Green Left Weekly Issue #449 May 24, 2001

EAST TIMOR: World Bank dictates development

BY JON LAND

The World Bank has been prominent in East Timor's transition to full independence - so prominent in fact that the country now faces a looming struggle about whether the institution's neo-liberal economic model, so renowned for the hardship it has caused other poor countries, will be imposed on East Timor too.

In April, the aid watchdog group AID/WATCH sent two members to East Timor to collect information on the World Bank's activities and to meet with East Timorese non-government organisations, political leaders and student and youth activists. The 12 day visit confirmed to researchers Tim Anderson and Yoga Sofyar that the World Bank's presence and influence is causing many problems.

"There is a great deal of confusion about what the World Bank really is, because at the moment East Timorese public life is dominated by the presence of UNTAET [United Nations Transitional Administration in East Timor], the peacekeepers and the civilian police", Anderson told Green Left Weekly.

"There is a common perception that the World Bank is a subsidiary or support group for the UN, which is not the case. There is a perception that the peacekeepers and some of the relief aid is quite good and effective, but there is also a great deal of resentment at the dual economy that has been set up by the UN, especially with staff on New York salaries, compared to the low wages of the East Timorese public service", Anderson added.

This resentment is magnified by the fact that decision-making is still very much in the hands of foreigners in the UN and in the World Bank. Anderson believes that with the withdrawal of the UN, which will follow the coming election of a new constituent assembly, the role of the World Bank will be increasingly that of a "neo-colonial power".

A number of East Timorese NGOs involved in monitoring development and aid are suspicious about the World Bank's motives and plans. Under Indonesian rule, the bank was responsible for funding transmigration and birth control programs, used by the Suharto dictatorship as a means of social control of the East Timorese.

Since the independence referendum in August 1999, the World Bank has stepped up its involvement in East Timor. A donors conference, organised by the UN and the World Bank in Tokyo in December 1999, pledged some US$522 million to the new nation.

The bank's Board of Governors has also established the Trust Fund for East Timor. Managed by the World Bank and the Asian Development Bank, the TFET has received grants from ten industrialised countries, including Australia and the United States.

UNTAET's head, Sergio de Mello, recently applauded the role of the World Bank, claiming that: " Never before did the international finance institutions and the World Bank work as fast as we have in East Timor in bringing about actual results for the East Timorese".

But, according to Anderson, while the World Bank and UN sing praises about the amount of money that has been donated to the reconstruction effort, the East Timorese have very little information about where that money is and how it is being deployed.

"Where they do have information, they are enormously disappointed with what they learn, like the fact that highly-paid international consultants are being paid with some of this money", Anderson told Green Left Weekly.

"They are disappointed that decisions are being taken by the World Bank and by its associates such as the [Asian Development Bank] in ways that have little to do with engaging the East Timorese people and their representatives", he added.

According to Anderson, one example of inappropriate economic planning is the micro-credit program established by the ADB, supposedly to aid women in poor rural areas. This project, funded with US$7 million from TFET, charges interest rates of between 40%-80% a year, and international consultants have been paid US$600,000 to advise that it be privatised and turned into a profit-making venture.

There is also considerable anxiety about the World Bank's agenda for the development of East Timor's agricultural sector, a pressing issue given that around 90% of East Timor's population are poor rural farmers and labourers. Land ownership and use is a point of potential conflict.

"The concern is that pressure from the World Bank on the direction of agriculture is going to complicate and exacerbate disputes around land ownership", Anderson explained. "The World Bank is indirectly at the moment - and I think with stronger pressure in the future - pushing the East Timorese into developing cash crops for export, in particular, organic coffee."

"This will create pressure on old traditional title and [lead to] the resolution of land disputes in favour of large landholders [who seek] to consolidate and create cash-cropping areas, which also poses the threat of environmental degradation.

"The World Bank hasn't openly pushed this so far, but there is no doubt they want the privatisation of agricultural services. Their plan for coffee - which is not out in the open yet - has doubts cast over it as a result [of] their phoney consultation with East Timorese economists", Anderson said.

Anderson explained that a group of East Timorese economists, retained by the World Bank to analyse the state of the country's coffee industry, resigned en masse after their work was trivialised. They had been offered US$10 a day each over a couple of weeks to complete a large study.

As a consequence of the visit to East Timor, Anderson said that AID/WATCH would be increasing its monitoring of the World Bank through building links and exchanging information with several East Timorese NGOs, along with producing a short documentary on the bank's activities.

Anderson also said the group would be pressuring the Australian government to play a better role in supporting East Timor's reconstruction and development, including supporting the new nation's right to have final say over how and where development aid money, including that in the TFET, is spent.

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