COLOMBO, July 15 (Reuters) - Sri Lanka's Tamil Tiger rebels said on Friday they would violate a three-year ceasefire and carry arms in military-held areas unless the government safeguarded their cadres following attacks in the restive east.
As a two-week rebel ultimatum seeking safety assurances lapsed, the Tigers vowed to make their own security arrangements and use armed escorts unless measures were taken immediately.
Analysts and diplomats say the standoff could spark an armed confrontation, breaking the truce and raising the spectre of a return to a civil war that has already killed over 64,000 people.
"Please be advised that we will be forced to resort to our means and modes of transport if suitable action is not taken," Liberation Tigers of Tamil Eelam (LTTE) political wing head, S.P. Thamilselvan, said in a letter to the Nordic monitors of the 2002 ceasefire, who act as intermediaries with the government.
"If ... the military attempts to prevent or hinder such travel, we would be compelled to act suitably," he added.
Under the truce, the rebels can move through government areas. But dozens of rebel cadres, police, soldiers and civilians have been killed in recent months despite the ceasefire.
Sri Lanka's military said it killed a Tiger cadre in a firefight in the island's eastern district of Trincomalee on Thursday night after troops were fired upon.
The army has beefed up patrols as tension escalates over the violence, which it blames on feuding between the mainstream rebels and a renegade faction. The Tigers accuse the military of helping breakaway cadres mount attacks.
The Tigers closed their political offices in government-held areas in the east on Thursday and pulled their cadres back to pockets of jungle they control.
The government had no immediate comment on the Tigers' threat. President Chandrika Kumaratunga appealed for calm on Thursday, vowing to ensure strict adherence to the ceasefire.
Hagrup Haukland, head of the Nordic Sri Lanka Monitoring Mission, said he did not expect the situation to escalate but any trust between the two sides had evaporated. "It's the worst situation I have experienced over these 3-=C2=BD years in terms of the mistrust and the climate between the parties," he said.
"The cornerstone in the ceasefire agreement is the ability of the LTTE to conduct their political work in the north and east. And if they can't do that then, for sure, the ceasefire is void."
Haukland said it was time the LTTE and military top brass sat down to discuss how to preserve the truce.
Two previous ceasefires have collapsed since the Tigers' war for self-rule began in earnest in 1983,
The standoff comes just weeks after the government agreed to share $3 billion worth of tsunami aid with the Tigers. Tens of thousands of people displaced by last December's disaster are still surviving on food handouts in temporary shelters.
But the aid deal, which donors hoped could help jump-start stalled talks to permanently end the island's protracted civil war, hit a setback on Friday when the Supreme Court froze it.
The interim order, sought by hardline Marxists who split from Kumaratunga's coalition government over the issue last month, seriously weakened the government.
Sri Lanka's rupee <LKR=> closed lower for the third straight session amid worries over the security situation, dipping 0.06 percent to 100.50 against the dollar. The stock market, which slid nearly 1.5 percent on Thursday, closed a shade firmer. (Additional reporting by Joe Ariyaratnam in Kilinochchi and Arjuna Wickramasinghe in Colombo)
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