Michael Leach – President Jose Ramos Horta's appointment of Xanana Gusmao as Prime Minister has once again set off conflict in East Timor's streets.

While the former governing party, Fretilin, emerged from recent elections as the single largest party with 21 seats in the 65-seat parliament, it failed to gain a working parliamentary majority. Gusmao's party, CNRT, though only securing 18 seats, has since gained the support of minor parties and formed an alliance with a majority of 37 seats.

While Fretilin is now claiming the new Government is "illegal", the conflict has deeper roots in destructive personal conflicts within East Timor's small political elite, with more at stake than simple questions of parliamentary majorities.

The ostensible conflict is over the interpretation of the constitutional section which entitles the "most voted party or the alliance of political parties with a parliamentary majority" to designate the prime minister, and thereby effectively determine the composition of the government and its ministers.

Fretilin is claiming that right as the "most voted party" and says it will make a range of "lawful challenges" to the President's decision to grant that right to the Gusmao-led majority alliance.

In itself, a constitutional challenge is an acceptable position for Fretilin to adopt, not least because East Timor still lacks its own history of conventions and precedent for this situation. By contrast, recent statements by Fretilin's leaders suggesting they may boycott Parliament are irresponsible, and represent a grave threat to political stability.

A legal challenge would allow East Timor's Supreme Court to deliver an authoritative constitutional ruling on the disputed section. There seems little doubt that the Supreme Court will favour President Ramos Horta's interpretation, because proportional representation systems normally require parliamentary alliances to guarantee majorities, and political stability.

However, behind these standard democratic prescriptions lies a far more complex problem for the young nation. The parliamentary vote was highly regionalised, with majority support for Fretilin in East Timor's three easternmost districts, for CNRT in the central districts around Dili, and, in the main, for smaller parties in the west.

In a more mature democracy, a simple governing majority would be sufficient to settle all disputes. Many hope the same principle will yet prevail in East Timor; not least because oppositions play a critical role in ensuring democratic accountability.

But there is no escaping the fact that strongly regionalised party affiliations raise much thornier questions of national unity, especially in the wake of the 2006 "east-west" crisis.

East Timor could yet descend into civil conflict on a scale not witnessed in 2006 if the new Government and Opposition mishandle these tensions.

Aware of these larger problems, Ramos Horta initially pushed for a government of national unity involving all major parties. Though initially opposed by both Fretilin and CNRT, Fretilin ultimately backed this idea when it became clear it would not secure the necessary support of minor parties to put CNRT in opposition. Attempts to forge a government of grand inclusion appear to have foundered in part on the bitter personal feuds that wrack East Timor's tiny political elite and, specifically, on the choice of prime minister.

Fretilin could not countenance the choice of Gusmao, suggesting an independent as a compromise. Even minor party leaders supporting Gusmao's alliance believe the former president to be unhelpfully motivated by a desire to end former prime minister Mari Alkatiri's political career.

Behind the scenes, the wider interests of national political stability risk falling victim to the increasingly bitter Alkatiri-Gusmao conflict. In Timor, ideological differences are still insignificant in comparison to personal and factional disputes within the former independence movement.

Many would now argue that the rifts within East Timor's political elite and particularly its older generation are so profound that its capacity to serve the national interest has been compromised.

For all the significance of the halving of Fretilin's vote, another telling statistic is that close to half of the voting population supported neither Fretilin nor CNRT. It may be left to a younger generation of Timorese politicians to heal these rifts.

The more recent link between intra-elite feuds and regional loyalties is an especially dangerous one. Gusmao's inauguration speech, reaching out to the Fretilin majority districts, was a good start.

But the new Government will need to show its bona fides by ensuring that key actors in the 2006 crisis, like Major Alfredo Reinado and alleged "hit squad" leader Rai Los, who campaigned for CNRT, face justice, as former interior minister Rogerio Lobato has with his sentence of 7 years' jail for abuse of power and the distribution of weapons to civilian militias.

There are clear risks for Australia in these disputes. There is a perception among a significant proportion of the Timorese population that Australia has "interests" in oil and gas which Alkatiri challenged in negotiations. Many view Australian Government actions through that prism. When our Prime Minister arrived in the sensitive post-election period and declared Gusmao the likely winner, such perceptions were reinforced. John Howard's observation, though accurate, was an inappropriate intervention, which carries risk for our security forces and civilian NGO workers on the ground.

In the short term, as it did after the presidential results, Fretilin must rein in its supporters, urge them to await and accept the result of any constitutional challenge, and return to Parliament. It is incumbent upon Fretilin to explain the situation accurately to its support base. Fretilin's reputation and future as an alternative government is clearly at stake.

In the long term, however, there are greater problems than the latest outburst of street riots.

Greater attention must be paid to healing regional divisions and, ultimately, to resolving the destructive personal disputes within the Timorese elite. It is to be hoped that the new Government and opposition find a way to cooperate in this critical task.

If not, sooner or later, younger members of all political parties may need to look long and hard at retiring certain leaders in the interests of their nation as a whole.

[Michael Leach is a research fellow at Deakin University, and was an international observer at the parliamentary elections.]