Colombo: After decades of ethnic bloodshed and a failure by either side to gain any advantage on the battlefield, Sri Lanka's government and Tamil Tiger rebels retreat to a boardroom in Thailand next week to seek a way to live together.

The government has been pouring more than a third of its revenue to fund the war against the Liberation Tigers of Tamil Eelam (LTTE), but has ended up with an empty war chest and a bloody nose.

For Tiger rebels, a war of attrition was too much to sustain despite a band of highly dedicated suicide bombers who have staged spectacular strikes and managed to keep fear alive in the island nation.

By June 2001, the LTTE said it had lost 17,211 of its fighters since the first guerrilla was killed by government forces in 1982.

The military has lost roughly the same number of combatants while many more on both sides have been wounded.

A figure of 60,000 people killed in the conflict in the past three decades is at best an arbitrary estimate as no one has kept complete track of all the civilians caught up in the conflict.

United Nations agencies estimate about 800,000 people are internally displaced by the war. Another million minority Tamils could be living abroad as refugees.

"The military option is not an option," said Prime Minister Ranil Wickremesinghe, who took office in December promising peace with Tigers. He has also promised to revive the economy, which went into a recession in 2001.

His attempts to dust-off a Norwegian-backed peace bid will reach a new level when delegates of the government and the LTTE have a formal face-to-face discussion on September 16, the first under Western facilitation.

Wickremesinghe said the peace process was only made possible by foreign support for his right-wing government.

"This (peace process) would not be possible if not for the Royal Norwegian government, India, the US, the United Kingdom and the European Union but to mention a few," Wickremesinghe said.

After a brief opening ceremony at a beach resort in Thailand, the delegates will move to a tightly guarded Thai Naval base in Sattahip in the Chonburi Province for three days of closed-door talks.

"The first round will be basically to clear the table and decide the priority of the items on the agenda," said the government's chief negotiator G L Peiris.

A new optimism has gripped Sri Lanka as two sides talk after several "confidence-building measures", including a Scandinavian-monitored truce, which began on February 23.

"The expectations from the talks are very, very high," said Nanda Godage, a former additional secretary to the foreign ministry. "Clearing the table and agreeing on the initial matters alone will take time."

"We are set for the long haul. It is going to take a long time to get to the main issues."

The government and the Tigers are expected to sidestep contentious matters at the beginning and focus on the rehabilitation and reconstruction of the island's war-ravaged Northern and Eastern regions.

The hard bargaining could be done elsewhere. There have been informal contacts between the two sides in London and Oslo as well as inside rebel-held territory of Northern Sri Lanka.

The Norwegians who are facilitating the talks have made it clear they will not force a solution on the parties.

The guerrillas have said they are willing to consider a substantial power-sharing arrangement within a concept of "internal self-determination", but it will have to be defined and dissected first.

Hardliners in Sri Lanka's majority Sinhalese community are opposed to any concessions to the Tamils, who over the years have complained of discrimination over language, education and jobs.

Western diplomats say the start of talks in Thailand was a powerful message of the commitment of both sides to resolve differences through dialogue rather than through the barrel of a gun.

But the prime minister has been stressing caution.

"I don't want to create euphoria. But if we have a firm foundation, the talks will not collapse," Wickremesinghe said. "A start has been made and we must go forward."