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ANALYSIS-Australia shifts with times on E. Timor 07:12 p.m Jan 12, 1999 Eastern

By John Mair

CANBERRA, Jan 13 (Reuters) - Australia's move to countenance independence for East Timor is in keeping with its pragmatic stand on the Indonesian-ruled territory, political analysts said.

Far from an ideological sea-change, Canberra's apparent change of heart on Tuesday merely acknowledged a recent thaw in Jakarta's own hardline policy on the restive province, they said.

``It is a shift, but I think it's just keeping up to date with what's already happening,'' Indonesia expert Harold Crouch said of what Canberra called a historic shift in policy.

The only Western country to recognise Indonesian sovereignty over East Timor, Australia previously only supported autonomy for the territory, which was invaded by Indonesia two decades ago.

``It would be silly for Australia to be insisting there can be no change... if the Indonesians themselves have backed away from that position,'' said Crouch, of the Australian National University.

Foreign Minister Alexander Downer said on Tuesday Canberra would back a political settlement that held out the long-term possibility of self-determination for the East Timorese people.

The move received a warm welcome from Jose Ramos Horta, the East Timorese independence leader and Nobel Peace Prize winner.

But it prompted Jakarta to flatly deny that independence was on its agenda. Since the downfall of autocratic President Suharto last May, Indonesia has said it will consider autonomy only.

Downer said Australia's preferred option was still for an autonomous East Timor to remain legally part of Indonesia, but it now recognised that independence should be a long-term option.

Analysts said Australia no longer wanted to be seen as the only Western nation supporting Jakarta's rule over East Timor.

Richard Robison, Asia Centre director at Murdoch University, said: ``Australia doesn't like being seen as one of the only countries that supports Indonesia's claim to East Timor.''

Indonesia has been holding talks with East Timor's former colonial power, Portugal, since last August in an attempt to bring peace to the territory.

``We recognise that the new situation in Indonesia is changing the dynamics surrounding the East Timor issue and we've made a significant shift in policy,'' Downer said on Tuesday.

``The demise of the Suharto regime, the emergence of President Habibie and his much more constructive approach to the issue does provide a window of opportunity and therefore I think it appropriate that we should change our position,'' he added.

East Timor has proved a prickly issue for Australian governments since the Indonesian invasion in 1975 and annexation the following year, under the rule of Suharto.

While the United Nations refused to recognise Indonesian sovereignty, Australia did, and later signed treaties with Jakarta to share the oil and gas deposits in the Timor Sea.

James Dunn, a foreign affairs specialist and former diplomat, said the shift was historic against that background.

Dunn wrote in the Sydney Morning Herald that Australia was belatedly ``accepting the immorality of that integration, influenced no doubt by the growing international support for the Timorese and by changing attitudes within Indonesia itself.''

The Australian shift may also be an indication that the talks with the Timorese and Portugal may soon produce a result, and so Australia is repositioning in readiness, Crouch said.

Australian policy -- long reviled by guerrillas in Dili -- is now aligned with the moderate wing of East Timor's resistance.

``I would say we are on the same wavelength for the first time in many, many years,'' Ramos Horta told Reuters.

The support for a substantial period of autonomy before any move to self determination is expected to increase the odds of a highly autonomous East Timor remaining part of Indonesia.

Downer says this would not only be more politically convenient for Australia, but would also work against any fragmentation of Indonesia -- a prospect that gives Canberra the shivers.

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