Sander Thoenes – The prospect that Indonesia may annul the 1975 annexation of East Timor before the end of this year, following a vote in which Timorese are expected to reject an offer of autonomy, has sent thousands of non-Timorese packing. As they hold most of the skilled jobs, own most of the shops and hold most of the funds, they are taking East Timor's economic infrastructure with them.

The hospital in Dili has not a single surgeon left, only half of the doctors it used to have, and a fraction of the medicine it needs. Some 2,950 of 3,660 state high school teachers have asked for a transfer.

Half the shops have closed and supplies are falling as fewer and fewer ships bring in goods from Indonesia. Bereft of garages or spare parts, public transport is at risk as well.

East Timorese accuse the Indonesian military of encouraging the exodus by blocking food supplies and setting up paramilitary groups, which have killed dozens of pro-independence activists in recent weeks and sown fear of civil war.

"There is a campaign to make it seem East Timor is not ready for independence," said Arlindo Marcal, preacher at the protestant church in Dili. "I don't see any other source of conflict than the military."

This reporter saw five truckloads of Timorese paramilitary under the command of three men of Javanese appearance with military style crewcuts. Even pro-Indonesian Timorese say the gangs were armed by the Indonesian military.

Diplomats, too, believe at least some of the current hardship in East Timor has been orchestrated by the hardliners in the Indonesian government, part of an effort to persuade liberals in Jakarta, foreign countries and the East Timorese themselves that autonomy would be better than independence.

Earlier this week Indonesia delayed its proposal on East Timor's status to the United Nations, raising concern that it had changed its mind on a January pledge to grant independence if an earlier offer of autonomy were rejected. It then suddenly dropped opposition to a direct vote in East Timor on the issue, however, leaving its autonomy proposal looking rather academic, as most Timorese are expected to opt for independence.

However much exaggerated, the exodus underscores the real cost of breaking away from Indonesia. Many migrants said they would leave even if East Timor managed to make a peaceful transition to independence, simply because they risked losing citizenship, civil service pay and, for traders, privileged access to credit and licences that helped keep Timorese marginalised in their own economy.

Many proponents of independence are confident that an offshore oil and gas field, large coffee plantations, marble mines and generous foreign aid would fill that void. "To feed the East Timorese will not be so difficult," says Jose Reis, member of CNRT, an umbrella for East Timorese groups. "East Timor has a lot of potential. And the world won't close its eyes on East Timor."

But the Timor Gap oil and gas field, shared with Australia, remains a dream until significant reserves are found. It is separated from the Timor island by a deep trough, making East Timor less attractive as a support base or processing site.

The military has plundered coffee plantations, marble deposits, teak and sandalwood, and torched large tracks of forest to chase rebels out of hiding. The large coffee plantations have been run into the ground by a company tied to Indonesian generals, who also monopolised the coffee trade and discouraged farming by offering low prices.

Politically, East Timor is far from secure as well. It is divided in tribes, languages and old rivalries, deepened in recent years as some opted to collaborate with Indonesia while others joined the guerrillas. Centuries of Portuguese colonialisation and 24 years of war and occupation have ill prepared the Timorese for ruling themselves, let alone a surprise independence.

CNRT is seen as a model for a new coalition government of East Timor but the organisation counts only 10 full-time volunteers. Its candidate for the presidency, Jose Alexandre "Xanana" Gusmao, is a popular rebel leader whose only proven skill is guerrilla warfare.

"If CNRT does not get its act together, a feudal structure will take its place," adds Rui Lourenco da Costa, a human rights activist. "Xanana is democratic but he could be a dictator because some of the people around him are not. They have no experience with democracy."

Mr Marcal insists that the East Timorese needs are small. "It's not like we're expecting to build a state like Singapore," he says. "We want to feel safe and have enough to eat. Walking the street at night and not being afraid – that is independence. That won't be such a problem."