For the past few months Sri Lankan troops have been trying to advance on three fronts in Vanni. Task Force 1, along the A-32 highway, towards Pooneryn, 57 Division towards Kilinochchi through Akkaraayan in south west of the city and towards Mullaitheevu through Naayaru in the south west region of Vanni.

As per latest reports, Task Force 1 has managed to reach Thikkuvil on the A-32 highway and is approximately 7 kilometers away from reaching Pooneryn, which is seen as a strategic milestone as it enables Sri Lankan security forces to open a land route to Jaffna peninsula.

The 57 Division in recent days has reached Akkaraayan junction following weeks of intense fighting surrounding the Akkaraayankulam bund.

The 58 Division is at Kokkaavil located west of the A-9 highway and the newly inducted Task Force 3 is west of Maankulam.

The LTTE continues to hold the A-9 highway from Omanthai to Kilinochchi and is offering stiff resistance to the Sri Lankan soldiers attempting to advance in multiple fronts.

Shops and commercial establishments in Tamil Nadu shut down and the state's roads wore a deserted look as a result of the traders' bandh (shut down) Friday on the Eelam Tamils issue. According to reports in the Indian media, the bandh was total all over the state as over 25 lakh traders, owing allegiance to 5,500 trade unions, took part in the peaceful agitation to show their solidarity with the Eelam Tamils.

All political parties in Tamil Nadu had extended their support to this bandh which took place from six in the morning to six in the evening in Tamil Nadu and Puduchery (Puthuchcheari). The shutdown of the private sector has drawn more participation than the government organised human-chain, observers said.

The organisors of the shutdown said the state-wide success of the bandh, even in rural areas, reflected that sentiments among Tamil Nadu public for Eelam Tamils running high, independent of state orchestration.

T. Vellaiyan, President of the Tamil Nadu Traders Union that called for the bandh, demanded an immediate halt to the genocide of Tamils in the war-ravaged island.

The bandh had a two point agenda: to condemn the Sri Lankan military's genocide on Tamils, and to express solidarity with the Eelam Tamils who had lost their livelihood in the island.

The bandh call had a rousing reception from traders of all strata of society: roadside tea-shops and grocery stores never opened, so did some of the largest cloth stores and hotels.

Asia's largest perishable goods market at Koyambedu in Chennai, which has roughly about 2500 wholesale shops, was completely shut down from 12 midnight Friday. Consequently, about half a million fruit/vegetable shops which get their supplies from here, were also shut down. This market employs about 10,000 workers and 500 drivers.

The traders' bandh affected all cities in Tamil Nadu. The public was affected because it was impossible to locate any store that had not downed its shutters. It was difficult to even buy a packet of milk, because the distribution was wrapped up by six in the morning.

Scheduled to be held originally on 17 October, the bandh was postponed to 31 October on account of the decision taken at the All Party Meeting organized by the Government of Tamil Nadu. Over 5.500 trade unions had come together to organize this bandh – they had distributed pamphlets highlighting the sufferings of the Eelam Tamils to all affiliated traders.

Moreover, traders from other Indian states, who run some of the most successful businesses in Chennai also extended their support to the bandh and cooperated by not operating Friday.

Mr. Vellaiyan was arrested by the Tamil Nadu Police for alleged 'enforcement' of the boycott following 'politically motivated complaints', the organisers said and added that they promptly secured his release.

News papers and television channels in India labelled this bandh a hundred percent success.

As international relations scholar Oliver Richmond pithily puts it, ‘the problem of peace is that first war must be eradicated or managed’. In Sri Lanka, however, Western states have followed exactly the reverse logic: as President Chandrika Kumaratunga put it in the late nineties, the solution was a ‘War for Peace’. This is the logic even today, several thousand lives later. The dynamics of the past three years have exposed the fundamental contradiction in Sri Lanka: ‘multi-ethnic’ means different things to the island’s communities. To the Tamils it means that we are, like the Sinhalese, one of the island’s founding races, and thus equal to them. To the Sinhalese, as Army commander Lt. Gen. Sarath Fonseka has explained, the island is Sinhala land and the others may remain, provided they know their subordinate place. The two visions simply can never be reconciled.

In the past three years, the West-led international community allowed the Sinhala lion a free hand to do what it willed to the Tamils. It was not just about destroying the ‘terrorists’ but, crucially, also of smashing the very foundations of Tamil political relevance in Sri Lanka. That is why the state’s killing of Parliamentarians, journalists, aid workers, social workers, and so on has taken place without any real sanction and little criticism from the self-styled liberal states. That is also why hundreds of thousands more Tamils have been displaced, reduced to living under plastic sheeting or less in their own homeland. In short, the Western states have endorsed and assisted – sometimes tacitly, often directly – this Sinhala effort to disaggregate the Tamils as a viable political community and reduce them to a scattered, pulverised, exhausted collection of Tamil-speaking individuals.

Yet we have resisted this genocide. On the one hand the LTTE has staged its trademark ferocious armed resistance. The Sinhala Army has advanced and taken territory in the past two years. Indeed, vastly superior to the LTTE both numerically and in firepower, it has always been able to do so. But the LTTE, grounded in various ways in Tamil determination not to be humbled as a people, has always proved indomitable. It is during war that the LTTE went from a few dozen cadres to the standing army, navy and air force it presently is. It is also during this war that the Tamils have forged themselves into committed political nation. Despite the best efforts of the liberal West to ignore the LTTE and to speak for us, we’ve had no doubts about our nationhood and our rights. And now, as never before, the impossibility of a single ‘Sri Lankan’ people has been laid clear.

No armed conflict is truly local and Sri Lanka’s has been internationally connected from its outset. Thus, just as the international community has been important to the waging of war, it will be important to the creation of peace. During the Cold War, our nation’s rights and interests were sacrificed by the West for its geopolitical interests. That powerful states will prioritise their interests over those of others will always be the case. However, in the past decade and a half, we have also been subject to another Western ideal of international order: global market economics and democracy. In other words, whatever those of us struggling in the developing world may actually say, our actual problem is deemed to be simply a lack of proper democracy and economic opportunity. The solution was thus to spread democracy and free markets, often violently. Even direct military action has been undertaken in this 21^st century civilising project.

However, the events of the recent past have questioned this utopian vision. The global financial meltdown, the leftwing uprisings across Latin America, Sri Lanka’s retreat into the Chinese sphere of influence, are all tremors of the same crisis. The most spectacular consequence has, of course, been the result of the US Presidential election this month. The competing economic visions set out by President-elect Barack Obama and his Republican rival are not merely an internal matter: the neoliberal model rejected by US voters has underpinned the ruthless and violent Western project to impose a specific order on the rest of the world.

Our liberation struggle has also been mired in this project. The unqualified Western backing for the Sri Lankan state, the hostility to the LTTE, the refusal to listen to our pleas, are an integral part of this project. The Sinhala-dominated state, with its Sinhala army, and its majoritarian democracy has been excused, defended and praised. The Tamils, despite our obvious suffering, casualties and deprivation, have meanwhile been branded as terrorists and racists.

Only the regional hegemon, India, has taken seriously the powerful and contradictory logics at the heart of the island’s conflict. But Delhi too subordinated the Tamils’ well being to her own perceived geo-strategic interests. However, neither the West nor India has been able to pursue their visions of order: the Sinhala state will not sit placidly within them and neither will the Tamils accept Sinhala oppression. Whilst the liberation struggle intensifies, we must not lose sight of shifting global and regional dynamics. There is much to give us confidence: a more assertive India, a more reflective US, the ‘return’ of geopolitics are all signs of, as President-elect Obama has put it, ‘change’. 

Sri Lanka's government rejected the latest a truce offer by the Liberation Tigers of Tamil Eelam (LTTE) out of hand demanding they surrender or be destroyed by the ongoing military offensive.

In parliament, Agriculture Minister Maithripala Sirisena repeated President Mahinda Rajapaksa's stance, which has been in place since the government scrapped a 2002 ceasefire in January 2008.

"The government will not go for a ceasefire with the LTTE. We will not have any form of discussion with the LTTE. We have already told them to lay down arms and there is no change in our stand," Sirisena told the parliament on Monday, November 10.

The government stand was in response to a statement released by the LTTE political head, B Nadesan, at the weekend stating “there is no hesitation on our side to reiterate our position that we have always wanted a ceasefire.”

Nadesan noted that it was the government that unilaterally abrogated the previous ceasefire and claimed that the LTTE was only fighting a “defensive war” thrust upon it by the government.

Nadesan statement was, in turn, a response to calls from Tamil Nadu political leaders for India to intervene and bring in place an immediate cessation of hostilities in the neighbouring island.

Since the beginning of October Tamil Nadu has witnessed mass protests by political parties, students, lawyers, traders, and cinema artists and technicians in support of Eelam Tamils, demanding the Indian central government put a hold to the genocide of Tamils at the hand of Sri Lanka.

As the protests gained momentum and widespread support poured in from the people of Tamil Nadu, the ruling Dravida Munnetra Kazhagam (DMK) leader and chief minister of Tamil Nadu convened a All Party Meeting on Tuesday October 14.

The political parties that attended the meeting passed a resolution demanding the Indian government to withdraw military support for Sri Lanka and request Sri Lanka to announce a ceasefire to enable affected civilians to receive humanitarian assistance.

The parties also announced that if the Congress led coalition government in New Delhi failed to intervene to stop the genocide of Tamils in Sri Lanka within 14 days, the 40 Tamil Nadu members of parliament will resign en masse.

As the fourteen days deadline neared, Sri Lanka sent Basil Rajapakse, younger brother and special advisor to the President Mahinda Rajapakse to New Delhi to meet India’s External Affairs Minister, Pranb Mukherjee.

According to reports, Rajapakse assured India that Tamils' needs would be met and India had used the talks to convey "its concern at the humanitarian situation" in northern Sri Lanka and had "emphasised the need for unhindered essential relief supplies."

Following his meeting with Basil Rajapakse, Pranab Mukherjee made an unscheduled visit to Tamil Nadu for a meeting with Tamil Nadu chief minister Karunanidhi in Chennai.

According to media reports the DMK chief had assured Mukhejee that he would not precipitate a crisis for the ruling coalition in New Delhi.

After the meeting, asked about the resignation threat, Karunanidhi said Mukherjee had requested him to postpone any decision in this regard as it would lead to a lot of complications. "I will certainly not create problems for the Centre," the chief minister said.

Mukherjee in return assured that any material aid provided by Tamil Nadu would be sent to the Tamils in Vanni.

However, the key DMK demand — that India ensure a ceasefire — remained unfulfilled and many political parties were dismayed by Karunanidhi backing down on the issue without the central government meeting any of the demands in the resolution or even securing any concrete promise to do so. 

Political parties and organisations across the spectrum assailed External Affairs Minister Pranab Mukherjee and Tamil Nadu Chief Minister M Karunanidhi for allegedly using the plight of the suffering Tamil minority in Sri Lanka for political ends.

Senior BJP leader Ila Ganeshan said separately: "The threat of the resignation of MPs from parliament was a mere drama aimed at diverting attention of the masses from the urgent issues in Tamil Nadu like the electricity shortage, law and order problems and rising prices. None expected the resignations to be handed over on Oct 29 to the speaker. The suffering Sri Lankan Tamil minority has only served the narrow political ends of the DMK and the Congress."

In addition, the public protests demanding immediate cession of hostilities continued across Tamil Nadu with a state wide shut down and fast by cinema stars, cinema technicians and television artists.

On Friday, November 7, Karunanidhi released a statement again calling for cessation of hostilities, but this time from both the warring sides in the island country – the Sri Lankan government and the LTTE.

"A permanent ceasefire is needed to ensure lasting peace for which a cessation of hostilities from both the sides is an inevitable need. Once the fighting ends, India and other third party mediators can ensure that the Tamil minority in the island is accorded adequate rights to exist honourably," Karunanidhi said in a statement.

Following Karunanidhi’s statement, on Saturday, November 8, Communist Party of India (CPI) Tamil Nadu, D. Pandian made public call for the Eelam Tamils' political leadership to clarify the Tamil stand on the issue of ceasefire.

In his statement, Pandian said that the people of Tamil Nadu state and India were being led to a state of confusion by the calls that demanded both the warring parties in Sri Lanka to announce a ceasefire.

Consensus of the people of Tamil Nadu is that the Sri Lankan government should immediately stop the war. However, when questions were raised by certain sections, there is a need for clarification, Pandiyan added.

Head of LTTE political wing responded to this call on Sunday, November 9.

Following Nadesan’s clarification both CPI and DMK urged the Prime Minster Manmohan Singh to call on Sri Lanka to stop the war.

Karunanidhi, in a statement released on Monday, November 10 said: “Pursuant to the steps initiated by the (central government) since then… (and) after Saturday’s offer of a ceasefire by (LTTE political head) Nadesan, India has an urgent need to get the Sri Lankan regime (realise) the inevitable responsibility to translate these into action (through the declaration of a ceasefire),”

Veteran CPI leader Pandian urged the Indian Prime Minister Dr. Manmohan Singh to act swiftly to end the war in Sri Lanka.

Noting that the LTTE has responded positively for the public call from the CPI to spell out their stand in unambiguous terms to the call for ceasefire and urged Manmohan Singh to use his good offices to impress upon Mr. Rajapakse to stop the war and agree for a ceasefire.

Pandian further said: As Indians, we feel, that the Sri Lankan ethnic conflict should he resolved amicably or else, the negative impact on India will have long term repercussions.

The Indian government may be bereft of all guts to do anything in Sri Lanka. But at least it can render a great service by not talking about the 13th amendment as a basis to resolve the crisis. What is more dangerous than India abetting a war against Eelam Tamils by providing arms, armed personnel and intelligence to Colombo is the political sabotage of thrusting the rotten 13th amendment upon the struggling people to muffle their voice. India should rather acknowledge the decades-old Tamil voice for self-determination as a nation, to base exploration of fresh models, writes Opinion Columnist.

The fact that India, especially its Congress government was instrumental to the enactment of the 13th Amendment in the constitution of Sri Lanka doesn’t mean that India should adamantly stick to it even after seeing its failure for two decades. Individuals may care for false prestige, but not a great nation like India.

The provincial council solution facilitated by the 13th amendment in 1987, failed at the outset primarily due to its incompatibility in concept and structure to match the acuteness of the ethnic divide in Sri Lanka, than due to the opposition to it by the LTTE.

This should have become clear without any iota of doubt to India at that time itself as the Indian sponsored Chief Minister Varatharaja Perumal himself became so frustrated of the working of the solution despite the presence of the IPKF, that he decided to declare an independent Tamil country on the day he quitted. He must have received tacit assent from India to take that step, but well, there was a Janata government in power in Delhi at that time which was able to see the realities.

A fundamental, conceptual conspiracy in the 13th amendment was that it provided devolution for eight provincial councils when the question was between two ethnicities. Thus the amendment was designed to nullify the importance of regional identity by equating those who wanted it and those who never asked for it. A reputed Sinhala scholar recently pointed out at a workshop in Oslo how the model failed to arouse enthusiasm in the Sinhala provinces.

The 13th amendment was far too short in addressing the basic requirements of Tamils: recognition of their ethnic identity as a nation of self-determination which was essential for their emotional security in the context of the inherent nature of Sinhala nationalism in Sri Lanka, physical security in the context of ethnically charged and inflated armed forces of the state, integrity of land in the background of state sponsored encroachments which started even before independence and structural provisions to implement development in all sectors in the way and extent they wish without hindrance.

The advocates of the 13th amendment argue that all basic Tamil aspirations could be found in it in an implied sense. But it was a folly or perhaps a deliberate sabotage that India and Sri Lanka thought of stuffing and stressing a unitary constitution with a phenomenon that needs at least a confederation-constitution to handle.

Eelam Tamils have to be ever thankful to Mr. Mahinda Rajapaksa and the Chief Justice Mr. Sarath Silva, for aptly demonstrating to India the void of 13th Amendment by a court ruling dividing the Northern and Eastern Provinces united by the 13th Amendment.

It would have convinced even a child how so simple it is to deny the Tamils their geographical integrity. But however explicit the Sri Lankan President and Chief Justice were, they failed to convince the Indian government and some sections in Tamil Nadu for they still harp on the 13th Amendment.

When a political effort fails it is statesmanship to find improved remedies. But, what happened in the case of Eelam Tamils was the leadership in India and Sri Lanka decided on a retrogressive tactic to penalize the already suffering people by going back to zero.

Mahinda was talking of Panchayat system (local government) solution, started an aggressive war abetted by India and the West, divided North and East, truncated the 13th amendment, terrorized the Tamil population and effectively used the JVP and JHU to resist to any meaningful solution.

As the saying goes in Tamil, it was a tactic of making people say ‘let there be no alms but hold the dog’ (Pichchai vea’ndaam, naayaip pidi), so that they would agree to anything the Establishment concedes. This is a typical bureaucratic approach for we don’t have statesmen anymore in our region. They are all executives and bureaucrats of a larger system. If that says ‘terrorism’ all of them will endorse it blindfold.

It is time that the Tamils of Eelam and Tamil Nadu should tell India and the International community clearly and loudly what they have in their mind and what they want, without mincing words. It is not a matter confined only to the LTTE. Even those Tamil groups now in the Mahinda camp will need the security of an irrefutable constitutional platform for all their dealings. Otherwise they will be liquidated once their services are not required.

Other than the intertwining of Eelam Tamil nationalism with the LTTE, implicated in Rajiv assassination, and an opinion that Congress and its officials are biased due to their earlier failure in SriLanka arising from Tamil resisstance, there are many other facts or myths circulate about India’s attitude and fears towards Eelam Tamil self-determination:

'Eelam may create inspirations in Tamil Nadu and elsewhere in India. Therefore, what the maximum the Eelam Tamils can get should be less than what the Indian states have.'

'Sri Lanka may seek the help of ‘others’ who will threaten Indian security.'

'Turmoil and security threat possible due to a backlash of the Sinhalese in Sri Lanka in the event of recognizing Tamil rights.'

Often many western diplomats have hinted that it is India that is an obstacle for Eelam Tamils getting anything politically substantial.

There is a view that as events in Sri Lanka move in a way not acceptable to them, India and her strategic partners will allow only further chaos and will think of only incomplete solutions in order to facilitate space for their interests. The attitude is ‘if you don’t listen to us, go to hell; let’s grab what’s possible’.

Some political analysts also have cited a line of thinking that the easiest way for India is to allow the elimination of top LTTE leaders so that the crisis would die and no need to care what happens to the Tamils, as they can’t blackmail like the Sinhalese.

Well, now there is a situation that if India doesn’t see to it that Eelam Tamils get their autonomy or independence, she may face worse security threats.

The people’s awakening in Tamil Nadu is a serious matter. It is difficult to predict the form it may take. Besides, the behaviour of India in respect to Eelam Tamils will seriously erode the credibility of Indian establishment with its ethnicities, minorities and subalterns. They will not look at it as a lesson. Rather they will look at it as a challenge. While the Sinhalese continue with their blackmailing, the Eelam Tamils also will try to seek other avenues. Military defeat of the LTTE is not the end of the Tamil struggle.

Not that the Indian leaders don’t know that it was actually the Sinhalese polity and the average Sinhalese mentality that didn’t cooperate from the very beginning with India’s geopolitical and security concerns. Had there been an understanding and regional perception, they wouldn’t have contributed to the ethnic crisis attracting all hawks to poke their noses. Rather the Sinhalese leadership chose to exploit the Indian concerns for blackmailing India and to achieve their chauvinistic goals in Sri Lanka, which has now reached the stage of systematic genocide.

The exclusive Sinhalese polity will not stop until the Tamil identity is completely subordinated and Sinhalicised. The perception it has given to its people is that this is settling scores with a two and a half millennia old enemy. There is no immediate likelihood that the Sinhalese perception will change for pluralistic accommodation.

A concrete structural arrangement not less than a confederation, if not a separate country, can only prevent catastrophe in the island. That too will need international supervision and separation of the warring parties for some time, considering the deep divide the prolonged war has created. In extreme situations facilitation of demographic movement also may be needed.

If India can take a bold stand on this it won’t be difficult to convince its ‘strategic partners’. A noble mission will only enhance India’s prestige inside and outside and no more blackmailing.

Whether the present government at Delhi may able to carryout such a venture or not, at least it should not seal the fate of Eelam Tamils by instigating the zombie of 13th Amendment.

What Dr. Manmohan Singh should perform in Sri Lanka is a surgery, not abetting genocide.

A Sinhala-dominated Sri Lanka is not in India’s interests, writes T S Gopi Rethinaraj, a Singapore National University scholar, in the November 2008 issue of Pragati, the Indian National Interest Review. A unified Sri Lanka under Sinhalese domination will be deeply inimical to India's interests. Colombo will permanently exploit India in the absence of a buffer that an Independent Tamil Eelam could provide, he wrote.

Pragati is published by The Indian National Interest—an independent community of individuals committed to increasing public awareness and education on strategic affairs, economic policy and governance.

In an article titled “Don't abandon the Tiger: A Sinhala-dominated Sri Lanka is not in India’s interests”, Rethinaraj writes "India has reached an impasse because of its stated policy to safeguard the territorial integrity of Sri Lanka and unwillingness to recognise LTTE’s standing in the conflict. Unless India overcomes this fixation, the Sinhalese dispensation will continue to exploit New Delhi and pursue its agenda without inhibitions."

Further, detailing the benefits of an independent Tamil Eelam to Indian Security interests Rethinaraj writes "A unified Sri Lanka under Sinhalese domination will be deeply inimical to Indian security and strategic interests. Presence of two states in India’s southern frontiers will act as a powerful deterrent to both successor states from pursuing policies that are prejudicial to the Indian Navy’s predominance in the region."

Full text of the article follows:

IN THE April 2008 issue of Pragati this writer had argued that the survival of the Tamil Tigers is India’s insurance policy against Sri Lanka swinging over to interests of powers that might seek to contain India in the Indian Ocean region. Now that the ethnic conflict has resurfaced as a factor in Tamil Nadu politics, India can ill afford to be seen as actively colluding with the Sinhalese to subjugate the ethnic Tamils. While the recent competitive jostling among political parties over the issue is largely due to fragile electoral alliances in the state, there is also growing public sympathy for Sri Lankan Tamils due to the grave humanitarian crisis generated by the military campaign against the Liberation Tigers of Tamil Eelam (LTTE).

India has reached an impasse because of its stated policy to safeguard the territorial integrity of Sri Lanka and unwillingness to recognise LTTE’s standing in the conflict. Unless India overcomes this fixation, the Sinhalese dispensation will continue to exploit New Delhi and pursue its agenda without inhibitions. India should also recognise that the Sinhalese majority is yet to show any inclination to moderate its racist vision for Sri Lanka’s future. Frequent reminders by Colombo’s ruling elite that the ethnic minority will have to accept the country as Sinhalese land only confirms that the ongoing war is not really about defeating the LTTE, but part of larger strategy to Sinhalicise the entire island. Sri Lankan government efforts to alter the demographic character of traditional Tamil areas by settling Sinhalese peasants and creating high security zones are mainly to weaken the Tamil resolve.

Since the LTTE remains the only roadblock to this Sinhalese agenda, its military defeat will ultimately result in the political, social, and psychological subjugation of Tamils living in the North, East and other parts of the island. The Sri Lankan state has mostly achieved this objective in areas not under LTTE control. This is the reason why this writer had argued earlier that ethnic Tamils in the island and India will lose leverage with Colombo once the LTTE is militarily defeated. However, the LTTE leadership should also realise that the Sri Lankan Tamils have the best opportunity to secure an honourable settlement when they are still militarily relevant and explore alternative ways to quickly resolve the ethnic conflict.

While the LTTE’s violent methods—forced recruitment, employment of child soldiers, and unrelenting militancy—are repugnant, their largely ethical conduct in the civil war has gone almost unnoticed. The LTTE has been mostly fighting a defensive war restricting their combat within what they perceive as traditional Tamil areas, and their guerrilla attacks have mostly targeted military bases and security forces. This is in contrast to almost all other militant/terrorist organisations in the world which mainly target civilian infrastructure and inflict massive civilian casualties.

Ironically it is the Sri Lankan state that has been deploying its firepower and aerial bombing capabilities over civilian areas in the north, resulting is massive civilian casualties and damages to residences, hospitals, and other civilian infrastructure. Unlike its antagonists, the LTTE has rarely been accused or found guilty of rape and other crimes against women and children during combat. The conduct of the Sri Lankan state reveals that the ongoing military campaign has an almost genocidal streak, with the deliberate targeting of civilian areas mainly aimed to deter civilians from supporting the LTTE.

Within India, especially after Rajiv Gandhi’s assassination, there has been a carefully orchestrated portrayal of the LTTE as the source of all troubles on the island. While the LTTE’s role in the assassination of Rajiv Gandhi deserves the strongest condemnation, that singular episode alone cannot be the basis for India’s Sri Lanka policy or for condemning Sri Lankan Tamils to eternal suffering. Suggestions that the emergence of an independent Tamil Eelam will hurt Indian security interests are disputable, because its ethnic and political ties to India through Tamil Nadu will be much stronger than that of the Sinhalese dominated state. However, given a chance, most Sri Lankan Tamils will be happy to live under a greater Tamil Nadu—comprising traditional Tamil areas in the North and East of the island—as Indian citizens. But India failed to explore that option to integrate the North and East with Tamil Nadu when several opportunities presented that outcome before 1987.

The historical baggage—some of which dates pre-Christian times—also continues to remain a major impediment to a peaceful resolution of the conflict. The British failure to present a partition plan to accommodate the political aspirations of the Sinhalese and Tamils allowed earlier historical grievances to fester. Since Sinhalese-Tamil social relations never assumed violent proportions like the Hindu-Muslim problem in pre-1947 India, the problem could have been easily sorted if the Sinhalese majority had been reasonable in their approach toward the ethnic minority. Until 1956 all ethnic groups at least shared a common identity and future as Ceylonese. The Sinhala Only Act and failure of Colombo’s ruling elite to produce a multiethnic national identity and vision for Sri Lanka deepened the social divide and paved way for separatism.

Competitive pandering to Sinhalese-Buddhist extremism by political parties gradually resulted in the constitutional alienation, linguistic disenfranchisement, and denial of education and economic opportunities of Tamils. Failure of conventional political methods to address these grievances and various state-led anti-Tamil pogroms eventually led the Tamil youth (from which the LTTE would emerge as the pre-eminent force) to wage an armed struggle for political separation.

The racism and blatant government discrimination against Tamils in jobs, education, and economic opportunities that produced the original conflict are still intact. Hence attempts to equate Sri Lanka’s ethnic problem with various insurgencies faced by India are not only incorrect but an unfair characterisation of the Indian state. India represents very different social and political values and every conceivable religious, ethnic, and linguistic group in India enjoys constitutional equality and protection.

Thus viewing Sri Lanka’s ethnic conflict through the prism of Indian federalism is misleading. India has always been keen in ending the ethnic conflict by actively engaging with the Sinhalese, and has consistently advocated a federal solution to Sri Lanka’s ethnic conflict. This, according to New Delhi’s assessment, would meet the aspirations of all ethnic groups in the island. While the federal political structure has worked remarkably well in the context of India, where coexistence of several ethnic/linguistic states acts as buffer to any chauvinism from the Hindi heartland, it is unlikely to work in Sri Lanka where there are only two main ethnic groups. But Colombo is not even prepared to offer Tamils the Indian-type solution, which would still preserve their political dominance in Sri Lanka. The failure to take into account this deep Sinhalese-Tamil divide explains the stagnation in India’s Sri Lanka policy.

Colombo has always keenly followed political undercurrents in India and within Tamil Nadu and benefits from the prevailing chaos. It has not only been successful is driving a wedge between the concerns of Tamil Nadu politics and the central government, but has also carefully cultivated certain Indian bureaucrats and journalists whose views on the ethnic conflict are compatible to the Sinhalese project. Historically too the Sinhalese have cleverly played one Indian kingdom against another to have an edge over the Tamil Hindu Jaffna kingdom. India’s succumbing to this contemporary scheming is, in the long run, deeply inimical to its interests and security.

Unless India makes a course correction, some political parties are likely to exploit the situation to revive the long-forgotten separatist propaganda in Tamil Nadu. While the National Democratic Alliance (NDA) government was more sensitive and remained equidistant from the two warring groups, the current United Progressive Alliance (UPA) government has been providing significant military assistance to the Sri Lankan government. This policy is inadvertently contributing to the Tamil subjugation project of the current Sri Lankan government.

India must not allow its long term interests to be corroded due to the machinations of the Sinhalese regime and its Indian supporters. It should intervene as it did in East Pakistan if Colombo does not show any sincerity and returns to its old ways. Indeed, a strong case could be made that an independent Tamil Eelam will not only be in India’s interests but permanently avoid exploitation by the Sinhalese. A unified Sri Lanka under Sinhalese domination will be deeply inimical to Indian security and strategic interests. Presence of two states in India’s southern frontiers will act as a powerful deterrent to both successor states from pursuing policies that are prejudicial to the Indian Navy’s predominance in the region.

India would do well to remember how it lost all leverage with China by meekly accepting the latter’s invasion of Tibet. India’s appeasement policies in response to developments in Tibet in the 1950s not only paved way for Tibet’s invasion, but emboldened China to lay claim over vast tracts of India’s territory. Of course India doesn’t have any border to settle with Sri Lanka, but it occupies its soft underbelly and a strategic position in the Indian Ocean. Colombo will permanently continue to exploit India in the absence of a buffer that an independent Tamil Eelam could provide.

Already, India has been shamefully remiss in failing to take the Sri Lankan navy to task over the issue of frequent killings of Indian fishermen. The fact that Sri Lankan navy could kill a few hundred Indian fishermen with impunity is a sign of the future behaviour of the Sinhalese state once it secures a military victory over LTTE and impose a solution on ethnic Tamils on its terms. Once the Sri Lankan state achieves that objective, India will be, according to a popular Sinhalese refrain, “discarded like curry leaves.”

The debate on economic competition between nations focuses centres on fair and unfair competition. It is unfair competition to protect local markets from foreign manufactured goods. But it is “fair competition” for governments to subsidise local industries that have “strategic significance”: defence or nuclear energy for example.

Genocide is the ultimate form of unfair competition: as Black July 1983 illustrates. In fact, each stage of the slow genocide of the Tamil people in Sri Lanka has also been an economic project.

Having looked at how the Tamil industrial base was eliminated, the unequal impacts of the ‘open’ economy, the numbers which prove that reparation to Tamils is unaffordable and how the Sri Lankan state has breached its contract with Tamil taxpayers, the rest of this piece focuses on how the genocide by the Sri Lankan state is funded by Tamil assets and the impact of the new Tamil international economy on the relationship between the Tamils and the Sri Lankan state.

Genocide funded by Tamil assets

The Sinhala State has not evidenced the faintest intention of restoring economic parity to the Tamil people on the island.

Following the 2004 tsunami, which hit the North Eastern Tamil homelands harder – because the tsunami waves came from the direction of the North and were more powerful when they hit the Tamil coast – the Sri Lankan government blocked the joint aid distribution mechanism it had agreed with the Liberation Tigers in order to ensure aid reached Tamil areas.

As Karen Parker of the IED has pointed out, there is no adequate explanation for blocking international aid from those who have already lost everything – other than the deliberate destruction of a people (genocide).

The genocidal war against the Tamil people is also financed by the distress sale of Tamil assets.

To cement international relations and finance the war, real estate in the formerly Tamil areas are being pawned off by the state.

For example, after the government “cleared” the East in a 2007 offensive against the LTTE, it entered into an agreement for India’s National Thermal Power Corporation (NTPC) to build a coal power plant on formerly Tamil land, despite the protests of Tamil parliamentarians representing the Tamil refugees displaced from there.

The Sri Lankan State has also invited international oil firms to bid for oil drilling rights off the Northern coast of Mannar.

Every stage of this genocidal war is ultimately about money, not only in its fungible form, but also in the form of assets such as land, titanium and oil that can be transformed into money.

But even in this the Sri Lankan government is not original for financing genocide with money belonging to the victims is not such a new idea.  

Consider Nazi legislation following Kristallnacht – the pogrom named after the vast number of broken windows.

The Nazis decided they could blame Kristallnacht on the Jews because it had been “sparked” by the assassination by a 17 year old Jewish teenager of a German embassy officer, Vom Rath, in Paris.

This would help them finance, for example, the cleaning up of the streets afterwards.

Accordingly, a "fine of 1 billion marks was levied for the slaying of Vom Rath, and 6 million marks paid by insurance companies for broken windows was to be given to the state coffers.

Similarly, Sri Lanka blamed the Tamils for the pogrom and as The Economist noted, the state benefited by taking over the damaged Tamil businesses.

This pattern of profiting from and financing genocide from the victims’ own assets, has continued ever since.

New Tamil international economy

Following 1983, the Tamil economic base has shifted globally to countries where it is safe. The Economist presciently noted this too, 25 years ago, in its article of the 20th of August on the 1983 pogroms: “Another key factor in Sri Lanka’s recovery will be the brain-drain of Tamils. Thousands of Tamil professional people are said to have left the country since the violence began last month.”

“One leading Tamil entrepreneur – and Sri Lanka’s most successful entrepreneurs are Tamil – estimates that 90% of his fellow-industrialists are now contemplating emigration,” the magazine noted.

In their host countries, Tamils are among the most economically successful refugee groups. For example, 1 in every 50 doctor in the British National Health Service is Tamil, as are nurses and other medical workers.

This despite an estimated less than 1 in 400 of every British adult being Tamil.

As an indication of per capita Diaspora income, the average British doctor earns over £106,000 pounds (circa 200,000 USD) or about 4 times the national average.

Sinhala State looks for Tamil investors

But the Sinhala government, NGOs and think-tanks have also noted the relative post-1983 prosperity of the Tamil Diaspora. And in it, they see a potential source of new income.

“The Tamil Diaspora is seen by the Sri Lankan state as an important actor in the ongoing war against the LTTE that needs to be checked,” Jehan Perera writing for the Daily Mirror in Colombo explains.

“It is a fact that many, if not most, who left the country did so in circumstances that were extremely painful and bitter to them.  They left for an uncertain future into alien cultures and societies, in which they would be an underclass for many years,” he concedes. 

“But due to the essentially egalitarian and merit-based nature of the Western societies to which they migrated, many of them and their children have finally prospered.”

The Sinhala State hopes that, once again, they can benefit from Tamil prosperity.

They  hope the Diaspora will ignore previous breaches of contract and help finance the failing Sinhala State – including its present judiciary, police and army.

In order for this to happen, the LTTE, their current rival for the Kavalar/government role, must first be destroyed.

Mr Perera, for example, explains that the Tamil Diaspora has not engaged with the Sinhala State because: “A large part of the reason has been the confidence of the Tamil diaspora that the LTTE's armed struggle for separation, which they support, will end in success.  So long as this belief, and desire, continues there will be little incentive on the part of the Tamil diaspora to engage constructively with the Sri Lankan state. However, recent developments on the ground and in international politics suggest that the struggle for Tamil Eelam will not be successful”

Once the LTTE is destroyed, so the thinking goes, the Sinhala State has an opportunity to persuade the Tamil Diaspora to “engage with it” – by investing money of course.

In his article, Jehan Perera explains this line of thinking: “This means that if the Tamil diaspora wishes to come to the aid of the Tamil people in Sri Lanka, they need to be prepared to engage constructively with the Sri Lankan state, and find ways to do so.”

In short, the failing Sinhala State, having alienated all its Western donors on Human Rights grounds can turn to the families of the entrepreneurs and professionals who fled the 1983 pogroms to finance the “protection” of the “liberated” Tamil areas. 

They can be persuaded to invest in the hopes of creating a “new Tamil economy” that can then be taxed by the Sinhala State and will finance its burgeoning army, parliamentary bureaucracy etc. As they did pre-1983.

Notwithstanding the Tamil Diaspora are tax-paying citizens in their new countries, they should also help the Sri Lankan State with its development objectives.

Because, so the Sinhala thinking goes, if the Tamil Diaspora want their internally displaced relatives not to starve, they won’t have any other option.

Apparently, the Tamil cow keeps giving milk long after it has been sent to the slaughterhouse. Whoever said you can’t have your cow and eat it?

UNP parliamentarian Ravi Karunanayake ridiculed the war expenditure of the Rajapkse administration saying that the government has spent over forty million rupees to kill one member of the LTTE since 2004.

Sri Lanka Army (SLA) commander, Lt Gen Sarath Fonseka announced on Monday that at least 13,000 Tamil Tigers were killed by the security forces.

Quoting government estimates, Karunanayake said 583 billion rupees were spent for the war since 02 April 2004.

If the Sri Lankan military chief's estimates are to be trusted, Karunananayake said, 42 million rupees were spent to kill one Tamil Tiger.

Sri Lanka unveiled its biggest ever war budget as it vowed to defeat Tamil Tigers and announced new taxes additional borrowing to plug the gap spiraling government spending and revenue.

President Mahinda Rajapakse, who is also the commander-in-chief and finance minister, sought approval for the country's largest-ever defense budget from Parliament on Thursday, November 6 as government forces continued their military offensive in the North.

Rajapaksa proposed to spend 177 billion rupees ($1.6 billion) on defense for 2009, an increase of 6.4 percent from 166.4 billion rupees ($1.5 billion) allocated this year.

In his speech, Rajapaksa said Sri Lankan soldiers had seized several LTTE bases and large swathes of land in the Tamil-dominated north and were close to crushing the organisation.

"It is to eradicate terrorism through this true humanitarian exercise that we spent a substantial amount of money on national security," he said.

The Tamil National Alliance party (TNA) - the largest Tamil political party with 22 lawmakers in the country's 225-member Parliament — walked out of the chamber during Rajapaksa's speech, protesting that Tamil civilians were being targeted in the government's military campaign.

TNA released a statement saying “As a mark of strong protest against and firm condemnation of the ruthless prosecution of the war by the Sri Lankan State in the North – Eastern territory of Sri Lanka, the areas of historical habitation of the Tamil speaking people, carried out by continuous aerial bombardment, multi barrel rocket fire, and other military attacks in Tamil civilian populated areas, through which war, the Sri Lankan State continues to commit genocide of the Tamil nation, by the extermination of Tamil civilians, and by the destruction and devastation of the Tamil homeland, and by the displacement of hundreds of thousands of Tamil civilians, tantamount to ethnic cleansing, and for the prosecution of which war, the Sri Lankan State seeks to allocate a colossal sum of money under the Budget proposals 2009, the Members of Parliament of the Illankai Tamil Arasu Kadchi ( Tamil National Alliance), will boycott the Budget speech and walk out of the House when the Hon.Minister of Finance commences the presentation of Budget proposals 2009.”

Rajapakse also announced a one percent tax on most goods and services to "rebuild communities and infrastructure facilities affected by terrorism," and downgraded the country's economic growth.

Despite high inflation, running at 23.4 percent at the end of last month, the government's war against the Tamil Tigers is seen as highly popular among the majority Sinhalese community.

Rajapakse also announced increased taxes on imported food, electrical and household goods, and raised import and export cargo duty from three percent to five percent.

Official figures showed that overall state expenses for 2009 will increase 15 percent to 15.6 billion dollars, nearly twice the expected government revenue of 7.92 billion dollars.

The government hopes to bridge the deficit with local and foreign loans.

Dayasiri Jayasekara, a lawmaker from the main opposition United Nation Party (UNP) attacked the budget and warned that resorting to external borrowing would lead to ‘dire consequences’.

“There is a bleak picture of our economy today. We have identified certain shortcomings in the Appropriation Bill for the 2009 Budget as well. The Government has been compelled to go for external borrowings at high interest rates. It will have dire consequences on the economy,” Jayasekara said.

On Tuesday November 4, the UNP presented its 'alternative budget proposals'  pledging to increase the salary of public sector workers by Rs. 7500, and a minimum wage of Rs. 40,000 for soldiers.

UNP lawmaker Ravi Karunanayake commenting on the proposals said, a future UNP government would reduce the 'burden' of 110 ministers to 35 ministers.

"Savings will be utilised for security development,".

The results of the U.S. presidential election this week are more an overwhelming rejection of the way the United States has been run in the recent past, particularly during the Bush administration, than merely a victory for Barack Obama.

The overwhelming enthusiasm during the campaign, and with the announcement of Obama’s victory, reflect how bad things are in the United States. The almost universal enthusiasm for Obama throughout the world, including Asia, is a clear expression of how badly the actions of the United States have affected the rest of the world.

There are many examples, but the worst is the way the so-called War on Terror has been manipulated to serve the interests of the greedy and of authoritarian governments at the expense of democracy, rule of law and human rights. The United States’ negative initiatives in the aftermath of 9/11 have generated many forms of global psychological warfare against human dignity, human freedom and the struggle to improve living conditions.

“Anti-terrorism” initiatives from the world’s most powerful country were exploited to the maximum by cynical leaders in other countries, mainly to deprive their own populations of basic freedoms and democracy. In many countries the War on Terror was manipulated to portray freedom of expression, publication and organization as subversive endeavors, and to deprive people of fair trials and protections against torture, illegal arrest, illegal detention and extrajudicial killings.

Through what are called “prevention of terrorism laws,” all these freedoms were sacrificed under the pretext of national security. In fact, with these laws in place, recent times have been the most insecure in many countries.

The existence of groups that might be portrayed as terrorists became a boon to unscrupulous leaders. In fact, the creation of terrorist responses through state-sponsored terror became a common element of ruling strategies in many places.

The “War on Terror” was not something that was meant to be won. It is, in fact, meant to be continuous so that populations may be continuously suppressed. The society that George Orwell foresaw in his novel 1984 is being realized in all too many places.

The manipulation of the media under the pretext of preventing terrorism has become more sophisticated than ever. Techniques are used to create confusion in the minds of people about themselves and their neighbours. By repeating various suggestions, doubts are created in the minds of the people as to the authenticity and credibility of any person or group that advocates democracy, rule of law and human rights.

A favorite theme concerns those accused of indirectly supporting terrorists. Anyone who seeks information – including lawyers, judges, journalists and intellectuals – that may be damaging to the leaders is portrayed as supporting the sinister plots of terrorists. Doubts are created concerning the intentions of such people, so ordinary people become confused.

In Asia, Sri Lanka is the most glaring example. Anti-terrorism laws and actions have now been extended to the deprivation of legal services to those considered “enemies of the state,” as demonstrated by a letter distributed to human rights lawyers by a group calling itself Mahason Balakaya, the Battalion of the Ghosts of Death. Death squads, operating under different names, have become part of peoples’ lives.

In the name of national security, Sri Lanka has come to resemble a police state. Similar conditions have been experienced in Pakistan, Bangladesh, Cambodia, Thailand and the Philippines, to name a few.

The American people have now rejected the government for which anti-terrorism was the core issue. The question is whether this will translate into genuine enthusiasm for democracy, rule of law and human rights.

The overwhelmingly positive response from countries outside the United States to the election of Barack Obama implies a deeply felt need for the United States to get its priorities right. People want to exorcise the psychosis of fear, cynicism and negativity and replace it with a belief in cooperation and human solidarity.

What really matters is not what the administration of Barack Obama will do. More important is what freedom-loving people throughout the world will do by creatively responding to the energies that have found expression in these times.

Movements for democracy, rule of law and human rights must take note of this new enthusiasm and work to create better conditions and develop strategies that prioritize human freedoms and human welfare. If the world passively waits for the next U.S. administration to take the lead, a great opportunity for a great change will be missed.

(Basil Fernando is director of the Asian Human Rights Commission based in Hong Kong)

The Political Wing of the Liberation Tigers of Tamil Eelam (LTTE), in a statement dated 30 October, condemned the Sri Lankan government for carrying out indiscriminate aerial bombardment and artillery barrage on civilians in Vanni.

“Today morning around 9.30am, Sri Lankan Air Force bombers entered the skies over Vallipunam in the Mullaithivu district and carried out extensive, indiscriminate bombing raids on the civilian housing scheme setup by the Caritas-HUDEC organization,” the statement said.

“A school student was killed and six more civilians including a baby were injured. Children and teachers attending the two pre-schools and the Vallipunam Kanista High School ran in all direction in fear and sought protection in bunkers and under bushes,” it said.

“Within few days of the Sri Lankan Government saying to the Indian Government that it will not carry out attacks on civilians, it has carried out attacks on Paranthan and Vallipunam civilian areas,” the statement noted.

The Sri Lankan army is also “continually carrying out discriminate artillery attacks on civilian settlements in Kilinochchi,” it noted.

Adding that “many civilians were killed, and injured” and many homes “destroyed”, the statement also cited the examples of Karialasingam Pirahalathan, 43, and Selvarasa Satheeswaran, 14, who were killed during bombing raids.

It also provided details of injured civilians, including Srinivasan Thimilarasan, 3 months, and Paramanathan Nivethini, a 17-year-old student.

“We strongly condemn the indiscriminate aerial and artillery attacks on civilians by the Sri Lankan military,” the statement concluded.

The silence of Western media and government has emboldened the majority Sinhalese to embark on a renewed campaign to dispossess and kill the Tamil people.

The Tamil-controlled north-east of Sri Lanka thunders "day and night" under bombardment from the forces of the Sinhalese government in Sri Lanka's capital Colombo as they attempt to destroy Tamil autonomy.

Against this backdrop, "a great human tragedy" is also "exploding", according to Fr James Pathinathan of St Theresa's Church in Kilinochchi, the administrative capital of the de facto government of the Liberation Tigers of Tamil Eelam (LTTE).

From the eye of the storm, Fr Pathinathan, who is also president of the local Justice and Peace Commission, reports that "deaths, injuries, displacements and attendant misery pervade the lives of innocent Tamil civilians... and the draconian economic embargo imposed slyly... has become a monstrous obstacle in giving relief and solace to the 170,000 persons recently displaced".

The Sri Lankan Government's economic embargo, involving the closure of roads and ports of access for food, medicines, and fuel for an already destitute population, has been compounded by its eviction of aid agencies from the north-east as it has increased the tempo of war in an apparent attempt to put a military end to Tamil aspirations for some kind of self-government.

War has broken out on various fronts in recent months, and the bombardment of Kilinochchi began a few days ago.

Government forces have driven Tamil civilians from their homes and farms, which, at least in the south, are in the process of being occupied by Sinhalese settlers.

This has extended a long process of violent colonisation, according to Tamil sources.

Church and aid agencies report that over 200,000 people have been "displaced" in the east of the Tamil homelands in recent months, now to be joined by 170,000 in the north.

Hopes for Sinhala victory lie not only in their numerical advantage, but also in the sheer quantity of explosives at their disposal and their ability to launch them from long range or from the skies.

Meanwhile, the silence of Western media and governments embolden the Sinhalese to embark on their campaign of pillage, rape and destruction.

The Tamils' defensive actions are driven by desperation that their race is threatened by genocide.

The depth of commitment of these people to Tamil Eelam, or the Tamil Motherland, is vividly demonstrated by sheer numbers.

Some 17,000 or more young Tamil men and women have already sacrificed their lives in the struggle for national liberation.

It is easy to see how Tamils believe that the Sinhalese are bent on wiping them out.

In 1948, Sri Lanka (then known as Ceylon) gained independence from the British.

Not long after, in 1956, the Sri Lankan parliament passed a Sinhala Only Act.

This relegated Tamils to the status of second-class citizenry.

It also exposed them to the repeated violence that culminated in the disgraceful race riots in 1983 when Sinhala mobs guided by voting-lists set out to destroy Tamil homes and even antiquities such as the library in Jaffna.

Sinhalese forces themselves invaded Jaffna and subjected the local population to barbaric treatment.

They were even prepared to murder journalists in their bid to intimidate the Tamil press.

Every day, Tamils in non-combat areas "disappeared", having been taken away in the backs of notorious white vans.

Underlying this conflict lies deep racist sentiment.

I personally have been astonished by the number of educated Sinhalese who boast of an "Aryan" heritage, compared to the "Dravidian" origin of Tamils.

The former implies some northern origin from lighter-skinned and educated forebears; the latter implies an origin in the jungles of India.

This antagonism is fuelled by fundamentalist Buddhist proclamations that ancient texts identify "foreign devils" who should be expelled.

This racism is supported in practice by the Marxist-Leninists of the People's Liberation Front (JVP) which holds 40 of the 225 seats in parliament and is part of the government coalition.

Proclaiming Lenin's doctrines of central dictatorship by the vanguard of the proletariat, it has vigorously urged military destruction of Tamil hopes for autonomy.

As bombs have begun to fall on the town of Kilinochchi, causing the population to flee, Fr Pathinathan has declared that "the call of the hour is urgent" and pleads for "the people of goodwill all over the world" to "protect the people of Vanni [north-east Sri Lanka] who are threatened with death and destruction and dehumanisation".

But few people seem interested.

With the Tamil homelands cut off more effectively than Biafra in the Nigerian civil war, who wants to see pictures of starving children?

As the Sri Lankan military inducted a new fighting unit and continued its offensive attacks in Vanni, the Liberation Tigers of Tamil Eelam (LTTE) staged air and sea attacks on military targets outside Vanni.

On Saturday November 1, Sea Tigers launched naval convoy and fought a fierce sea battle off the island's northern coast.

According to LTTE sources 20 Sea Tigers attack craft took part in the battle in the seas off Naakarkoayil in Vadamaraadchi East Saturday morning from 5:15 a.m. to 7:00 a.m., sinking an SLN Dvora Fast Attack Craft (FAC) and a hovercraft.

Sea Tiger officials further said that SLN engaged 20 vessels in the clash, but was forced to withdraw after suffering casualties.

A water-jet vessel of the SLN sustained damage in the sea battle and was towed back to Kaangkeasanthurai (KKS) naval base.

The Tigers said their Sea Tiger commandos reached their base, after defeating the SLN.

Seven Black Sea Tigers laid down their lives in the operation, the Tigers said.

Eleven days earlier, the Sea Tigers attacked two Sri Lankan Navy supply ships in the same area sinking one and damaging the other.

Air Attack

On Tuesday, October 28, an LTTE air craft carried out an attack on Thallaadi military base, the main artillery and Multi-Barrel Rocket Launcher (MBRL) launchpad of the Sri Lanka Army in Mannaar dropping three bombs on the base, inflicting heavy damage.

An hour later, another LTTE air craft dropped two bombs on Kelanitissa power station and returned to base safely.

The air raid at the Kelanitissa power station in Colombo late on Tuesday started a fire and killed one person and wounded two, hospital officials said.

Two turbines and air coolers sustained damage according to the sources in Colombo.

An MI-24 attack helicopter gunship of the Sri Lanka Air Force (SLAF), deployed in Vanni offensive, and a Bell helicopter used to transport the wounded soldiers from the battlefield, sustained damage in the bombing raid on the Sri Lankan garrison at Thallaadi in Mannaar, according to a reliable military source.

Sri Lankan military officials have claimed that there was no major damage caused by the Tiger air strike and said only one soldier had sustained injuries in the attack.

The raids on a Colombo power station and a northern military camp late on Tuesday are the eighth and ninth carried out by the "Air Tigers", known in the Tamil language as Vaanpuligal, since they shocked the world with their first attack in March 2007.

At a time of global financial crisis, Sri Lanka’s reliance on borrowing combined with plunging  foreign exchange reserves, spiraling inflation and poor fiscal policies are making Sri Lanka the most vulnerable in the region, according to international monetary experts.

In its annual report, the International Monetary Fund (IMF) directors expressed their concern on the risks of public debt distress arising from the increasing reliance on dollar-denominated, short-term commercial debt.

That risk has grown more acute since the dollar has strengthened against other currencies in the last month.  

IMF said the global financial crisis, which has drastically cut the availability of credit, had made "Sri Lanka's external accounts ...vulnerable to a reduction in international investor risk appetite."

Since October 2007, Sri Lanka has increasingly sought high-interest foreign commercial borrowings via syndicated loans and a sovereign bond issues to avoid local commercial loans that attract a rate of over 20 percent.

Rupee depreciation

IMF also said the real exchange rate of the rupee has been overvalued and the central bank's protection of it could create the risk of attracting short-term speculation and volatility.

Since mid-September, the Central Bank of Sri Lanka exhausted $ 600 million, 25 percent of its foreign reserve, to protect the local currency before it decided to allow 'limited depreciation' of the rupee.

After withdrawal of the 6-week long policy of defending the currency at 108 per dollar costing 100 million US dollars per week, the currency fell to 110 per dollar by the end of the week, its lowest level since late last year.

Bankers and currency dealers said they saw more rupee weakness and a foreign banker in Colombo said on condition of anonymity said:  “I expect we can see some more of the same, with depreciation of the rupee,"

FX reserves

In addition to the Central Bank’s attempt to peg the Sri Lankan rupees against US Dollars, Citigroup Global Markets Asia in a market commentary attributed foreigners exiting Sri Lanka T-bill and bond market for driving the decline in FX reserves.

Citigroup estimated foreign holdings to have fallen from $670 million in early October to around $380 million in bonds and bills combined by end of October.

"We also expect the FX reserves to continue to come under pressure - we think there is still more near-term pressure of foreigners liquidating their LKR bonds and bills, especially if LKR is at increased risk, thus, presenting possibly another $380m possible outflow (assuming foreign holdings could go to zero).

"How externally vulnerable is Sri Lanka? We think they are very vulnerable though how close is a bit unclear. We have repeatedly argued that Sri Lanka is the most extremely vulnerable country in the region, as highlighted in our recent report….” added Citigroup.

External borrowing

Analysts estimate the government will need external financing of between $4-$6 billion in 2009 to cover the budget deficit, short-term debt, and debt amortisation but point out the depreciating Rupee, record inflation and the global finacial downturn make it hard to raise debt.

James McCormack, Fitch Ratings' head for Asia-Pacific sovereign ratings  raised concerns about the instability of the exchange rate and said any sizeable depreciation of the rupee would impact the government's repayment capacity," said.

In addition Sri Lanka’s high inflation also had a negative impact on its capacity to borrow.

Eurasia Group analyst Maria Kuusisto in a report issued earlier this month said, with the inflation hitting 23.4 percent in October Sri Lanka would have to offer "painfully high interest rates" to raise debt.

"This would add expensive debt to Sri Lanka's already sizable foreign borrowing," she wrote.

Rating agencies blame increased government expenditure as the main reason for high inflation.

Sri Lanka sold its first sovereign bond for $500 million in October last year and on October 7 this year announced plans for two syndicated loans this year for up to $300 million each.

IMF is of the view that  the global crisis had drastically cut credit availability, making Sri Lanka's external account "vulnerable to a reduction in international investor risk appetite."

Citigroup also shared this view in its commentary saying “the recent announcement seeking proposals for a $ 300m syndicated loan looks very difficult under the current environment”.

Economic growth

In addition to increasein cost of borrowing SDri Lanka is also faced with a steep drop in revenues with its key revenue making industries facing the impact of global credit crisis.

With much of the developed world considered by economists to be in recession, analysts said Sri Lanka's exports growth will weaken this year, such as in its garment and tea sectors, the country's biggest and third-biggest export earners.

Sri Lanka’s $27 billion economy only grew 6.8 percent last year, slowing down from a two-decade high of 7.7 percent in 2006, and the IMF said it expects economic growth to slow to 6.1 percent in 2008 and drop even further to 5.8 percent in 2009.