STEVE INSKEEP, host:

From NPR News, it's MORNING EDITION. I'm Steve Inskeep. Good morning.

We're going to follow up now, on several days of looting and arson by rampaging gangs in the capital of East Timor. This is the worst violence to the hit the world's youngest nation since it got its independence from Indonesia seven years ago.

Earlier this week, East Timor's president assumed emergency powers, and today he urged the country's feuding security forces to work toward national unity.

NPR's Michael Sullivan is in the capital, Dili. And, Michael, what's the situation now?

MICHAEL SULLIVAN reporting:

Things are a little better today, Steve, in many ways. But in some other ways, they're not a whole lot better at all.

It's better that the gangs - they've been terrorizing the people here, on and off for about a week now - they're no longer around on the streets like they were before. They've pretty much disappeared. And I think that's due, in large part, to the presence of the Australian peacekeepers, and some Malaysian and New Zealand peacekeepers, as well.

So there's less looting now, as well, and there are more ordinary people on the streets. But several more houses were set on fire today. The peacekeeping forces can't be in every place at once. And some of these criminal elements, I think, you know, they just wait for the Australian troops to go by. Then they come, they light the houses on fire, and then they leave before the Australian troops can come back again.

But I think the peacekeepers are definitely having a positive effect. And I think President Gusmao's announcement on Tuesday night, that he was assuming these emergency powers, I think that probably had a calming effect as well.

INSKEEP: We mentioned feuding between different security forces. How have they aggravated the situation?

SULLIVAN: Well, they aggravated the situation, in that there were open gunfights in the city last week. Now those security forces have now withdrawn, the rebels have withdrawn and the security forces have been sent to their barracks. So, they're no longer on the streets now. All the peacekeepers have to do - all they have to worry about right now - are these gangs.

INSKEEP: You mean you have to get the security forces off the street in order to get more security? That maybe doesn't speak very well for the government at the moment.

SULLIVAN: It's a very fluid security situation, right now. Yeah.

INSKEEP: Now, their trouble is aggravated here, as I understand, by a power struggle between the president and prime minister. How did this all get started?

SULLIVAN: Well, I mean, they're two different things. I mean, it all got started - ostensibly at least, on the face of it - with the government's decision, back in March, to sack about 600 soldiers - that's just under half the army - for insubordination. They didn't like that too much, and things kind of unraveled from there. I mean, they culminated in these clashes we saw last week, between the government security forces and the rebels. And after that ended, then the whole thing just sort of developed a life of its own. And you saw these gangs on the streets - not at all clear where they came from, or who they support. But the power struggle thing, I think that's definitely becoming a problem, because there seems to be a power struggle between the president, Xanana Gusmao, and the prime minister, Mari Alkatiri.

Now, Alkatiri is in theory the one in charge of running the government, on a day-to-day basis. But Xanana Gusmao, the president, he's a hero of the resistance against the Indonesians; he spent several years in Indonesian prisons; and while it's a largely ceremonial post, until now at least, he carries a lot of moral authority with the average Indonesian. And he was a reported - with the average East Timorese, I mean. And he was reportedly very angry with the way Alkatiri's government dealt with the dismissal of the soldiers in the first place.

INSKEEP: How has all this violence affected life in a country that's very poor?

SULLIVAN: Outside of the city, I can't really tell you. But I do know that aid agencies here are saying, in Dili alone - in the great metropolitan Dili, if you would - about 60,000, maybe closer to 65,000 people are now internally displaced. I mean, they're living in camps. And there's definitely a climate of fear here.

The gangs, they might be laying low, but the people don't seem to believe they're gone for good. And it doesn't seem like most people are prepared to go back to their homes until they get some sort of assurances that the security situation is going to improve substantially. And I don't think that people have gotten that sense, yet, despite the presence of the foreign troops here.

INSKEEP: And I have to ask, because we're about to describe what happened to this showcase for peacekeeping and for peaceful transition to a new government, what are the broader implications of the problems here?

SULLIVAN: Well, you know, it's a bad situation. The Timorese haven't gotten many breaks, recently. But new nations, I think, are sort of like little children, you know? They need a little help, they need a little nurturing, they need to be taken care of while they grow.

And if they don't get that, they run the risk of becoming failed states. And failed states often mean large numbers of refugees. And failed states are also lawless places where people like terrorists and drug dealers can thrive. Yeah?

INSKEEP: Okay, thanks very much. That's NPR's Michael Sullivan in Dili, the capital of East Timor, which has seen several days of violence by rival gangs, among others. Transcript provided by NPR, Copyright NPR.