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U.N. envoy urges peace for East Timor talks 03:20 a.m. Dec 17, 1998 Eastern

JAKARTA, Dec 17 (Reuters) - The United Nations East Timor negotiator said on Thursday it was vital to maintain peace in the disputed territory to ensure the successful outcome of talks on the province's fate.

``The most important thing right now is to maintain peaceful conditions in East Timor,'' Jamsheed Marker told reporters after meeting Timor rebel leader Xanana Gusmao at Jakarta's Cipinang prison.

``I will stress this when I am in Dili because the negotiations are at an advanced stage.''

Marker is due to fly to the capital of East Timor on Saturday for a brief visit.

Indonesia and Portugal began talks in August on a proposal by President B.J. Habibie to grant wide-ranging autonomy to the former Portuguese colony now ruled by Jakarta.

The two countries had hoped to reach an agreement on East Timor's fate before the end of the year, but negotiations ended last month without result.

The talks are due to resume in early February.

Marker arrived in Jakarta on Tuesday for a nine-day visit.

He will meet key Indonesian leaders, including Habibie and armed forces chief General Wiranto, as well as East Timorese leaders in Dili.

Indonesia invaded East Timor in 1975 after former colonial power Portugal pulled out.

Jakarta formally annexed the territory the following year in a move not recognised by the United Nations.

Marker described his meeting with Gusmao as useful and productive.

``We discussed all aspects of the present negotiations. He has promised his support for the continuation of these negotiations and this process,'' Marker said.

About five Timorese youth yelled ``Free Xanana!'' and ``Viva East Timor!'' outside the prison and unfurled a pro-independence flag as Marker finished talking to reporters.

On Wednesday, Gusmao was quoted as saying he was pessimistic that the Jakarta-Lisbon talks would achieve a breakthrough soon.

Significant progress could only be achieved if democratic change took place in Indonesia, the official Antara news agency quoted him as saying.

Indonesia has said it hopes a deal can be struck with Portugal by March.

But Foreign Minister Ali Alatas says Jakarta then faces the even harder task of selling it to the territory's people, many of whom want a referendum on the territory's future.

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