also: SMH: East Timor Takes Over Own Policing and Defence 
South China Morning Post Thursday, May 20, 2004

Analysis

Two Years On, East Timor Has Reason for Cautious Optimism

By PETER KAMMERER,

Foreign Editor

East Timor remains among the world's poorest and least developed nations on the second anniversary of independence, but observers are not as gloomy about its future as might be expected.

As celebrations began last night, analysts suggested that prospects for the country's 800,000 people were finally lifting. Although much work needed to be done by the government to build infrastructure, create jobs and prevent corruption, conditions were improving, they said.

Their assessment appeared to be backed by a World Bank report released yesterday showing East Timor's economy, which contracted by 2 per cent last year, would grow by 1 per cent this year. International donors meeting in Dili said the government had cut the deficit and enacted laws to stimulate development.

The United Nations also gave a vote of confidence yesterday by handing over command of policing to a 3,000-strong East Timorese force, although an international contingent will remain as support for at least a year.

President Xanana Gusmao also acknowledged that many challenges remained, four years after the former Portuguese colony fought a bloody struggle for freedom from Indonesian occupation. Independence was finally won on May 20, 2002.

"Timor-Leste will continue to face many new challenges; in security, in development and in our struggle against poverty," Mr Gusmao observed. "All these cannot be overcome without ensuring stability."

A UN report last month indicated problems including "disturbing reports" of corrupt practices, criminal activities and negligent use of firearms.

Worsening the troubles are allegations that Prime Minister Mari Alkatiri took US$2.5 million in bribes from the oil and gas company ConocoPhillips in return for investment in the rich Timor Sea fields. He has denied the claims.

Oxford University researcher Peter Carey believes such problems are outweighed by the progress the government has made in the past two years.

"East Timor started from zero minus 10," he said from Manatutu, the town most devastated by Indonesian-backed militias following an independence vote in 1999.

Dr Carey cited rampant poverty, disease and unemployment, especially among young people, as being among the biggest difficulties for the government. The World Bank's report put the jobless rate at 20 per cent, although some estimates have put the combined unemployment and underemployment rates at 50 per cent.

Australian National University expert on East Timor George Quinn said the government was hampered by having a small budget and revenues mostly reliant on international donors.

Income from oil and gas reserves in the Timor Sea, seen as the nation's lifeblood for development, were being held up by a territorial dispute with Australia.

Without more revenue from oil, East Timor faced a "very difficult road", he believed. Nonetheless, there were signs of improvement. "At least it's getting back to where it was in the latter years of the Indonesian administration."

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Sydney Morning Herald Thursday, May 20, 2004

East Timor Takes Over Own Policing and Defence

By Matthew Moore, Herald Correspondent in Dili and Craig Skehan

Five years after more than 14,000 United Nations troops and police restored order to a devastated East Timor, and on the eve of the second anniversary of the country's independence, Dili has taken over responsibility for its defence and internal policing.

At a ceremony beneath the hills that gave Dili's residents sanctuary during the 1999 bloodshed, the commanders of the UN police and peacekeeping forces signed documents that gave East Timor's security forces their new responsibilities from midnight last night.

President Xanana Gusmao, the Prime Minister, Mari Alkatiri, and the departing UN police and peacekeeping commanders were all confident that the country's new police and defence forces were sufficiently well trained and equipped to cope on their own.

However, the UN will leave behind a much reduced force in case that confidence proves misplaced.

The UN has declared the next 12 months a "consolidation phase" during which about 400 of the 1750 peacekeepers can be called on by the Prime Minister in extraordinary circumstances.

In Canberra, the Defence Minister, Robert Hill, and Justice Minister, Chris Ellison, announced details of a smaller Australian contribution to the extended UN Mission of Support in East Timor (UNMISET).

Senator Hill said that by the end of June, Australia's military contribution would be reduced from 440 to 100 personnel, but this would still be about a quarter of the total UN military force.

The Australians will mainly be involved in headquarters, logistics, engineering and military liaison roles, with an army colonel the force's deputy commander.

An Australian Army Black Hawk detachment will return to Townsville this month.

The Australian Federal Police will provide 16 officers as part of a $6.5 million policing package, joining 140 international personnel in the UN police contingent.

The Australian deputy force commander in East Timor, Paul Retter, described the decision to keep a small rapid-response force as "a bit like weaning [the East Timorese] off the UN".

He said there were now good relations between the East Timorese and the Indonesian military and he was confident the Indonesian Army, just over the border that divides the island into two countries, wants peace as much as the East Timorese.

The force's commander, Lieutenant-General Khairuddin Mat Yusof, praised the efforts East Timor had made to build its own independent defence force.

"As a people you are taking a great step forward," he said.

"There is no turning back; there are surely many more steps to be taken in the future."

In her speech to thank the 39 nations that had provided police under the UN umbrella, the UN police commissioner, Sandra Peisley, said 157 officers would remain behind, down from a peak of 1580. While great progress had been made, she cautioned, "a lot still remains to be done and this will not occur overnight".

Mr Alkatiri said he was "still concerned with the security in our country" and urged his people to co-operate to ensure the security forces could provide the stability needed.

In Atambua in West Timor, Indonesia's military commander, Colonel Djoko Setiono, said the change would make no difference to how his troops operated.

"For us it's the same whether it's the UN or East Timor's forces. The TNI [Indonesian military] also has a commitment to create a peaceful situation on the border, so there's no reason for the UN to worry."

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