VZCZCXRO5567
OO RUEHCHI RUEHNH RUEHPB
DE RUEHDT #0357/01 1921512
ZNY SSSSS ZZH
O P 111512Z JUL 06
FM AMEMBASSY DILI
TO RUEHC/SECSTATE WASHDC IMMEDIATE 2781
INFO RUCNARF/ASEAN REGIONAL FORUM COLLECTIVE
RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DC
RHHMUNA/HQ USPACOM HONOLULU HI
RUEHBR/AMEMBASSY BRASILIA PRIORITY 0321
RUEHBY/AMEMBASSY CANBERRA PRIORITY 0670
RUEHLI/AMEMBASSY LISBON PRIORITY 0588
RUEHLO/AMEMBASSY LONDON PRIORITY 0429
RUEHKO/AMEMBASSY TOKYO PRIORITY 0451
RUEHWL/AMEMBASSY WELLINGTON PRIORITY 0527
RUCNDT/USMISSION USUN NEW YORK PRIORITY 0597
RUEHDT/AMEMBASSY DILI 2107

S E C R E T SECTION 01 OF 03 DILI 000357 
 
SIPDIS 
 
SIPDIS 
DEPT FOR EAP/MTS,INL 
PACOM FOR POLAD AND JOC 
 
E.O. 12958: DECL:  7/11/2016 
TAGS: PREL PGOV PREF KJUS KCRM KDEM PINR TT
SUBJECT: PRESIDENT GUSMAO SAYS RAMOS-HORTA WILL LEAD A REFORM 
GOVERNMENT 
 
REF: (A) DILI 355; (B) DILI 356 
 
DILI 00000357  001.2 OF 003 
 
 
CLASSIFIED BY: Grover Joseph Rees, Ambassador, U.S. Embassy 
Dili, Department of State. 
REASON: 1.4 (b), (d) 
 
 
 
¶1. (C) Summary:  Ambassador met today with President Xanana 
Gusmao, who gave a detailed account of the negotiations that led 
up to the appointment of the new Government that was sworn in 
today.  The President also expressed his confidence that Prime 
Minister Jose Ramos-Horta will lead a reform government, 
listening respectfully to the recommendations of the Fretilin 
party leadership but following his own instincts on election law 
and anticorruption efforts.  Gusmao dismissed speculation that 
Fretilin insider and new First Deputy Prime Minister Estanislau 
Da Silva would dominate the new government, stating that 
reform-minded Second Deputy Prime Minister Rui Araujo would be 
responsible for all areas that were the focus of corruption 
allegations under the government of former Prime Minister Mari 
Alkatiri.  The President said he will address the nation today 
to set forth what he regards as urgent priorities for the new 
government.  The President also said it will be necessary to get 
at least some Timorese police (PNTL) officers back on the 
streets in Dili in order to create security conditions that will 
allow internally displaced persons (IDPs) to return to their 
homes.  Finally, President Gusmao suggested that former Prime 
Minister Alkatiri is more likely to be convicted of serious 
crimes if Timorese prosecutors wait until the conclusion of the 
impending international investigation, which Gusmao expects to 
produce new evidence of criminal activity by Alkatiri and other 
Fretilin leaders.  End summary. 
 
Negotiations with Fretilin 
-------------------------- 
 
2.(C)  Ambassador Rees met today, July 11, with President 
Gusmao, who expressed optimism about the new Government he swore 
in yesterday.  Gusmao said his negotiations with four Fretilin 
leaders over the shape of a new government had gone quickly --- 
see Reftels --- because he managed to convice them that it would 
not be to their advantage to push him too far.  The President 
said that on several occasions when the Fretilin delegation had 
put forth an unacceptable demand, "I kept telling them I would 
dissolve Parliament" if they did not show some flexibility. 
 
¶3. (C) Gusmao's account of the negotiations was somewhat 
different and more elaborate than press accounts, which 
indicated that Fretilin had simply proposed him three names from 
which he chose Ramos-Horta.  According to Gusmao, the Fretilin 
delegation led by Estanislau Da Silva first proposed a slate led 
by Da Silva himself for Prime Minister, with Ramos-Horta and 
Fretilin insider Antoninho Bianco for deputy prime ministers. 
Gusmao did not react to this proposal --- which the delegation 
surely knew would not be acceptable to him --- but instead took 
notes, declared the meeting at an end, and said he would have to 
take time to consider the proposal.  The Fretilin leaders then 
suggested a variation that was even less acceptable to the 
President:  Bianco for Prime Minister, with Da Silva for First 
Deputy and Ramos-Horta as Second Deputy.  Gusmao again reacted 
by saying he would take their proposal under consideration. 
Fretilin then proposed their third-choice package with 
Ramos-Horta for Prime Minister and the other two as deputies. 
Gusmao now indicated that they were finally getting somewhere, 
but asked about the possibility of Dr. Rui Araujo, the highly 
regarded Minister of Health in the Alkatiri government, in place 
of Bianco.  They said they had checked with Araujo and he was 
unavailable.  The President then suggested they adjourn the 
meeting until the following day. 
 
¶4. (C) According to Gusmao, he himself then called Dr. Araujo, 
who said he would be honored to serve as one of the Deputy Prime 
Ministers.  When the meeting reconvened on Saturday afternoon, 
Gusmao confronted the Fretilin delegation with this new 
information and re-urged his suggestion of Ramos-Horta, Da 
Silva, and Araujo.  The Fretilin delegation responded by asking 
him to explain what was wrong with Bianco, as well as why he did 
not want Da Silva (who was in the room) for Prime Minister. 
According to the President, he reminded them again that he could 
always dissolve Parliament and call early elections, and they 
 
DILI 00000357  002.2 OF 003 
 
 
finally agreed to his preferred slate. 
 
¶5. (C) The President said that the Fretilin leaders displayed no 
embarrassment about suggesting a government composed almost 
entirely of members of their own inner circle --- essentially 
the Alkatiri government without Alkatiri --- and seem to regard 
him as unreasonable for suggesting alternatives.  He indicated 
that he had written in his notes of the Friday meeting, "They 
are not aware of the crisis." 
 
¶6. (C) President Gusmao indicated that the idea of having a 
Prime Minister and two Deputy Prime Ministers had been his own 
idea, because Ramos-Horta, while a good leader, is not a good 
administrator.  He said that in the new Government Ramos-Horta 
will directly supervise the ministries of Foreign Affairs, 
Defense, and Interior as well as a commission on national 
reconciliation.  Dr. Araujo will supervise the Ministry of 
Finance --- including government procurement and the customs 
service, which has been the target of numerous corruption 
allegations --- as well as public grants and other areas that 
need to be made or kept transparent and noncorrupt.  Da Silva 
will be in charge of implementing the national development plan 
and preparing laws, codes, and regulations (including a civil 
service law and regulations governing the police and the 
military) that the Alkatiri government neglected to enact.  But 
the final decision on the content of these laws will be 
Ramos-Horta's, and Gusmao said he expects to consult frequently 
on these matters with Ramos-Horta.  Gusmao said he will allow 
the "declaration of crisis", under which he assumed authority 
over security and defense, to lapse later this month so as to 
normalize the situation, but that he will continue to work 
closely with Ramos-Horta on these areas. 
 
¶7. (S) (Please strictly protect): Commenting on Minister of 
Labor Arsenio Bano, an Alkatiri ally who is regarded as capable 
and moderate and who had been mentioned as a possible deputy 
prime minister, Gusmao said that "Arsenio deceived us.  When he 
worked in civil society, he was a wonderful guy.  But when he 
became a Minister he behaved very badly."  The President said 
Bano, who is in charge of distributing internationally-donated 
food in IDP camps, had distributed some of the food to 
participants in the recent pro-Alkatiri demonstrators. 
 
¶8. (C) The President acknowledged that by agreeing to a 
government that can serve through the 2007 elections, he has 
lost the leverage he had to force Fretilin to hold a new party 
Congress at which its leaders would be elected by secret ballot 
as required by law.  See Ref A and refs therein.  However, he 
expressed confidence that the courts would rule in favor of a 
legal challenge to the May Congress that has been filed by 
Ambassador Jose Luis Guterres, who was unsuccessful in his 
challenge to Alkatiri for Fretilin's top post after the Congress 
voted to ignore the secret ballot requirement. 
 
Ramos-Horta will be a reform Prime Minister 
--------------------------- 
 
¶9. (C) Asked about the tension between Ramos-Horta's ambitious 
program of open governance, anticorruption, and election reform 
and his promise to consult closely with the Fretilin political 
committee (see Ref A), Gusmao expressed confidence that 
Ramos-Horta would be guided by his own principles rather than by 
the desires of Fretilin leaders.  He said "he will talk with 
Alkatiri, but he will not give in to him.  That's not the kind 
of Prime Minister he wants to be, and it's not the image he 
wants to have."  Gusmao pointed out that Ramos-Horta had 
announced soon after his swearing-in that he will revise the 
draft Penal Code to eliminate the criminal defamation provision 
that had been a pet project of Alkatiri's. 
 
More police necessary for IDPs to return home? 
------------------------------- 
 
¶10. (C) The President said he had chosen not to give a speech at 
yesterday's swearing-in ceremony because he did not want to 
distract attention from Ramos-Horta's address.  Instead, Gusmao 
will give his own address to the nation today outlining 
priorities for the new Government.  Chief among these would be 
creating security conditions under which the many thousands of 
IDPs in church facilities and elsewhere can be persuaded that it 
 
DILI 00000357  003.2 OF 003 
 
 
is safe to return home. 
 
¶11. (C) Echoing previous statements by Ramos-Horta, the 
President said that as soon as this weekend the government 
should select a few neighborhoods that have not been too badly 
damaged by the recent violence.  International police should be 
joined by "Timorese police, the village chiefs, and youth 
organizations" in providing the pervasive security presence that 
will be necessary to convince residents of these neighborhoods 
to return to their homes.  The President acknowledged a 
difference of opinion with international police officials, who 
he said are currently of the view that no PNTL officers should 
be returned to duty in Dili until the conclusion of a lengthy 
vetting and/or retraining process that has yet to begin.  He 
said these officials may have a "misperception" that PNTL 
officers were involved in widespread violence in Dili during 
April and May.  He said only a few PNTL members had committed 
violent acts --- primarily those from eastern districts who 
joined armed FDTL groups on May 23rd through May 25th, as well 
as a group headed by former deputy district commander Abilio 
Mesquita that had committed various crimes including an attack 
on the home of FDTL commander General Taur Matan Ruak --- and 
that these officers are no longer in Dili.  (Note: Mesquita has 
been arrested and is in detention, while all or almost all of 
the PNTL members who joined with FDTL are reportedly now located 
in FDTL facilities in Metinaro and elsewhere.)  Gusmao also said 
that if a police officer who was guilty of brutality or 
corruption was returned to the streets, members of the community 
would not hesitate to complain.  Gusmao said he hoped to sit 
down with international police officials soon to discuss this 
issue and that he "must" convince them, because in his view the 
international police presence alone will be insufficient to 
restore law and order to the neighborhoods so that it will be 
safe for IDPs to return. 
 
Criminal proceedings against Alkatiri 
 
¶12. (S) Asked what he thought would happen in the criminal 
investigation into charges that Alkatiri had distributed arms to 
Fretilin insiders with instructions to kill government 
opponents, Gusmao said the proceeding was going slower than 
expected but that this might be a good thing, since the 
allegations that are currently well-documented enough to serve 
as the basis for criminal charges are only the tip of the 
iceberg.  If Alkatiri were formally charged now, he might be 
able to persuade the court that he distributed weapons "only to 
protect people, not to kill."  But the President predicted that 
the international commission of inquiry, whose staff have 
recently begun to arrive in Dili, would find new evidence of 
similar activities by Alkatiri involving other armed groups.  He 
also hoped that by putting together a comprehensive picture of 
what happened at key times during the security crisis, the 
international commission's report would make clear that 
Alkatiri, by encouraging General Matan Ruak to launch an FDTL 
attack on PNTL officers in Dili on May 25, was complicit in the 
killings of unarmed police officers that day.  Finally, Gusmao 
said that renegade police officer Abilio Mesquita (see paragraph 
11) had met with Alkatiri and received several thousand dollars 
from Alkatiri's brother shortly before he was arrested, possibly 
in exchange for agreeing to kill ex-guerrilla leader Railos, the 
principal complainant in the criminal case against Alkatiri. 
The President said he now believes Mesquita's May 23 attack on 
General Matan Ruak's house may have been instigated by former 
Minister of the Interior Rogerio Lobato, possibly with the 
complicity of Alkatiri,  to create a pretext for the May 25 FDTL 
attack on police officers and installations. 
 
¶13. (U) Comment:  During today's meeting the President appeared 
calm, focused, and happier than he has been in months.  He is 
optimistic that the new Government will make a difference. 
Although the President sometimes differs with Ramos-Horta on 
matters of style and substance, he trusts him, and he expects to 
serve as the new Prime Minister's principal advisor and 
collaborator.  End comment. 
REES