Financial Times

E Timor struggles against ‘time bomb’

By John Aglionby in East Timor

Published: August 28 2009 18:12 | Last updated: August 28 2009 18:12

The morning market in Ebano, a hill village 30km south-west of Dili, East Timor’s capital, provides a neat snapshot of life in the former Portuguese colony a decade to the week after it voted overwhelmingly for independence from Indonesia following 24 years of brutal occupation.

Stalls are simply tarpaulins spread out on parched ground either side of the potholed dirt road that snakes through the village; the only shelter most vendors have from the searing tropical sun is a makeshift tower of cardboard boxes erected to provide some shade.

A few pitches are well laid out and their owners’ sales patter demonstrates a clear entrepreneurial bent. But the majority of stallholders sit sullenly waiting for customers.

“It’s uncomfortable, hard work,” said Manuela dos Silva, one of the merchants. “But we have little choice because we’re getting very little help from the government. Life in rural areas is still all about survival.”

Her three clearly malnourished daughters playing around her, all aged under six, are evidence of two of the country’s biggest problems; a poverty rate in excess of 50 per cent and one of the world’s highest birth rates, at more than seven children per woman.

José Ramos Horta, the president, who shared the 1996 Nobel Peace Prize for his efforts to end the Indonesian rule that left more than 150,000 Timorese dead, says that when a shortage of water and dependence on subsistence agriculture is added, the scale of the problems the country faces cannot be overstated.

“With this population growth and poverty, [and] increasing pressure on water and land, 20 years from now we will start killing each other over water and land,” he told the Financial Times.

He has no doubt that, unless more attention is paid to rural areas, urban migration ­ particularly among the rapidly escalating ranks of disillusioned and unemployed youth ­ will be so great that it will create a “time bomb”.

East Timor’s challenges go much deeper, however. In 2006, four years after the independence it gained following a three-year transitional UN administration, part of the military mutinied and the police force imploded.

The government all but collapsed, the prime minister was forced to resign, an Australian-led military force was deployed to restore order and a new, greatly beefed-up United Nations mission was established.

The role of the UN in East Timor has come under much scrutiny. What was supposed to be a relatively easy nation-building exercise has proved anything but. Ten years after it first entered the country, local politicians’ assessment of the world body’s performance is “a little above average”.

Peaceful elections followed in 2007 but one morning in February 2008 some of the rebel soldiers who had remained at large tried to assassinate Mr Horta and the prime minister, Xanana Gusmão.

Both leaders survived and in the last 18 months the government has brought more than a semblance of calm to the nation, although largely through handouts to troublemakers, pensioners and resistance veterans.

But government institutions remain extremely weak; the military has undergone little reform and the reconstruction of the police force is far from complete.

While political leaders are confident a repeat of 2006 is unlikely, many analysts ­ both Timorese and foreign ­ are less certain.

“The key to long-term political stability is the development of institutional values that can steer the country through a crisis,” says Colin Stewart, who until June was the head of the UN mission’s political section. “These are not yet in place and insufficient international attention is being paid to help the Timorese do this.”

East Timor does have significant oil and gas resources to help it through its adolescence and a widely respected petroleum fund, modelled on Norway’s and designed to limit how fast the country can spend its wealth.

The fund currently stands at $5bn (€3.5bn, £3bn) and, thanks to being invested in US Treasury bills for the past four years, has grown 6 per cent in the last year. Emilia Pires, finance minister, says that in the next few years the government intends to diversify investments and spend more than the recommended “sustainable” amount in order to develop infrastructure and the tiny non-oil economy.

“It’s not ‘how much can I use each year’,” she told the FT. “I’m looking at what do we need to do to fast-track development, especially in the non-oil economy.”

Many observers, including the International Monetary Fund, are concerned the government is not spending wisely and that the sources of economic growth, which reached 12.8 per cent last year, need to be diversified. Most, however, are giving ministers the benefit of another couple of years before passing judgment.

Lucas Sarmento, who eight months ago established a seaweed farm with six friends just outside Dili, is typical of many Timorese when asked about their development.

“We’re like a little child that’s growing up,” he says. “We’re making mistakes. But we’re confident that in the future things will be better as we become more mature.”