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East Timor News Digest 4 – April 1-30, 2011


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East Timor troop decision after poll: Smith

Australian Associated Press - April 15, 2011

Karlis Salna – Defence Minister Stephen Smith says a full assessment of a planned withdrawal of Australian troops from East Timor will be made in conjunction with the government in Dili following elections to be held next year.

Mr Smith, who met with various East Timorese officials in Dili on Friday, said Australia was pleased with the current security situation in East Timor.

However, he said all parties agreed it was premature to make a final decision on plans to hand over full control of the country's security to East Timor forces.

"We need to take it step by step. We're very pleased with the enhanced security arrangements and conditions, very pleased with the stabilisation effect as we know it now," Mr Smith told reporters in Dili on Friday.

"We think, as does Timor-Leste, that the appropriate point to start making judgments about these matters is in the aftermath of the 2012 elections."

Australia has 400 defence personnel in East Timor as part of what was a larger International Stabilisation Force (ISF), initially deployed following the country's near-collapse in 2006 amid political tension and violence.

Along with a contingent of United Nations security personnel, they are scheduled to withdraw following next year's elections.

The comments, made as Mr Smith emerged from a 40-minute meeting at the Presidential Palace with President Jose Ramos-Horta, came in the wake of an Australian Strategic Policy Institute (ASPI) report earlier this week which suggested a military presence may be required until 2020.

Mr Smith, when asked about the ASPI report, reiterated that a full assessment of the security situation would be made after the 2012 elections.

"We need, together with our International Stabilisation Force partner New Zealand, together with Timor-Leste and together with the United Nations, to make judgments in the aftermath of the election about these matters," he said.

"But currently we are confident we will see a successful election. We hope to see a full and free election, we hope to see everyone respecting the outcome of the election, whatever that outcome is."

Dr Ramos-Horta has already dismissed the ASPI report, telling AAP that the political tensions seen in East Timor in 2006 were now "almost non-existent". "If we were to continue to need a strong international police force, it's an admission of failure of leadership," he said.

Mr Smith said Australia's proposal that a regional refugee processing centre be built in East Timor was not discussed with Dr Ramos-Horta, who remains one of the few political voices in the country yet to fully reject the idea.

It was also not discussed at an earlier meeting with Deputy Prime Minister Jose Luis Guterres, who less than two weeks ago made the point that it had been unanimously rejected by East Timor's parliament.

Mr Smith said it was not an issue that could be expected to be raised in the context of his visit. "It's a matter for the relevant portfolio ministers," he said.

"As (Immigration Minister Chris) Bowen has said recently in the aftermath of the Bali Process meetings, and as President Horta himself has said, these matters remain under ongoing discussions between the relevant ministers and the relevant officials."

The defence minister, whose trip to Dili marked the 10th anniversary of the defence partnership agreement between Australia and East Timor, also had lunch with Australian troops stationed in Dili.

"We've been here for a number of years now, both in good times and in bad times," he said. "They're making a terrific contribution."

Ramos-Horta says ADF must leave after 2012

Australian Associated Press - April 12, 2011

Karlis Salna – East Timor's President Jose Ramos-Horta has dismissed suggestions Australian forces should remain in the fledgling nation beyond a planned 2012 withdrawal.

While conceding some of the social and economic problems that contributed to the violence seen in East Timor in 2006 still remain, the president insists political tensions in the country are now virtually non-existent.

The comments come in the wake of a report released earlier this week by the Australian Strategic Policy Institute (ASPI) which warned the withdrawal could pave the way for fresh unrest.

The report suggested Australia, which is set to withdraw its 400-strong contingent following elections next year, should maintain a military presence in East Timor beyond 2012, and possibly until 2020, to prevent or respond to further crises.

But Mr Ramos-Horta, who was appointed acting prime minister and then prime minister during the 2006 unrest, has dismissed the report, saying the withdrawal of international forces must go ahead as planned.

"I disagree with that assessment," he told AAP, in response to the ASPI report. "The United Nations will leave here in 2012, by the end of 2012. The ISF will leave. They already have less than 500 men and women in this country from a height of 3500 in 2006," he said.

While he has no executive power in his role as president – a position he took over from current Prime Minister Xanana Gusmao following the 2007 elections – Mr Ramos-Horta remains an influential figure in East Timorese politics.

He said there was a "strong, sincere commitment" by all sides of politics in East Timor to ensure the violence seen in 2006 is not repeated. "The political tensions in the country are almost non-existent now," he said.

"It has been 10 years since independence. A country has to be on its own, on its own feet. If we were to continue to need a strong international police force, it's an admission of failure of leadership."

Mr Ramos-Horta also described warnings in the ASPI report about the growing influence of China as a "nonsense".

"The increasing assertiveness and almost certain expansion of China's 'soft power' approach towards East Timor will challenge Canberra's political influence," the government-funded Canberra think-tank said in its report.

Mr Ramos-Horta said the soft power approach employed by China was "nothing new", adding that the United States and other nations used similar methods to project influence in the region.

"Of course China is a major regional power, with aspirations to be a global power. They use soft-power approach," Mr Ramos-Horta said.

"The US foreign aid is very much condition(al)... aid is part of foreign policy too. (There's) nothing wrong with that. I don't disagree with American approach, using their aid as part of soft power diplomacy."

ADF urged to stay in East Timor to prevent further crises

The Australian - April 11, 2011

Rowan Callick – Australia should maintain troops in East Timor beyond their planned withdrawal after next year's elections, says the Australian Strategic Policy Institute.

The Timor Defence Force would need assistance until 2020, "not least to ensure" it remained focused on defence and not "political activities" and policing, the institute says in a new report.

The 400 Australian Defence Force personnel in East Timor are deployed as part of the International Stabilisation Force, which is mandated to start withdrawing from next year.

Police and legal structures also need to be supported and consolidated, the report says. Police have been trained under the "confusing and internally contradictory guidance" of the UN police deployment.

The government-funded Canberra think tank also sounds an alert about the growing influence of China. "The increasing assertiveness and almost certain expansion of China's 'soft power' approach towards East Timor will challenge Canberra's political influence," it says. Australia should not, it says, "directly compete with China for East Timor's affections".

"Instead, the Timorese may need to be reminded, in more beguiling ways, of where its true and most reliable friendships lie. Working with the US in the security and defence realms in our region is also very important."

It says that a relatively small continuing ADF presence should have a cautionary capacity, helping to prevent further crises and, failing that, orchestrating a rapid and efficient response.

When off duty in Timor, ASPI recommends, ADF personnel should not wear uniforms and should not carry weapons in public – "which elicits negative responses among many Timorese when the threat environment is low". It urges "a more widely distributed intelligence function to allow the recognition of potential threats before and as they arise".

Australia should renew its offer, ASPI says, of contracted air surveillance of Timor's southern exclusive economic zone, heading into the Timor Sea towards Darwin. It suggests greater co-operation between ADF and Australian Federal Police officers, and between both institutions and AusAID to ensure "a more complete approach" to meeting East Timorese needs.

Australia is particularly well positioned, ASPI says, to help East Timor develop its agriculture.

"It has considerable expertise in dry land farming and conducts world- leading research into semi-tropical agriculture and livestock management."

ADF should stay in East Timor beyond 2012

Australian Associated Press - April 8, 2011

Adam Gartrell – Australia should maintain a military presence in East Timor as late as 2020, a new report recommends.

The Australian Strategic Policy Institute says many of the problems that led to Timor's near-collapse in 2006 – and the subsequent Australia-led military intervention – remain potent.

Australia currently has around 400 Australian Defence Force members in East Timor but hopes to withdraw them soon after elections scheduled for 2012. But ASPI warns total withdrawal could pave the way for fresh unrest.

"A complete withdrawal may leave the ADF exposed to the risks of having to return at a later date," ASPI says. "Timor-Leste is currently relatively stable and looks set to continue more or less as it is. However, there remain a number of potential spoilers."

A relatively small presence could help prevent further crises and, failing that, orchestrate a rapid response to them.

Meanwhile, East Timor's defence force – known as F-FDTL – needs continuing ADF mentoring and training, the report says. Raising F-FDTL to UN peacekeeping standards would probably take to 2020 on current skill levels, it says.

"A small but highly effective dose of ADF prevention now would be more preferable... compared to a potentially larger, reactive dose in the future."

ASPI says Australia's diplomatic relationship with East Timor is currently good, despite antagonism from some Timorese officials. "Australia, for its part, needs to be seen as a benign, sympathetic and constructive partner, despite what are sometimes confronting provocations with its neighbour," the report says.

China's increasing influence in East Timor is a challenge to Australia's influence, the report goes on. But Australia should avoid competing directly with China for Timor's affections.

"Instead, the Timorese may need to be reminded, in more beguiling ways, of where Timor-Leste's true and most reliable friendships lie."

Refugees & asylum seekers

East Timor PM opposes refugee centre

Melbourne Age - April 30, 2011

East Timorese Prime Minister Xanana Gusmao says he is against an Australian proposal to establish a regional refugee centre in his country. "I have never accepted it," he said on the sidelines of a ruling party conference in Dili.

Australian Prime Minister Julia Gillard raised the idea last year as a way of stemming the flow of asylum seekers who travel via Indonesia to northern Australia in rickety boats. Her government says negotiations are ongoing with East Timor.

The only person in the tiny country who has spoken in favour of the idea is President Jose Ramos-Horta, who sought asylum abroad during Indonesia's harsh military occupation of East Timor from 1975 to 1999.

Ramos-Horta's office yesterday clarified Australian media reports that he had rejected Canberra's proposal, saying it was a matter of ongoing regional discussion.

A spokesman for the president said while East Timor would not agree to a regional centre on a bilateral basis, Dr Ramos-Horta had not rejected the concept altogether.

"As the president has said before, East Timor would never turn its back on asylum seekers," the spokesman said.

"But this is not a bilateral matter. It can only be resolved on a regional basis and through discussions through organisations such as ASEAN, which East Timor hopes to join this year or next year, and with groups such as the United Nations."

Australian opposition leader Tony Abbott said Ms Gillard's plan was a "flight of fantasy". (AFP/AAP)

Timor refugee centre KO'd

Melbourne Age - April 29, 2011

Lindsay Murdoch – Julia Gillard's proposal to build a refugee centre in East Timor has been rejected by the country's President Jose Ramos-Horta, the only senior political figure in the tiny nation who had left the door open to the plan.

"Timor-Leste [East Timor] says that we will not agree to set up an asylum seeker processing centre in the country," Dr Ramos-Horta told Timorese journalists.

The declaration will embarrass the Prime Minister, who has been insisting talks with East Timor's leaders were continuing at the highest levels despite earlier rejection of the plan by the country's Prime Minister Xanana Gusmao, Deputy Prime Minister Jose Luis Guterres and senior ministers.

Yesterday, a spokesman for Immigration Minister Chris Bowen was still insisting East Timor's Council of Ministers – the equivalent of Australia's cabinet – has not rejected the plan.

However, the council decided last year that East Timor would not negotiate the plan directly with Australia, referring the issue instead to a 50- nation meeting on people smuggling known as the Bali Process.

Official sources in Dili told The Age that members of East Timor's delegation felt they were poorly treated by Australia's representatives during a ministerial-level meeting of the Bali Process last month, where Ms Gillard's plan did not rate a mention during official talks.

Their complaint was discussed during a recent meeting of the Council of Ministers in Dili, sources said.

Mr Bowen's spokesman referred The Age to comments Mr Bowen made on radio on Wednesday, including that Dr Ramos-Horta still regarded the centre as a possibility and that "discussions continue".

But Dr Ramos-Horta delivered the final blow to the plan in comments reported by East Timor's Independente newspaper, saying a regional centre was not an issue to be discussed between East Timor and Australia.

"There should be a regional agreement and the agreement should not be made by Timor-Leste and Australia because it is not a bilateral problem," Dr Ramos-Horta said.

Observers in Dili say the plan was never going to be approved by East Timor, a country of a million mostly impoverished people struggling with a myriad of social, security and development problems.

But East Timor's leaders wanted to be seen to be considering Ms Gillard's proposal as Australian diplomats and officials attempted to push what was widely seen as an ill-conceived idea.

In addition to government leaders, the plan was also opposed by the Fretilin opposition, four parties in the ruling coalition and dozens of non-government and community organisations.

Canberra journalist Laurie Oakes revealed last year that hours before Kevin Rudd was deposed as PM he told Ms Gillard that a refugee centre in East Timor would not work and East Timor would not accept it. But Ms Gillard went ahead despite the advice and announced her plan for the centre only days before the last federal election.

Last year, some senior officials in Dili toyed with the idea of allowing Australia to build the centre on East Timor's undeveloped south coast if Canberra in return were to fund major infrastructure projects in the area.

But Mr Gusmao publicly dismissed the plan during an interview with The Economist magazine in London in March, saying he would not be able to explain to his poor countrymen why foreign asylum seekers would be entitled to international-grade healthcare, food, clothing and schooling for their children while many Timorese did not.

Mr Ramos-Horta revealed two weeks ago in an interview he had not discussed Ms Gillard's plan with any Australian officials for months, while still insisting the door was still open to negotiations. But he raised concerns about the length of time it would take to process asylum seekers, and said that setting up a regional centre outside a regional agreement framework "would be like a Band-Aid approach".

Questions remain on Timor detention

Australian Associated Press - April 29, 2011

East Timor President Jose Ramos-Horta has moved to clarify reports he has rejected an Australian bid for an immigration detention centre in his country.

Fairfax Media reported Dr Ramos-Horta had told journalists in his country that East Timor wouldn't agree to the centre.

Immigration Minister Chris Bowen as recently as Wednesday confirmed that talks were continuing with the East Timor government on setting up a centre and that Dr Ramos-Horta believed it was still a possibility.

A spokesman for the president told AAP on Friday that while East Timor would not agree to a regional centre on a bilateral basis, Dr Ramos-Horta had not rejected the concept altogether.

"As the president has said before, East Timor would never turn its back on asylum seekers," the spokesman said. "But this is not a bilateral matter. It can only be resolved on a regional basis and through discussions through organisations such as ASEAN, which East Timor hopes to join this year or next year, and with groups such as the United Nations."

The spokesman said many questions remained, such as where a detention centre would be built and how it would be funded. And the Timor government would set limits on it, such as a cap of 200 detainees and a detention period of no more than six months.

Opposition Leader Tony Abbott said it was time to scrap the plan. "It was always a flight of fantasy, it was always just a confection designed to get the government through an election campaign," Mr Abbott told reporters in Alice Springs on Friday.

He said Prime Minister Julia Gillard should ask Nauru to reopen the centre funded by the Howard government. The government has rejected reopening the Nauru centre as the tiny nation is not a signatory to the United Nations protocols for refugees.

Timor plan not on Ramos-Horta's agenda

Australian Associated Press - April 12, 2011

Karlis Salna – East Timorese President Jose Ramos-Horta says a plan for a regional processing centre to be built in his country has not been on his agenda for months despite Prime Minister Julia Gillard insisting negotiations have been ongoing.

While Mr Ramos-Horta says his country has not yet closed the door on the idea, he says that even if an agreement was reached, it would take years before such a facility could be built.

Mr Ramos-Horta, who was appointed to lead East Timor's negotiations concerning the proposal, has revealed he hasn't held any discussions with Australian officials for months despite comments to the contrary from Ms Gillard.

In the lead up to a regional meeting on people smuggling held in Bali last month, Ms Gillard and Immigration Minister Chris Bowen insisted East Timor remained Australia's focus for the proposed regional processing centre.

Just two week's ago, the prime minister said the question of the East Timor processing centre "is something that Australia continues to pursue with East Timor at the highest levels".

However, Mr Ramos-Horta told AAP the last time he discussed the proposal with Australian officials was at least "two (or) three months ago".

There has been little support in his country for the so-called East Timor solution introduced by Ms Gillard ahead of last year's election, with other members of its parliament having rejected it outright.

In an interview last month, East Timor Prime Minister Xanana Gusmao reportedly all but dismissed the proposal, saying he could not justify a situation where asylum seekers would receive education and healthcare at levels better than most people in his own country.

Mr Ramos-Horta, while not completely opposed to the idea of a regional processing centre has now joined a chorus that has failed to support the plan, saying that "setting up one in Timor-Leste outside regional agreement and framework would be like a band-aid approach".

East Timor rejects refugee centre proposal

ABC News - April 6, 2011

Sara Everingham and staff – East Timor's deputy prime minister has confirmed his country has rejected Australia's proposal to establish a refugee processing centre on Timor's soil.

The Australian Government insists talks about the proposal are continuing with the highest levels of East Timor's government, but during a visit to Darwin today, Jose Luis Guterres said no agreement had been reached.

"Unhappily there is no agreement but as friends we have to accept that we don't always agree on everything but it's fair enough to recognise our different point of view on any subject," he said.

Mr Guterres says the processing centre cannot go ahead in East Timor because the country's parliament has voted against it.

"It's already know that the parliament has said no," he said. "All external agreements with countries or international organisations has to go to the parliament and our parliament unanimously said no to this proposal."

He says the church and civil society have also expressed opposition to the centre and added that Australia is aware of East Timor's position.

But Mr Guterres says his nation wants to support multilateral efforts to stop people smuggling. He says his nation would be prepared to help fund a regional processing facility in a more suitable country.

Last week the Economist magazine reported that East Timor's prime minister, Xanana Gusmao, had rejected Australia's proposal because a processing centre in country would be socially divisive.

The magazine said one of the main reasons Mr Gusmao is opposed to the centre is that he would not be able to justify better living conditions for refugees than he is able to offer many of his own people.

But Immigration Minister Chris Bowen rejected reports East Timor was not in favour of housing the centre and said the Government would not change its focus. "Our position remains the same. We've been focused on discussions with East Timor," he said.

The Federal Government has previously said Prime Minister Julia Gillard's plan for the processing centre received a boost after a people-smuggling conference in Bali last week reached a regional cooperation agreement.

But the UN High Commissioner for Refugees said East Timor has not approached it about the idea and said that even if a centre was built, it would be unlikely to be used to process everyone who arrives by boat at Christmas Island.

Bowen says Timor refugee centre still the focus

ABC News - April 4, 2011

Immigration Minister Chris Bowen says he does not accept reports East Timor is not in favour of housing a regional processing centre for asylum seekers.

East Timorese prime minister Xanana Gusmao is reported in The Economist magazine as saying it would be difficult to explain to his poorer citizens why asylum seekers would be given better treatment than some of their countrymen.

The Federal Government last week claimed Prime Minister Julia Gillard's plan for the processing centre received a boost after a people-smuggling conference in Bali reached a regional cooperation agreement.

Leaders at the conference agreed a regional centre would be considered as part of a group response to the issue.

Despite reports of a lukewarm reaction in East Timor, Mr Bowen says the Government is not changing its focus. He admits, however, that a processing centre in East Timor is a controversial prospect.

"Our position remains the same. We've been focused on discussions with East Timor," he said.

"But it was a big step forward to have all the nations as part of the Bali process agree that a regional processing centre or centres is an appropriate part of a regional framework. We will continue those discussions under the framework agreed by ministers in Bali last week."

UN says Timor refugee plan unlikely

ABC News - April 1, 2011

Matt Brown – More cold water has been poured on plans to establish an asylum seeker processing centre in East Timor, with the UN refugee agency saying the country has not approached it about the idea.

The Federal Government says Julia Gillard's plan for a processing centre on East Timor has received a boost after a people-smuggling conference in Bali this week reached a regional cooperation agreement.

The deal did mention a possible centre or centres, but the UN High Commissioner for Refugees says the chances of building a processing centre like the one the Government wants is unlikely.

Eight months after the policy was announced, UNHCR assistant commissioner Erika Feller says the proposal has not been explored with East Timor. "I don't know [whether] East Timor is keen on or not, because we haven't actually spoken with East Timor about that," she told the ABC.

Before the election last year, Ms Gillard said the East Timor centre would undermine people smugglers because it would ensure "a boat ride to Australia would just be a ticket back to the regional processing centre".

But the UNHCR says if a centre is ever built, it is unlikely to be used to process everyone who arrives by boat at Christmas Island.

"I think there could be a centre that would assist a particular government – be it Indonesia, be it Malaysia, be it Thailand, be it Australia – to deal with... some growing problem, some particular pressure," Ms Feller said. "But I don't think it would regularise the handling of asylum claims."

The Government says it would need the support of the UNHCR to make its Timor processing centre a success.

While East Timor says it is not interested in the plan, Ms Gillard insists she will continue negotiations. However Ms Feller, who attended the Bali conference, says the agreement to develop a common system to deal with asylum seekers was "very significant".

"It is the first time that we've had a common framework that could regulate things in this region," she said. "It will help us tremendously to build asylum capacity. We are very pleased."

Ms Feller says having a common system in the region could also dissuade asylum seekers from heading for Australia.

"If people are bent on doing it then they try it anyway but if they get better opportunities or at least if they get some opportunities somewhere else en route, I think it will have an impact," she said. "It could cut numbers."

Aid & development

Cuba shows way with health aid in East Timor

Canberra Times - April 29, 2011

George Quinn – Since 2004 about 300 Cuban doctors, nurses and medical technicians have been working quietly but effectively in East Timor.

They provide basic health care, dealing mostly with diarrhoea, malaria and respiratory infections. They also give ante- and post-natal advice, and teach communities about basic hygiene. Most are working in rural areas where the majority of East Timor's impoverished population lives. Some are permanently stationed in very remote corners of the country. Most are on contracts of at least two years' duration.

Being speakers of Spanish they have found it relatively easy to learn the closely related Portuguese language. A good number have mastered the indigenous national language Tetum, and a few can even get by in local languages. And the Cubans are economical. Most work on a shoestring stipend, their modest salaries being paid directly to their families back in Cuba. The East Timor Government makes a small contribution to their expenses, providing accommodation, some equipment and basic transport services.

The Cuban aid program also pays for East Timorese students to study medicine. Currently about 600 are in Cuba and about 200 more are studying in East Timor under Cuban instructors. Graduates from Cuba are now trickling back into East Timor's health-care system supported by a substantial allocation of funds in the country's most recent budget.

The Cuban program is not without its problems, but, overwhelmingly, its no-nonsense approach is popular with local people. Infant mortality has dropped dramatically, household hygiene is improving and the Cubans have clamped a medical head-lock on the intractable problem of malaria.

Australia is also committed to improving the health of East Timorese. In the current five-year period beginning in 2006 AusAID is spending well over $30 million, mainly on the development of a strategic plan for the health sector and on the development of specialist medical services. In 2008, when East Timor's President Jose Ramos-Horta was critically wounded in an assassination attempt, his staff did not turn to Cuban medical workers but to Australian medics who undoubtedly saved his life by rendering expert initial care and evacuating him swiftly to Darwin. So, needless to say, Australia's medical aid is much appreciated in East Timor.

Nevertheless, there are big and fundamental differences between the two programs. The Australian program is expensive, rather narrowly focused on high-tech specialist services, and centred in cities and the major hospitals. It involves small numbers of Australian personnel on relatively short-term placements. Hardly any of them know local languages.

Cuba's program, on the other hand, is vastly cheaper and more cost- effective than Australia's. It concentrates on the fundamentals of health care in rural and remote areas. It involves hundreds of medical personnel on relatively long-term placements, and many of these medics (though far from all) are able to work without intensive reliance on interpreters.

Australia has accepted no more than a tiny handful of East Timorese into medical training programs in Australia whereas Cuba is providing invaluable, very practical medical expertise to many hundreds of them both in Cuba and on the ground in East Timor. In many ways the Cuban program and Australia's complement each other.

Yet a question hangs in the air. Despite the very real need for grassroots medical services in East Timor, Australia is incapable of matching the Cubans in supplying these services, certainly on nothing like the scale of Cuba's program. Why?

The answers to this question are complex. Australians are renowned for their practical outlook and can- do expertise, but they are increasingly shackled by deep-seated cultural and organisational problems that suggest a troubling picture of developments in our society. It is almost laughable to imagine that hundreds of Australian doctors might be willing to spend years in remote parts of East Timor, as hundreds of Cuban doctors do. It is equally laughable to imagine our medical training institutions bending their rules enough to allow access to East Timorese students, as Cuba's do. In a slightly desperate gesture of frustration with our country's medical closed shop, the Federal Government announced recently it would fund five scholarships for East Timorese to study medicine in Indonesia.

Security and insurance concerns driven largely by paranoia and ignorance play a role too. Australia's travel warnings urge visitors to "exercise a high degree of caution in East Timor because of the uncertain security situation and the possibility of civil unrest. The situation could deteriorate without warning." As our nation's daring, do-it- yourself pioneer spirit fades into myth, Australians are less and less likely to accept the rigours of work over long periods in tough surrounds that are perceived (through our Government's eyes) as unsafe. The legendary reluctance of Australians to learn foreign languages too is leading to a gradual turning away from the realities of an increasingly bilingual world, and, in my view, is closing young minds to the diversity of our neighbourhood.

In some of the darker nooks and crannies of the Australian Government there is concern at the growing influence of communist Cuba and communist China in a nation that is no more than a quick hop across the water from Darwin. And what is happening in East Timor is rippling out into the island nations of the Pacific too. In the Solomon Islands, Vanuatu, Kiribati and Nauru, Cuba and China have established secure and rapidly expanding footholds in local development aid. Aid is a powerful tool in the dynamics of international relations and regional security. But in East Timor, despite a reservoir of gratitude and goodwill towards Australia, our country is rapidly losing out to more flexible and culturally well-tuned programs from countries that are ideologically very different from us. Unless vested interests and in-grained attitudes can be faced down in Australia, I don't think there is much we can do about it.

[George Quinn is an adjunct professor and visiting fellow in the College of Asia and the Pacific, Australian National University.]

World Bank faults itself for slow progress in East Timor

New York Times - April 21, 2011

Brian Knowlton, Washington – A frank evaluation by the World Bank's internal auditors of a decade of efforts to help East Timor underscores the challenges facing international organizations attempting to assist struggling nations.

The draft report, which has yet to be released publicly, assigns much of the fault for slow progress in East Timor, which only emerged in 1999 after a quarter-century struggle for independence from Indonesia, to the bank itself. But it also illustrates the dilemmas that arise as development agencies try to meet urgent needs while ensuring that donor money is not misspent.

The report by the Independent Evaluation Group, which reports directly to World Bank directors, covers the period from 2000 to 2010. It says that:

Ferid Belhaj, World Bank country director for East Timor, said it was against bank policy to comment on an evaluation not yet final. But he said the country had made "tremendous progress" in the past decade, building or rehabilitating 637 schools, and helping increase life expectancy from 56 in 2000 to 61 in 2008.

"The World Bank has been supporting their efforts to overcome the huge development challenges which are faced by all post-conflict countries where political and social institutions are fragile, and things can go wrong," he said. "In Timor, we have had to adjust over the years to fast changing and unpredictable situations."

The bank's new World Development Report 2011 points to the need for long time horizons in fragile states. "True institutional transformations require time," it says. "It typically takes 15 to 30 years for weak or illegitimate national institutions to become resilient to violence and instability."

At independence, East Timor was devastated. An estimated 70 percent of its economic infrastructure had been destroyed in years of fighting that had killed thousands and displaced much of the population.

The World Bank is supposed to work through local governments, but East Timor barely had one then. Ministry offices were sometimes staffed by former rebels fresh from the hills.

"It's a lot easier to look backwards," said Scott Guggenheim, a former World Bank adviser who worked in East Timor. "The country had been burned down. You had half the population in refugee camps."

Mr. Guggenheim, who spoke by telephone from Kabul, where he is working with that government on development, said that project delays like those afflicting East Timor are equally common in Afghanistan.

"Procurement is always tricky. It's where most corruption happens," he said. "The donors clamoring for faster procurement are the first to scream bloody murder if an audit says that people cut corners to speed things up."

It is a classic tension, development specialists said. Recipient countries want assistance quickly. Donors want assurances their money will be well spent. The World Development Report emphasizes the need to help fragile countries quickly but responsibly.

"International agencies and partners from other countries must adapt procedures so they can respond with agility and speed," it states. "We need to accept a higher level of risk: If legislatures and inspectors expect only the upside, and just pillory the failures, institutions will steer away from the most difficult problems and strangle themselves with procedures and committees."

The question raised by critics – and at least indirectly by the new evaluation, is whether the World Bank, has fully internalized those lessons about flexibility and less risk-aversion.

"We err on the side of caution," said Lant Pritchett, a former World Bank adviser who is now a professor of economic development at the Kennedy School of Government at Harvard University.

He noted how Ellen Johnson Sirleaf, the newly elected president of Liberia in 2005, issued desperate pleas to international donors for a $15 million industrial generator, because she had promised to restore electrical power to parts of the capital within 100 days. Her government approached the World Bank, the United Nations, the African Development Bank, the European Union and the US Agency for International Development. All had money, but none could meet the deadline.

"Everyone said, we could do that in a year, year and a half," said Mr. Pritchett. Mrs. Sirleaf could not wait. She finally got help from Ghana.

"All the procedures are set up for sort of functioning places with long time horizons," not countries facing chaos and desperate need, said Mr. Pritchett.

Difficult compromises are often necessary, specialists say. "If you're in a post-conflict situation and you think people's lives are at stake, you are going to want to try to move as quickly as possible, even though you recognize that maybe some things are going to be used less efficiently," said Michael Morfit, a professor of international development at Georgetown University who worked in Indonesia for Usaid. "You just accept that as the tradeoff."

The case of the Portuguese-language school texts in East Timor poses a somewhat different but still challenging question: when to resist a government's policies if these seem ill-advised.

"In 1999, the education system had collapsed and enrollment was close to zero," the evaluation report states. But it said there appeared to be no serious discussion within the World Bank as to "whether it made sense for the bank to finance the distribution of textbooks in Portuguese to teachers and children who didn't understand the language."

But present and former officials said the bank had little choice but to accept a government's preferences when it comes to such matters as an official language. "They're not ill-meaning," Mr. Pritchett said of bank officials. "They're just trying to follow the rules of the organization."

Foreign affairs & trade

Excluding Timor Leste from Asean 'unnatural'

Straits Times - April 18, 2011

Lynn Lee – Indonesia is backing Timor Leste's bid to join Association of Southeast Asian Nations (Asean) because excluding it would be "economically unnatural" and "politically destabilising" for the region in the long term, said Indonesian foreign minister Marty Natalegawa.

In an interview earlier this month with The Straits Times, he said: "I think its good if... Timor Leste finds a wider family of Asean that is welcoming. What kind of impression are we setting if we keep them at arms' length and say they are not quite part of us?"

He said Timor Leste's application to join Asean had not yet been discussed among leaders of the 10 member states but would likely come up during the Asean summit. As chairman of Asean, Indonesia is hosting the annual meeting next month in Jakarta.

Timor Leste, off eastern Indonesia, became independent 12 years ago after a largely violent secession struggle with Indonesia. Relations between both countries are better these days but Timor Leste, with around 1.1 million people, is still struggling to grow its economy after bouts of domestic turmoil.

As a result, some Asean members – including Singapore – believe that admitting Timor Leste could be a drag on community-building efforts, given that member economies are due to integrate by 2015.

Dr Natalegawa agreed that it would take special effort to get Timor Leste "economically up to speed" with the rest of the region. But similar efforts had been made before with less-developed members, he said, noting that oil- and gas-rich Timor Leste would eventually be a net contributor to Asean.

"Is the answer to... isolate (Timor Leste)? I think, politically, that would be destabilising and economically, it is unnatural."

"How can you have a neighbourhood where everyone is happy and prosperous apart for one that you exclude? We think it is best to have them in now," said Dr Natalegawa, who was Indonesia's ambassador to the United Nations and Britain before taking up his current post in 2009.

Dr Natalegawa, who spoke on the sidelines of a meeting between Thai and Cambodian foreign ministry officials on their border dispute, also gave his views on Asean's evolving role.

Even as they nurtured strong ties with one another, member states were at a "critical juncture", he said, as to whether the future of the region would be marked by tense competition or remain peaceful and conducive to economic growth. Hence the need to promote common ground amongst all countries and to "wage peace aggressively", he said.

Dr Natalegawa also said he did not see Asean as a bloc to balance the rise of powerful countries or to face thorny regional issues head on, such as the ongoing South China Sea maritime boundary dispute that six South-east Asian countries have with China. Indonesia is not one of them.

"We are not attracted to the notion of having faultlines in our region, as if there is an 'us' and there is a 'them'," he said.

Instead, Asean could help create the space to discuss thorny issues diplomatically, he said, citing the ongoing border dispute between Thailand and Cambodia.

"I hope it creates positive energy and encouragement (for both countries) to get it right rather than if they were on their own," he said.

Dr Natalegawa said Indonesia was of the view that Asean should work towards speaking with a collective voice on the global stage. This was already happening to a certain extent, he said, but a similar plan – like the one that kickstarted the process of the Asean Economic Community – was needed.

Indonesia, he said, was hoping that this road map could be agreed on at the second Asean meeting in Bali later this year.

"We expect to have this road map by 2022, that Asean speaks with greater cohesion and collective voice on various global issues, but it will... not be at the cost of individual national policies.

"We are keen for this to be a post-2015 Asean vision. We cannot stand still, otherwise there is inertia and we are left behind from global trends."

Mining & energy

Timor rejects Woodside's oilfield claims

Melbourne Age - April 25, 2011

Lindsay Murdoch, Darwin – East Timor has rejected a claim that its leaders are failing their mainly impoverished people by blocking development of the Greater Sunrise oil and gas field, saying the multibillion-dollar project will go ahead.

The nation has also reaffirmed that it will honour the outcome of stalled and bitter negotiations over the field in the Timor Sea.

Hitting back at comments by Woodside Petroleum chief executive Don Voelte, East Timor government spokesman Agio Pereira said "to be perfectly clear, the government and the people of Timor-Leste want Sunrise to be built. The nation looks forward to the benefits that can and will flow to the Timorese people."

While insisting that piping the gas to a processing plant in East Timor was the best outcome for East Timorese, Mr Pereira said that "as far as the government of Timor-Leste is concerned, negotiations continue with the Australian government through the frameworks set up by treaties... These mechanisms are to ensure the integrity of the process and are not to be subverted."

East Timor has consistently said it will keep legal commitments in treaties and contracts it has signed over Greater Sunrise.

But Mr Pereira's comments could kick-start negotiations, following a walkout by officials at a meeting of the Sunrise Commission last December, then the cancellation of a meeting in March after months of bitter claims and counter-claims over the project.

Perth-based Woodside announced early last year it would build a floating LNG platform above the field, rejecting East Timor's demand for the plant to be built on its south coast, which Woodside says would cost an extra $US5 billion.

In March, East Timor's chief petroleum negotiator, Francisco da Costa Monterio, said East Timor would seriously consider terminating the treaty if the dispute remained unresolved.

Appearing to lose patience over the project, Mr Voelte last week accused East Timor of reneging on the terms of the treaty it signed in 2007 to allow Greater Sunrise to be developed to the best economic, and good oilfield, practice. He said building a floating platform would deliver $US13 billion to East Timor over the project's life.

"By objecting to Sunrise being built, they must be objecting to promoting the quality of life and improving the livelihood of their people," said Mr Voelte, who will soon step down from Woodside and return to the US.

"And we've done everything right. We're trying to get a meeting with the guy that's stopped this – we can't get a meeting. Let me just say, something's broken."

But at the weekend Mr Pereira described Mr Voelte's comments as "ill-suited and inappropriate". He said that despite Mr Voelte's claims, project delays occurred because of the company's cited issues of non-compliance. "One of the most significant of these was caused by Woodside's reluctance to prepare and deliver the development materials as required by the regulator," Mr Pereira said.

The Treaty on Certain Maritime Arrangements in the Timor Sea, which covers Greater Sunrise, runs for 50 years from February 2007 but Australia or East Timor can terminate it in 2013 if there is still no development approval.

Woodside asks East Timor for Sunrise talks

Australian Associated Press - April 20, 2011

Woodside Petroleum Ltd says East Timor's government has ignored requests for talks on the stalled Sunrise development and that competitors had shown interest in buying the $7 billion project.

Woodside chief executive Don Voelte used his last annual general meeting with the energy giant to express dismay at the stalemate with the East Timor government, which has effectively blocked the planned liquefied natural gas project in the Timor Sea.

East Timor wants a processing plant built on its shores, but Woodside prefers a floating vessel concept.

Mr Voelte said Woodside had "done everything right", abiding by a process set up by the East Timorese and Australian governments. But efforts to secure a meeting with the "guy that's stopping this" – East Timor Secretary of State Agio Pereira – had so far failed.

"Something's broken and I'm really disappointed," Mr Voelte told reporters after the meeting in Perth on Wednesday. "At least talk to us."

Woodside had enough projects on its plate and didn't particularly need Sunrise for its growth plans but had already made a substantial investment in the proposal, he said.

East Timor, on the other hand, needed the project to boost economic growth, but its government was denying its people the chance to prosper, Mr Voelte said. The oil and gas giant could sell the asset, but it was not the company's way to give up, he said.

"When you take a look at all the failures they've had with their E&P (exploration and production) industry outside of Sunrise – nine straight dry holes, people have walked away from the concessions etcetera – they need, let me repeat, they need Sunrise.

"Of course, we can monetise the project some other way, but that's not Woodside. I can sell the project to another oil and gas company – I got lots of people knocking on the door for that. I can sell it to maybe one of our joint-venture partners, but that's maybe giving up on this thing."

Partners in the project are Royal Dutch Shell, Osaka Gas and ConocoPhillips. Woodside predicts the project, which would cost at least $7 billion to develop, would boost East Timor's coffers by $13 billion, Mr Voelte said.

"For a government that was such great freedom fighters... 12 years later now, what's the measurement of this government on nation building?

"By objecting to Sunrise being built, they must be objecting to promoting the quality of life and improving the livelihood of their people.

"And I just don't get it – I don't understand it. This can fill out their future fund."

Woodside at the meeting gave no clues about Mr Voelte's successor.

Mr Voelte a straight-talking Nebraskan leaves the company in the second half of calendar 2011 after seven years at the helm. Chairman Michael Chaney said the selection process was on track and the company expected to unveil its new chief during the June quarter.

Mr Voelte described Woodside as "a proudly independent company... and may it ever remain so", amid speculation it could be a takeover target for BHP Billiton Ltd. Woodside shares closed up 55 cents, or 1.19 per cent, at $46.60.

Economy & investment

Timor Leste: Small steps that build a nation

Straits Times - April 16, 2011

Zubaidah Nazeer, Dili – Former investment banker Derek Chua traded in his sharp suits for comfortable clothes so that he could cycle to work each morning here in Timor Leste's capital city.

The 33-year-old Singaporean, the finance director of Timor Leste's only general insurance company, first visited the country two years ago.

Now he is among a growing group of foreigners, including more than 300 Singaporeans, working in South-east Asia's youngest nation, drawn by its economic promise and a government that welcomes foreigners and foreign investment.

On the back of strong petroleum exports, Timor Leste's growth hit double digits in the last three years. The economy this year is expected to grow by 10 per cent for the second straight year.

The young nation still needs a suite of infrastructure and services to build up its economy. As a result, Dili is bustling with new developments and businesses.

Companies from China are putting up power lines in and around the city, as well as in government buildings such as the Presidential Palace. Traders from China run provision shops, as well as hotels and restaurants. Australian oil companies are involved in projects in the south.

Indonesia recently said it would do more to boost trade and infrastructure, and has indicated an interest in investing in Timor Leste's oil and gas sector.

Singaporeans are in businesses ranging from financial services to plantations and retail. One of them is Bill Tan, 68, who began his coffee export business after buying a 3,000ha plantation in 2005. He employs 140 workers at his processing plant and exports his arabica beans to European markets.

But being a pioneer in an undeveloped market has its challenges. These include the lack of regulations, insufficient infrastructure and a low- skilled labor force among the population of 1.1 million.

Getting in and out can be a challenge as well. There is only one airport, with flights to just three destinations from Dili – Singapore, Bali and Darwin, Australia.

Investors complain about the slow pace of doing business and lack of transparency. A businessman in land development said: "There is a lot of bureaucratic red tape and sometimes, agreements change, bogging down progress."

Collin Yap, 40, whose company, National Insurance Timor-Leste, celebrates its first birthday this month, said he started from scratch. "We worked with the central bank... The whole process of securing licenses and clearing government and financial checks took us 20 months," he said. "The key is to build rapport and show you are sincere."

Timor Leste's government says it is aware of these problems and is working to fix them. In a recent interview with The Straits Times, Economics and Development Minister Joao Goncalves listed the government's three priorities as building roads, ensuring a stable power supply and providing clean water.

Some of these projects would be paid out of the country's Petroleum Fund – a sovereign wealth fund in which surplus oil and gas income is deposited – that stands at $7.4 billion. The government has taken $450 million from this fund for a power plant in Dili.

Goncalves also cited investor-friendly rules like cutting company taxes from 30 percent to 10 percent and allowing companies to claim full depreciation costs in the first year. "We are looking at improving accessibility... We have devoted this year to make infrastructure development a top priority."

Against this backdrop, Timor Leste is seeking to become Asean's 11th member, even as other countries feel it is too soon. The worry is that it will not be able to catch up with its neighbors, which have spent the last few years removing tariffs and streamlining Customs procedures, among other things, to achieve Asean economic integration by 2015.

During an interview, President Jose Ramos-Horta gave assurances that his country, which has no external debt, was not expecting financial help from Asean states. Foreign Minister Zacarias da Costa said Timor Leste had a road map to grow together with Asean, so that it "won't be a burden" to the member countries. Asean membership, he said, would boost the country's image and allow it to learn from its neighbors.

"Some of the concerns raised are legitimate...We emerged from a conflict, but we have proven that we have managed to recover quickly," he said.

Timor Leste won independence from Indonesia in 1999 after a bloody struggle and a decisive referendum that was met with violence from militias allied with the Indonesian military. After a brief period of UN tutelage it became a formal country in 2002. Violence broke out again in 2006 and 2008 during protests. Ramos-Horta and Prime Minister Xanana Gusmao survived assassination bids by military rebels attempting a coup.

The country has since stabilized and will hold its third parliamentary and presidential elections next year. The United Nations peacekeeping mission of 1,500 personnel, installed after the crisis in 2006, will also be phased out after the elections.

Residents, too, are picking up their lives and are looking forward to changes. As Alfredo, a fishmonger, said: "We want foreigners to help with progress, but we also want better education for our children so they can contribute to big things in the country."

Analysis & opinion

The land that Indonesia lost

Jakarta Globe - April 25, 2011

Joe Cochrane – To many Indonesians, Timor-Leste is a country redolent with bad dreams, the result of the problematic past when it was the country's 27th province and the traumatic birthing process of the new nation. Joe Cochrane returns to the capital, Dili, to find much has changed and that the neighbors to the west are still a part of the story.

The bustling shops in the Colmera area of Dili are a testament to the return of boom times in the capital of Timor-Leste. Once a conquered, neglected province of Indonesia, Timor-Leste has emerged from the shadow of its own home-grown factional fighting, political upheavals and violence between 2006 and 2008 to show some of its earlier promise as an emerging democratic nation following formal independence nearly nine years ago.

Things are rolling on the eastern side of Timor Island, and these days it has far less to do with the presence of the United Nations support mission composed of a mere 1,500 international police officers and administrative staff. Instead, Timor-Leste can thank its own natural resources this time around: billions of dollars in oil and gas wealth that is now finding its way from a strictly monitored petroleum fund into the state budget. In 2002, the budget was less than $20 million; for 2011 it's $1.3 billion.

The government of Prime Minister Jose Alexandre 'Xanana' Gusmao, the former guerrilla leader who once rattled the cages of Indonesian Army generals, is flinging out contracts like Frisbees as he tries to escalate infrastructure and economic development and better the lot of Timor-Leste's one million people, 41% of whom remain mired in poverty. Ironically, Indonesia is playing no small role in the current economic surge: Timor-Leste's 2010 real GDP growth could top 10%, and the country is projected to have one of the world's top 10 fastest-growing economies in 2011.

But the nature of Indonesia's support has caused some to raise their eyebrows and ask whether it is in reality helping its former neighbor or simply benefiting from the new country's inability to produce goods for itself. Take, for example, the stores of Colmera, where vendors sell a wide variety of merchandise ranging from shoes and jeans to construction materials. Nearby small convenience shops sell cold bottled water and household items ranging from soap to shampoo to laundry detergent.

These diverse products all have one thing in common: they were made in Indonesia and shipped to Dili via Surabaya, just like the majority of Timor-Leste's imported products. "Our exports to Timor-Leste are around 70% (of the country's total imports), but it's mostly the daily needs of the Timor-Leste people," said Mahendra, counselor of the Indonesian Embassy in Dili. But that's not all that Indonesia is exporting.

The young men running the clothing stores in Colmera speak bahasa Indonesia with East Javanese accents. With a nod and a wink, they confide that they are Indonesians and have clothes and shoes shipped in by relatives back on Java, which they sell at a nice profit. No one minds, given that prices for just about everything are higher in Dili as a result of the presence of the UN and foreign aid workers. Indonesian contractors are renovating the famed Hotel Turismo on Dili's beach road, building restaurants and roads, importing cement and participating in a construction of the national power grid.

One-way traffic

It's hard to fault small businessmen trying to earn a fast buck, but the benefits should go both ways. Unfortunately, it does not. Foreign direct investment by Indonesian companies, big or small, into Timor-Leste is basically zero. Indonesia's presence is limited to two state-owned construction companies involved in projects, a Bank Mandiri branch, state oil company Pertamina selling fuel, and Merpati Nusantara Airlines and Batavia Airlines flying in and out.

"There is no investment. We don't have any big business here," says Mahendra, though he holds out the possibility of Indonesian companies partnering with Timorese firms on electricity and other infrastructure projects. In fact, they already have. Indonesian state-owned construction firm PT Wijaya Karya announced in February that it has secured a $16.9- million power plant project in Timor-Leste.

The Gusmao government is spending $600 million this year on infrastructure development, including $450 million alone on a new power plant and national grid system. Once completed – the government says it will be finished this November – the national grid will be able to generate 130 MW of power, nearly quadrupling Timor-Leste's current supply of 35 MW, says Helio Simatra Tavares, executive director for external trade at Timor-Leste's Ministry of Tourism, Trade and Industry.

"We may be able to sell some to West Timor because we will have such over- capacity," he adds. But electricity and coffee, Timor-Leste's top export, are not helping the country to establish a manufacturing base. The country imports more than 80% of its needs, including items like bottled water, frozen chicken and even rice. Foreign direct investment (FDI) outside of the oil and gas sector remains very low, and total FDI in 2000 was only $18 million. More recent statistics are hard to find. While a few Indonesian companies, such as Tomy Winata's Artha Graha Group, have been looking around for possible investments, according to Mahendra, Indonesia's primary role in Timor-Leste these days is that of a supplier and project expeditor. "Eighty percent of anything being done here is being done with Indonesians," said one Dili-based expatriate development expert, who asked not to be named.

"Despite all the (conflict) in the past, the Timorese are using the Indonesians to rebuild the country. Xanana wants to be as snug as a bug in a rug with Indonesia – and there's nothing wrong with it." Indeed, Indonesia is Timor-Leste's closest neighbor and its ports in Surabaya and Makassar are within easy sailing distance of Dili. The countries share a land border, where some goods enter Timor-Leste, their citizens both speak bahasa Indonesia, and for better or for worse they have a shared history.

All that, plus the fact that Indonesia is the world's fourth-largest country and sits right on Timor-Leste's doorstep, made it easy for Timorese leaders such as Gusmao and Jose Ramos-Horta, who is currently the country's president, to reject calls by human rights groups and the Timorese public to request a UN war crimes tribunal in The Hague to prosecute Indonesian military officials.

Instead, they opted for reconciliation with Jakarta and now have warm diplomatic relations. While this has brought stability along the West Timor border, it has not translated into Indonesian companies setting up facilities such as a fisheries cannery, a commercial ice-making factory, a bottled water plant, or any of the other manufacturing enterprises that Timor-Leste needs to create local jobs and reduce its reliance on imports.

Petroleum income accounted for about 95% of total government revenue and almost 80% of gross national income (GNI), and it's widely agreed that Timor-Leste needs to start creating viable alternative economic sectors because the petrodollars won't last forever. "We want investors to do things that we cannot do. We need them to train up our people," says Finance Minister Emilia Pires.

Nonetheless, Ramos-Horta told GlobeAsia that he is not surprised at the lack of delegations of potential Indonesian investors visiting Dili. "The Indonesians are not major investors, neither here or in other regional economies like Singapore, China or India," he said. "Indonesian businesses are very insular; they invest much more within Indonesia itself, which is good anyway."

Even China is investing in rice plantations in Timor-Leste, through a project called the China-East Timor Agricultural Cooperation on Hybrid Rice Technology, according to GRAIN, an international non-profit group. Few doubt that an economically strong Indonesia is a good thing for Southeast Asia. But since 2004, only 86 foreign companies have signed investment deals in Timor-Leste, 68 of which were implemented, says Secundino F. Moreira, director of the Ministry of Economic Development's investment office.

These were mostly small-time ventures such as hotels and restaurants. Sitting in his quiet office along Dili's beach road, Moreira says he thinks foreign investors remain wary of Timor-Leste because of its violent history, most recently in 2006 when rival factions of the Army and National Police battled it out in the capital, killing dozens and leaving some 150,000 people homeless. Adds Mahendra from the Indonesian Embassy: "We should convince Indonesian companies to do more in Timor-Leste. They still have negative impressions of the situation here. Only brave companies are willing to gamble."

For example Digicel, an international telecommunications company, has been in the country for three years yet continues to wait for an operating license. There is also no shortage of stories about foreign businesses being "muscled out" of projects they've got off the ground by the Timorese government or local business players.

Bureaucratic red tape is frequently cited as an impediment to investment, as is high costs for even unskilled labor. The World Bank ranked Timor- Leste 174th out of 183 economies in its 2011 "Ease of Doing Business" survey. But it's not as if Indonesian businessmen are as a rule risk- adverse.

Smaller players are operating in Timor-Leste via relationships first established when the country was an Indonesian province. "The Timorese tried to get global investment, but because of the lack of laws or enforcement of them, the US, the French, Russia, Singapore, and others said no," the development expert states.

"The only people who can do business here are people who have personal relationships, and people who can operate in a gray, fluid, ambiguous environment. "But every Timorese guy who gets a government contract says to themselves, 'Can I do this?' If not, they find an Indonesian to do it for them. And it's almost all construction." The profit margins are enticing enough.

The presence of the UN and foreign aid workers for the last 11 years, plus Timor-Leste's petrodollar-fueled economy, means that prices for nearly everything are higher. As a result, an Indonesian contractor can make up to 50% profit on a government contract by using imported materials and Indonesian laborers. Of course, this is small potatoes compared to the investment potential in mining, palm oil plantations, manufacturing and other industries in Indonesia itself.

An informal survey among several businessmen and analysts had a clear consensus: Why invest down in Timor-Leste when there are so many opportunities in Kalimantan, Sulawesi and Sumatra? Good point, but Timor- Leste still has a card up its sleeve that should get it some international attention. Oil and gas production could continue until 2050 or beyond, if it can reach an agreement with Australia on jointly developing the Greater Sunrise field in the Timor Gap.

The Gusmao government has included in its national strategic development plan a proposed $3.9 billion facility on Timor-Leste's south coast consisting of a LNG processing plant, an oil refinery, a supply base and a new highway and road system. Finally, there's the Timor-Leste Petroleum Fund. The government is seeking amendments to the country's petroleum law so it can increase its equity investments to up to 50% of the fund's value.

Currently, the government can only invest 10% in equities and the remaining 90% in US Treasury bonds. The government would also like to acquire international loans based on the fund's net worth. "With our petroleum fund and significant liquidity and surplus, we can also invest in strategic sectors in other Asian economies," Ramos-Horta says, including in Indonesia. In an irony of history, Timor-Leste may end up some of the country that once ruled it.

The eagle and the dragon in the Land of Sandalwood

PacNet - April 20, 2011

Loro Horta – After 400 years of inept Portuguese colonial rule and 24 years of brutal Indonesian occupation, Timor-Leste (formerly East Timor) gained its independence in 2002 following a UN-sponsored referendum.

Since then, the small territory has witnessed an intense competition between the United States and the People's Republic of China. While Timor- Leste has not been considered as strategically important for either country, both see their presence in the territory as a barometer for their global competition.

A US Defense Department official noted: "If we cannot maintain a respectful presence in Timor where we have the support of two of our oldest allies, Australia and Portugal, how can we expect to do so in much more difficult places? This is embarrassing."

In recent years the Chinese presence in Timor-Leste has surged. It built the new Foreign Ministry building, the presidential palace, the defense force headquarters, and 100 houses for the military. A Chinese company was awarded a $378 million contract to build two power plants and state-owned Poly Technologies sold two 52-meter patrol boats. Timor has bought assault rifles and non-lethal items such as logistic supplies and uniforms from China. Some 4,000 Chinese now reside in Timor where they control small and medium commerce.

In January 2011, a delegation from China's state-owned Exim Bank visited Dili to negotiate provision of a soft loan for infrastructure development. The loan, expected to be as much as $3 billion, would transform the country's economy and make China its main economic partner. However, the deal has run into delays due to objections from Timor's British and Australian-trained finance minister, who has more than 40 Australian advisors working for her.

Growing numbers of Timorese are going to China for studies – an estimated 140 public servants went for training in 2008 alone. In the past, educating foreign elites has given the US tremendous diplomatic and political benefits; China may soon begin to benefit from such investments in soft power. So far, the charm offensive is working, with Timor's leadership expressing gratitude and supporting Beijing on international issues such as Tibet, Taiwan, and human rights.

The pace of US engagement has also increased, most visibly through additional aid and a strengthened diplomatic presence. Washington is particularly concerned by the growing military cooperation between China and Timor. While not a US priority, Timor is in a strategically important area between Australia and Indonesia and near the vital Straits of Ombei and Wetar, one of the deepest underwater trenches in the world and important for submarine passage from the Pacific to the Indian Ocean – a potentially vital choke point in any future conflict.

The US Navy has in recent years increased its presence in Timor and is at the forefront of US diplomatic efforts. Several US ships have visited the island since 2008, with the largest contingent in early 2010 when three US warships and 1,500 marines conducted a 5-day landing and rescue exercise. Since 2010, a group of US Navy Seabees has been engaged in humanitarian assistance projects building schools, repairing roads, and supporting local authorities. The US Navy has for several years regularly deployed to Timor the USS Mercy hospital ship and has treated thousands of Timorese patients.

US-based NGOs have worked in remote areas of Timor where they are generally welcomed. The election of President Obama in 2008 was met with wide-spread celebration and helped dismiss the myth of the US as a racist society.

Growing US engagement with Timor comes at a crucial time as Australia, Timor's main security guarantor and political partner, has grown unpopular as a result of racist attitudes of advisors and troops stationed in the country.

The US approach to building soft power in Timor has focused on reaching the grassroots. Yet, using the Navy to do this sends a clear message that the US is the dominant player in Asia. US emphasis on humanitarian assistance and the quality of its diplomats such as the widely respected former Ambassador Hans Klemm have enhanced the US image in Timor. Humanitarian assistance, scholarships, and other grassroots diplomacy have paid dividends despite resentment of US support of Indonesian occupation.

China has focused on state-to-state and institutional relations. While many Timorese see the Chinese government in a positive light, the growing number of Chinese traders is generating resentment. As noted by Chinese Consul Chung in Dili "The growing number of Chinese coming here is really keeping us busy, very often they get into trouble with the locals."

Despite these problems, China is seen as an important and valuable partner that assisted Timor in areas that other countries would not. The Chinese presence is likely to continue to grow in Timor-Leste as China sees its presence in the territory as a test of its influence vis-'-vis the US.

[Loro Horta (rabino_azul@yahoo.com) was the UN National Project Manager for Security Sector Reform in Timor-Leste. A graduate of the PLA National Defense University senior officer course, the Chinese Ministry of Commerce Central School and the US National Defense University, he is currently studying at the US Naval Post Graduate School.]

What we really knew about East Timor

New Matilda - April 14, 2011

Clinton Fernandes – In April 2007 I applied to the National Archives of Australia for access to records of the Defence Intelligence Organisation relating to Indonesia and East Timor in 1975. I wanted information from the period from 1 October to 31 December 1975, when the Indonesian military destabilised and then invaded East Timor, to establish how much the Australian government knew about the impending invasion – and also about the deaths of the Balibo Five, who were killed during this period.

My search turned up 42 documents relevant to the application. However, on the advice of the Department of Defence, Archives advised that a significant proportion of those documents were to remain unavailable to the public. So I applied to the Administrative Appeals Tribunal for a review of the decision.

Prior to the hearing, Attorney-General Robert McClelland, issued a certificate under the Archives Act which meant that certain evidence would be heard in closed court. The effect of this? I was unable to hear a substantial part of the government's case – but that they could hear all my arguments, and presumably try to rebut them in closed court.

Ian Latham, a Sydney barrister, volunteered to represent me pro bono. He drove down to Canberra the day before the hearing, accompanied by Professor Peter Donovan, an expert in mathematics and cryptography at the University of NSW. Donovan provided expert evidence as to the obsolescence of 1975-era encryption technology.

Two weeks ago the Tribunal ruled that while certain parts of the documents I requested some four years ago should still be exempt, about 250 lines should not have been censored.

These 250 lines show that the Australian government knew about the Indonesian military's operations in great detail, and ahead of time. Although well-informed observers have argued this for years, this is the first time it has been confirmed with documentary evidence. Indeed, during a 2007 inquest into the killing of the Balibo Five, the NSW Coroner accepted the intelligence agencies' position that nothing from the records should be made public.

The documents do not show that Australian intelligence knew that the journalists were in Balibo. But it would appear that Australian intelligence agencies knew within hours of their deaths on 16 October 1975 that the Indonesian field team in Balibo had advised their military commander that they had killed a number of foreigners. Australian analysts worked out the probable identity of these foreigners after hearing media reports that foreign journalists were missing in East Timor. A few hours later, Australian intelligence agencies were able to confirm this.

It's important to note here that at the time, the Australian government was refusing to publicly confirm that Indonesian forces were even involved in East Timor. Several days later, the Indonesian Department of Defence and Security asked its forces in East Timor to bring the bodies of the Balibo Five to Atambua, in Indonesian West Timor. They received this reply, according to the documents: "It is not possible to take the bodies to Atambua because they have already been reduced to ashes". Even two weeks later, on 31 October, Australian intelligence could not "reach firm conclusions about either the circumstances and manner of their deaths, or the circumstances in which their bodies were burned".

It was eventually established that Indonesian special forces had captured the town of Balibo at 7.55am on the morning of 16 October. They killed the five journalists, dressed the corpses in military uniforms, placed guns beside them, and took photographs of them in an attempt to portray them as legitimate targets.

The attack on Balibo was part of a major coordinated attack in which six towns along the border were attacked by 1500-2000 regular infantry, special forces, marines and partisans supported by artillery, mortars, a B-26 bomber, a C-47 gunship and some armed helicopters. East Timorese resistance was much more robust than the Indonesians had expected, although it was "restricted to limited, initial opposition followed by withdrawal and the conduct of sporadic harassment," according to the documents. There was no overall East Timorese command and control system, and it would be unable to "sustain conventional opposition in the face of Indonesian military pressure".

Nevertheless, one Indonesian unit was surrounded and taking casualties. Its commander asked for reinforcements and a helicopter gunship to provide air support and to evacuate the wounded. The East Timorese resistance inflicted heavy losses on the Indonesian supply line between Balibo and Maliana, where the uphill, winding road and thick vegetation favoured the use of hit-and-run ambushes. Its mortar attacks caused great damage to the Indonesian forward command post on the weekend of 18-19 October. Indonesian forces received a nasty surprise in battle when they discovered that 70 per cent of their own mortar rounds failed to fire.

The killing of the five foreign journalists caused alarm in the Indonesian high command. Worried about the international diplomatic consequences, they called a halt to the military operation and, according to the documents, planned an intelligence operation to discredit Australia in case it openly criticised the murder of the journalists.

Previously, Australia had provided Malaysia with weapons and ammunition under a Defence cooperation program. But Malaysia had supplied some of them to Indonesia. Indonesia therefore began preparations "to publicize a false claim of Australian support for Fretilin. Indonesia would use as evidence not only the presence of Australians who were aiding Fretilin [i.e the murdered journalists whose corpses had been dressed in military uniforms and weapons and photographed] but also the supposed capture from Fretilin troops of hand grenades of Australian origin," the documents report.

Australian intelligence became aware of the plan and privately assessed that while "Australia has supplied grenades, identifiable as of Australian origin, to Malaysia", any Indonesian claim could be rebutted because "if Indonesia produced any of these in an attempt to substantiate an allegation of Australian support for Fretilin, it might be possible to demonstrate that the grenades had been part of a batch given to Malaysia".

Indonesia's concern about a negative international reaction combined with its own logistical problems and the onset of the wet season led to nearly five weeks of inactivity as it waited to see what the reaction would be. But there was no adverse reaction from Australia, Britain or New Zealand. This was the real "green light"; the lack of international condemnation at the killing of five foreign journalists meant that the Indonesian military could treat the East Timorese as they wished.

In 2007, the coronial inquiry in NSW found that the journalists were unarmed, dressed in civilian clothes, and had their hands raised in the universally recognised gesture of surrender. They were shot and/or stabbed to death by the Indonesian military. Since the killings were associated with, and occurred in the context of, an international conflict, the coroner referred the case to federal authorities for possible war crime prosecutions.

The federal opposition leader at the time, Kevin Rudd, reacted to the Coroner's decision by saying, a week before the 2007 election:

"This is a very disturbing conclusion by the coroner concerning the fate of the Balibo Five back in 1975. I believe this has to be taken through to its logical conclusion. I also believe those responsible should be held to account... My attitude to this is dead set hardline. I've read a bit about what happened in Balibo, I've been to Balibo, walked up there, I've seen the fort, I've seen where these blokes lost their lives. You can't just sweep this to one side."

When Labor came to office a week later, however, very little happened. It was only after the movie, Balibo, was released in mid-2009 that the Australian Federal Police announced that it had begun a formal investigation into the killings.

If Kevin Rudd, now Foreign Minister, still believes the matter "has to be taken through to its logical conclusion", then the he and his colleagues the Attorney-General and the Minister for Home Affairs, who have oversight of war crimes investigations, need to explain to the Australian public why nothing has happened more than three years later – and why the Labor government continues to follow in the tradition of its predecessors by restricting access to vital information about Australia's complicity in the Indonesian invasion of East Timor.

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