The World Bank in East Timor: Solidarity Needed to Avoid the Usual Traps

The World Bank in East Timor: Solidarity Needed to Avoid the Usual Traps

by Lynn Fredriksson

The World Bank put pending funds to Indonesia on hold on September 9, the same day President Clinton suspended U.S. military and financial assistance to Indonesia. The Bank cut the monies in response to both militia terror following the announcement of East Timor's August 30 vote for independence and the Bank Bali corruption scandal (which involved campaign money funneled to former Indonesian president Habibie).

As of early November, Bank loans to Indonesia remain suspended. In September, CNRT President Xanana Gusmão and José Ramos-Horta met with World Bank President James Wolfensohn, the East Timor "team leaders" (Klaus Rohland and Sarah Cliffe) in Washington, and a large group of potential institutional and international donors for East Timor. This was the first international donor meeting to coordinate institutional and country pledges. Both Xanana and José eloquently addressed East Timor's need for assistance, offering a vision for a just, environmentally sustainable and egalitarian society.

The press conference afterwards, featuring WB Vice President Jean-Michel Severino and the two resistance leaders, was a first. In subsequent interviews Xanana clearly articulated his intention to avoid the trap of international financial institution (IFI) lending and structural adjustment requirements. In Xanana's favor on this front, until full independence (following 2-3 years of UN administration), East Timor is ineligible to receive loans, limiting the Bank's role to donor coordination and discretionary funding for direct aid.

As this issue goes to press, a Bank assessment team, consisting of approximately 40 political and economic specialists (approximately half of whom are East Timorese) is in East Timor to gauge financial need and the current political and security situation. Former East Timor Governor Mario Carrascalão heads the delegation.

Press coverage of this group's activities has been maddeningly one sided. It has largely overlooked East Timorese and CNRT participation in the nascent economic and political reconstruction of the shell-shocked nation.

To avoid overdependence on World Bank dictates, other independent assessments are needed, as are recommendations by non-institutional economic and financial experts to advise the emerging East Timorese leadership. Finally, the international solidarity community must continue to support the East Timorese people in their efforts to live in peace, free from the international debt that has hobbled so many developing nations.