THE outlook in Ethiopia is now for ballots not bullets.Ethiopia is one of the world's oldest civilizations; its people have never known democracy. Just two months after a minority rebel group seized power, ending almost three decades of war, they and some 20 other ethnic and rebel groups this week formed a transitional government and promised free elections within two and a half years. The new government calls for freedom of speech, religion, association, and multiparty politics. If put into practice, this would mark a historic break with centuries of dictatorial rule. Dewit Yohannes, a senior official with the victorious rebel coalition, the Ethiopian Peoples Revolutionary Democratic Front (EPRDF), insists that "the major objective [of this week's conference] has been a commitment to democracy and peace." Mr. Yohannes says that although the EPRDF has the military muscle to do things its way, it is willing to accept less than a majority control in the new Council of Representatives. The council will govern until elections are held in early 1994. Participants in the conference this week insisted that leaders in the transitional government will not all be of the same ethnic or rebel organization. Questioned about this, Yohannes says the EPRDF is "not a single organization," but a coalition. So "technically" he admitted, the EPRDF could end up with all the top spots, though he said it is not likely the council would approve that. Apportionment of seats in the council, he says, is a matter of population, and clout. The Oromos, for example, are getting fewer seats in the council than the Tigreans, even though they are the largest tribe. The EPRDF will be the single largest group in the new council. Nonetheless, some degree of power-sharing is a necessity for the winning rebel coalition, says a source close to EPRDF leaders. Because their group draws its main force from the minority Tigre, EPRDF leaders realized they could not govern Ethiopia's diverse population peacefully without sharing power. While some Ethiopians who are not from the Tigre ethnic group expressed doubts about the future, there appears to be a consensus among many Ethiopians that the time for peace - and democracy - has at last come. "After 3,000 years, different nationalities [ethnic groups] are glued together ... to establish a democratic country," says Befekadul Dibaba, an Oromo who returned from exile for the conference. "If it will be successful, I don't know, but we should be allowed to start it." Others, however, question the EPRDF's commitment to human rights. "We've heard good words before only to have things turn sour," says an Ethiopian civil servant. A second issue facing the new government concerns the EPRDF's commitment to allowing minorities to secede. For nearly 30 years, the Eritreans have fought to gain the right to hold a referendum on independence. The EPRDF, in an apparent deal with the Eritrean People's Liberation Front (EPLF), has agreed to allow such a referendum in exchange for guaranteed access to the port of Aseb, which lies within Eritrea. Without use of that port, Ethiopia would be land-locked. EPRDF support for a referendum in Eritrea may also be linked to the major military assistance the EPLF has given the Tigre rebels over the years. Eritrea's independence plans are complicated by other ethnic claims. The Afars, for example, whose people live in Eritrea as well as other parts of Ethiopia, also want a referendum to form their own state, says Afar Liberation Front official Kadafo Hanfare. The Oromo Liberation Front (OLF), also wants independence or at least regional autonomy. "The Ormos are sort of the million dollar question," says Michael Clough, a senior fellow at the Council on Foreign Relations, in New York. "They're not really the problem now, because they're not really organized. They'll be a problem 10 years from now." The EPRDF's commitment to majority rule and the right of self-determination, including secession, could pose a dilemma if the majority of Ethiopians opposed a minority group's desire to secede. Makonnen Bishaw, an anthropologist at the University of Addis Ababa, says pro-unity feelings among many Ethiopians are so strong, that m very, very anxious that it [war over secession] is going to happen again." But Mr. Clough says: "I don't think a return to civil war is imminent. All the groups that might go into opposition won't have a lot to fight with." The end of the cold war between the United States and the Soviet Union means "nobody's going to get any guns." Most potential opposition groups would be hard-pressed to come up with substantial cash for arms in Ethiopia, one of the world's poorest countries.