Peace broker Norway warned Sri Lanka's warring parties that if they did not show progress in talks which opened in Geneva on Saturday they would risk losing international financial support.
Norway's International Development Minister Erik Solheim told both sides at the start of their meeting that the international community was running out of patience and the South Asian nation was jeopardising millions of dollars in support.
Solheim urged the Sri Lankan government and the rebel Liberation Tigers of Tamil Eelam (LTTE) to resolve Asia's longest and the bloodiest separatist conflict which has claimed over 60,000 lives since 1972.
"I see very few countries with such economic potential...," Solheim said adding that an end to the conflict could make Sri Lanka an economic powerhouse and an example to the rest of the world.
"I have been involved in this process for eight years, and Norway for seven years, and it is a very long time for us," he said.
"We have shown a lot of patience and we are prepared to show more, but the people in Sri Lanka and the international community will be impatient."
He said the island risks losing huge financial support unless the two parties showed progress towards a political solution based on the talks held since September 2002.
The parties in December 2002 agreed to work towards a federal system of power sharing but those talks remain inconclusive.
Solheim called for the de-escalation of military operations, a halt to "terrorist killings," -- a reference to attacks by the Tigers -- and discussions on underlying political issues for a final peace deal.
He noted that the scale of violence had increased in Sri Lanka since the two parties last met in Switzerland in February and said they had not delivered on promises made then.
However, Saturday's talks, he added, were a step in the right direction.
"This (meeting Saturday) constitutes a small ray of hope, at least a step in the right direction," he said before the two sides started their deliberations behind closed doors at Geneva's International Conference Centre.
The two sides sat facing each other with a bouquet of flowers in the middle a blue-carpeted conference room.
The Sri Lankan government's chief negotiator Nimal Siripala de Silva shook hands with the leader of the political wing of the Liberation Tigers of Tamil Eelam (LTTE), S. P. Thamilselvan at the invitation of Solheim.
They repeated the handshake for the benefit of cameras. Talks began without a formal agenda because of disagreement on what should be taken up first, diplomats said.
"The international community can give help, advise, financial assistance, but at the end of the day, political decisions will have to be taken by the leadership of the government and the LTTE," Solheim said.
Representing neutral host country Switzerland, Swiss diplomat Heidi Tagliavini asked the two parties to make use of the latest round to de-escalate the violence at home.
"For Switzerland, the talks will have been successful if, as a result, the situation of the civilian population improves and the violence subsides," she said. "I hope you too can identify with this small but important step."