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United States To Devote $907 Million to Tsunami Reconstruction

18 May 2005

Funds to support infrastructure, debt deferral, early warning system

The United States will be devoting $907 million to tsunami reconstruction efforts in South and Southeast Asia, with funds going to rebuild critical infrastructure, support local businesses and help establish a tsunami early warning system, according to U.S. Ambassador to Sri Lanka Jeffrey Lunstead.

A portion of the funds will go to repay expenses that have already been incurred.  The remaining $656 million will be divided among the affected countries of the region.  Lunstead said that reconstruction funds are also coming from the relief foundation created by former Presidents Bush and Clinton.

Lunstead said the proposed projects in Sri Lanka include the rebuilding of bridges, sanitation systems, schools, clinics, and fisheries harbors.  In addition, the U.S. Agency for International Development will build 100 playgrounds to help children and families return to more normal lives.  Lunstead said a portion of the funds will be used for work programs and psychosocial support designed to help people make the transition from emergency camps back to communities.

Following is the transcript of Lunstead’s press conference:

(begin transcript)

Signing of Supplemental Spending Measure and Tsunami Relief
Jeffrey Lunstead, Ambassador to Sri Lanka
Press Conference at the American Center

Colombo, Sri Lanka
May 13, 2005
Released by U.S. Embassy Colombo

PUBLIC AFFAIRS OFFICER PHILIP A. FRAYNE: Good morning and thank you for coming to this press briefing at the American Center. We're happy to have you here. As you know, the sheets we handed out to you two days ago, President Bush signed legislation, which would amongst other things increase significantly the United States aid for tsunami relief and reconstruction. So without further ado I will introduce Ambassador Jeffrey Lunstead and Andrea Yates, Acting USAID Director in Colombo.

AMBASSADOR LUNSTEAD: Thank you, Phil. As Phil said, two days ago on May 11, President Bush signed the Supplemental Appropriations Bill, which will provide $907 Million for tsunami relief and reconstruction. Some of this money will go to repay expenses, which have already been incurred, by our Department of Defense and USAID, and some of it will also be used for regional assistance on a tsunami early warning system. Of that money approximately $656 Million will be available for direct assistance to tsunami-affected countries. We don't know yet the exact amount that will be available to specific countries; that will be determined over the forthcoming weeks between the Executive Branch and the Legislature. But we do know the areas we intend to work in, in Sri Lanka and in other countries, and I'd like to discuss, brief you today, on those areas and some of the specific projects we plan to do.

These will all come under our action plan for relief and reconstruction. One of the areas will be what we call transition from camps to communities. On this effort, we will provide money, which will be used for cash for work programs, which will provide assistance to businesses in the affected areas, which will allow them to get back to work. This will also provide psychosocial support for affected individuals and families, especially children. As part of that psychosocial support for children I'd like to mention one area in which we've already begun work on, which is that we are going to build one hundred playgrounds in affected areas, which will help children get back to normal activities.

Some of this money will come from the supplemental; some of it is also being donated from funds raised by former Presidents Bush and Clinton in their initiative. We also -- and you may have seen this, it was in the newspapers yesterday -- are providing $3 Million to the Bounce Back Tourism Campaign. All of this is intended to restore normal life, as it says, to return people from camps to communities, restore normal life, help them get back their normal livelihoods in these areas.

We will also be doing a large-scale infrastructure program. We expect this will be about $35 Million -- that's an approximation, we don't have an exact figure yet. There are several different components to this; one is in the Aragam Bay-Pottuvil area, we will replace the Arugam Bay Bridge, which was badly destroyed, which has a temporary bridge, which was set up by the Government of India, but it needs a permanent bridge. It will be more than just the bridge, in addition to the bridge we will provide a water and sanitation system for the Pottuvil and Aragam Bay area; this will include a sewage drainage system and provision of fresh water, and the hope here is that this entire package will again allow Aragam Bay, which is an important tourist sight, to come back to restore economic activity. We call this the Aragam Bay Project, but it's much bigger than just the bridge, it's an integrated project, which will significantly upgrade the facilities in the Aragam Bay area.

We will also rehabilitate or rebuild up to fourteen vocational education schools, which were damaged or destroyed in the tsunami. These schools are in the south and the east. Two of these schools will be model schools, which will be designed to demonstrate maximum use of environmental principals; they'll be "green" schools, so to speak. We'll also assist in upgrading the curriculum and the teaching methodology for these schools. This is intended not just to rebuild a physical facility but to help in the overall economic development of these areas because we think that vocational and technical education are very important for economic development in Sri Lanka.

We also will rehabilitate or rebuild three fisheries harbors; these will be Hikadua, Marissa, and Dondra. This will include repairing damage from the tsunami, especially damage to the break waters, will include where relevant building new break waters, will also include upgrades to the entire fisheries infrastructure. For instance, facilities for fish waste disposal, so that the fish waste is disposed of in an environmentally sound manner, and also fish processing and flash freezing plants so that the fishermen will have an improved economic opportunity there for fisheries. Again, this is not just rebuilding what has been broken by the tsunami, but upgrading the facility to provide greater economic opportunity. These are large-scale infrastructure programs that I mentioned.

We'll also do small-scale infrastructure throughout the tsunami affected area schools, clinics, sanitation systems and community centers. These will be labor intensive projects which will be opportunities for communities and local authorities to prioritize their own community needs and for getting money back into the communities as we rebuild. Now, all this infrastructure will need to have maintenance and capacity so we will also provide capacity building at provincial and local levels to help governance and to provide better service delivery in these areas.

I mentioned earlier that there's also a component of this bill, which will go towards Tsunami Early Warning. Some of that will be for a regional system, some of it will go towards local capacity in tsunami early warning   we haven't worked out the exact amounts yet, but it will be a substantial component. That's what we're planning to do with this bill that's been passed, and I'd be happy to take any questions.

QUESTION: I'm Zainab from Lanka Business Online. I have two questions. The first one is, what was the outcome of yesterday's private sector summit that was held in Washington on tsunami reconstruction, and secondly, what is the U.S. Government position on suspending taxes on Sri Lanka's exports for about three years. This was asked for as tsunami relief. What is the position of the U.S. Government on that?

AMBASSADOR LUNSTEAD: I actually haven't seen a report yet on the private sector summit, but of course since we're ten hours ahead of Washington it's a little hard to get the report. I have not seen a report yet on it, so I can't answer the first question. The second question, you're talking about debt relief? I'm sorry, I meant to mention Debt Relief, and it's in my notes and I forgot. The bill also includes funding for short-term debt deferral and restructuring; what the bill would do would be to allow Sri Lanka and Indonesia, if they choose to do so, to defer their official government debt to the United States for a period of one year and then to restructure that debt to repay it over the following four year period; this would allow relief to current budgetary expenditures. Now the bill says that if this is done the resources that are saved must be used to benefit tsunami victims. The government of Sri Lanka has about $40 Million in official debt payments due to the Government of the United States this year, so that would be the amount that's deferred if the Government of Sri Lanka decides that it wishes to do so. That's a decision for the Government.

QUESTION: V.S. Sambandan from the Hindu. What is the total official debt of the Sri Lankan Government to the U.S.?

AMBASSADOR LUNSTEAD: I believe it's about $500 million, but I'm not sure. We could check on that and get back to you if you want to leave your name. I don't have that figure with me, but the relevant portion is the amount that's due this year is about $40 Million, which we are willing to restructure and defer over four years.

QUESTION: Dilip Ganguly from Associated Press. Could we have a little bit (unclear) on the debt issue to understand it better? Can we defer it by a year?

AMBASSADOR LUNSTEAD: Right, the amount that would be due this year, which is about $40 Million we would defer, the Government would not have to pay it this year, and it would then be paid over the following four years. So it's a four-year restructuring.

QUESTION: (Dilip Ganguly, Associated Press) What if the Government agrees to spend this money on tsunami

AMBASSADOR LUNSTEAD: On tsunami, and other conditions. It's a Paris Club initiative, so the Paris Club sets certain parameters, debt referral and restructuring is a highly technical subject which I'm not an expert, probably none of us are, so the government will have to decide if it wishes to meet specific conditions, but the offer is on the table.

QUESTION: Has the U.S. Government taken a position on suspending export duties, which would largely benefit industries like the apparel industry in Sri Lanka?

AMBASSADOR LUNSTEAD: No, there has not been any decision on that. The United States has looked into some measures, which would provide some trade benefit to the tsunami-affected countries. One of those measures is to allow accumulation of GSP benefits to South Asian countries, but there is no discussion of reduction of duties on apparel. I did forget to mention that we'll also provide money out of this funding to Maldives, which also has a great need, and our intention is to provide that money to the Maldives National Fund for Reconstruction, and we'll work with the Government of the Maldives to select specific projects that we will work on.

QUESTION: (Dumeeta Luthra, BBC) I just wanted to ask, this $40 Million, is that capital being deferred, or is that interest, and will there be interest over the four years. I don't know if I missed that earlier.

AMBASSADOR LUNSTEAD: The $40 Million is the amount of payment which is due by the Government of Sri Lanka to the United States this year, so that would be both principle and interest. I don't have a breakdown on it; if anyone's interested we can find somebody to look into that. What was the second part of the question?

QUESTION: (Dumeetha Luthra, BBC) There will be interest accruing on the restructured loan?

AMBASSADOR LUNSTEAD: I believe not, but I would have to check on that and we can get back to you.

QUESTION: I am Prasad from Rupavahini (state-owned television). There's an initiative between the Government and the LTTE to build a joint mechanism on tsunami development. As an international donor, how does the United States see the situation?

AMBASSADOR LUNSTEAD: Well, we believe that a joint mechanism between the government and the LTTE would greatly help in the effectiveness of the relief and reconstruction effort in the North and the East and we support the initiative, the efforts, of the President and the Government to finalize such a mechanism.

QUESTION: I'm from ABC news. Will the U.S. Government be channeling any aid for LTTE controlled areas through any of the NGOs?

AMBASSADOR LUNSTEAD: Well, on the emergency relief assistance, which we have already done, we've provided assistance to a number of NGO's which operated throughout the country, including in LTTE areas. The assistance, which we intend to do, which I've mentioned, will be used throughout the country. I don't think we have specific plans for using it in LTTE areas.

QUESTION: There's no specific channeling of money through NGOs to LTTE controlled areas?

AMBASSADOR LUNSTEAD: No, we've never done that.

QUESTION: (Dilip Ganguly, Associated Press) Under the existing laws you cannot channel even indirectly into an area controlled by the LTTE?

AMBASSADOR LUNSTEAD: That's not true. The law says we can't do anything that would provide material assistance to the LTTE because it's listed as a terrorist organization. We can provide humanitarian assistance in LTTE controlled areas and we have done that through international NGOs who have received grants from us for various activities.

QUESTION: Mr. Ambassador, I'm from the Daily Mirror newspaper. Two quick questions. Number one, when will the $650 Million dollars be allocated to separate countries, and number two, have you been in communication with any specific ministry with regards to the debt deferral, maybe the Finance Ministry? Have you discussed anything concrete?

AMBASSADOR LUNSTEAD: We've had discussions for the past several months with the Finance Ministry about the debt issue, so that is ongoing discussions.

QUESTION: What has the Government response been?

AMBASSADOR LUNSTEAD: Well, the Government is interested in debt deferral, but it had to see the final details, and now that we have the details we're in further discussions with the government. Oh, the first question   we will have the first breakdown in, shall we say, a few weeks. That's a very vague answer but I don't have anything more specific than that. But we expect that within the next few weeks we'll have a specific breakdown.

QUESTION: You mentioned certain trade concessions that involves accumulation of GSP plus benefits. Could you elaborate what does this mean?

AMBASSADOR LUNSTEAD: I was afraid you were going to ask that. (Laughs). I'll have to get somebody to get back to you on it with the details. It's a technical trade question and I don't have more than that on it, but I can have someone call you about it if you want to leave your name and number.

QUESTION: (Dilip Ganguly, Associated Press) One point I found very interesting, one hundred playgrounds for kids? Whose idea was that?

AMBASSADOR LUNSTEAD: Do you want to talk about the playgrounds, Andrea?

USAID ACTING MISSION DIRECTOR ANDREA YATES: Shortly after the tsunami we were looking for ways to have what are called safe spaces for families, communities, but especially for children to gather, to play, to interact, to have something to do, and also to get them back to a normal daily life, attitude, etc., and one of the things we looked at was replacing and repairing playgrounds. We fortunately were able to get funding through - or will be able to get funding through - the supplemental bill that the Ambassador has been talking about. We also have funding from the Bush-Clinton fund; they raised funds from a variety of sources including private sector and the U.S. -- individual schools, etc. There were actually thousands of donors who contributed to that fund, and we also have money from a third organization called Joint Distribution Committee, JDC, and combined, that's going to allow us to build one hundred playgrounds. We have in country right now this week a team of people, mostly through the National Recreation and Parks Service Association of the United States and one of their jobs is to look at playgrounds, age-specific, cultural-specific safety issues, placement, all of those things, and they're in Sri Lanka right now, looking at sites, talking to organizations, talking to our government partners about where these might be placed.

AMBASSADOR LUNSTEAD: This is a great example of what we call a public-private partnership, where we have money and expertise from the public sector and the private sector coming together, and we do want to mention the contribution of the JDC, the Joint Distribution committee, which is a relief and reconstruction branch of the American Jewish Committee which is operating here in a number of different areas now.

QUESTION: (Inaudible.)

USAID ACTING MISSION DIRECTOR ANDREA YATES: And that's one of the issues that certainly we're looking at. The areas are going to be identified through working with local NGOs and local communities. The government may provide some of the land. In some areas, there are going to be playgrounds existing, destroyed, and they're going to be replaced. The land that will be used is not necessarily suitable for housing.

QUESTION: (Dumeetha Luthra, BBC) The donors' conference this weekend -- Will you be attending and what are you expecting to come out of it?

QUESTION: (V.S. Sambandan, The Hindu   inaudible)

AMBASSADOR LUNSTEAD: So we're changing subjects, is that it? Ok, Donor's Conference, I'll be attending, Andrea will be attending. We hope to have a frank report from the government on its plans. The conference of course, is not just about reconstruction, but also about the entire poverty reduction and economic growth strategy of the government, so we hope to have a report from the Government for its plans on the entire economic growth package, and a frank discussion between multilateral and bilateral donors and the government on how to move forward.

QUESTION: (Dumeetha Luthra, BBC) How disappointed are you that a joint mechanism hasn't been signed before this conference?

AMBASSADOR LUNSTEAD: Was that an attempt to put words in my mouth? (Laughter). As I said before, we think that a joint mechanism would be a very effective way to improve delivery of reconstruction assistance to the North and the East so we hope that it will happen as quickly as possible. You asked about President Clinton   you really need to talk to the U.N. about this because President Clinton will be coming under his U.N. hat, but I believe he'll be coming at the end of the month and spending some time in Sri Lanka and in Maldives, but it's really, you have to talk to the U.N. about it because it's their baby.

QUESTION: The U.S. is not going to put any pre-conditions on setting up a joint mechanism with the LTTE? The U.S. will nevertheless go ahead with giving out whatever aid they have allocated?

AMBASSADOR LUNSTEAD: Our aid, our assistance reconstruction program will move forward, yes, but we do think that the signing and implementation, which is really the hard part of a joint mechanism, is important both for the reconstruction process and for the entire political process for progress in the peace process.

QUESTION: But it's not a prerequisite?

AMBASSADOR LUNSTEAD: No, no. We've never said that.


Released on May 17, 2005

(end transcript)

(Distributed by the Bureau of International Information Programs, U.S. Department of State. Web site:

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