Fiji's military said yesterday it would set up an interim civilian government after indigenous rebels defied an ultimatum to lay down their weapons and free 27 hostages or be excluded from a future administration.
The military decided to create the interim administration within a week and retain executive power until ethnic Indian Prime Minister Mr Mahendra Chaudhry and 26 other political hostages were released unharmed, adding it still hoped for a peaceful resolution to Fiji's five-week crisis.
"The military government will now take serious steps towards drawing up a list of ministers to run an interim government for the country for the next 24 months," military spokesman Lieutenant-Colonel Filipo Tarakinikini said.
Rebel leader Mr George Speight said a civilian government overseen by the military "seemed a pointless act of desperation" and refused to comment on whether the move would harm his cause to rid ethnic Indians - who comprise 44 percent of Fiji's population - of political power.
"We won't be threatened by what they ( the military) say," Mr Speight told reporters.
Mr Tarakinikini said there would be no place in the interim administration for Mr Speight, but said the military was still open to talks with the rebels after negotiations stalled on Sunday.
Fiji's economy has been crippled as a result of the five-week crisis, with sugar production halted, tourist resorts closing and thousands of jobs lost.
The military has repeatedly said martial law in the island nation would continue for two years unless the rebels freed Mr Chaudhry, an ethnic Indian, and the other members of his multiethnic coalition government.