Last week’s bull run on the Colombo Stock Exchange whose All Share Price Index (ASPI) hit an 8-year high earlier in the week and crossed the 900-point barrier on Friday was a clear indication that regardless of the LTTE’s non-attendance at the Tokyo donor summit opening tomorrow, investor perception is that Sri Lanka’s chances of working out a durable peace remains good. Both the ASPI as well as the Milanka Price Index (MPI) tracking liquid blue chips rocketed last week, the latter - established relatively recently - to its highest ever with most of the impetus coming from foreign buyers. As one local broker put it, "These are people, even though some like Raj Rajaratnam are Sri Lanka born, who can put their money into any bourse in the world. The fact that they are buying into our market is a clear indicator that it is their judgement that prospects here are good."

Ironically, the market signals were quite different to those sent out by the LTTE’s Anton Balasingham in his two most recent letters to Prime Minister Ranil Wickremesinghe. But Wickremesinghe seemingly remains unfazed, expressing confidence in two interviews he granted before leaving for Tokyo that direct talks would soon resume. Despite the unfortunate but obvious bad blood between the prime minister and President Kumaratunga whose "no, no" to the LTTE’s interim administration demand has been as loud as she can possibly make it - notwithstanding it being part of the PA’s draft constitution presented to parliament in 2000. Both leaders understand very well that there is no option to a negotiated settlement and the country cannot afford to go back to war. The best way of achieving peace on terms that will be acceptable to the majority of the people of this country is for the two major political parties to present a united front to the Tigers. But neither the PA nor the UNP have paid heed to that clear message of the electorate which elected a PA president and an UNP prime minister.

There is more than an element of speculation in stock market punting and the mere fact that we had a bull run on the CSE with substantial foreign inflows does not mean that our economy is all fired for take off. Far from it. Although the signal might have been propitious, what can really get the economy moving is a clear sign that a durable peace is within reach. Such a fortunate situation is still a long way off with the LTTE sticking to its hard line and making the going as difficult as it can for Wickremesinghe and the government. Sadly this strategy makes good sense for the Tigers given the success they’ve had in extracting concessions by adopting unyielding and uncompromising postures. Both Balasingham’s letters suggest that the Tigers’ current focus is to push Colombo to use its influence to get some international heat off its back. As it is, the government has done enough – too much many believe – on this score and that is why so many ambassadors trek to Kilinochchi nowadays to talk to the Tigers.

If the LTTE calculated that their brinkmanship will result in the Tokyo meeting being postponed till such time as they were willing to talk turkey, they made a grievous error. As we have reported on our front page today, the mood in the Japanese capital was optimistic yesterday and there was reason to expect that they will not come down on any pledges they planned to make merely because Prabhakaran and Balasingham have played hard to get. Nevertheless, it must be freely conceded that there is no doubt that the LTTE’s presence would have made a tangible difference certainly to the level of global confidence that the peace process is not just on track but heading in the right direction. The absence of one party must necessarily create doubts and that is the hard reality that we must swallow. It is to be hoped that Sri Lanka’s foreign friends don’t merely proffer carrots but also use some stick in Tokyo. The US has certainly been helpful up to now with Ambassador Ashley Wills being outspoken in much of what he has said in Colombo about Tiger behaviour. It’s a pity that he is ending his assignment here shortly. Hopefully his successor will understand the situation as well as he has.