The general has been in custody since February 8, when military police arrested him on charges of engaging in politics against the president while still in uniform.

Tensions

Opposition parties staged protests for the second week running to demand Fonseka's release despite attacks by police and government supporters.

Sri Lanka's influential Buddhist clergy, the majority faith on the island, appealed to Rajapaksa to release Fonseka.

They included the custodians of the holiest shrine, the Temple of The Tooth.

Fonseka and Rajapaksa worked together to end the 25-year war against Tamil Tiger separatists last year, but fell out soon after.

The government said Fonseka had conspired against the president and would face a court-martial.

On Friday, the Supreme Court admitted a petition filed by Fonseka's wife on grounds that his detention in military custody was illegal. The court gave the government four weeks to give its reply to the petition.

Analysts say political unrest could affect the country's $40bn economy as it is poised to grow more than six per cent this year due to post-war economic optimism and high foreign investment.

The UN and US have raised concerns over unrest in the island and urged the government to respect the law.

Rights violations

European Union nations on Tuesday went a step further by withdrawing preferential trade benefits from Sri Lanka due to "significant shortcomings" on human rights issues, the EU Commission announced.

Minority Tamils have often accused Colombo
of ill-treating and harassing them [EPA]
 
The decision came after an "exhaustive investigation ... identified significant shortcomings in respect of Sri Lanka's implementation of three UN human rights conventions," the Commission said in a statement on Monday.

The suspension of the "Generalised System of Preferences Plus" (GSP+) benefits will not take effect for six months "giving Sri Lanka extra time to address the problems identified", the EU executive added.

The European Union's GSP+ scheme gives 16 poor nations preferential access to the trading bloc in return for following strict commitments on a wide variety of social and rights issues.

Sri Lanka's government has faced almost constant criticism over the past several years because of the way it has conducted the war against the Liberation Tigers of Tamil Eelam (LTTE) separatists.

Sri Lanka earns about $150m annually due to preferential tariffs, according to trade estimates.