Why East Timor is falling apart

They accuse Alkatiri of shooting of five unarmed protesters in Dili last month - charges that Alkatiri denies. Gangs of disenfranchised youths armed with machetes, swords, and even bows and arrows, have embarked on a series of tit-for-tat attacks, and Dili's ramshackle neighborhoods have been set alight.

The clashes have further exposed the East-West fault line in East Timorese society, with Easterners regarding themselves as the mainstay of the struggle against Indonesian occupation, and Westerners perceived as being too close to Indonesian West Timor, just across the border.

These murderous ethnic and political divisions have been exacerbated by chronic underdevelopment and 50 percent unemployment: East Timor's illiteracy rate is among the highest in Asia, the population is soaring and many families live on $1 a day. Huge offshore oil and natural gas deposits promise to bring billions of dollars' worth of revenue, but much of the production has yet to start because of years of acrimonious talks over Australia's overlapping claims.

Mr. Gusmao, the president and a hero of the liberation to whom the disaffected soldiers profess allegiance, announced on Tuesday that he had assumed all powers over the military and police, in what was seen as a snub to Alkatiri. But the rebels say that is not enough to diffuse the standoff, and want the prime minister's resignation forthwith.

Signs of political movement emerged later in the day with the resignation of the defense minister Roque Rodrigues and the powerful interior minister, Rogerio Tiago Lobato.

But descending the twisting mountain road that leads back to Dili, plumes of smoke could be seen rising from the most recently torched houses. Thousands of desperate refugees, made homeless by the unrest, stormed a government warehouse and looted 50- kilogram sacks of rice before being chased away by hard-pressed Australian troops in full combat gear.

"Get back and stay back," screams one trooper, armed with an automatic rifle.

"We can understand their frustration," says another soldier, Corporal Jarrett Vesely. "They are just hungry."

Australian armored personnel carriers were dispatched to help quell the chaos, Black Hawk helicopters clattered overhead, and tear gas was used to break up rival gangs marauding along potholed roads lined with crumbling colonial villas.

The Australians have been put in an almost impossible role as policemen, peacemakers, and emergency food-aid providers. But despite their robust tactics they have been warmly welcomed - even by the renegade Reinado.

"They can't deliver a miracle in one day, but their conduct so far has been very good," he says, surveying the thatched huts, dirt tracks, and coffee plantations in the valley below.

"We have to cooperate with the international forces, but in the end it's only the Timorese who can solve East Timor's problems."

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