Prime Minister Mahinda Rajapakse is set to go head to head on yesterday with main opposition leader and investor-favorite Ranil Wickremesinghe in a race that is seen as too close to call. Left-of-center Rajapakse has forged election pacts with hardline Marxists and Sinhalese nationalists, pledged a tough line on the rebels and vowed to build up a ?national economy,? which some analysts fear is code for protectionism.

Wickremesinghe, the market choice because of his emphasis on free market policies and foreign investment, is seen best placed to convert the 2002 truce he brokered as prime minister into a peace deal with the Liberation Tigers of Tamil Eelam. The Tigers, blamed for a suicide bombing at the last presidential election in 1999 and for murdering the island?s foreign minister in August, have promised not to interfere. There has been minimal pre-election violence compared to previous years, but a minority Tamil party opposed to the rebels accused them on Tuesday of killing one of its polling agents.

?It is a referendum on nationalism versus internationalism, on modernity versus tradition,? said Jehan Perera, director of the non-partisan peace advisory group, the National Peace Council. ?It is a choice between an indigenous oriented effort to both resolve the ethnic conflict and to develop the economy, and an outward, international-oriented effort,? he added. In a photo-finish, the Tigers could emerge as unlikely kingmakers.

The rebels and their political proxies have vowed to remain neutral in the poll, but front organizations are encouraging a boycott in the rebel-dominated north, which could hurt the more moderate Wickremesinghe?s chances. With a silent war raging in the restive east between the Tigers and a renegade faction they accuse the military of helping, some analysts believe the rebels are not ready to give up their push for a separate homeland in the north and east.

Return to war unlikely

While analysts say a return to war is unlikely, they suspect the Tigers want efforts to convert the truce into a final end to a war that has killed over 64,000 people to remain in limbo. Sri Lanka?s hopes of jump-starting an economy long hamstrung by low foreign investment and under-investment in infrastructure, particularly in rebel-held areas, hinge on a lasting peace deal.

?All economic fundamentals are linked to the longer-term prospects of the peace process,? said Hasitha Premaratne, head of research at HNB stockbrokers in Colombo. ?Whether the foreigners want to come and invest in Sri Lanka or not would largely depend on the practicality and workable peace solution that you would see here,? he added, saying that Wickremesinghe?s plans were more realistic and practical.

Rajapakse and the right-of-center Wickremesinghe, who narrowly lost the presidency to outgoing president Chandrika Kumaratunga in 1999, are both in hot pursuit of moderate swing voters among the 13.3 million electorate. Both have pledged a raft of subsidies on goods from milk powder to fertilizer for the rural poor and farmers, who make up the backbone of the electorate in a $ 20 billion economy whose biggest currency-earners include foreign remittances, garment and tea exports and tourism.

Many voters say they have lost out under the tenures of both main candidates, and are despondent about the choice they face. ?We can?t believe the promises of either,? said Samu Dilum Sanjeewani, 39, who still lives in a tent with her sister and two daughters in a camp near the southern city of Galle nearly a year after Asia?s tsunami flattened her home. ?We have lots of elections, but no one delivers,? she added. ?We want peace, but first we want a house and we want the cost of food to come down,? she added.

Simon GARDNER

WHO IS MORE LIKELY TO WIN ?

Leading presidential candidates

■ Brief profiles of the two main candidates:

>MAHINDA RAJAPAKSE

Left-of-centre Rajapakse styles himself a man of the people with strong grass-roots support among the island?s Sinhalese majority, particularly hardline Marxists and nationalists who detest the Tamil Tiger rebels. A lawyer by trade, Rajapakse entered parliament in 1970 and has previously held the Labour, Fisheries and Highways portfolios. He has vowed to take a tough, fresh approach in peace talks with the Tigers.

He has ruled out a separate homeland for ethnic Tamils and vows to amend the 2002 cease-fire agreement with the rebels if elected ? much to their chagrin ? and will axe a plan to share $3 billion in tsunami aid with the Tigers. The 59-year-old Premier has also pledged a ?balanced national economy? that rules out privatisation of key state assets and has offered a raft of milk and fertiliser subsidies for the rural poor. He wants to foster small and medium-sized businesses and is aiming for annual economic growth of 8 percent. His hobbies include watching his sons play rugby, watching television with his family and weightlifting.

>RANIL WICKREMESINGHE

Right-of-centre Wickremesinghe, who also trained as a lawyer, is the financial market favourite because of his emphasis on free market policies and boosting foreign investment. He entered parliament in 1977, held a host of cabinet portfolios including Education, Industry and Science and Technology and has twice served as prime minister. The 56-year-old brokered a 2002 truce that halted the island?s two-decade civil war and is seen as best placed to convert it into a lasting peace deal with the rebels. He has also promised a raft of populist subsidies, including $50 million to keep down the cost of goods from milk powder to fertiliser next year. He is targeting 10 percent annual growth over the next decade and aims to create 3 million jobs. He will also ditch a divisive coastal buffer zone that aid workers say has hampered reconstruction in the wake of December?s tsunami, and has promised hundreds of thousands of survivors new homes and livelihoods within one year. Wickremesinghe says he learnt to face defeat and victory from studying prime minister Winston Churchill. He enjoys reading about politics and listening to music.