Timor PM agrees to violence probe - UN says

DILI, June 7 (Reuters) East Timor's prime minister has agreed to an international investigation into the violence in his country, but refused to step down as demanded by rebel troops, the UN representative in East Timor said today.

The world's youngest nation was plunged into violence after Prime Minister Mari Alkatiri sacked 600 of the 1,400-strong army for mutiny when they protested about alleged discrimination against soldiers from the west of the country.

''He is agreeable for the investigations to be carried out with the participation of the international investigators and prosecutors,'' Sukehiro Hasegawa, head of the UN office in East Timor, told Australian radio.

''He insists that truth should be known,'' Hasegawa added.

Youth gangs from the country's east and west have been roaming the streets of the capital, Dili, fighting and looting after initial clashes between police and troops.

''I am concerned that some of those gangs may have some links to politicians. I can't prove it, but I have some concerns about that and it's very important that whatever differences there are, that these differences are resolved peacefully,'' Australian Foreign Minister Alexander Downer said today.

An estimated 100,000 people have been displaced and around 20 killed in the violence which has brought a 2,500-strong peacekeeping force from Australia, Malaysia, New Zealand and Portugal to Dili.

Nine homes were set on fire in Dili on Wednesday, but there were no reports of fighting or looting.

Many East Timorese blame Alkatiri for the unrest. Some 2,000 protesters rallied in Dili on Tuesday, demanding he be removed and new elections held. Elections are not due until May 2007.

NEED FOR MORE POLICE Rebel troops holed up in the hills above Dili want Alkatiri to step down, blaming him for sparking the violence by forcibly putting down a protest by troops.

Hasegawa said rebel troops would not come down from their hideouts unless Alkatiri resigns.

''In other words they are demanding that the government be dissolved before they start a reconciliation process,'' he said.

Alkatiri has refused to step aside, saying he was democratically elected.

Hasegawa said he would return to New York on Wednesday to seek approval for a UN-backed police force for East Timor.

Australia said it was important to increase the foreign police presence to deal with criminal activity and it would send another 40 police, raising its contribution to 200. It was in talks with Malaysia and New Zealand to also send more police.

''We are making a major effort to increase the number of police in East Timor,'' Downer told reporters in Australia.

''The problem now is gangs on the streets. I think a lot of that work can be done by the police rather than just the military,'' he said.

East Timor's parliament would have to change laws to enable foreign police to operate in the country.

Downer also said Australia would give an additional A 1 million dollars to ensure food supplies for the displaced. It has already committed A.0 million to emergency relief.

The east-west divide in East Timor's population of around one million people first surfaced during the bloody referendum in 1999 to vote for independence from Indonesia.

Although ethnically and linguistically identical, people from the west were seen as being more pro-Indonesian and those from the east more pro-independence.

East Timor became independent in 2002 after being run by the United Nations for two-and-a-half years after the referendum.

REUTERS CH PM1402