Gusmao party forms coalition for E.Timor government

DILI, July 6 (Reuters) A party set up by former East Timor president Xanana Gusmao has lined up partners to form a coalition government in the wake of last week's parliamentary elections, party leaders said today.

''We have decided to make an alliance for the stability of the country. We will work to establish terms of reference ...,'' Gusmao told a news conference.

Gusmao's CNRT party, which the resistance hero established this year as a vehicle to become prime minister, formed an alliance with the Association of Timorese Democrats-Social Democratic Party (ASDT-PSD) and the Democratic Party.

The coalition has a combined 51 per cent of the vote and is expected to hold 37 seats in the 65-chamber parliament.

With vote counting completed in all districts, the former ruling party Fretilin headed the field with 29 per cent support. CNRT was second with 24 per cent.

The coalition will have to seek permission from President Jose Ramos-Horta, a close ally of Gusmao, to form a government.

''We declare that we have decided to coalesce with CNRT and ASDT/PSD to implement our programmes,'' Democratic Party president Fernando de Araujo told the conference.

PSD president Mario Viegas Carrascalao said the coalition was still discussing who would be named prime minister.

Both Fretilin and CNRT had ruled out forming a unity government, an idea floated by Ramos-Horta.

FRETILIN SAYS HAS RIGHT TO GOVERN Fretilin Secretary General Mari Alkatiri said leaving his party out in the cold was ''a mistake''.

''We have the right to govern but we need the involvement of other parties in the cabinet,'' Alkatiri told a news conference.

''We ask them to think about the country's progress and security.'' Alkatiri told Reuters yesterday that Fretilin, which has ruled for the past five years, was ready to form an alliance with any party, except the CNRT.

Fretilin, which led the 24-year struggle against Indonesia, remains popular, especially in the east of the country, but its candidate fared badly in the recent presidential election.

Gusmao, who ended his term as president in May, appears to have become increasingly frustrated by the pace of progress under Fretilin and the factional infighting that has been blamed for contributing to the chaos and bloodshed of 2006.

After his appointment in March as leader of CNRT, he pledged to lead the country on a new path. The role of prime minister is much more hands-on than the more ceremonial presidency.

Factional bloodshed broke out in East Timor last year, triggered by the Fretilin government's sacking of 600 rebellious soldiers. In the ensuing mayhem 37 people were killed and 150,000 driven from their homes.

Foreign troops led by Australia intervened to restore order, but sporadic violence and unrest have continued.

East Timor voted to break away from Indonesian rule in 1999 and, after a period of United Nations administration, it became independent in 2002.

The former Portuguese colony is one of the world's poorest countries, but has rich energy resources that are only starting to be developed.

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