The current crisis in Sri Lanka stems from the bitter differences between Prime Minister Ranil Wickramasinghe and President Chandrika Kumaratunga over how to deal with the LTTE.

While Wickramasinghe believes that limited devolution of powers to the LTTE in the areas it controls in the north and east of the island can resolve the ethnic war that has plagued the nation since the early 80s, Kumaratunga thinks too many concessions are being made to the LTTE, which is proscribed by India (and the US) as a terrorist outfit.

Under Sri Lankan law, the president is directly elected and is also the head of state, head of the cabinet and the commander in chief of the armed forces. The prime minister is elected separately.

Kumaratunga was elected Sri Lanka's first woman president in 1994, and then won a second term in 1999. But her Sri Lanka Freedom Party, which was in power from 1994 to 2001, lost to the United National Front led by Wickramasinghe in the 2001 parliamentary elections.

Under a Norwegian brokered peace effort, the new prime minister immediately opened up peace talks with the LTTE, and in February 2002, the two sides declared a ceasefire and agreed to talk.

In September 2002, the government lifted the ban on the Tigers, and the first round of peace talks began in Thailand, where the LTTE dropped its demand for a separate state.

In December, at peace talks in Norway, the LTTE agreed to accept autonomy in the Tamil dominated areas in the north and the east of the island. But in April this year, the outfit pulled out of the talks saying it was being marginalised and that the government's power sharing formula was not acceptable.

On October 30, the LTTE issued a set of counter proposals, seeking almost complete self-rule and authority over security, land, the police, external trade and even taxation.

This was the last straw for Kumaratunga, whose party said the proposals laid the ground for an eventual separate state. The proposals had "hugely significant statements and omissions which affect the nation's sovereignty and violate the constitution", the SLFP said in a press release.

But her decision to suspend parliament has sparked off a crisis, which now threatens to torpedo the peace process. Some reports say the Tigers have already put their cadres on alert to restart their terror campaign if the peace talks collapse completely.

India has refrained from making any comments apart from the standard appeal to give peace a chance, knowing the sensitivity of Sri Lankan opinion to any hint of 'outside interference'.

New Delhi is concerned about the implications of the LTTE getting charge of Trincomalee, where Indian Oil Corporation has invested millions of dollars in a storage facility. Officials fear that if given fiscal autonomy over the port town, the LTTE, which killed Indian prime minister Rajiv Gandhi in May 1991, might want to renegotiate the arrangement.