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C O N F I D E N T I A L SECTION 01 OF 04 DILI 000355 
 
SIPDIS 
 
SIPDIS 
DEPT FOR EAP/MTS, DS, CA 
PACOM FOR POLAD AND JOC 
NSC FOR HOLLY MORROW 
USUN FOR GORDON OLSON AND RICHARD MCCURRY 
 
E.O. 12958: DECL:  7/10/2016 
TAGS: PGOV PHUM KDEM PREL MOPS TT
SUBJECT: RAMOS-HORTA BECOMES PRIME MINISTER IN NEW FRETILIN 
GOVERNMENT 
 
REF: (A) DILI 224; (B) DILI 231; (C) DILI 239; (D) DILI 243; (E) DILI 316; (F) 
DILI 327; (G) DILI 334; (H) DILI 352 
 
DILI 00000355  001.2 OF 004 
 
 
CLASSIFIED BY: Grover Joseph Rees, Ambassador, U.S. Embassy 
Dili, Department of State. 
REASON: 1.4 (b), (d) 
 
 
 
(1) (C) Summary:  President Xanana Gusmao announced on July 8 
his appointment of Jose Ramos-Horta as Prime Minister. 
Ramos-Horta's name was put forward by leaders of the ruling 
Fretilin party on condition that President Gusmao also appoint 
two Deputy Prime Ministers.  Fretilin leaders initially insisted 
that both Deputies be members of their own inner circle, but 
they and Gusmao eventually reached agreement on Minister of 
Agriculture Estanislau Da Silva and Minister of Health Rui de 
Araujo.  Da Silva is a Fretilin insider and close ally of former 
Prime Minister Mari Alkatiri while Dr. Araujo, like Ramos-Horta, 
is regarded as an independent and a reformer.  Ramos-Horta and 
the two Deputies were sworn in today by President Gusmao.  In 
his acceptance speech Ramos-Horta acknowledged that an early 
test for the new government will be whether it can create 
conditions under which the many thousands of internally 
displaced persons (IDPs) will be persuaded that it is safe to 
return to their homes.  He also promised to root out corruption, 
mismanagement, and abuses by security forces --- practices that 
most Timorese associate with the previous government --- and to 
work closely with the Catholic Church and others whom the 
Alkatiri government had alienated.  He also emphasized, however, 
that as the leader of a Fretilin government he will consult 
regularly with Fretilin leaders, including Alkatiri, on  policy 
matters.  Ramos-Horta's speech included effusive praise for 
Alkatiri, who faces serious charges that could include 
conspiracy to murder, and who announced today that he will drop 
his attempt to assert Parliamentary immunity.    The remaining 
members of the new Cabinet will be announced within the next few 
days and are expected to consist primarily of reappointments 
from the former government. Ramos-Horta's appointment was 
greeted enthusiastically by almost everyone in East Timor, but 
many expressed doubts about whether he will be able to satisfy 
both the Fretilin leadership and the general population.  The 
inauguration of the new government puts an end, at least for 
now, to the President's plans to dissolve the Fretilin-dominated 
Parliament and call early elections.  End Summary. 
 
Compromise leadership includes two independents and one Fretilin 
insider 
--------------------------------------------- -------------- 
--------------- 
 
(2) (U) On Saturday, July 8, President Gusmao announced his 
appointment of former Foreign/Defense Minister and 1996 Nobel 
Peace Prize winner Jose Ramos-Horta as Prime Minister.  The 
President also announced the appointment of Minister of 
Agriculture Estanislau Da Silva as "First Deputy Prime Minister" 
and of Minister of Health Rui de Araujo as "Second Deputy Prime 
Minister." 
 
(3) (C) East Timor's constitution provides that the Prime 
Minister shall be nominated by the party or coalition that 
controls a majority in Parliament.  The President then consults 
with other parties in Parliament and decides whether to appoint 
the ruling party's nominee.  The process of choosing a successor 
to former Prime Minister Mari Alkatiri, who resigned on June 26, 
had been complicated by the President's belief that the Fretilin 
Party currently has no legally elected leaders and by his 
reluctance to deal with Alkatiri, who remains Secretary General 
of Fretilin.  See Reftels.  The President finally met on Friday, 
July 7, with a delegation of Fretilin leaders that did not 
include Alkatiri.  They proposed a slate of three persons, on 
the condition that the President could choose one of the three 
for Prime Minister and designate the other two as Deputy Prime 
Ministers with broad power over significant areas of Government. 
 The three names they proposed  were Ramos-Horta, a non-Fretilin 
member of Alkatiri's cabinet whom the Fretilin leaders knew to 
 
DILI 00000355  002.2 OF 004 
 
 
be the President's choice for Prime Minister; Da Silva, a 
capable cabinet minister who is also a leading member of 
Alkatiri's "Mozambique group"; and Antoninho Bianco, a less 
distinguished member of the Mozambique group.  The President 
reportedly counterproposed Dr. Araujo, a capable and popular 
Minister who like Ramos-Horta is not a member of Fretilin, and 
Minister of Labor Arsenio Bano, an Alkatiri associate who is 
regarded as a moderate, for the two Deputy Prime Minister 
positions.  The Friday meeting ended with no agreement but 
resumed on Saturday, when the two sides reached the compromise 
of Ramos-Horta, Da Silva, and Araujo.  The compromise includes 
the designation of Da Silva as "first" of the two Deputies, but 
sources close to Ramos-Horta indicate that both deputies will 
report to the Prime Minister who will retain ultimate authority 
over all ministries. 
 
(4) (C) Da Silva is a bright and engaging man who is generally 
regarded as having been a capable Minister of Agriculture.  He 
speaks good English and has worked closely with the Embassy and 
USAID on numerous projects.  However, a number of the Alkatiri 
government's many critics have expressed dismay at his prominent 
role in the new government, characterizing him as a "radical" 
member of Alkatiri's tiny inner circle of ex-Mozambique exiles. 
As chair of the Fretilin Congress in May, Da Silva presided over 
the controversial decision to ignore the statutory requirement 
of a secret ballot for the election of party leaders, which 
guaranteed Alkatiri's re-election over reformist challenger Jose 
Luis Guterres.  See Refs A-D.  During the run-up to Alkatiri's 
resignation in June, there were reports that the former Prime 
Minister had offered to resign if and only if the President 
would agree to appoint Da Silva as his replacement. 
 
(5) (U) Dr. Araujo is a non-Fretilin member who is generally 
regarded as a reformer.  A medical doctor trained in New 
Zealand, he was perhaps the most highly regarded Minister in the 
former Government, not only for his intelligence and sincerity 
but also for his technical and managerial skills.  Like Da 
Silva, he speaks good English and has a good relationship with 
the Embassy and USAID.  Like Prime Minister Ramos-Horta, Dr. 
Araujo is well-liked by critics of the former Government 
including President Gusmao, opposition party leaders, and 
Catholic Church officials. 
 
Ramos-Horta promises reconciliation and sweeping reform, but 
will work with Fretilin 
--------------------------------------------- -------------- 
-------------------------- 
 
(6) (U) The new Prime Minister and his two deputies were sworn 
in this morning by President Gusmao in a ceremony at the 
President's "Palace of Ashes."  The small group of attendees 
included officials of the former Government (but not Alkatiri), 
parliamentary leaders from Fretilin and opposition parties, 
heads of diplomatic missions, and the Timorese and international 
news media.  The ceremony consisted of the President's 
administration of the oath of office to each of the three new 
leaders and then a speech by Ramos-Horta delivered in each of 
the two national languages, Portuguese and Tetum. 
 
(7) (U) Ramos-Horta's speech included admissions of important 
failures by the former Government in which he served and 
promises to do better: "We failed in the area of internal 
security, we failed in the dialogue with the people, we stand 
accused of insensitivity and arrogance, and corruption started 
to invade institutions of the state.  We say that we want 
foreign investment . . . . [but created] a bureaucratic 
stranglehold that undermines our best intentions . . . ."  He 
promised to attack corruption by enhancing the transparency of 
government procurement and other processes, to simplify 
government bureaucracy "immediately" so that it does not deter 
private enterprise, to alleviate poverty, and to address the 
problems in the military (FDTL) and police (PNTL) that 
contributed to the political and security crisis.  He also 
promised reconciliation with groups and institutions that had 
 
DILI 00000355  003.2 OF 004 
 
 
been alienated by the Alkatiri government, in particular with 
the Catholic Church, "the only continuous solid institution" in 
Timorese life, which "must be venerated and called once again to 
partnership with our young State, help us get out of this 
crisis, heal the wounds, . . . [and] assume a bigger role in 
education and in the human development of our people and the 
fight against poverty."  He praised the Church's work in caring 
for IDPs, and added that among his government's first tasks 
would be to create security conditions in which the IDPs would 
feel safe in returning to their homes. 
 
(8) (U) Dr. Ramos-Horta also emphasized, however, that he is now 
the head of a Fretilin government and that he will work with 
Fretilin.  He said he will have monthly meetings with the 
party's "National Political Committee" (frequently referred to 
by friends and foes as the "Politburo") and weekly meetings with 
Alkatiri and Francisco "Lu'Olo" Guterres, President of Fretilin 
and also of the National Parliament, to consult on questions of 
policy and governance. Although Ramos-Horta has confided to 
associates that he intends to be an independent leader who will 
reach out to all segments of society including the political 
opposition, a Fretilin insider told Emboff yesterday that the 
party regards Ramos-Horta as "bound to implement Fretilin 
programs." 
 
Ramos-Horta praises Alkatiri, soon to be questioned as a 
"suspect" 
--------------------------------------------- ---------- 
 
(9) (U) Ramos-Horta's address included several passages of 
effusive praise for Alkatiri, whom he called "my brother and 
friend from my youth" whose decisions were "always guided by 
prudence and loyalty to the people whom he really loves." 
 
(10) (C) In what may be a related development, Alkatiri sent a 
letter to the Parliament today reversing, at least for the time 
being, his earlier assertion of Parliamentary immunity from 
prosecution in connection with an ongoing investigation into 
charges that he authorized the arming of a "hit squad."  See Ref 
¶G.  Alkatiri's letter said he would defer his assumption of 
membership in Parliament until after July 20, when he has been 
ordered to appear for questioning in the case.  Although a 
former order had designated Alkatiri as a "witness" in the case, 
the latest order indicates that he is a "suspect."  The July 20 
hearing could result in Alkatiri's immediate arrest, although 
sources close to the case indicate that Ramos-Horta may have 
been urging prosecutors not to proceed with the charges against 
Alkatiri, at least until after the report of the United Nations 
commission of inquiry into the violence committed in East Timor 
during April and May.  Ramos-Horta's swearing-in speech also 
included a respectful mention of the commission of inquiry. 
 
Remaining cabinet members to be named soon 
---------------------------------- 
 
(11) (U) The remaining cabinet members will reportedly be named 
soon, perhaps this week.  Ramos-Horta has stated that he does 
not intend to make major changes in the Alkatiri cabinet, 
although he would like it to be smaller than its current 41 
members.  There are unconfirmed reports that he will appoint 
current Ambassador to China (and former Vice Foreign Minister) 
Olimpio Branco or current Ambassador to Australia Hernani Coelho 
as the next Foreign Minister, and that independent Minister of 
Education Armindo Maia may be replaced by Rosalia Cortereal, the 
current Vice Minister.  Da Silva will reportedly retain his 
Agriculture portfolio and Dr. Araujo will reportedly retain 
Health.  Ramos-Horta met yesterday with the Fretilin political 
committee to discuss the composition of the cabinet. 
 
Timorese greet new Government with cautious enthusiasm 
-------------------------------------- 
 
(12) (C)  Ramos-Horta's appointment was greeted enthusiastically 
by almost everyone in East Timor.  He appears to be well-liked 
 
DILI 00000355  004.2 OF 004 
 
 
by most elites, including those who do not particularly like 
each other, and even more popular with ordinary citizens.  Many 
have cited his appointment as an important step toward giving 
people the confidence in government that will persuade them to 
return to their homes and go back to their normal lives. 
Opposition members and Church officials were particularly happy 
with the appointment, although some expressed reservations about 
whether anything would really change with Da Silva as First 
Deputy Prime Minister and other Alkatiri associates in key 
ministries.  As Bishop Basilio Nascimento of Baucau told 
Ambassador, "today was a positive development that will reduce 
tension," but "this may not be the end of the problem.  It may 
be the beginning of a new problem," since Fretilin leaders 
"still don't recognize that they have done wrong." 
 
Comment 
------------ 
 
(13) (C) Ramos-Horta is a talented, energetic, likeable man who 
sincerely wants to make East Timor a mature and participatory 
democracy governed by the rule of law.  This makes him an 
enormous improvement over the former Prime Minister, whose many 
good qualities were no match for his love of power and his 
belief that power rightfully belonged to him.  If Ramos-Horta 
has a tragic flaw, it is the opposite of Alkatiri's:  he likes 
to be liked, he himself sometimes likes and trusts people he 
shouldn't, and he believes implicitly that everything can be 
worked out.  As his close friend Bishop Nascimento puts it, 
"Ramos-Horta is a negotiator.  His instinct is to equilibrate 
between Almighty God and the Devil.  This sets bad precedents." 
Ramos-Horta will have to make some hard choices during the next 
few months:  he wants to end corruption in government 
procurement, but most reports of such corruption involve the 
Fretilin leadership with whom he has pledged to consult 
regularly.  He wants free and fair elections either administered 
or supervised by the United Natons, but the Fretilin leadership 
(including Ramos-Horta's ex-wife, Minister of State 
Administration Ana Pessoa, whom Ramos-Horta still holds in high 
regard) have vigorously opposed this.  He endorses the 
international investigation into the April-May violence, but 
such an investigation will quite possibly implicate Fretilin 
leaders and senior FDTL officers in serious crimes. 
Ramos-Horta's instincts on the substance of all these issues are 
shared by President Gusmao, by the Church and other civil 
society institutions, and apparently by a substantial majority 
of ordinary Timorese including many who identify themselves as 
Fretilin supporters.  But these instincts are clearly at odds 
with the views and interests of the Fretilin inner circle who 
will occupy most positions in his government and with whom he 
has promised to consult closely.  Ramos-Horta may find himself 
faced sooner rather than later with the difficulty of serving 
two masters. 
 
(14) (C) The swearing-in of the new Government puts an end, at 
least for now, to President Gusmao's plan to dissolve Parliament 
and call early elections.  If all goes even minimally well, this 
Government will serve until the expiration of Parliament's term 
in May 2007.  If, however, the political/security crisis should 
recur, or if Ramos-Horta and the Fretilin leadership should have 
differences that result in the Fretilin-dominated Parliament 
failing to pass key elements of the Government's program, the 
President would retain the constitutional power to dissolve 
Parliament when necessary to resolve a "grave institutional 
crisis."  The effect of such dissolution would probably be to 
leave Ramos-Horta --- together with whatever cabinet members he 
and the President decided to retain --- in office as a caretaker 
government until the spring elections.  End Comment. 
REES