INVESTIGATIONS are under way after members of the Australian-led military
stabilisation force in East Timor and Timorese soldiers accidentally
exchanged fire during an altercation in the capital, Dili, as tensions rose
ahead of legislative elections on Saturday.

The international soldiers, believing they were being attacked after
hearing shots from East Timorese soldiers also trying to control a
rock-throwing crowd on Sunday night, let loose a number of warning rounds.

"It was both the ISF (International Stabilisation Force) and F-FDTL
(East Timorese military) doing their normal legitimate jobs, but due to the
disturbance of a large crowd and the static positioning of the two units,
the incident occurred," military spokesman Squadron Leader Ivan
Benitez-Aguirre said.

"Basically they came from one end and we came from the other, and
shots were fired."

Separate investigations are being carried out by the Australian and
Timorese militaries, and by East Timor's UN police force.

The incident came as Prime Minister Estanislau da Silva handed down a
long-awaited report on flaws besetting the country's military, after
internal fighting last year between the armed forces and police.

The study, by a senior group of politicians, civilians and military
figures known as the Commission of Notables, was launched last year to
address the crisis posed by a group of around 600 soldiers who had gone on
strike. The group, referred to as "the petitioners" for their
complaints over poor pay and ethnic-based discrimination, was eventually
sacked as the crisis erupted in full-scale violence, with dozens killed.

Aimed squarely at improving discipline levels in the F-FDTL, it is
separate to a speculative defence white paper released late last year, which
proposed attack helicopters and a missile-equipped naval fleet. Those
proposals are understood to have generally been dropped.

Mr da Silva warned that the petitioners' issues should not be confused
with those of rebel former military policeman Alfredo Alves Reinado, whom
the Australian-led military have been hunting for several months.

The hunt was called off last week on condition that dialogue with the
renegade begin. Major Reinado has so far not begun talks, citing safety
concerns.

The man Major Reinado has blamed for his troubles, former president
Xanana Gusmao, yesterday hosted the final rally for his political party,
CNRT, ahead of Saturday's election.

Mr Gusmao, who hopes to be prime minister if his party wins, is relying
on the country's 520,000 voters to remember him as a hero of the 24-year
anti-Indonesian resistance.

His chief opponent will be former prime minister Mari Alkatiri, who
yesterday celebrated the anniversary of his ouster by opening bottles of
champagne.

He said he would accept the result if Fretilin lost on Saturday -- a
likely result, after his party's poor showing against Nobel Peace Prize
laureate Jose Ramos Horta in April presidential polls.