May 29 (Bloomberg) -- The European Union listed Sri Lanka's Tamil Tigers as a terrorist organization in a bid to push the separatist movement back to peace talks and avert a full resumption of the South Asian island's two-decade civil war.

Sri Lanka's peace process is threatened by attacks that have continued almost daily since the government and the Liberation Tigers of Tamil Eelam held their first meeting in three years in Geneva in February. The violence, for which the government and LTTE blame each other, prevented the sides from holding a second round of talks that were scheduled in April.

The EU's ban, which could result in a freeze on Tamil Tiger assets and other measures to prevent them raising funds, followed a proposal by the U.S. to list the LTTE as a terrorist group as a means of cutting off financial aid and weapons supplies. The Tamil Tigers have denounced the imposition of new international sanctions, saying it may provoke further violence.

``This could mean a major military attack that seeks to show the world that the international ban has not changed anything on the ground,'' said Jehan Perera, director of the National Peace Council, a non-governmental peace advocacy organization. ``Unless the government is able to take some very positive initiatives with respect to the peace process, a strong LTTE military reaction may be anticipated.''

The ban will go into effect when the EU decision is published in the Official Journal in the coming days.

Resumption of War

International donors, led by the U.S., Japan, the 25-nation EU and Norway, have appealed to both sides to hold peace talks to prevent a resumption of war. The donors have made progress toward peace a condition of providing $4.5 billion in aid to Sri Lanka.

A decision by the EU to join the U.S., U.K. and India in listing the LTTE as a terrorist organization would embolden the Sri Lankan government's ``military option,'' the TamilNet reported May 18, citing LTTE chief negotiator Anton Balasingham.

Listing by the EU would be a ``serious impediment to reaching a just and lasting solution to Sri Lanka's conflict,'' Balasingham said in a May 20 statement, according to TamilNet. ``Faced with global isolation and humiliation, the LTTE may be compelled to stay away from further talks.''

The EU's decision to put the LTTE on the terror list is aimed at forcing the group to the negotiating table, Balasingham said. Attacks by the army and armed groups on Tamil civilians are ``conveniently ignored,'' he said.

Sea Attack

The Tamil Tigers have fought since 1983 for a separate homeland in the north and east of Sri Lanka in a conflict that's killed more than 60,000 people. The Tamil Tigers say Tamils are discriminated against by the mostly Buddhist Sinhalese majority.

The LTTE pulled out of Norwegian-brokered talks aimed at supporting a 2002 truce accord because of travel restrictions on their officials and renewed violence. International monitors, including officials from Norway, Sweden, Denmark, Finland and Iceland, suspended their operations at sea after a Tamil Tiger attack May 11 on a troop-carrying vessel that killed 17 Sri Lankan sailors.

The LTTE must abandon terrorism if it wants to bring peace to Sri Lanka, Donald Camp, the U.S. principal deputy assistant secretary for South Asian affairs, said May 16 during a visit to Sri Lanka.

Sri Lanka's President Mahinda Rajapakse is working to form a consensus among Sri Lanka's mainstream political parties to discuss a solution, the Financial Times reported May 25.

To contact the reporters on this story: Anusha Ondaatjie in Colombo at anushao@bloomberg.net; Paul Tighe in Sydney at ptighe@bloomberg.net

Last Updated: May 29, 2006 15:38 EDT