BOGOTA (Reuters) - With Colombia‘s peace process in virtual tatters, the government, backed by the United States and its regional allies, is preparing to step up its war against Marxist rebels. Colombia launched a programme this month to overhaul its ill-equipped and poorly motivated military and create a more professional force that would be "ready for peace or war." Meanwhile, neighbours Peru and Ecuador have moved more troops to their northern borders under a U.S.-devised plan to contain Colombian "narco-traffickers and their associated insurgents." Washington has shied away from taking a direct hand in Colombia‘s long-running conflict, which has claimed more than 35,000 lives in the last 10 years alone. It insists its aid packages are devoted to a war against drugs. But that war is increasingly taking on overtones of a counterinsurgency effort. And in the aftermath of this month‘s kidnap-murders of three Americans by Marxist rebels, Republican lawmakers on Capitol Hill are expected to urge beefed-up assistance to the Colombian army to fight guerrillas. After initial denials, the Revolutionary Armed Forces of Colombia (FARC) claimed responsibility for the brutal killings of Terence Freitas, 24, Ingrid Washinawatok, 41, and Laheenae Gay, 39, who were helping U‘wa Indians defend their ancestral lands against a U.S. multinational‘s plans to explore for oil. FARC commanders tried to shift the blame to a little-known, mid-ranking field commander. But government officials insist top regional commander German Briceno, brother of the FARC‘s No. 2 leader and military strategist, ordered the killings. The U.S. State Department has demanded that the FARC — included on the U.S. list of international "terrorist" groups — surrender the killers for extradition. The internal conflict has been bleeding Colombia for nearly four decades and President Andres Pastrana, who took office in August, has made a negotiated settlement his top priority. But the FARC broke off talks just days after they got under way in January and the smaller National Liberation Army (ELN) has also put an abrupt end to exploratory talks with the government. Washington pledged support for Pastrana‘s peace efforts and a senior State Department official even held an unprecedented meeting with a top FARC commander in Costa Rica in December. But the United States is due to give Colombia a record $240 million aid package in 1999, including weapons and aircraft, and it is helping to set up an elite 1,000-strong army anti-narcotics unit near rebel strongholds in the south. Most of the aid is ostensibly to fight the war against cocaine and heroin, but U.S. and Colombian officials call the estimated 20,000 insurgents "narco-guerrillas," blurring the line between counter-narcotics and counterinsurgency. It is not clear if a scheduled April 20 meeting between government and FARC representatives will succeed in reviving the moribund peace process. Some critics accuse Pastrana of making too many concessions to the rebels. The rebels have offered little in return and reject demands to stop using ransoms from kidnapping and "taxes" raised by protecting illicit drug crops to bankroll their uprising. Amid growing frustration with the rebels, Pastrana said he would not extend the demilitarization in the southeast when it expired May 7, a move that could signal the end of official moves toward Colombia‘s pacification. If talks break down definitively, regional FARC warlords say they are laying plans for a "first, great offensive" to set up a government of "workers, peasants and Indians" by force. Political observers believe the possibility of direct U.S. intervention in Colombia‘s conflict is remote but say Washington is playing an ever-greater behind-the-scenes role.