Uli Schmetzer – On the athletic field of this coastal town, Indonesian soldiers armed with American-made M-16 assault rifles and wearing steel helmets stood in the cool shade of teak trees as they made residents of this troubled island line up under the hot midday sun.

The exercise was to teach the locals how to salute the flag and sing the national anthem during Indonesia 's Independence Day celebrations Monday, when Timorese must hail the country that invaded them. The scene was typical of military arrogance on this island, once coveted by global traders for its aromatic sandalwood and spices but now drenched in the blood of one-third of its native population, killed during a brutal 23-year guerrilla war against the hated Indonesian army.

Known as the Sandalwood island, East Timor floats on a pristine blue sea framed by a halo of green corals. But its 600,000 native inhabitants have become chameleons who learned to change colors and loyalties to survive a cruel occupation and an often just as cruel resistance movement.

The bloody war has left scars that will not heal easily. The conflict turned neighbors into informers, guerrilla supporters into traitors and revered leaders into turncoats. It has left people looking over their shoulders whenever they talk to someone. In East Timor, meetings are set up through a chain of intermediaries. Someone remains always on the lookout for spies. Conversations die the moment a stranger approaches.

In the capital of Dili, a small, drowsy place where everyone seems to know everyone else, a popular vegetable vendor, trusted by everyone, was killed recently in a motorcycle incident. In his pockets people found an ID card that identified him as an officer in Kopassus, the feared Red Beret Special Forces. The Indonesian unit was blamed for most of the atrocities on East Timor when the unit was commanded by Lt. Gen. Prabowo Subianto, the son-in-law of former President Suharto.

Down the road from the Liquica athletic ground, troops were poking their rifles through the fruit baskets of women. The prodding and pushing at bananas and papayas was not for weapons but for proscribed pamphlets urging people to reject the offer Jakarta made this month to grant limited autonomy to the troublesome 27th province it annexed in 1976, an annexation never recognized by the United Nations. The offer did not include the withdrawal of Indonesian security forces.

The little man in government uniform who watched the scene shrugged. "Even the bishop is now searched for publications," he said. Then he added in a whisper: "I wear their uniform, but what's inside," he said, pointing at his heart, "beats for os ermaos," literally, "the brothers," an affectionate local term for Fretilin guerrillas. The banned pamphlets exhort the Timorese "in the name of peace and liberty" to hold out for a referendum on the island's future, a vote almost certain to opt for independence rather than autonomy with integration.

Jakarta roundly rejects such a choice with the excuse that it will further divide the island and further inflame old grievances. Indonesia 's anointed governor on East Timor, Abilio Soares, said, "No problem has ever been solved by referendum. We prefer dialogue." But it is difficult, the Timorese say, to hold a dialogue with guns pointed at one's head.

Ask Pedro Fragoso de Oliveira and his family of six who cultivated a vegetable garden and ran a store on the outskirts of Liquica before a mob of paramilitary terrorists wearing ski masks and known as "ninjas" torched their thatch-roofed Atap hut and their store last month. The children were still inside.

When Oliveira lodged a complaint he was told that as a Fretilin sympathizer he had no rights. A similar charge could be laid against most Timorese. Next day a platoon of Indonesian soldiers turned up at the burned home, followed by another mob of "ninjas" armed with spears and bush-knives. The soldiers brutally beat up Oliveira and those neighbors who had rescued his children from the fire.

"Not so long ago the army would have executed him," said a local official named Koliati. "In 1975 the Red Berets took the town chief and five others, tied them up, marched them to the outskirts of the town and shot them dead. They left the bodies near the road covered with leaves and told us to shut up or else we'd share the same fate."

The news did reach East Timor's outspoken Catholic leader, Bishop Carlos Ximenese Belo, who won the 1996 Nobel Peace Prize for his courage together with Jose Ramos Horta, vice president of the national Resistance Movement of Timor. The bishop denounced the massacre. The result, however, was less than dramatic. "One lieutenant and one soldier were transferred--to the pleasure island of Bali," Koliati said.

In the minds of most of East Timor's 860,000 people – 250,000 of them Indonesian settlers imported to boost Jakarta's claim to the island – the greatest obstacle to peace is the presence of an army that enjoyed immunity for any outrage it committed under the Suharto regime.

The new government that succeeded Suharto's regime is eager to portray a more democratic Indonesia . Suddenly the armed forces find themselves accused of crimes. Earlier this month, East Timor commanders were ordered to ease some aspects of their occupation on the island.

Checkpoints on main roads are now unmanned, as army units have moved into the hills to monitor traffic from more distant vantage points. Dili is calm, but in every rural village, town or hamlet, troops remain garrisoned and visible, making East Timor a country under military siege.

Dili is a town of whitewashed colonial government palaces, a few new banks and supermarkets and the rusted hulks of shipwrecks washed up on pebble beaches. Now the island capital is a showcase for the peace offensive: Raids on homes have been reduced to a minimum. Two soldiers are on trial for killing a native woodcutter, and a high military official has apologized for recent excesses.

In return, Fretilin's jailed but much revered leader, Jose "Xanana" Gusmao, has sent a directive from his cell in Jakarta that negotiations for a settlement being held among Portugal, Indonesia and the UN should not be jeopardized. The war has gone into limbo.

"Our fight is not with the people of Indonesia," Gusmao's sister Armandina said in an interview. "Our fight is with (the Indonesian army). I feel pity for the Indonesian people who have less and less to eat. For them, every day is becoming a problem, and we are like a pebble in their shoe. So why don't they get rid of the pebble and stop limping?"

Armandina, the fourth of seven Gusmao sisters and two brothers, is a charismatic woman. She still battles the nightmares of five months in military detention during which she was abused in a way she won't discuss. "It would've been better had they beaten me to a pulp," she said.

Abuse in East Timor takes many forms: The hooded ninjas who burn, beat and terrorize suspected Fretilin supporters. The standard beating and torture of detainees. The injection of schoolgirls and women with anti-fertility drugs to keep down the native population, a sacrilege for the staunchly Catholic Timorese, who often have 10 and more children. The sudden raids on homes to search for guerrillas. The manhandling and fondling at checkpoints.

"I had all my toenails pulled out, one by one," said Joao who was sent in 1980 with 3,500 other Fretilin sympathizers to the penal island of Atauro off Dili. "They just dumped us there. There were no doctors, and the only food (was what) the local tribes gave us. I helped to bury 10 to 12 of my comrades a day in the first months. I was lucky. Toenails grow back."

Joao still lives on Atauro even though he could go home now. He has no intention to return to the mainland unless East Timor is free. Or if "os ermaos ask for me," he added with a wink. "There is not a family in East Timor which has not had at least one member killed by the (Indonesian) military. How can we accept autonomy under the continued presence of this military?" said Manuel Vargas Carrascalao, one of the island's patriarchal figures.

Carrascalao is a sometime politician, a coffee plantation owner and currently the de facto voice of Fretilin, a movement that has split into five parties, though all five still recognize Xanana Gusmao as their leader.

Carrascalao, a craggy-faced man with a diplomat's ready smile, has lived a charmed life: He was once arrested after protesting against a soldier who had killed a woman to steal her jewelry. Twice a truck tried to run him down. Another time, a bullet went through his car windshield. He was told to leave the country and refused. In 1991, he was ordered at gunpoint to stop the search for his daughter among the corpses of student mowed down by troops in Dili's cemetery. He refused and later found out she had escaped the shooting. "I guess I was spared because God wants East Timor to be independent," he said.

In a country where people's loyalties are tested often, Carrascalao's critics say he is a political opportunist who sided with the Portuguese during the civil war against Fretilin, supported the Indonesians, joined their parliament and then became a fervent nationalist clamoring for a referendum on the future. "I remember him shouting in parliament in 1989 'We will never, never allow a referendum in East Timor,' " said Florentino Sarmento, head of East Timor's human-rights organization.

An economist, Sarmento favors autonomy with federation in some distant future. He scoffs at Fretilin promises of riches from offshore oil deposits once the country is independent. "Economically, independence would be a disaster. We don't have technology or human resources. Independence would not help the poor people but allow politicians to travel and live well on government funds. As for the oil, it is offshore in international waters, and we would have to share it with Australia."

A pragmatist, Sarmento has won few friends with his accusation that not only the Indonesian army but also the guerrillas committed atrocities during the war, brutally killing alleged traitors and collaborators. "They forced people to eat their tongues and then killed them. They shot fathers in front of their families and asked people to dig their own graves, then gouged out their eyes and made them find their graves," he said.

"Now some of these guerrilla leaders eat a lot of rice and make a lot of rupiahs. Some hold senior positions in the civil service, and others are honored campus professors. It's best to let bygones be bygones. There are too many skeletons in the cupboard." Sarmento has his share of critics in this country of many tribes, many languages and many opinions. Some say he used to be a loyal nationalist but turned integrationist and a lackey of Jakarta.

There is one issue that unites nearly everyone: The Indonesian troops must go before any compromise can be reached. The withdrawal this month of 1,300 combat soldiers – from a force estimated at 15,000 on East Timor – is widely seen as a sham.

Watched by silent natives from behind iron-spiked fences, the troops embarked at Dili harbor as newly armed military personnel arrived billed as "doctors, advisers and agrarian experts." "The soldiers simply changed their shirts and put on new insignias," the local official Koliati said. Added Carrascalao: "These withdrawals have gone on for years. We're tired of them. They go out the front door, change uniforms and come in the back door."

Indonesia has signaled no intention to weaken its security forces on East Timor, notorious for its militant inhabitants. The little country lost about one-third of its population in the guerrilla struggle against Japan in World War II.

Once the Japanese were defeated, the Timorese survivors picked up the discarded Japanese guns and turned them on their Portuguese colonial masters. When the Portuguese withdrew from East Timor, after 460 years, the various factions and tribes fought a civil war. Fretilin won. But before the liberation movement could settle into the colonial palace, Indonesia invaded in 1975 and started the mother of all wars.

Today, Timorese nationalists and students refuse to accept anything short of a referendum to determine their future. The war of guns has turned into a war of words. "We were prepared to fight for six years in 1975 and we fought for 23 years. We can fight for another 23 years," said Maria Alves, a member of the parliament Jakarta has set up in Dili.

In the past, Alves could have been labeled a collaborator, and her tongue would have been cut out. But today her fervent support for independence is fashionable. "The more people die the more the living want their liberty," she said.

Everyone now rides the independence bandwagon, yet few public figures on East Timor can boast a clean track record, and only two "men of honor" have remained untarnished. One is Bishop Belo. His Roman Catholic Church is spiritual home to 85 percent of the population. Its devotion to a "peace with dignity" has been unquestioned. His clerics face constant raids on their homes by troops searching for documents and hidden guerrillas. "As Christians, we cannot refuse shelter to those in need," said one young priest.

Perhaps to placate fears that a Muslim Indonesia will eventually tamper with East Timor's Catholic faith, former President Suharto built an 85-foot-tall statue of Christ the Redeemer on a cliff overlooking Dili Bay and came to inaugurate it. One problem: The Dili Christ, designed by a Muslim architect, faces Mecca. Few of the faithful trek up the cliff to visit him.

The other man of respect is the enigmatic Xanana Gusmao, a former poet and a civil servant in the Portuguese administration. Since he was betrayed and captured in 1992 at a house in Dili, Gusmao has assumed the aura of a Nelson Mandela in East Timor.

In this region where three tribes may live on one island but speak three languages within walking distance of one another, Gusmao's charisma transcends language barriers, the jealousies of village shamans and the nagging differences among the five political parties that split his Fretilin movement. Every politician uses a Gusmao anecdote to boost his or her credibility. Carrascalao says the rebel leader told him he wants a referendum. Sarmento says Gusmao wants a referendum in 10 years. Gov. Soares says he was the only one to travel to Jakarta to plead for Gusmao in 1992.

Perhaps Sarmento has the best credentials: He says he lent Gusmao his own car, which the Fretilin commander drove to the rendezvous the day he was captured. The car is still in the police compound. "People love Xanana because he is the only one who has remained coherent and stuck to his principles," mused his sister.