Rajapakse wins election on peace pledge

Nov 18 | Updated: Nov 19 2005, 07:12am hrs
Sri Lankan Prime Minister Mahinda Rajapakse was elected president as voters backed his plan to renegotiate a cease-fire accord with Tamil separatists in a bid to end the nations two-decade civil war.

Rajapakse won 50.3% of vote compared with 48.4% for Ranil Wickremesinghe, according to the Elections Commission. Rajapakse, 60, will be sworn in on Saturday afternoon.

Reaching a permanent peace agreement with the Tamil Tigers, who want a separate homeland in the islands north and east, is crucial for Sri Lankas tea- and textile-exporting economy, which has expanded every quarter since the cease-fire was signed in 2002. Rajapakse is expected to take a harder line in talks with the separatists, analysts including Hasitha Premaratne said. Mahinda doesnt mean war, but he will need to deviate and accept a more flexible approach to take the peace process forward, said Premaratne, head of research at HNB Stockbrokers Pvt in Colombo. Otherwise there could be a lack of confidence among investors.

Stocks had their biggest drop in almost 20 months after Rajapakse claimed victory, with the benchmark Colombo All-Share Index sliding 6.9 percent. Rajapakse pledged to halt sales of state assets to overseas investors, and the government last week said it will raise corporate tax rates. There was panic selling as investors figured the election outcome, Prasanna Chandrasekera, an analyst at John Keells Stock Brokers in Colombo, said today.

-Bloomberg