Subject: Eureka: East Timor's continued uphill battle to secure a future

Eureka Street


East Timor's continued uphill battle to secure a future


By Paul Cleary

A potentially unstable coalition government with few detailed policies and weak administrative ability is now certain to emerge after East Timor’s first post-independence poll resoundingly rejected the party which had championed the country’s long struggle for independence.

Results from the 30 June poll indicate that the ruling Fretilin party saw its vote collapse to around 29 per cent. This is less than half the vote it received in the 2001 poll. The newly-formed CNRT party led Mr Xanana Gusmão, the hero of East Timor’s armed resistance struggle, came second with around 24 per cent of the vote. It is now vying with Fretilin for the allegiances of minor parties to secure a 51 per cent majority in parliament.

Whatever the composition of the coalition government, East Timor is now facing an uphill battle to secure its future and avoid a cycle of weak or failing governance. Dedication to creating jobs for a young and fast-growing population, and to improving administrative capacity so that the country can effectively spend its oil revenue, are the essential prerequisites for turning an unstable coalition into a strong and cohesive government.

The Gusmão-led CNRT has targeted the major weaknesses of the Fretilin government ­ its highly centralised and dysfunctional administration which made it unable to roll out programs to improve the lives of an impoverished and massively unemployed million-strong population. This poor performance was in spite of having the benefit of massive revenue from ConocoPhillips’ Timor Sea oil and gas project.

After 24 years of violence and Indonesian occupation, East Timor had until last year been a success story in the difficult business of post-conflict reconstruction. It was seen as a model for Iraq and Afghanistan.

But the country lapsed back into renewed conflict in May 2006 after the Fretilin government mismanaged a minor dispute within the armed forces. A dearth of job opportunities, reflecting four years of economic contraction in per capita terms, created the conditions for renewed conflict. Australian and other international peacekeepers, which had left the country prematurely in 2004, were forced to return in May last year when warring armed forces factions put the country on the brink of civil war.

Mr Alkatiri’s government succeeded in alienating the majority of the population with an authoritarian and undemocratic approach to government. He became infamous for making insensitive remarks, threatened to close down newspapers and tried to make defamation a criminal offence. His government was so ineffective that it was unable to spend the money it had available; about one third of the modest 2005-06 budget was unspent in a country with massive needs.

Mr Alkatiri’s mismanagement outraged Mr Gusmão, who served in the largely ceremonial post of president from 2002-07. This is why the former poet, painter and pumpkin farmer shelved his retirement plans and overcame bad health to make an audacious bid for executive power. Mr Gusmão had used his moral authority to force Mr Alkatiri to stand down as prime minister last year.

Mr Gusmão’s CNRT has the support of the powerful Catholic Church and is joined by a young and impressive Timorese, Mr Dionísio Babo Soares, a lawyer who has a PhD in anthropology from the Australian National University and worked recently on policy issues for the Asia Foundation in East Timor. He is also a popular musician and football commentator. But it remains uncertain as to whether Mr Gusmão or Mr Alkatiri can lock in the support of two key minor parties, the Democratic Party and ASDT-PSD.

Mr Babo Soares, who has been published widely on post-conflict reconstruction, said recently that in government the party would "enact immediate and swift reform" to decentralise government administration. Under the Fretilin government’s highly-centralised administration, even the smallest expenditures had to be approved by ministers. When ministers were travelling overseas, as was often the case, the business of government ground to a halt.

The new president, Mr José Ramos-Horta, who is closely aligned to Mr Gusmão, has vowed to be an activist president on economic management and, with the help of advice from a coterie of economists from the US and UK, has proposed popular fiscal measures to address poverty and unemployment. Mr Ramos-Horta has called for abolishing income tax for businesses and individuals below a threshold and making East Timor a free trade zone.

The former government was unable to strike the right balance between spending and saving. The challenge for the new government is to effectively administer programs to generate jobs and encourage private sector activity. There is an urgent need to circulate money in East Timor, where barter remains important. Handouts and expenditure should be targeted and they should be based on merit and mutual obligation. Veterans who made countless sacrifices during the Indonesian years are worthy of pensions. Mothers who shoulder the vast majority of the domestic work, and who are good financial managers, could effectively use a child endowment in a country where 40 per cent of children are undernourished. And public works projects to improve infrastructure and soak up some of the massive pool of unemployed youth would also be an effective target for public expenditure.

The creation of a rural credit bank to promote private sector activity would be another worthy goal for the new government, provided it is properly managed. In a country where the acronym KKN (which stands for corruption, cronyism and nepotism) is a common refrain, the new government could learn from the fiscal discipline established by the Fretilin party, while governing with greater sensitivity and effectiveness.

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