MARCH 20, 2000 VOL. 155 NO. 11

E A S T   T I M O R ' S   R E C O N S T R U C T I O N
Is Aid Doing More Harm Than Good?
By JASON TEDJASUKMANA Dili

John Stanmeyer/Saba for TIME Full of hope: East Timor's economic future depends in part on the skills of its fishermen.

The spirits of East Timorese may have revived, but restoring life to their economy may take longer. Nearly 80% of the population is unemployed. So far, the territory's only private businesses--a few bakeries, restaurants, hotels and rental companies--have been opened by foreigners attracted by low costs. Electricity and water are free, and save for a controversial tax on coffee exports, no regulations have been set up to cover taxation, investment and workers' compensation.

East Timorese themselves face limited options. An agreement signed last week by the United Nations and Australia to recover oil and gas from the Timor Sea promises to generate millions of dollars in foreign exchange. But production won't begin before 2004. In the meantime, East Timorese leaders and World Bank officials are pinning their near-term hopes on agriculture and fishing. Mild weather and seasonal rains should ensure that this year's harvest of coffee, at nearly 8,000 tons, will be as good as if not better than previous years'--good news for the one-quarter of the population who depend on the territory's key export. Successful harvests of vanilla, rice, corn, soybean, cassava and sandalwood are also expected to bring in desperately needed foreign exchange and ensure food self-sufficiency. "Agriculture will lead economic growth for some time," says Sara Cliffe, the World Bank's chief of mission for East Timor.

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Locals, however, expected more from the millions in international aid promised after the territory voted for independence last August. The armored personnel carriers brought in by Australian-led peacekeepers have torn up East Timor's already poor roads. Rural areas, still subject to blackouts and shortages of water, complain that reconstruction funds have mainly been directed toward the capital, Dili. "All of this money is being poured in, but it's not being distributed properly," says aid worker Galu Wandita. Towns like Gleno, Suai and Oecussi have been so devastated that aid workers privately question whether the $520 million pledged by donors in December will even begin to cover the most basic requirements of sanitation, housing and education.

More worrisome, local resentment has begun to build over the dominant role being played by outsiders in the rebuilding process. Former colonial overlord Portugal has set up postal services, while Australia is providing a mobile phone network. Both have opened banks in Dili, the only two branches operating in the territory. Four currencies--the Indonesian rupiah, Portuguese escudo, Australian dollar and U.S. dollar--are in circulation, baffling local traders trying to keep up with daily exchange rate fluctuations. The U.S. dollar won out over the escudo as the territory's official currency, yet only a select group of Timorese working for the U.N. earn their pay in dollars.

Timorese leaders acknowledge the need for the expertise of foreign administrators and engineers. But they warn that the international mission will fail unless more Timorese are recruited. "We are grateful for the presence of the international community, but give East Timorese an opportunity to be involved in the decision-making," says Dili's Bishop Carlos Belo. "Otherwise the U.N. will leave East Timor with the same problems as before." Outsiders may be in control, but it is time to let the Timorese take charge of their fate.

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