COLOMBO, Nov 17 (Reuters) - Sri Lanka's military this weekend took control of the entire western coast for the first time since 1993, sparking renewed talk that President Mahinda Rajapaksa will use the boost to call an early parliamentary election.
Here are some scenarios about what could happen next in one of Asia's longest-running insurgencies:
EARLY ELECTIONS: With the Liberation Tigers of Tamil Eelam (LTTE) losing ground and the military riding high, Rajapaksa would have morale and plenty of political capital on his side if he called an early parliamentary election. Three provincial council elections are due by April. He has the option to hold a parliamentary vote and even a presidential one at the same time as those. No one but the president, who on Monday reached the halfway mark in a six-year term, knows when, how or if early polls will happen. He is not saying.
CAPTURING KILINOCHCHI: Capturing the LTTE's self-declared capital of Kilinochchi would allow the military to sweep the rebels east through the jungles on an arc-shaped front to the port of Mullaitivu, hemming the LTTE in from all sides. A month of fighting around there has been heavy and the rebels appear ready to make their stand, analysts say. With Saturday's capture of the west coast, soldiers have turned east and are aiming for Paranthan, just north of Kilinochchi, to cut supply lines to guerrillas on the neck of the Jaffna Peninsula. Once that is done, watch for troops to move south from Jaffna to meet their comrades. Soon after, the battle for Kilinochchi would near a crescendo with the army striking from the north, south and west.
THE INDIA EFFECT: Sri Lanka's giant neighbour to the north has always loomed large in the conflict and last month -- with Indian Prime Minister Manmohan Singh facing an election next year -- pressured Colombo to ease up the offensive amid concerns about Tamil civilians. India is home to about 60 million Tamils, and their politicians for decades have had links to the LTTE. But after some shuttle diplomacy, India said it distinguished between military operations to eradicate the LTTE, which is on its own terrorism lists, and the need to address Tamil rights. Indian Tamil politicians since then have demanded a ceasefire, but Rajapaksa and Singh seem to be in agreement that the war must go on, as long as due regard is given to the safety of innocent Tamils. Expect little Indian government interference as long as New Delhi remains satisfied that is the case.
MARKETS SHRUG: If Kilinochchi falls, analysts and market players say they expect a brief boost to the Colombo Stock Exchange <.CSE> and maybe some temporary relief to depreciation pressure on the rupee <LKR=>. Both tend to move on their own fundamentals and have recorded some impressive performances in spite of the 25-year war. Both at the moment are down this year amid a global financial crisis and other local worries. The IMF has warned Sri Lanka's economic growth could be at risk if the country doesn't cut spending, stop supporting the rupee and ease reliance on expensive foreign short-term debt. Given Rajapaksa's primarily rural power base has been largely shielded from economic woes through his populist budgets, an economic crisis presents a correspondingly lower political risk to him -- especially with the war going well. The central bank has said it has about three months of import cover, is not talking to the IMF and doesn't anticipate needing to. It plans to survive any cash crunch by cutting back on development projects.tting back on development projects.
COUNTERATTACK: The Tigers could do what they have done after losing ground in the 1980s and 1990s, which is regroup and counterattack. But security analysts say the army is three times bigger and much more hardened than it was in those days, with better weapons and, most importantly, unflinching political support to fight the war as they see fit. The Tigers also have fewer ways to smuggle in weapons after most of their merchant smuggling fleet was destroyed. The government on Saturday warned citizens to be vigilant for more suicide bombings and unconventional attacks in Colombo in response to the Tigers losing ground. Their rudimentary air force bombed a power station in Colombo on Oct. 28, and there have been at least seven blasts in the city since Aug. 30. But the city is under heavy guard and the government has no compunction about carrying out heavy-handed sweeps of Tamil areas to avert attacks.
(Editing by Paul Tait)
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