also Oil riches amid the squalor; Essential ingredient for nation building

AFP - February 18, 2008

Analysis: Timor must overcome poverty, divisive politics

By Belinda Lopez

East Timor, a fragile young democracy rocked by assaults on its two top leaders last week, must work to overcome grinding poverty and a divisive politics to achieve stability, analysts say. Renegade soldiers launched shooting attacks on President Jose Ramos-Horta, leaving him critically wounded, as well as Prime Minister Xanana Gusmao, who fled unharmed, in the latest violent twist in the nation's six-year history. Rebel boss Alfredo Reinado was killed during the attacks and analysts said his death eliminated a key obstacle to peace.

But the struggling, impoverished nation must target the root causes of disgruntlement among its one-million-strong population if it is to emerge as a stronger state in the future, they warned. Reinado joined a rebellion that started two years ago with the mass desertion of around 600 soldiers from western districts who were upset over easterners allegedly being given preferential treatment.

Though he was not part of the original group of deserters, the former army major helped stoke unrest that left 37 dead and deepened regional schisms. But the east-west divide goes much deeper than Reinado, analysts said. "He was very flashy and charismatic, but he was more the symptom than the cause," said John Miller, a campaigner with the East Timor and Indonesia Action Network. More intransigent roots of the schisms were "poverty and joblessness: the East Timorese have not been able to recover from the Indonesian occupation, from the destruction the Indonesians left behind," he said.

Indonesia invaded East Timor in 1975 and ruled brutally until a 1999 referendum saw the East Timorese vote to break away. Militias backed by the Indonesian military murdered some 1,400 people and left a trail of destruction during the period surrounding the vote. Unemployment remains high in Dili, at 23 percent, jumping to 58 percent for the 15 to 19 age group, according to 2004 figures. Reinado's belligerence towards East Timor's leaders and championing of regional grievances struck a chord with jobless youths from the west wandering Dili's streets, Miller said, with some coming to see him as a hero.

George Quinn, an East Timor expert at the Australian National University, said poor economic conditions had seen tensions spike over easterners moving in to seek work on the scarce job market. "What happened in 2006 was in some degree a backlash against the intrusion into their world. That issue still has to be addressed," he told AFP.

Australian Prime Minister Kevin Rudd, who visited Dili on Friday, tapped the issue of unemployment and said he had raised it in talks with his counterpart. "Ensuring young people across Timor-Leste have a job is for business, but also this country's long-term stability," the premier said. But East Timor's cut-throat politics are also to blame for fostering regional divisions, said sociologist and East Timorese politics expert Helen Hill, from Australia's Victoria University.

The east-west divide had its genesis in Portugal's long colonial occupation of East Timor and it had been a sleeper issue, she said. Under Portuguese rule, those from the east came to be known as "faraku" - meaning "fight back" - because of their resistance to the colonisers, while westerners were known as "kaledi", meaning "subservient", Hill said. Indonesia's occupation pushed these identities under the surface, with a strong national identity emerging in response. But in the post-independence era, Hill said, politicians have lent on regional identity to shore up their support bases.

Xanana Gusmao, the country's prime minister and a leader hailed by many as East Timor's independence hero, was partly to blame, Hill argued. A speech made by Gusmao, a westerner, in his former role as president during the military deserter crisis in 2006, explicitly acknowledged the east-west divide, which spilled into national elections the following year. "That's the sad thing, the political parties hardly talked about different policies, they talked about different identities," Hill told AFP.

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Globe and Mail

February 17, 2008 at 10:32 PM EST

Oil riches amid the squalor

Geoffrey York

DILI, East Timor ­ Jito Dorego lives in a malaria-infested refugee camp, scrounging a few dollars of income by unloading ships and selling bottles of petrol on the side of the road.

He survives on rations of beans and rice. When the rainy season arrives, his tent is flooded with water and mud, forcing his family to sleep outdoors.

He is one of about 70,000 people in East Timor, almost a tenth of the population, who still live in refugee camps. With 80 per cent of its people subsisting on less than $2 a day, East Timor is the poorest country in Asia.

And although it won independence from Indonesia in 2002, East Timor is still experiencing civil unrest and violence. Australian troops started landing last week to help restore order after an assassination attempt on President Jose Ramos-Horta, who is expected to recover. Rebel leader Alfredo Reinado was killed.

While it struggles to establish a stable democracy, by some measures East Timor is becoming one of Asia's richest countries. Billions of dollars in oil revenue are pouring into its foreign bank accounts, and billions more are expected. It is a paradox that baffles its impoverished people.

Over the next 30 years, as much as $100-billion is expected to flow into East Timor from its burgeoning offshore oil wealth. It's an astounding bonanza for a country of barely a million inhabitants. The value of its petroleum fund, set up in 2005, has climbed dramatically in the past year, reaching close to $2-billion, with soaring oil prices producing an unexpected windfall.

East Timor has gained widespread praise for the prudent management of its oil wealth and its willingness to tuck away most of its money for future generations. Its petroleum fund is one of the three best-managed sovereign wealth funds in the world, according to a study by the Washington-based Peterson Institute for International Economics, which ranked it ahead of Alberta's Heritage Fund and 28 other funds around the world.

East Timor's government is desperately trying to avoid the “oil curse,” the corruption and stagnation that afflicts many of the world's oil-rich countries, such as Nigeria and Venezuela. By investing its wealth cautiously in U.S. Treasury bills, and by setting up an elaborate system of checks and balances to regulate its use of oil money, the country is winning plaudits from the international community.

But the people of East Timor, trapped in misery and deprivation, find it hard to muster any enthusiasm for the scorecards of global think tanks. Praise is not enough to placate the angry poor, whose unhappiness is mounting.

“The money shouldn't be just for future generations,” Mr. Dorego said. “It should be for this generation, too. Who are we? Aren't we the people of East Timor?”

The poverty here is staggering. About 50 per cent of East Timor's population is unemployed, and 60 per cent of the population is illiterate. Almost half of all children are malnourished. Half of the country's families have no access to safe drinking water.

The capital, Dili, is filled with refugee tents for families whose homes were torched in 2006, when clashes between the police and army deserters gave way to looting and arson. The country is dependent on foreign peacekeepers.

Much of the capital is still in ruins, and the streets are scorched and plagued by gang warfare.

Yet as East Timor's oil revenue has skyrocketed, its poverty has only deepened. One of the biggest problems is a lack of absorptive capacity. The government has been unable to spend the money it has now, let alone the massive tide of money in the future. Last year, for example, it managed to spend less than 50 per cent of its $350-million state budget, and some analysts predict that it won't be much more successful this year.

Less than six years after winning independence, East Timor remains one of the world's youngest and least-developed states, paralyzed by poor infrastructure, an electricity crisis, a lack of health and education, and a severe shortage of skilled technocrats and experienced business leaders, all of which is limiting its ability to spend its oil windfall.

“You can't pour a litre of water into a half-litre bottle,” says Jose Texeira, a former minister of natural resources who is now a member of parliament. “The water gets wasted, and you can't drink it again.”

For almost a quarter of a century, East Timor was controlled by Indonesia, which installed its own people in almost every administrative post. When the Indonesians pulled out in 1999, few experienced managers remained in the country. And the government has further handcuffed itself with a complex system of financial controls, set up to combat corruption.

“We have abundant resources and a lot of international goodwill and foreign assistance, but we haven't done much with it,” says Joao Saldanha, an economic analyst at an East Timor institute.

“We lack the capacity to recruit competent people, and the government is suspicious of almost everyone, including our neighbours. They want to keep hands-on control of everything.”

The government needs to be cautious in its spending, he says. “You shouldn't force yourself to spend money when you don't have the capacity.”

Many of East Timor's politicians, however, are pushing for more lavish spending. In national elections last year, some campaign posters featured images of satellites, rockets, helicopters and glitzy skyscrapers, a tempting vision of a free-spending future. There were promises of more money for widows, orphans, veterans, road-building projects and bridges.

“The higher oil prices should make it possible for us to create a better foundation for the country,” said Mario Carrascalao, leader of the Social Democratic Party, a partner in the governing coalition.

He is demanding a 50-per-cent rise in spending from the petroleum fund.

Mr. Texeira, the former resources minister, helped establish the tight controls on the petroleum fund in 2005. Now he worries that the government will be unable to resist the pressure for more spending.

“I don't know how we're going to deal with this problem of increased expectations,” he said.

“Nobody is trying to dampen those expectations. I'm worried that the government is going to deal with it by giving handouts. That could create the worst kind of welfare state. We don't want to squander the money and become another Nigeria.”

--

Eureka Street.com.au - Vol 18 No 4

February 18, 2008

Essential ingredient for nation building

Michael Mullins

Last week represented a great leap forward for Australia, with the Parliamentary Apology to the Stolen Generations finally taking place. The hope flowing from the momentum generated by this one event is immense, even though public attention will quickly be absorbed by other issues.

For East Timor, it was a different story, with the attempted assassinations of President Jose Ramos-Horta and Prime Minister Xanana Gusmao. These demonstrated that, while the country may have been in good hands, this did not necessarily translate into a secure future for its young population.

What distinguished the lead-up to Australia's apology was determination on the part of political leaders to listen to the stories of Aboriginal and Torres Strait Island peoples. By contrast, the Howard Government had got it wrong when it decided to pump an unprecedented level of resources into the Northern Territory intervention, without first listening to hear Aboriginal people articulate what they believe the priorities are.

At the end of the week, Prime Minister Kevin Rudd and Foreign Minister Stephen Smith went to Dili for what was essentially a visit to listen and to reassure East Timor of Australia's availability if help were required. Rudd promised Gusmao that an enlarged contingent of Australian troops would stay in the country as long as they are welcome. On Saturday, Fr Frank Brennan commended them for recognising that an acknowledgement of the East Timorese people's need for self-determination must underlie all attempts to help them build their nation.

Fr Brennan, a former director of Jesuit Refugee Service in East Timor, was speaking with Geraldine Doogue on ABC Radio National. He pointed out that the UN's attempts at nation-building came to nothing because it was 'very good at publishing documents that come off computers written by people who were well intentioned', but not as skilled in listening to the people's own perspective on their needs.

He said: 'Australia's intervention will work if whenever we do anything, we do it with the humility where we continue to say, you are the Timorese, you are self-determining. No matter what the problems you're facing, we're here to work with you.'

The outbreak of violence in East Timor April 2006 suggested that the UN had not reached first base in its efforts to lay the foundation for a small but robust nation. Now with its listening to the Stolen Generations as the basis for the apology and subsequent action, the Rudd Government has provided a template that may be of significant use to those involved with nation building in East Timor.

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