Subject: Cash-Strapped E Timor To Rely On Aid For Years -Economists

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Associated Press June 13, 2001

Cash-Strapped E Timor To Rely On Aid For Years-Economists

DILI, East Timor (AP)--As international aid donors prepare to meet in neighboring Australia to discuss East Timor's future, economists warned on Wednesday that the fledgling nation could be reliant on foreign aid for years to come.

Despite an expected windfall of tens of millions of dollars from offshore oil and natural gas reserves as well as coffee exports, the World Bank said East Timor won't reach economic self-sufficiency for up to 10 years.

"The population will continue to be poor over the medium term and will need a really sustained, well-planned development program to make sure their incomes are raised," said Sarah Cliffe, the bank's East Timor representative.

After centuries of colonial misrule by Portugal and 25 years of corrupt and repressive Indonesian occupation, East Timor is one of the poorest parts of Southeast Asia.

Much of its infrastructure lies in ruins, destroyed by anti-independence militia gangs after the territory voted to break away from Indonesia in a U.N.-sponsored referendum in 1999.

On Thursday, representatives from the World Bank, the U.N., Japan, the U.S., Portugal, Australia and other Asian and European countries will meet in Australia's capital Canberra for two days of talks.

They will discuss an economic blueprint for East Timor that has been drafted by the territory's U.N. administrators and the World Bank.

They also hold hopes of new pledges of financial assistance.

At the last donors' meeting in Tokyo in December 1999, $523 million was pledged to help East Timor rebuild. However, only a fraction of that was delivered.

Oil and natural gas from the Timor Sea, between East Timor and neighboring Australia, is expected to bring in up to $100 million a year from 2004.

An agreement with Australia to share royalties from the exploitation of the natural resources is expected to be worked out later this month.

The export of high quality, organically grown coffee is expected to bring in as much as $50 million a year and U.S.-sponsored aid groups are working hard to increase that figure.

U.S.-based coffee giant Starbucks Corp. (SBUX) already snaps up most of East Timor's 3,000 metric tons of Arabica and Robusta coffee beans.

East Timor's finance minister Mari Alkatiri said that with the oil, natural gas and coffee, the territory may "be a very wealthy country in the future."

But current per capita income is about $400 a month and East Timor's administrators only manage to raise a third of government operating costs through taxes.

Alkatiri said that in addition to a lack of funding, another major stumbling block to a prosperous future is the lack of skilled and experienced workers.

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