COTABATO CITY, Philippines (Reuters) — Philippine negotiators and the country’s largest Islamic guerrilla group are talking of a breakthrough in efforts to end one of the world’s oldest Muslim rebellions, but they may be overly optimistic.Analysts and residents of Cotabato City, in the midst of the area where the Moro Islamic Liberation Front (MILF) operates, say there are too many complexities in an insurgency now into its fourth decade for it to be easily resolved.

Government negotiators have offered the Moros, Muslim inhabitants of the southern Philippines, the right of self-determination, which could lead to a homeland of their own where they would enjoy considerable autonomy, but not independence. MILF chairman Al Haj Murad has called the offer an advance in the peace process, which has achieved little in years of negotiations and often been interrupted by renewed fighting.

Speaking to reporters at his jungle camp on Saturday, he said hurdles remained, but the new government offer had “given some light to the negotiations”. “I understand they are optimistic about something simply because the government is trying to think creatively for the first time ever,” said Zachary Abuza, an expert on Southeast Asian politics at Simmons College in Boston. “I think they are overly optimistic because there are a lot of complicating factors in the agreement.”

The government of president Gloria Macapagal Arroyo, he and other analysts said, needs to keep the powerful military in-check and push any deal which may be signed through what could be a hostile congress. “The question is up to what level is there a paradigm shift,” said Benedicto Bacani, the head of a think tank in Cotabato City. To my mind, it’s only at the level of the panel, and, to a certain extent, the executive. It hasn’t really developed into a national policy. Constitutionally, it has a very weak basis.”

Rudy Rodil, one of the government negotiators, said the cabinet had approved the new offer, which was made following a new interpretation of the constitution. “It is a breakthrough, it is a break away from the past,” he said. “This is a breakthrough because, since the peace process started in 1975, this is the first time the government is offering recognition of the right to self-determination.”

At least 125,000 have been killed in the Muslim insurgency in Mindanao, one of the richest parts of Southeast Asia in terms of untapped natural resources but perhaps the most impoverished.

Analysts say billions of dollars in foreign investment could flow into agro-industries, fisheries and mining in Mindanao if there could be an enduring peace. In 1996, the government signed a peace deal with the Moro National Liberation Front (MNLF), a rival of the MILF. It was hailed as the solution to decades of bitter fighting between Muslim separatists and the mainly Catholic central government in Manila, but floundered due to a lack of funds, poor implementation and opposition from hardliners. Analysts say any government deal with the MILF could raise the hackles of the MNLF, which is relatively powerful although much smaller than before and splintered into factions.

“In order for the government to be in a position for the MILF to trust them, they have to implement the agreement with the MNLF,” said Jose Lorena, a Cotabato lawyer who is close to the MNLF. If they have to have a comprehensive agreement, they have to fulfil their commitments.”

Other spoilers could be powerful local Muslim clans, who control municipalities and other lucrative local government posts in Mindanao. Many have formed loose alliances with local army commanders against the rebels. The region is awash in weapons and crime is rampant. Despite a ceasefire, gun battles frequently break out between rebels and soldiers, who often take opposing sides in land disputes and clan wars.

In Cotabato City, the bustling bazaar starts shutting down before dusk. “By 7 p.m., customers are gone,” said Jess Lustre, the owner of a shop selling mobile phone accessories. “There is no peace here now. So many people of Cotabato are leaving, there is no future here.”