The following is a statement from World Bank Country Director Peter Harrold addressed to the Daily News:

"I deeply regret any offense or misunderstanding caused by the published version of the interview I gave to the Sunday Times which appeared on March 6, 2005.

The Sunday Times reported that I used the phrase "a kind of unofficial state." Regarding World Bank policy toward the LTTE, I stand by my previous statement that I never used the phrase "unofficial state." Rather, what I said was "an official statement" while discussing the Government's LTTE policy.

I do not regard the LTTE-controlled areas as an unofficial state, nor does the World Bank.

Upon further review of our recording of the interview, it is clear that a reasonable person could have misunderstood me.

I am sorry I did not speak more clearly, but I am sure about what I said, and I think that when it is heard in its context, it becomes clear that I have not said anything that is out of line with current Government policy.

In the interest of full disclosure I have asked our staff to place an unedited excerpt of the interview on our website so that people may judge for themselves. The interview can be played by clicking on the following link: http://www.worldbank.org/lk.

The World Bank works directly with sovereign governments. We have a long-held partnership with the Government of Sri Lanka, and we act in accordance with their policies.

I sincerely hope that we can put this situation behind us so that we can focus on the urgent tasks of rebuilding the nation after the Tsunami disaster, and fighting poverty in Sri Lanka, for all Sri Lankans.