On the face of it, it offers everything the international community has been demanding; in practice, it may turn out to be an attempt to reduce pressure and buy time for the military while doing nothing to improve the plight of the people of East Timor.
However the details are filled out, it is clear that, far from representing a solution, it is simply the beginning of a new and perilous phase.
The first big question mark hangs over the man who made last night's announcement. From the beginning, it has been clear Mr Habibie is personally content to give East Timor its independence. It was his idea in the first place: in January, unprompted by international pressure, he said the territory could have its freedom if that is what its people desired.
When the big pro-independence vote was announced nine days ago, he accepted it, even as the military were embarking on plans to terrorise and displace the population. If there is one clear lesson of the past two weeks, it is that the personal wishes of Mr Habibie are irrelevant to the situation.
The second problem concerns the still undefined role of the Indonesian military, or TNI. The details were vague last night but from conversations with UN officials it was clear the soldiers will not withdraw and will play a part in the peace-keeping. Since the invasion in 1975, the main agents of East Timorese suffering have been the Indonesian security forces.
As everyone now acknowledges, the most recent violence was planned and carried out by the TNI, initially through its proxy militias and now openly by soldiers on the streets. "The military has been involved, local authorities have been involved," Mary Robinson, UN Commissioner on Human Rights, said yesterday.
But even as she was promising to set up a war crimes tribunal, the UN in New York was negotiating a deal which will leave the military with substantial responsibilities in East Timor. This was a face-saving measure offered as an inducement to Jakarta but its ramifications are enormous.
For nearly 25 years East Timor has been the military's personal domain. Even before the emergence of anti-independence militias, Indonesian officers controlled businesses, held senior positions in local government and maintained a network of informers and paramilitary enforcers.
No one knows East Timor's rocky, jungly terrain better than the TNI, which will run rings around UN troops. By the time they arrive, the military's work may, in any case, be done. Since the referendum result was announced, 200,000 East Timorese have been displaced, many forcibly deported to other parts of Indonesia.
Dili, where a skeleton UN staff clings on, has been largely burnt; one can only guess at destruction in the rest of the country. The intention seems to be to purge or displace the core of the East Timorese population, or at least the 80 per cent who voted for independence, and in a week the task has already been substantially completed.
But the UN forces are not expected to arrive for weeks, or even months, in which time anything could happen. Mr Habibie might fall; the final hold-outs of pro-independence sentiment may be purged. The military may bring in settlers from other islands, allowing it to declare - correctly - of its newly engineered East Timor that there is no longer any support for independence. Unless the UN quickly sends many observers, none of this will be detectable by the outside world.
The UN's great mistake was its willingness to trust the military, to send in its people unarmed and under their sole protection. Time and again the the TNI has proved its mendacity. In forging this "solution",the world is making the same mistake all over again.Reuse content