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Indonesia and rebels in East Timor are talking after seven years of war

The first step appears to have been taken at last to end the long guerrilla war in the former Portuguese colony of East Timor, invaded and annexed by Indonesia in 1976.

If a peaceful settlement emerges, Indonesia may be able to improve its international image, especially in neighboring Australia.

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According to latest reports, the Revolutionary Front for an Independent Timor , the rebel group known by its Portuguese abbreviation Fretilin, has already negotiated a cease-fire with Indonesian forces as a first step in settling the Timor problem.

This extraordinary development was revealed last week to reporters in Lisbon by Dom Martinho de Costa Lopes, acting Roman Catholic bishop of East Timor. It was later confirmed by recently arrived Timorese refugees, and by reports from Jakarta. (An Indonesian government spokesman has denied there is any cease-fire, noting that would only be negotiated with a sovereign state, not with rebels such as Fretilin. But the denial leaves open the possibility that some kind of peace had been arranged under a formula that does not concede to East Timor a sovereign status.)

To back up their claim, Timorese refugees reaching Lisbon have produced smuggled photographic and documentary evidence of the cease-fire. The evidence was entrusted to them by Fretilin leaders inside the tiny Southeast Asian territory.

The halt in the seven-year-old hostilities reportedly went into force exactly three months ago on March 23 after the opposing sides had met on two occasions in Timor's eastern zone at a place called Larikuto.

In deference to guerrilla demands, the Indonesian side, which included the governor of Timor, Mario Carrascalao; the local Indonesian troop commander, Colonel Purwanto; and Jakarta's area intelligence chief, Major Assis, attended the talks unarmed, according to sources.

The guerrillas, all members of the Fretilin independence movement, were represented by their leader, Jose Alexandre Gusmao, known by his Timorese name Sha Na Na, and his aides, who by agreement were armed.

Fretilin reportedly presented the Indonesians with three demands: a cease-fire, an Indonesian admission to the United Nations that it was prepared to talk with the guerrillas, and an agreement to allow an act of self-determination in East Timor supervised by the UN and neighboring countries.

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Dom Martinho said that although the cease-fire condition was being rigorously observed, the Indonesians had yet to reply to the guerrillas' other two demands.

Meanwhile, in a remarkable volte-face on its previous hard line toward the rebels, the Indonesians shipped Fretilin's sick and wounded by helicopter to hospitals in the Timor capital of Dili for treatment. The Indonesians also delivered food and medical supplies into the bush for the guerrillas by air, according to the bishop.

The authorities allowed Roman Catholic priests into Fretilin areas to perform baptisms and marriages and say mass for hundreds of people who have been cut off from the church by seven years of fighting and strife.

A question mark hangs over why Indonesia has chosen this moment to negotiate with rebels whom it insists it has been increasingly successful in suppressing. But observers here suggest that one possible explanation is that Jakarta will string out the talks while feeding and caring for the guerrillas in the hope of destroying their will to fight.

Jakarta would score diplomatically if it could go into the scheduled October debate on Timor at the United Nations with the problems of the territory close to resolution.

East Timor was a Portuguese colony abandoned at the outbreak of civil war in 1975. Left-wing Fretilin prevailed over rival groups, declaring independence and setting up a short-lived republic. Indonesia declared the new entity a security threat and invaded.

There have been widespread reports that Fretilin resistance was continuing in small numbers, even though most of East Timor is secure. Indonesian officials and Western diplomats estimate that no more than a few hundred men are still resisting Indonesian authority.

In years past, reports of brutal Indonesian tactics to stamp out the guerrillas have generated charges of human rights abuses from the United States, Australia, and Portugal. Recent visitors to the island have generally reported the territory is secure in Indonesian hands, with some signs of economic progress and little to support predictions that mass famine may be around the corner.

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