Two AID/WATCH volunteers returned from East Timor yesterday and observed that, while East Timorese society has been heartened by the stability and security restored by the Peace Keeping Forces, and by the good relief work supported by the international community, it is distressed and confused by the emerging role of the World Bank.

AID/WATCH researchers Yoga Sofyar and Tim Anderson, found consistent concern amongst NGOs, church groups and administration officials, that the development assistance – generously and freely given by the international community – is being managed in a predetermined, secretive and authoritarian manner. The main responsible agency is the World Bank, supported by the International Monetary Fund (IMF) and the Asian Development Bank (ADB).

Successive World Bank teams have now argued that the "clean slate" of East Timor's devastated economy presents an ideal opportunity for a 'free market' experiment. " They have argued this consistently, as a 'best practice' notion, despite East Timorese opposition" said Mr. Anderson.

Mr. Sofyar and Mr. Anderson were informed that many East Timorese feel that the World Bank is not treating them with respect. Recently a group of East Timorese economists, retained by the World Bank to analyse the state of the country's coffee industry, resigned en masse after their work was trivialised. They had been offered a couple of weeks and ten dollars a day each to complete a large study. At the same time, hundreds of thousands of dollars has been wasted on international consultants.

According to the main student body, IMPETU, a World Bank attempt at a youth consultation fared little better. The World Bank organised a forum, then were not seen again. Mr Aderito de Jesus Soares, lawyer and Director of the Sahe Institute, said that East Timorese participation in World Bank projects had so far been "cosmetic".

AID/WATCH calls on The Bank to explain its presence in East Timor, and to apologise and compensate for its involvement in past projects such as the unpopular and coercive transmigration and birth controls schemes.

The Asian Development Bank has been put in charge of US$7.7 million of Trust Fund moneys intended to establish microcredit for poor rural people (especially women). This project has been designed with interest rates between 40 and 80% pa, and plans to privatise the scheme as a profit making venture with international consultants receiving US$600,000.

Mr Demetrio Amaral de Carvalho, Director of the Haburas Foundation, informed AID/WATCH that the World Bank appeared to have "its own perspective" on what projects would be funded, and this had a lot to do with profit making concerns. Many community proposals have been ignored. The relief and peacekeeping efforts have been good, but the current process is not "nation building".

The World Bank has blocked proposals by East Timorese administrators and UNTAET for facilities such as a public grain silo and public abattoirs, insisting that all potential revenue-generating projects must be privatised. The World Bank has termed such calls attempts at "command and control activities" – an inappropriate reference to Soviet styled totalitarianism.

Minister for Economics in the Transitional Administration, Mr Mari Alkatiri, told AID/WATCH that his cabinet was "resisting" pressure from the World Bank to not use trust funds for public economic facilities. There is also serious concern at the "dual economy" that has evolved, with UN staff paid 30 and 40 times more than local people, regardless of skills. A number of restaurants, for example, are notable for the absence of East Timorese customers.

Yet UNTAET will soon be gone, but the World Bank will remain. AID/WATCH would like to see the Australian Government play an active role in helping engage the East Timorese community in the development of their country. A sustained effort is needed to help this new neighbour nation find its feet, and express its own character and voice. The paternalism must end.

AID/WATCH recommends that:

• The Australian Government, in all available fora, insist that East Timorese representatives have the final say on the deployment of the donated Trust Fund moneys.
• In view of East Timor's poor communications (the phone system was destroyed by the retreating Indonesian army and militia) the Australian Government arrange that Telstra offer to the East Timor Transitional Administration an affordable telephone and internet system, cross-subsidised by Telstra's other profitable concerns.
• The Australian Government make public the details of its negotiations with East Timor over the Timor Gap Treaty, so that the Australian public can assure themselves the East Timorese are getting a fair deal from the Australian Government and the oil companies.
• The Australian Government expand its efforts in education and training support (especially teacher training and medical training) to more than cover the gap left by Indonesia.