Subject: AFP: World Bank says E Timor can expect up to US$500 million

World Bank says East Timor can expect up to 500 million dollars

DILI, East Timor, Oct 29 (AFP) - The leader of the World Bank mission to East Timor on Friday said donors could provide up to 500 million dollars to help rebuild the territory, but he warned against a flood of grant aid.

"East Timor should not start with any debt," said Klaus Rohland, World Bank country director for Papua New Guinea and the Pacific Islands, adding that the nation could rely on non-refundable grant aid for the first few years.

As a result he said the World Bank planned to establish a trust fund for East Timor's development to full statehood.

"We want to give a measured dose of support. Too much money too quickly can ruin the social fabric and structure of a country as we saw elsewhere in the 1970s and 1980s," he told a press conference here.

He said donors were keen not to repeat the experience of Indonesia where there was "development with corruption, or even non-development with corruption."

Rohland also stressed the importance of including East Timorese as much as possible in the planning process to tailor a development strategy to meet their specific needs.

"We want to see East Timor implement (part) of the program itself," said Rohland, adding that he hoped by the time the United Nations Transitional Authority for East Timor (UNTAET) departed in two or three years, the territory would be participating in its own development.

Mario Carrascalao, a former governor of East Timor and now a member of a special commission of East Timorese working with UNTAET, said he hoped the nation could redevelop its coffee plantations, exploit minerals and eventually develop tourism.

But he said that first "we have to repair the damage physically and spiritually in a very short time."

"We know the UN authority is here ... but we should be in a position to give them information on what are our real aspirations," he said.

The World Bank, International Monetary Fund (IMF), Asian Development Bank (ADB) and other bodies have sent a 40-member delegation to East Timor to conduct a two-week survey to examine development needs to be presented to donors in Tokyo in December.

Rohland said aid agencies were anxious to get an early start following on from the humanitarian work being done by the United Nations.

"You need to get a transition into development assistance," Rohland told reporters on arrival early Friday at Dili's airport.

The team will assess the medium and long-term development needs of East Timor, building on work by humanitarian agencies which have appealed for 199 million dollars to cover the first nine months of relief work.

"This is why we, in agreement with and at the request of Xanana Gusmao, came in early to make sure that there is a seamless transition from one phase of development to the other," Rohland said referring to East Timor's independence leader and likely first president Gusmao.

The IMF will focus on macroeconomic issues, including building a financial system from scratch and choosing a currency, with the Portuguese Escudo a candidate.

"The escudo would certainly be an option for the country," he said.

Carrascalao said the East Timorese resistance had already said it would like to see the escudo used and that Portugal had supported the decision.

The mission is a first step in the arduous task of rebuilding a territory whose basic infrastructure was virtually obliterated in the wave of violence led by pro-Jakarta militias in September.

The violence followed an overwhelming vote for independence from Indonesia by the people of the former Portuguese colony in a UN-sponsored ballot on August 30.

Rohland said it would be reckless to put a price tag on the cost of rebuilding, saying figures as varied as 50 million dollars and one billion dollars had been suggested.

"We see widespread destruction, not deep destruction. It might not take as long as I thought," he said.

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