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Achievements of a “failed state”

By Tim Anderson - posted Friday, 16 June 2006

The post-independence crisis in Timor Leste has drawn attention to the fragility of institutions in that newly independent country. Australian intervention in 2006 has been accompanied by menacing suggestions of a “failed state” - not just a state that cannot govern itself, but one that poses a threat to others, thus justifying intervention. Yet foreign intervention is anathema to independence and self-governance (in East Timorese terms, “ukun rasik an”).

The immediate danger to Timor Leste's established right to self-determination is likely to be an Australian neo-colonial dominance that could reverse the independent path the nation has undertaken, with its new constitution, national development plan and distinctive policies. The internationalisation of the intervention (the UN involvement) only slightly diminishes this threat. Powerful Australian interests are talking openly about the need for a strong Australian hand on East Timorese policy.

The Fretilin Government, led by Prime Minister Mari Alkatiri, has attempted to manage the tensions of independence, appeasing Indonesia, joining the World Bank but not borrowing money, and maintaining a civil relationship with Australia, while maintaining its rights in the oil and gas dispute.


That civil relationship appeared to have endured until the recent crisis, when open hostility to Alkatiri, in particular, erupted. This hostility was out of all proportion to the share of responsibility Alkatiri may have had for the army crisis.

Reflecting the depth of the frosty relationship with the Fretilin-led government, the Australian Government and corporate media have not even condemned the renegade soldiers who took up arms against their own government and shot people in the street. John Howard and Alexander Downer pretend an “even-handed” policy to Timor Leste's elected government and its violent renegades.

President Xanana Gusmao has so far escaped criticism for not denouncing the renegade soldiers and gangs that are acting in his name. Xanana has great domestic popularity and has not been so closely implicated in the policy conflicts with Australia.

The attacks on Prime Minister Alkatiri reflect underlying tensions that have been building for some time. The prime minister, a strong economic nationalist, remains the country's chief strategist. Many of the tensions relate to distinctive policy developments in the seven years since 1999. The best known achievements have been in the oil and gas dispute, but there have also been modest advances in agriculture, health and education. Yet associated with many of these advances has been opposition or hostility from Australia, and its mentor, the US.

There was wide support for the construction of a new constitution (with a bill of rights, a highly democratic electoral system, recognition of shared national resources and customary law) and a development plan. The pursuit of a greedy Australian Government over East Timor's oil and gas resources proved more difficult. Alkatiri led the first round of negotiations (mainly over the Bayu-Undan field), with broad East Timorese and Australian support. The deal shifted Australia's 80-20 offer to a 90-10 settlement. The second round (over the Greater Sunrise field) shifted the Australian “final” position of 18-82 to a settlement of 50-50.

In both sets of talks there was considerable aggravation, particularly the latter, where Australia got its way in deferring fixed maritime boundaries. Australian officials and some academics told the East Timorese again and again that they were “unrealistic” and would get nowhere. Downer told Alkatiri he would give him "a lesson" in politics. Downer and the “realists” were wrong. The East Timorese did not get their full claim, but they came out several billion dollars ahead.


On agriculture both the World Bank and the Australian Government opposed the transitional government's plans (2000-02) to rehabilitate rice fields, and to use aid money for public grain silos and a public abattoir. That is, the Australian Government - blinded by neo-liberal ideology, and their belief in privatisation and export orientation - blocked East Timorese developmental plans. Yet few interventions are more destructive to development than obstructing a small, post-colonial nation defining and creating its own institutions.

Despite this obstruction, after independence the Alkatiri Government built public grain silos (with FAO assistance) and promoted domestic rice production (with Japanese assistance) as a key policy goal. Despite a lack of resources, a focus on rice production is now embedded in the country's food security policy. A recent UNDP report tells us that the domestic rice production of 37,000 tonnes in 1998 rose to 65,000 tonnes in 2004. This means less dependence on imported rice, an important concern for a country with a history of famines. However, the 2006 crisis has again disrupted domestic supply.

There have been modest gains in education and health. Gross school enrolments increased from 59 per cent in 1999 to 66 per cent in 2004. The biggest improvement was upper secondary school, where enrolment ratios rose from 37 per cent to 46 per cent (they had fallen to 27 per cent in 2001). Infant mortality was static (mainly due to a lack of skilled birth assistants) but under-5 mortality continued to decline.

However, the most significant development in health has been the collaboration with Cuba, which began in 2004. Cuba, a poor socialist country, has the best health system in Latin America and the largest bilateral medical aid program in the world. There are now around 100 Cuban doctors in Timor Leste, most based at village level, and several hundred young East Timorese are studying medicine in Cuba.

In December 2005 Alkatiri travelled to Cuba, visiting the students and the Cuban Government. He secured an increase in promised medical scholarships from 200 to 600. This could generate an enormous rise in health workers, particularly considering the whole country, as at 2005, only had 45 doctors. US Ambassador Grover Joseph Rees III, predictably, protested the development of a relationship with Cuba.

The US ambassador also supported the 2005 church-led protests at government attempts to make religious education optional in schools. This rally turned into demands for the criminalisation of homosexuality and abortion, the removal of “communists” from the government and for the resignation of Prime Minister Alkatiri. The US provided logistical support for the demonstrators - porta loos, to help sustain their protests. The government backed down, keeping religious education compulsory.

The other side to this developmental picture is the growth of unemployment and income poverty in Dili, which has seen its urban population double in recent years. The dislocation of 1999 and the “bubble” economy of 2000-02 contributed to the urban migration, but maintenance of rural programs could help slow it. Yet Australia and the World Bank rarely provide support for the subsistence sector and domestic markets. The large unemployed and young urban population has added to the strains that have built up around the Xanana-Mari Alkatiri rivalry, a rivalry which has been exploited by Australia in the 2006 crisis.

There was international praise for Alkatiri's fiscal conservative management, both in the budgets and in managing oil and gas revenues. However there is also international resentment at his controls over investment and his resource nationalism. In 2003 Alkatiri said, "Independence means sovereignty over all our resources". He has so far maintained the popular “debt free” start for the country, though there are plans to borrow from the Kuwait Fund, to support a national energy grid. Bypassing the World Bank in this way might cause further consternation in Australia and the US.

Caution over foreign investment and borrowing is one area where Jose Ramos Horta - the talented diplomat - differs from his prime minister. Ramos Horta has said he would prefer to "move faster" and would support more "facilities, privileges" for foreign investors. Asserting extraordinary independence from government policy, he is also the only Timor Leste minister to support the disastrous Iraq war.

The more independent economic path pursued by Alkatiri, and the more accommodating attitude shown by Ramos Horta, help explain why the latter has become the “Australian candidate” in the latest Australian intervention. Australian commentators (with little regard for East Timorese democratic processes) have openly declared their preference to replace Alkatiri and Fretilin with some sort of Ramos Horta-led coalition. Such playing of favourites is a great threat to independent development and to public institution-building in Timor Leste.

Australian intervention also has immediate dangers. Several senior army commanders are known to have lost confidence in Xanana because of his perceived links to renegade army leader Major Alfredo Reinado. Though it is not yet clear exactly what links Xanana or Ramos Horta may have with the rebel soldiers, the loyal army commanders are likely to resist any Australian-backed attempts to depose Alkatiri and the Fretilin leadership.

It seems likely that, in his attempts to overthrow Alkatiri, Reinado had at least implicit support from Catholic Church leaders and the Australian and US governments, as well as some understandings with Xanana. Observers have noted that Reinado's wife works at the US Embassy and that Reinado has undertaken extensive leadership training with the Australian armed forces. One Australian officer has said, despite the rebellion, that he regards Reinado as a future political leader. These are hostile acts against the East Timorese nation.

Whatever their prior knowledge of the Reinado-led rebellion, the Australian Government made good use of it to undermine the elected government of Timor Leste. However, domestic compromises (including two ministerial resignations, the promotion of Ramos Horta and a UN inquiry) seem to have forced a temporary back-down. Yet if the “palace coup” does not succeed on this occasion, we will need to closely watch progress in what The Australian calls the now “poisoned” relationship between the Howard and the Alkatiri governments. At stake is an independent economic path for Timor Leste.

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First published in New Matilda on June 14, 2006.

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About the Author

Tim Anderson is a Senior Lecturer in Political Economy at the University of Sydney.

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