East Timor. Country Profile 2006

Transcription

1 Country Profile 2006 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 26 Red Lion Square London WC1R 4HQ 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 the 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 26 Red Lion Square London WC1R 4HQ 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, online databases and as direct feeds to corporate intranets. For further information, please contact your nearest Economist Intelligence Unit office Copyright 2006 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. ISSN 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 June km miles Wetar Strait DILI Ombai Strait The Economist Intelligence Unit Limited 2006

4 Comparative economic indicators, 2005 Gross domestic product (US$ bn) Gross domestic product per head (US$ 000) Australia Australia 34.7 New Zealand New Zealand 26.4 Papua New Guinea Fiji(a) Fiji(a) Samoa(a) Samoa(a) Tonga(a) East Timor Vanuatu(a) Vanuatu(a) Papua New Guinea Solomon Islands(a) Solomon Islands(a) Tonga(a) East Timor (a) Sources: Economist Intelligence Unit estimates; national sources (a) Sources: Economist Intelligence Unit estimates; national sources. Gross domestic product (% change, year on year) Consumer prices (% change, year on year) Solomon Islands(a) Samoa(a) Fiji(a) Tonga(a) Samoa(a) Solomon Islands(a) Vanuatu(a) Fiji(a) Papua New Guinea New Zealand Australia Australia East Timor East Timor New Zealand Papua New Guinea Tonga(a) Vanuatu(a) (a) Sources: Economist Intelligence Unit estimates; national sources (a) Sources: Economist Intelligence Unit estimates; national sources. Country Profile The Economist Intelligence Unit Limited 2006

5 East Timor 1 Contents East Timor 3 Basic data 4 Politics 4 Political background 6 Recent political developments 8 Constitution, institutions and administration 10 Political forces 12 International relations and defence 14 Resources and infrastructure 14 Population 14 Education 15 Health 15 Natural resources and the environment 16 Transport, communications and the Internet 16 Energy provision 17 The economy 17 Economic structure 18 Economic policy 20 Economic performance 21 Regional trends 22 Economic sectors 22 Agriculture 22 Mining and semi-processing 23 Manufacturing 23 Construction 24 Financial services 24 Other services 24 The external sector 24 Trade in goods 25 Invisibles and the current account 25 Capital flows and foreign debt 26 Foreign reserves and the exchange rate 27 Regional overview 27 Membership of organisations 28 Appendices 28 Sources of information 28 Reference tables 28 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 2006

6 2 East Timor 30 Gross domestic product by sector at constant prices 31 Gross domestic product by expenditure at current prices 31 Consumer prices 31 Balance of payments 32 Net official development assistance 32 Exchange rates Country Profile The Economist Intelligence Unit Limited 2006

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 2006: January 1st (New Year s Day); April 14th (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 2006

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). The president, José Alexandre Xanana Gusmão, is widely seen as a national hero; he 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 then, 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 Country Profile The Economist Intelligence Unit Limited 2006

9 East Timor 5 Indonesia 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 to deter voters, 98.6% of registered voters took part in the referendum and 78.5% voted for independence. In the aftermath of 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, UNsponsored 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. 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 The Economist Intelligence Unit Limited Country Profile 2006

10 6 East Timor 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 and presidency are established 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). The fledgling East Timor government, led by the prime minister and Fretilin leader, Mari Alkatiri, has struggled to live up to the expectations of the populace, and 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. In the first few years of independence, there were a number of public displays of disaffection with the government. In December 2002 the capital, Dili, was placed under a state of alert after a student-led protest turned violent. 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. Despite these problems, Fretilin secured a wide margin of victory in the country s first local elections, which were held in a staggered fashion from late 2004 into Mr Alkatiri claimed that the results of the local elections showed that people still had confidence in his administration. Although the head of the UN Office in East Timor (UNOTIL), Sukehiro Hasegawa, said that the elections were held in a peaceful and orderly fashion, opposition parties complained of voter intimidation during the elections and criticised the operations of the Technical Secretariat of Electoral Administration (STAE). Country Profile The Economist Intelligence Unit Limited 2006

11 East Timor 7 Violence flares again, and foreign troops are deployed The country s development as a sovereign nation was being severely tested in May 2006, as an upsurge in violence in the capital, Dili, brought the country to the brink of civil war, in part centring on an east-west divide. The spark for the unrest was the fracturing of the fledgling defence force. Around 600 rebel soldiers, who were sacked in March, and their supporters rioted in Dili in April, damaging buildings and clashing with police. Fearing further clashes between the rebel soldiers and the security forces, there was a mass exodus from the capital in early May, with tens of thousands of people (around 75% of Dili s population, according to UN estimates) fleeing. By mid-may the government reported that the situation in Dili had calmed, but this did not hold for long. In late May there were further violent clashes between the rebel troops and their former colleagues in the defence force in the capital. Security in Dili quickly deteriorated, as armed gangs, aligning themselves with either the rebel forces or pro-government groups, went on the rampage, and the death toll rose. On May 27th the UN ordered its non-essential staff to leave the country and a number of foreign embassies withdrew staff. Accepting that the remaining members of the fledgling defence force could not guarantee full national security, the government called on the help of forces from a number of countries. Australia, New Zealand, Malaysia and Portugal readily agreed to deploy troops to help quell the violence. The call for international assistance to enhance security came just a few days after the country had marked its fourth anniversary of independence. Although the arrival of Australia s initial contingent of troops on May 26th helped to improve security in central Dili, it remained unclear how long it would take to resolve the crisis. Australia initially deployed 1,300 troops. The whole episode dealt a major blow to the credentials of the ruling Fretilin administration. The party, and Mr Alkatiri in particular, faced intense criticism for the failure to prevent the problems in the defence force from escalating. Criticism has also centred on the government s failure to improve the livelihoods of the people, with a sense of general desperation contributing to the outbreaks of looting and the willingness of many to take up arms. The events also re-ignited the deep-seated tension and rivalry between Mr Alkatiri and Mr Gusmão. On May 27th Mr Alkatiri reiterated his claim that there were elements attempting to stage a coup d"etat. Important recent events 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 Security Council agrees to extend UNMISET s mandate until May 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. The Economist Intelligence Unit Limited Country Profile 2006

12 8 East Timor 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. The commission comes into operation in August 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. July 2005 East Timor becomes the 25th member of the Association for South-East Asian Nations (ASEAN) Regional Forum (ARF), a body that focuses on political and security issues. February 2006 Mr Gusmão approves the dissemination of the controversial final report from the independent Commission for Reception, Truth and Reconciliation, but he states his disagreement with the commission s recommendations. March-April 2006 Around 600 troops from the East Timor Defence Force are sacked after going on strike. The sacked troops and their supporters riot in Dili, causing widespread damage to property and resulting in the deaths of five people. Mr Alkatri says the incident was an attempt at a constitutional coup d etat. May 2006 UNOTIL s mandate is extended for one month. Violence in Dili erupts again as exsoldiers clash with defence force troops. Australia, New Zealand and Portugal agree to deploy troops to help support the local security force. Constitution, institutions and administration The powers of the president are defined narrowly 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 that he would not be content to operate strictly within the limits set on the presidency in the new constitution. Country Profile The Economist Intelligence Unit Limited 2006

13 East Timor 9 Portuguese and Tetum are the official languages The judiciary is weak Indonesia and East Timor form a joint commission UNMISET s mandate expires; UNOTIL takes over 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. 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. 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 was officially formed in August 2005, when its ten members (five Indonesians and five East Timorese) were sworn into office. The main aim of the commission was 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. An independent commission of experts, set up by the UN secretarygeneral, Kofi Annan, 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 it 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 US-based Human Rights Watch, have continued to call for an international tribunal. 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, The Economist Intelligence Unit Limited Country Profile 2006

14 10 East Timor which was formally established on May 20th 2005 with a one-year mandate, comprised 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. However, following the riots in Dili in April 2006, the UN agreed to extend UNOTIL s mandate for a further month, up to June 20th. Prior to this extension, there had already been calls in early 2006 for a continued UN presence in the country. In January 2006, during an address to the Security Council, Mr Gusmão called for the establishment of a special UN political office that would provide the government with technical and logistical support while the country prepares for presidential and parliamentary elections in Mr Gusmão also requested that military liaison personnel be deployed along the border with Indonesia, as well as support for police training being given. 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 winner of the Nobel Peace Prize, 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 Mari Alkatiri, the leader of Fretilin and the current prime minister, before independence was granted, but Mr Gusmão s public shows of discontent with Country Profile The Economist Intelligence Unit Limited 2006

15 East Timor 11 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 No. of % of national seats district seats 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, but he was re-elected as the party s leader in May 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. The Economist Intelligence Unit Limited Country Profile 2006

16 12 East Timor International relations and defence East Timor has been keen to improve ties with Indonesia 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 CAVR report creates tension The publication and dissemination of the final report from the independent Commission for Reception, Truth and Reconciliation (CAVR) has created tension between the East Timorese leadership and the Indonesian government. (The CAVR was established in 2000 as an independent statutory authority to inquire into human rights violations committed between April 1974 and October 1999, and to facilitate community reconciliation.) Despite Mr Gusmão s apparent reluctance to do so, in February 2006 he approved the dissemination of the report, following his submission of the report to the UN secretary-general, Kofi Annan, in January. The report estimates that the minimum number of conflict-related deaths during Indonesia s occupation was 102,800, of which 18,600 were unlawful killings and 84,200 were owing to hunger and illness. The report also states that the vast majority of the unlawful killings were perpetrated by the Indonesian security forces. In its report, the CAVR made a number of recommendations. It calls for the UN to renew the mandates of the Serious Crimes Unit and Special Panels in East Timor and increase their resources in order to be able to continue to investigate and try cases related to crimes committed during Indonesia s near 15-year occupation up to In terms of recommendations related to East Timor s reconciliation with Indonesia, the commission calls on the Indonesian government to send a senior delegation to East Timor to acknowledge the violations committed by its representatives during the occupation and to co-operate fully with any future international or East Timorese initiatives to address justice for violations of human rights committed in East Timor. The commission also recommends that the Indonesian government make financial contributions to a reparations trust fund and those Indonesian companies that profited from war and related activities in East Timor to do the same However, Mr Gusmão has indicated that he does not agree with the report s recommendations, preferring instead to follow a policy of strengthening ties with Indonesia and avoiding diplomatic disputes. Indeed, when meeting Mr Yodhoyono in February 2006, Mr Gusmão reaffirmed his rejection of any proposal to set up an international tribunal and instead sought international support for the joint Commission of Truth and Friendship (CTF). A maritime border dispute with Australia is resolved The current definition of the maritime boundary between East Timor and Australia, which was agreed between Indonesia and Australia, relates to the deepest point in the seabed between the two countries. Under this definition, Country Profile The Economist Intelligence Unit Limited 2006

17 East Timor 13 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. After several years of protracted and tense negotiations, in January 2006, both sides reached an agreement on the disputed maritime border and the sharing of future revenue streams from oil and gas developments in the Timor Sea. Under the deal, East Timor has agreed not to dispute the maritime boundary for 50 years in exchange for a 50:50 split in revenue from the development of the Greater Sunrise field. Ties are formed with ASEAN and the wider region A fledgling defence force is created, but runs into trouble 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). East Timor currently only has guest status with ASEAN, but aims to gain observer status in the near future. The financial burden of being a full member of ASEAN remains a major constraint for the East Timorese government. In order to become a full member, East Timor must have embassies in all ASEAN member countries; currently East Timor only has embassies in Indonesia and Malaysia. The cost of attending around 500 group summits and ministerial meetings a year would also be a substantial burden for the country. However, the country is hoping to join the regional group within five years. In July 2005 East Timor joined the ASEAN Regional Forum (ARF), a group that focuses on political and security issues and comprises the ten ASEAN members, together with the US, the EU, China, India and a number of other countries. The fledgling East Timor Defence Force (ETDF), which was founded in early 2000 following the disbanding of the guerrilla force, Falintil, in early 2000 created, was in a state of turmoil in early The force has been partially recruited and trained with the aim of eventually comprising 1,500 regular light infantry and 1,500 reservists. However, in February 2006 around 400 troops went on strike over poor pay and working conditions, and the number soon rose to nearly 600, more than one-third of the total force. The troops, given an ultimatum to return to their barracks by March 1st or be sacked, were eventually dismissed in mid-march. 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. The Minister for Foreign Affairs and co-operation, José Ramos Horta, stated that he would seek to set up a commission of inquiry into the soldier s claims that they were discriminated against. However, the situation deteriorated rapidly in April-May, when the sacked troops and their supporters rioted in the streets of Dili, and the ensuing clashes with the police and military resulted in a number of deaths. By late May, the sacked troops had established a base on the outskirts of the city. The Economist Intelligence Unit Limited Country Profile 2006

18 14 East Timor Resources and infrastructure Population Attempts to gather accurate population data in recent years have been complicated by the return 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 Timor s first post-independence national census, which was carried out in July 2004, indicate that the population has grown by over 6% between 2000 and 2004, 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 censusa 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 a Preliminary data. Source: National Directorate of Statistics. Education 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. In recent years there have been improvements in enrolment rates. In 2000/01 (school Country Profile The Economist Intelligence Unit Limited 2006

19 East Timor 15 year) the net primary enrolment rate was only 67.7%, but had risen to 86.2% by 2004/05. Although the net secondary enrolment rate has also increased, it remains low, rising from 15.9% in 2000/01 to 33.6% in 2004/05. In terms of the number of teachers, there has been an overall increase from around 5,200 in 2000/01 to nearly 7,800 by 2004/05, resulting in a drop in the student:teacher ratio from 43:1 to around 32:1. The generally 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%. 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 healthcare system through the destruction of buildings, the loss of equipment and drugs and the departure of senior medical staff. The healthcare 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 2004, compared with nearly 67 years in Indonesia and around 56 years in PNG, according to World Bank data. In terms of other health indicators, such as infant mortality and immunisation rates, East Timor fares poorly compared with Indonesia, but fares better than PNG. Health statistics, 2004 Life expectancy at birth (years) Infant mortality (per 1,000 births) Immunisation ratea East Timor Papua New Guinea Indonesia a Percentage of children under 12 months receiving measles vaccination. Source: World Bank, World Development Indicators. Natural resources and the environment 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. The Economist Intelligence Unit Limited Country Profile 2006

20 16 East Timor 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. In 2006 the Asian Development Bank was funding a project to rehabilitate and strengthen around 123 km of important roads in rural areas in an effort to improve access to remote areas and subsequently tackle problems of food insecurity. The government is hoping that by improving infrastructure, particularly the transportation system, it will foster private-sector development, improve agricultural productivity, reduce poverty, and strengthen its capacity to deliver services. The government will contribute US$2.5m to the project s total estimated cost of US$12.5m. There are eight airports in total, but only three have paved runways. There are limited international air services into Dili s 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. Much of the telecommunications infrastructure was severely damaged in Before the popular consultation there were 12,000 fixed lines in operation. 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. In July 2002 a consortium led by Portugal Telecom was selected to run the nation s telecoms services as Timor Telecom (TT). The company has a 25-year contract to operate these services. According to TT, in late 2004 there were 25,000 mobile subscribers using a GSM network covering a number of major cities, including Dili, Aileu, Baucau, Liquica, Manatuto, Oecussi, and Viqueque. In late 2004 there were also 2,100 fixed lines in use. Internet usage is 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 powergenerating 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 Country Profile The Economist Intelligence Unit Limited 2006

21 East Timor 17 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. However, the arrangement has not been overly successful. In October 2005 EDTL s director, Helio Ximenes, said that there had not been any improvements or developments in the EDTL in the previous two years, and suggested that the government replace MEC as the operating company. The economy Economic structure Main economic indicators, 2004 Real GDP growth (%) 1.8 Consumer price inflation (av; %) 3.2 Current-account balance (US$ m) 119.0A a Includes official transfers. Source: IMF, Democratic Republic of Timor Leste: Selected Issues and Statistical Appendix, June 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, the agricultural sector (including forestry and fisheries) has accounted for an increasing share of GDP, rising from 26% in 2000 to 32% in However, around 90% of the population rely on agriculture and the subsistence economy for their livelihoods. The services sector has accounted for a large share of GDP, over 55%, but this figure is skewed by the presence of personnel from the UN and donor nations. There are huge reserves of oil and natural gas in the Timor Sea, but the oil and gas sector has only had a marked impact on the economy since Comparative economic indicators, 2004 East Timor Australia Indonesia New Zealand Papua New Guinea Fiji GDP (US$ bn)a GDP per head (US$)a ,200 1,151 23, ,216 Consumer price inflation (%;av) Current-account balance (US$ bn) Exports of goods (US$ bn) Imports of goods (US$ bn) Foreign trade (% of GDP) a 2004 estimate Sources: Economist Intelligence Unit; Asian Development Bank; IMF. The Economist Intelligence Unit Limited Country Profile 2006