George Quinn – It is hard to describe the air of lassitude that lies like a twilight over Dili. Pigs rifle through piles of rubbish. Grass runs wild in gardens and sprouts in wiry tufts through cracks in the pavements. A haze of smoke rises from cooking fires in the squalid camps where tens of thousands of people now shelter. Everywhere there are hundreds of blackened shells of houses and other buildings.

As night falls the ubiquitous taxis disappear, people hurry off the streets and an uneasy emptiness grips the city.

Dili has fragmented into ethnic ghettos. Many residents from the eastern end of the country have fled to their home regions or are living rough in the jumble of tents and plastic sheeting that fill the precincts of churches and spread like rubbish-filled pools under trees in parks. Less than half the city's population remain in their houses.

A few enclaves of easterners are holding out in the suburbs but for the most part a kind of ethnic cleansing has occurred and westerners dominate.

Schools and universities are reopening, but here too there is creeping division. Because most state schools are in western- dominated areas, the children of easterners are afraid to enrol in them. They are flooding into the Catholic school system which they see as more tolerant and secure.

The National University stands on neutral ground in the centre of the city and is admitting both easterners and westerners, but the minor universities are losing their eastern students, a few of whom are even choosing to head for campuses in Indonesia. According to one young university student I met hawking bananas in the street, the situation is complex and seems to be getting more so by the day. Three factors stand out: ethnic divisions, urban unemployment and contempt for the Fretilin-dominated Government.

The Timorese have always recognised the idea of "westness" and "eastness". In East Timor loromonu westerners have often spoken disparagingly of those from the lorosae east, especially the Fataluku-speaking people whom some describe as crude and stroppy savages. Conversely easterners have tended to regard westerners as lazy and lacking backbone.

In colonial times these prejudices were kept in check – the Portuguese didn't allow their subjects to move around a lot and the two ends of the island didn't see much of each other. Under Indonesian rule ethnic prejudices were submerged in the suffering that all endured. The euphoria of independence too was dazzling enough to hide divisions for a few years. But freedom and the passage of time have removed the old constraints and prejudice is back.

Since East Timor's secession from Indonesia, villagers have flooded into Dili looking for work in the cash economy, with the Government or one of the host of NGOs that seem to dominate city's economy. The commercial sector is very small. The Alkatiri Government was fiscally conservative and declined to sponsor a fat public service. Brutal competition broke out for the few jobs available. In the alienating environment of the city, far from the certainties and moral constraints of village culture, primordial stereotypes came back to life. The city became a tinderbox waiting for a spark.

The Alkatiri Government lost its hold on public popularity. Although new Prime Minister Jose Ramos-Horta is widely respected, many in Dili see his Government as a clone of Alkatiri's. He will have to perform if he wants to survive, and many doubt that he has the discipline and attention to detail the job demands. There is now a powerful disconnect between ordinary people and government. It is not just dissatisfaction with certain policies or with the Government's handling of the military rebellion.

There is a smouldering sense of outrage that the bright promise of independence has proved a mirage.

In Indonesia the perpetrators of serious crimes and human-rights abuses are thumbing their noses at the law, and many in East Timor see their Government as complicit in this. The Government's wacky insistence on the use of Portuguese in education is a millstone around the neck of those who want a good education quickly. Worst of all, the Government is perceived as less than interested in job-creation.

Ramos-Horta is taking steps to address these problems but he may be too late. It is clear that Fretilin is riding for a fall in next year's election. The campaign will be rough and, when the results are known, Fretilin hardliners will probably be unable to accept the loss of parliamentary power that will be inflicted on them. A move towards more authoritarian government is possible and could be popular.

Already many are disillusioned with the idea of parliamentary democracy, believing that cliques of unscrupulous politicians are stage managing and funding the current tension. People are asking why Xanana Gusmao doesn't take over from the parliamentarians and run the country himself backed by the military that still reveres him.

The big winner from the current turmoil is renegade soldier Alfredo Reinardo. He has the status of a Scarlet Pimpernel among the disaffected "western" youth who rule Dili's streets. But we can expect no political or policy solutions from him, only a spoiling role and possible armed insurgency driven by personal ambition.

Most of the people I have spoken to are resigned, many are angry, all are bewildered about the causes of the violence. But all agree that there will be no quick return to normality. For the foreseeable future we are looking at a more-or-less permanent state of tension. This does not bode well for next year's general election.

[George Quinn heads the Southeast Asia Centre in the College of Asia and the Pacific, ANU.]