Oil in troubled waters - funding a Basic Income for East Timor

Australia looked good for a while. In Catalonia, where sympathies for small oppressed nations are deeply rooted in direct experience, not many people are aware of the less savoury aspects of the history of Australia’s relations with Indonesia. An example is Australia’s recognition of the Indonesian occupation of East Timor in its haste to sign the Timor Gap Agreement, giving it access to East Timor’s natural resources. What came through here in recent years was Australia’s role in the International Force for East Timor and the $100 million spent on aid programs in one of the world’s poorest countries. Now people are starting to wonder how Australia could hold out a little balm with one hand while illegally greasing the other to the extent of $2 billion from oil and natural gas fields in disputed areas.

In withdrawing from the International Tribunal for the Law of the Sea and unilaterally issuing licences, Australia has shown a greedy contempt for international law. With its delaying tactics in the negotiations, putting East Timor over a barrel and trying to force it to agree to the worst possible deal, Australia looks more like the playground bully than the generous and concerned neighbour that Alexander Downer claims it is.

Everything is so topsy-turvy Down Under that East Timor is now, albeit unwillingly, Australia’s biggest donor country.

The legal issues at stake have been amply discussed in Australia. East Timor’s ranking, along with Chad and Niger, as one of the world’s poorest nations (and one of the most ill-treated) is well-known too. What is missing from all the discussion about Australia withholding the oil and gas revenues that East Timor so desperately needs is what East Timor might do with this input into its economy. There is vague talk of improved health services, roads and so on but the fact is that access to this revenue would offer the East Timorese government one option that would usher in what José Ramos Horta has called “East Timor’s time to prosper”. We refer to Basic Income. This is a payment made by the State as a right of citizenship, to each full citizen or resident of the society, regardless of whether he or she wishes to engage in paid employment, or is rich or poor, and which is paid independently of his or her other sources of income, and irrespective of his or her cohabitation arrangements in the domestic sphere.

In December 2002, the Brazilian Senate approved a law that was passed in the Chamber of Deputies in December 2003 for the gradual introduction of a Basic Income as of January 2005. Basic Income is seen here as constituting an essential measure for economies that are characterised by great inequalities of income and wealth and where huge sectors of the population live in conditions of utmost poverty. The proposal is especially valid for countries like Brazil or East Timor which, after many years of dictatorial regimes, have undertaken the commitment to resolve their most pressing social and economic problems through improving the mechanisms of democracy and offering better conditions for the possibility of full citizenship.

The East Timor Constitution enshrines these principles and demonstrates a belief that, in order to build a just and democratic society, it is necessary to stimulate values of equality and social cohesion without denying the inclination of the members of our species towards improving their own personal conditions of existence. In such contexts, so the Constitution of East Timor suggests, opportunistic leanings can give way to attempts to achieve more just conditions of existence and the organisation of social relations that give real meaning to the concepts of freedom and democracy. In brief, the Constitution offers a vision of community that is deeply entrenched in the values of East Timorese society, while also being totally compatible with ethical principles that are present, one way or another, and more or less happily, in all cultures.

East Timor is essentially an agrarian economy, with 90 per cent of the population based in the rural area (before the massive displacement of 1999) and 75 per cent engaged in agriculture (primarily subsistence agriculture). It is at present one of the poorest countries in the world, with an estimated Gross Domestic Product per capita of US$215-230 in 1999. This means that at least 50 per cent of the population receives well below the internationally-established threshold of absolute poverty: one US dollar a day.

In the nascent East Timor, introducing a Basic Income would not mean so much adapting an existing system to accommodate a Basic Income, as starting from scratch with clear, simple and accountable economic criteria. It would help to maintain the existing strength of community values and solidarity in East Timor, and this should make it possible to introduce modest but comprehensive local reforms throughout the country, so that the ripple effects would eventually be felt at national level. For example in terms of the self-sufficiency of food production, this could help break down the deeply entrenched and deadening dualism in the economy between the modern non-Timorese sector and the rural subsistence economy. Other possibilities include dealing with environmental damage on the national scale through local initiatives, improving marketing and transportation systems nationwide and redressing the marginalised position of women.

Such a policy would function as a system of micro-credits for everyone, without external interference and avoiding the pitfalls of the micro-credit system of distribution that, in fact, benefits only a minute percentage of the population. Although the United States Congress has theoretically prioritised helping the world’s poorest people, the aid allocated for this is just US$2 billion. The individual credits have a ceiling of US$300 in the poorest countries, but this US$300 is one-off and has to be repaid.

In East Timor the highest goverment officials earn only some US$700 a month. A Basic Income of, say, US$40 a month would represent for the very poorest family with, for example, six dependents, a stable monthly income of US$320. In a hamlet of 20 similar families this Basic Income would bring in US$6,400 per month, enough to finance a hand tractor, livestock, and a small transport business at the community level in a very short time. Small isolated communities would again be linked together in market networks and people could begin to move out of the overcrowded towns back to the countryside, establishing stable food production beyond the subsistence level.

Assuming a total population of 800,000, this would represent an overall sum of US$384 million per annum, while Australia’s illegal takings from the oil and gas reserves in the Timor Sea presently amount to US$365 million.

The population census conducted in 2000 by the United Nations Transitional Administration in East Timor (UNTAET) estimated that 41.1 per cent of the population was less than 14 years of age. Another Basic Income scheme could be, for example, a Basic Income of US$40 for those over 14 years (US$226,176,000 per annum) and US$30 for those under 14 years (US$118,368,000 per annum), which would represent a total of US$344,544,000 for the Treasury, less than what Australia is taking in the Timor Sea reserves. Different figures and combinations could be considered.

Still more impressive is what these figures represent in comparison with what East Timor is now spending on food imports: US$237 million per annum. This is about 62 per cent of an overall Basic Income of US$40. Social and economic life before the invasion was based on agriculture with a significant community-based component. The pilot project of rice cultivation with buffaloes in the isolated community of Uatulari (a problem zone because of the high degree of militia activity), financed by the Regional Government of Catalonia (US$142,680 in total), has proved that even the most difficult areas can achieve self-sufficiency in rice in a very short time with a modest financial input. In other words, the saving of US$237 million per annum in food imports could eventually cover about two thirds of a substantial Basic Income.

To look at the figures another way, a Basic Income of US$40 per month for everyone in a hamlet of 20 eight-member families represents US$76,600 per annum compared with the annual average of US$47,560 that the much bigger community of Uatulari has received from the Catalan Government over the last three years, a contribution that has completely transformed economic and social life in Uatulari.

Furthermore, given the nature of East Timorese society, stable food production means restoring the social fabric that was destroyed with the killing of livestock and general havoc of the occupation years and especially the months after the 1999 referendum, as Uatulari has also demonstrated. This “social capital” is a necessary though not sufficient condition for resettling the 280,000 people who were displaced from East Timor during the militia violence, including militia members themselves.

Another aspect is that there was a massive migration to the capital, Dili, in 1999, a problem of population imbalance that is yet to be solved. In particular, there are many unemployed, traumatised and disaffected youth with a great capacity for violence, who are especially susceptible to the attempts of diehard former militia and pro-Indonesia elements to create instability. Another group that needs urgent consideration is that comprised by the former FALINTIL guerrilla fighters, men (and some women) who renounced their youth, and any educational and employment possibilities they may have had, in order to fight for their country’s independence. These people, their widows and dependents, account for some 40,000 people today. They are the country’s heroes and yet are economically, and therefore socially, excluded. In short, a revived economy on the basis of a Basic Income would favour many processes of reconciliation besides improving the democratic processes that the East Timor government so desires to make a reality.

We are also asking whether the Australian government will continue to deny East Timor this option of real socioeconomic development on a nationwide scale and to deny itself the long-term advantages of having a stable and self-sufficient neighbour. Finally, we are wondering whether it really wants to keep projecting this unflattering image of the nasty old man who snatches sweets from a child, or the future from the children of East Timor.