Just a week after plunging the country into an acute political crisis, Sri Lankan President Chandrika Kumaratunga met with Prime Minister Ranil Wickremesinghe on Wednesday to discuss ways of ending the current standoff.

Nothing was resolved after the two and a half hour meeting. Both sides issued bland statements describing the talks as “friendly and cordial” and declaring “there was an exchange of views on various matters”. Further discussions are due to be held in the coming week.

It is hardly surprising that no agreement was reached. What is significant is that the meeting went ahead at all. Just seven days before, Kumaratunga had used her autocratic presidential powers to take control of three key ministries, deploy soldiers in the streets, suspend parliament for two weeks and announce a state of emergency.

Her abrupt about-face is testimony to the intense pressure being brought to bear on the president to back away from her grab for power and to reach a working arrangement with the United National Front (UNF) government.

At the centre of the conflict is the country’s long-running civil war. The major powers and big business are pressing for a powersharing deal with the Liberation Tigers of Tamil Eelam (LTTE) to end the devastating conflict and facilitate the island’s integration into the global economy. After winning the 2001 elections, the UNF signed a ceasefire agreement with the LTTE and initiated talks.

Kumaratunga, however, faced demands from sections of her own Peoples Alliance (PA) and Sinhala extremist groups such as the Janatha Vimukthi Peramuna (JVP) and Sihala Urumaya (SU) to oppose the so-called peace process. She seized control of the defence, interior and information ministries on November 4, declaring that the UNF was endangering national security and conceding too much to the LTTE.

But within two days, the president had backed away from imposing the state of emergency. The US, Japan, the European Union and UN Secretary General Kofi Annan all expressed concern about the consequences for the so-called peace process. Indian Prime Minister Atal Behari Vajpayee held a 20-minute telephone conversion with Kumaratunga urging her to avert a constitutional crisis.

Wickremesinghe returned from Washington last Friday, crowing over US President Bush’s support for the government and its negotiations with the LTTE. The US also indicated that a trade agreement and other economic measures might be put in jeopardy. The IMF’s representative in Colombo, Jeremy Carter, warned that the first $80 million tranche of $567 million in financial assistance was in doubt.

The last week has been dominated by intense political manoeuvring. In a televised address to the nation last Friday, Kumaratunga insisted that she supported the “peace process” and would order the armed forces to abide by the ceasefire. At the same time, she continued to berate the UNF for undermining national security and called on all parties to form a patriotic government of national unity.

Wickremesinghe and the UNF rejected the appeal for national unity. Instead, they put the president in an awkward position by calling on her to take over the peace process. How could the government negotiate with the LTTE, Cabinet Secretary G.L. Peiris declared, if it did not fully control the state apparatus? He also hinted that the government might use its finance ministry to block money to the three ministries taken over by Kumaratunga. The government also challenged the president to call fresh elections.

The standoff continues. The government has informed the Norwegian facilitators of the peace process that it cannot take responsibility for negotiations in the current situation. Kumaratunga has refused to take over the talks, fearing she will alienate sections of her own party and undermine a possible alliance with the JVP.

While last Wednesday’s meeting failed to produce any agreement, both Wickremesinghe and Kumaratunga are being prevailed upon to come up with a solution. Representatives of the IMF, World Bank and Asian Development Bank met with the president on Wednesday to urge her to ensure that the peace process continues, along with the government’s planned restructuring measures. Parliament is due to reconvene on November 19 for the tabling of the Sri Lankan budget.

A team of Norwegian diplomats, including Deputy Foreign Minister Vidar Helgesen, has been meeting with all sides to help patch together some kind of deal. Norway has indicated it has suspended formal involvement in the talks, adding to the pressure on the prime minister and the president to end the political stalemate.

The Joint Business Forum (JBIZ) representing major sections of big business sent letters to Wickremesinghe and Kumaratunga on Thursday seeking urgent meetings. Last week the same organisation issued a statement urging both sides to work together. Behind these moves are deep concerns within corporate circles that continuing political instability will end any prospects of economic recovery, as foreign investment stalls and share prices plummet.

The JBIZ statement is the latest in a series of calls by business leaders and the media for the UNF and PA to bury their differences and form a national unity government that will develop a joint approach to negotiations with the LTTE. An editorial in the Island newspaper last week, for instance, reiterated this demand, while at the same time bemoaning the fact that it would take a “miracle” for the parties to come together.

Two of the so-called workers parties—the Lanka Sama Samaja Party (LSSP) and Communist Party—have lined up uncritically with the demands of the major powers and big business for a “cohabitation government”. Their support for the “peace process” signifies tacit backing for the UNF government’s extensive package of open market reforms, including privatisation, the slashing of government spending and job cuts.

While there are strong pressures for a government of national unity, both Wickremesinghe and Kumaratunga are concerned that a joint administration will leave them open to political attack by the Sinhala extremist organisations.

Kumaratunga is particularly vulnerable. Up to now the JVP and SU have hailed her as a national saviour. But such sentiments could rapidly transform into opposition if she joins forces with the UNF in negotiating with the LTTE. If, on the other hand, Kumaratunga attempts to appease the JVP and SU, she will find herself confronted with demands to use her powers as defence minister to take tougher military measures against the LTTE—a move that has the potential to precipitate renewed fighting.

As a result, the political situation remains extremely tense. Perhaps the most striking feature of the past 10 days is that none of the parties—government or opposition—has even referred to the needs and aspirations of the majority of ordinary working people for basic democratic rights, decent living standards and genuine peace, free of communal hatred.