Ted Bardacke and Diarmid O'Sullivan – "We reiterate our full respect for the sovereignty and territorial integrity of Indonesia and support the efforts of President Wahid toward a peaceful settlement of the situation in Aceh."

Last week, this statement about Indonesia's most serious separatist threat was issued from capitals across the world. Whether it came from the country's Asian neighbours meeting in Manila, western powers in Washington and Brussels, or Middle Eastern countries which might be sympathetic to Aceh's Islamic militants, the wording was nearly identical.

So was the sentiment: Indonesia, the world's fourth largest country, could be on the verge of disintegrating and few governments want either to hasten that day or to deal with the consequences, which would be much more serious than the recent move to independence of poor, culturally distinct and illegally annexed East Timor.

Sitting at the northern entrance to the vital shipping lanes in the Straits of Malacca and on top of huge natural gas reserves exploited by Mobil, the US oil company, Aceh would be a significant loss to Indonesia. But the blow to the credibility of the central government in Jakarta would be fatal. Many other provinces, particularly Irian Jaya, site of the world's largest gold mine and big independence demonstrations last week, would be difficult to hold on to unless the army took control and prematurely ended Indonesia's rocky two-year experiment with democracy.

The regional implications would be equally far-reaching. Says a foreign businessman just returned from resource-rich East Kalimantan on the island of Borneo: "Everybody there is watching Aceh. They're thinking 'If the Jakarta government can't keep Aceh, then why should they keep us?' There are even whispers about creating a 'Greater Borneo' with talk going on across the border [with Malaysia]."

By denying world support for the Acehnese separatists through a frenetic series of overseas trips since he became president in October, President Abdurrahman Wahid has won an important battle in the low-intensity war to keep Aceh part of Indonesia.

But in the province militia activity is on the rise, with civilian government having ground to a halt and the Indonesian army in the curious situation of being the most powerful orchestrator of events while officially confined to barracks.

There are daily reports of killings or kidnappings, and people have taken to forming patrols to guard their home districts at night from what they describe as "provocateurs". On any given day these could be members of the GAM guerrilla group, the army, gangsters, Acehnese taking revenge for past atrocities or soldiers acting to protect their private business interests.

Col Syarafuddin Tippe, garrison commander of the Indonesian armed forces in the provincial capital of Bandar Aceh, is sure of one thing: the army has lost the hearts and minds of the Acehnese through its brutality, he says. Although Mr Wahid has ruled out a referendum on independence, that is the overwhelming Achenese demand.

"If there's a referendum, just give them independence, because 99.9999% of them will vote for it anyway," says Col Tippe. But local activists believe that the army, far from giving up, has already begun its counter-offensive.

"The problem for the army is that they have no justification for carrying out operations," says Otto Syamsuddin Ishak, a local academic. The army is solving this problem, he believes, by using agents provocateurs to spread violence and chaos and create the impression that only martial law can restore order. Activists point to the recruitment of a ex-GAM guerrilla known as Arjuna, who they say leads a force of several hundred former guerrillas and hoodlums who masquerade as GAM members, a tactic used before by the Indonesian army in Aceh and East Timor.

"It's hard to prove, but we have good sources in Jakarta who know the relationship between Arjuna and the military, especially Zacky," says Iqbal Farabi, head of the state human rights commission in Aceh, referring to Gen Zacky Anwar Makarim, a special forces officer accused of organising the pro-Jakarta militias in East Timor, who has been active in Aceh in the past.

As Mr Wahid pursues a solution to the problem in Aceh, many believe he is using the confused situation to his strategic advantage – as he has many times before in his political career

With the separatist movement a motley coalition of Moslem student activists, educated urban people, villagers and religious scholars, along with guerrillas divided into at least two factions, and the army unclear as to what their orders are, the president has made himself the only potential unifying force around which a compromise could be forged. It is still months away but while Mr Wahid sends out conflicting signals to probe reactions he may be able to judge where the middle ground lies.

"Aceh needs time, discussion and a very long leash," says a senior western diplomat. "But he is the right man for the job."

Still, any solution acceptable to the separatists in Aceh will require the punishment of military officers responsible for the killings of thousands of civilians in the territory over the past two decades.

Some suggest the beginnings of the process of accountability will start at the lower levels of the army, who, when pressed in court, are likely to implicate their superiors and in that way move up the chain of command – a scenario firmly ruled out by the country's defence minister.

The fundamental problem for Mr Wahid remains that he "needs to go after some very big fish" within the army to placate the Acehnese, the diplomat says. But the fundamental unknown is whether the army will stand for it.