The violence in East Timor is a result of decades of occupation by Indonesians troops and civilian administrators. The native East Timorese are Melanesians, a different ethnic group than the Indonesian Malays. The Melanesians are darker, more tribal and speak a larger variety of different languages (15 among the million East Timorese). The Malays tend to look down on the Melanesians, and the Melanesians don't like it. Worse yet, many Melanesians in western East Timor, opposed independence, worked with the Indonesian government, and stayed in East Timor after independence. So did many Malays, especially those who had lived in East Timor for generations. To further incite animosities, those in western East Timor tended to be better educated, while those in eastern East Timor were more active in resisting the Indonesians. These animosities were never fully worked out, as it was the UN and UN peacekeepers (led by Australia) that finally got Indonesia out of East Timor five years ago. One more disruptive factor was the return of many pro-independence East Timorese, who had lived in exile for years. Well educated and skilled politicians, the exiles snagged many good government jobs, and this led to some resentment, especially in eastern East Timor.
There is not much of a modern economy to speak of, with much of the population depending on garden plots and primitive agriculture to get by. A key source of well paying jobs is the government, and the principal government officials, including the heads of the army and police, favor kin and fellow tribesmen for jobs. This causes bad feelings, which are now be played out in street violence and revenge attacks.
Things are not likely to get better in the long run, because Australia has had plenty of experience with similar situations in New Guinea and the Solomons. Same mix of Melanesian tribalism and poverty, and inability of the local government to govern.
May 30, 2006: In East Timor, the 2,500 UN peacekeepers have seized nearly 500 weapons (guns and grenades) in the past two days. The East Timor government has gotten its act together, with the president of the country broadcasting a speech that seemed to calm things down. The president and the prime minister have been feuding for some time. The president is more popular than the prime minister, so pushing the prime minister aside was a popular move. All the violence really wasn't going anywhere, and most East Timorese now realized that. The 30,000 or so refugees from the capital, where most of the violence was, began returning home.
May 26, 2006: Australian, Malaysian and New Zealand peacekeepers arrived by air in East Timor, with more on the way by sea. The peacekeepers rules of engagement (ROE) allow them to shoot-to-kill if attacked, but not to use force to bring in looters and armed gangs of civilians. These, and not renegade soldiers, are proving to be the chief cause of murder and mayhem.
May 25, 2006: Things turned ugly in East Timor as renegade soldiers killed nine unarmed policemen who were under UN protection. The UN had negotiated a truce between the police and soldiers, and the soldiers broke it. This will further increase the tribal and political hatreds that have caused law and order to collapse here. Meanwhile, Australian peacekeepers took control of the main airport.