E Timor 'open' to Australia's refugee centre plan

Asylum-seekers to Australia are currently taken to Christmas Island

East Timor says it is open to the idea of housing a refugee processing centre - as debate intensifies over the plan by Australia's prime minister.

Both East Timor's president and prime minister said they would discuss the proposal, although the deputy PM predicted it would be rejected.

Australia's new PM Julia Gillard says a regional processing centre would thwart people-traffickers.

But opposition to the proposal is growing in East Timor.

In her latest comments, Ms Gillard appeared to back away from naming East Timor as the location for such a centre - suggesting she had been misunderstood or misquoted in her earlier speech.

'Island prison'

East Timor's President Jose Ramos-Horta said Ms Gillard had raised the proposal with him, adding that he was open to the idea as long as it was a temporary stop for people before they were resettled in other countries.

"I wouldn't want Timor-Leste to become an island prison for displaced persons fleeing violence," he said, referring to East Timor by its official name.

Prime Minister Xanana Gusmao struck a similar note, saying East Timor's leaders were "open-minded and open for discussion in participation to solve the problem".

"This is not only Australia's problem but also the region's problem. So the government cannot avoid this issue," he said.

However, his deputy Jose Luis Guterres voiced growing concerns in East Timor that the country - among the smallest and most impoverished in the world - would not have capacity to run such a centre.

He suggested Australia had the capacity to deal with its asylum seeker issues internally, or by boosting aid to countries where the refugees come from, primarily Sri Lanka and Afghanistan.

"Australia, as a big country, has the potential to create the refugee centre in their country without importing new problems to other countries," he said.

Forthcoming election

Earlier this week, Ms Gillard announced she had held talks with East Timor about building a regional processing centre where people seeking asylum in Australia would be housed while their credentials were checked.

"A regional processing centre removes the incentive, once and for all, for the people smugglers to send boats to Australia," she told the Lowy Institute think-tank in Sydney.

"The purpose would be to ensure that people-smugglers have no product to sell. Arriving by boat would just be a ticket back to the regional processing centre."

However, on Thursday, she denied she had named East Timor as the location for such a centre, saying: "I'm not going to leave undisturbed the impression that I made an announcement about a specific location."

"It's not for me to unilaterally announce a location in another country, we're talking about a sovereign nation," she said on Fairfax radio.

"I'd had a conversation with the president of East Timor and believed it was appropriate to indicate that he had said to me there was a preparedness to have the discussion with Australia."

She said a location for such a centre would only emerge from talks with regional neighbours.

The BBC's Nick Bryant in Sydney says that what Ms Gillard hoped would be a quick political fix is turning into an almighty policy mess.

For although she discussed the concept with East Timor's president, his is a largely ceremonial role and she has not got the go-ahead from the government, despite Mr Gusmao's reassuring words.

Australia currently sends asylum seekers to its Indian Ocean processing centre on Christmas Island.

However, the detention centre is overcrowded and many asylum seekers have been moved to the mainland while their applications are assessed.

Treatment of asylum seekers is a contentious issue in Australia, even though asylum seekers represent a tiny fraction of the country's annual immigration intake - just 1.6%.

The debate about border protection comes ahead of elections in Australia, expected this year.