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FM AMEMBASSY DILI
TO RUEHC/SECSTATE WASHDC IMMEDIATE 3782
INFO RUEHZS/ASSOCIATION OF SOUTHEAST ASIAN NATIONS
RUEHLI/AMEMBASSY LISBON IMMEDIATE 0993
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RHMFIUU/CDR USPACOM HONOLULU HI
RUEHDT/AMEMBASSY DILI 3191

UNCLAS SECTION 01 OF 02 DILI 000379 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EAP/MTS AND INR 
PACOM FOR POLADS -- AMB CHRISTY 
 
E.O. 12958: N/A 
TAGS: PGOV TT
SUBJECT: TIMOR-LESTE: FRETILIN SETTLES INTO OPPOSITION ROLE 
 
DILI 00000379  001.2 OF 002 
 
 
¶1. (SBU) SUMMARY:  FRETILIN's leaders remain optimistic that 
Prime Minister Xanana Gusmao's government will be short-lived. 
FRETILIN is confident that it can undermine Gusmao's coalition 
by frustrating the realization of the government's policy 
objectives and highlighting its lack of governing experience. 
FRETILIN has thus far failed, however, to rally substantial 
public discontent against the government and doubts are growing 
as to its willingness and ability to do so .  END SUMMARY 
 
EYES ON THE PRIZE 
 
¶2. (SBU)  In August 2007, just after the appointment of the 
Gusmao government, former PM Alkitiri told the Ambassador that a 
combination of inexperience and unrealizable public expectations 
would bring the new government by this month, December 2007. 
Although this forecast will be missed, FRETILIN, Timor-Leste's 
largest political party, maintains the dogma that it will 
reclaim control of the state in the near term, while 
conveniently moving the timeframe.  The party now points to 
early 2008, just after the expiration of a constitutional 
requirement that a new parliament not be dissolved within its 
first six months.  FRETILIN parliamentarians, who continue to 
call the new government "illegal and unconstitutional," are 
confident that the government will collapse soon after this six 
month grace period is over in January 2008. 
 
¶3. (SBU)  The FRETILIN's strategy for retaking power continues 
to be to try to foil Gusmao's policy initiatives and highlight 
the coalition's lack of governing capacity.  Arsenio Bano, 
FRETILIN's deputy President, told poloff that his party's 
opposition strategy has benefited from high public expectations 
for the new government.  He noted that Gusmao had "overpromised" 
and thus far failed to gain traction in dealing with the PM's 
stated priorities: relocating the internally displaced persons 
(IDPs) from camps, bringing rebel leader Alfredo Reinado to 
justice, and addressing the demands of the military petitioners, 
a group of several hundred soldiers who resigned from the 
Timorese armed services in early 2006 citing discrimination 
along regional lines.  Until these priorities are met, the 
government is unlikely to make progress in tackling other 
development challenges. 
 
¶4. (SBU)  The strategy makes use of three FRETILIN strengths: 
its size, its heavy representation among the civil service, and 
the identification the party has struck with many of the tens of 
thousand internally displace persons (IDPs) living in camps 
around Dili.  The party controls 21 of 65 seats in parliament. 
In three elections for President and the National Parliament 
earlier this year, it consistently won around 30% of the vote, 
the majority of which came from the eastern districts.  With 
this solid support base in the eastern districts, FRETILIN knows 
that it cannot be excluded from the solution to problems such as 
the IDPs (significantly easterners) and even the petitioners 
(mostly westerners), for whom any solution must not appear 
somehow detrimental to the east.  All indications are that 
Fretilin intends to use this leverage solely for party 
advantage, however, and not to assist in creating durable 
solutions. 
 
¶5. (SBU) FRETILIN's hold on the civil service means that much of 
the country cannot be governed without their support. Reforming 
the civil service is a government intention but will take time 
to accomplish.  Meanwhile, Fretilin is charging that replacing 
even non-performing bureaucrats is tantamount to politicizing 
the bureaucracy.  As examples of the government's difficult 
position, Bano noted a recent controversy surrounding the 
replacement of the head of the Land and Tax office and a much 
disparaged government plan to distribute rice to civil servants 
as a means of increasing their pay (note: in fact, the latter 
largesse was not a government initiative, but was voted into the 
2007 transitional budget by the parliament). 
 
¶6. (SBU) Finally, FRETILIN's success in developing support among 
many IDPs, some of which began flying the FRETILIN flag outside 
of their camps last fall, may give the party a support base it 
can mobilize to block a government program to reintegrate camp 
members into the general populace.  Key camps, some of which 
have become hotbeds for criminal gang activity, are located at 
strategic points, including the airport, port, hospital and 
along the main road connecting Dili with the eastern part of the 
country, including Baucau.  In a pinch, FRETILIN could attempt 
to use its camp supporters to shut down key public services. 
 
PEACEFUL OPPOSITION 
 
DILI 00000379  002.2 OF 002 
 
 
 
¶7. (SBU) While continuing to withhold formal recognition of the 
government, FRETILIN thus far has disavowed violent opposition 
and has attempted to highlight its role as constitutional 
opposition.  According to an Australian poloff, FRETILIN, now 
that it is out of power, has lost the sources of patronage with 
which it has rallied its base in the past, making it difficult 
to arrange large-scale protests in the capital.  Further, the 
party may be hesitant to promote civil disorder outside of their 
eastern stronghold where they lack a secure majority of the 
population. 
 
¶8. (SBU)  In contrast, FRETILIN leaders have gone out of the way 
to show that they are the party that is acting in accordance 
with the constitution.  FRETILIN played a constructive role in 
criticizing and actually making improvements to the government's 
transitional budget, passed in October.  Party spokesman, Harold 
Moucho, told poloff, the party plans to scrutinize the 2008 
budget even more closely.  Moucho noted that as long as the 
government does not tamper with the 2005 Petroleum Fund Law that 
locks up much of the country's natural resource wealth in U.S. 
treasury bonds, or gives amnesty to Reinado, FRETILIN could 
continue to play its opposition role in a peaceful manner. 
 
A COUNTRY STILL DIVIDED 
 
¶9. (SBU) Despite the improving security environment, political 
divisions and personality conflicts among Timor's elite remain 
bitter and have the potential to create instability.  During its 
November 2007 visit to Timor-Leste, the UN Security Council 
found that divergences among the political leadership has 
negatively affected national unity and polticial stability at 
precisely the moment when such qualities are needed to combat 
grave problems such as the IDP, Reinado and the petitioners. 
Nevertheless, Ana Pessoa, a FRETILIN leader and parliamentarian 
suggests elite reconciliation is still possible.  She believes 
that after experiencing the frustration of government, Prime 
Minister Gusmao may open to the idea of political compromise. 
Elite reconciliation would probably be supported among party 
officials that have maintained strong personal relationships. 
Aniceto Guterres, the leader of the FRETILIN bench in 
parliament, admitted that he maintains close ties with leaders 
from his former party in the AMP.  He noted his reservations 
about Alkatiri's personality and leadership style, which he 
described as uncharismatic, and blamed much of the continuing 
crisis on the inflexible positions of the political elite. 
 
¶10. (SBU) COMMENT:  FRETILIN's attitude towards its opposition 
role has evolved from the anger and denial we saw immediately 
following formation of the AMP government in August.  While it 
continues to regard itself as Timor-Leste's natural party of 
government, post believes that it will not resort to 
destabilizing tactics to unseat the coalition in the short term. 
 Instead, FRETILIN's leaders now believe that the AMP cabinet 
will inevitably make missteps, prove itself ineffective, and 
perhaps fall victim to intra-coalition bickering and defections. 
 All this, party leaders hope, will at the very least lead to 
public calls for a FRETILIN comeback, and perhaps result in an 
early collapse of the government.  There's a good deal of 
wishful thinking here.  Past efforts by the party to organize 
legal protest in the capital against the government, once in 
late August and again last month, were complete duds.  Our sense 
is that the Timorese public remains willing to give the 
government an opportunity to resolve key problems, improve the 
delivery of public services and stimulate the economy. 
Government contacts tell us their effort in recent weeks to 
reach out to the Fretilin leadership to develop a joint approach 
to the IDP problem has fallen on deaf ears.  Given the 
volatility of Timor politics, we can't rule a surge of 
discontent should there be a serious government misstep on 
problems such as the IDPs, petitioners or Reinado. 
Regrettably, Fretilin leaders may see a continuation of the 
nation's distress solely through the lens of political 
advantage.  End comment. 
 
¶11. (U)  This report was prepared by TDY Political Officer James 
Schutzer. 
KLEMM