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As IMF Hands $2.5B Loan to Sri Lanka, Letter of Intent Withheld, Ethnic Cleansing Alleged

By Matthew Russell Lee

UNITED NATIONS, July 24, updated -- As the International Monetary Fund's executive board approved a $2.5 billion loan to Sri Lanka, the IMF refused to release a copy of the Rajapakse government's letter of intent for the loan. As far back as a March press briefing in Washington, Inner City Press asked the IMF what safeguards, if any, would ensure that the IMF funds not boost the Rajapakse government's shelling and now detention of civilians in northern Sri Lanka, and alleged ethnic cleansing there.

   At its press briefing days before the IMF Managing Director announced his staff's recommendation that the loan be approved, IMF spokesperson Caroline Atkinson said that the international community's views would be taken into account. But her colleague William Murray on Friday rejected Inner City Press' reject for a copy of the letter of intent, first saying that Sri Lanka would be the one to release it, then replying that the IMF's "transparency policy" leaves release entirely in the hands of the applicant, Sri Lanka. Mr. Murray wrote:

"Will check on the Letter of Intent. They're released by the member country, and typically after Executive Board review of the economic program. Sri Lanka's board meeting is today."

And then, after Inner City Press formally re-request a copy of the Letter, Murray wrote:

"The publication of the Letters is governed by the Executive Board's transparency policy. That policy empowers the member country to decide whether to release the document or not."

   But the policy states that the country's consent to publication by the IMF is "presumed." So why is the Sri Lankan letter not made public by the IMF?

IMF, through a glass darkly, Sri Lankan letter of intent not shown

   In fact, long after Sri Lanka's Ambassador to the U.S. had publicly announced the IMF's approval, which he said no one opposed, Mr. Murray at 5:49 p.m. Friday told Inner City Press to "stay tuned" about the IMF's Sri Lanka decision. While the Times of London reported that the UK would vote against the loan, the UK has only a five percent say. At press time it appeared the UK, France, Germany, Argentina and the United States abstained on the loan, an "IMF source" was quoted. How can the IMF let an applicant country scoop it on announcing a loan, while allowing the country to withhold its letter of intent?

Update -- long after deadline for this article and after Sri Lanka already announced the IMF's approval, the IMF put online a press release (no further communication was received from Mr. Murray) putting the size of the loan even larger, at $2.6 billion. Analysis will follow, watch this site.

* * *

With UN Silent on Sri Lanka, IMF Staff Urge $2.5 Billion Loan, Will Views Be Heard?

By Matthew Russell Lee

UNITED NATIONS, July 21 -- With Sri Lanka putting restrictions on the Red Cross and the press, and despite statements by the UK and US on the country's application for a $1.9 billion loan from the International Monetary Fund, on July 20 IMF Managing Director Dominique Strauss-Kahn announced his staff will recommend a $2.5 billion transfer to Sri Lanka at a board meeting on July 24.

   Since March, Inner City Press has asked IMF spokespeople what safeguards if any would be attached to the loan. Most recently on July 16, the IMF's Caroline Atkinson said that the views of the international community will be taken into account. Four days later her boss issued a press release with no mention of safeguards. Pro-government media in Sri Lanka report IMF board approval as a mere formality. HSBC and now JPMorgan Chase are helping the Rajapakse regime to do a road show to foreign capitals to drum up more investment.

   Outgoing UK minister to Asia and the UN Mark Malloch Brown told Inner City Press earlier this month that "the IMF loan is not moving," is not going anywhere. His boss David Miliband had said the conditions are not right for such a loan. With 300,000 people detained in government camps, are the conditions any better now?

IMF Board room, Sri Lanka internment camps and safeguards not shown

  An AP wire service reporter who exposed conditions in the camps was told to leave the country, his visa not renewed. (Reuters with more pro-government reporting, on the other hand, apparently had no such problem.)

   The Red Cross was been ordered to cut back in Eastern Sri Lanka, where it had over 140 workers. Despite commitments to investigate itself, the Rajapakse government ended an investigation into the killing of 17 workers of the NGO Action Contre La Faim, exonerating its armed forces. And what does the UN have to say?

On July 21, Inner City Press asked

Inner City Press: over the weekend, Action Contre la Faim -- it’s this French NGO -- denounced the Sri Lankan Government’s ending of an inquiry of how 17 of their workers were killed, and they called for an international inquiry, including calling on the UN to take action. Since the UN -- John Holmes and others -- had said they were closely watching that investigation, what do they say now that it’s over, and the group concerned calls it a whitewash?

Associate Spokesperson Haq: We’ll check with OCHA what kind of particular response they have on the issue concerning Contre la Faim. As far as that goes, there has been no UN investigation into this, as you are aware. We’ll first monitor events on the ground, and we do continue to monitor a wide range of issues concerning how the Government of Sri Lanka has followed up on the commitments that the Secretary-General had outlined in his letters. As you know, the Secretary-General met with President [Mahinda] Rajapaksa last week on the margins of the Non-Aligned Movement summit, and he brought up again the sort of actions we had wanted taken in Sri Lanka.

Inner City Press: Just one more on that. I wanted to know, there was a report in the Times of London saying that, in the camps in Vavuniya, up to 1,400 people have died, and the AP has also reported that the conditions are very dire in terms of health. What’s the UN, if they’re closely monitoring, are they monitoring both the health and the level of deaths inside these camps?

Associate Spokesperson: Well, that of course depends on the level of access we have. We don’t have necessarily the most precise information about things like death tolls. At the same time, we do have tremendous concerns about the humanitarian conditions in the camps, and that was in fact one of the topics that the Secretary-General raised with the Sri Lankan President last week.

  But pro government media reported the meeting as a love fest, and it doesn't seem to have any effect. Watch this site.

* * *

IMF Says on Sri Lanka, Int'l "Views Will Be Considered," Spends on Honduras But Dodges Question

By Matthew Russell Lee

UNITED NATIONS, July 16 -- When the International Monetary Fund's Executive Board finally meets on Sri Lanka's application for a $1.9 billion loan, IMF spokeswoman Caroline Atkinson told the Press on Thursday, "all of the international community's views will be considered."

  The question posed, by Inner City Press, asked the IMF to respond to reports that "funds spent in the North are 'the jailer of these people and 'looks like internment.' What safeguards would be in place?" Ms. Atkinson's answer, referring to what she called the IMF's "good discussion with the authorities," did not mention any safeguards. Briefing at Minute 17:18.

   United Kingdom officials have made statements, which they have not retracted, that Sri Lanka's application for an IMF loan is "not moving," that the conditions are not right.

  While the US position has vacillated, the Obama administration's close attention to media probably means that the New York Times front page story of July 13, and the next day's editorial, makes less likely for now U.S. support for a $1.9 billion loan to Sri Lanka, whose military budget is $1.6 billion.

This in Honduras -- but could be Sri Lanka, IMF answers not shown

   Inner City Press also asked if the expulsion of Manuel Zelaya from Honduras has given rise to any changes or discussions within the IMF. Ms. Atkinson responded that "we have followed the normal international practice." She said that "we don't have any program with Honduras."

   But the IMF last month opened up a Technical Assistance Center for Central America, Panama, and the Dominican Republic (CAPTAC-DR) in Guatemala City. IMF Deputy Managing Director Takatoshi Kato was quoted that "this center is an example of strong regional cooperation in Central America, Panama and the Dominican Republic... A region with almost 40 million people has significant economic potential. The Fund is proud to be a partner in the effort to promote regional economic growth and development, and hopes that CAPTAC-DR will serve as an engine to push forward the objective of a more economically cohesive region.” The latest regional technical assistance center will serve Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua, and Panama.

   So the IMF has a center which spend money to serve Honduras. Clearly, as in the case of Sri Lanka for the last four months, the IMF likes to dodge questions and, some say, accountability. But in light of the CAPTAC-DR, it cannot so easily dodge the question of Honduras. The World Bank has spoken to the question. When will the IMF?

Footnote: Inner City Press also asked the IMF, "What is the IMF's response to the UN General Assembly's outcome document with its criticism of the IMF and geographical balance, etc? And please deny that you pick and choose and censor questions submitted online about pending IMF loan applications - like Sri Lanka." The former has yet to be answered; there has been one round of back and forth (without substantive answer) on the latter. We will continue to pursue this.

* * *

On Sri Lanka, IMF Said Ready to Lend, Dodges Ethnic Cleansing, Where Are Obama, UK?

Byline: Matthew Russell Lee of Inner City Press at the UN: News Analysis

UNITED NATIONS, May 20 – With the Red Cross blocked from access in Sri Lanka to the wounded and dying, with NGOs increasingly barred from the UN-financed camps for IDPs, in Washington the International Monetary Fund said Thursday that it looks forward to presenting for approval to its Board Sri Lanka's request for a $1.9 billion loan.

  The statement was made by the IMF's director of external relations Caroline Atkinson. Inner City Press online asked a follow-up during the Fund's biweekly press briefing, which Ms. Atkinson re-stated: please state whether as the Sri Lankan government says the proceeds of any IMF loan would support re-housing in the north, which some would described as ethnic cleansing?

    The IMF's Ms. Atkinson responded, “Perhaps it's just helpful to clarify that when the IMF lends, it is not for specific projects. We lend to support a country's finances. We make a loan to the Central Bank to support reserves. Any other question?”

    On March 12, Inner City Press went to the IMF in Washington and asked Ms. Atkinson's colleague David Hawley what safeguards were being considered to ensure that the proceeds of any IMF loan to Sri Lanka wouldn't be enable war or ethnic relocation. Mr. Hawley said that things were at an early stage. Later, French Ambassador to the UN Jean-Maurice Ripert told Inner City Press that “the Americans are trying to play with the loan.”

   The U.S. subsequently confirmed this, receiving human rights credit for raising the issue. The UK has as well. After a contrary statement by the UK Ambassador to the UN, in response to Inner City Press' question at the UN Security Council stakeout, UK Foreign Minister David Miliband said he didn't think conditions for an IMF loan to Sri Lanka were right. Are they now?

IMF's Dominque Strauss-Kahn and Ms. Atkinson, ready to lend to Sri Lanka

   Now, after two weeks ago refusing to take the question at their briefing, the IMF says that while there is still no access to the killing zone in the North, while doctors who reported on the war as well as offering treatment are detained and interrogated, it wants to present the loan for approval by its Board within weeks.

  What happened, some ask, to the ostensible US and UK opposition? At the US State Department this week, the Obama Administration appeared to waver or move on from it previous position, both on the loan and as stated by the President following Time magazine's diagnosis that Barack Obama was failing the Sri Lanka test.

The IMF's implicit argument that it is not supporting what a government does on the ground by lending to its Central Bank is specious. In fact, many experts on Sri Lanka note that the government's military offensive in the North was assisted not only by aid after the tsunami, but even more by the proceeds, to the Central Bank, of debt forgiveness. Now during the current crisis the IMF wants to make a loan to the Sri Lankan Central Bank. Ms. Atkinson alluded to, but did not give an explanation as requested by Inner City Press, of a “larger facility” being discussed.

Victor's justice, victor's loans, some call it, as they call the UN's Ban Ki-moon's impending visit to Sri Lanka a sort of victory tour. Inner City Press leaves today on the UN trip. Watch this site.


  Click here for an Inner City Press YouTube channel video, mostly UN Headquarters footage, about civilian deaths in Sri Lanka.

Click here for Inner City Press' March 27 UN debate

Click here for Inner City Press March 12 UN (and AIG bailout) debate

Click here for Inner City Press' Feb 26 UN debate

Click here for Feb. 12 debate on Sri Lanka

Click here for Inner City Press' Jan. 16, 2009 debate about Gaza

Click here for Inner City Press' review-of-2008 UN Top Ten debate

Click here for Inner City Press' December 24 debate on UN budget, Niger

Click here from Inner City Press' December 12 debate on UN double standards

Click here for Inner City Press' November 25 debate on Somalia, politics

and this October 17 debate, on Security Council and Obama and the UN.

* * *

These reports are usually also available through Google News and on Lexis-Nexis.

Click here for a Reuters AlertNet piece by this correspondent about Uganda's Lord's Resistance Army. Click here for an earlier Reuters AlertNet piece about the Somali National Reconciliation Congress, and the UN's $200,000 contribution from an undefined trust fund.  Video Analysis here

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