Timor Leste: After the UN’s departure, can the country sustain its rise?

The United Nations Integrated Mission in Timor Leste (UNMIT) withdrew its troops on December 31^st, 2012. When introduced in 2006, it aimed to “bring about a process of national reconciliation and to foster social cohesion’. This task is almost complete – but questions remain as to exactly how far Timor has come and how helpful the UN mission has been.

Indonesia’s twenty-five year long occupation of Timor Leste came to an end on 20th May 2002, as a result of a 1999 referendum and ensuing civil war. Infrastructure built under Indonesian rule was largely destroyed in the post-referendum violence, leaving the newborn nation without roads, bridges, and administrative buildings.

Half of the population is illiterate and 37.4% lives under the international poverty line of less than US$1.25 a day, according to UNDP figures. Ongoing negotiations with Australia over oil exploitation in the Timor Gap have hindered the economy’s ability to fully benefit from oil and gas reserves, and low-level violence persists in rural districts.

Despite these challenges, however, Timor’s GDP has been growing by 8% or more since post-election violence subsided in 2007, with projected growth of 10% this year (World Bank, 2013). This is the effect of a recent improvement in relations with its former occupier and a renewed focus on education starting from the grassroots level, both of which have contributed to greater economic liberalization.

The two most active organizations in the drive to educate Timorese children and adults are the United Nations and the Catholic Church. During the independence struggle, Timor Leste’s Catholic identity acted as a unifying factor against the predominantly Muslim Indonesians, and since independence Catholic institutions have set up hundreds of primary schools, hospitals, maternal health clinics, and employment centers.

“It is important to get children off the streets and into classrooms,” affirmed a Canossian nun in Dili, the capital. “We run schools all the way from kindergarten to university in several cities around the country. We work with the government and the United Nations to expand access to healthcare as well.” The secret to Timor’s recent success lies in the government’s tight cooperation with the UN mission and Catholic entities, allowing UN aid workers and religiously affiliated charities and schools to operate freely at the local level.

While corruption and a weak judicial system have hampered efforts to liberalize key industries such as oil and agriculture, Timorese authorities have nonetheless succeeded in establishing an export-based market economy dependent on commodities such as oil, petroleum gas, and coffee. A 2003 study by the United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP) on the geology of Timor Leste revealed substantial mineral resources of base metals, mainly copper, gold, and silver. These deposits could attract significant foreign interest.

Oil and gas are responsible for 57% of exports, and a state petroleum fund of US$8.7 billion has fueled investment in education and infrastructure. Private investment from Portuguese firms has allowed Timor Telecom to establish a monopoly and expand telephone network coverage to each district capital.

Monopolies, a major hindrance to economic development, are now being displaced due to recent government efforts aimed at stimulating competition in the economy. In 2013, Indonesian telecommunications outfit Telkomsel will begin operating GSM and 3G services nationwide under the banner of TELIN, its international subsidiary. Timor’s numerous airports, destroyed in 1999, have since been rebuilt, and domestic flights are expected to begin in 2013 now that UN troops have left.

It would be foolish, however, to underestimate Timor Leste’s overdependence on its oil reserves. The International Monetary Fund (IMF) has described Timor as “the most oil-dependent country in the world.” Tens of billions of dollars worth of petroleum oil and gas lie under the Timor Gap, a stretch of sea between the island of Timor and Australia. A treaty regarding the division of the maritime area was signed by Australia and Indonesia in 1989 and was then revised upon Timor’s independence in 2002.

Government officials, however, have since accused Australia of “cheating” them out of their fair share of resources. Arbitration on the case began in April 2013, amid accusations of Australian espionage and intransigence. The two nations are now debating over where to construct a pipeline and an onshore liquid natural gas (LNG) processing facility that was originally meant to be built in Darwin, Australia, under the terms of the 2002 treaty.

Building the facilities would bring about elevated costs and cause potential environmental damage on Timor’s southern coast. Although this would create employment opportunities, training skilled workers to operate the refinery would take time. Furthermore, the decision to bring the case to international arbitration is a major risk as it will be difficult to prove that Australia engaged in covert activities. A better option would be for Timor to seek a larger share of oil revenues while consenting to the construction of the pipeline and the processing plant in Australia.

Timor has been the focus of international media in the past more for security reasons than for its burgeoning economy – so being out of the news for so long is positive for the nation. Violence has declined since post-election peaks in 2006-2008, yet this is surprisingly not due to the increased presence of the UN. In fact, UNMIT troops, largely provided by developing countries, have allegedly been accused of killing civilians and blaming the attacks on local groups in order to justify their continued permanence in the country.

A hotel operator in Dili stated “You know why people still think of Timor as a warzone? Because of the UN.” He went on to assert what many other Timorese have expressed: that Timor is now developing on its own and, therefore, does not need UN forces; that their presence scares off potential investors; and that some UNMIT soldiers had apparently staged murders to give the stabilization mission a veneer of legitimacy.

The validity of such claims could be called into question. However, the possibility of pressure groups influencing the Timorese press into misreporting similar events with the aim of tarnishing the UN is low, given the virtual nonexistence of the media. Fears could be overblown, but it is undeniable that seeing large military vehicles roam the streets and soldiers patrol government buildings unsettles visitors and businessmen alike.

Timor Leste is progressing in the right direction. Maternal mortality rates are falling, literacy and employment rates are rising, and the country is far more stable now than it has ever been. UNMIT’s departure is a sign that Timor Leste is finally open for business, and the arrival of large Indonesian and Australian multinationals proves this.

Beneath the optimism, however, lies a fundamental question: is this growth sustainable? There is still much to be done in building infrastructure. Tourism, which could become a significant source of revenue, is stagnant and undeveloped. Corruption is extensive and political crises persist, but if privatization continues, social services are expanded, and the rule of law is firmly established, Timor Leste can achieve further economic development.

For a country that endured something close to genocide for a quarter of a decade and then had to rebuild everything from scratch, today’s challenges are nothing if surmountable. Timor Leste is learning to stand on its own feet, and is doing so faster than ever.