In an interview with rediff.com, Assistant Secretary of State Richard Boucher, the Obama administration's point man for South Asia, also lauded the role played by India in urging the Lankan government to protect the rights of Tamils.
"We have always supported the effort against the Tamil Tigers. They are a terrorist organisation and the government was right to fight them," he noted.
But Boucher added, "We have also been very, very clear with the government that the purpose of fighting terrorism is to bring the benefits of a democratic government to the people."
The US feels the Sri Lankan government "hasn't worked hard enough to bring that democratic government to the people of the area and frankly, to the Tamil community in Sri Lanka."
"We welcome the incredible progress they are making against the terrorist group," he reiterated, "but they have to pay as much attention to the welfare of the citizens who are caught in the middle."
The government has to be scrupulous in its fight against terrorists, stressed Boucher, adding, "Sometimes, that means not shooting back lest you catch civilians in the crossfire. You have to be attentive to the civilians trapped in the middle and make sure that they receive aid."
Boucher also brought up the contentious issue of freedom of press in the strife-torn country, recalling the brutal killing of Sunday Leader Editor Lasantha Wickramatunga.
He revealed that some Sri Lankan journalists have been threatened by government officials.
"You can't have a functioning democracy without respect for the media. People ought to be saying, 'A great victory by a democratic government'. But they are not, because it is tarnished by all these other things," he explained.
Boucher pointed out that Wickrematunga's slaying was not the first attempt to silence the press by violence.
"During my visit to Jaffna over a year ago," he recalled, "I had raised this issue. The government needs to do something to make sure it stops."
When queried if the LTTE was responsible for the murders of journalists in Jaffna, Boucher replied cautiously, "There had been reports of all kinds -- of different people killing journalists up there -- there were accusations back and forth about who did it."
He stated that the Sri Lankan government needs to pay attention to these issues during its offensive against the LTTE.
The US continued to support development and humanitarian efforts, particularly in former LTTE-dominated areas that the government had seized control of, he said.
Noting External Affairs Minister Pranab Mukherjee's recent visit to Sri Lanka to express concern over the condition of the displaced Tamils, Boucher said the US appreciated India's efforts. "We have very similar attitudes and interests on this," he said.
"We do talk to our Indian counterparts about the policy in the region, including on Sri Lanka. Frankly, it's not just the US and India, it's the other co-chairs too. Countries like Japan, Norway and the European Union which are interested in fighting terrorism and supporting democracy --they are also looking at this situation in Sri Lanka with both support and anguish."
It was imperative, said Boucher that "a democratic government which achieves victory against terrorism also puts in as much effort towards achieving a better democracy."
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