Subject: IHT: Portugal Shows Desire for New East Timor Ties

International Herald Tribune Thursday, December 23, 1999

Portugal Shows Desire for New East Timor Ties

By Michael Richardson International Herald Tribune

DILI, East Timor - Carrying several large suitcases full of freshly minted Portuguese bank notes, Joao Manuel Tubal Goncalves flew by chartered helicopter from Darwin, in northern Australia, to East Timor recently to open a branch of Banco Nacional Ultramarino.

It is the territory's first, and so far only, bank to conduct business since the violent end of 24 years of Indonesian rule here that followed an overwhelming vote for independence in August.

As Mr. Goncalves shepherded his precious luggage under armed escort to a newly whitewashed office amid a row of burned and looted shops in the center of town, a container with 6 metric tons of Portuguese coins was being unloaded for the bank at the Dili wharves.

The next day, Banco Nacional Ultramarino, Portugal's main overseas bank, opened, sending a clear signal that East Timor's colonial ruler for more than 400 years was ready to again have an influential role here.

The fact that East Timor now has four currencies in circulation - the dollar, the Australian dollar, the Indonesian rupiah, and the Portuguese escudo - is an indication of the deep culture shock and painful choices the territory faces as its past and future collide.

The Portuguese government, having handed Macau, its last possession in Asia, back to China this week, is anxious to dispel suggestions that it has any neocolonial designs on East Timor.

''We are not coming with any ideas of the past, only for the future,'' said Mr. Goncalves, who directs the operations of the Portuguese government-owned bank in the territory with a staff of less than a dozen.

Portugal's departure from Macau was dignified and carefully orchestrated in advance with Beijing. But in 1961, India drove the Portuguese at gunpoint from Goa, and 14 years later the Portuguese watched helplessly as Indonesian forces stormed into East Timor.

''We are present in the Orient in a modern version, as we are in Goa,'' said the Portuguese foreign minister, Jaime Gama, on a recent visit to Dili.

''We expect East Timor to be independent, with good relations with its neighbors, Australia and Indonesia, and regional bodies like ASEAN and APEC,'' Mr. Gama said, referring to the Association of South East Asian Nations and the Asia-Pacific Economic Cooperation forum.

Still, Portugal has moved swiftly to regain a foothold in East Timor. Lisbon was one of the largest contributors to a $520 million aid program for the territory that was unveiled in Tokyo on Friday. The money, which does not have to be repaid, will be used to rebuild East Timor over the next three years to prepare it for independence.

To ensure that the program is being properly implemented, it will be reviewed in mid-2000 in Lisbon at a donors' meeting hosted by the Portuguese government.

''With Portugal, we have a special relationship,'' said Xanana Gusmao, the head of the National Council of Timorese Resistance who is widely expected to become East Timor's first president. ''Portugal was the sole country that was always behind us in the very difficult times during the Indonesian occupation.''

East Timor is under transitional United Nations administration.

Defense Minister Julio Castro Caladas of Portugal announced in late November that Lisbon would send a 700-man contingent to the UN peacekeeping force in the territory that will take over early next year from the Australian-led multinational force sent in by the UN to restore order after the Indonesian military failed to do so.

The Portuguese contingent will include a logistical support company backed by helicopters.

A recent survey of East Timor's reconstruction needs, coordinated by the World Bank, said that urgent priorities to get the economy going included re-establishing a banking system to take deposits, make loans, exchange currencies, and finance trade and business.

East Timor, which is sandwiched between Indonesia and Australia and has cultural ties to Portugal, must soon make decisions on a national currency, language, and the relations it will have with key foreign countries.

Many of the older generation East Timorese independence leaders speak Portuguese. Some favor a close association between an independent East Timor and Portugal that would include having Portuguese taught in schools and the escudo as the national currency.

Such leaders look to Lisbon as a friend that can help open doors in the European Union and attract European investment for East Timor as it seeks to avoid being overly reliant on either Australia or Indonesia.

Lisbon takes over the six-month rotating presidency of the EU from Finland at the beginning of January.

Mr. Goncalves said that the Banco Nacional Ultramarino group was bringing together a consortium of government and private sector companies in Portugal to invest in, and trade with, East Timor.

But many younger Timorese, who have been educated in Indonesian, worry they will lose out if Portuguese, now spoken by fewer than 10 percent of East Timorese, is reintroduced as an official language.

They are also concerned that too close an association with Portugal will detract from East Timor's sovereignty and complicate its relations both with Indonesia and Australia.

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