Subject: Poverty a threat to Timor's stability

Also: RT: Timor gas revenue must go to the poor -U.N. report

The Sydney Morning Herald

Thursday, March 9, 2006

Poverty a threat to Timor's stability

Craig Skehan

ENTRENCHED poverty could destabilise East Timor unless earnings from oil and gas are fairly distributed, a United Nations report has found.

Half the estimated population of 1 million lacks safe drinking water and 60 in every 1000 infants die before their first birthday. Life expectancy is only 55, while the average yearly income of $500 has been falling.

The report, written by the UN Development Program in collaboration with the East Timorese Government, says that to tackle poverty, East Timor will need to achieve economic growth of 5 to 7 per cent a year.

The signs of pitfalls ahead reinforce a World Bank warning last year that an estimated $19.5 billion in oil and gas revenue over 20 years from the Timor Sea could fuel corruption.

Last month more than 400 soldiers - nearly a quarter of the defence force - protested over pay and conditions as well as alleged favouritism.

Australia agreed to East Timor receiving 90 per cent of revenues from a joint energy development area 400 kilometres north of Darwin, but there are still local critics of the deal.

East Timor's President, Xanana Gusmao, acknowledges in the UN report that Timor Sea royalties do not necessarily guarantee a bright future.

"Poverty can potentially act as a breeding ground for social instability and civil disorder, and it can trigger crime and strife," said Mr Gusmao, a veteran of the resistance to Indonesia's occupation.

Poverty is most severe among the 80 per cent of households who earn a living from agriculture. A male-dominated culture puts additional pressures on women.

There is a petroleum fund to finance development projects, but the departure of many international assistance personnel is exacerbating skills shortages.

There have been media reports of foreign businessmen complaining about government officials demanding bribes.

The UN report praises the embrace of democracy by the East Timorese and cites scope for future exploitation of hydrocarbon reserves to underwrite improved living standards.

The total requirement for public expenditure during the next four years has been estimated at $1.1 billion.

But even with projected oil and gas revenues, foreign aid will be required to fill a shortfall of about $160 million a year. Australia contributes $40 million.

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Timor gas revenue must go to the poor
-U.N. report 09 Mar 2006 00:02:31 GMT

By Achmad Sukarsono

JAKARTA, March 9 (Reuters) - East Timor, the U.N.'s newest member state and one of the poorest nations in the world, should channel its prospective gas revenues to rural development and basic needs, a report from the world body said on Thursday.

Tiny East Timor, a one-time Portuguese colony taken over by Indonesia in 1975, broke away from Jakarta in 1999, but freedom from foreign occupation has not alleviated widespread poverty, the United Nations Development Programme report said.

East Timor's per capita income was under $370 in 2004, less than what it was 10 years ago when it was still ruled by Indonesia, and the report said it might still be falling.

"Poverty itself is a cause of many health problems and the reason why many children do not get adequate schooling," it said.

"The primary task therefore is to create a more dynamic rural economy that will enable farmers and rural communities to ... work their way out of poverty," the report said, adding a prospective oilfield off Timor island could be the lifesaver.

East Timor suffered considerable damage to its infrastructure as well as some 1,000 deaths in 1999 in violence blamed mainly on pro-Jakarta militia backed by Indonesian military elements.

That came to a halt when Australia sent soldiers to enforce the results of East Timor's vote for independence.

The neighbours have since signed a deal to share revenues from the development of huge hydrocarbon resources in the Timor Sea with an estimated value in the billions of dollars.

"Given the likely revenues from oil and gas, this (human development) is technically feasible and financially affordable," the report said.

The Dili government has vowed to use the revenue wisely.

"It is vital for us to ensure that these funds are managed in a way that benefits all communities in (East Timor)," said Prime Minister Mari Alkatiri in a UNDP statement.

"This includes widening opportunities for the poorest populations in rural areas. It is also important for us to be forward-thinking and to wisely save and invest a portion of this money for future generations."

However, the report warned investment so far has mostly gone to the capital Dili, with only a third of total public expenditure and a fifth of goods and services targeting rural districts.

"Growth will have to start with agriculture, which employs nearly three-quarters of the labour force," said Sukehiro Hasegawa, the UNDP Resident Representative in Timor, in a statement.


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