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Is Sri Lanka’s war near its end?

[Gulf Times, Thursday, 18 December 2008 08:01 No Comment]

Sri Lanka’s military yesterday said it was assaulting the edge of Kilinochchi, which the separatist Liberation Tigers of Tamil Eelam (LTTE) claim as capital of the nation they want to create for Sri Lankan Tamils.

The military has made the most battlefield progress since the war began in 1983. That has analysts asking if the ground war could soon be over.

Here are some scenarios of what could happen next:

The military has been as relentless in assaulting Kilinochchi as the Tigers have been in defending it from kilometres of trenches and bunkers since September. Growing casualty counts from both sides suggest troops are closing in, but no one will predict when they can seize the northern town. If it falls, it will be a huge victory for the military. But the Tigers still control a wedge-shaped piece of land in the northeast corner of the island, and soldiers are fighting on almost all fronts to the west and south, including below the Mullaitivu port on the east coast. Two more units of near division strength — Task Forces Four and Five — are soon to deploy, the military has said.

With the LTTE losing ground and the military riding high, President Mahinda Rajapaksa has plenty of political support. That has prompted allies to call for an early parliamentary election to consolidate power and sidestep criticism of his government’s handling of the $32bn economy, levelled by the main opposition United National Party. He has already dissolved two provincial councils, clearing the way for polls there to test the waters. Some say the fall of Kilinochchi would be the trigger for an early national poll, but advisers say that is just one possible reason.

If Kilinochchi falls, analysts and market players say they expect a brief boost to the Colombo Stock Exchange and maybe some temporary relief to pressure on the rupee. Both tend to move on their own fundamentals and have recorded some impressive performances despite the 25-year war. This week, Standard & Poor’s Ratings Services cut Sri Lanka’s sovereign rating by one level to B, five notches below investment grade, on declining foreign exchange reserves and a high fiscal deficit. Most analysts say a sovereign default is unlikely. That said, the IMF has warned that Sri Lanka’s impressive economic growth could slow if it doesn’t cut spending, stop taking expensive foreign loans and spend its foreign exchange to support the rupee.

Not really, especially with popularity for his war effort so strong. Rajapaksa’s mainly rural power base has been largely shielded from economic woes through his populist budgets and development projects. Rajapaksa is also counting on a flood of post-war reconstruction money to come in after fighting ended.

Tiger leader Vellupillai Prabhakaran in his annual speech in November said the government was living in a “dreamland” if it thought it would win. The diplomatic currency on which the Tigers had long traded — that they are defending a minority — suffered this week when Human Rights Watch accused them of mistreating and forcibly recruiting the Tamils they say they represent. Many analysts say Prabhakaran may order bombings or air raids in Colombo, but will not be able to reverse military gains as spectacularly as he did in the 1980s and 1990s.

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