Subject: SMH: Goodbye basket case, hello oil

Sydney Morning Herald

Goodbye basket case, hello oil By Jill Jolliffe in Darwin March 8 2003

This weekend East Timor is celebrating concluding its $50billion oil and gas deal with the Australian Government, disproving predictions that it would be an economic basket-case after independence.

The ratification of the Timor Sea Treaty - signed originally by Australia and East Timor on independence day - will not guarantee its economic future, but it will make a substantial contribution.

The country is South-East Asia's poorest and its projected 2003-04 budget expenditure of $135.2million is not covered by estimated revenues.

The $60 million shortfall will be met by international donors committed to support the fledgling nation. Their continued short-term backing is guaranteed, after which the treaty revenue benefits should be felt.

Almost three years after Indonesia withdrew from East Timor, the former Portuguese colony still appears shockingly poor to the average visitor. Many houses still stand charred and derelict, testifying to the violence that accompanied the painful birth of this new nation.

Yet the territory has come a long way since 1999. There is a democratically elected government, and the United Nations has trained police and transformed the former guerilla army, which is ready to take over when UN peacekeepers leave in a year or so.

Schools and the health system are operative and thousands of Timorese have been recruited to the public service.

On May 20, 2002, President Xanana Gusmao and Indonesia's President, Megawati Soekarnoputri, raised their hands together in a gesture of friendship, signifying that the past was behind them.

But the media lost interest, foreign personnel departed in droves and East Timor was left to survive. Problems persist, above all economic.

The oil is there, but East Timor needs to generate other export revenues and find niche markets, such as eco-tourism. But it has unexplored precious metal reserves, and coffee production.

Security remains a problem. Unemployment contributes to sporadic instability, especially in rural areas, where millennial peasant cults give expression to the frustrations of ex-guerillas reduced to banditry to exist.

The riots that exploded in Dili in December served notice on the Fretilin Government to be more sensitive to its small parliamentary opposition and other critics.

A resurgence of border infiltrations by former militia fighters led the UN's Secretary-General, Kofi Annan, to announce this week that the scheduled June, 2004, withdrawal of about 3800 peacekeepers is under review.

The East Timorese are determined to succeed, despite daunting problems. They reason that, having survived 24 years of Indonesian occupation and human rights abuses, the battles ahead cannot be that difficult.

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