India offers Sri Lanka funding to speed Tamils' return home

Gesture seen as attempt to maintain influence

India has offered Sri Lanka $100m (£61m) in aid to help refugees caught up in the endgame of the civil war to return home and rebuild their devastated communities.

In a move that may also allow India to maintain a measure of influence over its island neighbour, the Home Affairs Minister, Palaniappan Chidambaram said his government was ready to provide the aid package if Sri Lanka submitted a "plan of action" on the rehabilitation of Tamil civilians.

Speaking in India's southern state of Tamil Nadu, which has a large Tamil population, he said: "Our concern is that the displaced Tamils should be resettled in their homes as early as possible." An estimated 260,000 civilians are still held in detention camps in the north of Sri Lanka, unable to leave and with little news as to their future. The conditions in some of the camps have sparked concern among human rights campaigners, and the international community has been pressing the authorities in Colombo to allow the civilians to return home as quickly as can be arranged.

The government insists it cannot release the civilians, who were trapped between government troops and the fighters of the Liberation Tigers of Tamil Eelam (LTTE), until full security checks have been carried out and villages once held by the rebels have been thoroughly demined.

President Mahinda Rajapaksa claims that 80 per cent of the civilians will be home by the end of the year, but so far only about 15,000 have been allowed to leave the camps, which are surrounded by razor wire. "It has started in a slow manner. It has to be speeded up," Mr Chidambaram said. "We will take steps to ensure that all the Tamils are sent to their homes."

India gave its its neighbour a similar sum in aid in the summer. Its influence over Sri Lanka was once unchallenged, but over the last two years China and Pakistan have stolen a march, helping the Sri Lankan army to build up its offensive capabilities. China is also helping Sri Lanka build the strategic Hambantota port on the south coast. India now seems eager to restore the balance of influence.

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