Investors jittery as Sri Lanka fighting escalates

May 30, 2007 (AFP) – Sri Lanka’s investors, international donors and lenders are watching with alarm as government fighting against Tamil Tiger rebels escalates and key economic targets come under attack, analysts say. There appears little space to manoeuvre unless the separatist conflict subsides. Roadside blasts Monday and last Thursday around Colombo killed 11 people and wounded 44 as fighting which was largely confined to the north-east spills over to the capital.

“Two attacks in Colombo, barely within one week, have negative effects, because the Western Province is the hub of economic activity,” said economist Muttukrishna Sarvananthan of the Point Pedro Institute of Development, a private think-tank.

Government officials say the location of the blasts, more than the extent of damage, is most worrying.

Monday’s bombing was on the main highway near a military air base south of Colombo while Thursday’s attack was just outside the gates of the city’s main seaport.

Sri Lanka’s ports and aviation minister Chamal Rajapakse said the ability of the Liberation Tigers of Tamil Eelam (LTTE) to mount air attacks could scare away tourists and discourage investment.

“Security is being beefed up at the p