The challenges facing Sri Lanka over the next seven years will be characterised by:

• The need to resolve a volatile political and conflict situation with the overall objective of realising a lasting resolution of the conflict through a peacefully negotiated political settlement which respects the legitimate demands of all the people of Sri Lanka including minority communities.
  
• The need to take forward a series of reforms and ensuring faster growth to achieve Millennium Development Goals (MDGs) on poverty reduction.
  
• The need to eradicate acute poverty in parts of central Sri Lanka and in the whole of the North and East of Sri Lanka.

The development assistance mapped out in this present Country Strategy Paper (CSP) seeks to assist Sri Lanka to meet these challenges. The CSP, for which an envelope of 112 MEURO has been set aside, is in line with the EU’s established strategy of focusing on conflict prevention and poverty reduction and will support the EU scenario based strategy towards Sri Lanka.

The priority sector for 2007-13 will be support to the peace process and poverty reduction in the North and East through sustainable integrated district development of one to two Districts. In addition, the CSP will include a smaller allocation of support to two non focal sectors: trade and good governance. The trade support takes note of the fact that trade concessions such as GSP+ can have a major development impact but countries such as Sri Lanka have not managed to make maximum use of them in the past. Support under the second non-focal will focus on promotion of good governance through electoral reform, human rights monitoring and advocacy and conflict resolution.

Over the past seven years, Sri Lanka has experienced widely different political situations, including periods of positive climate towards peace/uneasy peace, of low intensity conflict and of high intensity conflict, the latter is arguably the prevailing situation in 2007. Conflict is clearly the single most important obstacle to successful implementation of the proposed EC programme and development activities will need to be adapted to suit what is feasible and appropriate. To this end, the CSP foresees three scenarios under which the EC’s support and response strategy will change respectively:

a). Under a scenario of a positive climate towards peace/uneasy peace, integrated district development as foreseen in the strategy will be pursued and support for trade and good governance will follow normal channels, supporting both government and non government institutions.

 

b). Under a scenario of insecurity and low-intensity conflict, when regional development and road building are problematic, support will focus more on trying to keep vulnerable communities in place, whereas for the two non focal sectors support will be directed via non state actors and, only if duly justified, aid could pass via government institutions.

c). Under a scenario of high intensity conflict with major displacement of population, support will tend to focus on the communities and people who have been uprooted, addressing their medium term needs in the conflict affected communities which cannot be addressed by the ECHO instrument. Under this scenario, support for governance and trade will be channelled exclusively via NGOs and the private sector.

Those scenarios need to be used with flexibility and judgment so that they allow account to be taken of the changing situation in the implementation of the CSP.