By the close of 1984, it was becoming clear that the parties within Sri Lanka were incapable of reaching a workable compromise on their own. The new Congress (I), I for Indira Gandhi, government of Rajiv Gandhi in India assumed an active mediation role at the request of the government of Sri Lanka. Gandhi's own interest in containing the ethnic crisis was self-evident. Thousands of Sri Lankan Tamil refugees were fleeing to Tamil Nadu State, which was also a sanctuary for most of the militant groups and the now disenfranchised TULF (the number of Tamil refugees was more than 100,000 in early 1987). Local politicians, particularly Tamil Nadu's chief minister, M.G. Ramachandran, demanded initiatives on the part of New Delhi to halt the violence. Ramachandran's AIADMK was one of the few southern regional parties friendly to Gandhi's Congress (I). An appearance of insensitivity to Tamil suffering on the part of New Delhi might cost it the support of the AIADMK or strengthen the hand of the Dravida Munnetra Kazhagam, the state's major opposition party.

At the same time, Gandhi, whose predecessor as prime minister (his mother) had been assassinated by Sikh extremists on October 31, 1984, had no desire to encourage separatist forces within his own ethnically and religiously divided country by sponsoring separatist sentiments in Sri Lanka. New Delhi wished to rein in the Tigers without appearing to be too enthusiastic a backer of Jayewardene's government.

A third problem for Gandhi was strategic. As the ethnic crisis deepened, the Jayewardene government sought increasing military aid from countries of which India was suspicious or which seemed to challenge New Delhi's primacy in the Indian Ocean region. China, Britain, the Federal Republic of Germany (West Germany), and South Africa supplied Sri Lanka with arms. Israel operated a special interest section in the United States Embassy in Colombo, and Israeli experts provided training in counterinsurgency and land settlement strategies. Retired members of Britain's Special Air Service also trained Sri Lankan military personnel. India also feared that the United States naval forces might establish an Indian Ocean base at the strategic port of Trincomalee ("another Diego Garcia" charged India). The most ominous foreign presence, however, was Pakistan's. In March-April 1985, Jayewardene made an official visit to Islamabad to confer with President Mohammed Zia ul Haq and other top Pakistani officials. According to Indian sources, Sri Lankan forces were trained by Pakistani advisers both in Sri Lanka and Pakistan. Gandhi, like his mother before him, referred to Sri Lanka's inclusion within a "Washington-Islamabad-Beijing axis".

Data as of October 1988