Subject: ST Commentary: A (Promising) Shell of a Nation Unable to Govern Itself

The Straits Times (Singapore) Friday, June 30, 2006

Commentary

A (promising) shell of a nation

Independence came to tiny country before it had learnt to govern itself

by John McBeth, Senior Writer

JAKARTA - IT HAS always been a puzzle to me why so many observers see Timor Leste as a failed state in the making. The tiny nation has more going for it than any Third World African state, including oil and gas revenues, a promising tourist potential and a pool, however small, of talented individuals.

So what has gone wrong and why is it coming apart at the seams?

Politics, first and foremost. Even in a country of one million people, whose citizens have surely suffered enough over the past three decades, Timor Leste politicians have simply been unable to bury the past, discard time-worn ideologies and carry on where the United Nations left off.

And there is a second major problem. While the government of newly resigned prime minister Mari Alkatiri has proven surprisingly and, in the opinion of some, suspiciously inept, much of the blame should also fall on the UN for leaving prematurely without building enough institutional capacity to allow the state to function effectively.

So now the embarrassed world body will have to return in force over the next six months - not only to maintain the peace and no doubt help the leadership work out a lasting political settlement, but also to stitch Timor Leste back together.

Given the complexity and often baffling nature of the situation as it stands now, it will not be easy. Even experienced observers struggle to explain what has happened and why. 'You have to put away your logic and only think illogically about it,' says one Western diplomat, pointing to the one question everyone is asking: Why did the government think it could fire 600 rebellious soldiers of the 1,500-strong East Timor Defence Force without there being any repercussions.

But that does not explain the rest of the disorder that followed, including the massacre of nine unarmed policemen, the distribution of thousands of automatic weapons to civilian militia groups and disquieting reports of death squads in the alleged pay of Mr Alkatiri and former interior minister Rogerio Lobato, who have been squarely blamed for the violence.

UN Secretary-General Kofi Annan has acknowledged that what the world body had held up as a model of nation-building has turned out to be nothing more than a fragile shell, still rent by the same political frailties that led to Indonesia's invasion in 1975 and still without an economy to dilute potential social disorder.

Much of the criticism of the UN arises from the culture of the organisation itself and the apparent institutional necessity of involving different nationalities in its operations.

In Timor Leste's case, the UN brought in an army of 840 civilians representing a ridiculous 114 countries, leaving only 1,800 largely menial jobs to the Timorese. During the three years under direct UN administration, Timor Leste received about US$2.2 billion (S$3.5 billion) in international aid. This has grown by a further $1 billion since then. But it was not quite the huge chunk of money it seemed. By most accounts, about half of that money went on salaries and other overheads that always come with the UN machine.

Efforts to reform the organisation and improve its nation-building role should begin now, before a single new staffer is sent into Dili.

That means dispensing with the gravy train that at one point had a Nepalese policemen, for example, directing traffic in the street outside the headquarters of the UN transitional authority.

Even back then, in 2000, the more thoughtful people in the UN were saying it would have been better to have gone in with just 100 competent people, who would have had to employ Timorese and whose jobs would have been on the line if they goofed up. As it was, the consequences for failure were just not there. Some of those working for the UN came fromcountries nearly as impoverished as Timor Leste; they would have been more valuable staying at home and working on problems there. Others possessed only a modicum of expertise and only seemed to be in Timor Leste to make up their country's seemingly mandated quota.

The Timorese had complained from the outset about the UN's failure to involve more local people in deciding their nation's future. 'We are not interested in inheriting an economic rationale that leaves out the social and political complexity of Timor Leste reality,' then-president-in-waiting Xanana Gusmao said in a rare and somewhat prophetic broadside in October 2000.

Some outsiders shared that worry. 'There's no economic model, in fact there's no modelling of the country at all in the way Timorese want it,' one Australian consultant told me at the time. 'If the Timorese don't participate, then they don't own the future.'

Forget the 70 per centof the economic structure destroyed by departing Indonesian troops. Just as big a hole was left in the country's administration itself, which any reasonable person should have realised would have to be filled before the country could get on its feet. Sadly, however, the UN left capacity-building to the Timorese themselves - with predictable results.

Mr Alkatiri can now point to that in explaining why his government has failed to make any real headway, particularly in key areas such as health, education and basic infrastructure. In a clear sign of bureaucratic ineptitude and the effects of three months of political turmoil, only 35 per cent of the US$135 million budget had been spent at the end of the 2005-2006 fiscal year, which falls this week.

This year's proposed budget is US$230 million - about the same amount that is now flowing in from the Bayu-Undan gas field in the Timor Sea.

Thanks to US$60-a-barrel oil prices, Timor Leste's 90 per cent share of royalties and tax windfalls are larger, and started much earlier, than anticipated, skyrocketing from US$41 million in 2003-2004 to US$243 million in 2004-2005. The country's Petroleum Fund has about US$500 million, with the Petroleum Law committing the government to saving most of that revenue as sustainable income in perpetuity.

Economist Joao Saldanha, of the Timor Institute of Development Studies, estimates that even if the price of oil were to fall to US$40 a barrel, Dili will eventually receive at least US$500 million in annual oil and gas receipts. Non-oil revenues amount to only US$8 million, about US$7 million of that coming from coffee exports which are expected to rise over the medium term in response to higher prices and improved marketing.

Small markets, high costs, a low skills base, poor infrastructure as well as a weak legal system are still obstacles to attracting the foreign investment needed to underpin economic development.

Politically, next year's scheduled parliamentary elections may go a long way towards allowing the Timorese themselves to resolve the current impasse.

Although Mr Alkatiri's belated resignation may have defused some of the tension, his Marxist-orientated Revolutionary Front of Independent Timor (Fretilin) is still the dominant player in the political equation. Timor Leste and the UN will also have to re-think the wisdom of maintaining an army, a non-negotiable issue at the birth of the nation because of Mr Gusmao's concern at finding jobs for hundreds of resistance fighters who might otherwise have become a destabilising influence.

But now, security analysts say it would make more sense to disband the army altogether and create an integrated self-defence force - basically a civilian police organisation with a paramilitary element that would serve to break up the political and ethnic divisions which triggered the recent violence and have continued to haunt Timor Leste since its independence.

------------------- Joyo Indonesia News Service


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