Mark Dodd, Kupang – Francisco Soares is finally going home. After drawn out negotiations the Indonesian Army has finally settled his salary arrears and paid his pension. The United Nations has promised that he and his family will be protected. So he and his family will go back to his old home in Los Palos, on the eastern tip of East Timor, and start a new life as a rice farmer.

Mr Soares is no ordinary refugee. He is East Timorese but, until recently, served as a loyal senior private in the Indonesian Army attached to Kodim (Military District Command) 1629 in Lautem. Before that he had served as a fighter with the then Fretilin independence guerillas, but was forced to change sides after Indonesian forces captured him in 1976.

Despite his former Fretilin links, his more recent service with the Indonesian military is a sensitive issue. "Look, I want to make one thing clear: I served as a military officer, not in the militia," he says of the rag-tag pro-Indonesian gangs blamed for much of last year's carnage in East Timor.

Mr Soares is speaking on board the Patricia Anne Hotung, a vessel chartered by the International Organisation for Migration as part of the most politically sensitive refugee repatriations carried out so far by the UN here.

A total of 410 demobilised East Timorese soldiers and their families are returning home in the first large repatriation of refugees by the UN since three international staff were murdered on September 6 in a mob attack by pro-Jakarta militia in the West Timor border town of Atambua.

Worldwide condemnation was swift, the UN Security Council criticised Indonesia over its failure to control pro-Jakarta militias. For the first time multilateral institutions and donors raised the spectre of suspending financial aid to Jakarta.

Across the border, UN aid agencies immediately suspended operations to an estimated 100,000 East Timorese refugees living in militia-controlled camps in West Timor.

With national elections tentatively scheduled for next August as East Timor enters the home stretch to full independence, political pressure to resolve the refugee issue forced a new approach in negotiations with Jakarta.

More than 250,000 East Timorese fled or were deported by the Indonesian military during post-election violence last year. It was an exodus regarded by senior UN human rights officials as the single worst war crime committed by Indonesia after East Timor voted overwhelmingly to end 24 years of brutal occupation.

According to officials of the UN High Commissioner for Refugees (UNHCR) the Atambua tragedy resulted in a tougher line from Jakarta against intransigent local officials in Kupang, including senior military officers.

The blunt-talking head of operations for the UNHCR in Dili, Bernard Kerblatt, said he has noticed a new willingness by Indonesia to finally resolve the refugee issue.

"From a UNHCR perspective the message permeating to a tactical level is – no more messing around. There is a completely different understanding of the situation now. Clearly the police are playing a stronger role in encouraging all the refugees to decide their future. Some senior [Indonesian] diplomats based in New York have been assigned to Atambua, of all places, to tackle this problem."

It has been learnt that the UNHCR is considering re-establishing an office in West Timor, but only after at least two more successful ship repatriations out of Kupang – evidence that Indonesia has finally restored security in the province and that the militia no longer pose a threat to humanitarian operations.

For the dwindling core of militia hardliners, this latest repatriation spells bad news. A UN security consultant said after returning from Kupang that the militias, and their criminal activities were an embarrassment to Jakarta and predicted that the Indonesian Army might be prepared to "take them out".

On the dock in Kupang, as the ship was loading, there were emotional scenes as uniformed Indonesian soldiers, many close to tears, bade farewell to old East Timorese comrades. Their presence was closely watched by senior Indonesian officers sitting in parked cars near the refugee ship.

Soldiers' pensions were paid dockside on the last day, clearing one of the grievances the refugees had about going home, apart from well-founded worries about their reception in the new East Timor.

Under the hot sun, they trooped up the gang plank, children with their pet dogs, one young girl carrying two prize cockerels slung in two shawls across her tiny shoulders, scores of plastic chairs and radios to stay in touch with Indonesian news. There was even a coffin, for a relative going home to be buried in East Timorese soil.

A market had sprung up alongside the ship after vendors heard the refugees had been paid. "You'll need these," said a young man trying to sell imitation gold watches to a group of refugees.

Francisco Soares considers his future. "You know, I was Fretilin in 1976. Then we got caught in a situation where we were surrounded, with no food. I was forced to join the [Indonesian] army. "I might join the new army if they need me, but I think I'm too old now, so my second choice is to be a rice farmer. I have friends there in Lautem; I am free to go back."

The signs are good. On Wednesday afternoon when the Patricia Anne Hotung docked at the dilapidated wharf at Com among the first group of wellwishers were a contingent of senior Falintil commanders, old enemies now seeking reconciliation.