Ian McPhedran, Dili – East Timor is a nasty little political jigsaw that will keep Australia guessing and engaged for decades to come. As rival gangs battled it out this week on the dusty back streets of the sweltering capital, former military officers sat stewing in the hills begging for dialogue and leadership, but refusing to lay down a single high-powered assault rifle.

Local police officers, armed to the teeth after just a few months formal training, stand by ready to react if ordered.

The big question on everyone's lips after President Xanana Gusmao declared a state of siege and assumed full security powers on Tuesday night was, "who is giving the orders" and just as importantly, "who is listening".

According to Mr Gusmao and the Australian military chief Brigadier Mick Slater the main man issuing the orders is the President in his capacity as Supreme Commander of the armed forces.

Prime Minister Mari Alkatiri says he is in charge as the political leader with the backing of his Fretilin party and the parliament.

The only way to test who is running the show will come after law and order is restored and upwards of 100,000 displaced people can return home. As of yesterday they were still voting with their feet and leaving Dili in droves.

It was 1975 and the pro-independence party Fretilin, and its members including Mr Alkatiri, Jose Ramos-Horta, Roque Rodrigues and Rogerio Lobato, squared up against the United Democratic Party which was closely aligned with Indonesia. The result was thousands dead and 24 years of brutal Indonesian occupation.

It is almost impossible to gain a complete and accurate picture of the various groups and sub-factions, plots, conspiracies – real and imagined – or just plain nastiness actually operating here.

When asked by The Advertiser why his people hated each other so much, Foreign Affairs Minister Ramos-Horta denied it, but was unable to provide an adequate explanation for the violence.

He merely referred to "other elements" and not the ethnic gangs that are loosely constructed along an east versus west fault line, who go at each other every day throughout the city. The key elements of this major regional crisis are worth having a look at. There are about six in the mix including:

• The government (divided).
• The police (divided).
• The army (split).
• The Catholic Church (united but factionalised).
• Gangs (divided).
• War veterans (united).

You could add to the list the women and children of East Timor who conducted a loud protest in front of parliament on Thursday demanding peace and security.

"A competent government should not let people suffer and die and become refugees in their own homeland," shouted female activist Filomena Diaz into a powerful public address system that carried the message deep in the nation's political headquarters.

Her message would have a very strong champion in Canberra. Prime Minister John Howard helped East Timor gain independence and copped the flak from Indonesia. He encouraged Australian taxpayers and the international community to pay the bill and now he watches as Dili burns and refugees flee in scenes eerily reminiscent of September, 1999. This time the East Timorese have no one to blame but themselves and this time the political elites must be held accountable for what has happened.

East Timor was supposed to be a UN success story. Special envoy Ian Martin, who ran the 1999 operation, is in Dili with a large team putting together a new plan for a second UN mission to East Timor.

The main political players are President Gusmao, Prime Minister Alkatiri, Foreign Affairs Minister Mr Ramos-Horta, Interior minister Mr Lobato and Defence Minister Mr Rodriguez. President Gusmao, and most people, blame Prime Minister Alkatiri for allowing the situation to de-generate to such an extent.

Mr Alkatiri blames Mr Gusmao for insighting "mutinous" troops and have accused him of attempting to stage a coup d'etat. The most common allegation is that Mr Alkatiri has unleashed his private army and that is what is sustaining the street gangs.

The suspicion is that he was building this army to protect him at election time next May. Perhaps he has memories of the last time Fretilin ran the show and the country fractured just before the Indonesians arrived to quell dissent.

If push comes to shove they could mount an effective and costly (both lives and cash) guerrilla war for years just like the Falintil did against the Indonesians. Mr Gusmao is the man his people are turning to and foreign governments are relying on. The sole unifying figure took to the streets on Thursday in an emotional bid to reassure his people that he was in charge and that everything would be fine. That is a message they are not buying as violence continues, hunger grows and fear spreads.

Australian troops are confronted with a tirade of abuse from people who want them to take firmer action against the gangs. The time is fast approaching where firmer action will be required to gain some respect.

The longer the crisis goes on the worse it will become for the politicians, especially for Mr Gusmao and Mr Alkatiri, and for the international force.

So far no shots have been fired and troops have not been targeted. But as the frustrations of a hungry population grow and the Diggers are restricted by what are seen by the locals as "soft" rules of engagement (ROE), the hostility will increase. The Australian troops are determined to avoid firing the first shot almost at any cost.

"Once that shot is fired then everything changes," said a defence official.