Steve Daly, spokesman for the Geneva-based Henri Dunant Center, which has mediated peace talks for the past three years, said the two sides failed to overcome their differences in talks that began Saturday evening. "Efforts have unfortunately been unsuccessful," he said.

GAM "prime minister" Malik Mahmud said after the talks "It is Indonesia's wish to continue the war upon the Acehnese."

"We have been ready. We have been fighting for already 27 years ... We have no other choice but to war," he said.

Indonesian government delegation leader Wirjono Sastrohandojo said his government nevertheless "keeps open the possibility of talk."

"All wars have to end with peace. The conflict in Aceh that has been going on for years should be ended ... efforts to reach peace must continue," he said.

Japanese Ambassador to Indonesia Yutaka Iimura called the outcome of the talks "regrettable," but added, "There is still a possibility (for a peaceful resolution) ... We continue to ask them to talk still."

"The biggest difficulty in the talks was the Indonesian government's request for the separatists to accept a special autonomy condition," he said.

The European Union, Japan, the United States and the World Bank, co-chairs of the Tokyo Preparatory Conference of Peace and Reconstruction in Aceh, said in the statement that they "deeply regret" that both sides "failed to seize the unique opportunity before them."

They encourage both parties to leave the door open to further dialogue and continue to follow the process closely.

Indonesian government negotiators had demanded the rebels immediately begin disarming, drop their call for Aceh independence and compromise over greater autonomy in order to avert a military offensive, Kyodo News quoted well-informed sources as saying.

The demands were in line with the government's warning late Saturday that it will issue a presidential decree on launching military operations or imposition of martial law in Aceh on Sunday or Monday if the rebels refuse to meet three conditions -- disarmament, the acceptance of the unitary state of the Republic of Indonesia, and special autonomy for Aceh.

According to Kyodo, after the failure of the negotiation, Indonesia's security chief Susilo Bambang Yudhoyono was reportedly at the resident of President Megawati Sukarnoputri, giving rise to speculation that the decree may be issued soon.

The GAM once threatened to withdraw from the talks on Friday after the Indonesian government detained five of the group's negotiators.

The Indonesian government released the five people shortly before the Saturday's talks.

(Xinhua News Agency May 19, 2003)