East Timor. Country Profile 2005

Transcription

1 Country Profile 2005 East Timor This Country Profile is a reference work, analysing the country s history, politics, infrastructure and economy. It is revised and updated annually. The Economist Intelligence Unit s Country Reports analyse current trends and provide a two-year forecast. The full publishing schedule for Country Profiles is now available on our website at The Economist Intelligence Unit 15 Regent St, London SW1Y 4LR United Kingdom

2 The Economist Intelligence Unit The Economist Intelligence Unit is a specialist publisher serving companies establishing and managing operations across national borders. For over 50 years it has been a source of information on business developments, economic and political trends, government regulations and corporate practice worldwide. The Economist Intelligence Unit delivers its information in four ways: through its digital portfolio, where its latest analysis is updated daily; through printed subscription products ranging from newsletters to annual reference works; through research reports; and by organising seminars and presentations. The firm is a member of The Economist Group. London The Economist Intelligence Unit 15 Regent St London SW1Y 4LR United Kingdom Tel: (44.20) Fax: (44.20) london@eiu.com Website: New York The Economist Intelligence Unit The Economist Building 111 West 57th Street New York NY 10019, US Tel: (1.212) Fax: (1.212) newyork@eiu.com Hong Kong The Economist Intelligence Unit 60/F, Central Plaza 18 Harbour Road Wanchai Hong Kong Tel: (852) Fax: (852) hongkong@eiu.com Electronic delivery This publication can be viewed by subscribing online at Reports are also available in various other electronic formats, such as CD-ROM, Lotus Notes, on-line databases and as direct feeds to corporate intranets. For further information, please contact your nearest Economist Intelligence Unit office Copyright 2005 The Economist Intelligence Unit Limited. All rights reserved. Neither this publication nor any part of it may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of The Economist Intelligence Unit Limited. All information in this report is verified to the best of the author's and the publisher's ability. However, the Economist Intelligence Unit does not accept responsibility for any loss arising from reliance on it. Symbols for tables n/a means not available; means not applicable Printed and distributed by Patersons Dartford, Questor Trade Park, 151 Avery Way, Dartford, Kent DA1 1JS, UK.

3 Banda Sea I N D O N E S I A Pulau Alor Pulau Lomblen Pulau Pantar Liquica Atabae Ermera Savu Sea Maliana Ainaro Oecussi enclave (East Timor) Pante Macassar Suai Zumalai WEST TIMOR (INDONESIA) Pulau Wetar Pulau Atauro Atauro Manatuto Baucau Aileu Maubisse Same EAST TIMOR Natarbora Ossu Viqueque Hotudo Timor Sea Pulau Romang Kisar Laga Lautem Com Lospalos Tutuala Pulau Jaco Lor Main road International boundary Main airport Capital Major town Other town July km miles Wetar Strait DILI Ombai Strait ' The Economist Intelligence Unit Limited 2005

4 Country Profile The Economist Intelligence Unit Limited 2005

5 East Timor 1 Contents East Timor 3 Basic data 4 Politics 4 Political background 6 Recent political developments 9 Constitution, institutions and administration 11 Political forces 13 International relations and defence 14 Resources and infrastructure 14 Population 15 Education 16 Health 16 Natural resources and the environment 16 Transport, communications and the Internet 17 Energy provision 18 The economy 18 Economic structure 18 Economic policy 21 Economic performance 22 Regional trends 23 Economic sectors 23 Agriculture 23 Mining and semi-processing 24 Manufacturing 24 Construction 24 Financial services 25 Other services 25 The external sector 25 Trade in goods 26 Invisibles and the current account 26 Capital flows and foreign debt 27 Foreign reserves and the exchange rate 28 Appendices 28 Sources of information 29 Reference tables 29 Population 29 Central government finances 29 Gross domestic product 30 Gross domestic product by sector at current prices The Economist Intelligence Unit Limited Country Profile 2005

6 2 East Timor 30 Gross domestic product by sector at constant prices 30 Consumer prices 31 Balance of payments 31 Net official development assistance 31 Exchange rates Country Profile The Economist Intelligence Unit Limited 2005

7 East Timor 3 East Timor Basic data Land area Population Climate Weather Languages Measures Currency Time Public holidays 14,609 sq km 924,642 (2004 census) Tropical Heavy monsoon rains, followed by a pronounced dry season. The north coast has a brief rainy season from December to February; the south coast has a double rainy season from December to June, with a break in March Portuguese and Tetum (official languages); English and Bahasa Indonesian (working languages); numerous local languages are also in use Metric system Dollar (US$)=100 cents 8 hours ahead of GMT 2005: January 1st (New Year s Day); March 25th (Good Friday); May 20th (Independence Day); August 15th (Assumption Day); August 30th (Popular Consultation Day); September 20th (Liberation Day); November 1st (All Saints Day); November 12th (Santa Cruz Day); December 8th (Immaculate Conception Day); December 25th (Christmas Day) The Economist Intelligence Unit Limited Country Profile 2005

8 4 East Timor Politics East Timor s political system is similar to that of the Portuguese model of semipresidentialism. The prime minister, Mari Alkatiri, is the leader of the Frente Revolucionária do Timor-Leste Independente (Fretilin, The Revolutionary Front for an Independent East Timor), which has a parliamentary majority and dominates the Council of Ministers (the cabinet). Widely seen as a national hero is the president, José Alexandre Xanana Gusmão, who rebuilt the resistance to Indonesia during the 1980s as a broad-based movement of national unity. The political system gravitates around two poles: the Fretilincontrolled parliament and cabinet, and the non-fretilin-controlled presidency. Political background East Timor suffers under Portuguese neglect An initial period of independence was short-lived The first Portuguese traders reached the island of Timor in the early 1500s. Before that little was known about the island, which was inhabited by ethnic groups broadly classified along the lines of Polynesian, Melanesian and aborigine. Timor was divided along its present lines under agreements reached between the Dutch and the Portuguese in 1859, with the Dutch controlling the west of the island and the Portuguese keeping the east and the north-coast enclave of Oecussi. Until the mid-20th century East Timor remained a strategically important, but neglected, outpost of the Portuguese empire. The military importance of the island was not lost on Australian or Japanese forces during the second world war. The Timorese sided with Australian forces in an effort to resist the Japanese invasion in Around 50,000 Timorese lost their lives during the battle and the ensuing three-year period of Japanese occupation. During the post-war period the Portuguese made efforts to promote the recovery and development of East Timor. However, following the overthrow of Portugal s dictator, Marcello Caetano, in April 1974, Portugal began to take steps towards casting off its burdensome colonies, including East Timor. As expectations of independence reached a high level in East Timor in 1974, the domestic political scene quickly developed. The most popular political party was Fretilin, which was initially formed as the Timorese Social Democratic Association in May Its main political rival was the União Democrática de Timorense (Timorese Democratic Union, UDT), which was formed at the same time by businessmen and landowners. The two parties were united in their principal objective of securing independence, and so formed an alliance in early 1975 ahead of an election planned for However, the union was fragile, and was eventually undone in August 1975 when UDT members, believing that Fretilin was planning a coup to secure power for itself, launched their own coup supported by police units. Faced with fierce resistance from Fretilin groups, which were supported by Timorese soldiers, the UDT and other small political groups fled to the neighbouring Indonesian province of West Timor, from which they launched crossborder raids supported by Indonesian troops. After calling for the UN to force Indonesia to withdraw its troops, Fretilin declared East Timor an independent republic on November 28th This period of independence was short-lived. On December 7th 1975 Indonesia Country Profile The Economist Intelligence Unit Limited 2005

9 East Timor 5 invaded East Timor, and in May 1976 ministers of the so-called Provisional Government!a group of East Timorese delegates chosen by the Indonesian military!voted for East Timor s integration into Indonesia. On July 17th 1976 Indonesia s parliament passed the integration bill and East Timor became Indonesia s 27th province. The UN Security Council never recognised Indonesia s sovereignty over East Timor. Indonesia s brutal occupation lasts 24 years The East Timorese choose independence, but at a cost The UN oversees the transition to independence In the immediate aftermath of Indonesia s invasion, around 60,000 East Timorese were killed. Such violence was to be a defining characteristic of the 24-year Indonesian occupation, during which perhaps as many as one-third of the pre-invasion population died. Although the Indonesian authorities invested heavily in the development of East Timor in terms of building healthcare clinics, schools and transport infrastructure, much of this served the needs of the increasing number of immigrants from Indonesian provinces. The majority of East Timorese refused to accept the rule of the occupying forces. Although the resistance movement, Falintil!originally the military wing of Fretilin! suffered massive losses in the late 1970s, the movement regrouped in the early 1980s under Mr Gusmão s leadership. Mr Gusmão left the party in 1988 and created a broad resistance coalition!conselho Nacional da Resistência Timorense (CNRT, the Timorese Council of National Resistance)!that emphasised a strategy of civil disobedience rather than armed conflict, in an effort to attract international attention and sympathy. The cost of running military operations and maintaining an administrative presence in East Timor proved to be a heavy burden for the Indonesian government in the aftermath of its own 1997 economic crisis. Owing partly to this, and partly to intensifying international concern, the Indonesian government finally decided in January 1999 to offer the people of East Timor the chance to vote on whether or not to accept wide-ranging autonomy or independence. The UN Assistance Mission for East Timor (UNAMET) was set up in June 1999 to prepare for the independence referendum, or popular consultation, which was set for August 30th The UN and local political groups pressed the Indonesian government to delay the referendum in order to give them more time to prepare. However, the government remained defiant, partly in response to the demands of the military, which appeared intent on embarking on a short campaign of destabilisation and intimidation. Despite the best efforts of the military and pro-independence militia groups to deter voters, 98.6% of registered voters took part in the referendum and 78.5% voted for independence. The military and the pro-independence militia groups sought brutal and violent retribution immediately after the referendum. At least 1,000 people were killed, more than 250,000 East Timorese were forced into Indonesian West Timor, and another 500,000 fled to the hills. International outrage at these developments led to the intervention of an Australian-led, UN-sponsored force, known as Interfet (International Force East Timor), to restore peace and order. Indonesian troops withdrew soon after. In October 1999 the UN Security Council passed a resolution establishing a UN Transitional Administration in East Timor (UNTAET), which was led by the special representative of the UN secretary-general, Sergio Vieira de Mello The Economist Intelligence Unit Limited Country Profile 2005

10 6 East Timor UNTAET s mandate was the broadest ever for a UN mission, and gave it full and exclusive governmental powers over East Timor. Among the main tasks facing UNTAET were those of providing security and maintaining law and order; establishing an effective administration; supporting capacity-building for self-government; and assisting in the establishment of conditions for sustainable development. In moves towards self-government, a 15-member legislature, the National Consultative Council, was established in 1999 and incorporated CNRT members and UNTAET officials. This was later replaced by the 36-member East Timor National Council, a precursor to a national parliament, in late Mr Gusmão was elected as the council s speaker. Recent political developments A Constituent Assembly is established East Timor becomes an independent nation The government struggles to maintain public confidence An election to an 88-member Constituent Assembly was held on August 30th Belying fears generated by the violence that had marked East Timor s previous experience of elections, the poll was peaceful. Despite predictions that the East Timorese would be baffled by the complexity of the issues and the electoral system and would not vote, 91% of registered voters turned out. Fretilin emerged as the largest party, winning 57% of the national vote and 62% of the vote for district seats, giving it a total of 55 seats, just short of the twothirds supermajority required to give it absolute control of the new assembly. On September 15th 2001 the assembly was sworn in and an all-east Timorese Second Transitional Government was appointed by Mr Vieira de Mello. Although Mr Gusmão initially refused to run for the presidency, on April 14th 2002 he won the presidential election by a landslide. Gaining 82.7% of the vote, he easily defeated his token opponent, the deputy assembly speaker, Francisco Xavier do Amaral. This was the final stage in East Timor s transition to independence, which was officially granted on May 20th 2002 when UNTAET transferred authority to Mr Gusmão, although the UN maintained a presence in East Timor under the UN Mission of Support in East Timor (UNMISET). However, the euphoria associated with the independence celebrations was short-lived, and the harsh realities facing the country during the early stages of independence soon became apparent. The fledgling East Timor government has struggled to live up to the expectations of the populace. Following the euphoria surrounding the granting of independence, people have become increasingly despondent and critical of the government s failure to tackle rising unemployment and crack down on alleged incidences of corruption, collusion and nepotism. The lowest point was reached in December 2002, when the capital, Dili, was placed under a state of alert after a student-led protest turned violent. In the ensuing clashes with the police, two students were shot dead and more than 25 were injured. There were also public disturbances in July 2004, when more than 100 people protested outside a government building in Dili, calling for reforms to the police force and also for fresh elections. Most of the protesters were reportedly former members of the resistance movement, Falintil, originally the military wing of the current ruling political party, Fretilin. The police eventually fired tear gas to evict protestors from the government building. There were a number of Country Profile The Economist Intelligence Unit Limited 2005

11 East Timor 7 injuries, and around 30 people were arrested. Mr Gusmão has been particularly critical of the government s failure to create a credible justice system, which has contributed to the public s growing concerns over the potential for corruption and abuse of power within the governing elite. Local elections show Fretilin s weakening support From late 2004 to mid-2005 East Timor held its first ever local elections, funded by the UN Development Programme and donor nations. Elections were held for village heads, village councils and sub-village heads. In total there are 442 villages (known as sukus) and 2,228 sub-villages (known as aldeias). Although opposition parties claimed that the process had been characterised by terror and manipulation, according to the UN the elections proceeded fairly smoothly. The first round of elections was held in late 2004 in the districts of Oecussi and Bobonaro, comprising a combined 68 sukus and 255 aldeias. Voter turnout was high!for example, it reached 92% in both Oecussi s suku elections and Bobonaro s aldeia elections. The National Election Commission noted some problems, such as voters names not appearing on voter lists, but the process was peaceful. Elections were held in March in the districts of Baucau, Lautem and Manatuto, with the remaining eight districts holding their elections in the following few months. Initial results generally indicated that Fretilin had lost some of its popularity at local level, with independent candidates, relying on strong local backing rather than party affiliation, performing well in a number of districts. Important recent events January 1999 Indonesia s president, B J Habibie, announces that East Timor will be given the opportunity to vote on whether to accept wide-ranging autonomy or independence. August 1999 A total of 98.6% of registered voters take part in the popular consultation, despite intimidation tactics of pro-integration militia groups and the Indonesian military. September 1999 The results of the popular consultation are announced, with 78.5% voting for independence. At least 1,000 people are killed as pro-integration militia groups and the Indonesian military go on the rampage, destroying buildings and infrastructure. Almost the whole of the population is displaced. The UN Security Council authorises a multinational force, known as the International Force East Timor (Interfet), headed by Australia, to enter East Timor. October 1999 Indonesia s parliament formally accepts the results of the independence referendum. The UN Transitional Administration in East Timor (UNTAET) is established to oversee the transition to independence. August-September 2001 Voting for the 88-member Constituent Assembly takes place. Frente Revolucionária do Timor-Leste Independente (Fretilin, the Revolutionary Front for an Independent East Timor) wins 57.3% of the vote. The Economist Intelligence Unit Limited Country Profile 2005

12 8 East Timor January 2002 Indonesia sets up a human rights court to try those believed to be responsible for the atrocities committed in the aftermath of the independence vote. March 2002 The Constituent Assembly agrees on the country s first constitution. April 2002 The resistance hero, José Alexandre Xanana Gusmão, becomes president after capturing 82.7% of the votes in the presidential election. May 2002 East Timor officially becomes an independent nation. UNTAET is replaced by the UN Mission of Support in East Timor (UNMISET). March 2003 The UN secretary-general, Kofi Annan, calls for the planned scaling down of UN security forces in East Timor to be delayed, amid widespread concerns of a growing security risk. The UN Security Council later agrees to extend UNMISET s mandate until May August 2003 The Indonesian government s ad hoc human rights tribunal of 18 officials is completed, with only two officials found guilty. Both are civilians of East Timorese origin. May 2004 The UN Security Council agrees to extend UNMISET s mandate for another six months, with a possible further extension of six months to May 2005 (an option that is later taken up). However, East Timor assumes greater responsibility for its own security arrangements, taking over full control of defence and internal policing. July 2004 More than 100 people, mostly members of Falintil (originally the military wing of Fretilin), protest outside a government building in the capital, Dili, calling for reforms to the police force and also for fresh elections. December 2004 Parliament passes the Law on Freedom, Assembly and Demonstration, which regulates political gatherings. The law includes provisions that prohibit demonstrations that are intent on questioning constitutional order, and those that aim to disparage the reputation of the head of state and other state officials. March 2005 The governments of East Timor and Indonesia formally establish a joint Commission of Truth and Friendship with the aim of resolving outstanding issues in the two countries past relationship in a peaceful and objective manner. April 2005 Susilo Bambang Yudhoyono makes his first official visit to East Timor since becoming Indonesia s president. The two sides sign a provisional land border agreement. Country Profile The Economist Intelligence Unit Limited 2005

13 East Timor 9 May 2005 UNMISET s mandate expires, but the UN maintains a presence in East Timor in the form of the UN Office in Timor Leste (UNOTIL), which has a one-year mandate. An agreement is reached to settle a dispute between the government and the powerful and popular Catholic church over the proposal to make religion optional rather than compulsory as a subject in government schools. This brings to an end three weeks of peaceful demonstrations, with protestors at times reportedly numbering around 5,000. Constitution, institutions and administration The powers of the president are defined narrowly Portuguese and Tetum are the official languages The judiciary is weak On March 22nd 2002 the Constituent Assembly promulgated the constitution, which was drafted with the direct input of the East Timorese, although the outcome of the Constituent Assembly election gave Fretilin de facto command over the drafting of the constitution. The constitution defines the powers of the president quite narrowly, following the Portuguese rather than the French model of semi-presidentialism. In a statement issued at the start of the presidential campaign, Mr Gusmão indicated several times that he would not be content to operate strictly within the limits set on the presidency in the new constitution. In late 2001 the Constituent Assembly decided to adopt Portuguese and Tetum, a local language, as official languages. By choosing both languages the authorities aimed to avoid alienating the majority of the population, which are not Portuguese speakers; Portuguese is spoken mainly by the older generation, who were educated under Portuguese rule, whereas Tetum and Bahasa Indonesia are now more widely spoken. According to an official household survey conducted in 2001 by the Planning Commission (which was given the task of producing a national development plan prior to independence), Portuguese is spoken by only around 5% of the population, whereas Tetum is spoken by around 82% and Bahasa Indonesia by around 43%. The decision to adopt Portuguese as the main official language of government remains controversial, as a shortage of translators in parliament has at times prevented debate and the progress of legislation. East Timor s legal system is inadequate, and its legal institutions are fragile. Dr José Ramos Horta, the Minister for Foreign Affairs and Co-operation, has complained publicly that the judicial and prison systems were established hastily, with an inadequate number of qualified judges. During the Indonesian occupation the East Timorese did not hold positions of responsibility in the justice administration. The departure of judges, prosecutors and court clerks in 1999 therefore left a dearth of legal capabilities in East Timor. The judicial infrastructure, including court-houses and detention centres, also suffered extensive damage in the immediate aftermath of the 1999 popular consultation. One of the most worrying ongoing problems is the failure to establish a strong judiciary comprising national judges. In January 2005 it was reported that all 22 national judges had failed an evaluation test and were therefore not eligible for conversion from probationary to career judges; 20 were to continue with advanced training. The Economist Intelligence Unit Limited Country Profile 2005

14 10 East Timor The Commission for Truth, Reception and Reconciliation Indonesia and East Timor form a joint commission East Timor s need to come to terms with past atrocities has been recognised in the creation of a Commission for Truth, Reception and Reconciliation. How this non-prosecutory body will dovetail with the justice system is clear enough in theory. In practice, however, there are differences of view among politicians and the general public over the scope for amnesties and the question of which crimes are to be treated as too serious to be forgivable. Mr Gusmão s more inclusive stance emphasises reconciliation. The apparent smoothness with which returning East Timorese have been reintegrated into the communities from which they fled in September 1999 suggests that the general public is not thirsty for revenge. In March 2005 East Timor and Indonesia formally established a joint Commission of Truth and Friendship (CTF) with the aim of resolving outstanding issues in the countries troubled past relationship in a peaceful and objective manner. The commission, which is set to commence its two-year mission in August 2005, will seek to reveal the truth rather than seek to punish those guilty of serious crimes committed in 1999 in the wake of the independence referendum. The UN has not given the commission its full backing. The UN secretary-general, Kofi Annan, has set up an independent commission of experts, a move that has been rejected by the Indonesian government. The UN commission conducted an assessment of the progress made by the UN Special Crimes Unit (SCU) and the Indonesian ad hoc human rights tribunal, and in June 2005 stated that those with the heaviest responsibility for serious human rights violations in East Timor had still not been brought to justice. International human rights groups, such as the USbased Human Rights Watch, have continued to call for an international tribunal. The search for justice There have been two formal efforts, one sponsored by the UN and one by the Indonesian government, to bring to justice those guilty of serious crimes in the aftermath of the 1999 independence referendum. However, neither process has completely satisfied widespread calls for justice to be served. The UN-sponsored Special Crimes Unit (SCU) in East Timor completed its investigations in November 2004 and had to complete its trials by May 20th The SCU filed charges against around 400 people, many of whom were Indonesians. The SCU s operations, however, were generally hampered by the Indonesian government s refusal to recognise the unit s authority, which meant that many accused officials were not extradited for prosecution in East Timor. Among those charged, the most senior official was General Wiranto, who was the head of Indonesia s military during the violence in By late 2004 a total of only 74 defendants had been convicted, and two defendants had been acquitted. The Indonesian government established an ad hoc human rights tribunal in March 2002 under intense international pressure. The court was set up to try 18 Indonesian officials suspected of human rights violations in East Timor. The tribunal was widely dismissed by human rights organisations, as Wiranto had not been indicted. Furthermore, a number of key witnesses ignored summons to appear in court owing to fears for their own safety. Of the 18 suspects, 16 were found not guilty. One of the two defendants who were found guilty, East Timor s former governor, Country Profile The Economist Intelligence Unit Limited 2005

15 East Timor 11 UNMISET s mandate expires; UNOTIL takes over Albilio Soares, has since had his conviction overturned on appeal, and the other, a militia leader, Eurico Guterres, remains free pending an appeal. Owing to security concerns and the apparent weaknesses of the local institutions, particularly the defence and police forces, UNMISET s mandate was extended (while the number of its personnel was reduced) on two occasions, in May 2003 and 2004, but the unit was finally dissolved in May However, reflecting the UN s ongoing concerns over the weaknesses of key emerging institutions and the failure to develop fully the rule of law in East Timor, a new UN office, the UN Office in Timor-Leste (UNOTIL), has been set up. UNOTIL, which was formally established on May 20th 2005 with a oneyear mandate, comprises 45 civilian advisers to support the development of vital institutions; 40 police advisers, with an additional 35 supporting the Border Patrol Unit; and ten officers to provide training in democratic governance and human rights. The UN Security Council has requested that UNOTIL transfer skills and knowledge to build up sufficiently the capacity of local institutions. Political forces Fretilin dominates parliament Relations between Fretilin and the president are strained Fretilin dominates the parliament, controlling 55 out of a total of 88 seats. East Timor s 13 districts are represented by one seat each; the remaining 75 seats are allocated to political parties based on a nationwide proportional representation system. Fretilin s claim to power derives from its status as the party of the resistance. Founded in 1974, Fretilin spearheaded the drive for independence and, with its armed wing, Falintil, organised resistance in the aftermath of the Indonesian invasion, declaring East Timor independent on November 28th Fretilin successfully ran its campaign for the Constituent Assembly election almost entirely on the basis of these historical achievements. Some see disturbing authoritarian tendencies in Fretilin. During the Constituent Assembly election campaign there were signs of this unattractive streak, only partly tempered by the UNTAET electoral and law-enforcement machinery. Fretilin inserted a clause in the constitution to make the assembly East Timor s first post-independence parliament. Critics of this decision included Mr Gusmão, the Nobel Peace Prize-winner, Bishop Carlos Ximenes Belo, most of the non-fretilin political parties and many civil society groups. Mr Gusmão was the chairman of Fretilin until 1988, when he left the party with a stinging condemnation of its dogmatism. He created a broad resistance coalition that embraced not only the guerrilla movement but also such important forces as the Roman Catholic Church and the growing body of disillusioned collaborators, urban youth and Indonesian-educated students. This alliance was formalised in 1998 in the Conselho Nacional da Resistência Timorense (CNRT, Timorese Council of National Resistance). Fretilin was a founding member of the CNRT, but withdrew from it in August Shortly before the August 2001 Constituent Assembly election, the CNRT dissolved itself. During the election, Mr Gusmão s estrangement from Fretilin was evident, as was his sympathy for two new CNRT-based parties, the Partido Democrático (PD) and the Partido Socialista Democrático (PSD). He agreed to a truce with The Economist Intelligence Unit Limited Country Profile 2005

16 12 East Timor Mari Alkatiri, the leader of Fretilin and the current prime minister, before independence was granted, but Mr Gusmão s public shows of discontent with the government s performance since independence have been a constant thorn in the prime minister s side. The parliamentary opposition is made up of a coalition of eight parties, which espouse a diverse range of political ideologies. Fernando de Araujo, the leader of the PD, the second-largest party in parliament, leads the opposition. Constituent Assembly election results, 2002 No. of national seats No. of district seats % of vote Fretilin Democratic Party (PD) Social Democratic Party (PSD) Social-Democratic Association of Timor (ASDT) Timor Democratic Union (UDT) Others Independent (Oecusi) 1 Total Source: International Foundation for Election Systems. Leading political figures José Alexandre Xanana Gusmão The president, Xanana Gusmão is widely regarded as East Timor s independence hero. Although initially reluctant to take on the presidency, Mr Gusmão s universal appeal was reflected in his landslide victory in the presidential election. Mr Gusmão led the resistance movement in East Timor for two decades. He was arrested by the Indonesian authorities in November 1992 and, after spending more than six years in prison and under house-arrest, was released soon after the announcement of the independence referendum result. Although his presidential powers are limited, Mr Gusmão has wasted no time in acting in his self-defined role as government watchdog. In 2004 Mr Gusmão announced that he would not run for re-election in Mari Alkatiri The prime minister and Fretilin s secretary-general, Mr Alkatiri was a founding member of Fretilin. He left East Timor on the eve of the Indonesian invasion in 1975 as part of an international mission to drum up support for the newly proclaimed Democratic Republic of East Timor. He spent the following 24 years in exile, mainly in Mozambique. As government leader he has struggled to live up to the expectations of the electorate. José Ramos Horta The foreign minister, Dr Horta was awarded the Nobel Peace Prize in 1996 (together with Bishop Carlos Ximenes Belo) for working towards a just and peaceful solution to the conflict in East Timor. He had fled East Timor three days before Indonesian troops invaded in 1975, and spent the following two decades in exile, lobbying foreign governments and the UN. Country Profile The Economist Intelligence Unit Limited 2005

17 East Timor 13 International relations and defence East Timor has been keen to improve ties with Indonesia A maritime border dispute strains relations with Australia East Timor s government has adopted a conciliatory stance towards Indonesia. Despite overseas pressure for an international tribunal to try Indonesian officials accused of human rights abuses, East Timor s government has not supported such moves, expressing a determination not to provoke a dispute with Indonesia over the issue. Since East Timor became an independent nation in May 2002, there have been a number of high-profile state visits by leaders of both countries. In April 2005 Indonesia s president, Susilo Bambang Yudhoyono, made his first official visit to East Timor. Mr Yudhoyono s visit was aimed at promoting co-operation and reconciliation; during the trip he visited the Santa Cruz cemetery, where more than 200 people were killed by Indonesia troops during a demonstration in November Although there were fears that local people would demonstrate against Mr Yudhoyono s visit, the trip passed peacefully, with Mr Gusmão urging the East Timorese to embark on a new relationship with its former occupier. There were also more tangible signs of improving ties during Mr Yudhoyono s visit, with both sides signing a provisional land border agreement on April 8th. There are, however, still some land border issues that remain unresolved, with disagreements continuing over parts of the border (4% of the total) that are delineated by a river. In June 2003, during his first official visit to Indonesia, Mr Alkatari met the then Indonesian president, Megawati Soekarnoputri, to discuss pressing bilateral issues, such as border tensions and refugees. Before this, Mr Gusmão had visited Indonesia in July 2002, and had been treated to an official state ceremony. He had also met General Wiranto, indicted by the UN Special Crimes Unit in East Timor in May Mr Gusmão has expressed disappointment over the indictments, and has said that it is not in the national interest to pursue such matters at the risk of damaging relations with Indonesia. Although Australia s overall support for East Timor s economic and security development has been welcomed, there are concerns that the lack of co-operation in other areas, particularly in resolving the disputed maritime border, threatens to damage bilateral ties. The Australian government has been criticised for its apparent unwillingness to renegotiate the joint maritime boundary. The current definition of the boundary, which was agreed between Indonesia and Australia, relates to the deepest point in the seabed between the two countries. Under this definition, Australia is entitled to claim ownership of large oil and gas reserves in the Timor Sea. The East Timor government, however, is calling for the boundary to be set at the mid-point between the two countries, according to the modern Law of the Sea convention. Under such a definition, East Timor would be entitled to claim ownership of all the large oil and gas developments in the Timor Sea. Owing to the fact that Australia withdrew from the International Court of Justice and International Treaty of the Law of the Sea prior to East Timor s independence in 2002, there is no possibility of recourse to a third-party arbitrator. According to East Timor, by redrawing the boundary the country could earn US$12bn in royalties from future oil and gas developments, compared with its current estimate under the existing boundary of US$4.4bn. By mid-2005 the dispute had resulted in a The Economist Intelligence Unit Limited Country Profile 2005

18 14 East Timor number of heated exchanges between the leaders of the two countries, and no clear resolution had been reached. The Australian government s initial attempt in early 2003 to force 1,600 East Timorese asylum seekers to return home after residing in Australia for more than a decade also threatened to damage relations. Mr Gusmão called on the Australian government to allow the refugees to remain in Australia, arguing that East Timor was already poverty-stricken and that the returnees would place a huge burden on the economy. In June 2003 the Australian government announced that it would grant permanent residency to about 400 East Timorese asylum seekers, and that the cases of 200 others would be considered. Many of the refugees have integrated into local communities in Australia since fleeing East Timor in the early 1990s. Ties are formed with ASEAN and the wider region A fledgling defence force is created East Timor became the 191st member of the UN in September 2002, and its leaders have worked on building the nation s standing by strengthening international relations, particularly with its neighbours in Asia and Australasia. East Timor, which once considered itself part of the South Pacific and still has strong emotional links with Portugal, has grasped that its interests lie in cultivating a close relationship with the members of the Association of South- East Asian Nations (ASEAN). Although membership of ASEAN may still lie a long way off, the government has been invited to attend ASEAN meetings in recent years and has received some support for its efforts to gain observer status, which would give it access to leadership networks within ASEAN. East Timor is expected to participate in the ASEAN Regional Forum (ARF) for the first time in July The ARF is the region s largest international security forum, comprising ASEAN and a number of other countries, including Australia, Canada, China, the EU, India, Japan, South Korea, New Zealand, Russia and the US. The fledgling East Timor Defence Force (ETDF) has been partially recruited and trained. It will eventually consist of 1,500 regular light infantry and 1,500 reservists. However, the founding of the ETDF and the disbanding of the guerrilla force, Falintil, in early 2000 created resentments. Demobilised former members of Falintil complained that the selection process was biased, both geographically and in the favour of Mr Gusmão s former Falintil protégés. Fretilin is committed to recruiting a wider range of former members of Falintil, some of whom may well not be acceptable to the present high command. Resources and infrastructure Population The 2004 census indicates rapid population growth Attempts to gather accurate population data in recent years have been complicated by the flow of refugees. According to the 1990 census, the population stood at around 748,000. In mid-2001 the UN attempted to record the population through a registration process; the results indicated that the population had dropped slightly, to around 738,000. However, results from East Country Profile The Economist Intelligence Unit Limited 2005

19 East Timor 15 Timor s first post-independence national census, which was carried out in July 2004, indicate that the population has grown rapidly over the past few years, rising to nearly 925,000. According to the results of the census, the gender ratio has remained fairly stable; in 2004 around 49.4% of the population was female. Dili, Baucau, Ermera and Bobonaro remain the four largest districts in terms of population (out of the total of 13), together accounting for around 50% of the country s population. There has been particularly rapid growth in the population of Dili, which is now home to nearly 168,000 people, up from an estimated 120,000 in Population by district and gender: 2004 census (m unless otherwise indicated; preliminary data) District Total Male Female Aileu 36,889 19,049 17,840 Ainaro 53,629 26,964 26,665 Baucau 104,571 52,483 52,088 Bobonaro 82,385 40,955 41,430 Covalima 55,941 28,018 27,923 Dili 167,777 88,373 79,404 Ermera 103,169 51,960 51,209 Lautem 57,453 28,174 29,279 Liquica 55,058 27,786 27,272 Manufahi 44,235 22,564 21,671 Manatuto 38,580 19,363 19,217 Oecussi 58,521 29,119 29,402 Viqueque 66,434 32,949 33,485 Total 924, , ,885 Source: National Directorate of Statistics. Education Literacy rates are low The educational infrastructure was seriously damaged during the postreferendum violence, and around 95% of schools and other educational institutions were destroyed. During the years of Indonesian rule, teachers were drafted in from other provinces in an attempt to use education to Indonesianise students. In late 1999 around 80% of secondary school teachers and administrative staff returned to Indonesia. The standard of education was low during Indonesia s rule and has not improved in the post-independence period, owing to the lack of highly skilled and experienced teachers; the student to teacher ratio stands at around 60:1 in primary schools. In 2001 the net primary enrolment rate was 75% for those aged between seven and 12. However, at secondary level the rate was only 30%. The poor standard of education in East Timor is reflected in the literacy rates of its population: only 48% of the adult population (15 years and older) are literate. By comparison, the literacy rate in Papua New Guinea (PNG) is 65%, and in Indonesia it is 87%. The Economist Intelligence Unit Limited Country Profile 2005

20 16 East Timor Health Health standards are poor Standards of health in East Timor were below the average for Indonesia during the Indonesian occupation. In the aftermath of the popular consultation the situation worsened dramatically, owing to the total breakdown of the health system through the destruction of buildings, the loss of equipment and drugs and the departure of senior medical staff. The health infrastructure has since been rebuilt steadily, but the overall situation remains poor, and many die from preventable diseases. Life expectancy at birth was around 62 years in 2003, compared with nearly 67 years in Indonesia and around 57 years in PNG, according to World Bank data. In terms of other health indicators, such as infant mortality, East Timor fares poorly compared with both Indonesia and PNG. Health statistics, 2003 Life expectancy at birth (years) Infant mortality (per 1,000 births) Fertility ratea Immunisation rateb East Timor Papua New Guinea Indonesia a Births per woman. b Percentage of children under 12 months receiving measles vaccination. Source: World Bank, World Development Indicators. Natural resources and the environment Rugged terrain makes transport difficult East Timor s total land area is 14,609 sq km, which includes the small enclave of Oecussi in West Timor (78 sq km), Atauro Island (141 sq km) and Jaco Island (11 sq km). Located near the equator, East Timor has a hot and humid climate with only slight seasonal temperature variations. The north coast has a brief rainy season from December to February; the south coast has a double rainy season from December to June, with a break in March. The terrain is rugged and mountainous, making transport difficult. The land is made up of limestone, coral, thick clayey soil, sand and a small amount of volcanic material. Only around 7% of the land area is irrigated. Widespread use of slash-and-burn agricultural techniques has contributed to deforestation and soil erosion, so that landslides and floods are common. As well as vast reserves of natural gas and oil in the Timor Sea, East Timor s natural resources include reserves of gold, manganese and marble. However, only the reserves of marble are thought to be sufficient for commercial exploitation. Transport, communications and the Internet Roads and airports are poorly developed East Timor s transport infrastructure is poorly developed and has been badly maintained. The results of a survey detailed in a report by a World Bank-led Joint Assessment Mission in 1999 show that East Timor had 1,414 km of paved roads but that 57% of the network was in poor or damaged condition. In addition, less than 50% of villages had access to paved roads. Owing to the prevalence of potholes and gravel roads, four-wheel drive vehicles are essential for land travel in most areas. There are eight airports in total, but only three have paved runways. There are limited international air services into Dili s Country Profile The Economist Intelligence Unit Limited 2005

21 East Timor 17 airport, Komoro, from Darwin, Australia and Denpasar, Indonesia. The port infrastructure has remained fairly undamaged, and includes services at the capital, Dili, and Laleia (Carabela Port). Telecoms services are rebuilt Much of the telecommunications infrastructure was severely damaged in Before the popular consultation there were 12,000 fixed lines in operation, but this had dropped to around 2,000 in 2000 (according to the most recent available data). An Australian telecoms company, Telstra, began rebuilding the telecoms infrastructure in 1999 under a UN contract. Telstra managed to resurrect the fixed-line network, in addition to creating a Global Systems for Mobile Communications (GSM)-based mobile phone network. There were around 12,000 mobile subscribers in 2000, but most were UN personnel. In July 2002 a consortium led by Portugal Telecom was selected to run the nation s telecoms services as Timor Telecom. Internet usage is very limited. Energy provision The electricity supply is unreliable The electricity supply is uneven and unreliable. Prior to the 1999 popular consultation and the ensuing destruction of infrastructure, total power generating capacity was around 40 mw, with 20 mw coming from two power stations in Dili, according to the Joint Assessment Mission. (The Joint Assessment Mission included local technical specialists in addition to officials from the IMF, the Asian Development Bank, UN agencies, Australia, Portugal, Japan, the US and the UK; it was established to gauge reconstruction and external financing needs.) The low-voltage distribution systems had suffered owing to the burning of buildings following the popular consultation, and a number of power stations were damaged. However, the physical damage to generation and distribution plant in Dili and the larger district centres was fairly light, making possible the rapid restoration of the facilities with international assistance. A total of 21 of the 57 power stations had been returned to an operational condition by early Fossil fuels provide the source for all electricity production, but there may be potential for hydro-power. In late 2002 the government decided to implement a programme of reforms in the power sector. In addition to an agreement to install prepaid meters, the state power authority, Electricidade de Timor-Leste (EDTL), was to be placed under a three-year external management contract, and agreement was reached with the Macau Electricity Corporation (MEC) in mid Under the conditions of the contract, MEC has taken over the management of assets and staff at EDTL, but the government will continue to be responsible for policy, regulations and the tariff structure. The Economist Intelligence Unit Limited Country Profile 2005

22 18 East Timor The economy Economic structure Main economic indicators, 2003 Real GDP growth (%) -2.7 Consumer price inflation (av; %) 7.2 Current-account balance (US$ m) 43.0a a Includes official transfers. Source: IMF, Democratic Republic of Timor Leste: Statistical Appendix, October Low-productivity agriculture dominates the economy East Timor is primarily a low-productivity agricultural economy. No official national accounts have been compiled since 1999, but according to estimates from the World Bank and the IMF, agriculture accounts for 25-30% of non-oil GDP. However, more than 90% of the population rely on agriculture and the subsistence economy for their livelihoods. In the services sector accounted for over 55% of GDP, but this data is skewed by the presence of UN personnel during these years. There are huge reserves of oil and natural gas riches in the Timor Sea, but they will have little impact on the economy until fiscal year 2005/06 (July-June). The non-oil export sector is small: export revenue reached only around US$6m a year in , and coffee is the only significant export earner. Comparative economic indicators, 2003 East Timor Australia Indonesia New Zealand Papua New Guinea Fiji GDP (US$ bn) GDP per head (US$) ,570 1,082 19, ,793 Consumer price inflation (%;av) Current-account balance (US$ bn) Exports of goods (US$ bn) Imports of goods (US$ bn) Foreign trade (% of GDP) Sources: Economist Intelligence Unit; Asian Development Bank; IMF. Economic policy The government s policy performance is praised The government has made substantial progress in implementing its National Development Plan (NDP), according to East Timor s development partners, which include the World Bank and the IMF. The NDP, which is entitled Our Nation, Our Future, focuses on economic growth and poverty reduction, and was endorsed at a meeting of development partners in May 2002, shortly before independence. (In May 2002 the development partners pledged a total of US$360m in aid, to be disbursed over the following three years, in addition to US$80m in previously pledged funds.) The government s performance has been evaluated at regular meetings with its development partners. The latest of these was in April 2005, and at the meeting East Timor s donors pledged their continuing commitment to supporting the country. Country Profile The Economist Intelligence Unit Limited 2005