Agence France Presse -- English

May 20, 2006 Saturday 6:41 AM GMT

Four years after independence, unrest again threatens East Timor

DILI, May 20 2006

In 2002, East Timor emerged from years of unrest to be hailed by the international community as its youngest member.

Four years later, there were no celebrations Saturday to mark the anniversary, amid worrying signs that renewed violence could again plunge the country into uncertainty and prevent it clawing its way out of poverty.

The streets of Dili were calm, mainly because tens of thousands of people have fled the capital following clashes last month that left five people dead when security forces opened fire on a rioting crowd.

The riot began as a rally in support of nearly 600 former soldiers who were sacked when they deserted their barracks complaining they were being passed over for promotions due to their ethnicity.

It was the worst unrest to hit Asia's poorest nation since it voted for independence from Indonesia in 1999. Some 1,400 people were killed then by militias backed by the Indonesian military.

Australia has sent two warships to the region while the United States has ordered a plane be put on standby in case people need to be evacuated.

Rumours about possible new clashes persist.

"Most of the people are in the mountains. They feel no security," Dili Bishop Alberto Ricardo told AFP. Around 95 percent of the country's roughly one million people are Roman Catholic and the Church wields significant influence.

UN officials and clergy here have called for an independent inquiry into the clashes. "Those who sent the military to kill are the ones responsible," Ricordo said.

With the young nation entering its fifth year clouded by uncertainty, the main cause of concern is the chaotic situation in the military: between a third and a half of the country's troops have deserted.

"We are in a state of crisis. Many people don't trust the institutions and have hidden in the mountains. Everything should be done to bring them back," Jose Luis Gutteres, the country's UN ambassador said.

On the political level, Prime Minister Mari Alkatiri is seen as haughty and out of touch with a growing proportion of the population.

He managed to quell a revolt this week at the annual congress of his ruling Fretilin party after detractors, led by Gutteres, tried to mount a leadership challenge.

The attempt failed, but it revealed the instability in East Timor and the difficult days likely to be ahead for Alkatiri.

On the economic level, East Timor remains Asia's poorest country. The situation is precarious, according to Foreign Minister Jose Ramos-Horta, touted as the best placed person to succeed charismatic President Xanana Gusmao.

"We don't have the large direct investment needed to kick start the economy," he said in an interview.

Most East Timorese are poor fishermen or farmers who feel they have been overlooked by international aid payments channelled through the United Nations.

Ricardo said: "The economic situation is worse than ever."

Around 80 percent of the infrastructure was destroyed in 1999 by militia supported by the Indonesian army during its bloody retreat after a 24-year occupation of this former Portuguese colony.

To counter the problem, the government has put forward ambitious plans to build schools and new infrastructure, based on projected growth of six percent in 2006 and seven to eight percent in 2007.

The country hopes its vast oil and gas reserves will provide the answer to its woes. After years of controversy, Dili reached an agreement with Australia last November on sea borders and extraction rights.

Oil revenues have already provided the government with hundreds of millions of dollars, according to Ramos-Horta, but how the government spends it is another question.

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