Paul Toohey – The dirt roads and hills in the western districts of the country are now their home. In Australian terminology, the 591 East Timorese soldiers – a third of the military – who abandoned their barracks in protest in March would be mutineers or traitors. In the delicate language of East Timor, they are "petitioners". Whatever they are called, the future of the country is theirs to decide.

In a field of weeds, with a band of ex-soldiers covering his back, Gastao Salsinha, leader of the rebel soldiers, agreed to meet The Bulletin to explain why he was prepared to see his country again taken into civil strife, if not war.

Until he was sacked for desertion, Salsinha, 32, was a lieutenant in the East Timorese army (F-FDTL). He sees he has only two choices: to back down or to fight. Right now, his are fighting words.

Last Friday week, Salsinha and his petitioners were in the fourth day of a peaceful protest outside the main government building on the waterfront of the capital, Dili. Their complaints are many but stem from their view that soldiers from the eastern part of the country have been favoured for promotions over soldiers from the west.

The argument, loosely, is that most of the former Falantil guerillas who staged the insurgency through the 24 years of Indonesian occupation, came from the east. Upon independence, they demanded, and got, the senior positions in the new military. Westerners think easterners are favoured both in the military and government.

It goes deeper: the soldiers, who were earning about $US75 ($97) a month, are not trusted. Their barracks are in the east of the country, far from their families and Dili, where the strife-traumatised people get upset at the sight of machine-guns; but especially because the government doesn't want them anywhere near the border with West Timor lest they get trigger-happy with the Indonesian army.

The western-born soldiers were incensed by reported claims of a senior officer that it was easterners alone who "won" the war with Indonesia. Attempting to defuse the insult, President Xanana Gusmao posed a rhetorical question, along the lines of: "If people from the east won the war, then are the people of the west militia?" The comments were supposed to unite the country but were taken out of context in the local media and represented as: "People from the west are militia." There could be no greater insult.

During the protest, the petitioners were joined by a large number of bored Dili youth who attached themselves to the ex-soldiers for something to do. The anatomy of the rioting that followed is yet to be pieced together. But it is said some of the young men broke ranks and started smashing and torching cars. Two protesters were shot dead.

The group was pushed west towards Dili's main market at Comoro, whose stalls are mostly run by easterners. They began stoning the western protesters. The petitioners and protesters, armed with sticks, hatchets and machetes, were repelled to the western outskirts of Dili where sustained shooting saw another three protesters gunned down. The government has confirmed five dead but agencies, including the United Nations, suspect the figure is higher.

Senior Minister Jose Ramos-Horta confirmed 45 houses were burnt down and 116 partially destroyed in spot fires across Dili. Salsinha insisted seven of his people were killed and he is unable to account for 68 men. He says they are either dead or being held somewhere.

"Since that day we have 100 police [The Bulletin believes it is 83 or 84 police deserters] who have joined us," says Salsinha. The police force is comprised mostly of westerners.

When the soldiers abandoned their barracks in March, they took only their boots and knives. When the police left their posts to join the protesters in the hills last week, they took weapons and vehicles. The western faction now has firepower. Government sources suspect more police are ready to support Salsinha.

As the violence of Friday spilled to Saturday, Dili mostly remained calm. It was over the following days that rumours began on SMS. It was said the loyal government troops would systematically hunt down the petitioners; or the petitioners were assembling in the hills above Dili to attack the capital.

Both were untrue but it was enough for the traumatised people. Since 1999, when the Indonesians and their East Timorese militia mates raped, sacked, burnt and murdered, the population remains psychologically frail. On Wednesday and Thursday last week, at least 20,000 people fled any way they could.

In scenes reminiscent of 1999, thousands ran to UN compounds, churchyards and embassies. The government implored people not to panic and to return home but, as of this weekend, normally gridlocked Dili central was near-deserted.

Salsinha says Prime Minister Mari Alkatiri had two months to respond to the grievances but failed to do so. The petitioners – and most of the country, for that matter – seem to detest Alkatiri, considering him aloof and arrogant. There are constant mutterings about his family's business dealings. Salsinha refuses to talk to Alkatiri but has been taking calls from Gusmao.

Gusmao is loved by most Timorese, including Salsinha, but the two are running out of things to talk about. "I would like the president to use his power as supreme commander and take all the guns off the military to stop this becoming a war," says Salsinha. "I want all the soldiers who shot my people to be suspended." The trouble is, Gusmao has no such power. Although he is little more than a figurehead, people believe he can – and should – exercise whatever power he likes.

Salsinha says there will be no talk of peace until Gusmao orders a surrender of all military weapons. And, by the way, says Salsinha, he must sack Alkatiri.

Gusmao has been stalling Salsinha, offering to reinstate the deserters' pay (refused as a "matter of dignity") and trying to keep the lines open. But that is tough for a practical reason: Salsinha is in the bush and finds it hard to charge his mobile phone.

"If we don't get a decision from the president, now, we'll go and become guerillas," Salsinha says. In an effort to appease the petitioners, Gusmao and Alkatiri last week announced several commissions would look into the soldiers' grievances and examine how many petitioners and protesters really died.

Salsinha warns that Dili's disaffected youth are prepared to join him and his men in the hills to stage a rocks-and-machete civil war. With blanket unemployment, and a widespread perception that independence has benefited only a handful of East Timorese, they have nothing to lose. The next election is not until 2007 – not soon enough for them.

Salsinha believes that if he shows his face in Dili, he will be arrested, if not shot. He accuses the remaining government-loyal military of distributing weapons to civilians for an assault on the petitioners. "If the east wants to fight the west, we are willing and prepared to fight," says Salsinha. It is hard to know whether he really means it; but now he's seen unarmed comrades gunned down, his resolve is hardened. If he feels any guilt for plunging his country into strife, he doesn't show it.

As with the 2002 riots, the government says these are merely growth pains of democracy. Ramos-Horta has been scathing of the international media for, as he sees it, damaging the name of East Timor. He really means he'd prefer there was less interest in what appears to be a rapidly failing state. The fact that so many fled Dili, to live with relatives in villages, taking ferries to nearby islands or the enclave of Oecussi, or – if they could afford it – jumping on planes to West Timor, says much about their confidence in the government and military: none.

Refugees in Ermera district said they would stay for months, sleeping on mats and floors, scrounging for food rather than return to Dili. Gusmao, acknowledging unity had been lost, has pleaded that people remember the dream and "hold on to it tightly". Ramos-Horta has tried to assure the international community the situation is calm: problem is, it is only calm because so few people remain in Dili.

While the government and Australian expats are angry at Australian press suggesting East Timor has set a course for violence, the reality is that civil war is on the cards if disaffected westerners don't return to the fold. A further problem is that when the population abandoned Dili for tribal homelands, be they east or west, they unwittingly demonstrated their loyalties, creating a tangible national division. As for those still in Dili, some are being accused of stealing the pigs, goats and chickens of those who fled. In wretchedly poor East Timor, that is no joke.

Late on Monday there were reports that up to 1000 youths were trashing cars and buildings in Gleno, in the region where Salsinha is based.

Alkatiri, elected by a committee and not the people, seems to be facing his last days in charge. He has restated his position that he would step aside only if there were someone good enough to replace him. He says no such person exists. Good sources within Alkatiri's Fretilin party tell us the PM is finished. The Fretilin Congress will meet on May 17. The sources say the first item on the agenda will be a vote to remove Alkatiri. Some 80% of the 600-plus members will, it is claimed, vote to get rid of him. Taking Alkatiri's political neck is the only thing that can save Timor.

It has been reported that the government – i.e. Alkatiri – has $US560m in oil and gas money. Incredibly, none is being spent on development projects that might give the people jobs. No one has any clear answers why Alkatiri – who also acts as Fretilin's powerful secretary-general – has insistently refused to invest in his nation, instead leaving the money to earn interest. The people have had enough. Gusmao is said to be fed up and will support Alkatiri's overthrow.

The UN was to end its current mission on May 20, but has been asked to stay. Word around Dili is they will only extend for another month. With so much trouble, it seems strange they would make such a short extension – unless, of course, they realise Alkatiri is dead as leader and consider his departure will be enough to reunite the country.

The trick – and senior Fretilin members are working on it – is to persuade Salsinha and his men to sit tight until Congress. They believe if they can convince the deserters that Alkatiri is a goner, and that they will take their place as equals in East Timor, Dili need not burn yet again.