Operation Yarl Devi by the Sri Lankan forces in the Palai area ends in failure with heavy military losses. LTTE demonstrates capability to wage conventional warfare. Peoples Alliance Party led by Chandrika Kumaratunge assumes power. Peace talks begin in Jaffna between Chandrika Kumaratunge's government and the Tigers. Third round of talks.
Tigers express concern over non-fulfillment of agreement on issues raised at meetings.
Fourth round of Talks. SL Army commences 'Operation Leap Forward' with thousands of troops and advances on two axes. Thousands of civilians flee the suburbs of Jaffna. Navaly church bombing kills 121. More than 2000 seriously wounded in indiscriminate shelling.