Sri Lanka's military on Saturday said it had seized the entire western coast of Sri Lanka after months of combat, leaving it in position to open a road to the war-isolated Jaffna Peninsula for the first time since 1993.
Analysts say the military is making gains and has the unflinching support of President Mahinda Rajapaksa in its mission to wipe out one of the world's most ruthless and effective insurgent groups. Here are some scenarios of what could happen next:
EARLY ELECTIONS: The rebel capital of Kilinochchi is the next big target for the army. The defacto seat of the Liberation Tigers of Tamil Eelam's (LTTE) quasi-government, Kilinochchi is a target of strategic, symbolic and political importance. Many including allies of President Mahinda Rajapaksa say its capture could prompt him to call an early parliamentary election to strengthen his coalition. But others say the president has given no hint of that and point out that keeping people guessing over elections has long been one of Sri Lanka's great political games.
CAPTURING KILINOCHCHI: Capturing it would allow the military to sweep the rebels east through the jungles on an arc-shaped front to the port of Mullaitivu, hemming them in from all sides. The military for the last month has said it was on the edge of Kilinochchi, 330 km (205 miles) north of the capital Colombo. Fighting is heavy and the rebels appear ready to make their stand there, analysts say. With Saturday's capture of Pooneryn, the army has cleared artillery that kept troops in Jaffna from moving south to Kilinochchi. Watch for those soldiers to begin moving. Soon after, the battle for Kilinochchi would near a crescendo with the army striking from the north, south and west.
MARKETS SHRUG: If Kilinochchi falls, analysts and market players say they expect a brief boost to the Colombo Stock Exchange and maybe some temporary relief to depreciation pressure on the rupee. But both tend to move on their own fundamentals after 25 years of war. Neither are looking good now amid a global financial crisis and an IMF warning that Sri Lanka's economic growth could be at risk if the country doesn't cut spending, stop supporting the rupee and ease reliance on expensive foreign short-term debt. Given Rajapaksa's primarily rural power base has been largely shielded from economic woes through his populist-angled budgets, an economic crisis presents a correspondingly lower political risk to him -- especially with the war going well.
COUNTERATTACK: The Tigers could do what they have done after losing ground in the 1980s and 1990s, which is regroup and hit back hard. But security analysts say the army is three times bigger and much more hardened than it was in those days, with better weapons and tactics. The Tigers also have few avenues to smuggle in weapons after most of its merchant smuggling fleet was destroyed. The former No 2 in the LTTE last week said Mullaitivu is now the only place the LTTE can ferry in weapons.
COLOMBO ATTACKS SPIKE: The government on Saturday warned citizens to be vigilant for more suicide bombings and unconventional attacks in the capital Colombo in response to the Tigers losing ground up north. Their rudimentary air force bombed a power station in Colombo on October 28, and there have been at least seven blasts in the city since August 30. But the city is under heavy guard and the government has no compunction about carrying out heavy-handed sweeps of Tamil areas to avert attacks.