THE WORLD - News from Jan. 4, 2009

The jungle town not far from the Indian Ocean had been looking more and more like the seat of an independent nation. The separatist rebels in charge opened tax offices, hosted diplomats, and even printed maps of the state they hoped to create.

That ended Friday as Sri Lanka’s military captured Kilinochchi, the Tamil Tigers’ de facto capital, winning a major victory in their decades-long battle to crush the ethnic separatists’ dream.

The seizure was celebrated by dancing in the streets of Colombo, the Sri Lankan capital, as people wondered whether Asia’s longest-running civil war would finally end.

“For the last time, I call upon the LTTE to lay down their arms and surrender,” declared President Mahinda Rajapaksa, who had promised to destroy the separatist group and end the war before 2008 was over. He was referring to the group’s formal name, the Liberation Tigers of Tamil Eelam.

But even as the Tigers were backed into an ever-shrinking corner of this island nation, they showed little sign of giving up. Less than an hour after Rajapaksa announced the town’s capture, a rebel suicide bomber struck near an air force headquarters in Colombo, killing three airmen and injuring 37 other people, authorities said.

Claiming that the Sri Lanka’s minority Tamil population is treated like second-class citizens, the Tigers have waded through years of battle, wearing vials of cyanide around their necks in case of capture, and raising $200 million to $300 million a year through an international network laced with extortion and fraud.

They fought hard for Kilinochchi, building a massive earth and moat fortification some 10.5 miles long. Over the past two months, they held off government troops -- with the aid of pounding monsoon rains -- in battles that reportedly killed hundreds of fighters.

Twenty-five years of fighting have left at least 70,000 people dead as foreign aid groups and outside observers, banned by the government from the war zone, have watched with despair. Both the United States and the European Union list the Tigers as a terror group.

But while Friday’s offensive gives the government key momentum and should make it harder for the Tigers to tap their resources for money and arms, analysts said the rebels still have thousands of fighters willing to die for their cause.

“It’s not going to be the end of the fighting or the end of the LTTE,” said military analyst Susantha Seneviratne, a retired colonel.

The rebels could not be reached for comment Friday. But reports indicated they were retreating, squeezing further into a slice of northern jungle about half the size of the U.S. state of Rhode Island.

Caught up in their retreat are 230,000 civilians displaced in the fighting, foreign aid groups say.

Army commanders said their forces met minimal resistance inside Kilinochchi. The rebel-affiliated TamilNet website said the Tigers had moved their headquarters northeast before the town fell.

In Washington, State Department spokesman Gordon Duguid described the Tigers “one of the most notorious and brutal terrorist organizations,” but called for a peaceful dialogue to resolve the Tamils’ legitimate concerns.

Though Rajapaksa has said he would pursue a political solution, he pressed ahead with the fight.