EAST TIMOR: PORTUGAL PREPARED TO LIFT TRADE BOYCOTT ON INDONESIA

Brussels, Sept. 3 (IPS) -- Portugal has softened its stance on Indonesia's policy in East Timor, which may pave the way for the signing of a new economic and trade agreement between the European Community (EC) and the ASEAN group of countries.

A senior EC official in charge of North-South relations, disclosed Thursday that talks on an economic and trade pact between the EC and ASEAN will be discussed at the next meeting between the two groups in Manila Oct. 29.

The Association of South East Asian Nations (ASEAN) comprises Thailand, Malaysia, Singapore, Indonesia, Brunei and the Philippines.

Previous talks had failed after Portugal boycotted a new agreement during a meeting of EC foreign ministers on Jul. 21 in Brussels. Portugal, at that meeting, strongly criticised the Dili massacre of last November, when Indonesian troops killed more than 150 pro-independent demonstrators during a peaceful rally.

Portugal demanded an international investigation into the massacre and a referendum of the East Timorese people in its former colony. Portuguese diplomats have since been lobbying Portuguese-speaking African countries in a bid to bring Timor's case before this week's Non-Aligned Movement (NAM) summit in Jakarta.

In December, 1975 Portugal withdrew from its former colony East Timor. One week later, Indonesian troops invaded and in July 1976, East Timor was annexed to Indonesia.

A UN Security Council resolution condemned the annexation and conferred on Portugal the status of ''administrating power'' over Timor until the holding of a referendum on independence.

Portugal's readiness to change its stance follows the announcement of UN Secretary-General Boutros Boutros-Ghali in Jakarta Wednesday that Indonesia and Portugal will resume talks on East Timor during the UN General Assembly in New York, which will start in two weeks.

The talks between the foreign ministers of both countries will be held under the auspices of the Secretary General, who is now attending the NAM meeting.

''Now Lisbon is prepared to lift its (trade) boycott when the Indonesian government admits that it violated human rights in East Timor and that it is responsible for the Dili massacre,'' the EC official said.

The meeting between Portugese Foreign Minister Joao Deus de Pinheiro and his Indonesian counterpart Ali Alatas is the result of informal talks of the UN ambassadors of both countries in New York.

The last formal meeting between the countries -- under the auspices of the Secretary General -- was in June 1991.

During this meeting, Indonesia agreed to the visit of a Portuguese parliamentary delegation. But at the last minute, Portugal suspended the visit which was planned for the first week of November 1991, because Jakarta had refused to include a Portuguese journalist on the list of visiting delegates.

Earlier, Portugal proposed that Ramos Horta, chief of the left- wing Fretilin which is seeking East Timor's independence, be permitted to visit East Timor to observe the situation and to meet the Fretilin guerrilla leaders there to help reach a settlement.

Indonesia rejected that proposal as ''unacceptable and unproductive''.

According to Lisbon, the foreign ministers, in their first meeting in New York, will have to ''first discuss the agenda''.

Integration of the East Timorese people in Indonesian society will be one of the issues which we will put on the agenda, he added.

Western diplomats in Jakarta say the general opinion in Indonesia is in favour of giving East Timor its independence following the collapse of communism in Eastern Europe and the Soviet Union.