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The sage Kautilya says, of peace-making: "The King (read: the State) can achieve progress by making peace with his enemy if he (the State) thinks that he can enjoy additional gain (a) from his own works (not spent in waging war), (b) from works undertaken by the enemy and, (c) from works accruing from the confidence generated by the peace" (Arthashaastra: 7:1.32).

Finance Minister Kairshasp Nariman Choksy and his advisors may have been thinking of the gains described in 'c' in the quote above when drafting the Government Budget for 2003. To all intents and purposes, the country has been presented with its first 'post-war' Budget.

It is a Budget that dwells more on the possibilities of a 'post-war' social and economic recovery than on the possibility of war. In that sense, the country is already concretely enjoying the peace dividend.

Mr. Choksy's Budgetary planning would have been done much before the second round of talks, and therefore, could be said to have an element of hope and aspiration rather than concrete, real, contextualisation. But the Finance Minister's prognosis is proving right. It is the outcome of the second round of peace talks in Nakhon Pathom, Thailand, more than anything else that gives this 'post-war' perspective a less than illusory or wishful character.

The Thailand talks have delivered a result much beyond expectations, although whether there has been any substantive 'breakthrough' as is being claimed may be judged according to whether one places much significance on theoretical exercises or whether one only recognises concrete political actions as being the genuine 'outcome' of any process.

Even so, since very new and unexpected subjects have been taken on board the talks process in Nakhon Pathom, the development may be considered as significant for the 20-year ethnic conflict that has seen the failure of at least three previous attempts at peace negotiations.

The principal official agenda of the second round of talks, held in a tourist resort in the Thai town of Nakhon Pathom, near Bangkok, had originally been limited to the economic and social rehabilitation of the Tamil majority-populated North and East regions of the country and a discussion of some governmental military de-escalation.

However, by the second day of the three-day round, both sides agreed to set up a 'sub-committee' to examine the political steps needed for a full political settlement of the conflict. At the end of the talks, on Sunday, the formal statement issued by the Norwegian mediators indicated that, in addition to the planned body to oversee the socio-economic rehabilitation of the embattled region, the two sides had agreed to set up a second sub-committee to oversee further withdrawal of Government forces from Tamil areas, a key demand of the Tigers, and also, a 'Political Sub-committee' to "explore" steps toward a full political settlement.

Since the political settlement aspect had so far been avoided by both sides and had not been on the agenda of these first few planned rounds of peace talks, this development is being hailed as a 'breakthrough'. A closer look at the mandate of the political sub-committee as well as a clear understanding of the larger political context of the peace negotiations may indicate that the 'breakthrough' is not such a great one.

The full settlement of the ethnic conflict requires meeting halfway the demand of the Tamil nationalist political and military movement for a separate Tamil state of 'Thamil Eelam' in the North-East. This can only be done by offering extensive power-sharing between the major ethnic communities, namely the SInhalese, Tamils and Muslims, and the setting up of provincial or regional self-rule structures in the North-East.

One of the significant aspects of the current peace process has been the studious avoidance of the issues of power-sharing and the unit of Tamil self-rule by both sides as they proceeded to focus on the immediate challenges of economic rehabilitation, social recovery and what is being called 'military de-escalation'. It must be noted that while from the Sri Lankan State side there may have been some expectation that the 'substantive issues', as the political power-sharing matters are described, should be taken up as soon as possible (vide President Kumaratunga's constant harping on this subject), it is the LTTE that has consistently insisted on indefinitely postponing these subjects. It is the LTTE that has been strongest in insisting that economic recovery and security matters be dealt with prior to any focus on substantive political issues of settlement. The Government, of course, has rightly not made this an obstacle for progress and has proceeded with the talks on mutually agreed agendas.

In this sense, it is possible to argue that the talks process has generally proceeded in favour of the LTTE's own objectives of obtaining greater political and legal legitimacy, more control over its target population being the Tamil people in the 'greater North-East' (that is in the North-East region extending beyond the area under its own control), and gradually whittling away at the military control and domination exercised by the Sri Lankan State forces in any part of the North-East.

Whether one regards these advantages being gained by the LTTE as 'progress' towards peace or, as a negative undermining of the Sri Lankan nation-state and a betrayal of the Sinhala nation, depends on whether one regards this country as being ethnically plural and, therefore, open to any number of political communities (one or more States and sub-states) or, whether one insists on a generally Sinhala-dominant single 'nation-state'.

In this writer's view, the concessions being granted to the Tamil side should be seen as accruing to the Tamil people as a whole and meeting the underlying need for an ethnically plural political community on this island. What is relevant about the benefits accruing to the LTTE itself, however, is the need to ensure that this not-so-democratic organisation is encouraged to move towards greater democratic structure and decision-making. But the matter of democratic decision-making and representation is a problem that has to be addressed by all ethnic communities in political structures in all parts of the island.

A closer examination of the mandates of the three sub-committees agreed to in Thailand indicates that the substantive progress has been in the sub-committee on 'immediate humanitarian needs' and in the sub-committee on 'de-escalation and normalisation'.

The first one has a concrete programme that envisages rapid moves to channel funds into the North-East region as a whole including the half of that region that is directly under LTTE control. What is significant is that this Sub-Committee includes both Government and LTTE representatives thereby effectively recognising an LTTE role in deciding the socio-economic future of the entire North-East region, including areas yet under State control.

This is an extension of and semi-formal recognition of the LTTE's political say over the entire region it claims as a separate state but has not militarily won complete control of, is a significant victory for the LTTE, although no one is publicly talking about it. This committee will plan for an international meeting of aid donor governments in December at which, for the first time, Sri Lanka will not be represented solely by a government delegation but will also have a delegation from the LTTE.

The sub-committee on 'de-escalation' in reality will oversee the further withdrawal of government forces from areas and strongpoints they currently hold in parts of the North-East. The LTTE has been making this demand ever since it signed the Ceasefire in February this year and is indicating the places it wants the withdrawal to occur. There is no indication of any military stand down that the LTTE will undertake.

This can be read as making way for the LTTE to remain in the region with significant military capability while the Governmental military presence is reduced.

While those hostile to Tamil military power may oppose this development, a realistic perspective will acknowledge that this process is only recognition of geo-political realities on the ground and the only way to concretise a genuine 'separation of forces' which, in the long-term, is an essential prerequisite for a permanent peace.

The setting up of the third Sub-Committee on political matters is in stark contrast to these very significant concessions by the Government side. The political affairs sub-committee will, for the first time in this negotiating process, and for the first time in decades, bring on to the talks agenda the very fundamental issues of the transformation of the Sri Lankan polity.

While the Government side has long wanted to include these 'core issues' or 'substantive issues', as they have been collectively known, as early as possible in the negotiating process. And always, it has been the LTTE which has been the one that has refused to include them.

Of course, the Government side has never been very convincing or emphatic in its insistence on the subject either because at all times (during both UNP and SLFP-led regimes) the Governing political party lacked the support of the main Opposition parties and therefore, lacked the ability to legislate and give effect to any State reform that is negotiated. Hence, it has always been easy for the LTTE to brush aside the half-hearted Government overtures in this regard.

In this sense, the new political sub-committee agreed to in Thailand is a major gain for the Government side. In the last abortive peace talks, in 1994-95 under the PA regime, the negotiations never went this far before they broke down. This time, however, the two sides have agreed to begin looking at the 'core issues'. The LTTE's agreement to this could be construed as the first concrete acknowledgement by that movement of something that it only verbally acknowledged previously: that there has to be an alternative to the original goal of a fully separate Tamil-dominated nation-state.

But at present, in terms of the current mandate of this sub-committee, it is only an acknowledgement on paper and little more. After all, the political sub-committee has been mandated to do something which both sides have been doing on their own for years, anyway: exploring models of power-sharing and studying peace processes in other parts of the world in order to learn about ways of successfully clinching a final settlement - either by secession (on the LTTE's part) or by power-sharing under a reformed State (the Government's hope). Thus, at present at least, the work of this sub-commitee will be more in the realm of a theoretical exercise than any actual negotiation on future political structures.

In any case, the Government is in no position to begin that kind of negotiation since it needs the backing of the main opposition party to push through any fundamental constitutional reform and lacks that backing at present. At the moment, both Government and Opposition are in very hostile political confrontation. Nevertheless, a first step has been taken in Thailand.

The challenge is for the Sri Lankan national political leadership to follow through in a convincing manner. The only way to meet the challenge of Thailand is through a bipartisan approach to peace-making.

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