UPDATE 1-Sri Lankan president leads in early results

(For more stories click [ID:nSRILANKA])

* Challenger Fonseka says fears arrest

* Troops surround hotel where Fonseka is

* Government says to challenge Fonseka’s eligibility
(Updates with results, details)

By Ranga Sirilal and C. Bryson Hull

COLOMBO, Jan 27 (BestGrowthStock) – Sri Lanka’s president took a
strong lead in early returns on Wednesday, but his main
challenger said he feared arrest after troops surrounded the
hotel where he and other opposition leaders were staying.

President Mahinda Rajapaksa led with 1.51 million votes
against 983,022 for his former army commander, General Sarath
Fonseka, with results from about a quarter of the votes cast in
Sri Lanka’s first post-war presidential poll officially
released.

The two war victors turned to foes in a bloody campaign
that culminated in a largely peaceful election on Tuesday, with
independent observers putting turnout at between 70 and 80
percent of the Indian Ocean island’s 14 million registered
voters.

Fonseka, a political neophyte, delivered an election day
shock by admitting he was not registered to vote. Rajapaksa’s
camp said it would challenge his eligibility after the Election
Commission said that did not disqualify him.

“The legal people are looking at it, but it may be only of
academic interest if he loses,” Central Bank Governor Ajith
Nivard Cabraal told Reuters.

As the results came in, Rajapaksa’s supporters lit
celebratory firecrackers in the capital, Colombo.

The military intrigue built after a surprisingly close and
bitter contest between two estranged allies who led Sri Lanka
to victory over the Tamil Tiger separatists in May, after a
25-year civil war many had deemed unwinnable.

HOTEL SURROUNDED

Early on Wednesday, Fonseka said soldiers had surrounded
the Cinnamon Lakeside hotel in Colombo where he was staying
with former prime minister Ranil Wickremesinghe, the official
opposition leader, and other opposition party heads.

“These people have surrounded the hotel with military and
threatened my security people,” Fonseka told Reuters by phone.
“They had a plan to surround us and take us into custody and I
don’t know if this is that phase of that particular operation.”

A Reuters reporter saw several hundred soldiers including
commandos posted outside the hotel after blocking the road in
front.

A military spokesman had no comment, but a senior military
source and a top presidential aide said Fonseka had been put
under watch to ensure he did not attempt to organise a coup
with loyalists from an army he commanded just eight months
ago.
Fonseka in the final days of the campaign said the government
had plans to either steal the vote or arrest him should he win.
The government laughed it off, saying Rajapaksa would win the
race cleanly and had no need to cheat.

The general on Tuesday said he expected to win by a million
votes, but he did not even win his home electorate of
Ambalangoda, tallying just 35.9 percent to Rajapaksa’s 62.7
percent.

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For a graphic see
http://graphics.thomsonreuters.com/RNGS/2010/JAN/SLANKA1.jpg
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Rajapaksa called the poll two years early, hoping to
capitalise on his post-war popularity to win a second six-year
term to cement his legacy. [ID:nSGE6000M8]

Fonseka as army commander ran a relentless
counterinsurgency campaign to crush the Tigers, while Rajapaksa
deflected an international push for a ceasefire and criticism
over civilian deaths that prompted calls for a war crimes
probe.

Whoever wins will take the reins of a $40 billion economy
which has enjoyed a partial peace dividend, and is on the path
to recovery with big Chinese and Indian investments into
infrastructure and plans to put $4 billion into development.

Foreign investors have put more than $1.5 billion into
government securities, and the Colombo Stock Exchange (.CSE: ),
turned in one of 2009’s best returns at 125 percent.

Both Rajapaksa and Fonseka have pledged to dole out costly
subsidies and public sector pay rises, which economists say
will make it hard for Sri Lanka to meet its cost-cutting
obligations under a $2.6 billion International Monetary Fund
loan.

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(Editing by David Fox)

UPDATE 1-Sri Lankan president leads in early results