The suicide ambush on a government naval base on Sri Lanka's southern resort coast represents a significant escalation of the minority Tamils' bloody campaign for a homeland in the north - more so than the bomb outrage that killed more than 100 unarmed government sailors in a leave convoy in central Sri Lanka on Monday. Neither attack will do much for another attempt at peace talks, set down for Geneva on October 28-29. This raises the question of what the latest attack, at the resort town of Galle by five boats disguised as fishing vessels, was intended to achieve. Rumours of imminent attacks have caused increasing trepidation in the south for some time. The consequences of a spread of hostilities and atrocities to the south are predictable and we have already had a foretaste. After yesterday's attack, Sinhalese mobs took to the streets and retaliated with violence against Tamil-run shops. If the sea-borne attack was aimed at causing a backlash against the low-profile Tamils in the south and sewing division, the results suggest the strategy might succeed. If this signals demands for greater support in cash and kind in future to finance the separatist campaign, it sends a worrying message. The effects on the key Sri Lankan industry of tourism and the national economy will take a little longer to reveal themselves. But they are uppermost in the minds of government officials and security forces and will not be far from the thoughts of prospective tourists, including those from Hong Kong. The rebels have shown that all it takes to frighten tourists away from resorts in the hill country and coastal areas is a single devastating attack in the capital, Colombo. The government and the Sinhalese have good reason to be jittery. Galle and other resorts are still recovering from the tsunami disaster that killed more than 30,000 Sri Lankans, decimated the tourist industry and ravaged the economy. Fear of a Tamil offensive now could derail the recovery, with peak season about to begin in Galle and its nearby beaches, a major draw for travellers. This is more likely to stiffen the government's resolve to fight rather than talk peace. Both sides say they remain committed to the peace process. But that can be put down to the anxiety of each not to lose the international community's support. Germany has fired a warning shot across their bows by freezing US$47.5 million in aid for both sides until they return to the peace process. A ceasefire brokered by Norway in 2002 remains in place - even if in name only - despite the carnage since the latest talks collapsed in February. The importance of this month's talks is that they are happening at all. With international pressure growing for both sides to return to the negotiating table, they may be expected to agree to meet again. A pledge to reduce violence and deal with humanitarian issues would be a bonus. The bilateral peace process is, realistically, all that either side has. As a Sri Lankan analyst says, the reason there is hope for the peace process is that there are no more alternatives to the process. The United Nations Security Council remains a bystander to three decades of bloody conflict over the Tamil demand for a northern homeland. The government insists it is an internal affair and rejects the idea of international peacekeepers. This is not the kind of dispute between nations that the UN was set up to deal with. Nonetheless, there is a strong case for persuading both sides that sooner or later the Security Council will have to address a conflict in which peace efforts have failed and in which innocent civilians continue to account for up to half the appalling casualties. A good starting point for mediation would be adherence to the ceasefire agreement that once offered so much hope. Progress in building trust on both sides would be slow. But if the conflict continues to spill into the south, the slide towards anarchy could be rapid.