Alcina Monteiro, Lisbon – East Timor resistance leader Jose Ramos-Horta on Wednesday welcomed a deal between Portugal and Indonesia to open talks on autonomy for the Indonesian-occupied territory, but he cautioned that any final accord would need to be put to a referendum.

"It is what I have been defending for years... a dialogue with no preconditions," the Nobel peace laureate told Reuters at the Lisbon Expo 98 world fair where East Timor has an exhibit.

Portuguese Foreign Minister Jaime Gama and his Indonesian counterpart, Ali Alatas, agreed in New York to discuss in detail an Indonesian plan for wide-ranging autonomy for East Timor.

The two countries, which have no diplomatic ties, will also open special interests sections in each others capitals by the end of the year as a move to ease tension. The accord to discuss the autonomy plan came after both set aside demands which had blocked progress for years.

Indonesia had previously sought recognition of its sovereignty, while Portugal had insisted on a prior commitment to consult the impoverished territory of 800,000 people through a referendum. Jakarta rejects a popular vote saying that its troops were welcomed by the East Timorese because of the chaos in which the territory had been left by the Portuguese withdrawal. Wednesdays communique said that the talks on autonomy, which will be held initially at senior official level, would be "without prejudice to their basic positions of principle."

But Ramos-Horta, who was awarded the Nobel Peace Prize in 1996 jointly with the Roman Catholic bishop of Dili, Carlos Belo, said that Indonesia should now quickly free resistance leader Xanana Gusmao. He noted that Gusmao, who has been jailed in Jakarta since 1992, had not set his freedom as a condition for any moves towards improving relations between Indonesia and Portugal, notably through the opening of special interests sections.

However, the resistance leader needed to be brought quickly into the talks on the future of the territory, Ramos-Horta said. "We are beginning to believe that we cannot allow negotiations to advance very far without Xanana being free," he said.

Once the talking was over, there could be no question about the final say on the future of the territory lying with the people of East Timor. "It (any accord) can only be accepted if it is accepted by the people," he said.

The need for an eventual referendum was echoed by Bishop Belo, who is in Lisbon to receive Portugals Order of Liberty, one of the countrys highest decorations, at a ceremony set for Thursday. "In the last few months and weeks, there has been a growing tendency to reject the autonomy offered by the Indonesian government," the bishop told journalists. "The people want a referendum... and I go along with what the people choose," he added.