By Ethirajan Anbarasan
BBC Tamil service
Sri Lankan President Chandrika Kumaratunga's bold decision to push through a deal to share international tsunami aid has restored hopes of a negotiated settlement to the island's ethnic conflict.
President Kumaratunga has staked her reputation on the deal
In addition, analysts say, the president has scored a victory over her political rivals by being "firm and decisive" in bringing about the deal with the Tamil Tiger rebels.
Under the agreement, Sinhalas, Tamils and Muslims will share nearly $3bn in aid pledged after the December tsunami.
Representatives from all three communities will be responsible for reconstruction work at different administrative levels in the Tamil-dominated north and east.
The Tsunami Relief Council, as it is called, may not have considerable political or executive powers but in more than two decades of war this is the first time both sides have come together to work in an administrative structure for a common cause.
The deal also comes at a time when the Norwegian-brokered ceasefire agreement, sealed in 2002, is at a critical stage, with both the rebels and the military accused of carrying out targeted assassinations.
The Tamil Tigers had been getting impatient with the delay in establishing the Tsunami Relief Council.
"The most important thing is, despite the stalemate in the peace process, the president has ensured that full-scale hostilities will not return for a while," says Sri Lankan political analyst, DBS Jeyaraj.
The tsunami relief structure gives legitimate powers to the Liberation Tigers of Tamil Eelam (LTTE) to carry out relief and reconstruction work and will also test their political and administrative structures.
In the run-up to the signing of the agreement, the president came under severe criticism both from within her coalition and from outside.
First, it was her main coalition partner, the hardline nationalist People's Liberation Front (JVP), which walked out of the government in protest at the pact.
But the government, reduced to a minority, still survives.
Many tsunami victims are yet to receive aid
Then the powerful Buddhist clergy took to the streets and violent clashes ensued. But she managed to convince the top Buddhist leaders that the pact would not harm the country's sovereignty.
The main opposition United National Party (UNP) also agreed to give its backing to the deal. With Norwegian support, neighbouring India's concerns were addressed through shuttle diplomacy.
Some of Mrs Kumaratunga's own party members reportedly expressed opposition to the deal, but as an executive president she went ahead with the pact without putting it to a vote in parliament for the time being.
The Muslims, who suffered heavily in the tsunami, were not a signatory to the deal, and many in the community are angry because they feel they were marginalised.
The Muslims' exclusion from the signing was ostensibly at the insistence of the Tamil rebels. The divided Muslim politicians could not influence the president's decision.
"The major achievement is in bringing the LTTE to work within a system under Sri Lankan sovereignty," says Mr Jeyaraj.
The president herself has urged all parties to take advantage of the window of opportunity to restart the peace process, which stalled in 2003.
But critics of the tsunami deal argue that the rebels will wield too much power in the tsunami council because of the nature of its composition, and that aid money might also be channelled into boosting the LTTE's armoury.
On the other hand, the agreement also gives an opportunity for the Tamil Tigers to show that they are not only a fighting machine but are capable of governance and administration to improve the economic conditions of the Tamil people.
There is also a huge risk that if the agreement fails - either because of the LTTE's actions or due to opposition in the south - then all fingers will point at Mrs Kumaratunga.
But, if it succeeds, the president could win international acclaim and restore her damaged credibility at home, not least among minority Tamils who are suspicious of her commitment to a peaceful resolution to the ethnic crisis.