Subject: AFP: Oil deal a desperately needed boost for East Timor

Oil deal a desperately needed boost for East Timor

by Peter Allport

SYDNEY, July 4 (AFP) - When international peacekeeping troops arrived in East Timor almost two years ago, they found a country of crosses.

Crosses marked the dead left by 24 years of Indonesian occupation and the resulting guerrilla war against Jakarta's comparative military might.

And barely a building had been left untouched by rampaging pro-Jakarta militia fighters (sic) seeking to overturn the result of the August 30, 1999 referendum result in favour of independence.

Schools were gutted, homes destroyed, churches desecrated and the all-important coffee crop, which was the territory's primary source of income, lay rotting.

The Catholic Church operated medical clinics, manned by western volunteers, aid agencies such as Caritas, and nuns armed with little but courage and precious little medical training.

The agreement between Australia and East Timor via which the world's newest independent state will receive more than seven billion dollars (3.64 bilion) over two decades in royalties from Timor Sea oil and natural gas projects amounts to an economic lifeline, aid agencies say.

Or the difference between economic independence and perpetual dependence on foreign aid from key donors such as Australia, former colonial power Portugal and the United Nations.

East Timor's Nobel peace prize winner, Jose Ramos-Horta, suffered no illusions about how to meet the challenges faced by unemployed youths roaming Dili and the countryside: they need jobs.

"It will bring about 400 million Australian dollars to East Timor by 2004, and this is extremely important to help the economy, to stabilise the situation politically," Ramos-Horta told ABC Radio here.

"Without this kind of money we would not be able to generate employment. Obviously in the first few years of independence it's very important that there will be jobs to stabilise the situation."

Australian aid agencies cited the agreement as a means of breaking the cycle of poverty and aid dependence that still afflict countries such as Cambodia, long after UN peacekeepers have departed.

"This treaty gives the East Timorese an important independent revenue source for about ten years as they work towards self-reliance, Australian council for Overseas Aid (ACFOA) spokesman Jim Redden said.

"An over-reliance on foreign aid and loans can all to often lead to a developing country becoming trapped in the debt-poverty cycle, whereby the government ends up spending more on interest repayments than on schools, health and jobs."

The man who authorised the deployment of Australian troops to East Timor, Prime Minister John Howard, acknowledged Wednesday that Australian concessions granting East Timor 90 percent of royalties from the Timor Sea were aimed ensuring the UN-administered territory did not become an economic basket case on Australia's doorstep.

"It will be a way of giving some revenue to the new country, which is going to be a very poor country and will need a lot of assistance," Howard said.

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