Lack of cash pushes Sri Lanka to peace talks: analysts

COLOMBO, Sept 14, 2006 (AFP) – Sri Lanka appears to be dominating Tamil separatists on the battlefield, but a dwindling war chest may have forced it to enter peace talks ordered by foreign donors, analysts and diplomats say.

“There is no doubt that the military enjoys the upper hand in current battles,” says retired air force chief Harry Gunatillake. “But there is an economic compulsion to go for negotiations.”

The government reluctantly accepted talks, marking a breakthrough in the Norwegian-led and internationally-backed peace process, after the South Asian island’s main donors threatened to pull the plug on much-needed aid.

“Failure to cease hostilities, pursue a political settlement, respect human rights… could lead the international community to diminish its support,” Sri Lanka’s main financial backers said.

The statement issued after a meeting of the United States, Japan, the European Union and Norway asked Colombo and the Tiger rebels to start talks in early October and be ready for a “progress review” by month’s end.

After initially denying that the government had agreed to unconditional talks, the island’s peace secretariat which works with Norway later issued a statement Wednesday saying