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The Sri Lankan army has Asia's longest-running insurgency on the ropes: The separatist Liberation Tigers of Tamil Eelam (LTTE) movement, long been considered one of the world's most fearsome guerrilla armies, lost its last stronghold at Mullaittivu on Jan. 25, and government officials are now confident of a decisive victory in the civil war that has claimed some 70,000 lives and displaced over a million people since 1983.

The LTTE is short on supplies and fighters, and has gone to ground in an ever ever-shrinking pocket of jungle in the northeast of the country as government forces advance. Sri Lankan President Mahinda Rajapaksa on Sunday called for the LTTE's surrender, but there is little chance that a rebel movement whose fighters over the years have chosen suicide over capture will go down quietly. (See pictures from inside Sri Lanka's Tamil Tiger territory.)

To understand how far the LTTE has fallen, consider the situation just three years ago, when an internationally brokered ceasefire collapsed: At that point, the rebels controlled around 5,800 square miles (15,000 sq. km.) of territory in a mini-state in the island nation's north and east. They had a navy composed of a flotilla of gunboats and transports, and even launched daring strikes on Colombo with their own makeshift airforce. But a sustained government offensive has inflicted defeat after defeat, and that, in turn, has prompted widespread desertions. Today, just over 1,000 fighters, including the LTTE's shadowy, ruthless leader, Velupillai Prabhakaran, have retreated into a wilderness of some 350 sq km, and are hemmed in on all fronts by emboldened government troops.

The government offensive has taken a heavy toll on the Tamil civilian population, leaving as many as 250,000 trapped in the war zone and vulnerable to crossfire. (Colombo insists the figure is closer 120,000). As many as 300 civilians have been killed in the last week of fighting, and human rights groups have accused both sides of abuses. The International Committee for the Red Cross (ICRC) claimed on Sunday that artillery shells landed in a makeshift hospital in rebel territory, killing at least 9 people and wounding 20 injured. And ICRC representative Sarasi Wijeratne in Colombo urged both sides "to allow the immediate evacuation of civilians and allow in the flow of essential medical supplies."

The Sri Lankan military denied shelling any hospitals, and has blamed the LTTE for civilian casualties. The government said Monday that the military campaign was in a "decisive stage", and that it could not "be responsible for the safety and security of civilians still living among LTTE terrorists". Colombo claims the rebels trap civilians in order to use them as human shields. Although the government has demarcated a safe zone north of Mullaittivu, it's unclear how non-combatants might be able to reach the sanctuary. While aid agencies clamor for access to those displaced, neither they nor most journalists have been allowed into conflict areas by either the government or the rebels.

Having brought the LTTE insurgency to the verge of collapse is a triumph for President Rajapaksa, who has revitalized the Sri Lankan armed forces through a massive injection of funds that has boosted everything from tactical capability to morale. Some 20% of the nation's budget is now devoted to military spending (6% of its GDP), and the boost in resources has, over the past nine months, helped the military make steady gains against what had once seemed intractable positions held by the rebels. Some have taken Colombo's example as a message for counterinsurgency efforts elsewhere. On Jan. 16, an editorial in the Wall Street Journal hailed Sri Lanka's successes as proof that wars "on terror" could be won militarily when negotiations prove futile. Diplomatic cooperation from India and the EU proved key in drying up the LTTE's sources of funding, and internal squabbles among the LTTE's leadership led to much of the militants' east wing laying down its arms or changing sides over the past four years.

The LTTE's guerrilla campaign, and its terrorism — which included assassinations, and suicide bombings by militants wearing explosives on their bodies, a tactic pioneered by the movement — aimed at securing an independent state for Sri Lanka's minority Hindu and Christian Tamils, who still face discrimination at the hands of the country's mostly Buddhist Sinhalese majority. More than two decades of conflict have led to allegations of atrocities on both sides — from kidnappings and extrajudicial killings to the recruitment of child soldiers. Various rounds of peace talks, the last held in 2002, failed to reconcile the LTTE with the government. But even with a decisive military victory, Colombo will have to take significant measures to win the peace.

Domestic critics of the Sri Lankan government suggest that the success of the military campaign has spawned a bellicose nationalism that brooks little dissent, and as such has heightened unease within the country's civil society. Journalists and dissidents have felt pressure to remain silent, and the President's brother, tough-talking Defense Secretary Gotabaya Rajapaksa, told local press that he would "chase away" any foreign media deemed to be offering a sympathetic ear to the rebels. Outspoken newspaper editor (and freelance TIME contributor) Lasantha Wickrematunge, whose paper accused the Defense Minister and other prominent politicians of corruption, was last month gunned down by unknown assailants.

But Sri Lanka's murky politics have little to do with its offensive against the LTTE, says Rajiva Wijesinha, who heads up the government agency charged with bringing about a lasting political settlement to the conflict. "After so many years of war, there has been a corrosion of the state," he admits, "but [in this campaign] we have abided by the rules and taken care of our civilians." Once the LTTE is quashed, Wijesinha envisions elections being held in the north and a gradual devolution of power to Tamils who have joined in the peace process. The Indian government, whose ruling coalition depends upon the support of Tamil parties within India, has urged Colombo to deliver on these promises. And there has been some progress: In Sri Lanka's east, competing Tamil parties, which include former LTTE cadres, successfully contested elections there, and the same scenario may emerge in Jaffna, the northern city which is the cultural center of Sri Lanka's Tamils.

Wijesinha cites a government plan to make Jaffna a national center for information technology, as part of a larger development program for Tamil areas. "The city used to be known for its excellence in education," he says. But, to the tens of thousands who are fleeing their homes as artillery fire rains down across the northeast, this vision of prosperity and peace seems painfully far away.

• Ishaan Tharoor
• Civilians cower as government forces prepare to deliver a knockout blow to Tamil rebels, in a remarkable reversal of fortunes