July 23, 2017 10:11 am JST

East Timor poll highlights country's growing pains

Election reveals worries over corruption, unemployment and persistent poverty

HAMISH McDONALD, Contributing Writer

An East Timorese woman casts her ballot in parliamentary elections in Dili, East Timor on July 22. © Reuters

SYDNEY -- East Timor, or the Democratic Republic of Timor-Leste as it is officially known, is no longer a new nation, but one wrestling with problems familiar elsewhere in Southeast Asia. The issues revolve around an entrenched and relatively prosperous political class existing amid a hinterland majority population still beset by poverty and seasonal food shortages in the tiny island-state.

Just over 15 years since gaining independence after centuries of Portuguese colonial rule, 24 years of Indonesian annexation, and a three-year United Nations-led interregnum, East Timor's 1.3 million citizens still treasure their democratic system.

In Saturday's parliamentary elections, the voter turnout was around 70%. Many queued patiently at polling stations from early morning, with some arriving after long treks on foot or by pony from mountain hamlets or by outrigger canoes from coastal villages. Early unofficial counts suggested the majority of voters were backing the current ruling coalition behind Prime Minister Rui Maria de Araujo.

Yet there are justifiable fears that unless the new parliament makes urgent changes in economic and social development, East Timor will confront a crisis within the next decade as oil and gas revenues disappear and a young population loses patience and respect for those in government. For the first time, corruption has been a major election issue.

East Timor risks growing disillusionment with the aging core of Portuguese-educated former freedom fighters and party leaders directing the government - including former President and Prime Minister Jose Xanana Gusmao, 71, of the National Congress for Timorese Reconstruction (CNRT) and former Prime Minister Mari Alkatiri, 67, of the Revolutionary Front for an Independent East Timor (Fretilin).

The two parties, former rivals, have been governing in a coalition since 2015. The result has been what critics deride as a cozy carve-up of government spending, with some funds earmarked to start Gusmao's proposed multi-billion-dollar "Tasi Mane" petrochemical industry project and $216 million allocated last year to a free trade zone supported by Alkatiri in the sleepy Oecusse enclave in Indonesian-controlled West Timor.

To be sure, East Timor has made good progress in reducing poverty. The share of the population that lives below the $1.90 a day poverty line fell from 47.2% in 2007 to 30.3% in 2015. The World Bank said this was "faster than most developing countries have achieved over a similar period." Meanwhile, electricity coverage grew from 37% of the population to 72% during the same period.

But unemployment and underemployment remain high, education levels are low, and malnutrition and other health problems persist, the World Bank reported in April.

Baby boom

The lack of jobs is a severe risk to stability. Thanks to a baby boom after the territory's violent exit from Indonesia in 1999, the population is extremely young, with about 60% under 25 and a median age of 19. Agriculture and tourism, which could potentially soak up a large part of the young workforce, are undeveloped. Exports of Timor's prized Arabica coffee doubled last year, but only to $30 million, as plantations are neglected and marketing services weak. Only 60,000 visitors arrive each year.

Time is running out to devote resources to these sectors. The World Bank and analysts at the respected La'o Hamutuk research group in Dili, the capital, warn that oil production from fields in the Timor Sea will cease within the next few years. Combined with low oil prices, that has meant government oil revenue has fallen sharply from $1 billion in 2015 to an estimated $400 million in 2016.

To cover a growing fiscal deficit, Araujo's government has dipped further into the $16 billion Petroleum Fund, a sovereign wealth fund that invests overseas to conserve oil revenues for future use. In 2016, it drew $900 million from the fund, far above the $545 million level needed for sustainable budget financing.

In the run-up to the election, Gusmao suggested the fiscal problem could be solved if the Australia shifted the maritime resources boundary line between the two countries, putting a large undeveloped natural gas field called Greater Sunrise entirely in East Timor's jurisdiction.

After years of wrangling about the maritime area, Canberra agreed in January to enter a conciliation process on the sea boundary supervised by the International Court of Arbitration at The Hague. The talks are aimed at a settlement in mid-September.

But even if Australia agrees to shift the boundary to the median line between the coasts, as East Timor wants, some complicated negotiations are likely to be needed with Indonesia as well to settle ownership of Greater Sunrise.

Nor are the gas field developers, led by Australia's Woodside Petroleum, likely to drop their opposition to Dili's insistence that gas from the field be delivered to Timor's coast by an undersea pipeline across a 3,000-meter deep seabed chasm known as the Timor Trench. The consortium favors a floating liquefied natural gas plant or a pipeline across shallower waters to Darwin, Australia. With gas prices low, it is also in no rush to develop the field.

Even if the pipeline was technically risk-free, the economics behind Gusmao's industrial scheme to utilize the gas are highly contentious. "High-cost developments such as the Tasi Mane project are expected to have only a very weak impact on poverty reduction in the near term, and may never yield a social return in a range of feasible scenarios," the World Bank said in its April report.

Remarks earlier this year by Franscisco Guterres, a Fretilin politician elected to the largely ceremonial presidency in March, suggested the CNRT-Fretilin coalition might be ready to show more flexibility about the development of Greater Sunrise, once the election is over and the sea border settled.

Emerging opposition

If policy does not change, however, the government can expect much more trenchant opposition in the new parliament. The election saw the political entry of the widely-revered figure Taur Matan Ruak, 60, who led the anti-Indonesian guerilla movement after Gusmao's capture and then transformed his fighters into the core of the new nation's small defense force.

East Timor's president until early this year, he chose not to stand for a second term and instead ran for parliament at the head of the newly formed People's Liberation Party. As president, he openly rebuked Gusmao and Alkatiri over their big-ticket projects. During the campaign, he attacked corruption and called for the government to focus on basic needs such as health, sanitation and education.

Another new party, Khunto, may also join the opposition ranks. Appealing to "disenfranchised young men" who face unemployment, its emergence reflects the shifting demographics of East Timor, election observer Michael Leach, a politics professor at Melbourne's Swinburne University, told Australian Associated Press.

In an election where the minimum voting age is 17, Taur Matan Ruak summed up sentiment among many parliamentary hopefuls with a particular appeal to young voters, urging them to join in nation-building. "If we don't know how to involve young people in the development process," he said. "They can become a time bomb."

Hamish McDonald is a former foreign editor of The Sydney Morning Herald and regional editor of the Far Eastern Economic Review who has written about East Timor since 1975.

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