Unable to achieve peace, Sri Lanka returns to war

COLOMBO, Aug 20 (Reuters) - Both Sri Lanka's government and Tamil Tiger rebels might still say they want peace despite a return to large-scale fighting, but in reality they may have got the war that they wanted after four years of ceasefire.

Hopes had been high after the Norwegian brokered truce was signed in 2002 - aid flowed in and most diplomats and analysts judged a two decade war that had killed more than 64,000 people to be over for good, with the Liberation Tigers of Tamil Eelam (LTTE) running a de facto state across a seventh of the island.

Now, troops and rebel fighters have been in battle for three weeks, first in a small-scale engagement south of the northeastern port of Trincomalee where the rebels closed off a water supply to government areas, then along other front lines.

''Our assessment is that both sides believe they can achieve things better through military means,'' a diplomat said.

In fact, few western experts believe either side can defeat the other. In three weeks of ground fighting, the front lines have barely moved and the action reminds some of World War One.

That may have come as a surprise to some in government.

''This is the time for a permanent peaceful solution - or military victory,'' a government official said before ground fighting began.

Increased ethnic violence and tension drives many Tamils into to the Tiger cause, and analysts say also pushes majority Sinhalese towards the government. Some say that both sides also want to make some military gains as a precursor to new talks.

''Eventually, it will have to come down to negotiations,'' one Tiger official told Reuters earlier in the year. ''But first, there will be one big fight.'' Violence had already been rising - at least 800 dead so far this year even before the ground war began - but August fighting shocked even some of the most pessimistic. Hundreds of civilians are feared dead, tens of thousands have fled their homes.

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