Remarks to the American Chamber of Commerce Colombo, Sri Lanka

(As prepared for delivery)

Thank you very much for that kind introduction, Gordon [Glick] and to all the members of AmCham for inviting me here today. I’m very happy to be in Colombo on my first visit as Assistant Secretary, though this is not my first trip to Sri Lanka. I was here a little over a year ago with Secretary Powell under much sadder circumstances, in the wake of the Tsunami. That trip will stay in my memory for so many years to come. We saw people whose homes were destroyed and lives were devastated and yet within a few days of the terrible wave they were banding together to help each other. I admire them and often think of their example.

Since December 2004, Sri Lankans have come together to move forward from this horrible tragedy. I’m proud that the people and government of the United States, along with many other nations and private organizations, responded almost immediately to send hundreds of millions of dollars in humanitarian relief supplies. The U.S. Agency for International Development (USAID) quickly dispatched a Disaster Assistance Response Team to help the government assess the country’s needs and coordinate the many different relief operations. The U.S. military sent 1,600 Marines along with helicopters, backhoes and tractors to ferry food, blankets and other supplies to the coasts, and help clean up the rubble. This quick action to give people access to food, medicines and sanitation contributed to the extraordinary lack of disease or malnutrition following the disaster. Of course, you had many friends in this massive effort. And, for our part, we will always be grateful to the many Sri Lankans who assisted American citizens caught up in the Tsunami.

In the 16 months since the Tsunami, the United States has committed more than $130 million to a wide variety of projects to help with rehabilitation. Working with private partners and nongovernmental organizations, we’ve built thousands of transitional shelters and dozens of children’s play parks, started vocational schools and provided over $16 million to rebuild lives. And, to make sure all the funds that came into the country are spent effectively, we are supporting an anti-corruption program to oversee the management of government budgets.

It is encouraging how much progress Sri Lanka has made in recovering from the Tsunami, but there are still reasons to be seriously concerned about the country’s future. There was hope that this same spirit could be applied to overcoming a man-made disaster -- Sri Lanka’s long and violent ethnic conflict. Tragically, that has not happened, and if anything, the political situation has only worsened. The atrocities range from Foreign Minister Kadirgamar’s assassination to the recent attempt on the life of the army commander and the massacre of civilians in Kayts and Wilikenda.

The violent incidents and serious violations of the 2002 Ceasefire agreement have been too numerous to list, and listing them merely overlooks the fact that each one of these incidents involves lives lost, individuals whose smile and creativity are lost to their families and to your nation’s future. The United States believes the Liberation Tigers of Tamil Eelam bear the major responsibility for the upsurge in violence and near-breakdown of the ceasefire agreement. They have committed scores of unprovoked attacks on civilians and military personnel, carried out assassinations and suicide operations, continue to recruit children and prevented Tamils from exercising their democratic rights in last year’s election. For nine years we have had them on our official list of Foreign Terrorist Organizations; they truly deserve the label. In that regard, we welcome the European Union’s decision to list the Tigers in Europe as a Foreign Terrorist Organization.

As we’ve said many times and will continue to say, the Tamil Tigers must renounce terror in word and deed, stop the violence, and recognize that the only solution to the conflict in Sri Lanka is a political one. They need to focus their vision on how to achieve their legitimate goals through a legitimate process of negotiation. If the Tigers give up terrorism, the United States will be able to consider dealing with them. The Tiger leadership has to understand that the entire world is united in its determination to combat terror, whether it emanates from the mountains of Afghanistan or the fields of the Wanni. As a friend of Sri Lanka, the United States will do whatever we can to help the sovereign Sri Lankan government in its struggle against this menace.

We are working with other governments to cut off financing of terrorist groups, including the Tigers. The United States has also brought to Colombo experts in money laundering to assist the government in tracking these streams. We’re also sending dozens of Sri Lankans to the U.S. for training in anti-terrorism programs. Our donation of a Coast Guard cutter last year to the Sri Lankan navy was a tangible symbol of our commitment to stand firm with the government in its opposition to the Tamil Tigers. It is important to be clear that the purpose of our assistance is not to encourage a return to war, because we firmly believe that there is no military solution to Sri Lanka's ethnic conflict. Rather, our assistance is meant to help Sri Lankans deter a return to war.

The Government of Sri Lanka also has responsibilities it must live up to. We have high expectations of a democratic government: respect for human rights, outreach to all citizens, respect for the rights of minorities, clean government for all, and a true vision of peace. In Geneva this February, the government agreed to prevent groups operating in areas under its control from carrying out armed attacks, and yet three months later it seems as if some groups continue to operate freely in those areas, carrying out their own violent operations. We think the government should uphold law and order in all areas under its control, and when incidents occur, they must be investigated thoroughly and impartially. Arrests should be made, and the culprits prosecuted. All Sri Lankans -- Tamils, Muslims and Sinhalese -- need to have confidence that the government will protect them, or they will turn to other groups for protection. This is the government’s responsibility in any country. As a recently elected member of the new UN Human Rights Council, the Sri Lankan government must firmly commit to upholding human rights at home so that it can more forcefully advocate protection of these rights within the Council.

We also think the government should provide a positive vision to Tamils and Muslims of a future Sri Lanka where their legitimate grievances are addressed and their security assured. President Rajapaksa has spoken of "maximum devolution." Previous negotiations have agreed on "internal self-determination" within a federal framework. However the idea is expressed, it could offer hope to many in the North and East that they will have control over their own lives and destinies within a single nation of Sri Lanka. A further elaboration of this idea could spur much needed debate on the contours of a settlement acceptable to the Sri Lankan people. Already there are steps the government can take to reach out to demonstrate the sincerity of this vision. For example, Tamils can be assured of their right to use their language and provided with equal opportunities in public and private sector employment.

Naturally, neither the United States nor the Co-Chairs nor the international community can dictate what a political solution should look like. Ambassador Lunstead and I have just come from a Co-Chairs meeting in Tokyo, and I’m sure most of you have seen the statement we put out Tuesday. We all remain extremely concerned about the deteriorating situation here. We’ve been urging all parties to cease the violence and get back into talks as soon as possible. We remain fully supportive of Norway’s facilitation of the peace process and the work of the Sri Lanka Monitoring Mission. Frankly, we think that the criticism we’ve seen of Norway in the media is wholly unfair and unhelpful in getting parties back to the table.

Governments are not the only entities who have a role to play in fostering peace – as Ambassador Lunstead has said many times, the business community also has a helpful role to play. Peace and prosperity go hand in hand, whether here in Sri Lanka or elsewhere around the world. In a way, AmCham is already in the peace-making business, and it needs to maintain a strong voice in support of peace. You know that Sri Lanka has already lost business because of the uncertainty of the situation here. You know that if Sri Lanka reverts to a full-scale war, the consequences for the business climate will be devastating. Investors -- be they foreign or local – won’t support projects that could collapse in the chaos and uncertainty of a war-torn country. Tourists will almost certainly stay away, and insurance rates on shipping could go up significantly. The government’s outlays for the cost of war will drain much needed resources from other development enterprises.

Conversely, an expanding and healthy economy with a regulatory framework that encourages foreign investment could undergird efforts to arrive at a negotiated settlement, since more people will see the tangible benefits of peace. In that regard, it’s important that the government look at how it is structuring its policies, in order to ensure that it is taking full advantage of all the country’s potential resources.

Sri Lanka’s economy grew at an impressive six percent last year, though there are questions about how evenly distributed the growth has been. However, I think growth could expand even more quickly if bold economic policies were implemented and even more if the specter of war were no longer hanging over the country.

The government needs to control the budget deficit, simplify tax laws, and expand the tax base. It needs to ensure that road, rail and air infrastructure operate at peak efficiency and that zoning and water and sanitation are developed with growth in mind and with the needs of local communities considered. Non-tariff barriers and restrictive, some might say discriminatory, import fees and levies should be removed. The procedures required to start a business should be simplified, and labor laws amended to give employers the structural flexibility they need while still ensuring displaced workers are helped to find a new career. Government enterprises should be privatized wherever possible, or at least run with full commercial rigor, subject to the tests of an open marketplace. Sri Lanka has been addressing these issues for years, but it’s time they were finally resolved and the country set on a path towards the prosperity it deserves.

Sri Lanka has qualified for funding from our Millennium Challenge Corporation –a revolution in assistance designed to help those who are trying to do development right. Sri Lanka has submitted its proposal, focusing largely on rural development. Due diligence is underway, along with negotiation of terms. We hope we can conclude the negotiations this year and get started with these important projects. This opportunity for a Millennium Challenge Corporation compact, along with the assistance and moral support we have given Sri Lanka over the years, should leave none in doubt that we consider Sri Lanka a true friend and partner. It is disconcerting to us to see a friend sliding back towards turmoil, and away from peace, from internal divisions and self-inflicted wounds. We do not want to see this nation that inherited great civilizations and cultures, descend once again into senseless war with no winners.

Sri Lanka, its people and its future, are important to the United States and we will continue to push vigorously to see peace here. In addition to working with the parties and the international community, I would urge all of you here today to do all that you can to foster an environment where peace can take root.

Thank you again for hosting me this afternoon, in what I hope is one of many discussions we may have together. I’m happy now to take your questions.