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Sri Lanka on Thursday began a new chapter in its decades-old war with Tamil Tigers having tossed aside a tattered 2002 truce with the rebels in its unquestionable belief it can defeat them.
The Liberation Tigers of Tamil Eelam (LTTE), seen as being on the defensive after a string of setbacks suffered during last year's slow collapse of the truce, also affirmed their readiness for all-out war.
Earlier this month they killed a government minister near Colombo, and on Wednesday they were the prime suspects behind a public bus bombing that killed 24 civilians and wounded scores of others.
With the ceasefire officially ending at midnight Wednesday, observers and analysts held out no hope of peace talks anytime soon and say the fall-out could be grim.
"Both sides have rolled up their sleeves for a bloody fight," said a Western diplomat who asked not to be named.
"There will be no end to war this year until they both end up with bloodied noses. Only then will they make moves to restart peace talks."
For the moment, Sri Lankan President Mahinda Rajapakse appears convinced that victory is just around the corner and is determined to push his troops into the northern jungles to kill LTTE supremo Velupillai Prabhakaran.
Sri Lankan army brass argue major battlefield progress can be made in the next six months and total victory achieved within three years, if the government is willing to see the conflict through.
The Tiger leader has in turn said peace talks with the island's ethnic Sinhalese majority are a waste of time, and says he has laid a trap for any Sri Lankan army unit that steps into his mini-state.
"There is an argument that says that the Rajapakse government and the LTTE are very much a mirror image of each other at this point," said Paikiasothy Saravanamuttu of the Center for Policy Alternatives, a pro-peace Sri Lankan think-tank.
"They're both trapped in the pursuit of a military solution. And as a consequence, everything else is of a secondary consideration or of no consideration at all."
But analysts have warned that as the government digs in for war, it will also have to dig deep into its pockets to bankroll a big push north.
"The degree to which the war escalates has a high importance on the economy," said Iqbal Athas of the London-based Jane's Defence Weekly.
"More and more money will be needed in the months ahead to replace military hardware. The government is going to find it challenging to sustain the war in the light of record high oil prices."
Sri Lanka hiked its defence spending by 20 per cent to a record $1.48 billion in 2008 to battle the LTTE, who have been trying to carve out a separate Tamil state in the north and east since 1972.
However, there are signs the war is beginning to bite, with the economy expanding by a slower-than-expected 6.7 per cent in 2007 and inflation running at nearly 18 per cent.
So far, key international donors like Japan, the European Union and the United States have continued to pour cash in, and past threats to stop the flow have proved empty.
But there are signs of growing impatience with the island's hawkish government, which has also refused to allow United Nations rights monitors despite allegations it has been dealing out "collective punishment" to minority Tamils in Colombo and is behind a string of murders and disappearances.
But as the last Nordic peace monitors left overnight, the island's increasingly hardline government was rid of what was perhaps an awkward impediment to waging a war where neither side takes any prisoners.
And in an angry diplomatic row in Geneva with the UN's top human rights official Louise Arbour, Sri Lanka laughed off the suggestion it could be heading for an international tribunal.
"It will not be deterred by thinly veiled (if pathetically unenforceable) threats, attempting to undermine the morale of its military," Sri Lanka's diplomatic mission to Geneva said in a statement.
The war has so far left an estimated 60,000-plus dead. (AFP)
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