East Timor President Threatens to Resign

Some of the nearly 1,500 demonstrators traveling to the capital to join demonstrations against Prime Minister Mari Alkatiri, sing and dance atop a truck Thursday June 22, 2006 in Dili, the capital of East Timor. East Timor's President Xanana Gusmao on Thursday threatened to resign after the ruling party defied his orders to oust Prime Minister Alkatiri , deepening a political crisis in the tiny nation following weeks of bloody street battles.(AP Photo/Ed Wray) (Ed Wray - AP)

DILI, East Timor -- East Timor's widely respected president threatened to resign Thursday after the country's prime minister refused to step down, prompting thousands of protesters to spill into the streets as the country faced a deepening political crisis.

President Xanana Gusmao, a former guerrilla chief revered for his role in helping East Timor achieve independence from Indonesia, has demanded that Prime Minister Mari Alkatiri resign or be fired.

"If the situation does not change by early tomorrow morning, I will send an official letter of resignation to Parliament," Gusmao, said in an address to the nation. "I'm embarrassed about all the bad things the state has done to the people."

Many East Timorese say Alkatiri's decision to fire 600 disgruntled soldiers in March was to blame for street battles and gang warfare that left at least 30 people dead and sent nearly 150,000 people fleeing from their homes. The violence was the worst to hit the Asian nation since it voted for independence seven years ago.

Thousands of young protesters opposed to Alkatiri's government arrived in the capital of Dili throughout the night in scores of trucks, buses and vans, and set up camp early Friday at the government headquarters.

"I'm afraid it could become violent; more shooting and burning of houses," protest organizer Augusto Junior Tridade told The Associated Press. "With Gusmao going to resign, it's a very, very difficult situation now."

Gusmao wrote a letter to Alkatiri on Wednesday demanding he resign or be fired. That sparked talks between the prime minister and members of his Fretilin party. They emerged vowing to stand by their leader.

"I will not resign, at all," Alkatiri told the Portuguese news agency Lusa in a telephone interview. "The situation is so complicated that a hasty decision could further complicate things."

Gusmao accused the party of creating instability and ordered it to replace Alkatiri as its leader _ although it was unclear what authority he had to make such a demand. "Fretilin's leaders want to kill democracy in East Timor," he said.

There have been small protests, with never more than a few hundred people, at the government palace since Tuesday. Thousands more began arriving Thursday night. Some slept on the waterfront road.

A few Australian soldiers with automatic rifles kept the orderly crowd off the government grounds. They are part of a 2,700-member peacekeeping force deployed in the country of 800,000 people.

Dueling political factions have sought to capitalize on recent violence, and some in East Timor have been accused of trying to stir more bloodshed for political gain.

The prime minister's critics allege he formed and armed a hit squad to silence opponents, a claim he vehemently denies.

However, the arrest Thursday of former Interior Minister Rogerio Lobato on charges of providing weapons to the self-proclaimed leader of a hit squad allegedly commissioned by Alkatiri added credibility to the claim.

Lobato was charged with attempted revolution, conspiracy, providing state weapons to civilians, and association with criminals. He faces up to 15 years in prison if convicted.