domingo, 27 de fevereiro de 2011


Sunday, 27 February 2011


Washington DC 24 FEBRUARY 2011

Your Excellencies
Ladies and Gentlemen,

First and foremost, allow me to say how happy I am, to be here today, at the prestigious John Hopkins University, to share with you a reflection on the Timorese experience in its transition from conflict to development.
It is a great honour for me to address such a distinguished audience, knowing of your keen interest to know a little more about the Timorese process and our goals for the future.

I would like to thank you, for coming here today, and to acknowledge the Southeast Asian Studies program at SAIS and Asia Society Washington, D.C for organising this event and our Embassy for its support.

Since we began our struggle for self-determination and freedom, the pages of our History have been filled with massacres and hardships; but also with heroic deeds, victories and successes achieved by our People seeking to attain their right to Independence.

To talk about Timor-Leste is to talk about perseverance, hope, determination and courage.

For more recent times, it is also to talk about advances and setbacks, errors and lessons learned, conflicts and recovery. It is to talk about enormous challenges!

In sharing our experience, in terms of transition and change, I do so with an open mind, without trying to impose any type of model or political lesson. Indeed, as a LDC (Least Developed Country), our story is similar to that of many other countries throughout the world, with similar backgrounds and difficulties, and we know that we are not the only ones, undergoing continuous Peacebuilding and Statebuilding efforts, after emerging from a situation of long conflict.

I said that because there is no success formula that can be transferred from one country to the other, if we think that it will accelerate the transition towards development. On the contrary, it is necessary to respect the specific circumstances and timings of the reality of every country.

Every program, project or political decision must be objectively adapted to the cultural, social and economic context of each society. They must correspond to the needs and aspirations of the People, and be accepted by them.

Ignoring these facts is often the reason why international assistance to LDCs, undergoing transition, always fails.

Ladies and Gentlemen,

Allow me to start by talking about ourselves, as People. Allow me to talk about what we were, what we are and what we want to be.

Timor-Leste is half of a small island, with the other half belonging to Indonesia. As such, we are located between two giants, Indonesia and Australia.

In addition to its ethnical, cultural and linguistic diversity, Timor-Leste underwent centuries of administration by foreign countries, in an endless conflicting co-existence, starting with the Portuguese colonial domination, which caused several struggles for independence, promoted by the various Timorese kingdoms. The last one was in 1912, and next year 2012, will mark its 100th anniversary.

While still recovering from that war, we were occupied by the Japanese from 1941 to 1945. Although this occupation was short lived, it covered the entire territory and caused great suffering to the Timorese, with dozens of thousands of deaths.

In 1963, as a result of the Cold War era, it was thought and may have been decided that the integration of Timor-Leste to Indonesia, would be the best solution for World Peace.

And so, it came to pass that in the fatal year of 1975 we started a new war. But this war would not have lasted 24 years, if other countries had not supplied weapons, tanks, aircraft and training to the Indonesian military, in order to improve their fighting skills and therefore annihilate the resistance of the small Timorese guerrilla army.

As such, we can say that our past, for centuries, in terms of conflict, was not one of conflicts between Timorese kingdoms or ethnicities. Instead, the war was between the Timorese and all those who came from the other side of the sea, the foreigners.

Evidently, having endured and fought alone for over two long decades, without any external military support, the Timorese people were scarred and developed a contesting nature that can propel them, easily, from peaceful demands into violent acts, without thinking about the consequences of their actions.

To make matters worse, the violence and the physical destruction that followed the Referendum, in 1999, deepened the already frail psychological and political situation and worsened the already miserable living situation of the people. On the brink of independence, the People of Timor-Leste struggled to even survive.

Still, the People of Timor-Leste made another display of their great spirit, by telling their Indonesian brothers and sisters that it was just our common past in fighting for freedom, and assuming a commitment to cooperate in solidarity and live in fraternity. The People of Timor-Leste also began an arduous period of Statebuilding.

Your Excellencies Ladies and Gentlemen,

With the arrival of the United Nations mission, and together with the international community, we began to build from scratch the foundations for our democratic institutions.

When, on 20 May 2002, we became the masters of our fate, as a State that was finally independent and sovereign, the expectations were that we, Timorese, might decide the future of our Nation. Naturally we believed that this future, in freedom, was promising.
But I would like to remind that there were some factors that seriously threatened this ideal, namely:
Lack of prepared and qualified human capital; 
Lack of political experience in democratic governance – a system that was
completely new to our society; 
Lack of basic infrastructure and other essential equipment; 
And, most importantly, the lack of financial resources of the Country itself.

Nevertheless, our people began with dignity to strive for a new life and for the better living conditions that they dreamed about. This led to a demanding society, both individually and

in terms of social groups, which expected immediate results, as if they would be the simple and logical outcome of emancipation.
Unfortunately, democracy does not triumph easily in a Country, that is mostly poor and psychologically traumatised.

For a family that starves both in times of war and of peace, that lives in precarious conditions and lacks access to health or education, democracy is a concept, too erudite and abstract to be well absorbed. Concepts such as tolerance, mutual respect, dialogue and even justice cannot be assimilated in a day, as a direct consequence of the rights and duties inherent in freedom.

The first social disturbance took place immediately after the euphoria of the celebrations of 20 May 2002. Then we had further disturbances every two years, as if Timor-Leste was condemned to a vicious cycle of violence.

In 2006, we had a serious political crisis that caused an atmosphere of insecurity in the Country and various other problems that eventually led to confrontations between the Police and the Military, resulting in hundreds of thousands of internally displaced people and countless damage to the State.

From these crises we learned our first major lesson: we urgently needed to learn to deal with the fragility of our State, which resided in the inability to address the root causes of problems, resulting in a trend to avoid problems rather than seeking proper solutions.

The truth is that there are no shortcuts for consolidating democracy and development. It is necessary to walk a long and arduous path, in order to change the mindset of our society and to transform the so-called democratic values into realities that every citizen can feel.
And is this not what we call Development? Yes, I know, it’s only one of the aspects; but an important one!

This is why 8 years of Independence are not enough to build a strong State, much less a developed society. It is natural that our young and fragile Nation had to contend with the resurgence of a few conflicts during this period.

We also needed to grow politically, that is, to impose a political will within State institutions to cooperate among themselves in the search for solutions, rather than focusing on the political dimensions of every situation and in doing so losing the judgement required to handle and solve crises.

Your Excellencies Ladies and Gentlemen,

In the end we reorganized and, in a more coordinated manner, looked for the way that was right for Timor-Leste. We succeeded in:
Today, leading a five-party Coalition Government that, when it came to office in August 2007, vowed to effectively introduce the necessary changes, we have achieved remarkable progress through a principle, that, is as simple as it is essential: to govern in dialogue!

We focused our efforts on establishing peace and stability, as well as solving the most critical problems of the Country, knowing that, without addressing the problem of stability and internal security, any development effort would be wasted.

It was through permanent dialogue and genuine cooperation between all Bodies of Sovereignty and Civil Society, together with the introduction of social justice measures, comprehensive reforms and public investment, that we managed to break the vicious cycle of conflict.
Solving the problem of the 150,000 IDPs in two years, while we were told it would take decades to resolve, like the experiences brought from several countries;
Reforming core institutions for national security and stability, namely the Police and the Military, which began a new stage of cooperation and solidarity, and, in doing so, they started to regain the trust of the people.
Starting a bold program to acknowledge our national heroes, the National Liberation Combatants, who were living in extreme poverty.

Introducing other social justice measures, namely the payment of pensions to the elderly, the disabled, widows and orphans who sacrificed so much so that Timor- Leste could be independent, and supporting other vulnerable groups such as women, children and youth, who make strong contributions to the stability and development of the Country.

From these initiatives, with their direct impact on the lives of the population, there was greater participation and confidence by all Timorese People towards the resolution of conflict and the consolidation of National Unity and Stability. This awareness resulted in the adoption of a new motto for our Nation, adopted in 2009, on the 10th Anniversary of the Referendum: “Goodbye Conflict, Welcome Development”.

Your Excellencies Ladies and Gentlemen,

Today, we are prepared to greet this new decade, from 2011 to 2020, with optimism, and to lay the foundations for bold national development.

And what is it, which gives us the confidence to face this next challenge, without fear?

Being free from instability and conflict, that diverted our energies required for building the Country, we could avoid wasting time, human and financial resources, so much needed to be invested in the productive sectors of the Country. On the contrary, we are implementing institutional and structural reforms that are vital for development and economic growth.

We have started the reform in the defence and security sector, by improving training programs to ensure their professionalism, competence, ethics and discipline. We have professionalised the public sector and introduced State management reform, to enable better service delivery to the people, including in our rural areas.

On the other hand, we have been working to promote transparency and good governance, with the creation of the Civil Service Commission, the Anti-Corruption Commission and Public Finance Management reform, which will soon provide data on State expenditure, in real time, and available for public viewing through our website.

We also started building the capacity of our private sector, which was practically embrionic,

promoting criteria for competence, professional honesty and technical capability, in regard to the cost-effectiveness of projects. We believe that our private sector should become a true partner of the Government in this vital period of Country building.

Together with national stability and the reform of our tax system, to provide attractive rates for national and foreign investors, our Country also offers great investment potential in nearly every sector. Business opportunities are on the rise and one needs only to look at commerce, industry, construction and tourism to see that they are growing and that our economy is emerging.

The current situation in Timor-Leste speaks for itself. Even with the serious world financial crisis, Timor-Leste had two-digit economic growth rates for the past three years. In 2009 we had an economic growth rate of 13% – this was not only the highest growth rate in the region, but also one of the ten highest in the entire world.

This growth resulted in a 9% decrease of poverty, enabling around 96,000 people to escape from a situation of extreme poverty. The 2010 United Nations Human Development Index had Timor-Leste move up 14 positions, while the Millennium Development Indicators were met, in regard to child mortality rates and other health indicators.

We managed to create strong and dynamic growth, able to fight unemployment not only in the Country’s capital but also in the countryside, by way of funding a decentralised private sector building fund.

In addition, Timor-Leste also became only the third country in the world, to be granted full compliance with the Extractive Industries Transparency Initiative. The Revenue Watch Institute and Transparency International ranked Timor-Leste in 2010 as being in the group of the countries with the most transparency in regard of revenue.

Your Excellencies Ladies and Gentlemen,

We have a Country blessed with great natural wealth and our Petroleum Fund currently stands at approximately 7.2 billion dollars. This amount is expected to increase to more than 20 billion over the next ten years. And this revenue is from the Bayu Undan field only!

As a result of our experience in the long Liberation Struggle, we are accustomed to meeting great challenges. This means that, today, the people of Timor-Leste are determined to achieve sustainable growth and to free themselves from misery.

And so, after thoroughly reviewing our needs, we are currently drafting the Strategic Development Plan, which will include a lengthy public investment program for developing our human capital and the infrastructure required for sustaining a strong and growing economy.

What does Timor-Leste want to be in 20 years? Undoubtedly, it wants to be a country focused on the hydrocarbon industry, a country with dynamic urban centres and consolidation of rural areas to ensure that basic services reach every citizen.

For this to be possible, we must, first and foremost, accelerate the extension, diversification and modernisation of agriculture. In the meantime, we will need to focus on a new paradigm of production and productive employment opportunities through the enhancement of industry and tourism, social service delivery and human capital development.

If the needs of the country require fast and sustainable economic growth, we need to invest in basic infrastructure to be able to diversify the economy. We cannot, and we do not want, to be eternally and excessively dependent on oil revenues.

As such, Timor-Leste is strongly committed to building a petroleum industrial base, which includes the construction of a pipeline from the Greater Sunrise field to Timor-Leste’s onshore.

We have been discussing these development plans with the Australian company Woodside, and we believe that a pipeline from Greater Sunrise to Timor-Leste, is the only way to transform these sovereign resources into a benefit for Timor-Leste.

But, Ladies and Gentlemen, we need to use oil revenues to develop the Nation. As a development strategy, we want to make good use of our natural wealth and we want to be the legitimate part of their exploitation.

We have been conducting technical and feasibility studies with international companies and, in addition to being feasible, the Timor-Leste option represents an equitable distribution of benefit for Australia and Timor-Leste, and for their respective people. This is why, it is, an imperative for our joint development.

In view of this, we will start to develop the Southern Coast of our country, establishing a Supply Base, a Refinery and an LNG plant, as well as necessary infrastructure such as port, airport and roads.

We Timorese are ready for this tough battle towards development! And we know that we will achieve our dreams, because our People have always responded when our Homeland calls on them to act!

And what is important is that the current state of the Nation requires that all Leaders of the Country assume their historic responsibility and to 
be courageous in making decisions towards a brighter future for the People of Timor-Leste!

We are currently formalising our membership application for ASEAN, to be made during the Indonesian presidency of this regional forum. We believe that having Timor-Leste join ASEAN during the Indonesian presidency is of great symbolic value not only for Timor- Leste and Indonesia, but also for all the members of this Association.

Ladies and Gentlemen,

Before I conclude, I would like to state that Timor-Leste is fortunate to be part of a region of the world that drives the global economy of today.

Our closest neighbours, Australia and Indonesia, are both regional economic powerhouses.

With Australian growth being fuelled by China and its demand for resources, Indonesia is becoming a remarkable success story.

We are integrating our economy in our East Asian region which includes Japan, China and South Korea as well as the major economies of ASEAN, Singapore, Thailand, Malaysia, Philippines and Vietnam.

Timor-Leste also had the honour, of being invited to preside over the ‘g7+’ group, which enables fragile and affected by conflict countries, to gather and to speak with a common voice, making use of the wisdom and shared experiences of a group representing 350 million people, from 17 member countries in Africa, Asia, the Caribbean and the Pacific.

This invitation happened, as a result of Timor-Leste hosting in April 2010, in Díli, the International Dialogue on Peace Building and State Building, which was chaired by Timor- Leste and the United Kingdom, with the participation of the LDCs from the ‘g7+’. The general goal of the ‘g7+’ is to awake leaders and peoples so that they may reacquire ownership of their processes, viewed within a long term perspective without losing sight of the characteristics of each country and their priorities, and without forgetting to focus also on the need for a better control and adjustment over outside help, requiring greater transparency by donors and beneficiaries, so that the real impact of that support can be seen in the development of the countries.

As a Nation, we have received the generous assistance of the International Community; which we hope to be able to reciprocate, in a genuine manner and within the same spirit of solidarity, by sharing experiences, both sweet and bitter, with other fragile countries throughout the world.

Ladies and Gentlemen,

Finally, and in conclusion, I must mention that one of the key aspects that enabled our Country to move away from conflict, hopefully forever, was the fact that our leaders and our People accepted in a consensual manner that there was a deep need in our society to practice Forgiveness and Reconciliation.

In view of the complexity of our history, there is no better way to progress as a Nation than to cultivate forgiveness and social harmony within our society.

As Prime Minister of the young Timorese Nation, I am proud and moved to acknowledge the nobility and dignity of our People, who, despite decades of suffering and living in Poverty, remain steadfast and hopeful, working tirelessly in order to develop the Nation.
In conclusion, Ladies and Gentlemen, there is no development without democracy. But there is also no democracy without development.
Democracy is not an end; it is a process that makes people hold on to the commitment of

values and principles of humanity. Thus, democracy cannot be imposed. Societies and peoples will always have the exact moment to defend the values that constitute their individual and collective fundamental rights.
It has happened in the past, and it is happening in the present.There are no models of democracy or of development. The values are what we have in common and each country and its people are the ones who will know the path to take!
Kay Rala Xanana Gusmão
24 February 2011

Foreign Aid Revisited: A Case Study of Timor-Leste

Saturday, 26 February 2011

Guteriano Neves
Presented at the 10th  EWC International Graduate Student Conference,
February 18th, 2011, Honolulu, Hawaii


High dependency on petroleum revenues, high unemployment among youth, institutional fragility, poor infrastructure, and lack of social services are various problems that Timor-Leste’s people have been facing from 1999 to the present. 

Because of this background, terms like “fragile” and “failed” state are frequently used to label Timor-Leste. In the light of the current circumstances, the question emerges among Timorese and scholars is “what happened with the billions of dollars that have been spent under the banner of peace building?” 

This paper assumes that peace is not only about the absence of the war, but also about the conditions for democratic governance, rule of law, and sustainable development. 

Based upon this assumption and looking at the current circumstance, this paper argues that foreign aid has failed to establish conditions for long-term peace and stability in Timor-Leste, which is the main objective of international community over the last eleven years. 

Among various aspects that have contributed to its failure, this paper focuses attention on three aspects: decision-making, economic development, and community development.

Who decides for whom?

Foreign aid, in Timor-Leste’s context, is used exclusively to describe all “grants,” including military assistance, technical assistance, and economic assistance given by donor countries since 1999 to Timor-Leste under the banner of “peace-building.” 

There are no precise numbers of how much foreign aid has been given to Timor-Leste because of inconsistencies in data availability, and different sources. Timor-Leste’s Institute for Reconstruction and Development, La’o Hamutuk (2009) estimates that “between mid-1999 and mid-2009, bilateral and multilateral agencies spent approximately $5.2 billion U.S. dollars on programs related to Timor-Leste.” 

According to Aljazeera Report (2009), between 1999 and 2009, Timor-Leste received $8.8 billion dollars, which means that every Timorese received $8,000 dollars. This is one of the highest per capita rates of international aid.

As the aid began to flow to the country by late 1999, alongside it, many multilateral and bilateral institutions, international Non Governmental Organizations (NGOs), and policy experts from various countries came with a noble mission, “to help Timor-Leste.” These institutions and scholars also came with their own backgrounds and expertise, along with the expectation that that Timor-Leste needed to work alongside them to build the country after its being left in ruins by the Indonesian military and militias.

 Yet these institutions and scholars had very little knowledge about the history of the country and do not know how to communicate with the local people. They will nonetheless make decisions about Timor’s future. Among various institutions, there are some that play critical roles in shaping policy, thus worthy of further discussion.

The first of all is the United Nations and its agencies. From 1999 till today, there have been four types of UN missions in Timor-Leste with different mandates. After massive destruction by the Indonesian military in 2002, the United Nations Security Council established United Nations Transitional Administration for East Timor (UNTAET) to govern the country throughout the transitional period, and also to prepare Timorese for self-government. 

In order to carry out its mandate, UNTAET was empowered with full mandate to fully govern the country as a “sovereign” entity. 

More important than that, the UNTAET also ruled as “authoritarian” regime, where all powers; executive, legislative, and judiciary, were under the purview of the Special Representative of the Secretary General. United National Mission of Support in East Timor (UNMISET) is another UN mission that was established in 2002, to continue providing support for Timor-Leste. 

UNMISET’s support covered several important sectors such as public administration, security, and law enforcement. Although its mandate was to support, UNMISET’s mission was characterized by a lack of consultation and coordination with local authorities, lack of coordination among donor partners, and some decisions were under the full control of the UNMISET. The United Nations Integrated Mission (UNMIT), which was established in 2006, continues to support Timor-Leste in critical areas, such as security-sector reform, human rights, governance and economic development until today.

Alongside the UN, the International Financial Institutions - the World Bank, the International Monetary Fund (IMF) and the Asian Development Bank (ADB) – have also played roles in the process. Right after the Indonesian military withdrew, the World Bank led a “Joint Assessment Mission” to Timor-Leste to identify Timor-Leste’s reconstruction needs. 

The result of this mission was a report, which was later submitted to First Donor Conference in Tokyo. Based on the report, the donors decided to allocate their funding. Between 1999 and 2006, the World Bank, together with the Asian Development Bank and ADB were entrusted with the management of the Trust Fund for East Timor (TFET). Through this channel, various crucial development programs, such as the Agricultural Rehabilitation Project (ARP), Community Empower Projects, Health and Education Rehabilitation Projects, were funded. 

The World Bank was also entrusted by the donor to supervise direct budget support for the Timor-Leste’s government through Transitional Support Program (TSP). From 2006 to date, these institutions are still playing roles in policy recommendations, and providing advisors to help Timor-Leste’s government.

Bilateral aid agencies such as the Australian Agency for Internatinoal Development (AusAid), the U.S. Agency for International Development (USAID), the Japanese International Cooperation Agency (JICA), and the European Commission Humanitarian Aid Department (ECHO) are also important actors in the reconstruction and development of Timor-Leste. These agencies manage various development projects in education, agriculture, private sector development, law enforcement, and infrastructure, which are funded through bilateral cooperation programs. 

Moreover, they also manage to hire, and pay international advisors, who assist capacity-building in important state and public institutions. Some bilateral projects were co-implemented with the UN agencies, such as UNDP, UNOPS, and others. The structure of these agencies is embedded with their respective governments. Therefore, the donor’s agenda determines how these agencies operate in the field rather than the realities on the ground determining how they function. In other words, it is not the reality on the ground that will shape how these agencies operate, but the policy from Washington, New York, Canberra, Tokyo, and Lisbon that affects development policies on the ground.

Spend in Timor-Leste, but not for Timorese

Another approach to understanding how foreign aid has failed in Timor-Leste is to look at how the aid is spent. Although by GDP, foreign aid in Timor-Leste is one of the highest, the reality on the ground hardly corresponds to the amount of money that has been spent. 

According to La’o Hamutuk (1999), from the more than 5 billion dollars that have been spent, only 10 percent of it has been inserted into the local economy. 90 percent of it was spent to pay international advisors and consultants, researchers, foreign soldiers, police, overseas procurement, imported supplies of automobiles, computer equipment, and others. 

Foreign aid perpetuates and strengthens inequality between local staff and international staff. The salary of the international staff members is ten times higher than that of their local counterparts who graduate from local or Indonesian universities. This perpetuates the notion that local staff is less capable than international staff.

Along with the flow of aid, foreign businessmen and imported goods also entered the country easily. Beginning in 1999, many businessmen came to East Timor to start their business. These businessman owned hotels, floating hotels, restaurants, bars, and coffeehouses in Dili. 

Timorese can only become cleaners, security guards, or at best cashiers in these businesses. Imported vegetables, meat, alcohol, etc also entered the country without any restrictions. These imported goods are merely to satisfy demands from international staff that have high salaries. 

International staffs do not go to buy their meals from local restaurants or local markets. Local people who sell their agriculture products in the street, or popular markets under poor conditions cannot compete with imported goods from Australia, Singapore, or Indonesia. Foreign aid also failed to develop productive economic sectors such as agriculture or micro-industry that will generate employment opportunities for Timorese citizens. Lack of investment in the productive sector still affects Timor-Leste’s overall economy today as it imports everything from bottled water to computer hardware.

Half-Hearted Rural Development

The claim that international aid has failed is quite obvious regarding rural development. Development in rural areas should have been the priority, given that 80 percent of Timorese live in rural areas. Since 2000, there have several projects implemented by the World Bank, UNDP, and other bilateral agencies to empower rural communities both economically and politically. 

Community Empowerment Project Community Empowerment Project (CEP), The Recovery, Employment and Stability Program for Ex-Combatants and Communities in Timor-Leste   (RESPECT), Ainaro-Manatuto Community Activation Program (AMCAP), and Agricultural Rehabilitation Projects  (ARP) are some of the projects that were designed to empower rural communities. 

However, despite this noble mission, these projects have some structural flaws, which affect their outcome. In general, these projects were designed by experts from outside who have limited knowledge about the rural context in Timor-Leste. 

Consequently, these projects were designed based on false assumptions about the structural and systematic problems that people face. Thus, they failed to address the real structural and historical problems that the people in the rural area are facing. To some extent, these projects reinforced these problems.

Most rural development projects were carried out without proper mechanisms involving the rural communities they were designed to serve. Adding to the lack of participation of local population, these projects are lacked transparency in their management, and the absence of mechanisms to hold people accountable. 

Thus, instead of solving problems, some rural development projects created additional conflict within the community. Creating multiple parallel structures is another problem with foreign aid. In these rural development projects, instead of using existing local structure, those programs bypassed national government, local legitimacy, and local knowledge by creating other parallel institutions. 

Finally, rural development programs are also designed with very short term objectives. Indeed, these projects failed to address the structural and systematic problems that people face. Moreover, due to lack of community involvement, people do not have sense of ownership of these projects. Consequently, after donors stop funding them, the community does not know how to continue these projects into the future. 

To sum up, most community development programs implemented by institutions like the World Bank, UNDP, or other development agencies are characterized by lack of coordination with local government, lack of long-term vision, and rather than support local government structures, these projects tend to weaken and established new ones.


Since foreign aid is provided under the banner of “peacebuilding,” foreign aid, has failed to create conditions for long-term peace and stability in Timor-Leste. Lack of mechanisms involving local authorities in the decision-making process, lack of investment in the productive sector, and half-hearted rural development are the factors that contribute to its failure. The Timor-Leste case is only one more case that illustrates the failure of foreign aid in post-conflict countries.