Wednesday, May 18 2005 09:17 Hrs (IST) - World Time -

Kandy, Sri Lanka: Foreign donors gave Sri Lanka a clear message at the end of an aid conclave, saying the country should either resume the peace bid with Tamil Tiger rebels or lose $ 3 billion in overseas assistance.

International aid agencies and countries urged the Government to revive the moribund peace process to qualify for receiving aid to repair the damage caused by years of separatist conflict and the December 26 tsunamis last year, Finance Minister Sarath Amunugama said yesterday (May 17, 2005).

After two days of intensive review of Sri Lanka's economic progress by bilateral donor nations and multilateral agencies, Amunugama said Sri Lanka stood to get some $ 3 billion over the next three to five years for reconstruction of tsunami-caused damage.

"Unless we go on the path of negotiations, many of these pledges and funding will not materialise," Amunugama told reporters.

The aid pledges included $ 300 million in debt relief and another $ 250 million to help shore up foreign reserves.

The World Bank's (WB) vice president for South Asia Praful Patel stressed that although foreign lenders were not imposing any conditions on Sri Lanka, they were keen to have the Government conclude a deal with Tamil Tiger rebels on sharing tsunami aid.

"We are not imposing conditions, but at the same time Sri Lanka cannot take international lenders for granted," he said.

Donors were also looking for an equitable distribution of aid and transparency and wanted the limping peace process revived to hasten economic recovery and development in the Island.

"For many development partners, the peace process is at the core of their interest in Sri Lanka," Patel said.

Diplomats said donors were generously offering help to prop up the wavering peace process and strengthen the tenuous ceasefire.

They said they were not concerned so much about the amounts of money that can be given but more about the implementation of projects.

They pointed out that a $ 4.5-billion aid package pledged by donors in June 2003 to help rebuild the conflict-ravaged areas was more or less untouched due to the hiatus in direct talks with the rebels since April 2003.

Kumaratunga told donors yesterday the country would go ahead with the proposed tsunami aid-sharing deal with the Tamil Tigers despite what she described as threats to her life from "within and outside" her Government.

Her remarks were widely taken to refer to the stiff Opposition to the deal from her Marxist coalition partner, the JVP, or People's Liberation Front.