The semi-presidential system in the new state of Timor-Leste has institutionalized a political struggle between the president, Xanana Gusmão, and the prime minister, Marí Alkatiri. This has polarized political alliances and threatens the viability of the new state. This paper explains the ideological divisions and the history of rivalry between these two key political actors. The adoption of Marxism by Fretilin in 1977 led to Gusmão’s repudiation of the party in the 1980s and his decision to remove Falintil, the guerrilla movement, from Fretilin control. The power struggle between the two leaders is then examined in the transition to independence. This includes an account of the politicization of the defense and police forces and attempts by Minister of Internal Administration Rogério Lobato to use disaffected Falintil veterans as a counterforce to the Gusm˜ao loyalists in the army. The December 4, 2002, Dili riots are explained in the context of this political struggle.