Belinda Lopez – East Timor, a fragile young democracy rocked by assaults on its two top leaders last week, must work to overcome grinding poverty and a divisive politics to achieve stability, analysts say.

Renegade soldiers launched shooting attacks on President Jose Ramos-Horta, leaving him critically wounded, as well as Prime Minister Xanana Gusmao, who fled unharmed, in the latest violent twist in the nation's six-year history. Rebel boss Alfredo Reinado was killed during the attacks and analysts said his death eliminated a key obstacle to peace.

But the struggling, impoverished nation must target the root causes of disgruntlement among its one-million-strong population if it is to emerge as a stronger state in the future, they warned. Reinado joined a rebellion that started two years ago with the mass desertion of around 600 soldiers from western districts who were upset over easterners allegedly being given preferential treatment.

Though he was not part of the original group of deserters, the former army major helped stoke unrest that left 37 dead and deepened regional schisms. But the east-west divide goes much deeper than Reinado, analysts said.

"He was very flashy and charismatic, but he was more the symptom than the cause," said John Miller, a campaigner with the East Timor and Indonesia Action Network. More intransigent roots of the schisms were "poverty and joblessness: the East Timorese have not been able to recover from the Indonesian occupation, from the destruction the Indonesians left behind," he said.

Indonesia invaded East Timor in 1975 and ruled brutally until a 1999 referendum saw the East Timorese vote to break away. Militias backed by the Indonesian military murdered some 1,400 people and left a trail of destruction during the period surrounding the vote.

Unemployment remains high in Dili, at 23 percent, jumping to 58 percent for the 15 to 19 age group, according to 2004 figures. Reinado's belligerence towards East Timor's leaders and championing of regional grievances struck a chord with jobless youths from the west wandering Dili's streets, Miller said, with some coming to see him as a hero.

George Quinn, an East Timor expert at the Australian National University, said poor economic conditions had seen tensions spike over easterners moving in to seek work on the scarce job market. "What happened in 2006 was in some degree a backlash against the intrusion into their world. That issue still has to be addressed," he told AFP.

Australian Prime Minister Kevin Rudd, who visited Dili on Friday, tapped the issue of unemployment and said he had raised it in talks with his counterpart. "Ensuring young people across Timor-Leste have a job is for business, but also this country's long-term stability," the premier said. But East Timor's cut-throat politics are also to blame for fostering regional divisions, said sociologist and East Timorese politics expert Helen Hill, from Australia's Victoria University.

The east-west divide had its genesis in Portugal's long colonial occupation of East Timor and it had been a sleeper issue, she said. Under Portuguese rule, those from the east came to be known as "faraku" – meaning "fight back" – because of their resistance to the colonisers, while westerners were known as "kaledi", meaning "subservient", Hill said. Indonesia's occupation pushed these identities under the surface, with a strong national identity emerging in response.

But in the post-independence era, Hill said, politicians have lent on regional identity to shore up their support bases.

Xanana Gusmao, the country's prime minister and a leader hailed by many as East Timor's independence hero, was partly to blame, Hill argued. A speech made by Gusmao, a westerner, in his former role as president during the military deserter crisis in 2006, explicitly acknowledged the east-west divide, which spilled into national elections the following year. "That's the sad thing, the political parties hardly talked about different policies, they talked about different identities," Hill told AFP.