Gusmao's move from prison makes him a powerbroker

The cardboard packing was still on the hanging pictures of Jesus Christ and Our Lady when the East Timor rebel leader, Mr Xanana…

The cardboard packing was still on the hanging pictures of Jesus Christ and Our Lady when the East Timor rebel leader, Mr Xanana Gusmao moved into his new home this week.

Indonesia 's Justice Ministry hurriedly purchased the lounge room icons after President Habibie signed a decree allowing Mr Gusmao to be moved from his Jakarta jail cell and placed under house arrest.

"I have no idea about the house yet, I have just come in, so I don't even know whether it's big or small," said Mr Gusmao, who has served five years of a 20-year jail term for armed rebellion.

The 53-year-old former guerilla chief is now playing a Nelson Mandela-like role as peace broker for his homeland. Indonesia's recent surprise decision to give East Timor the option of immediate independence has jolted East Timorese to the reality that they may soon have their own country.

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The government is showing public signs of impatience at the pace of negotiations in New York. Mr Habibie has turned up the heat, stressing he wants to see the East Timor issue settled by January next year. Talks continue at the UN between Indonesia and Portugal, the colonial power whose withdrawal from East Timor was followed by Jakarta's 1975 invasion. However, Mr Gusmao's Dutch-style bungalow in the central Jakarta suburb of Salemba will probably be where the real deals are hammered out.

"I think everybody recognises the crucial role that Xanana Gusmao can play," said Ms Anna Gomes, the first Portuguese diplomat to be based in Indonesia since 1975.

Mr Gusmao, who is likely to be the first president of an independent East Timor, said he is prepared to meet all parties in his new home to speed up a resolution. But he has to bridge deep hatreds that span the 23 years of Indonesian occupation between those who support and reject integration with the giant archipelago.

"This is not about a move to a special house, but I am assigned to participate more comfortably in trying to settle the East Timor situation," said Mr Gusmao, sitting on his front verandah.

He will still be guarded by armed police and Justice Ministry officials. Under the conditions of his house arrest - known here as an "assimilation" - Mr Gusmao is not allowed to leave the premises. But more privacy for Mr Gusmao inside the compound, better living conditions and a telephone to the outside world means a symbolic upgrading of his stature.

The former governor of East Timor, Mr Mario Viegas Carrascalao, said the move indicates a growing respect for Mr Gusmao's role as a key peacemaking figure. "I consider the move as a positive step considering that the government is treating Xanana not as a common criminal but as a political prisoner," said Mr Carrascalao.

Resistance figures are unsatisfied with the house arrest and say it is a half measure. A former guerilla leader Mr Ma'Huno said Mr Gusmao should be free to engage in international negotiations along with the Indonesian and Portuguese foreign ministers.

Mr Ma'Huno said militias armed by the Indonesian military are now creating havoc in East Timor, terrorising residents in the countryside. Disarming the paramilitaries and winding back the 15,000 strong Indonesian troop level are two of the stumbling blocks in the talks over the territory's future.

"Negotiating with the military is very important because it's the basis of the peace process," said Mr Gusmao, who says his main task now is to prevent civil war between the opposing factions.

In the longer term, Mr Gusmao must consider how a free East Timor will survive economically.

Senior members of Mr Gusmao's Council for National East Timorese Resistance (CNRT) admit the rebel leader has his work cut out.

"We want a transitional autonomy. We should take it slowly if we want to avoid a civil war and financial over-dependence on foreign powers," said Mr Francisco Cepeda, political spokesman for CNRT.

Economic analysts say East Timor would run a $150 million (£107 million) budget deficit for the next 25 years if given immediate independence.

Military foundations and well connected businessmen have already sold off most of East Timor's lush forests of sandalwood and teak, and deposits of limestone and marble. The military continues to export 20 tonnes of sandalwood from south-west East Timor every month in cahoots with ethnic Chinese businessmen.

The territory (roughly half the island of Timor) has one crucial resource - an unknown quantity of oil. It is still tied up in the Timor Gap Treaty between Indonesia and Australia. East Timor's bleak economic forecast is overshadowed by the potential for violence on the ground between armed factions.

Settling into his new home, complete with cheap chintz lounge and pink bed cover, Mr Gusmao nevertheless remains positive about moves to independence. "I'm optimistic, I always have been," he said.

AFP adds: The UN High Commissioner for Human Rights, Mrs Mary Robinson, said in a letter to Mr Gusmao that she learned "with much joy" of his transfer to house arrest. "I am sure that now that you are one step closer to freedom you will be able to play a most important role in determining the future of East Timor," she said.