COLOMBO, 6 November 2003 — Sri Lanka’s political crisis worsened yesterday as President Chandrika Kumaratunga declared a state of emergency amid mounting global fears for the fragile peace process with Tamil rebels.

The president’s move came after she sacked the ministers of defense, interior and information, suspended Parliament and deployed troops around key installations in a head-on confrontation with the cohabitation government.

Despite the political uncertainty, government ministers said they were still in total control over Parliament and had asked peace broker Norway to go ahead with arrangements for a face-to-face meeting with Tamil Tiger rebels.

Presidential aide Lakshman Kadirgamar said the truce with the rebels would be respected. The state of emergency, which goes into effect today, gives sweeping powers to troops to make arrests and restrict personal freedom.

“The president has no intention of resuming or provoking the resumption of hostilities,” Kadirgamar told reporters.

However, investors were unimpressed. The Colombo Stock Exchange shed a record 15.37 percent yesterday, after losing just over five percent Tuesday when Kumaratunga rejected a Tiger blueprint for a settlement to decades of ethnic conflict which has claimed more than 60,000 lives.

The Sri Lankan economy has recovered from a recession after Kumaratunga’s bitter rival, Prime Minister Ranil Wickremesinghe, signed the landmark truce with the Liberation Tigers of Tamil Eelam (LTTE) on Feb. 23 last year.

The truce has led to 20 months of relative peace, economic growth and rising numbers of foreign investors and tourists.

Finance Minister K.N. Choksy said the president’s actions had plunged the country into economic uncertainty and prevented him from unveiling a “welfare-oriented” budget on Nov. 12.

Kumaratunga’s actions were widely seen as a “constitutional coup” against Wickremesinghe as he traveled to Washington to meet President George W. Bush after the LTTE said it was ending an eight-month boycott of peace talks.

Wickremesinghe pledged to sort out the crisis after emerging from talks with President Bush. “This is not the first crisis I have had,” he told reporters.

“When I go back, I’ll sort it out. We have a majority in Parliament. I have a mandate to bring peace to the country.”

Wickremesinghe said that Bush asked him about developments in Sri Lanka. “Things were quite all right when I left,” Wickremesinghe said, paraphrasing his tongue in cheek remarks to the US leader.

The White House earlier said that Bush would express strong support for democracy in Sri Lanka, but appeared keen to avoid being drawn into the country’s bruising domestic politics.

“The United States strongly supports the peace process and strong democratic institutions in Sri Lanka, and I expect the president to reaffirm that support in the meeting,” said Bush spokesman Scott McClellan. Kumaratunga’s spokesman Eric Fernando said her move was to facilitate “administrative and procedural matters”.

Diplomats said Kumaratunga had so far acted within the constitution and analysts said it was likely she would call snap elections.