Feud between President Kumaratunga and PM Wickremesinghe continued with both sides intransigent over control of defence ministry. Sri Lankan government demanded 9 January Kumaratunga renegotiate ceasefire with Tamils or give up security portfolio appropriated in November. Kumaratunga claimed she could keep office 1 year longer than expected, until 2006, due to early investiture and second secret inauguration ceremony: claim rejected by government. Snap elections possible as Kumaratunga’s Sri Lanka Freedom Party (in opposition) signed alliance with Marxist People’s Liberation Front (JVP), Sri Lanka’s third largest party, creating The United People’s Freedom Alliance. JVP opposed to devolution of power to minority Tamils. Tamil Tigers (LTTE) continued to warn that peace process under threat. Norway replaced leader of monitoring mission whom Kumaratunga had accused of anti-government bias. Delegation from LTTE travelled to Norway for talks 28 January.

Under U.S. pressure, President Chen Shui- ban modified language of proposed 20 March referendum: voters now to be asked whether they approve increasing purchases of U.S. weapons should China fail to redeploy missiles aimed at Taiwan; earlier version involved direct call for removal of missiles. China condemned revised language, saying referendum would bring tensions to “brink of danger”. French President Jacques Chirac called poll “grave mistake”, angering Taipei.

Wave of violence in south blamed on separatist Islamist militants. Weapons depot looting and arson attacks on 21 government schools 4 January, followed by 10 deaths in several incidents. In response, martial law declared in Pattani, Narathiwat and Yala provinces in predominantly Muslim south. Arrest warrants for 4 Muslim militants issued. Security clampdown fuelling resentment. Thai PM Thaksin Shinawatra blamed lethal machete attacks on 3 Buddhist monks as work of separatists attempting to ignite religious conflict.

Government called for UN to extend its mission beyond 20 May deadline. At present 2000 UN personnel in East Timor. UN Secretary General to report to Security Council in February. Australian Defence Force chief, General Peter Cosgrove, said his troops should remain in East Timor even if UN pulls out in May. Two issues raising tensions on border with Indonesia: East Timorese upset by Indonesian military exercises on Palau Batek, small island off coast of East Timorese enclave. Secondly, group composed of disgruntled former Fretilin members, Kolimau, allegedly infiltrating from East Timor into West Timor to recruit former militias there to help destabilise East Timor once UN peacekeepers withdraw May 2004.

Turkey offered to hold trilateral talks with Armenia and Azerbaijan over disputed Azerbaijani territory, occupied by Armenian forces since 1993.

Authorities rejected opposition party appeal for release on bail of dozens of detainees arrested during demonstrations following fraudulent 15 October presidential election. Baku courts ruled 4 opposition leaders and editor of opposition daily must remain in pretrial detention for further 3 months. Council of Europe and Human Rights Watch condemned government’s post-election crackdown.

Failed attempts by NATO's Stabilisation Force (SFOR) to locate former Bosnian Serb president Radovan Karadzic and military leader Ratko Mladic caused Hague War Crimes Tribunal to question Bosnian and Western political will. Posters in support of Karadzic appeared in his wartime base, Pale, after 4-day NATO-led operation failed. Police arrested former president Jelavic on organised crime charges. High Rep. Paddy Ashdown launched attempt to unite city of Mostar institutions presently divided between Bosnian Muslims and Croats.

Conflicting versions of end to last month’s incursion by Chechen rebels into neighbouring Dagestan. Russian officials say troops killed all but 3 rebels; latter say most made it back to Chechnya. Meanwhile, fighting continues with no end in sight. Official Russian statistics showed sharp rise in number of rebel attacks in 2003.

Explosion 11 January destroyed buildings; no one claimed responsibility. Truce between nationalists and French government has lasted 2 months.

Prospects for reunification improved as new coalition government formed in Turkish Cyprus. Pro- reunification Republican party leader and new prime minister Mehmet Ali Talat joined by Democrat Party’s Serdar Denktash, son of President Rauf Denktash. 1 May set by new government as date to find solution based on previously rejected UN plan. EU leaders pushed Turkey to encourage resolution of Cyprus issue in light of its bid for EU membership. Turkish PM Erdogan met UN Secretary General Kofi Annan 24 January and asked for renewed efforts by UN to find solution. Annan conditioned talks on both sides agreeing to UN blueprint as basis for negotiations and referendum on results. Sec. State Powell indicated willingness of U.S. to help sides reach Agreement.