Reconstruction - 2002-2006

    1) North East Housing Reconstruction Programme – World Bank US$ 75 M (Rs.7500 M)

    2) North East Coastal Community Development Project – ADB US$ 22 M (Rs.2200 M)

    3) North East Irrigated Agriculture Project II - World Bank US$ 64 M (Rs.6400 M)

    4) North East Road Rehabilitation Programme – EU

    5) North East Community Restoration and Development Project Loan – ADB US$ 180 M (Rs.18000 M)

    6) Rehabilitation of Bridges in the North-East - UK

    7) North East Emergency Rehabilitation Programme WB/EU

    8) Conflict Affected Area Rehabilitation Programme - ADB US$ 80 M (Rs.8000 M)

    9) National Protection and Durable Solution for IDP’s - UNHCR

    10) Jaffna Water Conservation and Environmental Management Project - GTZ

    11) Mannar District Rehabilitation and Reconstruction through Community Approach Project - JICA

    12) UNDP Technical Assistance Programme - UNDP

    13) Food Security and Reconciliation in Batticaloa District - GTZ

    14) Agricultural and Rural Development in Trincomalee Districts - JICA

    15) Recovery Programme for People Affected by North East conflict - WB

    16) Emergency Rehabilitation for the Community in the Vanni and the East - JICA

    17) Water Supply Scheme in Mannar District

    18) Northern Rehabilitation Project NRP-GTZ

    19) Pro Poor Economic Advancement and Community Enhancement Project - JBIC

    20) Secondary Education Modernization Project - ADB

    21) Teacher Education and Teacher Development Project - WB

    22) General Education Project II - WB

More than 50% of the foreign funded projects are based on loans granted by international institutions and foreign governments to the Government of Sri Lanka, which is then required to repay these loans. It is the Government that bears the burden of funding the development of the North and the East and repaying these borrowed funds.

However, studies reveal that approximately 10-20% of these funds are siphoned off by the LTTE. It is largely from these illegally acquired funds that the LTTE maintains its name-board structures and logistics, trains its child soldiers and places its armed cadres, both men and women, in a perpetual state of war.

Risk Management Strategies in Conflict Affected Areas

Government explores Guarantee Facility to encourage private investment in the North and East

Private Investment has played a vital role in the development of the South of Sri Lanka and it is hoped that it will contribute to the development of the conflict affected areas of the country. The Government is making every effort to attract both foreign and local private capital into the conflict affected areas to spread the economic benefits of private investment. The Government is discussing with the Multi-lateral Investment Guaranty Agency (MIGA) of the World Bank Group in developing and implementing an initiative to provide risk insurance cover for private investors in these areas.

Government’s policy in encouraging private investment in the North and East, is aimed at creating job opportunities for the youth in these Regions which would in turn enable them to realise life’s higher aspirations - a better life for them and their families. Development of the North and East offers an alternative pathway to lives which are otherwise marred by violence and destruction. Development is a sine qua non for peace.

Bank reluctance to fund business enterprises in high risk conflict affected areas, could to some extent be overcome by establishing industrial zones coupled with incentives for investors to be attracted to invest in conflict affected areas, such as:

A survey would be conducted to assess demand for the investment guaranty facility. It is only upon assessment of a proper demand by investors for the investment guaranty facility that further steps would be taken to concretize the proposal.

The Government is committed to promote an investment drive in the North and East not only among local investors but also among the diaspora which is already investing substantially in Colombo. Diaspora funds could play a critical role in changing the lives of the people in the North and the East.

Trincomalee Special Economic Zone

President Mahinda Rajapaksa has identified Trincomalee as being in the forefront of the country’s future economic development and under his leadership Trincomalee will be transformed into a vibrant industrial base and usher in a new economic dimension to Sri Lanka

The groundbreaking Foundation stone laying ceremony of the proposed Trincomalee Special Economic Zone was held on January 7, 2007 under the patronage of the Minister of Enterprise Development and Investment Promotion, Mr. Rohitha Bogollagama.

The site at Kappalthurai is considered to be the most attractive location to establish a special economic zone in Sri Lanka with the Trincomalee harbour recognized internationally as one of the best ports in the world. This is one of the 12 Special Economic Zones proposed in the 2006 Budget.

Cabinet approval was granted on February 16, 2006 to gazette approximately an extent of 675 kilometers for this project.

Substantial foreign investment is expected for the Special Economic Zone due to Trincomalee’s geographical location. It should attract a large number of investors. The main objective of the Trincomalee Special Economic Zone is to create an entrepreneurial spirit by encouraging long term investment and creating a new industrial culture by promoting public and private partnerships.

It will also be a leading provider of port related products and services to international markets by maximizing the potentials of the Trincomalee Port and its environs as well as to make the most convenient location in the East as a destination of investment.

Infrastructure Development Plans which will spur Investment in Post - Conflict Sri Lanka

Peace Process

GENEVA TALKS

GENEVA 1 – CEASEFIRE TALKS - 22-23 FEBRUARY 2006

The Government of Sri Lanka ( GOSL) remains committed to a negotiated settlement despite the refusal by the LTTE to return for talks for a long period of time. Talks were finally resumed in Geneva in February 2006 when the GOSL and the LTTE met for talks on the Ceasefire Agreement. The GOSL made it clear in its opening statement that the Ceasefire Agreement entered into by the GOSL of that time and the LTTE in February 2002 was “contrary to the constitution and law of the country, however as certain benefits had flowed to the people as a result the GOSL would preserve the ceasefire”. The ceasefire was considered “ a first step to arrive at a negotiated settlement to the ongoing conflict and we propose to rectify certain grave anomalies arising from the agreement”.

Discussions were held on issues related to the ceasefire, including the concerns of the Muslim, Sinhalese and Tamil civilians. Issues regarding the welfare of children in the North and East, including the recruitment of children were discussed.

The GOSL emphasized that it remained committed to achieving substantial and sustainable economic development in all parts of the country, and had invested heavily in provincial development.

At the end of the talks both the GOSL and the LTTE expressed a commitment to respecting and upholding the Ceasefire Agreement and to “taking all necessary measures to ensure that there will be no intimidation, acts of violence, abductions or killings” It was agreed that the next round of talks would be held in Geneva on 19-21 April 2006.

However the LTTE used numerous excuses to avoid returning to the round of talks in Geneva in April and launched a violent campaign against the security forces and civilians which culminated with widespread attacks on Government positions in Trincomalee and Jaffna in August 2006 which were unsuccessful.

The Government continued to work towards a negotiated settlement and agreed to meet with the LTTE in Oslo in June 2006 to discuss issues relating to the Sri Lanka Monitoring Mission (SLMM). The meeting was called by Norway to ensure safety and security of the Scandinavian truce monitoring mission after the May 11 Sea Tiger bid to target a ship carrying 710 security forces personnel returning to the Jaffna peninsula.

However having being brought to Oslo the LTTE delegation refused to talk to the Government delegation again on the pretext that they wanted a GOSL Minister to be part of the delegation.

GENEVA 11 – OCTOBER 28-29 2006

Despite an escalation of violence by the LTTE after the Geneva 1 talks in February 2006, the GOSL continued to remain committed to a negotiated settlement to the ongoing conflict and open to having talks with the LTTE. The GOSL met with the LTTE in Geneva 28-29 October 2006 for resumed talks.

The deliberations proceeded in a cordial and business like manner until lunch on the second day. Both the GOSL and the LTTE stated that it was preferable to progress into discussions on solving issues rather than spending time laying blame for past deeds.

The GOSL delegation reiterated that it was, consistent with the Mahinda Chintanaya, committed to moving the country forward to the realization of a just and honorable peace; a peace based on the principles of a true democracy and human rights and that it hoped to achieve this through negotiation and dialogue.

At the outset the GOSL stated that its focus would be on humanitarian issues and the political processes with a view to achieving a sustainable solution to the conflict. It also suggested that agreement could be reached on issues for future discussions.

On the first day of the talks, the following matters were discussed: humanitarian issues, political processes, the de-escalation of violence, democracy and political pluralism. Both parties discussed these issues in detail for the first time. The serious problems confronting the Muslim community in the East and the North due to the LTTE’s actions of ethnic cleansing were also highlighted by the GOSL delegation.

In its presentation the GOSL delegation explained the Government’s development programme for the North and the East and, the initiatives undertaken to address the concerns of the minorities in particular the Tamil minority. Details of the steps taken to ensure that adequate supplies were sent to the Jaffna peninsula were explained carefully. The Government took the view that the needs of the Jaffna peninsula could be met more efficiently and cost effectively by using the sea route.

Significantly the LTTE made no attempt to contradict these details, however in the face of the government presentation, merely shifted its initial contention that the supply of food and medical supplies to Jaffna was a major humanitarian concern to a new position claiming that family reunions and freedom of movement for people in the peninsula was the paramount concern. They accordingly claimed that the re-opening of the A9 was critical. It is also significant to note that no complaints were raised in relation to deprivations or shortages of supplies in LTTE dominated areas such as Mullativu and Killinochi.

The Government explained that the A9 route was open at the Omanthi check point enabling supplies to move freely into Killinochi and Mullativu.The GOSL emphasized that it was only the entry/exit point at Muhamalai in the Jaffna peninsula that was temporarily closed following the massive attack by the LTTE on GOSL positions on 11 August 2006. This attack had completely destroyed the infrastructure that had been constructed by the GOSL to facilitate the movement of people and supplies through the check point. Since then the Government had moved essential supplies by ship and air and also deployed vessels to facilitate civilian movements to and from the peninsula. The Government reiterated that Muhamali could not be opened immediately due to concerns for the safety of civilians using the entry/exit point and in the interests of national security; the necessity for this position was even more evident in light of LTTE artillery attacks in this area even as the talks proceeded. (these have continued since then).

The GOSL emphasized the fact that the closure of the entry/exit point at Muhamali was a temporary measure and that the Government had every intention of opening. However good faith must be demonstrated by the LTTE by refraining from launching attacks in the area and undertaking offensive actions.

The GOSL urged the LTTE to cooperate in the short term in order that essential supplies could be transported to Jaffna. The Government was facing numerous difficulties in hiring private vessels for this purpose as the safety of ships could not be ensured due to the threat of LTTE attacks. Both the ICRC and the UN had as a consequence of requests from the GOSL confirmed they were willing to flag the supply ships if the LTTE gave the necessary security guarantees. The LTTE continues to refuse to give such assurances.

The Government clearly stated that it was willing to place the opening of the A9 route at Muhamali as a priority item on the agenda at the next round of talks. This it was felt would also allow for time to test the bona fides of the LTTE assurance that it would adhere 100% to the CFA. It would also give the opportunity to engage in strengthening the confidence building process started at these talks further. The Government intended to re-open Muhamali and make the A9 a modern highway which will link Jaffna to the south of the country and facilitate development and ensure a better life for the people of the area. It is of paramount importance that the il legal activities resorted to by the LTTE along the highway such as the collection of il legal levies, extortion and the forced training of children comes to an end.

It is unfortunate that the LTTE focused on the re-opening of the A9 route to the exclusion of alternate options to address the humanitarian needs of Jaffna and with total disregard to the urgent needs of the Jaffna people. The duplicity of the LTTE is evident in this illogical stance and also in light of the fact that they are continuing daily attacks on the Muhamali exit/entry point.

It is also regrettable that the LTTE which came to the talks on an unconditional basis decided suddenly after the first session of the second day of the talks to impose a precondition on future talks by demanding that the GOSL delegation concede to opening the Muhamali entry/exit point immediately.

Nevertheless the GOSL considers the deliberations they had with the LTTE on political issues encouraging. The LTTE were briefed on the government initiatives in relation to the rapidly evolving Southern consensus and on constitutional reforms leading to a political settlement to the conflict. The LTTE responded positively to these endeavors and in particular welcomed the MOU signed between the SLFP and the UNP. The GOSL delegation was able to confirm that they would be in a position to place at least an interim report from the APRC at the next round of talks.

The Government stated that it saw the deliberations as a positive start and confirmed it was ready to continue the dialogue unconditionally at any future dates.

Since these talks the Government offered various alternate options for humanitarian relief to alleviate the problems of the people in the Jaffna peninsula. On 11 November, 2006 an alternate route was proposed through Pooneryn to carry supplies via the land route and on 20 November the Government offered to open the entry/exit point at Muhamalai on a one off basis to enable a convoy with urgent supplies of food to the peninsula. The LTTE turned down both proposals and refused to cooperate with the Government.

CONSTITUTIONAL REFORM

Since April 2006 His Excellency the President and the Government of Sri Lanka have taken a number of initiatives to facilitate the realization of a negotiated settlement to resolve the national problem. Significant among them is the endeavor to develop constitutional proposals with broad support. The main aim has been to find an indigenous solution that will lead to an end to the decades of internal strife, and enable all people to live in dignity and peace in Sri Lanka.

The Government has emphasized the fact that the task of finding a political solution to the national question requires a multi-party effort and an inclusive approach. In this context the formation of the All Party Representative Committee (APRC) and the appointment of a Panel of Experts on 11 July is a significant step in reaching a national consensus among political parties.

At the Inaugural Meeting of the APRC and the Panel of Experts on 11 July 2006, The President H.E. Mr. Mahinda Rajapakse stated, “any solution needs to as a matter of urgency allow people to take charge of their own destiny. This has been tried out successfully in many parts of the world. There are many examples from around the world that we may study as we evolve a truly Sri Lankan constitutional framework including our immediate neighbor India. Improving the lives of Sri Lankans all over the country is our ambition. Improving the lives of the impoverished in the North and the East is a priority. ”

The mandate given to the APRC and the Panel of Experts as outlined in the President’s speech is to “fashion creative options that satisfy the minimum expectations…as well as provide a comprehensive approach to the resolution of the national question”. He wished them success “in their collective endeavor in formulating a political and constitutional framework for the resolution of the national question”.

The aim of the Government is to engage the various political parties discuss their different approaches and through their deliberations arrive at a broad framework that will generate consensus.

The APRC and the Panel of Experts have met on a regular weekly to bi-weekly basis and have confirmed that they have made significant progress in their deliberations. The Panel of Experts presented their preliminary reports to the APRC on 6 December 2006. The APRC is in the process of formulating a proposal to submit to the All Party Conference (APC).

Strengthening the political process, the Government initiated discussions with the main opposition party, the United National Party (UNP), on 15 September 2006 primarily to facilitate reaching political consensus in the South. Discussions were based on a 6-point common minimum national agenda put forward, consisting of: peace, good governance, electoral reform and social development. The two parties have signed an MOU on 23 October 2006. The UNP in the MOU extended its support to the government “in its pursuit of a negotiated settlement to the on-going conflict while opposing terrorism in all its manifestations and upholding human rights”. The strengthened political consensus in the South is a significant step in formulating a new constitutional framework for the resolution of the conflict and in particular one that will address the needs of the people in the North and the East. The UNP is now participating in the APRC deliberations.

Conclusion

In conclusion, I wish to state that the current conflict though it has lasted for over a period of 23 years is unlikely to escalate into a state of ‘total war and destruction’.

There are developments already taking place which provide hope and confidence that a peaceful settlement of this issue is close at hand. We are encouraged by the emerging Southern consensus and the deliberations taking place at the APRC. We are equally encouraged by the multiple voices in the Tamil community both within and outside Sri Lanka calling for a peaceful settlement without a division of the country.