Craig Skehan – Entrenched poverty could destabilise East Timor unless earnings from oil and gas are fairly distributed, a United Nations report has found.
Half the estimated population of 1 million lacks safe drinking water and 60 in every 1000 infants die before their first birthday. Life expectancy is only 55, while the average yearly income of $500 has been falling.
The report, written by the UN Development Program in collaboration with the East Timorese Government, says that to tackle poverty, East Timor will need to achieve economic growth of 5 to 7 per cent a year.
The signs of pitfalls ahead reinforce a World Bank warning last year that an estimated $19.5 billion in oil and gas revenue over 20 years from the Timor Sea could fuel corruption.
Last month more than 400 soldiers – nearly a quarter of the defence force – protested over pay and conditions as well as alleged favouritism.
Australia agreed to East Timor receiving 90 per cent of revenues from a joint energy development area 400 kilometres north of Darwin, but there are still local critics of the deal.
East Timor's President, Xanana Gusmao, acknowledges in the UN report that Timor Sea royalties do not necessarily guarantee a bright future.
"Poverty can potentially act as a breeding ground for social instability and civil disorder, and it can trigger crime and strife," said Mr Gusmao, a veteran of the resistance to Indonesia's occupation.
Poverty is most severe among the 80 per cent of households who earn a living from agriculture. A male-dominated culture puts additional pressures on women.
There is a petroleum fund to finance development projects, but the departure of many international assistance personnel is exacerbating skills shortages. There have been media reports of foreign businessmen complaining about government officials demanding bribes.
The UN report praises the embrace of democracy by the East Timorese and cites scope for future exploitation of hydrocarbon reserves to underwrite improved living standards.
The total requirement for public expenditure during the next four years has been estimated at $1.1 billion. But even with projected oil and gas revenues, foreign aid will be required to fill a shortfall of about $160 million a year. Australia contributes $40 million.