Paul Toohey – Xanana Gusmao's Timorese Government is heading close to collapse as parties in his ruling Parliamentary Majority Alliance (AMP) coalition turn against him and leave the door open for Fretilin, the party with the biggest majority, to form its own coalition.

The AMP holds 36 seats in the 65-seat parliament but three of its member parties, the Social Democratic Party (PSD), the Timorese Social Democratic Association (ASDT) and the Democratic Party (PD) are shifting their loyalties.

The ASDT left the AMP coalition on Saturday and signed an alliance with Fretilin, which won a majority in last year's general election but was prevented from forming government by the AMP coalition.

The leader of PSD, Mario Carrascalao, has spoken out against Mr Gusmao and his ministers but said yesterday he planned, for now, that his party would stay with the coalition despite unhappiness within his own ranks.

"We will continue to stay in the coalition for now, because we do not like the alternatives," he said. "But there is no doubt this is all getting very close."

PD is deemed as vulnerable to Fretilin persuasion and could split down the middle.

The ASDT, headed by former president Francisco Xavier do Amaral, had a party meeting several weeks ago in which members voted to evict Tourism Minister Gil Alves and State Secretary for the Environment, Abilio Lima. The two ministers do not hold parliamentary seats (in East Timor, cabinet members are appointed from within and outside of parliament).

The party alleged the men were corrupt, were too close to the Indonesian military and businesses and did not represent the ASDT ideologies. Mr Amaral asked Mr Gusmao to remove the men from their ministries but the Prime Minister declined, causing ASDT to abandon the AMP coalition.

There are widespread claims the Gusmao Government is corrupted, not so much by its parliamentary wing but by its executive members.

"The view is he (Mr Gusmao) has a bunch of ministers who are corrupt and there's a view he has a bunch of people who worked way too closely with the Indonesians," said a source. "The AMP is supposed to be glued together by a common dislike of Fretilin but the departure of ASDT shows that is changing. He's known about this and he's been saying privately he's just going to ignore it. The numbers are there and he can't ignore it."

Mr Gusmao returned from a trip to Indonesia yesterday and will need to act urgently to stop the rot.

Fretilin is understood to be negotiating with the smaller parties and believes it could soon have a majority, but insists it will not use it to force Mr Gusmao to stand aside. "There is no constitutional trigger that says the prime minister must stand down if he does not hold a majority," said a Fretilin source.

But there are two other mechanisms to oust the Prime Minister before the next general election, which is expected, pending ongoing discussions, late next year.

One is a no-confidence vote by the parliament, which would require President Jose Ramos Horta to ask Mr Gusmao to resign. The second, and more pressing, is that Mr Gusmao requires the parliament to approve his budget, which must be delivered by the end of the month. Without approval, he will not be able to govern.