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Sri Lanka
The Development Challenge: Sri Lanka is grappling with not only one peace process but two. Until recently, peace negotiations between the Government of Sri Lanka (GSL) and the separatist Liberation Tigers of Tamil Eelam (LTTE), parties to a 20-year war waged mostly in the North and East, were at center stage. In November 2003, however, the GSL-LTTE talks were eclipsed by the President's move to reassert control over three key ministries, including defense, leading the Norwegian government to put a hold on its mediation role in the peace process. The move precipitated high-stakes discussions between the President and Prime Minister, rivals from the two major political parties, to establish a more unified approach to key peace-related issues.
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Historically, the political opposition from either party has been unwilling to compromise with the ruling party on peace proposals and related constitutional revisions, while the ruling party has not always felt compelled to put forward broadly acceptable proposals. In the uneasy cohabitation government that resulted from elections in 2001, the task of generating and maintaining political support for the peace process has been difficult and delicate. Complicating the situation is the President's power to force elections at any time by exercising her power to dissolve the government. This cohabitation crisis postponed serious dialogue and debate on the LTTE's counterproposal to the Government's suggested plan for an interim administration in the North and East, the basis for resumption of formal peace talks. Negotiations have been on hold since the LTTE announced its temporary withdrawal from talks in April 2003. This standoff between the two most powerful figures in the Sri Lankan state highlighted the urgent necessity of building a more transparent and inclusive peace process in which a broad range of stakeholders not only have the opportunity to participate but recognize the importance of doing so constructively. That the 2002 ceasefire agreement between the GSL and LTTE has remained intact bodes well, and neither side seems eager to pursue a military solution to the conflict.
During 2003, the international community pledged $4.5 billion to support the GSL's efforts to address the immediate and longer-term needs of the war-affected North and East. Disbursement of these funds was made contingent upon the resumption of negotiations, along with satisfactory progress against benchmarks related to human rights, security, and democracy. While humanitarian assistance programs continue, implementation of development projects for the North and East remains at a standstill pending resumption of the talks. Meanwhile, there is urgent need to identify and fund durable solutions for more than 500,000 internally displaced persons (IDPs) and an estimated 85,000 refugees from India. Reintegrating IDPs into their communities of origin and resettlement villages will require significant human and material resources, as well as resolution of thorny issues such as expropriation, compensation, and displacement. Other priority tasks include eliminating the danger of landmines, rebuilding homes, schools, hospitals, and water sanitation facilities, and providing sustainable livelihoods.
Long-term priorities focus on development to help sustain and consolidate the ongoing reconciliation process. Recognizing the links between unemployment, political exclusion, and social unrest, the government seeks to develop a workforce that will meet the demands of a modernizing and increasingly outward-looking employment market, while envisioning a future in which decision making is decentralized and shared with citizens and other stakeholders. Greater capacity to meet the physical, social, psychosocial and economic needs of the burgeoning population of conflict-affected and vulnerable Sri Lankans is required. The services must include improved, appropriate technology devices and employment training for the mobility disabled, interventions that improve function for torture affected individuals and communities, programs addressing threats to children's security and well being, and targeted interventions to assist Sri Lanka's response to the HIV/AIDS epidemic.
Sri Lanka is endowed with generous human and natural resources, and is well placed as a regional hub for trade and investment. Provided the political-security situation remains stable, the economy is well-positioned to take advantage of international economic opportunities. Energized by a year of peace, the trade-based economy grew by 4.4 % in 2002 after the 1.4 % contraction in 2001. GDP is expected to grow by 5.5 % in 2003. However, spending is required to renovate and construct essential infrastructure, create two million jobs, and provide social services to address poverty. The GSL's ability to respond is severely constrained by the continued high cost of maintaining its security forces and the burden of servicing its debt through interest payments that account for more than 30 percent of government expenditures. Key economic reforms will address the debt burden, privatization of key industries, revenue enhancing fiscal measures, downsizing of the central government, e-governance, the reduction of trade barriers, and job creation.
The USAID Program: USAID/Sri Lanka's portfolio consists of four programs that concentrate on: 1) laying the foundations for economic growth; 2) promoting inclusive and peaceful approaches to politics and governance; 3) improving the social and economic status of disadvantaged groups; and 4) supporting the peace process. These programs were developed and approved in 2003 in response to new opportunities to support the peace process while laying the foundations for long-term development. In addition, Congressionally earmarked funds support activities implemented under the humanitarian assistance program (383-007) through Leahy War Victims, Displaced Children and Orphans, and Victims of Torture funding.
Other Program Elements: USAID's Bureau for Asia and the Near East manages three regional programs with activities that benefit Sri Lankans. The U.S Asia Environmental Partnership Program focuses on policy and technology transfer related to urban air and water quality and solid waste management. The South Asia Regional Initiative for Energy Cooperation and Development is helping the Government of Sri Lanka to broaden participation and improve management of the energy sector, providing a cleaner, less expensive, and higher quality energy supply to business and industry. The South Asia Regional Initiative for Women and Children's Equity promotes the rights of women and children. USAID's Office of Transition Initiatives (OTI) bolsters public support for a negotiated peace settlement through fast, flexible, small-grants support for community-based activities that: deliver visible peace dividends, including infrastructure improvement and livelihoods development; reduction of violence in targeted communities; and enhancement of the quality and exchange of peace-related information to increase public ownership of the peace process.
Other Donors: Overall donor assistance to Sri Lanka was $330 million in 2001. Japan is Sri Lanka's largest donor, followed by the Asian Development Bank, the World Bank, Germany and the United States. Donor coordination in Sri Lanka has improved although there is need for better information sharing in this dynamic, high-stakes environment. Almost all donors provide assistance related to peace building and humanitarian assistance, though the level of resources and focus varies. The World Bank and the International Monetary Fund provide multi-year loans to support the Government of Sri Lanka's poverty reduction strategy and macroeconomic reforms. Japan and the Asian Development Bank provide loans and grants in the areas of infrastructure, reconstruction and rehabilitation, industrial development, agriculture, health, human resources, transportation, and power sector reform. In the area of democracy and good governance, the World Bank has a project supporting legal reform, while the United Kingdom, Germany, Sweden and Norway have programs related to conflict, human rights, civil society and media development. USAID has a comparative advantage in a number of areas, including private sector development, trade capacity building, participatory governance, and providing a quick and flexible response for immediate reconstruction and rehabilitation needs. In humanitarian assistance, USAID will continue the lead role it has occupied since the early 1990s in support for the civilian disabled.
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