Mark Dodd – A damaging rift has opened between East Timor's two rival presidential candidates over the treatment of a group of army mutineers whose demands for military reform a year ago brought the country to the brink of civil war.

Interim prime minister Jose Ramos Horta favours compensation for the 591 so-called petitioners, the name given to former eastern-born soldiers dismissed after protesting ethnic discrimination in the ranks.

If elected president in next month's run-off ballot, Mr Ramos Horta has promised to re-open a contentious investigation into the illegal distribution of weapons to civilian groups by the former Alkatiri government.

That provoked an angry response from rival candidate Francisco Guterres, head of the ruling Fretilin party.

Speaking in the mountain town of Aileu yesterday, Mr Guterres warned against plans to pay compensation to the petitioners. He said it could reignite civil strife in the troubled country still trying to recover from violent ethnic unrest.

A decision last year by former Fretilin prime minister Mari Alkatiri to dismiss the petitioners erupted into bloody mayhem that left dozens killed, forced his resignation and led to the deployment of an Australian-led peacekeeping force. "We should be careful not to make a new wound to heal another. If we decide to compensate the petitioners, what will be the impact on the other soldiers?" Mr Guterres said.

The plight of the petitioners, who are nominally allied to another army renegade, Major Alfredo Reinado, should be resolved "institutionally," he added, referring to a government commission into the problem.

With a second-round of voting only weeks away, Mr Ramos Horta was also challenged to explain what happened to a diplomat-training college he promised to build from his 1996 Nobel Peace Prize winnings.