| Subject: AFR: Lisbon
leads new Timor invasion
Australian Financial Review December 7,
1999
Lisbon leads new Timor invasion
By Geoffrey Barker
A helicopter carrying Joao Manuel Tubal
Goncalves and several suitcases full of newly printed Portuguese banknotes
landed in Dili from Darwin last Sunday week. At the same time, a container
with six tonnes of Portuguese coins was unloaded in Dili harbour.
The next day, Banco Nacional Ultramarino,
Portugal's major overseas bank, opened for business in a bare but freshly
painted building that stood relatively undamaged in the wreckage that
passes for Dili's central business district.
More than 400 years after they first set
foot on East Timor in search of sandalwood, and 25 years after they
abruptly withdrew from their neglected colony as it plunged into civil war
ahead of the Indonesian invasion, the Portuguese were back.
Their objective: to re-establish economic
influence over independent East Timor under the United Nations
Transitional Authority.
BNU, at present the only bank in East
Timor, is the spearhead of the Portuguese push.
The catalyst for the fast move by BNU
director Goncalves and his staff was a controversial UN decision to make
the escudo the official currency of East Timor - despite the fact that
no-one in East Timor wants to accept it. The main currencies in use are
the Australian and the US dollar, and still (for the time being) the
Indonesian rupiah.
As Goncalves tells the story, BNU's
return was motivated primarily by Portugal's desire to meet its
obligations to some 800 Timorese still entitled to Portuguese pensions
paid in escudos. Judging by the crowd of hundreds of East Timorese milling
around the bank's locked front door last week, a lot of people were
looking for their pensions.
Sitting in a slightly chaotic office, at
a desk containing a computer screen and some Telstra bills, Goncalves says
the escudo is fully convertible and euro-denominated and the bank is
willing to change escudos for any other currencies it has or its customers
want, except the rupiah.
With some pride, Goncalves notes that
some customers are already opening accounts to deposit part of their
escudo pensions.
But given that no-one in East Timor wants
escudos, and that escudos buy few Australian or US dollars, the pensioners
would seem to have little option but to stash them away in the bank and
hope that they gain value when East Timor revives its economy.
In fact, BNU's move seems clear evidence
that Portugal is moving to set up an economic enclave in East Timor,
presumably in order to retain an Asia Pacific presence after Macau's
return to China.
Senior Australian foreign policy
officials are not pleased about the prospect of enlarged Portuguese
influence in the region. Pointing to the history of East Timor, Mozambique
and Angola, they note that Portugal's post-colonial record is tainted and
they question Portugal's economic capacity for effective and reliable
long-term economic support.
There may even be a hint in some
Australian attitudes that East Timor's apparent willingness to entertain
approaches from its former colonial master reflects a lack of
acknowledgement of Australia's economic and political support and role in
peacekeeping.
But so far, Australian banks have shown
no interest in moving into the East Timor vacuum, although Telstra has
established a mobile phone service, and Australian firms in Darwin have
snatched a lead in providing shipping services, construction and other
materials, rental cars and rough-and-ready hotel accommodation and meals
in Dili.
The Portuguese Foreign Minister, Jaime
Gama, visited East Timor last week, pledging to make it one of Lisbon's
foreign policy priorities.
Given Portugal's 400-year history of
exploitation and neglect in East Timor, Gama's pledge seems a late
recognition of some responsibility for East Timor's plight.
He told The Australian Financial Review
that Portugal had already injected some $US60 million ($95 million) into
East Timor between March and December, and expected to contribute $US75
million next year.
It also intended to support East Timor's
balance of payments for five years at a cost of up to $US100 million a
year.
Given this level of support, the East
Timorese may happily embrace the escudo as the nation's currency,
especially if it brings Portuguese investment in its wake.
Gama tries to play down suggestions that
Portugal is moving to economically recolonise East Timor. "We are
present in the Orient in a modern version - as we are in Goa. We expect
East Timor to be independent, with good relations with its neighbours
Australia and Indonesia and regional bodies like ASEAN and APEC," he
says.
But given the use of the Portuguese
language and the re-establishment of an essentially Portuguese continental
legal system in East Timor, there seems little doubt that Portuguese
influence, economic and otherwise, will be cemented in place fairly
quickly.
According to Goncalves, BNU's role will
be to pay Portuguese aid subsidies to East Timor as well as old pensions.
He notes that the escudo was the local currency before the Indonesian
invasion.
At present, Goncalves says, the lack of a
financial legal system prevents BNU from making loans until laws are in
place. He says BNU is a commercial bank which has always been very active
in assisting small to medium-sized enterprises.
Goncalves says neither Portugal nor BNU
feels any debt to East Timor. "We do not think like that. We are
willing to help as much as we can."
He says that in Portugal the BNU group is
setting up an East Timor development company, partly State-owned, partly
private, to undertake infrastructure projects. "There are companies
which are very interested," he says.
Gonclaves says that if East Timor becomes
"a very low-tax territory", the capability of the people, the
land and offshore resources could make it a very good place for investment
by Portuguese firms.
No country has spoken up more than
Portugal in defence of East Timor, according to Goncalves. "Ask
people to wear white for East Timor or to put white sheets in windows for
East Timor, or to form human chains for East Timor, and they do it in
Portugal," he says.
"There is a deep understanding. The
Timorese have a connection with us. We are not coming as we did before.
That is out of the question. We are not coming with the ideas of the
past."
But the Portuguese are clearly coming,
and the bankers are leading the way. Meanwhile, for Christmas, Australia
is exporting John Farnham and the Duntroon band. Fine entertainers, but no
match for a suitcase full of escudo banknotes.
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