West may hold up $1.9bn loan to get help for civilians

Tamil refugees in Kadirgamh camp at Chettikulam, northern Sri Lanka, which David Miliband, the British Foreign Secretary, and his French counterpart, Bernard Kouchner, visited.

(by Jeremy Page, Times Online)

The United States is threatening to block a $1.9 billion (£1.2 billion) emergency loan to Sri Lanka from the International Monetary Fund (IMF) because of the treatment of civilians caught in the conflict with the Tamil Tiger rebels, according to Western diplomats.

Sri Lanka applied for the loan early last month to help to cope with a financial crisis caused partly by the global credit crunch and partly by its record defence expenditure of $1.6 billion this year and $1.5 billion last year.

The Central Bank said that it expected to conclude negotiations on the loan by the end of March, and most analysts expected it to be cleared by mid-April. The IMF said last night, however, that the loan was still being discussed. Western diplomats say that is because the United States, Britain and other allies are reluctant to bail out unconditionally a Government that has dismissed their concerns about civilian casualties and human rights issues in the past few months.

They are also anxious not to lose their only real leverage over the Government in continuing negotiations over the plight of tens of thousands of civilians on the front line or in internment camps.

“The Americans want to play with the question of the IMF loan,” Jean-Maurice Ripert, France’s Ambassador to the UN, told Inner City Press — a news service covering the United Nations — on Tuesday. The Times has heard a recording of the comment. It was the first public admission by a Western official that Washington may be responsible for an apparent delay in the IMF emergency loan — which can be disbursed in ten days.

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