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Timor-Leste
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Situation and cooperation
Timor-Leste is the poorest country in Asia and lags far behind its neighbours in development terms. The Human Development Index (HDI 2009) ranks it 162nd out of 182 countries.
Timor-Leste has to struggle with the typical problems of a post-conflict society: a stagnating economy, weak governmental institutions and a traumatised population. Violence and ethnic conflicts break out repeatedly, creating deep rifts within the country. Many people had continued to live in refugee camps, for fear of further violence or because land issues remained unresolved. The closure of these camps and the refugees’ return to their home villages have helped to stabilise the country.
Almost half the population lives on the equivalent of less than 0.88 US dollars a day. Wide disparities exist between urban and rural areas and between the better-off eastern provinces and the underdeveloped western provinces. Unemployment stands at 40 per cent and young people are particularly badly hit. There are only 400 new jobs for the 15,000 new entrants to the job market each year. Many young people without the prospect of a decent future are all too easily recruited by ruthless gang leaders.
As a result of the unrest that followed the 1999 referendum, the country's gross domestic product initially dropped by 30 per cent. It then increased by 15 per cent in both 2000 and 2001 as a result of international reconstruction assistance, but has been stagnating for several years since.
Overall conditions for private investment remain poor. Timor-Leste ranks 164th out of 183 countries in the World Bank’s 2010 "Doing Business" index, which measures the legal and regulatory environment for private sector activity. Use of the US dollar as a currency means that Timor-Leste does not operate an independent monetary policy.
Economic prospects
Finds of oil and gas reserves off the coast of Timor-Leste have fuelled hopes of an economic upturn. However, the finds are located in an area over which both Australia and Timor-Leste claim sovereignty. The two countries agreed in 2006 to drop their border conflict over the Greater Sunrise gas field for fifty years and, during that time, to exploit the resources and split the revenues.
In the coming decades, the treasury of Timor-Leste can therefore expect receipts estimated at 10 billion US dollars. Since the oil and gas fields are only expected to generate revenues for a 20- to 30-year period, however, Timor-Leste has set up an oil fund based on the Norwegian model. Revenues are channelled into the fund, which is used for the urgently needed development of infrastructure and state structures.
Whether or not the oil and gas sector will create new jobs in Timor-Leste will depend on the Australian consortium that is exploiting the resources. It is unclear whether the transhipment and processing facilities will be located in Timor-Leste or only in Australia.
Apart from its mineral resources industry, agriculture is the most important sector of the economy in Timor-Leste. About 80 per cent of the workforce earn their living in this sector, although it accounts for only around a quarter of gross domestic product. Subsistence farming predominates. Coffee is the most important cash crop for export. Other exports include vanilla and cashew nuts. Cocoa is a potential export product but the productivity of the plantations and the quality of the cocoa produced are, in many cases, still inadequate. Further problems in the agricultural sector are insufficient levels of investment and unsustainable methods, such as slash-and-burn.
The manufacturing industry, commerce and financial services only play a minor role in the national economy of Timor-Leste. The growth in the building trade is attributable to foreign donors. The reconstruction of the country offers plenty of potential work for the construction industry: the road network, health facilities and schools are still in a deplorable state.
The education system is weak. Only one in two adults can read and write, and just 69 per cent of children of school age attend a primary school (as at 2007). The electricity supply is unsatisfactory and only around 60 per cent of the population have guaranteed access to safe drinking water.
Coming to terms with the past
A major challenge for the government of Timor-Leste is to come to terms with a past which is scarred by acts of violence.
While it was operating a transitional administration, the United Nations set up an investigative authority (the Serious Crimes Unit; SCU) and a special court (Special Panel for Serious Crimes), each presided over by one local and two international judges. Both authorities prosecuted crimes committed during the period of Indonesian occupation and after the 1999 referendum. Between 2000 and 2005, 700 violent deaths were investigated. The remainder were not processed as the United Nations Mission was not extended.
Many of the accused have now been awaiting trial for several years. In February 2008 the United Nations Integrated Mission in Timor-Leste (UNMIT) reinstated the Serious Crimes Unit and commissioned it to look into the remaining cases. Prosecutions are to be brought by local courts. But the justice system in Timor-Leste is still in its infancy. There is a lack of staff with legal training and the appropriate infrastructure is not in place. The authorities are overstretched and no improvement in the staffing situation is likely in the immediate future. The population therefore has very little faith in the justice system. In 2006, the Office of the Provedor for Human Rights and Justice ("Provedoria dos Direitos Humanos e Justiça") was established. Between September 2007 and July 2008, it recorded 201 complaints, 108 of which related to human rights violations.
To address the population’s need for reconciliation, the Timor-Leste Commission for Reception, Truth and Reconciliation (Comissão de Acolhimento, Verdade e Reconciliação de Timor Leste, CAVR) was established in 2002 as a complement to criminal prosecutions. Its mission was to examine the human rights violations committed during the period of occupation, to facilitate reconciliation processes for less serious crimes and to submit a final report with recommendations. The Commission was well received by the population, took over 7,500 statements from victims, witnesses and perpetrators and facilitated over 1,400 reconciliation processes. In January 2006 the Commission’s final report was submitted to the then Secretary-General of the United Nations, Kofi Annan. Through its work the CAVR initiated reconciliation processes throughout the country for less serious human rights violations and facilitated the reintegration of the more than 250,000 people who had fled to West Timor.
Decentralisation
In 1999 the UN transitional administration had the difficult task of establishing a government and associated institutions for Timor-Leste within a very short space of time. Institutions were created for health care, education and justice. But the government institutions are still weak.
During the Indonesian occupation, Timor-Leste was administered centrally. The transition to a decentralised system which ensures effectiveness, acceptance and responsiveness in all districts is one of the most important tasks facing the government of Timor-Leste. If the population’s expectations are to be met, it must address the lack of qualified and motivated civil servants, particularly in rural regions.
Priority areas of German cooperation with Timor-Leste
Development cooperation between Timor-Leste and the Federal Republic of Germany began in 1999 at the time of the UN transitional administration. In the initial phase, cooperation focused not only on food, emergency and refugee aid, but also on the drinking water supply in the eastern districts.
At the governmental dialogue between Germany and Timor-Leste in April 2010 in Dili, 6.5 million euros were pledged to the country for Technical Cooperation. That brought the volume of German commitments and other funding to more than 50 million euros altogether.
Cooperation with Timor-Leste will concentrate on the priority area of crisis prevention and conflict management. Three million euros from the commitment is earmarked for a Peace Fund, 2.5 million euros for the consolidation of measures concerned with Rural Development and one million euros is to be used to strengthen the Study and Expert Fund. Options are currently being examined to see how the individual projects can be combined into a peacebuilding programme.
Existing programmes under the previous priority area – Maritime Transport – will be continued. Germany has also provided institutional support to the Commission for Reception, Truth and Reconciliation (CAVR).
Development of maritime transport
The German contribution to the development of this sector consists of financing a ferry and a shipyard for repairs. Beyond this, German development cooperation has been involved in providing the transport ministry with advice on setting up a port authority.
Promotion of rural development
Cooperation in the priority area of rural development consists of promoting private sector structures and supporting competitive market production.
Trilateral cooperation between Timor-Leste – Indonesia – Germany
In March 2007, Timor-Leste, Indonesia and Germany signed a joint declaration of intent to establish trilateral cooperation. Germany had committed 800,000 euros for this purpose back in 2003. The aim is to implement joint projects to promote democracy and human rights. These efforts should also contribute to crisis transformation and crisis prevention. A trilateral working group (Timor-Leste, Indonesia and Germany) decides at regular intervals on the activities to be financed.
