Thursday February 7, 02:38 PM

East Timor taking steps to 'contain' Reinado

East Timor's deputy Prime Minister says there has been significant progress in containing the threat posed by armed rebel leader Major Alfredo Reinado.

East Timorese troops loyal to Major Reinado fired a number of shots when they came across Australian troops last night, in what is understood to have been a chance encounter.

Reinado was arrested on charges of illegal weapons distribution, desertion and attempted murder after unrest in 2006, but later escaped from jail.

Deputy Prime Minister Jose Guterres says arresting Reinado is not an immediate option because of his armed support base.

"We have established a taskforce within government and they have met a number of times with Reinado and his group and this process of dialogue continues," he said.

"The fact we have achieved the process of containment in Emera shows already we have made positive steps."

Dr Damien Kingsbury is an Australian academic expert on East Timor who was in Dili last night.

He says informed sources tell him the encounter between Australian forces and troops loyal to Reinado was by chance and there is no lingering hostility between the groups.

"My understanding is Australian troops were out on routine patrol in the district Reinado is known to be in and they incidentally came across some of Reinado's men who were also on patrol," he said.

"Reinado's men panicked and fired off a few shots, but the shots were not reciprocated."

He says there is no reason to believe Reinado's men deliberately targeted Australian troops.

"I think it really was a panic response - they thought that they might have been pursued by the Australian troops," he said.

"When they realised it was just a routine patrol, they fired off their shots, they were not reciprocated and Reinado's men pulled out."

Troop presence

Meanwhile Mr Guterres says the assistance of Australian troops is vital as the country works to contain the threat.

"[Australian troops] have helped stabilise the country, working closely with the United Nations and today I must say the situation has improved in East Timor," he said.

"I believe that once the situation is completely stabilised, the Government will decide, in consultation with the current Australian Government to see if they have to remain in East Timor."