Indonesia's armed forces said yesterday they supported a government suggestion that East Timor could be given independence.
"If the situation develops in such a way that allows East Timor to separate with dignity from the Republic of Indonesia, certainly ABRI [the armed forces] would respect the decision," the ABRI chief, Gen Wiranto, said.
ABRI, which made substantial profits out of business in East Timor, had spearheaded the hardline government stand against giving up the former Portuguese colony.
But responding to international pressure, Indonesia said on Wednesday it could consider independence for the eastern half of Timor island if its offer of autonomy was rejected by East Timorese and the international community.
Just how realistic the offer is remains unclear. Independence would be considered by the legislative body, the People's Consultative Assembly (MPR), after elections in June.
Parliament unanimously passed sweeping political reforms yesterday, clearing the way for elections on June 7th, and the country's first taste of democracy in four decades.
Indonesia invaded East Timor in December 1975 and annexed it the following year.
The move was not recognised by the United Nations.
"One needs to be aware that integration was then the best solution . . . but if one day East Timor separates from Indonesia it will be the best solution for that time," Gen Wiranto said.
"ABRI's intervention in East Timor was to prevent more bloodshed in the region after Portugal left the region arbitrarily," he said.
"It was the best solution. We should no longer blame each other."
An estimated 200,000 East Timorese have died in fighting and from disease and starvation during Indonesia's often brutal, military-led rule there.
Gen Wiranto said over 1,000 Indonesian soldiers had died in the territory.
Indonesia and Portugal were due to resume UN-sponsored talks in New York yesterday over the fate of the impoverished territory of 800,000 people.
Jakarta has offered special autonomy, giving East Timorese control over most of the province's affairs.
Since taking over East Timor, it has become a diplomatic handicap for the Indonesian government and a severe drain on the nation's military and financial resources.
The military has been further stretched over the past year as waves of ethnic, religious and political violence hit the nation amid its worst economic and social crisis in three decades.
Nobel peace laureate Bishop Carlos Belo said yesterday steps towards possible independence for East Timor from Indonesia should proceed slowly in order to boost chances of reconciliation among its people.