Damien Kingsbury – The diplomatic row between Australia and Indonesia has highlighted the increasingly critical situation in the already troubled territory of Papua. As events develop, the future of Papua looks less clear than at any time since Indonesia moved into the former Dutch territory in 1963.

The options range from worsening discord and conflict to the prospect of independence. But for those Papuans who favour independence, Indonesia's nationalists, spearheaded by the Indonesian military, the TNI, are profoundly opposed to Papua's separation from Indonesia and will destroy the place rather than let it go.

Should this situation arise, the Indonesian Government would have almost no capacity, and probably little desire, to limit the TNI's actions.

Beyond Papua in Indonesia, there is only opposition to its independence.

The problem with the independence proposition is that even though there is little likelihood it can be achieved, it suits the TNI to raise this prospect to entrench its own position in Papua and, as guarantor of state cohesion, in Indonesian politics.

No matter which way events turn, the situation in Papua is not sustainable. Indonesia's President Susilo Bambang Yudhoyono recognises this and wants a negotiated resolution. However, he has so far said this should occur within the context of existing legislation for Papua. According to most Papuan groups, this is too limited to produce an adequate outcome.

Similarly, there is growing international interest in and increasing pressure for a resolution in Papua, not least from the US Congress and some parts of the US administration. Australia also wants to see a resolution in Papua, in large part to limit it as the focus of continuing bilateral discord.

The US Congress has applied some pressure over Papua's status and could push for a negotiated settlement. But the US administration is generally keen to retain and indeed boost Indonesia as a regional ally.

Short of overwhelming public pressure, as with East Timor, Australia is reduced to the diplomatic equivalent of hand-wringing, and this is more over its relationship with Jakarta than reflecting any great concern for the people of Papua.

The question, then, is whether a negotiated settlement can be charted between the competing claims of Papuan calls for independence, the backlash this would entail and the deteriorating status quo. A negotiated settlement, if it moved beyond rhetoric, would require three criteria. These can be summarised as intention, capacity and opportunity.

Both the Indonesian Government and a representative Papuan organisation must first want a negotiated solution. Yudhoyono does, if within an impossibly limited framework. Key Papuan leaders have also said they seek what they call a just peace through dialogue. The primary intention, therefore, appears to be there.

In terms of capacity, there has been a coalescing of Papua's political organisations around a common vision for the future, as well as a desire for a negotiated settlement to that end. In support of his legislative program, Yudhoyono, meanwhile, has so far been able to muster a small but definite majority in Indonesia's legislature, the People's Representative Council or DPR.

However, in Indonesia's sometimes factious political environment, Yudhoyono must also be able to command substantial institutional support to ensure that any agreement reached is respected. It would be easy for the Indonesian army or its proxy militias in Papua – Laskar Jihad and Laskar Tabligh - to wreck any such agreement. The militias have opposed Papuan activists in the past and there have been recent reports of militia involvement in drive-by shootings.

Among Papuans, too, there has been a capacity to divide, although many Papuans note that their lack of a united leadership is primarily a consequence of their leaders being murdered or forced into exile. Divisions in Papuan society, however, have been overstated in Jakarta and there is now a commitment to the idea of a representative team rather than the idea of a single leader.

A negotiated settlement also requires opportunity. The Aceh peace agreement was initiated before the 2004 tsunami, but there is no doubt that event helped push negotiations to a successful conclusion. The other main factor was international support, and pressure on both parties.

Papua does not have the tsunami incentive, but there is an increasing sense of urgency about its status. And, as with Aceh, any settlement in Papua will also require support, not least on the part of a willing mediator and the backing of a key international power such as the US or European Union to act as a guarantor for any agreement.

Indonesia would prefer to negotiate an outcome internally, but any possible internal agreement would probably be subverted, as it was with Papua's original special autonomy package. There is virtually no one in Papua who wants a negotiated settlement who would trust the Indonesian Government without international mediation and related guarantees.

There are, however, two impediments to the possibility of a negotiated settlement. The first and main impediment is that Indonesia's DPR has not yet passed the enabling legislation from the Aceh peace agreement. Further, and despite international guarantees, the legislation that is being considered falls short of that which was agreed to.

Despite differences between Aceh and Papua, the Aceh peace agreement will act as a precedent to any possible negotiated settlement for Papua. If it fails, then the chances of a negotiated settlement in Papua would appear slim. If the Aceh legislation is passed, but in diluted form, or subverted in practice, this too will undermine a possible Papua settlement.

At this stage, however, it appears that the Aceh peace agreement will hold. A recent meeting of senior Free Aceh Movement (GAM) leaders and other Acehnese politicians in Stockholm reaffirmed them as committed to a path of peace through democracy.

To that end, the Aceh peace legislation will probably be passed in the next few weeks, and its expected shortcomings will be referred to its international guarantors, the Crisis Management Initiative and the EU, for mediation. At that point, prospects for a follow-up settlement for Papua may start to look more reasonable, if not promising.

A lesser, although still critical, problem also lies with the international community. The EU backed the Aceh peace agreement because it came hot on the heels of its commitment with others to rebuilding Aceh after the tsunami.

Support for the Aceh agreement was also the first outing for the EU as a global player in conflict resolution. The relative success of the EU's Aceh monitoring mission has given it confidence. However, a further effort may stretch Indonesia's willingness to provide the necessary endorsement that such missions require.

And it may stretch the limited enthusiasm of the EU's member-states, which have provided less, rather than more, to Aceh than was originally asked of them. There are many in the US Congress who would also like to assist in resolving the Papua problem, but they are unlikely to receive great support from the administration, perhaps beyond Secretary of State Condoleezza Rice. Apart from the US's significant and sensitive investments in Papua, such as the contentious Freeport copper and gold mine, the US administration sees its renewed ties to the TNI as part of its principal focus of the war on terror.

Not only will the US administration be reluctant to jeopardise this warming security relationship, any military-based monitoring capacity is also limited by the US being stretched to its financial and logistic limits in Iraq. There is, then, little will, much less capacity, for even a moderate military-based guarantee in Papua.

Where there may be some scope, however, is for a US or joint US-EU civilian-based monitoring exercise through their respective official aid agencies. A military response to violations appears highly unlikely, but clear economic sanctions could work.

Indonesia remains highly vulnerable to pressure on foreign investment and continuing multilateral aid through the World Bank and International Monetary Fund. It was, after all, this latter type of pressure that persuaded the Indonesian government to allow an Australian-led UN sanctioned force into East Timor in 1999.

It appears, then, that a negotiated resolution to the Papua problem is available, if still having to overcome serious hurdles. Like any such resolution, it will not be easy and will be prone to competing pressures.

The intention to work towards a resolution exists on the Papuan side and probably exists on the part of Yudhoyono. It also appears that each have the capacity to negotiate, if still dealing with some fractious elements.

The question is, will the international community help provide Papua, and Indonesia, with the opportunity?

[Damien Kingsbury is director of international and community development at Victoria's Deakin University and was adviser to the Free Aceh Movement in the 2005 Helsinki peace talks.]