East Timor's Fretilin wants independent PM

DILI, Aug 2 (Reuters) East Timor's former ruling party, Fretilin, has proposed the appointment of an independent prime minister as a way to end a deadlock over who should govern the country, its secretary-general said today.

East Timor installed a new parliament on Monday but political parties have failed to end a deadlock over who should form a government after no party won a clear majority in June 30 legislative elections.

President Jose Ramos-Horta has suggested an alliance led by former president Xanana Gusmao but Fretilin rejected it, said party secretary-general Mari Alkatiri.

Fretilin will boycott parliament until rivals agreed to discuss its proposal for an independent prime minister, he said.

''Without our participation the parliament cannot function.

Commissions in parliament are not set up yet. How can they approve the budget?'' Alkatiri told a news conference.

''Nothing will function, including the government, if there's no parliament,'' he said.

Alkatiri said under Fretilin's scheme, his party and Gusmao's coalition will be represented by a deputy prime minister each.

Ramos-Horta has given parties until tomorrow to agree on a new government or he will step in and appoint a government.

Fretilin, which led East Timor's 24-year struggle against Indonesia, won 21 seats in the 65-member parliament in the June poll, far short of the majority required to rule.

It says it has the right to govern because it won the most votes in the election.

The CNRT, a party founded this year by former president and independence hero Xanana Gusmao, won 18 seats. It has declared a coalition with other parties to form a majority in parliament.

Fretilin and the CNRT had previously ruled out Ramos-Horta's proposal to form a unity government.

Factional bloodshed broke out in East Timor last year, forcing tens of thousands of people to flee their homes.

The mayhem, during which 37 people were killed, was triggered by a government decision to sack 600 soldiers.

REUTERS PD VV1453