Washington – US President Bill Clinton has warned the president of Indonesia that relations with the US will be seriously damaged – including an implicit threat to curtail international aid – if there is mass violence during next week's referendum on self-rule in East Timor, The New York Times reported Saturday, citing senior administration officials. The US effectively has veto power over international loans to Indonesia. Administration officials declined to reveal the exact wording of the president's warning in a letter sent this week, but one senior official told the New York Times the threat of curtailing international loans and other aid through the International Monetary Fund and the World Bank wasn't stated directly in the letter.

"But it's implicit," he said. Another senior official said: "It's a very tough letter."

Officials told the New York Times that Clinton's letter to President B.J. Habibie was intended to put him on notice that he will be held responsible if the Indonesian military fails to crack down on the anti-independence militias that have been responsible for several recent killings in East Timor.

The Indonesian government has been promised nearly $50 billion in loans from the IMF to deal with the aftermath of the Asian economic crisis, which has crippled the economy of the vast archipelago nation.

A three-member congressional delegation that just returned from East Timor said that mass violence was a strong possibility next week, especially given the close ties between the well armed anti-independence militias and the Indonesian military and police.

"My worst fears are coming true," said Sen. Tom Harkin, D-Iowa, who led the delegation last week and who supports the immediate use of peacekeeping troops there, possibly including Americans. "I predicted this.

The civilian forces, the Indonesian police, are not going to stop these thugs. They're openly associating with them."

Harkin told The New York Times that if there is widespread violence next week, he would push the administration to punish Indonesia under a 1977 law requiring the US to vote against World Bank loans for countries that systematically violate human rights.

"It's important to underline the fact that the Indonesian government itself has placed its credibility on the line here," spokesman James Foley told the New York Times. "The responsibility for maintaining law and order is East Timor is very much the responsibility of the Indonesian authorities."