Sydney Morning Herald August 26, 2000

Peace stirs a new nation to work towards a prosperous future

People are smiling in Dili, something that has never happened before, writes Herald

Correspondent Lindsay Murdoch, in Jakarta, explains why.

It had been a bad few hours. Tempers were starting to fray. Some people wept. As gunfire echoed around the besieged United Nations compound in Dili, hope that the madness would soon end turned to despair. Then a remarkable thing happened. At 3.15am, probably the darkest hour of a long night, Pedro poked his tiny head into the world.

I was dozing two metres away on the concrete floor of a makeshift hospital. Pedro didn't cry too much, so as not to wake me. But instead of opening my eyes to the crazy-dog militia, as we called the killers over the razor-wire fence, I saw a beaming Joana Remejio nursing her just-born son on a piece of cardboard laid on the floor.

"I am very happy that my baby is alive," she said.

That was 12 months ago. I met Pedro again the other day. He personifies the world's newest emerging independent state, East Timor. He's a little fat, having been pampered by the outside world in his first few months, has a cheeky smile and is on the make.

Or at least his father is. "Pedro was born in United Nations territory, therefore he should have a letter proving he has world nationality," says Rodrigues Remejio, a carpenter who has set up shop in a ransacked house in Dili.

Twelve months after East Timor was looted and burned and hundreds of Timorese killed, Indonesia's madness has moved on. Like Pedro, East Timor is growing out of the ashes.

It took a few days upon returning to Dili to notice a new trait among the territory's people, who suffered 24 years of repression under Indonesian rule and 450 years of benign neglect by Portugal.

Many people may be living under plastic, lacking basics like pots, pans, chairs and tables and may not have access to doctors, schools, lawyers or accountants, but they're smiling. In mist-shrouded villages deep in the mountains, along the pot-holed streets of Dili, in freshly painted corner shops, on the island's lovely beaches, most Timorese are smiling. It was never like that before.

Jose Ramos Horta sits in an air-conditioned office in the former UN compound preparing to open a school for diplomats. East Timor has none. The Nobel Peace laureate says his impoverished state has tremendous potential to be self-sufficient in agriculture.

"If you fly across the country you see some fantastic valleys with great potential. It reminds you of some of the biblical passages about the promised land."

But he does not have grand ambitions or illusions about the problems facing East Timor, one of the world's 10 poorest countries.

"If we can arrange to live in peace, if our people can reconcile without hatred or violence, if we can achieve a significantly reduced level of malaria, if we can prevent joining Indonesia in terms of prostitution and drugs, if we can eliminate illiteracy, if we can respect human rights and avoid becoming like Liechtenstein, or having a coup like Fiji ... it will work."

What will the new East Timor be like?

Some of the policy advisers in the Department of Foreign Affairs in Canberra predict the emergence of a chronically aid-dependent state where rival members of the elite are at each other's throats, corruption is endemic and the government cannot deliver basic services.

There are even fears East Timor will eventually become disenchanted with the Western world and align itself with despotic states, creating a haven for terrorists or drug traffickers on Australia's doorstep.

An Adelaide businessman, Gino Favaro, sips beer in the waterfront garden of his Hotel Dili, where this time last year the thugs of Jakarta's army threatened to open the stomach of his young Indonesian wife if he did not leave East Timor.

"You wait. This place will take off," he said. "It needs to be a tax haven, a Swiss banking set-up ... it will be low taxation and open for foreign investors. The place will boom. Tourism will be the biggest industry. There will be at least one casino and eco-tourism will be strong."

Favoro, the deputy head of Dili's chamber of commerce and a long-time resident, says that in 10 years East Timor will be an upmarket Bali with five-star resorts.

"You will be able to sit in a luxury hotel built in the mountains in the middle of a coffee plantation and sip cognac by the fire into the early hours.

"People who don't know the Timorese say they are lazy. But these people are hungry for knowledge, hungry to learn."

Jose "Xanana" Gusmao, the bearded former guerrilla leader who spent eight years in Indonesian jails, will almost certainly be the first president of the world's newest state.

He also has no illusions about how difficult it will be to build a nation from scratch.

"We are very concerned about a lack of political knowledge," he said. "Democracy, human rights, justice ... our concern is to the put together knowledge to create a civil society."

East Timor has no experience in democracy or self-rule.

Gusmao is also deeply worried about the lack of skills and training among his people. The Indonesians did not allow the Timorese to have a professional class. Among the 800,000 population there are only 35 doctors, none a specialist or surgeon. Half of them are foreigners working for the UN or international agencies.

There are few engineers or tradespeople. There are nowhere near enough secondary school teachers or university lecturers.

The UN discovered there were only 59 lawyers in the territory. None had court experience because the Indonesians who fled last year ran the judicial system. Schools, courts, clinics, hospitals and the civil administration will have to be rebuilt out of the destruction.

Sergio Vieira de Mello, a Brazilian UN official appointed East Timor's transitional administrator, says foreign assistance in key positions will be needed for years. "We desperately need to upgrade the skills of the Timorese. Capacity building is a major problem."

Dili looks like a boom town. Friday night, and the DownUnder hotel bar is packed. The Australian manager grumbles about a 10 per cent tax imposed by the UN but business is good. He has vaguely heard that the hotel was the former headquarters of the most feared militia group, Aitarak. It is where the group's leader, Eurico Guterres, used to kill and torture. But who cares now? There are no ghosts of the past here: the level of music would drive them away.

Peak-hour rush: gleaming white Landcruisers create a traffic jam outside the former governor's office, a colonnaded waterfront building now occupied by the UN.

BMWs and Volvos ply the streets. People from all parts of the world rush to work carrying laptops and mobile telephones. Others sit in the open-air Cafe Dili sipping lattes, gazing at two passenger liners which house hundreds of UN staff, and pleasure cruisers bobbing on the morning tide near the rusting hulk of an Indonesian Navy landing barge.

But the big-spending UN staff have created a false economic bubble that has fuelled inflation. Food is too dear for the average Timorese. Fuel prices jumped 30 per cent in one month. Lack of jobs and unfulfilled expectations about the UN have provoked riots.

Under the Indonesians the public service accounted for a staggering 20 per cent of the economy. The new public service being planned by the UN will be one-third the size, and the wages on offer do not reflect the rising cost of living. A World Bank report acknowledges that the scale and shock of the UN spending does not match the distortions that come with it. "It's a very big bubble. UN spending accounts for 20 per cent of GDP," said Sarah Cliffe, chief of the World Bank's mission in Dili.

The bank has given small loans to each village to be spent at the discretion of elders. But the population of Dili is still double what it was before last year's violence, creating hardship and social problems.

Despite the presence of armed UN peacekeepers and police, unemployed gangs of youths still fight on Dili streets. The UN has traced some of the worst trouble-makers to a breakaway group of Gusmao's former guerrillas.

The lure of the UN money has attracted hundreds of entrepreneurs, many of them Australians, who have opened restaurants, supermarkets, hotels, car hire firms and other businesses that will suffer, if not collapse, when the UN operation winds down and Timorese take control.

An estimated 75 per cent of Timorese are subsistence farmers, eating hand to mouth. Few of them have so far benefited from the arrival of the UN.

The UN's development co-ordinator in East Timor, Finn Reske-Nielsen, says the UN's artificial economy is a serious problem. "There has got to be a development strategy aimed at economic development for the short to medium term," he said. "And agriculture must become the mainstream of that."

A former Jakarta-appointed Governor of East Timor, Mario Carrascalao, says the territory's coffee production should double in the next two or three years.

"We have the best coffee in the world," he said. "At the moment 48,000 hectares of plantations are being worked. That is nothing. We can easily go up to 100,000 hectares, and that will create a lot of jobs for a lot of people."

During Indonesia's occupation huge tracts of fertile land were not farmed because of the security situation.

De Mello says experts have told him that, given limited quantities of fertiliser and high quality seed, East Timor could quickly become self-sufficient in rice and maize.

More than anything else, East Timor's economic viability will depend on talks with Australia over oil and gas revenues from the Timor Gap, the resource-rich seabed between the two nations. But Gusmao has asked Timorese and UN planners not to factor a big windfall from Timor gap royalties into their calculations.

"East Timor has a lot of potential in the areas of tourism, agriculture and fishing," said Mari Alkatari, the Minister for Economic Affairs in the country's transitional cabinet set up by the UN. "It would be bad for us to create a sort of cargo-cult mentality where all our thinking is on the Timor Gap," he said. "If money comes from oil or gas in the Timor Gap it will be a bonus but we won't be counting on it."

Ramos Horta says the Timor Gap's potential is linked to development of industry in the Northern Territory. "Yes you have to be realistic about that," he said.

He cites some estimates that East Timor will receive more than $200 million in oil revenue and $300 million from natural gas in the Timor Gap within a few years.

He predicts the negotiations with Australia will greatly favour East Timor. "The Australians will tell you they are being most flexible," he said. "Without negotiating the sea boundaries, we believe Australia will agree with our basic principle that the middle line in the exclusive economic zone is the boundary. This means that at least 90 per cent of revenues from the Timor Gap would come to East Timor."

One of Gusmao's biggest worries is security for his people, especially after a recently stepped up campaign by pro-Jakarta militia to destabilise the border between East Timor and Indonesian West Timor.

But he shows a remarkable ability to forgive Indonesia, developing a warm relationship with its reformist president, Abdurrahman Wahid, who has apologised to East Timor for atrocities committed by Indonesia and has promised to disband the militia.

Gusmao realises how important it will be for East Timor's future to have good relations with its giant neighbour and to be able to put aside the lingering hatred.

"If you really want peace, if you really want stability, we have to put everything behind us," he said. "If not you will live under some kind of spell. You cannot see the future. You cannot work towards the future."

Isn't that tough? "Yes, of course, yes. But we learned during 24 years that we can win despite the odds being against us. They were killing our people ... but we found the better way was to ... bring them to our side. They joined with us in the jungle. They died like heroes with us."

Gusmao plans to create an army of perhaps 3,000 to 5,000. The core of the ranks will be his former guerrilla fighters, who have been bored and restless since they came out of the mountains last September and October. "We will feel nothing without a sense of security," he said.

Carrascalao says there are many in Indonesia "who want to create instability so they can say Indonesia's rule was better".

"Why do you think they destroyed everything when they left? They didn't want to leave anything behind to make it easier for the Timorese ... they formed the militia groups to create a situation conducive to civil war."

The Carrascalaos are one of the most prominent of only 20 to 30 families that make-up East Timor's political elite.

It will be mostly from the existing elite families that Timorese will elect members of a constituent assembly at UN-supervised elections, to be held possibly between August and December next year.

Joao Carrascalao, Mario's brother, who is Infrastructure Minister in the transitional cabinet, says there is a determination among East Timor's emerging politicians to establish a government of national unity, involving all the significant parties, for several years.

"Things could easily go back to the fighting of the mid-1970s, especially if people don't have a strong vision of unity," he said.

The main political parties that have re-emerged are Fretilin, the revolutionary group once headed by Gusmao that fought for independence, and the UDT, whose fighters assisted the 1975 Indonesian invasion of East Timor.

A new centre-right Social Democratic Party was formed last week with the Gusmao's blessing . It aims to offer an alternative to what it calls "revivalism of the past".

A Western diplomat monitoring East Timor said: "Normally it is a recipe for disaster to expect former enemies to work together. But one factor brought them together: the behaviour of Indonesia after the invasion."

A small group of Timorese leaders surrounding Gusmao are anxiously waiting to take charge of their new country. But in interviews none of them underplays the enormous challenges. They speak candidly about the difficulties solving issues such as land ownership. Thousands of properties are in dispute.

Foreign investors will lack the confidence to spend money until they are settled. Some claims date back to the Portuguese days.

Questions fundamental to East Timor's future are being argued passionately. What should the national language be, Portuguese or English? Should there be a presidential system, like Indonesia's, or a parliamentary system based on the English model?

People are deeply traumatised.

In Dili, a group of women with newborn babies seek counselling; they want to know whether they should baptise their babies, conceived during rapes by Indonesian soldiers. When Gusmao goes into towns or villages he tells his people to be patient, to understand that independence did not suddenly arrive with the departure of the Indonesians.

"I tell them to be humble, to accept that we are not perfect."

UN officials and diplomats in East Timor say the emerging state is lucky to have leaders such as Gusmao and Ramos Horta.

But strains are already taking their toll. Gusmao has angered some party leaders by denouncing what he calls their inappropriate ambitions for power at a time East Timor needs national unity.

"[Gusmao] has his faults like everybody else, but he understands his own limitations," said a Western diplomat based at a Dili mission. "He cares deeply about the fate of his people. He has an ability to listen and compromise. He will be able to tap an enormous amount of international goodwill for his new country."

Like most East Timorese. Maria Lourdes de Sousa, 40, has a horror story. At the height of last year's rampaging by pro-Jakarta militia she had to run the gauntlet of mobs to reach West Timor with her lawyer husband and four children.

The militia were hunting her because she had worked for the UN. At a checkpoint thugs tried to drag her two-year-old son from the car. "I held on and held on ... it was frightening," she said. The boy still carries the scars.

Several weeks ago, days before she gave birth to her fifth child, she sat for an exam to select 50 trainee diplomats. "I never imagined I would ever be a diplomat, but I passed," said the face of the new East Timor.

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