Indonesia must address discontent in its easternmost province of Papua or face increased militancy from pro-independence groups, a report says.
The report by the International Crisis Group, a Brussels-based think tank, urged Indonesia to address Papuans' demands for meaningful autonomy.
Papua is Indonesia's most remote and least developed province.
A small group of rebels have waged a low-level battle for independence from Indonesia for decades.
In a separate development, Papua's best-known independence activist, Filep Karma, spoke of his treatment in detention by the Indonesian authorities.
In a rare interview obtained by the BBC via a local radio station, Mr Karma - who is serving a 15-year sentence - said he had suffered punching, kicking and mental torture.
A spokesman for Indonesia's Foreign Ministry, Teuko Faizasyah, told the BBC that allegations of prisoner abuse were always investigated and dealt with properly.
The International Crisis Group (ICG) said Indonesian leaders needed to address Papuans' concerns by expanding political autonomy and affirmative action policies, and tackling the influx of migrants from the rest of Indonesia.
"Unless these three issues are tackled head on in face-to-face meetings, the impasse is unlikely to be broken and increased radicalisation is likely," the report said.
The report details how Jakarta rejected a proposal from the Papuan People's Council requiring all candidates in district elections to be indigenous Papuans.
This move incensed the Papuans, who say an influx of migrants from other Indonesian islands is threatening to overrun the local population, the report said.
"As Papuans point out, if national law trumps local law every time, it raises the question of how much devolution the central government is really willing to countenance," the report said.
Papua was granted special autonomy status in 2001. The deal was an attempt to allay demands for independence.
But many Papuans believe that special autonomy is useless and that it has failed to raise their standard of living, says BBC Indonesia correspondent Karishma Vaswani.
Human rights groups say despite a large reserve of natural resources Papua remains one of the least developed parts of Indonesia.
In June representatives of the Papuan assembly held a ceremony symbolically handing back special autonomy to the Indonesian government.
Hundreds of people then joined a protest in the provincial capital, Jayapura, demanding independence.
Indonesian Foreign Ministry spokesman Teuko Faizasyah said the government had made significant concessions to Papuans.
"We gave more autonomy, we gave the local people the room for them to govern their province. Certainly, we observe and we evaluate if there is a problem," he said.
But the ICG report warned that the longer Jakarta failed to discuss Papuan concerns over discrimination and unfulfilled promises, "the stronger the radical voices will become".