Don Greenlees, Jakarta – The Harco Hotel in central Jakarta is a dreary resting place for people travelling on the cheap. For 100,000 rupiah ($20) a night, visitors are led down a narrow concrete passageway to a small cell. It's not a place to linger.

The hotel's coffee shop is no more inviting. It is dimly lit and the bare concrete floor is obviously awaiting decorative inspiration and the money to pay for it.

Sitting alone, bent over a table in the corner, is Cancio Lopes de Carvalho. Last year, on his frequent excursions to Jakarta from East Timor's capital, Dili, he was used to the comfort of expensive hotels paid for by the provincial government or the armed forces. On such visits, he was usually guarded by fit men with short-cropped hair. Lopes de Carvalho was an important man: the head of a notorious militia unit that went by the dramatic title of Mahidi, Life or Death Integration. Now his gestures and manner are less sweeping and he describes himself modestly as a "refugee".

At a recent meeting on a bright Jakarta morning, Lopes de Carvalho contemplated the sorry state of an armed movement that only a year ago believed it could dictate the fate of East Timor but today remains confined to the no-man's land of refugee camps across the border.

"Myself, a militia commander, I often feel why do I need to shout. The struggle for integration [with Indonesia] is over," he told The Australian. "You cannot change the outcome because its already an international decision, the UN is in there. The problem now is the fate, the uncertain future of the ... people living in the camps."

The militia, officially disbanded but in reality as active as ever, are a source of worry for the UN peacekeepers in East Timor and of irritation for the Indonesian Government.

This week's ambush by suspected militiamen, which claimed the life of New Zealand Private Leonard William Manning – the peacekeeping force's first combat fatality – was a reminder of the dangers posed by pro-Indonesia East Timorese.

It was the latest in a string of cross-border raids – any one of which could have claimed the lives of the Australian and New Zealand peacekeepers, who have the primary responsibility for protecting the border.

More of these raids can be expected in the months ahead as the UN High Commissioner for Refugees gradually clears the remaining 120,000 refugees from the camps, which by some estimates number up to 240.

But the truth is the pro-Indonesia East Timorese are a group running out of options and of influential friends. Lieutenant-General Hasnan Habib, who is on a panel of experts advising on prosecution over human rights abuses in East Timor, says the armed forces and Government have nothing to gain from aiding the militia, but have a lot to lose in hard-won international support.

"We have to do something serious about prosecuting human rights abuses," he says. "The President has made a commitment to [UN Secretary-General] Kofi Annan so that there is no need to establish an international tribunal."

Lopes de Carvalho, best known for signing a death threat against Australian diplomats and journalists last year, acknowledges he and his comrades cannot count on the same military connections they had a few months ago. Asked whether he felt deserted by the Indonesian Army, he replied forcefully: "That's true! ... It might be harsh, I'm only saying they no longer have any political or moral responsibility towards us."

Sympathy for the pro-Indonesia forces among the political and military elite in Jakarta has declined in direct proportion to the rise in worry over sectarian bloodshed in Maluku and separatism in Aceh and West Papua.

It leaves the militia one card left to play: the existence of a large number of refugees in the camps almost one year after East Timor voted for independence. The camps give the militia bargaining power with the pro-independence victors in East Timor, the UN and the Indonesian Government. If the return of the refugees can be reduced to a trickle, then the pro-Indonesia leadership can claim to represent a significant portion of the population and might be able to cut themselves a better deal.

"What's left in the camps are pure pro-integration people, militia and their families," says Lopes de Carvalho. "There are 140,000 people. If they don't return, that would mean the process of reconciliation has not been successful yet."

Not surprisingly, his assumptions on the numbers wishing to return differ drastically from those of the UNHCR and UN Transitional Administration in East Timor. Those agencies suggest that up to 80 per cent would ultimately like to return home. But the political calculation that the refugees represent bargaining power is absolutely right. It is one of the reasons behind the renewed intensity of disinformation and acts of intimidation in the camps that are hampering the repatriation program and forcing foreign aid workers on the defensive.

Another reason is that the camps remain the springboard for incursions into East Timor. The militia, and those East Timorese who were members of the Indonesian army and police, are not waging jungle-based guerilla war as did the Falintil resistance. They are coming from the camps and the towns. Remove the camps, says Australian Brigadier Duncan Lewis, and you substantially remove the risk of border incursions. "The central issue is really the refugee camps," he says. "Until we get them away from the border, we will still have problems."

Essentially, the rational pro-Indonesia East Timorese leadership – a small proportion are so fanatical they cannot see what is in their own interests – hope to use the refugees and the border tensions to achieve reconciliation on their terms and keep alive sympathy in Indonesia.

This has a particular poignancy given the fact many have the threat of prosecution for human rights abuses hanging over their heads. The bottom line is that they want the wrongs they committed in the past forgotten.

Says Lopes de Carvalho, hopefully: "There's no hero, no villain, nothing like that. If we want to investigate the violations, I think, that from the pro-independence side they would have to admit honestly and transparently that they had committed human rights violations too."