Subject: KY: Top U.N. official says E. Timor fragile but not 'failed state'

Thursday September 6, 9:38 PM

LEAD: Top U.N. official says E. Timor fragile but not 'failed state'

(Kyodo) _ (ADDING QUOTES, INFO ABOUT PETROLEUM FUND)

The top U.N. official in East Timor said Thursday the fledgling country that gained its independence five years ago remains fragile but is no "failed state" as recurring political turmoil and street violence have led some to believe.

"It is an emerging democracy, too young to be a failure," Atul Khare, specil representative of the U.N. secretary general for East Timor, said in a lecture at the Japan Institute of International Affairs.

Noting that the international community has "invested a lot" in helping East Timor become a viable democracy, Khare said the violence that paralyzed the country in April and May last year, leaving up to 40 people dead and displacing 15 percent of its population of less than 1 million, "did not nullify those efforts nor did it reveal Timor-Leste (East Timor) as a failed state."

Last month, East Timor was again shaken by unrest in the wake of the June parliamentary election in which no single political party won a majority. The violence was sparked Aug. 6 when President Jose Ramos-Horta announced the formation of a new coalition government that exluded Fretilin, the party that won the most votes.

The disturbances have included street fighting, arson attacks, tire burnings and roadblocks -- even attacks on U.N. police and the Australia-led international security forces.

The collapse of law and order stems from political rivalries, regional divisions, grievances among soldiers and police, and discontent among gangs of idle youth in a country where unemployment and underemployment is as high as 70 percent.

Fretilin, formerly the ruling party but now in the opposition, had refused to recognize the legitimacy of the new government of Prime Minister Xanana Gusmao and is seeking a new election by as early as February. It considers the continued presence of over 1,000 international troops illegal.

In light of East Timor's continuing difficulties, Khare wants the mandate of U.N. Integrated Mission in Timor-Leste -- which he heads -- to be extended by another five years after its expires next February as more time is needed for East Timor to build up a neutral and professional army and police force.

East Timor, he said, 'will need the sustained support of the international community, including possibly through the presence of the U.N. peackeeping operation, till such time that a strong police force is built to support the sustenance of law and order."

UNMIT currently has over 1,600 U.N. police in East Timor mainly from Malaysia, Portugal, Pakistan and Bangladesh, backed up by over 1,000 international troops from Australia, New Zealand, Malaysia and Portugal.

Khare said one of the key underlying factors that led to the 2006 crisis was widespread poverty.

"These are people who had a dream of independence but have not seen the promise of independence" in terms of jobs or any significant improvement in their living conditions, he said.

But while East Timor is the poorest country in Asia, with 80 percent of its people living on less than $2 a day, it is blessed with extensive offshore oil and gas reserves.

Khare said that if properly managed, energy revenues could provide the necessary budgetary resources to tackle East Timor's serious rural poverty and urban unemployment problems.

As of May, East Timor had accumulated over $1.3 billion in oil revenue locked in a special Petroleum Fund account in a bank in New York -- a figure that is increasing by more than $100 million monthly.

Eager to avoid other pitfalls of oil wealth seen in other developing, East Timor has followed the advice of foreign donors by placing the proceeds in the fund, which the government can access only following approval by the parliament.

While East Timor may now be "rich" in monetary terms, Khare said the absorptive capacity of its economy is still too low, so the benefits "are yet to translate into improved infrastructure, jobs, schools, health facilities and food security for the population."


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