East Timor: nation in waiting for oil wealth

<a href=www.iol.co.za>IOL, May 16 2003 at 06:12AM By Sid Astbury

Sydney - So long in coming, so sublime to behold, the euphoria that suffused East Timor's independence day almost a year ago has burned away like the morning mists on the hills that ring Dili, the new nation's sparkling seaside capital.

Helping lance the irrational exuberance of that day was rioting in December that took the lives of at least two young demonstrators and which left houses and businesses smouldering.

Also conspiring to deliver a painful dose of reality were the daily departures from Comoro Airport of the United Nations staff that had shepherded the half-island to freedom.

The 800 000 East Timorese are finally rid of their colonial masters - the Portuguese had been in charge for 400 years, the Indonesians for 24 - but independence is still a notional concept.

The border with the Indonesian province of West Timor is patrolled by the 3 800 UN peacekeepers that give the dirt-poor territory its security backbone.

The annual budget of the left-leaning administration of Prime Minister Mari Alkatiri is $77-million (about R610-million), 40 per cent of which is foreign aid.

Alkatiri has promised the mostly Roman Catholic East Timorese that true independence will come when oil and gas revenues from fields in the Timor Sea start rolling in next year.

From $7-million in 2004, the value of oil money sluicing through government coffers should rise to $300-million in 2013.

The cash comes courtesy of the Timor Sea Treaty, which gives Dili 90 per cent of petroleum revenues from one part of the Timor Sea and Canberra the remaining 10 per cent.

It's a huge windfall that could either underpin the prosperity of the world's newest nation or tip it into a cycle of massive corruption and revolving door governments - witness Nigeria and Venezuela.

"The equitable, sustainable, and transparent management of petroleum revenues is a heavy responsibility," Alkatiri has admitted. "The East Timorese desperately need the revenues."

They do indeed: with an annual average income of less than $500, they are the poorest people in South East Asia.

The East Timorese are in some ways worse off than they were when the Portuguese simply upped and left in 1975. Then, the territory was self sufficient in food, but is now reliant on imports of rice - despite over half the workforce being in agriculture.

Coffee, the biggest cash crop and only sizeable export, was being harvested at an annual rate of 45 000 tons before Indonesian troops carriers ran up Dili's beaches. This year, the coffee harvest should reach just 10 000 ton.

But optimism that East Timor will make a good go of independence has yet to fracture.

The December riots, described by President Xanana Gusmao as a little local difficulty unlikely to be repeated, did not prove the first of a series.

The administration in Jakarta, despite sending gunships into Dili harbour unannounced in the hours before independence, has caused little trouble to its counterpart in Dili over the past 12 months.

Paul Dibb, an academic at Canberra's Australian National University, has complimented the East Timorese on not riling their former masters.

"The Indonesians see the taking away of their East Timor province as an enormous humiliation - even though they clearly brought it upon themselves," Dibb wrote recently. "The East Timorese leadership know they must learn to live with a strongly resentful giant neighbour."

Another phenomenon the East Timorese must accept is the withering of international interest in their fate.

Before independence, Foreign Minister Ramos Horta said he would like to see East Timor become "almost an Australian protectorate".

He is likely to be disabused. Canberra is keen to get its relationship with Dili onto an equal footing, where there is no sentimentality and no residual special treatment.

An indication of this new climate came last month when Immigration Minister Philip Ruddock rejected a plea by Gusmao that the 1 600 East Timorese who hold temporary visas be allowed to stay in Australia.

Ruddock said it was "a little disingenuous" of Gusmao to appeal to East Timorese stuck in refugee camps in West Timor to return home but not extend the same entreaty to those availing themselves of Australia's hospitality.

That the relationship was going to be businesslike rather than patron-client was underlined when giant Australian phone company Telstra shocked the East Timorese by not extending its contract to run the territory's telecommunications system.

Expatriates in Dili may moan about creeping corruption, burdensome taxation and the high-cost economy, but the transition to self-rule has gone better than most expected. - Sapa-DPA