(Recasts with rebel and analyst comments, details) By Manny Mogato MANILA, Sept 3 (Reuters) - The Philippines ended peace talks with the country's largest Muslim separatist group on Wednesday, scrapping an 11-year peace process and raising the spectre of more violence in the conflict-ravaged south. Manila's sudden shunning of the 11,000-member Moro Islamic Liberation Front (MILF) chokes any possibility of an economic lift for the southern island of Mindanao. The island has attracted little foreign investor interest despite large deposits of nickel, gold and copper as well as offshore gas reserves and agricultural lands because of the years of violence and uncertainty. "There are no more talks," presidential spokesman and former peace adviser Jesus Dureza told Reuters. "We're dissolving the peace panel. You don't need it when you're ending talks with an armed group. We'll start consulting with the people on the ground and find out how can we resolve the Muslim problem," he said. President Gloria Macapagal Arroyo decided to scrap the talks after rogue MILF members attacked communities on Mindanao last month, killing civilians and burning property, Dureza said. Manila has insisted its decision was not a return to war and a new peace panel composed of non-MILF stakeholders from Mindanao would be formed to try and end a conflict that has killed over 120,000 people since the late 1960s. But Kuala Lumpur, which had been chairing the talks since 2001, warned that violence could escalate and that the MILF had to be involved. "If the peace process is to prevail, the process has to move forward through renewed format and perimeters agreed by both parties," said Othman Abdul Razak, Malaysia's chief facilitator to the negotiations. "The alternative would be more violence as hopelessness sets in. I just hope both sides would exercise utmost restraint to preserve peace, which has been elusive in Mindanao." Analysts said the decision to pull the plug on the talks reflected the absence of real political will to end the conflict. "It's a dangerous and complicated move that could increase the risk of violence," Earl Parreno of the Institute of Political and Electoral Reforms told Reuters. FRUSTRATION The MILF said it was not surprised by Arroyo's decision, which comes after the government last week junked a territorial agreement that was meant to give Muslims in the south of the largely Catholic country more land and power. "What is there to talk about? They can't even honour a deal they had made with the MILF," Michael Mastura, a former congressman and a member of the rebel peace panel, told Reuters. "Going into peace negotiations was only an option because the MILF has been waging a protracted rebellion against government for years," he said. The MILF's chief negotiator, Mohaqher Iqbal, said the organisation would continue to honour a five-year old ceasefire but hundreds of MILF troops had already resumed fighting against the government last month. Mastura said he expected the ceasefire to collapse. Frustration is widespread among MILF commanders at the lack of progress after 11 years of talks. Muslim regions in Mindanao are the poorest in the country and an eventual peace deal would release up to $100 million in development projects from international donors. Foreign investment could also pick up if security improved instead of the current campaign of small-scale bombings, sporadic battles between rebels and government troops and kidnappings. (Additional reporting by Jalil Hamid; Editing by Carmel Crimmins)
A Christian boy eats lunch under an umbrella inside a shelter at Raikia village in the eastern Indian state of Orissa in this August 30, 2008 file photo. One night last ...
