In 2002, East Timor was welcomed by the international community as its newest member, in the hope that the country would be able to make a clean break from its tortuous past, turn over a new leaf and function normally. But such high hopes proved to be short-lived.

Independent East Timor inherited more than its fair share of seemingly intractable problems stemming from the brutal 1976 Indonesian annexation and subsequent occupation. The legacy of Indonesian rule was about 200,000 East Timorese dead and a festering ethnic conflict.

In the latest flare-up, East Timor was plunged into chaos by armed gangs roaming the streets of the capital, Dili - looting, burning houses and committing ethnic violence while rival factions within the disintegrating police force and army were too busy engaging in sporadic fighting of their own.

The national leadership is also in disarray. Prime Minister Mari Alkatiri is estranged from President Xanana Gusmao and Foreign Minister Jose Ramos-Horta.

The current crisis can be attributed to Alkatiri's March decision to sack more than a third of the army for insubordination. This was after soldiers from the western portion of the country went on strike over allegations he was biased in favour of soldiers from the eastern part, who had reportedly received most of the promotions.

Alkatiri's tough action ignited a rebellion that led to a breakdown in law and order, with scores killed, thousands fleeing their homes in panic and many others seeking shelter in refugee camps.

Alkatiri's Fretilin Party won 58 per cent of the vote in the country's first elections in 2001, and he has substantial backing in the eastern part of the country.

Gusmao, who has since taken over national defence and security responsibilities from the beleaguered Alkatiri, appealed for foreign troops to help restore peace. An advance force of 1,000 Australians, 220 Malaysians and 160 New Zealanders has so far been unable to wrest control from marauding armed groups that are terrorising people.

More than 2,000 foreign troops are expected to be dispatched to East Timor early this week, including a small contingent from Portugal. Their first priority is to secure Dili, but it is still not clear whether they will be prepared to employ lethal force, which may be necessary to disarm the armed gangs. Already, Australia has suggested UN involvement may be sought if the coalition force it leads found the situation beyond its peacekeeping capabilities.

Gusmao and Ramos-Horta have called on the unpopular Alkatiri to step down, but he has refused. Alkatiri has accused both the president and the foreign minister of inciting violence to force his resignation. This already-tense situation could escalate into full civil war.

Last week, UN Secretary-General Kofi Annan appointed a special envoy to East Timor to find a way out of the political deadlock and broker peace.

The problem is that any solution to this political impasse may call for Alkatiri's removal from power. An alternative, less-drastic move would require him to rein in his autocratic tendencies and come to the negotiating table, in order to discuss the possibility of reinstating most of the soldiers he sacked and addressing the grievances that led to the rebellion in the first place.

Bringing back some semblance of stability to East Timor is the first step. But with public confidence in Alkatiri's government eroding, any return of peace could be temporary. Perhaps the general election scheduled for next May could be moved up, in order to let the East Timorese decide whom to give the mandate to rule.