East Timor leaders begin talks on possible new government

East Timor's Prime Minister Xanana Gusmao delivers his address during the anniversary marking the Santa Cruz massacre in Dili on Nov 12, 2014. The former guerrilla leader is meeting the President this week to discuss a possible government restru
East Timor's Prime Minister Xanana Gusmao delivers his address during the anniversary marking the Santa Cruz massacre in Dili on Nov 12, 2014. The former guerrilla leader is meeting the President this week to discuss a possible government restructuring, sending perhaps the strongest signal yet that the independence hero wants to step down. -- PHOTO: AFP

DILI (REUTERS) - East Timor's Prime Minister Xanana Gusmao is meeting the President this week to discuss a possible government restructuring, sending perhaps the strongest signal yet that the independence hero wants to step down.

Mr Gusmao, 68, a guerrilla leader who helped end Indonesian rule in 2002, has hinted for more than a year that he would resign to let a younger generation lead a nation that ranks among the world's poorest, despite its abundant gas resources.

"From the signals we can read, I think it looks right now that the Prime Minister is more serious then ever about stepping down," said Mr Cillian Nolan, deputy director of a Jakarta-based think-tank, the Institute for Policy Analysis of Conflict.

The Sydney Morning Herald reported last week that Mr Gusmao had informed colleagues he would step down within days.

The government on Monday said the two leaders would meet throughout this week on a possible new government, but did not comment on Mr Gusmao's political future.

"Prime Minister Gusmao has foreshadowed a major restructuring of the government for some time," a government spokesman said in a statement.

"He said the objective of the change is to produce an executive that is efficient and effective."

Mr Gusmao became prime minister in May 2007 after serving as the country's first post-independence president for five years.

Experts say front runners to replace him include former health minister Rui Araujo and State Minister Agio Pereira.

It was not clear what role, if any, former president and Nobel Peace Prize winner Jose Ramos-Horta would play in a new government.

East Timor has struggled to develop economically since independence. Despite gas production worth billions of dollars, around half of the country's population of 1.2 million lives in poverty, the World Bank says.

East Timor is trying to develop more of its natural resources to boost employment and government revenue.

It is in talks with Australia's Woodside Petroleum to resolve a decades-long row over the Greater Sunrise project, which remains undeveloped 40 years after the gas fields were discovered.