As a result of Shri Parthasarthy's discussions with both sides a set of proposals were formulated and the Sri Lanka Government agreed to convene an All Party Conference to consider these proposals (which came to be known as Annexure 'C'). The proposals in Annexure 'C' were centered on the creation of Regional Councils (separately) in the Northern and Eastern Provinces of -Sri Lanka.

These Regional Councils were to be granted substantial devolution of powers including the subjects of law and order, land policy, education etc. and had power of taxation, raising finances etc. Though President Jayewardene had agreed that the proposal in Annexure 'C' would form the basis of negotiations, the All Party Conference when it met in 1984 did not focus on the Annexure 'C' proposals but considered only limited Schemes of devolution of power. Committees were set up to study individual aspects of this limited devolution and meetings were repeatedly adjourned. Discussions dragged on throughout 1984 while the cycle of violence by militants and indiscriminate counter-violence by the security forces against Tamil civilians took a grievous toll of innocent lives and vitiated the atmosphere. In December 1984, the Jayewardene Government presented proposals in the form of the draft 10th Amendment to the Constitution and the draft District and Provincial Councils Development Bill. These proposals did not contain any meaningful devolution of power. They merely extended the Scheme of decentralization at District level to the Provincial level for limited co-ordination. The TULF rejected these proposals and thereafter the All Party Conference was wound up.

In late 1984 and early 1985, the Sri Lanka Government escalated its military operations against the Tamils, indicating that it would tackle "terrorism" before trying to reach a political solution. This only resulted in increased violence and tension in Indo-Sri Lankan relations.

In 1985, the Prime Minister, Shri Rajiv Gandhi took the initiative to renew India's good offices as part of a policy of improving bilateral relations with neighbouring countries.

The Indian initiative came in the wake of spiraling violence involving indiscriminate killings of innocent Tamil civilians by the Sri Lanka Security forces and retaliatory attacks by Tamil militants on Sinhalese civilians in Anuradhapura. The Sri Lanka Government responded to the Indian initiative. President Jayewardene visited Delhi in early June 1985 and it was agreed that India would:

1. Help bring about a ceasefire between the Tamil militant groups and the Sri Lanka Government; and
2. Help arrange direct negotiations between the Sri Lankan Tamil groups and the Government of Sri Lanka.

Immediately following the Sri Lanka President's visit, a team of Sri Lankan officials and legal/constitutional experts visited India and held discussions with our Attorney General on the Sri Lankan Constitution. It was agreed that there was scope for devolution of powers within the framework of the Sri Lankan Constitution.

Thimpu

Two-rounds of direct negotiations were held in Thimpu in July 1985 and again in August 1985. These talks were adjourned in mid-August without agreement, and there was still a very wide gap between the positions of the two sides. The Sri Lankan side was prepared to concede the formation of separate Provincial Councils albeit with limited powers. The Tamil militants demanded their recognition as a nationality with right to self-determination and the right to an identified homeland-viz. the merger of Northern and Eastern Provinces. The moderate TULF also insisted on the need for merger of the Northern and Eastern Provinces and grant of substantial powers to this Tamil linguistic province. (For the Tamils the difficulty in accepting a separate Eastern Provincial Council lay in their fear that being today only 40% of that Province they may not be able to form or control the Provincial Government when it does emerge; they would thus not be able to stop the erosion of their demographic position in the area, or retain control over lands being colonized and the law and order machinery).

Delhi Discussions

Government of India, however, decided to continue the dialogue through a process of indirect negotiations, with Indian officials talking to both sides separately in an attempt to narrow differences to the point where direct negotiations could be resumed. At the end of these indirect negotiations on 30.8.1985 the Sri Lankan side presented a working paper (Draft Framework of Accord and Understanding) which, it was agreed by the Government of India, could serve as the basis for further negotiations.

The Draft Framework of Accord and Understanding was as indicated above, intended only as the basis for further negotiations. It envisaged the creation of Provincial Councils (Separate Provincial Councils for the Northern and Eastern Provinces) by amendment to the Sri Lankan Constitution, with devolution of limited powers to the Councils over subjects including law and order, land, education, culture, industry etc. The then Foreign Secretary discussed these proposals with the various Tamil militant groups in October and November 1985, but the latter rejected them even as a basis for further negotiations.

TULF Proposal: December 1985

Consequent to the rejection by the Tamils of Sri Lanka's proposals, Prime Minister Rajiv Gandhi stated in Parliament on November 20, 1985 that the "ball was in the Tamils' court". At India's suggestion, the Tamil United Liberation Front leaders prepared an alternate set of proposals (in December 1985). The TULF proposed a federal structure in which the Northern and Eastern provinces would be combined in a single Tamil linguistic State. Though this proposal meant the acceptance of a structure within the framework of the Unity of Sri Lanka, the Sri Lanka Government in January 1986, rejected the TULF proposal in harsh language and reiterated its inability to accept any proposals which altered the unitary character of the Sri Lankan Constitution. Thereafter, India's good offices were suspended for a few months. At this stage the Sri Lanka Government sent further communications indicating their willingness for further negotiations on the subjects of law and order and land settlement. They also agreed for the first time to consider the question of redrawing the boundaries of the Eastern Province. This phase was, however, marked by brutal almost genocidal attacks by security forces on the Tamil civilians and India's good offices were, therefore, kept suspended.

In the middle of April 1986, President Jayewardene indicated Sri Lanka's interest- in reviving India's good offices, and on the Government of India receiving indication of Sri Lanka's willingness to move forward, a delegation led by Shri P. Chidambaram, Minister of State, visited Sri Lanka for further negotiations.

New Sri Lankan Proposals: May/June 1986

Consequent to the discussions with the Chidambaram delegation and later clarifications/communications, the Sri Lankan Government put forward detailed formulations for a solution. Following an evaluation of these proposals, the Government of India's Official Spokesman stated: "We feel that the stage has now been reached where the package of proposals in regard to the devolution of power can be conveyed to the Sri Lankan Tamils for their careful consideration". The package of proposals was accordingly handed over to the TULF and the other Tamil militant groups at the end of June 1986. The proposals which were discussed consisted of:

(i) A Preamble explaining the principles on which the Sri Lankan Government was proceeding viz., devolution of power of Provincial Councils within the framework of the unity and integrity of Sri Lanka and the maintenance of the unitary character of its Constitution. It implied retention of existing provinces as the unit devolution but, in order to meet the Tamil demand for "linkage", proposed institutional arrangements for some co-ordination between two Provinces on matters of mutual interest.

(ii) A note on the actual establishment of provincial Councils and the devolution of powers to them as well as some details of the functioning of Provincial Councils; and,

(iii) Specific proposals in regard to the devolution of powers to the Provincial Councils in relation to Law and Order and Land Settlement. The Sri Lankan proposals accepted the need for bifurcation of the Police Force into a National Division and Separate Provincial Divisions. They also clearly stated for the first time that Land would be a devolved subject.

TULF Talks

These proposals marked a step forward. On their basis the TULF reopened direct discussions with the Sri Lankan leadership, Two rounds of negotiations were held in July and August 1986. During these discussions some common ground emerged on many of the subjects under discussion, except for the crucial subject of the unit of devolution. Based on these discussions, the Sri Lankan Government prepared draft legislative proposals and these were then discussed by the TULF with Indian constitutional/legal experts in September/October 1986. The TULF revised the proposals to bring them in line with the understandings reached earlier as also the basic Tamil demands in relation to a single Tamil Linguistic Unit.

The Sri Lankan proposals, as modified by the TULF, were the subjects of discussions between the Tamil Nadu Government and the Sri Lankan Tamil militant groups at the end of October and early November 1986. The militant groups presented a detailed critique of the proposals, suggesting that the powers in respect of law and order, land settlement etc. were still inadequate; the fundamental difficulty of the Tamil militants was that the proposals did not specify an identified Tamil homeland i.e. merger of the Northern and Eastern Provinces. Their observations were conveyed by the Tamil Nadu Chief Minister Shri M.G. Ramachandran to Prime Minister Rajiv Gandhi in early November 1986.

Bangalore

Prime Minister Rajiv Gandhi held discussions with President Jayewardene in Bangalore during the latter's visit for the SAARC Summit in mid-November and during these discussions, President Jayewardene provided some assurances in regard to constitutional safeguards and on the questions of merger. He suggested that the Eastern Province could be trifurcated into 3 Provinces, one each for the Tamils, the Muslims and the Sinhalese presently residing there.