East Timor President Threatens to Resign

East Timor's president on Thursday threatened to resign after the ruling party defied his orders to oust the prime minister, deepening a political crisis in the tiny nation following weeks of bloody street battles.

"Tomorrow I will write a letter to Parliament to inform them that I'm resigning as the president of the republic because I'm embarrassed about all the bad things the state has done to the people," President Xanana Gusmao said in a rambling, 90-minute address to the nation.

Many East Timorese say Prime Minister Mari Alkatiri's decision to fire 600 disgruntled soldiers in March was to blame for clashes and gang warfare in the capital that left at least 30 people dead and sent nearly 150,000 people fleeing their homes.

The violence was the worst to hit the tiny Asian nation since it voted for independence from Indonesia seven years ago, although tensions have eased in recent weeks with the arrival of a 2,700-member foreign peacekeeping force.

Gusmao wrote a letter to Alkatiri on Wednesday, saying he no longer had the trust of the people and demanding he resign or be fired.

That sparked emergency talks between the prime minister and members of his Fretilin party, which controls 55 of the 88 seats in Parliament. They emerged hours later vowing to stand by their beleaguered leader.

CountyWatch: East Timor

"Fretilin reaffirms Dr. Mari Alkatiri as prime minister," said party spokesman Jose Reis, adding that Alkatiri had only recently been re-elected as head of the party and could not be forced from office.

Gusmao immediately accused Fretilin of creating instability and demanded that the party replace Alkatiri as its leader — although it was not clear what authority he had to make such a demand.

"If the situation does not change by early tomorrow morning, I will send an official letter of resignation to Parliament," he said in his address to the nation. "Fretilin's leaders want to kill democracy in East Timor."

Dueling political factions have sought to capitalize on the violence, which pitted rival security forces against one another in the streets of Dili, and some have been accused of trying to stir more bloodshed for political gain.

The prime minister's critics allege he formed a hit squad to silence his opponents, a claim he 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 credence to those allegations.

Lobato was deputy head of Fretilin and a political ally of Alkatiri's.

He was escorted Thursday by Australian troops to court, where he was charged with "attempted revolution, conspiracy, providing state weapons to civilians, and association with criminals," said Prosecutor-General Longuinhos Monteir.

He faces 15 years in prison if convicted.