Lunstead, who is leaving the country after three years, also said in a statement released Wednesday that a solution to Sri Lanka's civil strife would require "radical changes in the way the entire nation is governed".
These changes must "empower all the people of Sri Lanka: Sinhalese, Tamils, Muslims and others, and give them a greater say in how they are governed in the areas where they live", he said in an American Independence Day address.
Spiralling violence has claimed the lives of more than 830 people and displaced tens of thousands more since December as a ceasefire agreement between Colombo and the Liberation Tigers of Tamil Eelam (LTTE) crumbles.
The tit-for-tat killings and military operations have sparked fears of an all-out war, with political sniping between the government and rebels effectively crippling truce monitoring efforts.
"I have to confess ... that I leave with some disappointment," Lunstead said.
"Peace talks have not resumed, the ceasefire is under constant pr