Subject: FT: Dili dilemma: how blunders in building a nation are being brutally laid bare

Dili dilemma: how blunders in building a nation are being brutally laid bare The UN's withdrawal of an interim administration four years ago now seems premature as Timorese are convulsed by anarchy, writes Shawn Donnan;

Financial Times. London (UK): Jun 12, 2006. pg. 17

East Timor's capital, Dili, these days bears all the hallmarks of a city in crisis. International peacekeepers in body armour patrol the streets while Blackhawk helicopters swoop above. Armoured personnel carriers rumble past the burnt-out remains of homes torched by machete-wielding ethnic gangs. At convents and churches, as many as 100,000 people are marking time in makeshift refugee camps. Yet just two months ago, on a visit to the world's newest - and close to its poorest - country, Paul Wolfowitz, World Bank president, hailed its emergence from a bloody rupture with Indonesia in 1999 as "a remarkable story". As the United Nations Security Council prepares to debate its future this week, the country he extolled looks dangerously fragile. Almost 600 armed soldiers - out of a total force of 1,400 - have deserted to the hills, demanding the dissolution of parliament and the resignation of Mari Alkatiri, the prime minister.

Meanwhile, the country's revered president, former guerrilla leader Xanana Gusmao, has been reduced to tearful public appeals to his countrymen to lay down their weapons. So what has gone so wrong, so fast? Viewed from within, East Timor's paroxysm is an intensely complicated Melanesian tangle of thuggish ministers, a stubborn prime minister, mismanagement, corruption, long-simmering but well- hidden ethnic tensions, and political positioning ahead of elections due next year. Diplomats blame the violence on the government's inept handling of the grievances of the former soldiers, from East Timor's western districts, who went on strike this year claiming discrimination by commanders from the eastern districts. But look below the surface and the conflict is a graphic illustration of the deficiencies of a highprofile UN experiment in nationbuilding.

A saga of short-termism, ill-directed aid and conflicting priorities, it holds salutary lessons for others who might seek to construct a country almost from scratch. The birth of the venture was prophetically inauspicious. East Timor had won its emancipation from Indonesia in a UN-organised vote that had a traumatic aftermath. Indonesian soldiers and pro-Jakarta militias killed 1,500 (including Financial Times correspondent Sander Thoenes) and forced more than 200,000 to flee their homes. The country was left in ruins as the departing troops enacted a scorched earth policy and thousands of Indonesian civil servants who had administered the territory fled with them. So when, in September 1999, Jos Ramos- Horta, Nobel peace prize winner and now the country's defence and foreign minister, flew to New York to discuss East Timor's future with United Nations officials, he was seeking a five-year UN administration.

The response from the UN, however, was swift and negative, Mr Ramos-Horta recalls. He remembers one official saying: "If the Security Council gives you two years you will be lucky." In the end the UN formally administered the country for eight months longer than that bleak prediction had suggested it might. But Mr Ramos- Horta says that its departure was still seriously premature and that the country has paid the price in weak government institutions, poor infrastructure and political instability. If international goodwill alone could have secured East Timor's future, its worries would be over. Between 1999 and 2002 - the years it was under UN administration - it received an estimated Dollars 2.2bn (1.2bn, ?1.7bn) in international aid. By the end of last year that figure is thought to have grown by a further Dollars 1bn. It is too simplistic, however, to present East Timor's problems as yet another example of a thirdworld country squandering billions in foreign aid. Most went on physical reconstruction of the country, ravaged by the departing Indonesian troops who, according to the World Bank, had destroyed 70 per cent of its economic infrastructure. Half or more of the support, Timorese officials and diplomats say, also came in the form of what is often referred to as "boomerang aid" - money that bankrolls development consultants' salaries and other overhead costs. According to diplomats, development experts and Timorese leaders interviewed by the Financial Times, too little of it was spent on shoring up the country's fragile institutions. Most notably, the UN administrators failed to build an effective police force - or at least one that would not dissolve at the first sign of trouble.

Many praise the leadership of Srgio Vieira de Mello, the Brazilian who headed the UN administration in East Timor and was killed in 2003 while leading its mission in Iraq. But not everyone lived up to his shining example, experts say. "There were a lot of crazy people around with all sorts of crazy ideas who were on this UN gravy train," says Hal Hill, an Australian economist who co- edited a book on East Timor's development. Behind that lay another issue, says Mr Ramos- Horta. "The UN was not prepared for nationbuilding, for creating a country, for building a country out of the ashes," he says. It was almost 40 years since it had attempted such a wholesale reconstruction - in what was the Belgian Congo in the 1960s - and the precedent was not an encouraging one: the former colony never became a functioning democracy. The outcome was equally flawed when the UN handed East Timor full independence after just 32 months and Mr Alkatiri's government assumed control. Mr Ramos-Horta says: "The UN left (the prime minister) with what you could generously call a sketch of a state." Mr Alkatiri is more outspoken.

His government "inherited a public administration that was completely fragmented," he says. Even Sukehiro Hasegawa, the UN's top man on the ground in East Timor, is frank about the shortcomings of its work there. In an interview with the FT he says the UN moved too quickly to downsize its peacekeeping presence in East Timor and withdraw from important institutionbuilding work, despite signs that the situation on the ground remained "fragile and fluid". He also concedes that since 1999 the UN had provided only "the minimum required to keep the government functioning" - largely, he adds, because of budget constraints. Ironically, the outpouring of international altruism created its own difficulties, producing what one senior western development official calls "a cacophony of different assistance". Countries such as neighbouring Australia and Portugal, the former colonial ruler, pursued different agendas and advocated policies that, once adopted, often made effective government difficult. Eager to see the lusaphone world grow, for example, Lisbon - a longtime supporter of Mr Alkatiri - promoted Portuguese as the official language of state, despite the fact that few Timorese speak it. The discordant messages often came from within the UN mission, complicated by its multinational character, Timorese officials and development experts say. "The mistake made by the UN was to try to bring New York to Dili," says Mr Alkatiri. "They brought people from different cultures and different backgrounds and brought them together to try to build a nation. But building a nation is not an easy exercise" - especially, he adds, when so many different visions are advanced.

There was duplication also in the work performed by multilateral agencies such as the UN and the World Bank, Mr Ramos-Horta argues. "In my view the UN is very good at providing political and security leadership," he says. "But then it should leave it to the World Bank to handle the economic development." Some argue that these factors were exacerbated by a fundamental structural problem in the way international aid is delivered. Diplomats and experts say the UN and other leading developmental organisations focus on short- term achievements and "checking boxes", an approach that militates against the enduring commitments needed to build a nation. "The way international assistance works is not conducive to sustained, long- term assistance," says one senior western development expert who spent years working in East Timor and asked not to be identified. "Look at how the (UN) Security Council operates. It puts one fire out after another . . . But the underlying root causes are often not attended to at all." Mr Ramos-Horta maintains that it is too early to call his country a failed - or even a failing - state. The current travails represent "a hiccup", albeit a serious one, that has "jolted the leadership and the international community". East Timor is only just beginning to reap the benefits of revenues from the development of oil and gas fields in its territorial waters. Joao Saldanha of the Timor Institute of Development Studies estimates that, even if the price of oil falls from its current high levels to Dollars 40 a barrel, government coffers will within a few years be receiving Dollars 500m in annual oil and gas revenues. The entire government budget for the fiscal year beginning on July 1 is just Dollars 230m.

But Mr Ramos-Horta says the country's future depends on finding a quick political resolution that will allow East Timor's economy to attract investment and infrastructural spending. It would then have a fighting chance of growing by the 7-8 per cent a year needed to dent poverty and unemployment. Mr Ramos-Horta does not hide his conviction that the best solution is for Mr Alkatiri - who remains defiant - to resign. "I believe that his loss of authority is irreversible," he says. He is also in no doubt about what is at stake. "If we don't resolve the political crisis then the economy will be ground to a standstill, to zero. New investments will not come. You might have donor fatigue," he says. Then, he adds, East Timor might truly become a failing state.

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