July 8, 2009

The group Tamils Against Genocide has quietly dropped a federal lawsuit it filed against U.S. Treasury Secretary Timothy Geithner and a top U.S. International Monetary Fund official in an effort to stop an IMF loan for Sri Lanka.

The group did not give a reason for filing a notice of voluntary dismissal on June 19. TAG’s attorney, Bruce Fein, had promised to use the lawsuit against Geithner and Meg Lundsager, the U.S. executive director at the IMF, to block the proposed $1.9 billion IMF loan for Sri Lanka.

U.S. Justice Department attorneys for Treasury Secretary Geithner and the IMF’s Lundsager argued in a recent court motion that the case was without merit because TAG’s case had no standing in federal court, and that it relied on a “series of remote contingencies.”

“This is not the first time in which plaintiffs similarly situated to the one here have come to federal courts seeking to use foreign aid decisions to redress an alleged injury caused by a foreign sovereign nation,” the Justice lawyers wrote. “At least three prior cases were dismissed for lack of standing.”

Under IMF guidelines loans are supposed to be awareded on economic, and not political, considerations. IMF staff have reviewed Sri Lanka’s request and found that it meets standards for an IMF loan. The IMF’s board must vote to approve the funding.

Sri Lankan government forces in May defeated the Liberation Tigers of Tamil Eelam, ending 25 years of conflict. The IMF funding would boost Sri Lanka’s plans to rebuild the northern part of the country, which was badly neglected when it was under LTTE influence.

Jaliya Wickramasuriya, Sri Lanka’s ambassador to the United States, said the TAG lawsuit never seriously threatened the IMF funding.

“The IMF professional staff has reviewed Sri Lanka’s financial status and has determined that the loan is justified as part of that organization’s worldwide economic stimulus program,” the ambassador said. “The people who will be hurt most if this loan is not approved are those living in Sri Lanka, especially in the north -- the very people who have just endured 25 years of terrorism.”