Subject: FT: Complications follow the painful birth of East Timor

Received from Joyo Indonesia News

Financial Times (London) December 4, 2003

Complications follow the painful birth of East Timor:

Despite growing stability, the world's newest country is still facing long-term challenges, writes Shawn Donnan

The signs of the painful birth East Timor went through four years ago are still easy to find. Burnt-out buildings remain a feature in the capital Dili as do the tarpaulins stamped with United Nations agency logos you find in conflict zones the world over.

Amid the reminders of Indonesia's scorched-earth exit from what is now the world's newest country, however, are signals of East Timor's new beginnings. The former Indonesian military headquarters is now a cultural centre. Second-hand taxis from Hong Kong and Singapore ply the streets of Dili. Stores sell pirated DVDs to peacekeepers and aid workers, who drop into a new luxury hotel for espressos and yoga classes.

Add it up and you could conclude the UN's four years of nation-building have been effective: it takes stability for entrepreneurship or creature comforts to be able to emerge; and East Timor no longer suffers under Indonesian oppression.

But since the UN began building a country from the ground up, significant problems have emerged. And when you consider the UN has been working with a welcoming population after only a short conflict, the country offers a daunting perspective on the task the international community faces in a place such as Iraq.

"What you have in East Timor is a country that has a long-term challenge to develop all its institutions," says Colin Stewart, a senior UN official who has been involved with East Timor since 1999. "There is no magic wand for that."

Some of the complications were made clear one year ago in a riot that expressed the disenchantment of many young East Timorese. The rioters torched a supermarket for expatriates and the home of prime minister Mari Alkatiri, whose government had taken over from the UN just months before.

A poll released last month by the US-based International Republican Institute indicated many East Timorese remain disappointed - with just 42 per cent saying they were better off than before independence. Mr Alkatiri blames unrealistic expectations. A large part of his job, he says, is "delivering clear statements that independence means work".

The prime minister also says he is working against a mindset of dependence caused by centuries of foreign rule, now perpetuated by the UN. With the UN's arrival, he argues, "another mentality of dependence was created - everything for free".

That, Mr Alkatiri says, has complicated East Timor's economic rebirth. After the reconstruction boom - and inflation - brought by the UN and its highly paid contract workers, economists say East Timor's economy is likely to be moribund in the medium term.

In a paper prepared for a donor meeting in Dili this week, the World Bank estimates East Timor's gross domestic product will have declined by 3 per cent in 2003, with per capita GDP falling to just Dollars 410 (Euros 339, Pounds 237).

The recession, which the bank expects to last throughout next year, is largely the result of the UN's gradual pull-out.

The peacekeeping force was more than halved to 1,750 at the end of November and next May its civilian contingent is expected to be cut significantly.

The government's budget has also been hurt by delays in petroleum royalties from the Timor Sea oil and gas projects it shares with Australia, which now offer the best hope for the country's economic future. As a result, Dili is asking donors to help plug an additional Dollars 126m budget gap over the next three years.

East Timor is also suffering from the fragility of key institutions such as its courts and police. A shortage of qualified judges and an immense backlog of cases is causing the standard sentence for many criminals to be their pre-trial detentions of up to two years.

Also, earlier this year an appellate court prompted a judicial crisis when it ruled that Portuguese rather than Indonesian law should serve as the stop-gap legal framework.

Lucas da Costa, the rector of the University of Dili, says the introduction of Portuguese - spoken by fewer than one in 10 East Timorese - as the official language in parliament has also left many MPs floundering. "The debate is in Portuguese but not everyone understands Portuguese," Mr da Costa says. "So the result is every law passes."

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