Independence and Beyond

East Timor ranks as one of the poorest countries in the world. Centuries of Portuguese colonial neglect and decades of repressive Indonesian military occupation left East Timor with the highest maternal mortality rate in Southeast Asia and the Western Pacific, a per capita income of $478, and a 60 percent illiteracy rate. Most people farm what land they have in order to survive, but that by no means guarantees a sufficient diet. Over half of East Timorese children are underweight, and one-quarter are malnourished. 

The World Bank has been in East Timor since late 1999. During the October 1999 to May 2002 transitional period when the United Nations was the governing authority, the World Bank managed grants given East Timor by donor countries and institutions. Although the World Bank cannot lend money to non-self governing territories, it shaped important donor-funded agricultural, health, and educational programs. These programs received mixed reviews from East Timorese, but a common critique dismissed the Bank’s community consultations as limited, rushed, and not meaningful. 

Post-independence, the Bank controls an additional trust fund of donor monies given the new government. But now it can also make loans to East Timor. Government leaders have repeatedly and publicly pledged to follow a “no loans” policy and have drawn up a modest national budget mindful of their limited resources. For fiscal years 2003 through 2005, the East Timorese government plans on spending just $256 million. This austerity is especially striking given the extent of 1999’s devastation; more than 70 percent of buildings were destroyed nationwide and reconstruction during the transitional period was agonizingly slow, especially in rural areas. The new government is stressing social service spending, in response to widespread demands for tangible improvements in the lives of all East Timorese. In fiscal year 2002, health and education spending comprises one-third of all expenditures; this percentage will increase in subsequent years. 

Yet, serious concerns for East Timor’s financial future and the role of the World Bank and other international financial institutions remain. The National Development Plan calls for spending $94 million over expected income from fiscal years 2003 to 2005. This “external financing requirement” (in World Bank lingo) has not been met by East Timor’s donors. The unwillingness of donor countries—many of which “invested” in East Timor during the occupation by giving Indonesia military training and weapons—to cover this shortfall is shameful. The U.S. spends more than East Timor’s projected three-year budget shortfall on one F-22 fighter plane—and the Ford through Clinton administrations provided Indonesia with over $1 billion in weapons during the occupation. East Timorese activists are wary that, in the absence of additional donor support, their government will come under increasing pressure to take out loans. 

Since finances are tight, East Timorese organizations are working with rural communities on small-scale, local initiatives in agriculture, health, education, and business. Activists believe communities can be more self-reliant than the National Development Plan assumes. They point to the alternative development approach used from 1974 to 1979 by FRETILIN, the former main pro-independence party and current head of government. Networks of local organizers carried out literacy campaigns, trainings in traditional herbal medicine, and organized agricultural co-operatives. 

The Sa’he Institute for Liberation works with some of these same local organizers today. Sa’he uses popular education to empower people in often-forgotten rural communities and facilitate knowledge sharing. Sa’he works with interested communities to identify which skills are present and which are needed. Different groups then learn from each other. The goal is not just the transfer of knowledge, but also nationwide community organizing. 

Another legacy of the Indonesian occupation is the Timor Gap Treaty, which establishes ownership over the undersea oil and gas reserves between East Timor and Australia. The 1989 treaty evenly split petroleum revenues between Australia and Indonesia, even though the fields lie much closer to East Timor. It was in essence a pay-off; Australia received more than its fair share in return for formal recognition of Indonesia’s illegal occupation of East Timor. 

Following the 1999 referendum, Australia renegotiated the Timor Gap Treaty with UN and East Timorese officials. After much pressure, Australia agreed to a more fair 10 percent/90 percent division of oil and gas revenues with East Timor. Although Australia publicly marveled at its own generosity, this agreement is still problematic. The 10 percent/90 percent scheme applies to an area of the Timor Sea known as the Joint Petroleum Development Area (JPDA). Fields to the east and west of the JPDA are the exclusive property of Australia. However, if the maritime boundary between East Timor and Australia were determined according to the UN Convention on the Law of the Sea, East Timor would receive a larger percentage of the JPDA and would completely own additional fields on either side of the JPDA, including the largest field in the Timor Sea. If international standards were used, East Timor would gain an estimated $28 billion in additional revenues, compared with the current treaty. 

Australia—which owns four times as much oil and gas in other, uncontested areas than is in the Timor Sea—isn’t the only greedy party. The company with the biggest stake in the Timor Sea is U.S.-based Phillips Petroleum. Phillips was one of the first companies to sign contracts for Timor Gap oil exploration in 1991, during the Indonesian occupation. Today, Phillips wants to build a pipeline from its Timor Sea fields to Australia. In addition to raising environmental concerns, the pipeline would severely limit employment opportunities for East Timorese workers in petroleum processing. 

With so many foreign powers active in East Timor—the UN, World Bank, oil companies, other governments and international aid agencies—it’s not surprising that one of the most active organizations is La’o Hamutuk (East Timor Institute for Reconstruction Monitoring and Analysis). Since 2000, La’o Hamutuk has investigated and challenged the major foreign actors in East Timor’s physical, economic, and social reconstruction. It aims to encourage transparency, democratic processes, and accountability to the East Timorese. La’o Hamutuk has also organized international exchanges where Brazilian popular educators, Nicaraguan domestic violence advocates, and Sri Lankan and Ecuadorean activists focused on petroleum issues visit East Timor. One unique feature of La’o Hamutuk is its collaborative nature; currently, three internationals work alongside five East Timorese staff. 

As expected, the mainstream media covered East Timor’s independence with no real context: distant tropical island, brown people, violent past. Any discussion of issues facing the new country—let alone the role of western governments in its tragic past— was absent. Yet in this age of increasing globalization (both from above and below), the understanding and action of people half a world away is crucial.            Z 

Diane Farsetta is national field organizer for the East Timor Action Network. For more information, contact the East Timor Action Network at etan@etan. org, or www.etan.org.