Jakarta – Indonesia said on Tuesday it would not allow a referendum on independence for East Timor, and a dispute over the restive province would remain deadlocked unless Portugal accepted Indonesia's proposals to settle the issue. Foreign Minister Ali Alatas said Indonesia's proposals on granting East Timor wider autonomy were the best hope for resolving the dispute over the former Portuguese colony. "Indonesia will not accept a referendum in East Timor. A referendum would create potential conflict and tension between East Timorese," Alatas said.

He was speaking to President B.J. Habibie's advisory council ahead of talks in New York between Indonesian and Portuguese officials. "Portugal has not agreed to accept the compromise proposal by Indonesia as a final solution. They just agreed to discuss the proposal," he said. "If they do not accept wider autonomy as a final solution of the East Timor issue there will be deadlock." Indonesian and Portuguese officials were due to begin in-depth talks on Tuesday to discuss Indonesia's proposals to give East Timor more autonomy. The United Nations said the talks were expected to last five days under the mediation of UN special envoy Jamsheed Marker.

Indonesia in August proposed granting East Timor "special status based on a wide-ranging autonomy" after two days of talks at the United Nations between Alatas and his Portuguese counterpart Jaime Gama. The two countries said they hoped agreement could be reached by the end of the year. The offer followed years of deadlock during the rule of former President Suharto, who resigned in May after 32 years in power amid a deepening economic crisis, mass protests against his rule and an explosion of rioting in Jakarta that left 1,200 dead. But Indonesia has resisted demands to allow a referendum and says jailed resistance leader Xanana Gusmao will only be released if a final solution to the dispute is agreed.

Alatas said there were signs Portugal was waiting for the installation of a new government in Indonesia before agreeing to any settlement on the province. Indonesia has scheduled parliamentary elections for May next year and is due to elect a new president and vice-president in December 1999. "However, I told them that it is better to put the framework in place now for a peaceful solution and then a new government (in Indonesia) could easily continue it," Alatas said.