Tim Dodd – Dili, which becomes the capital of the independent state of East Timor at midnight this Sunday, is a relatively prosperous town for a developing country.

And Dili is the only place in East Timor which most of the VIP visitors will see when they arrive for this weekend's independence celebrations.

But the capital city, boosted by expatriate spending from UN advisers and aid workers, gives a false picture of the real state of East Timor. What this weekend's influx of visitors is unlikely to see is the grinding poverty of the rural districts of East Timor where life is as bad as the worst places in Africa.

So, in spite of the subtitle of this column, its purpose is actually to examine the living conditions of East Timorese outside Dili where over three-quarters of East Timor's estimated population of 800,000 lives.

Of these rural dwellers, three-quarters are engaged in subsistence agriculture which is highly inefficient and produces very poor returns. Productivity is so low that East Timor has, for decades, imported large quantities of basic foodstuffs.

Poverty is concentrated in rural areas where 46 per cent of East Timorese earn less than the nominated poverty line income of US55cents a day. In urban areas, which essentially means Dili, the figure is 26 per cent. Only 37 per cent of people over 15 in rural areas can read and write (as opposed to 82 per cent of urban people).

These figures are from a United Nations Development Program report on East Timor issued this week. It contains the agency's assessment of conditions in East Timor which it measures against its human development index which takes into account standard of living as well as other indicators such as health and education.

Timor is the lowest in Asia, worse than such countries as Laos and Burma, and on a par with Rwanda. (The ranking is based on conditions country-wide and includes the better-off people in Dili.) The ranking was done for 1999, the latest year for which full international comparisons are available. Since then East Timor's HDI has risen a little but not by much.

Country-wide, life expectancy is only 57 years with large numbers of deaths from preventable diseases such as malaria, respiratory tract infections and diarrhoea. Maternal mortality is also high with 420 women dying for every 100,000 live births.

Speaking of births, East Timor has a high birth rate and an estimated annual population growth rate of 2.5 per cent. What will be the effect of independence euphoria and hopefully, better health care, on this figure? This is my interpretation, not the UNDP's, but it seems likely that in a Catholic culture averse to birth control that there will be a population explosion which the country can ill-afford.

The UNDP also says that East Timor's women are particularly disadvantaged, largely because their incomes are far less than their male counterparts, and this difference is far greater than in neighbouring countries such as Indonesia and Cambodia.

Ordinary East Timorese also know there are big difficulties with independence because their worsening poverty tells them so.

Julio Soares, a coffee farmer and owner of a small shop in the remote mountainous outpost of Fatubesse, told The Australian Financial Review that life is now much tougher than it was under Indonesian rule when the local farmers received a fixed monthly wage equivalent to about $60 a month. Now the farmers are directly exposed to the world coffee market which has been hit by oversupply from Brazil and Vietnam.

A farmer with a typical half hectare plot is no longer an employee but a small business owner with a very seasonal cash flow of no more than $400 a year. "Living is more difficult than before but we chose to live separately from Indonesia and that is the consequence," he says. But he still notes with satisfaction that the people are no longer plagued by "mean and evil" Indonesian troops.

For Mr Soares, independence certainly has its own rewards but it is obvious that it also contains the seeds of a multitude of new problems.