Subject: St.Pete Times: Rebuilding East Timor

St. Petersburg Times June 16, 2000

Rebuilding East Timor


DILI, East Timor

Nine months after East Timor was devastated by rampaging militias who opposed its independence, U.N. authorities and freewheeling capitalists work to rebuild the economy.

Tom Culbert, an Australian with a compact build and tattooed arms, hit the ground running last year after Indonesian troops pulled out of East Timor. He's no marine; he's a businessman scouting investment opportunities.

Culbert soon found an abandoned Indonesian government machine shop and took it over. His company, Universal Engineering, now produces security bars for the U.N. Transitional Administration in East Timor, or UNTAET.

Other foreigners run hotels, operate restaurants and even provide catamaran sunset cruises. Only foreigners can afford such services, however, leaving many East Timorese angry at a growing economic divide. The influx of foreigners earning high salaries has driven up inflation an estimated 100 percent. A Timorese laborer's daily wage of $ 6 per day now buys two cappuccinos.

East Timor's economy resembles the Wild West as small-time foreign business people try to make quick profits, UNTAET tries to stabilize the situation and Timorese try to figure out their future economic system.

Timorese unemployment in urban areas has remained at an estimated 80 percent. Local residents are increasingly angry at the U.N. administration for not providing more decent-paying jobs. Port workers, hotel workers and even U.N. drivers have all staged strikes in recent months.

"UNTAET isn't really serious about developing opportunities for Timorese to be employed," says Eusebio Guterres, head of Labor Advocacy for East Timor, a non-governmental organization.

The United Nations cannot be the country's main employer, said Sergio Vieira de Mello, UNTAET chief administrator. But international agencies have cut red tape to speed reconstruction and provide some jobs. "Never has the World Bank, the Asian Development Bank, the IMF (or) the U.N. worked as fast as it has here," Vieira de Mello said. "Unfortunately, it is still too slow."

Seeking self-sufficiency

UNTAET faces a daunting economic task. Portugal maintained East Timor as a desperately poor colony for more than 300 years. After Indonesia invaded and occupied East Timor in 1975, it spent hundreds of millions of dollars on infrastructure and economic development. The Indonesian military, which ultimately controlled East Timor, assumed that its economic largesse had won Timorese support for remaining as a province of Indonesia.

In fact, nearly 80 percent of East Timorese voted for independence on Aug. 30, 1999. In response the Indonesian military and allied militias massacred hundreds of people, torched cities and ultimately forced hundreds of thousands of people to flee their homes.

Amid international outrage, an international peacekeeping force landed on the island.

Today much of Dili is a burned-out concrete shell. The departing Indonesians and their Timorese supporters even took bathroom fixtures and window frames. Machinery too heavy to transport was disabled. UNTAET has worked furiously for eight months to restore electricity, water service and minimal port facilities.

UNTAET and other international agencies are funding a number of crash rebuilding programs, including one to repair damaged schools in time for classes to open in October. Sarah Cliff, World Bank chief in East Timor, said the program emphasizes local control and job creation.

"School principals and councils will be given materials and cash to be able to mobilize local employment to get the schools up and running again," she said.

The World Bank is committed to building a market economy in East Timor so it can take its place in the global economy. But it won't be easy.

The infrastructure is so poor that East Timor can't even attract garment sweatshops, Cliff said. She predicts the nation could eventually become self-sufficient in agriculture and promote coffee and seafood exports.

"That's the sustainable path forward," Cliff said.

Economy driven by aid

East Timorese independence leaders face tough choices about how to develop their country's economy. Fretilin, the Revolutionary Front for an Independent East Timor, which most observers expect will win future parliamentary elections, began fighting Portuguese rule in the 1970s as an anti-imperialist organization.

Events in the 1980s and the collapse of the Soviet Union in 1991, said Fretilin leader Mari Alkatiri, forced them to reconsider the lack of democracy and liberty under the Soviet-style system. But Fretilin doesn't completely trust capitalism either, Alkatiri said, because it has failed to eliminate poverty.

The newly independent East Timor expects to raise a lot of money for economic development programs by exploiting offshore oil and natural gas.

Australia had previously signed a joint exploration agreement with Indonesia to develop those resources. Expected revenue could exceed $ 500-million over the next five years.

UNTAET backs East Timor's claim that all of the oil and gas fields fall within East Timor's territorial waters, according to UNTAET official Peter Galbraith. Australia disputes the claim, and negotiations are likely to be protracted.

In the meantime, East Timor's economy is being driven by international aid and the capitalists flooding into Dili.

Culbert, the Australian businessman, hopes to get East Timorese contracts connected with offshore oil. But his agreements to use facilities in Dili end in two years, roughly when U.N. administration ends and East Timor starts to run its own affairs.

"No one knows what the economy will look like after that," he said.

GRAPHIC: BLACK AND WHITE PHOTO, REESE ERLICH; BLACK AND WHITE MAP, Associated Press; A vendor ekes out a living by selling cigarettes and soft drinks to U.N. staff in front of the headquarters of U.N. Transitional Administration in East Timor. ; Maps locate East Timor

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