While the overall advice level has not changed, the Department of Foreign Affairs and Trade (DFAT) updated its website on Monday afternoon, saying "post-election political tension may continue". "The situation could deteriorate with little warning," DFAT said.

Dozens of cars were torched and security personnel fired shots in the air in Dili to disperse crowds and restore order, while there were also reports one man had been killed in an area about 10km from the capital. Police were investigating the cause of the death.

There was also violence in a number of districts outside of the capital. It erupted after the National Congress for Timorese Reconstruction (CNRT) party announced at the weekend it would invite two minor parties to join it forming government, returning Xanana Gusmao as prime minister. Mr Gusmao's party fell three seats short of being able to form government in its own right.

The DFAT advice warned that political tension may continue while results were being finalised and the new government formed. "We advise you to exercise a high degree of caution in East Timor because of the uncertain security situation and the possibility of civil unrest." The overall advice remains at level two out of four.

East Timor was racked by political violence at its last elections in 2006, leading to the deployment of international forces including about 400 Australian troops. Along with a contingent of just under 1000 United Nations security personnel, they are scheduled to withdraw later this year.

Timor-Leste: Peacekeeping drawdown begins

IRIN - July 5, 2012

Dili – The UN peacekeeping force is on track to begin withdrawing from Timor-Leste in October 2012 after a "remarkably peaceful" parliamentary election campaign concluded on 4 July, ahead of the election on 7 July.

The United Nations Integrated Mission (UNMIT) in Timor-Leste began in 2006 after a mutiny by soldiers and a breakdown of order led the government to request international support.In terms of the mission's Joint Transition Plan, UNMIT will withdraw if the parliamentary elections are conducted in line with international standards and without major violence. Two rounds of presidential elections in March and April both took place peacefully.

"We've seen campaigning that's been much more peaceful than what we saw in 2007, and it's probably a reflection of a much higher level of maturity of the democratic system in Timor-Leste," said Finn Reske-Nielsen, the head of UNMIT, who described the month-long parliamentary election campaign as a "remarkably quiet and peaceful set of activities", despite the expectation that this election would be more hotly contested than the presidential poll.

If stability prevails after the election, Reske-Nielsen told IRIN the drawdown of some 2,800 peacekeeping staff will begin in October, although electoral personnel are likely to withdraw sooner. Some 150 staff have already left.

"Our civilian staff will be withdrawn in a few waves, the first in October, then November, and finally in December. At the end of December we should have a very small staff contingent on the ground."

A small political mission is expected to replace UNMIT in 2013 but Reske- Nielsen said this mission's mandate was not yet clear. "The only thing we've been told is the government would like to see a role for such a mission in helping to develop the next generation of political leaders." The staff is likely to be much smaller and may involve a human rights presence or continued support to the national police force (PNTL).

There has been speculation that the International Stabilization Force (ISF), composed of troops from Australia and New Zealand, will also withdraw later in 2012, but force commander Luke Foster told IRIN no date has been set and the next government would make this decision.

Foster said the ISF would maintain a low profile during the election period. "We still stand ready to provide the support if it's required... our assessment is that support won't be required."

In March this year ISF closed two bases, handing over control to the Timor-Leste government. The remaining bases are to be handed over "in due course".

While no decision has been made on the date of the withdrawal, Foster said his assessment was that the PNTL and the military are able to maintain law and order. "There is no doubt that in the last twelve months their professionalism, their capability and their ability to respond have improved, and that all bodes well for the future." (mw/pt/he)

UN to leave if East Timor poll goes well

Australian Associated Press - July 5, 2012

Meagan Weymes – The UN, after presidential polls were held peacefully over two rounds in March and April, says it will pull out its remaining 1300 troops within six months if the general election on Saturday goes well.

There are concerns that violence will reignite in the oil-rich but underdeveloped state if none of the 21 parties wins an outright majority and a fragile coalition takes power.

Following the end of Portuguese rule in 1975, East Timor was occupied by Indonesia for 24 years. Some 183,000 people died from fighting, disease and starvation before the half-island state voted for independence in 1999.

The country has offshore fields of oil and natural gas. Its Petroleum Fund has swelled to $US10 billion ($A9.76 billion) but corruption is common and half of its 1.1 million people are officially classified as living in poverty.

In the elections, the left-wing Fretilin party, which became synonymous with the pro-independence struggle, has a populist platform for spending the oil money to lift income and education levels.

The centre-left National Congress for Timorese Reconstruction (CNRT) wants rather to establish a plan for longer-term investment on major infrastructure projects.

Saturday's polls are due to be the last big test before East Timor, which celebrated a decade of formal independence in May, takes full responsibility for its own security.

The United Nations Integrated Mission in East Timor (UNMIT) was deployed in 2006 after a political crisis.

The only major violence since then was a failed assassination attempt in 2008 on president Jose Ramos-Horta, the Nobel peace laureate who lost to Taur Matan Ruak in the recent presidential election.

This weekend's vote should be largely peaceful, but after the results are announced, "there will be some disappointment, and that (may) give rise to some level of tension", the UN mission's Danish head, Finn Reske-Nielsen, said.

"I can only hope the political leaders will continue to convey these messages to their followers, that whatever you do, don't resort to violence," he said.

Human rights & justice

Bodies in East Timor mass grave likely Chinese: Police

Agence France Presse - July 13, 2012

Police in East Timor who uncovered a mysterious mass grave at the national government palace last month said Friday they had found the bones of 72 bodies and clues the dead may have been Chinese.

Construction workers discovered the remains of 52 people in a garden outside the beachfront palace in June, which houses the office of Prime Minister Xanana Gusmao, and contacted police.

"There were new bones found on Monday, so now we have 72 bodies," Criminal Investigation Service commander Superintendent Calisto Gonzaga told AFP.

"Some materials were found buried, like drinking glasses, a spoon and plates, so we need archaeologists to help identify them. But by observation, it seems the plate and glasses are from China."

In 1975, Indonesia invaded the former Portuguese colony, starting a 24-year bloody occupation in which an estimated 183,000 people were killed or starved to death.

Gonzaga said he suspected the bones pre-dated Indonesian occupation and could be from World War II, although there were no military boots found, suggesting they were probably civilians. East Timor was occupied by the Japanese during the war.

Gonzaga said he hoped to engage an international forensics team, with experts from Australia, Malaysia, Korea and Thailand to look into the mystery.

Damien Kingsbury, an expert on East Timor at Australia's Deakin University, earlier said if the bones were not Timorese, they were most likely of Chinese people, who were in East Timor before Indonesian occupation.

Kingsbury said Indonesians would not have buried their own people in a mass grave, and that the bodies were less likely to be of Portuguese colonisers.

East Timor voted in 1999 to become an independent nation in a UN-sponsored referendum.

Political parties & elections

Timor turning the corner on poll violence

The Australian - July 21, 2012

Peter Alford, Jakarta – Political normalisation is finally at hand in East Timor, despite last weekend's sudden outbreak of rioting that marred at the last moment the young nation's third elections.

"It was an unfortunate end to what had been an almost exemplary election process," said Deakin University's Damien Kingsbury, who led an Australian observers group to the presidential and parliamentary elections. Otherwise, this year's experience has been in bright contrast to the chaos and menace permeating the 2007 elections.

The events that provoked Sunday night's clashes are likely to worsen the bad spirit between Prime Minister Xanana Gusmao's CNRT and Fretilin, the main political parties.

But they have not disrupted formation of the second Gusmao government, nor preparations for the UN special mission's departure by year-end and ending the Australian-led military stabilisation mission soon after.

East Timor's capacity to properly manage elections is vindicated and party leaders honoured their joint undertaking to restrain their hotheads during the two campaigns.

The police force, rebuilt under international guidance following the breakdown of civil authority in 2006, effectively restored order by early Monday, although Fretilin complains of unnecessary force against its supporters.

CNRT secretary general Deonisio Barbo conceded that some of his members' language on Sunday had provoked Fretilin supporters angry at their party being excluded from the new government.

Mr Denesio "extremely regretted" harsh words spoken against Fretilin at a CNRT special conference that endorsed Mr Gusmao's recommendation for a new coalition instead with the Democratic Party (PD) and Frenti-Mudanca.

CNRT won 30 seats in the election, Fretilin 25, PD eight and Frenti-Mudanca two. In a political consolidation that favoured CNRT best, the other four parties and alliances elected to the 2007 parliament were wiped out.

Fretilin, the strongest political force in the East Timorese struggle for independence and in the first five years of the new nation, lost government when its vote halved in 2007. Its leaders, former prime minister Mari Alkatiri and Francisco Guterres "Lu Olo" had campaigned on returning Fretilin to government by negotiating the party into a coalition.

That proposal, according to Professor Kingsbury, was "ill-advised and created unrealistic expectations" among Fretilin supporters, contributing to the frustration and anger that erupted on Sunday evening.

The other inflammatory factor was that the CNRT conference was televised live, so that members intensely proud of Fretilin's role in bringing free East Timor into being, watched as it was rudely ejected from coalition considerations.

The Timor Leste Journalists Association this week joined complaints about the telecast. "We cannot accept the live report that opened an opportunity for one party's members to say words of hatred against another party – that contributed to the conflict," said association president Tito Belo.

On the other hand, given the bad blood between the two leaderships and Fretilin's robust criticisms of CNRT and the first Gusmao government, it would have been naive not to expect some heated reaction to its efforts to join a new coalition.

Further, while Fretilin was arguing for a coalition "government of best talents", there was an obvious concern for the risk to accountable government of the two big parties sitting together on the government benches with 55 of the parliament's 65 seats.

Mr Gusmao, who played on that concern, is discussing details of a coalition agreement with the junior partners and is expected to finalise a new ministry by August 5.

He returns from the election with his authority and CNRT's control of the government significantly strengthened. But he also confronts an array of huge difficulties, some of which have been held in abeyance until the election was safely out of the way.

The largest and most immediate of those include spreading development more evenly from Dili, the booming capital, to the outlying districts where little has happened since independence to improve education, health care, sanitation, roads and farming.

There is government and civil service corruption, which is growing faster than the new Anti-Corruption Commission's capacity to contain it.

Then there is the challenge of returning the $US12 billion ($11.5bn) Petroleum Fund, East Timor's only substantial income source, to a sustainable basis while somehow meeting the first Gusmao government's development blueprint, precariously dependent on tapping the fund.

The fund's survivability, in turn, depends on East Timor reaching agreement with Australia's Woodside Petroleum and its partners on the Greater Sunrise liquefied natural gas project. The development is stalled by a long-running dispute between Woodside and Dili about where the gas is to be refined into LNG.

"This requires tough decisions from the government, not about what sounds good to punters ahead of an election, but what realistically the country needs to do to sustain its future in the medium- to long-term," says Professor Kingsbury.

Post-election violence persists in East Timor

Associated Press - July 16, 2012

Guido Goulart, Dili – East Timor's president called on security forces to restore peace and order Monday as violence persisted over the runner-up in this month's election being excluded from a new coalition government.

One person was killed and four policemen were injured in clashes Sunday in the capital, Dili, and the district town of Viqueque, said police chief Longuinhos Monteiro. On Monday, witnesses said they heard gunshots in a Dili neighborhood and that protesters there were burning tires.

The violence started shortly after Prime Minister Xanana Gusmao said his party would set up a coalition with the Democratic Party and Frenti- Mudanca, excluding the Fretilin party from the government.

President Taur Matan Ruak met with the leaders of the four main parties as the unrest continued Monday and said at a news conference he was preoccupied with the violence and appealed to people to bring peace, stability and harmony back to the country.

"Violence is not (the best) way in the democracy. We all condemned the violence and there is no justification at all," said Ruak, a former guerrilla fighter who took office May 20, replacing Nobel Peace Prize laureate Jose Ramos-Horta.

Ruak said he was confident to leave Tuesday for Mozambique to attend the conference of Portuguese-speaking countries, given the people's solidarity to maintain peace and harmony.

The Supreme Court of Appeals officially endorsed the results of the July 7 parliamentary polls Monday. Gusmao's National Congress for the Reconstruction of East Timor, or CNRT party, won 30 seats in the 65-member assembly.

It was seeking to form a coalition with the Democratic Party and Frente- Mudance, which claimed 10 seats between them. Second-place Revolutionary Front for an Independent East Timor, or Fretilin party, won 25 seats.

Monteiro said 16 protesters were arrested in violence that started early Saturday when protesters pelted and damaged Annur mosque, the biggest Muslim place of worship in the predominantly Catholic nation.

East Timor was a Portuguese colony for three centuries before a brutal Indonesian occupation that left more than 170,000 dead. It voted overwhelmingly for independence in 1999. Withdrawing soldiers and proxy militias went on a rampage, killing another 1,500 people and destroying much of the infrastructure.

The international community quickly deployed UN peacekeepers and poured in billions of dollars. But gang violence and splits in the army and police have turned deadly several times and, six years ago, led to the collapse of the government.

Fretilin excluded from East Timor coalition government

ABC Radio Australia - July 16, 2012

To East Timor, where Prime Minister Xanana Gusmao's CNRT party is moving towards forming a coalition government. His party won the most seats in last weekend's election but not enough for a majority.

Yesterday his party held a national conference to decide which parties to invite to be coalition partners. The day ended with several violent incidents, mostly in the capital Dili

Correspondent: Sara Everingham

Speakers: Dionisio Babo Soares, CNRT Party's secretary general; Sandra McGuire, United Nations Mission in East Timor; Jose Teixeira, Fretelin party spokesman.

Everingham: It's just over a week since people in East Timor went to the polls. Xanana Gusmao's CNRT Party won the most votes in the election but it needs to form a coalition to govern.

Yesterday the party held a national conference to consider its options. The party's secretary general, Dionisio Babo Soares, says the decision was made to pursue a coalition with two smaller parties the Democratic Party and Frente-Mudanca.

The party ruled teaming up with the large Fretilin Party to form a grand coalition or a national unity government. The CNRT's Mr Babo Soares says official negotiations with the two smaller parties will begin once East Timor's court of appeal confirms the vote count.

Soares: We actually will wait until the court of appeal has made its decision and then move forward with negotiations with the political parties.

Everingham: After last week's poll, East Timor was congratulated on running a smooth and peaceful election. But last night there was rock throwing in parts of Dili.

This morning Sandra McGuire from the United Nations Mission in East Timor said 58 cars had been hit with stones.

Mcguire: Last night there were scattered incidents of unrest following the announcement that the CNRT was forming a coalition with two other parties to form government.

There were stonings of cars and two incidents in the districts outside of Dili. But this morning everything's quiet.

Everingham: The incidents outside Dili included the burning of a shop and the burning of a house; both were in different areas. Police have confirmed that one person has died today from injuries suffered yesterday.

Sandra McGuire from the UN mission says the Timorese police will investigate what caused the unrest. Today Fretilin said CNRT delegates had made denigrating comments about Fretilin at its national conference which was broadcast nationally.

Party spokesman, Jose Teixeira.

Teixeira: The event was a spontaneous emotional reaction by some people here in Dili, primarily in two or three locations in Dili, as the result of some statements made by some delegates to a CNRT special conference in Dili yesterday.

These statements that insulted and denigrated the historic role of Fretilin, it's something that is still an emotive issue for some people. It doesn't forgive, it doesn't excuse any act of violence. But you know I mean it was a highly provocative thing to have occurred.

Everingham: But the CNRT Party's Dionisio Babo Soares rejects that. He says Fretilin supporters had high expectations of being part of the coalition government.

Soares: Well we went through their statements that they was made yesterday, were made yesterday during the debate, nothing was done against Fretilin. Nothing whatsoever, any words, either insults or, what do you call it?, insulting Fretilin, as what we have received in the past.

Everingham: This election is being seen as a test for East Timor because the United Nations peacekeeping mission is preparing to leave the country by the end of the year. This morning Sandra McGuire said the UN police played a supporting role last night but she said it was mostly East Timor's police force that responded.

Mcguire: I think we can take pleasure in the fact that the situation was handled primarily by the national police and they handled it well.

Everingham: But Jose Teixeira says Fretilin has received complaints about the police response. Police have confirmed that included firing warning shots into the air and using tear gas.

Teixeira: We've already reported the matter to the ombudsman for human rights and justice. I must say that I have had my share of phone calls today from constituents who were talking about what was an overzealous reaction.ac But let's leave it to the authorities to investigation.

Everingham: PM was not able to contact the commander of East Timor's police force.

This afternoon Sandra McGuire from the UN mission said police were still dealing with pockets of unrest in Dili and in the districts. But she said for the most part it's still calm.

Violence in East Timor after snub to party

Sydney Morning Herald - July 16, 2012

Michael Bachelard – Violence erupted in East Timor late last night, apparently prompted by political party Fretilin being excluded from a role in the new governing coalition.

Police confirmed that about 58 cars were burned and stones thrown at traffic in the capital Dili, as unrest also spread to the outer districts of Viqueque and Baucau. A number of cars were torched and early rumours were suggested that one person had died in the conflict in the Dili suburb of Comoro, outside the headquarters of the ruling CNRT party, but this now seems doubtful.

However, sources in Dili say most of the main roads are blocked as United Nations police patrol the poverty stricken city in an attempt to bring it under control. Residents also reported the sound of either gunfire or gas canisters being shot around the western suburb of Comoro.

The fragile democracy had this year managed a presidential election and a run-off election for president, as well as parliamentary election without significant violence, but the announcement yesterday by Prime Minister Xanana Gusmao that he would invite two minor parties into a coalition to form government for the next five years appears to have triggered an angry response from Fretilin supporters.

Until yesterday, hopes were high within Fretilin that they might also be invited to join a "government of national unity". But Mr Gusmao dashed those hopes at a special meeting of his National Congress for Timorese Reconstruction in Comoro, Dili, by announcing he would govern with the Democratic Party and a new party which had broken away from Fretilin, Frenti-Mudanca.

Sources suggested that the violence had been triggered by one of the CNRT delegates at the meeting who strongly criticised the leaders and members of Fretilin, which has spent the past five years in opposition.

A source told Fairfax Media, the publisher of this report, that houses owned by CNRT figures in some of the outer districts may have been torched, but this remains unconfirmed.

East Timor was wracked by violence in 2006 and again in 2007, prompting Australian and United Nations forces to move into the country to help keep the peace. The latest outbreak may jeopardise plans to leave at the end of this year, once the new government had been bedded down.

In last week's election, Mr Gusmao's party increased its vote from 24 per cent in 2007 to 36 per cent. Fretilin received 30 per of the vote and 25 seats, PD (Democratic Party) – backed by outgoing president Jose Ramos- Horta – gained 10 per cent and eight seats and Frenti-Mudanca 3 per cent and two seats.

The CNRT's general secretary said forming a coalition with PD and Frenti- Mudanca was in the best interest of stable government. A Fretilin MP, Estanislau da Silva, said earlier he was not disappointed by yesterday's decision. "We would have liked to contribute," he said. "We have experience. But that is their decision."

[With Mouzinho Lopes and Joyce Morgan in Dili.]

Fretilin denies responsibility for violence

Sydney Morning Herald - July 16, 2012

Joyce Morgan, Dili – The East Timorese President has called for calm after a night of violence in the capital, Dili, which left one man dead, dozens of vehicles destroyed and has raised questions about the planned withdrawal of UN peacekeepers.

President Taur Matan Ruak met the leaders of all political parties, including Prime Minister Xanana Gusmao and opposition Fretilin leader Mr Mari Alkatiri, yesterday to discuss the situation.

He asked the leaders to ensure their supporters remained calm. He said he did not plan to cancel his departure tomorrow for a conference in Mozambique in the wake of the disturbances.

The violence erupted on Sunday hours after Gusmao's party opted to exclude Fretilin from the new coalition government. Fretilin now faces a further five years in opposition with two minor parties expected to join with Gusmao's CNRT (National Congress for Timorese Reconstruction) to form government.

The election and its aftermath have been seen as a key test of whether the 1300 peacekeepers would depart later this year.

The death occurred about 14 kilometres from Dili, at 8am this morning. The police chief Longuinhos Monteiro could not confirm how the man had been killed. Police were still investigating the death.

He denied the violence, which also left 15 people injured and destroyed 60 vehicles and seven houses, was politically motivated.

Fretilin leader Mari Alkatiri rejected this. He said the trouble was sparked by public criticism of Fretilin made at Sunday's special conference in Dili of Mr Gusmao's CNRT at which the coalition with the minor parties was announced. Mr Alkatiri has demanded an apology.

He acknowledged Mr Gusmao's party had the right to exclude Fretilin from the new government following elections earlier this month. Mr Alkatiri said Fretilin would to co-operate with the new government but denied his party was responsible for the violence.

The ballot left Mr Gusmao's party with 30 seats in the 65-seat parliament, three seats short of being able to govern in its own right. Mr Gusmao has invited PD (Democratic Party) and Frenti-Mudanca to join the government rather than form an all party national unity government as some key figures had advocated over the past week. There was a strong police presence on Dili's streets today.

[With Mouzinho Lopes.]

Fretilin snubbed from East Timor coalition government

ABC Radio Australia - July 16, 2012

Violence in East Timor was sparked when Prime Minister Xanana Gusmao announced his National Congress for Timorese Reconstruction will form a coalition government with two smaller parties.

CNRT won the most seats at the general election, but was still three short of an outright majority. Mr Gusmao's decision to join forces with the Democratic Party and Frente-Mudanca condemns the election runner-up Fretilin to another five years in opposition.

Presenter: Richard Ewart

Speakers: Dr Michael Leach, East Timor specialist, Swinburne University

Leach: In the East Timorese system unless a party gets a majority which didn't happen this time or last time, this is always the trickier period, the formation of government rather than the election. And yesterday the CNRT made a decision that it would form a coalition with PD and a smaller party called Frente-Mudanca. This is where Fretilin supporters are always going to be at the point at which they were going to be disappointed rather than the election outcome itself. Look there's some suggestion that yes there might have been some Fretilin supporters involved, that needs to be investigated. There's also a suggestion that there might have been some provocation from CNRT delegates at one point. There are a few sources that are reporting that. But I certainly heard the same as the UN you just talked to that in fact those cars were mostly stoned rather than burnt, and there's a couple of other incidents, but everything remains calm this morning.

Ewart: Now in terms of the way that Xanana Gusmao has put his coalition together, there was a suggestion certainly a week or so ago that he was prepared to talk to Fretilin, but it's been suggested to me that if those two; the CNRT and Fretilin had joined forces it would effectively leave Timor with no real opposition?

Leach: Well that's right, I mean they would have had the PD which has eight seats. Certainly PD was concerned that there might be a CNRT-Fretilin coalition, that's my information they've been a little bit concerned about that, so they'll be relieved with yesterday's result. Obviously Fretilin's a much larger party, it has 25 seats and would no doubt make a better and more effective opposition than a smaller party with eight seats.

Ewart: So in terms of the coalition that we now have, I know Fretilin was quoted as saying they wanted a government of the best talent. Do we have that in Timor?

Leach: Look those negotiations are still to happen. What happened yesterday is that the CNRT has expressed its view on who it wants to align with. What still has to happen is that CNRT and PD now have to go horse-trading and do the actual negotiations. So this is not quite over, and then the President has to appoint that government. In those negotiations what's going to come up and what's going to be the key issue is the distribution of ministries between CNRT and PD. Now in the last government CNRT didn't end up with many ministries to keep a multi-party coalition together. This time I'm assuming they're going to want more ministries, because they had a very good performance. But PD is in a strong bargaining position because one of the interesting things about the election is that Fretilin plus PD could be a majority as well. So they have that sort of extra bargaining power with the CNRT. I think it's quite likely that they will go with CNRT, I think that's the most obvious result at this point. That's probably what will happen, but they also have that pressure they can apply to CNRT to get more ministries.

Ewart: What though does the future hold do you think for Fretilin as a party, because it seems to be based on the outcome of this election losing support, and also what does the future hold for Mari Alkatiri, he was the first prime minister in a post-independence East Timor and now he seems to be on the outer?

Leach: Well it may be an opportunity for Fretilin now to renew its leadership I think after this second defeat. We may see that happening over the next few months, there was likely to be some talk, some discussions, some activities in relations to the Fretilin leadership, we might see that happen. The interesting issue is down the track there are two political forces in the country and some people might argue that they're in fact Xanana Gusmao and Fretilin. The CNRT party it's going to be interesting to watch how Xanana develops new leaders inside his party because the party's very much revolved around his very strong charismatic personality, his legacy of the resistance struggle, he gets a lot of personal support. One of the interesting things in five years time if he were to resign is how CNRT would fare after that, and to do that they're going to have to promote some new leaders below Xanana to allow a transition when he does retire.

Ewart: In terms of the UN and situation in East Timor and if and when the peacekeepers eventually leave, do you think that we're getting closer to that now, I mean do we have stability based on the outcome of this election?

Leach: I think we're getting there. I mean last night's developments were a little bit of a worry but if you compare those to 2007 they were reasonably minor. So obviously we need to keep an eye on this over the next week in the formation of government. But as the UN just said the national police responded pretty well last night, things are I believe calm at the moment. If that continues over the next week then certainly things bode well or reasonably well for the departure of UN and Australian troops toward the end of this year.

Gusmao to form East Timor coalition

Sydney Morning Herald - July 15, 2012

East Timorese Prime Minister Xanana Gusmao will form a coalition government with the country's two minor parties. The decision was announced at a special meeting of his CNRT (National Congress for Timorese Reconstruction) in the capital, Dili, yesterday.

Mr Gusmao's party won 30 seats in the 65-seat parliament in elections just over a week ago. But it was three seats short of being able to govern in its own right.

Mr Gusmao's party increased its vote at last weekend's election from 24 per cent in 2007 to 36 per cent. Fretilin received 30 per of the vote and 25 seats, PD (Democratic Party) – backed by outgoing president Jose Ramos- Horta – gained 10 per cent and eight seats and Frenti-Mundanca 3 per cent and two seats.

The CNRT's general secretary said forming a coalition with PD and Frenti- Mudanca was in the best interest of stable government.

A Fretilin MP, Estanislau da Silva, said he was not disappointed by yesterday's decision. "We would have liked to contribute," he said. "We have experience. But that is their decision."

The new government, which takes office in August for a five-year term, faces challenges in the fledgling democracy. The oil-rich but economically poor country, which has just marked 10 years of independence, must build infrastructure, combat corruption and develop the non-oil sector of its economy.

Newly elected President Taur Matan Ruak must now officially invite Mr Gusmao to form a government. The vote and negotiations were seen as a vital test of whether the 1300 UN peacekeepers can withdraw from the country. They are expected to leave at the end of the year.

East Timor ruling party wins 30 seats

Australian Associated Press - July 13, 2012

The ruling party of East Timor resistance hero Xanana Gusmao has won 30 seats in parliament, according to a final count on Friday from last weekend's vote, and will need to form a coalition to govern.

Gusmao's centre-left National Congress for Timorese Reconstruction (CNRT) is three seats shy of the 33 needed for an absolute majority in the 65-seat parliament which would allow him to remain prime minister.

The national electoral commission count of Saturday's vote showed that the main opposition left-wing Fretilin party had come second with 25 seats. The Democratic Party (PD), a member of the previous ruling coalition, won eight seats, while Frente-Mudanca grabbed two.

The CNRT said it would decide on Sunday which party to team up with. If it is unable to form a majority, Fretilin and PD could join forces and lead parliament.

Friday's results need to be confirmed by the nation's supreme court before being officially declared, and parties have 48 hours to complain to the court of appeals.

Preliminary results given on Sunday had said CNRT had won 31 seats, and Fretilin 24. The count for the other two parties remained unchanged.

The results set the stage for negotiations to form a coalition, amid concerns that drawn-out, post-election wrangling could reignite violence in the energy-rich but deeply poor state.

The vote was a key test for the fragile democracy, which celebrated a decade of formal independence in May. The UN sees the polls – and their aftermath – as the last big test that will decide whether its remaining 1,300 peacekeepers and other security staff can withdraw.

Wrangling over a coalition generated weeks of tensions after the 2007 elections. Presidential polls that were held over two rounds in March and April passed peacefully, and there was no major violence linked to the parliamentary polls.

In the last legislative elections in 2007, the CNRT won three fewer seats than Fretilin, but Gusmao's party won out in the post-election horse- trading to lead a coalition government with three smaller parties.

The country has offshore fields of oil and natural gas and its petroleum fund has swelled to $10 billion, but corruption is endemic. Half of East Timor's 1.1 million people are officially classified as living in poverty, posing the main challenge for the future government.

Gusmao, 66, is a hero of the resistance who was thrust into the world of politics after his landslide victory in the 2002 presidential election.

Parties haggle on East Timor government

Sydney Morning Herald - July 11, 2012

Michael Bachelard – A key civil society group in East Timor has warned against the proposed "government of national unity", saying it would reduce scrutiny of decisions and diminish democracy.

Political horse trading is well under way after Saturday's election, and sources say the four main parties are edging towards forming a unified government. This would mean the country would have no opposition.

The electoral commission announced yesterday that Xanana Gusmao's CNRT party had won 30 seats, the former opposition, Fretilin, 25, the Democratic Party, eight, and Frenti-Mudanca, two. Fretilin activist and former MP Jose Teixeira said on Monday a coalition government would "bring together talent to govern for the best of the country".

But non-government organisation La'o Hamutuk said a pluralistic state was "an essential element of democracy, so that various viewpoints can be discussed publicly".

"In a government of national unity, policy debates may take place behind closed doors in the council of ministers. Citizens may be unable to follow or participate in important decisions," the organisation said.

La'o Hamutuk is concerned at massive increases in spending from the country's $10.5 billion petroleum fund, and at the same time, "more policy directions are being set by fewer people and they are making major errors".

"The issues are critical – Timor-Leste's fifth constitutional government may be the last one with significant oil wealth at its disposal."

Gusmao set to return as Timor-Leste PM

Irrawaddy - July 11, 2012

Simon Roughneen, Dili – Saturnina da Silva doesn't have a name for her baby boy yet, born just 12 hours before Saturday's parliamentary election in the tropical half-island nation.

Her voice faint, the 24-year-old raised an ink-covered index finger, signaling that she had voted – giving birth at this time saved her the five-hour bus trip to vote in her home village in Viqueque in the southeast of the half-island country of East Timor, which is also known as Timor- Leste.

More seriously, she said that "it was important for me to vote, even today, even though I am so tired, as this is for the future of the country."

Also looking to the future is Kay Rala Xanana Gusmao, the Timorese independence fighter icon and outgoing prime minister. His CNRT party topped the poll in Saturday's election with 36.6 percent, just under 173,000 votes.

On Sunday afternoon he spoke for an hour to staff party headquarters in Dili, thanking them for their effort but expressing disappointment that his party failed to attain the overall majority that would allow it govern alone, after heading a fractious 2007-12 coalition government made up of five parties.

"We will discuss among ourselves in coming days, we have at least three options," said Gusmao as party colleagues whooped and chanted in the tarp- covered backyard of the party office. His party won seats, less than the 33 needed for a majority, but putting it in a strong position to form a coalition with one of the four parties that broke the 3 percent support ceiling for getting seats in the Timorese legislature.

Nearest rival Fretilin won 24 seats, which means it would have to either make an unlikely deal with Gusmao's erstwhile coalition partners, the Democratic Party (PD), or, as former East Timor president Jose Ramos-Horta has suggested, form a big tent coalition with Gusmao, which would effectively leave East Timor without an opposition. On Tuesday Fretilin leader Mari Alkatiri said that his party wanted to be in government.

Gusmao's stature as independence leader seems to have helped his party increase its share of the vote, up from 18 seats in 2007. During Indonesian rule, Gusmao's resistance leadership inspired bravery among other Timorese, tales of which came out on Saturday during otherwise innocuous polling day interviews.

Outside a sun-blasted polling station near Dili's tiny international airport, Paulino Lay reluctantly told his story: "I was the one who brought the first foreign journalist to meet Xanana Gusmao in the jungle near Ainaro during the resistance. It was in 1990, it was such a difficult and dangerous mission," he recalled.

"People risked their lives – not just me – to help the reporter to get into Timor-Leste and to interview Xanana." He says they wanted to raise awareness of the Timor cause internationally, 15 years after Indonesia's invasion of the former Portuguese colony.

"After the interview was broadcast, the Indonesians figured out that it was my car that was used to take the journalist to the mountains," he said.

He fled, hoping to get to Portugal, but didn't feel secure enough to try to board a flight via Indonesia. "I hid out in Jakarta for 9 years," he said. "I came back to my homeland in 1999."

That was the year Timorese voted to secede from Indonesia, after a brutal 24-year occupation that was never recognised under international law despite the death of around one-third of East Timor's population.

Now 10 years into independence – the UN ran East Timor from 1999 to 2002 -- Timorese are at a decisive point in their history, with questions over how to manage and spend the country's oil and gas revenues, currently over $10bn, from which almost 90 percent of government spending will come this year.

Also looking to the future is Fernanda Borges, outspoken leader of the National Unity Party (PUN) and, until now at least, considered one of East Timor's next generation of political leaders.

PUN went into the election with three seats after winning 4.5 percent of the vote in 2007. This time, however, the party dipped to under 1 percent losing all its seats. Twenty-one parties contested the election, with a 74 percent turnout but with a fifth of all votes going to parties such as PUN that failed to top the 3 percent bar for getting a seat.

While the election was peaceful, with no sign of ballot box cheating, Borges alleges that a lot of money was spent by bigger parties, ensuring that smaller ones were squeezed. "From what I have heard, there was a lot of vote-buying in the districts," she said. "CNRT had a lot of money to throw around, as did some of the newer, smaller parties, and it is not clear where this came from."

Borges said such sharp practice does not augur well for a tiny young democracy that is for now highly dependent on natural resources. "If we think we can act like this, it will cost us in our future development," she said, adding, "we need to be clean."

The last East Timor government was hit with several corruption allegations, including a jail sentence for the former justice minister, as increasing oil and gas revenues saw a fourfold jump in government spending.

If returned as prime minister, Gusmao says he will use the energy largesse to improve East Timor's cratered, winding mountain roads and upgrade the country's power and clean water supply. When asked about criticism that his previous government spent too much money on the wrong things, he implored that "we need to invest now, while we can, otherwise we will remain stuck at this level, a poor country."

East Timor considers rainbow government

Sydney Morning Herald - July 10, 2012

Michael Bachelard and Mouzinho Lopes – East Timor's sometimes fractious politicians are contemplating the extraordinary – forming a government of national unity in which all parties would govern together.

The two major parties, Fretilin and CNRT, are being urged to join in a "big tent" coalition by the former president, Jose Ramos Horta, and the influential Catholic Bishop of Dili, Alberto Ricardo. Bishop Ricardo urged the nation's politicians to "receive and embrace each other" with "co- operation and unity".

The prime minister in the last government, Xanana Gusmao of the CNRT party, was waiting for a final declaration of a result and made no public comment yesterday except to tell supporters that the party has "at least three options" for forming government. This appears to include the possibility of an alliance with Fretilin, the former opposition.

Fretilin's president Francisco "Lu Olo" Guterres and its secretary-general Mari Alkatiri have also signalled their willingness. "Fretilin will indeed [join] this government," Mr Guterres said. "CNRT won more, [but] Fretilin will participate in this government."

Mr Alkatiri, a former prime minister, said the result showed Timorese wanted to strengthen national unity. Such an outcome would leave the country without an effective opposition during a time when a number of the government's policies – particularly the amount being spent from its $10.5 billion petroleum fund – are contentious.

However, in East Timor's system, the prime minister and other ministers are often not members of Parliament. Observers say it's possible that with an executive made up of all the elected parties, the Parliament itself might apply the kind of scrutiny usually provided by the opposition.

The final result of Saturday's election had yet to be announced by the electoral authority, but CNRT was in the box seat to form a government. It's likely to have won 30 seats to Fretilin's 24 or 25 and the Democratic Party's eight. A new party, Frenti-Mudanca (a breakaway from Fretilin) has won two. A third minor party, Khunto, may also take two seats.

In the 2007 election, Fretilin won 21 seats – three more than CNRT – but Mr Gusmao's party proved more adept at negotiating coalitions, and ended up forming the government.

Formal coalition discussions are not yet under way, but shortly after the preliminary results were announced on Sunday afternoon, Democratic Party secretary-general Mariano Assanami Sabino went to a meeting at CNRT's headquarters. CNRT secretary-general Deonisio Babo said the Democratic Party leaders were there to congratulate CNRT on its success.

Frenti-Mudanca president Jose Luis Guterres also paid a visit to the CNRT headquarters at about 6pm local time on Sunday. "Your house that run strongest in the election," Mr Guterres told Mr Gusmao. Sources said the two party leaders had talked informally about forming a new government.

Mr Babo said his party had not yet made any decisions but would put the interests of the nation above the interests of the party. "First, [we] must put the state's interests at the top and the party's interests in the second place, and [we] must think about what is best for the people," Mr Babo said at CNRT's Bairro dos Grilos headquarters. "Four parties will enter Parliament. We will talk to each other about what is best."

East Timor PM's party wins parliamentary election – provisional result

Reuters - July 8, 2012

Tito Belo, Dili – The party of Prime Minister Xanana Gusmao has won East Timor's parliamentary election, but was short of a majority, provisional results showed on Sunday, raising the prospect of a coalition government in Asia's youngest nation.

With all the ballots counted from Saturday's poll, the National Council of Timorese Resistance (CNRT) party led by Gusmao, a former guerrilla leader, had 36.7 percent of the vote, election commission official Tomas Cabral said.

The opposition Fretilin Party, also a key player in securing independence from Indonesia, scored 29.9 percent. The Democratic Party lay third with 10.3 percent, placing it in a key position in any bid to form a government.

"The result makes us even more curious about who would form the government," said Antonio dos Reis, a veteran independence fighter. "But for me, these parties should unite and form a united government so that we can start developing this country."

With negotiations on a coalition almost certainly ahead, voters huddled around radios to hear the latest tallies, while many followed results posted on Facebook and Twitter.

"What we will see in the next two or three weeks is a lot of discussion between CNRT and the Fretilin about the potential arrangements for the foundation of the government," said Silas Everett, country representative for the Asia Foundation. "The discussions will probably result in either a coalition or a minority government."

The CNRT based its platform on seeking foreign loans to build infrastructure in one of Asia's poorest country with high youth unemployment. Fretilin opposes resorting to loans.

However, Everett said that if the parties could bridge their differences, the resulting coalition would produce a more stable government able to proceed with economic development. CNRT is open for talks following the result announcement, said Dionisio Babo Soares, the party's secretary general.

The party targeted to win 44 seats but would only get around 30 of the 65- seat parliament based on the result. Official results are expected on July 17. The government has said a new administration will be formed by August 8.

Indonesia invaded East Timor, a former Portuguese colony occupying half an island at the eastern end of the Indonesian archipelago, in 1975.

It spent decades trying to crush opposition to its rule before the territory won independence following a UN sponsored referendum. A UN mission promoting stability remains to this day.

East Timor has enjoyed stability and peace in the past five years, following a factional conflict in 2006 and attempts to assassinate then- president Joes Ramos-Horta and Gusmao in 2008. The United Nations, which has said its mission will end in December, lauded Saturday's election as peaceful and orderly.

Gusmao consolidates power in East Timor elections

Sydney Morning Herald - July 8, 2012

Michael Bachelard – East Timor's Prime Minister Xanana Gusmao has consolidated his power and extended his lead over the country's opposition, winning the largest bloc of votes in the country's parliamentary elections.

With about two-thirds of the vote counted, Mr Gusmao's CNRT party has won 37 per cent, compared to Fretilin's 30 per cent, and the Party Democrats with about 10 per cent of the vote.

Academic and election observer Damien Kingsbury said the Democrat Party and CNRT had been involved in coalition discussions last week, and were likely to join together – as they have since 2007 – to form a government.

Two other minor parties, Frenti-Mudanca and Khunto, will be represented in the parliament, but the vast bulk of the 21 parties who contested the election, including some in the former Government coalition, did not reach the 3 per cent threshold for parliamentary representation.

This means, according to Kingsbury, that 20 per cent of voters will not have a representative in parliament. It also means that a 37 per cent overall vote will translate into well over 40 per cent of seats in the 65- member parliament.

The election is being seen as a key test of the stability of the young democratic state, and it has so far passed peacefully. The director of the Election Administration secretariat Tomas Cabral said he believed that the counting would finish today, and that it went well in all territories.

It's also unlikely, given CNRT's high vote, that the horse-trading between parties for power will provide any opportunity for unrest. However, it is likely now that Fretilin, whose vote remains stubbornly fixed at about 30 per cent, will go through some soul-searching of its own.

Its leader, former prime minister Mari Alkatiri, is unpopular and renowned for his abrasive style. Political sources in East Timor say it is likely that younger members of the party will now seek to replace him as leader.

Since 2007, Mr Gusmao, a former resistance leader and head of the CNRT party, has been the Prime Minister at the head of a coalition called AMP. That coalition became increasingly fractious towards the end of the last term, with East Timor's third party, the Democrats, agitating internally.

However, according to Dr Kingsbury, they have already agreed to negotiate a new coalition agreement, which would give Mr Gusmao a "comfortable majority in parliament".

Mr Gusmao will also have a good relationship with the new president, former head of the army Taur Matan Ruak, whom the Prime Minister backed in the presidential poll earlier this year. His relationship with the former president, Jose Ramos Horta, had deteriorated in the lead-up to the presidential election as Mr Ramos Horta became more open in criticising Mr Gusmao.

Yesterday's result, which should be confirmed with a final vote in the next 24 hours, is likely to see little change from the policies that the AMP government have implemented, including massive spending from the country's $10.5 billion Petroleum Fund in an attempt to improve infrastructure and kick-start a non-oil economy in the tiny country.

The $10.5 billion Petroleum Fund, which last year provided 97 per cent of East Timor's budget spending, is large but finite, and the Opposition Fretilin Party had accused Mr Gusmao of frittering it away for no real gain.

Civil society groups have also worried that the fund is being spent too fast, leaving too little legacy for the future.

The financial management of the fund will also come under scrutiny after the election, after this website revealed that the chairman of its Investment Advisory Board, Olgario de Castro, had been bragging to his friends about the amount of money at his disposal.

If the election and the process of appointing a new government continues in its peaceful manner, both the United Nations police and the Australian-led International Stabilisation Force will leave the country later this year for the first time since they were invited back in 2006. (with Mouzhino Lopes)

East Timor votes in parliamentary election

Reuters - July 7, 2012

Tito Belo, Dili – East Timor voted on Saturday in a parliamentary election in which Prime Minister Xanana Gusmao's party faces a stiff challenge from two opponents as it seeks to extend its term at the helm of Asia's newest and one of its poorest nations.

Gusmao told reporters he was confident his National Council of Timorese Resistance party (CNRT) would win 44 of 65 parliamentary seats on its platform of seeking foreign loans for infrastructure projects and expanding the amount of an oil fund used for the state budget beyond its current limit of 3 percent.

Gusmao, a guerrilla leader in the fight to end Indonesian rule, became the first president after independence in 2002.

The main opposition Fretilin party, also a key player in the fight to secure independence, opposes foreign loans and wants to maintain the percentage of the $10.5 billion petroleum fund used for the budget at current levels. Peace and stability are also key concerns for over 600,000 eligible voters in a country that saw factional violence in 2006 as well as in the period leading up to independence.

"I have given my vote and I hope my vote will not fall to the ground and go to waste, that what the parties have promised us, such as to open more jobs and create peace, will be realized," Floriano da Silva, a student, told Reuters.

Indonesia invaded East Timor, a former Portuguese colony occupying half an island at the eastern end of the Indonesian archipelago, in 1975. It spent decades trying to crush opposition to its rule before the territory won independence following a referendum. A UN mission promoting stability remains to this day.

Gas dispute

East Timor has offshore gas resources but is embroiled in a dispute over the exploitation of the reserves with Australia's Woodside Petroleum, which heads a consortium of firms developing the Greater Sunrise project gas field.

Despite its petroleum fund, about half the Timorese population lives below the poverty benchmark of $0.88 per person per day and 50 percent of children are underweight, according to a United Nations' report.

CNRT, the opposition Fretilin and the Democratic Party lead a total of 21 parties and alliances contesting the election.

There have been no reliable polls, but one analyst drew parallels between this election and a presidential poll won in April by Taur Matan Ruak, who defeated a Fretilin candidate and Nobel peace prize winner and incumbent Ramos Horta.

"If we were to look for indications about where this election might go, we can look to the presidential election. Because Ruak won, I think that probably gave a bit more momentum to CNRT," Cillian Nolan, a Southeast Asia expert with the International Crisis Group, told Reuters. Ruak ran as an independent but support from Gusmao helped him.

Whoever wins, a coalition government with the Democratic Party is a likely outcome. Official results are expected on July 17 and the new government will be formed on August 8, the government said.

A decade after independence, the United Nations said its mission will end in December and it will hand over to the state the task of policing a country in which street gangs remain a significant problem.

East Timor stages 'peaceful' parliamentary vote

Agence France Presse - July 7, 2010

Meagan Weymes – East Timor's voters went to the polls Saturday in parliamentary elections seen as a key test for the young and fragile democracy and likely to determine if UN peacekeepers can leave by the end of the year.

Polls opened at 7:00 am (2200 GMT Friday) and voting continued until 3:00 pm for some 645,000 registered voters, with authorities saying the elections had been peaceful.

There have been concerns that violence could reignite in the energy-rich but underdeveloped state if, as predicted, none of the 21 parties wins a parliamentary majority and a fragile coalition takes power. Presidential polls that were held over two rounds in March and April, however, passed off peacefully.

The United Nations sees Saturday's elections – and their aftermath – as the last big test that will decide whether its remaining 1,300 peacekeepers and other security staff can withdraw as planned within six months.

"I'd like to congratulate the citizens of Timor-Leste (East Timor) who in a free way cast their vote. It was a very peaceful and safe day," said Luis Carrilho, commissioner of the United Nations Police (UNPOL).

National police chief Longuinhos Monteiro also said "everything went well" during voting, and that his force would remain vigilant until the formation of a government next month.

"From now forward, until the forming of a government we will still execute our operation plan to make sure we guarantee the stability and tranquillity of our people," he told reporters.

The country has offshore fields of oil and natural gas and its Petroleum Fund has swelled to $10 billion, but corruption is endemic. Half of East Timor's 1.1 million people are officially classified as living in poverty, posing the main challenge for the future government.

"I want the government to look after infrastructure and improve healthcare for the people," said Martinho Afonso, a 55-year-old farmer, as he cast his ballot in the Dili suburb of Farol. "Things need to improve for the poor people in rural areas, where people have no home, no electricity, no water," he said.

The left-wing Fretilin party, which is synonymous with the pro-independence struggle, has campaigned on a populist platform of spending oil revenues to lift income and education levels.

The centre-left National Congress for Timorese Reconstruction (CNRT) is promoting longer-term investment on major infrastructure projects such as roads, electricity and water.

CNRT leader Xanana Gusmao, a charismatic figure and a resistance hero during the struggle for independence, is fighting to stay on as prime minister.

The elections and their outcome test whether East Timor, which celebrated a decade of formal independence in May, is ready to take on its own security.

A 450-strong International Stabilisation Force (ISF) – made up of troops from New Zealand and Australia – is also awaiting the outcome of the poll before finalising a pullout.

The United Nations Integrated Mission in East Timor (UNMIT) – with a total current military, police and civilian force of about 3,000 – was deployed in 2006, after a political crisis in which dozens were killed and tens of thousands displaced, with a mandate to restore security.

The only major violence since then was a failed assassination attempt in 2008 on then president Jose Ramos-Horta, the Nobel peace laureate who lost to Taur Matan Ruak in the recent presidential election.

Fretilin, which received the largest number of votes in 2007 but failed to form a coalition, has dismissed any talk of working with the CNRT on forming a post-election government.

"Fretilin should win, and I believe that even if we don't Fretilin will still have a political role in the future," said party president Francisco Guterres, popularly known as "Lu Olo," after casting his ballot.

Eyes on Timor's testing election

Agence France Presse - July 6, 2012

Dili – East Timor is about to face a crucial test of its fragile democracy in parliamentary elections that will determine if UN peacekeepers can leave.

The UN, after presidential polls were held peacefully over two rounds in March and April, says it will pull out its remaining 1300 troops within six months if the general election tomorrow goes well.

There are concerns that violence will reignite in the oil-rich but underdeveloped state if none of the 21 parties wins an outright majority and a fragile coalition takes power.

Following the end of Portuguese rule in 1975, East Timor was occupied by Indonesia for 24 years. About 183,000 people died from fighting, disease and starvation before the half-island state voted for independence in 1999.

The country has offshore fields of oil and natural gas. Its Petroleum Fund has swelled to $US10 billion ($A9.72 billion), but corruption is common and half its 1.1 million people are classified as living in poverty.

In the elections, the left-wing Fretilin party, which became synonymous with the pro-independence struggle, has a populist platform for spending the oil money to lift income and education levels.

The centre-left National Congress for Timorese Reconstruction (CNRT) wants instead to establish a plan for longer-term investment on major infrastructure projects.

Tomorrow's polls are due to be the last big test before East Timor, which in May celebrated a decade of formal independence, takes full responsibility for its own security.

The United Nations Integrated Mission in Timor-Leste (UNMIT) was deployed in 2006 after a political crisis. The only major violence since then was a failed assassination attempt in 2008 on president Jose Ramos-Horta, who lost to Taur Matan Ruak in the recent presidential election.

New Zealand MPs to observe East Timor's elections

NZ Newswire - July 4, 2012

New Zealand MPs will be among official observers of East Timor's parliamentary elections this weekend. Foreign Minister Murray McCully says five are going, meeting a request from East Timor.

They are Labour's Phil Goff, the Green's Kennedy Graham, NZ First's Barbara Stewart and Lindsay Tisch and Jacqui Dean, both National. Mr Goff and Mr Tisch are part of the Association of Southeast Asian Nations Regional Forum observer team, the other three are independent observers.

The July 7 election will also have a team of EU observers and a team of six EU election analysts.

It is a decade since East Timor, with a population of 1.1 million, gained independence from Indonesia, and it has suffered periods of political turmoil since then.

There are 24 political parties contesting 65 seats under a proportional representation system, and only two have a chance of winning.

They are the Congresso Nacional de Reconstrucao, led by Prime Minister Xanana Gusmao, and the Frente Revolucionaria de Timor-Leste Independente, which has been in opposition for the last five years. Neither is expected to gain an outright majority.

The observer teams will report on the fairness of the election and the integrity of the ballot process.

Graft & corruption

Timor fund chief makes light of $10.5 biilion account

Melbourne Age - July 4, 2012

Michael Bachelard – "If I've got $600 million a year... you'll partake in it," Olgario de Castro reassures his mates, his voice caught by a secret recorder as coffee cups clink in the background.

"I want the money, not the power!" he says at one point and, later, of another deal: "Last minute, we'll find $2 million!"

The conversation moves fast. It's often indistinct, full of in-jokes and threads of earlier discussions and it's impossible to say how much is bravado and how much a joke. It could be by any group of business wannabes big-noting themselves in a cafe.

The catch is that, in this conversation, Mr de Castro, the big-noter-in- chief, is a very important man to the fragile state of East Timor. He is the chairman of the board advising the government on where to invest the country's $10.5 billion petroleum fund – "the only money that stands between Timor Leste and even worse poverty and underdevelopment", according to respected local researcher Charles Scheiner.

East Timor goes to the polls this weekend, and the Petroleum Fund is at the very centre of politics there. Last year withdrawals from the fund made up 97 per cent of East Timor's budget spending. Outside of this fund and its earnings, according to the United Nations, the country barely has an economy.

Mr de Castro, a Darwin accountant and part of the tight-knit Timorese expatriate elite, chairs the Investment Advisory Board for the fund. He is also close to the person ultimately in charge of that fund, East Timorese Finance Minister Emilia Pires. The country's Central Bank plays the third key role.

Mr de Castro did not respond to requests for comment, but East Timorese Prime Minister Xanana Gusmao said through lawyers that he was "seeking advice and conducting an investigation" into the recording, after The Age provided it.

The recording, made in December 2010 but given anonymously to The Age by an Australian source last week, shows Mr de Castro being, at the very least, indiscreet and reckless.

Perhaps he is joking about spending millions of dollars intended to protect the future of one of the most impoverished peoples in the world. If he's not joking, his words are considerably more serious.

In response to ribbing from three Australian companions, Mr de Castro talks about opening a $5 million Swiss bank account, and about refusing an offer of a private jet and an apartment in Singapore because "I'd have to explain that".

He says he is going to live in England as part of "a separate deal altogether". Multimillion-dollar sums are tossed around – $600 million a year that he will control and in which his friends can partake, but which the vice-president of the World Bank in Washington had told him "was fraudulent".

There is talk of a $2 million furniture deal which would be approved, Mr de Castro says, but not until January 2011 because "we've got the budget to prepare".

He says he has been offered the job of finance minister in East Timor both by Ms Pires and also by the opposition party, Fretilin. But he exclaims repeatedly that he does not want it because: "I want the money, not the power."

Asked in the midst of this whether he cares about East Timor at all, Mr de Castro says: "Of course! A few billion dollars of infrastructure for free for the country. Isn't that a positive thing?"

And asked if Mr Gusmao is "on your side", Mr de Castro replies: "Xanana is for me. Xanana is for me to make it happen."

This may well be a joke, but for someone in his position, even shooting the breeze on an issue like this is ill-advised. The politics of the petroleum fund heated up considerably last year. Until now the money has been invested conservatively, overwhelmingly in international bonds, but late last year, the Gusmao government changed the rules to allow half to go into equities, and a further 10 per cent as collateral for loans.

The idea was to diversify the country's investments, but the opposition party Fretilin, which set up the fund and its conservative principles, opposed the change, warning it would open it up to the sort of fly-by- nighters who robbed tiny Nauru of all its mineral wealth, mostly through dodgy property deals.

Mr Scheiner, a researcher at the respected East Timor policy analysis group La'o Hamutuk, has also warned against the changes to the fund. Though he says the country's leaders and its people have had long experience of violence inflicted by foreigners, they "may still be a little naive about how easy it could be to steal their resources".

"As a small, inexperienced country with a big bank account, [East Timor] is a tempting target for unscrupulous people who want to convert the nation's petroleum wealth to their personal gain," Mr Scheiner said.

Already one attempt has been made to scam the fund. In September 2009, a proposal was put forward by a group called Asian Champ Investment, that East Timor put $1.2 billion into its private bank account for a year. In return the country would receive $90 million "interest" up front.

"When I told one foreign ambassador about it in 2009," recalls Mr Scheiner, "he said, 'I get emails like that from Nigeria every day'."

But in East Timor, the proposal was given a serious hearing. The minister passed it to the Investment Advisory Board. The board wrote a formal reply, signed by Mr de Castro, recommending the minister reject it.

Curiously, though, the government has been reluctant to release a full explanation of how the proposal got that far. And the Singaporean businessman who proposed the deal to East Timor, Datuk Edward Ong (who claims he only acted as a go-between) had previously been approved by the government for a massive five-star hotel project on the outskirts of Dili -- a project which is stalled and well overdue.

The tape, which was recorded in December 2010, 15 months after the deal was scuppered, captures Mr Ong's name, but in confusing circumstances. "He told me that he had the finance approved independently, but... he lied to me," Mr de Castro says, in apparent reference to the Singaporean.

Now that legislation makes East Timor's billions more footloose, Mr Scheiner is worried. "Although Timor-Leste's revenue management system is better than most oil-dependent countries, it is not leakproof and it appears to be weakening," he says. "We are afflicted by the 'resource curse'."

Development & infrastructure

East Timor is changing, but not fast enough

Global Post - July 6, 2012

Helene Hofman, Dili, East Timor – Grace Gunawon, 22, remembers Dili before East Timor gained independence from Indonesia, when it wasn't safe to play in the streets after dark.

But like most of the world, she witnessed the worst of the violence – the clashes in the lead-up to the 1999 referendum on independence and the 2006 gang riots – from a distance.

"My family went to Indonesia when things got really bad," she explains one balmy Saturday night at an outdoor street soccer tournament she helped organize with some friends. "We had to leave."

Gunawon spent the rest of her childhood in Indonesia, and went on to study marketing at a university in Jakarta. Then in March, as East Timor approached its 10th anniversary of independence, the Gunawons decided it was time to return home. "We knew we would come back one day. Everyone does. Now the situation is more stable; things are getting better."

Better socially perhaps, but on the economic front there is still a long way to go. Gunawon would have liked to pursue a career in marketing, but those roles don't yet exist in East Timor, where the private sector is still in its fledgling stages. That's why she has spent most of her free time over the last few months organizing this street soccer event.

The country is in the midst of major changes and, after a decade or more overseas, many East Timorese are now repatriating. The parliamentary elections on Saturday will be the country's first without United Nations assistance, and in December, the organization is set to withdraw its peacekeepers entirely. Australia says its stabilization mission is also nearing an end.

But unemployment is high, and East Timor is still one of the region's least developed countries. Of the 1 million-plus people in East Timor, two-thirds are under the age of 30, and officials say between 50 and 60 percent of those are out of work. About half of the population lives in poverty, according to the United Nations, and the literacy rate is among the lowest in Asia at less than 50 percent.

Things are changing, but not fast enough for Gunawon and her peers. The education and experiences they collected overseas have prepared them for opportunities their home country can't offer.

"Dili is changing. I got back two years ago and even since then it's different," says Ricky Osorio, 25, who also spent many years in Indonesia. He chats enthusiastically about the country's first shopping mall, Timor Plaza, which opened earlier this year, and mentions the development of the seafront.

"But, Dili can be so boring. Doesn't it seem quiet? And it's so small you can walk from one end to the other. When we were students in Jakarta we went out with our friends. Mostly we just hang out at each other's houses here," he says.

"Actually I mainly look forward to holidays in Bali so I can go out," Gunawon laughs. The Indonesian resort island is just two hours away by plane and – along with Singapore and Darwin in northern Australia – is the only international destination linked by commercial flights.

Osorio lives in the family home with his brother who is also in his 20s. He has an MBA and his brother is a qualified civil engineer. But, like Gunawon, they haven't heard of any jobs they'd like to apply for.

The government is the main employer in East Timor and the only other opportunities are in the oil industry or with the NGOs that have been set up since around the time of independence.

Gunawon and Osorio are more fortunate than the majority of their peers. They will never be forced to flog cigarettes and bunches of fruit on the street like the children of the city's poorer families. They are privileged to have been educated abroad.

Schools in East Timor were regularly disrupted by the conflict. Classes were delivered in a confusion of Indonesian, occasionally Portuguese, Tetum and other local languages. Even today, the schools suffer from a lack of funding and there are rarely enough chairs for all the students in a class.

But the staggering youth unemployment rate does not discriminate. "It is very hard to find work," says Tonilia De Fatima Dos Santos, a researcher with the Timor-Leste Institute for Development Monitoring and Analysis, La'o Hamutuk.

She stayed in East Timor throughout the unrest and found herself competing for roles with many who grew up and studied overseas. "I always hear and I always see that there are families with maybe 12 children and in that family no one has work. This is not a small number, it's the majority."

Despite being among the brightest in her class, De Fatima Dos Santos sent off countless job applications before getting even one reply. "The government does not realize how important this is for the stability of East Timor," Gally Araujo says of creating opportunities for young Timorese.

He recently returned from Portugal. His family fled there in 1991, after the Santa Cruz massacre in which troops fired on mourners attending a funeral, killing more than 250.

Araujo has ambitions to start an eco-tourism business, and currently coaches a youth soccer team in his spare time. Like most Timorese, he is concerned about the influence of gangs in Dili. At the time of the 2006 riots, there were at least 13 gangs operating in the capital. There may be fewer now but local youth organizations suggest that seven out of 10 young men will still end up joining one.

"There is nothing for young people to do," Araujo says. "There are too few opportunities. They need structure, they need motivation, otherwise it becomes a problem."

For new East Timor government, poverty is prime challenge

Agence France Presse - July 6, 2012

Vincent Souriau – The abject poverty visible only an hour's drive out of East Timor's capital illustrates the challenge facing the government that takes over one of Asia's poorest countries after elections on Saturday.

Thirteen years after the end of an Indonesian occupation that left over a quarter of its population dead, East Timor is struggling to lift its people out of poverty despite potential riches from offshore energy.

In the village of Lora Lau, children walk barefoot and eat from the bare ground in slums. Olandina Guterres, 40, makes a meagre living for her large family selling baskets and hats from braided banana leaves.

"I consider myself fortunate. Here we just received electricity, even though power cuts are frequent," said the former teacher. "There is progress, but it's very slow."

Her neighbour Mariano Pereira is a farmer, like 80 percent of the working population. "It is difficult to find food. I have no good job to earn money, only farming. It is barely enough to feed my family. We can't afford to sell our products, we don't produce enough," Pereira lamented.

The guerrilla war against Portuguese colonisers who left in 1975, and the conflict triggered by the 1975-1999 Indonesian occupation that followed, destroyed the economy of this half-island nation.

Despite more than $1.5 billion poured into the country by international donors between 1999 and 2011, according to official figures, almost half of the 1.1 million population still lives below the international poverty line.

New President Taur Matan Ruak, a former guerrilla leader who was elected separately to the parliament that is being chosen on Saturday, has promised to tackle poverty and reduce unemployment, which runs at 20 percent.

"We must invest in favour of trade, infrastructure and education... (and) we need to create development centres outside major urban centres," he said in an interview with AFP.

In Dili, the presidential palace and a few government buildings built with Chinese funding are nearly the only visible signs of development.

Despite international aid, agricultural productivity remains one of the lowest in Asia. This year, the UN's Food and Agriculture Organization is increasing cereal imports by 9 percent. "The agriculture sector needs to be tremendously increased and valued," said Charles Scheiner of the non- governmental group La'o Hamutuk.

Promising oil and gas reserves have raised hopes of an economic boom that has yet to materialise, while energy revenues have already become the lifeblood of the economy, contributing to more than 90 percent of state funding.

"The core of the economy should focus on the production of simple things – water, candles, cigarettes, beer – for local consumption," said Scheiner. "But unfortunately, that is not very glamorous. The government would much rather dream about oil refineries, which is going to drain what is left of the oil money and leave the people with nothing," he said.

The International Monetary Fund (IMF) calls East Timor the "most oil- dependent economy in the world".

In 2011, the government launched a Strategic Development Plan to improve infrastructure, education, healthcare and training by 2030. But the IMF has recommended moderate investment projects in the short term, fearing a faster pace would feed inflation and squeeze the poor even more.

Of the two leading parties contesting Saturday's parliamentary election, the left-wing Fretilin party has a populist platform for spending the oil money to lift income and education levels.

But the centre-left National Congress for Timorese Reconstruction would prefer a plan for longer-term investment on major infrastructure projects.

Foreign affairs & trade

Former East Timor president still sees value in Indonesian relationship

Agence France Presse - July 19, 2012

Ulma Haryanto – Former East Timorese President Jose Ramos-Horta stressed the need to maintain border security with Indonesia as a key part of improving the already close relations with Jakarta.

"Indonesia will forever be our most important neighbor," he said in an appearance on the "Insight Indonesia" talk show on BeritaSatu TV on Wednesday. "We need the friendship and understanding for the stability on our borders."

He added that East Timor was also relying on Indonesia's support to gain membership in the Association of Southeast Asian Nations.

The 62-year-old Nobel Peace laureate, in Jakarta for the inaugural "Peace and Reconciliation in Southeast Asia" forum hosted by the journal Strategic Review, acknowledged calls to press Indonesia for an apology over the violence that gripped the former Indonesian territory following an independence referendum in 1999.

Rights groups like the Commission for Missing Persons and Victims of Violence (Kontras) have demanded that Jakarta offer an official apology to East Timor and hold retired Gen. Wiranto responsible for the post- referendum upheaval that left more than 180,000 people dead from fighting, disease and starvation.

"[An apology] is absolutely necessary as a manifestation of commitment to the agenda of truth and reconciliation for Timor Leste," said Indria Fernida, the Kontras deputy coordinator. But Ramos-Horta said there were other pragmatic state interests at stake in the two countries' relations.

"We are also sympathetic to post-Suharto Indonesia," he said. "Indonesia was in turmoil, there were dramatic changes, an end of a 30-year regime. I said so many times over the years to our people, [that] we freed ourselves in 1999 because Indonesians freed themselves."

Ramos-Horta also discussed the presidential election in his country in April, in which he lost his bid for re-election. "I handed over a country at midnight on May 19 that was peaceful and prospering with double-digit growth in the last five years," he said. "It is [the new government's] responsibility to build on that and to do even better."

He lauded the election process as "remarkable," both at the technical and administrative levels. "There was not a single incident or complaint lodged against the behavior of political leaders, parties [or] the national police," Ramos-Horta said.

He said he hoped that the new president, Jose Maria Vasconcelos, and Prime Minister Xanana Gusmao could sustain peacemaking efforts, especially in light of the scheduled withdrawal of some 1,300 United Nations peacekeepers by the end of the year.

"The president and the prime minister have to manage this situation with absolute prudence and wisdom to continue the healing process that was started in 2007," he said.

He added that angry demonstrations that erupted in the capital, Dili, earlier this week were nothing that the country's own security forces could not handle. "It was essentially a problem of law and order," Ramos-Horta said.

He also spoke of promising infrastructure projects that would take place over the next five years, including a new airport, schools and housing. "It will be a massive investment, but it is guaranteed," he said.

He said that even though East Timor's petroleum fund alone could finance all the projects, the government had signed a $100 million soft loan agreement with Japan. "Talks are also under way with China for a concessionary loan for infrastructure projects," he added.

Former East Timorese President Jose Ramos-Horta spoke on Wednesday about the growing relationship between his country and its former ruler.

Mining & energy

East Timor moves to collect taxes owed to it by oil companies

Macauhub - July 12, 2012

The government of the Republic of Timor-Leste (East Timor) has started legal action against a number of international oil groups, including Conoco-Phillips, in order to recover taxes that the government says have not been paid, according to a statement issued Tuesday in Dili.

Explaining the legal action based on the oil companies' legal obligations resulting from production contracts signed for the Joint Petroleum Development Area (JPDA), the statements aid that the East Timor government had hired lawyer and US ambassador Pierre-Richard Prosper to advise it and to represent the country on issues related to investments and development of infrastructure in the oil sector.

Following audits carried out by the Timorese authorities 28 evaluations were carried out against oil companies, and the secretary of state for Natural Resources, Alfredo Pires said that the debt was of "hundred of million or possible even billions."

According to the terms of the JPDA, 90 percent of revenues belong to East Timor and the remaining 10 percent to Australia, and Ambassador Pierre- Richard Prosper called on agents of the Australian Tax Office to carry out audits to establish the amount of taxes paid so far. (macauhub)

ConocoPhillips challenges tax reassessment action in East Timor

Bloomberg - July 12, 2012

Joe Schneider and James Paton – ConocoPhillips, a US oil and gas producer, challenged a new tax assessment by the government of East Timor that may add billions of dollars to the Asian nation's treasury.

ConocoPhillips and about a dozen other companies involved in gas production have been "aggressive" in the use of deductions to lower tax payments, said Pierre-Richard Prosper, a Los Angeles-based partner at Arent Fox who represents East Timor in the case. The Houston-based company sued after the government rejected the deductions, he said.

East Timor gets 90 percent of revenue from petroleum developments in the Timor Sea while Australia receives 10 percent, according to an agreement between the two countries after the Asian nation split from Indonesia in 2002. The Bayu-Undan field in the region, which is operated by ConocoPhillips (COP), may be worth $15 billion to the 10-year-old country, according to Australian government estimates.

"As far as we're concerned, we've paid the taxes that have been assessed," Robin Antrobus, a Perth-based spokesman for ConocoPhillips, said by phone today. "We have some disagreements with some of the assessments, not all, and we will pursue the remedies available to us."

Bayu-Undan is connected by pipeline to the Darwin liquefied natural-gas project in the Northern Territory, one of three LNG ventures operating in Australia. The development is being followed by $180 billion of additional LNG projects under construction in Australia to meet rising Asian demand.

Tax audits

East Timor hasn't been able to enforce its tax code until recently and has been conducting an audit of petroleum production for the past 12 to 18 months, Prosper said. The audit found deficiencies in a series of assessments on a range of operations, he said.

"It is a David and Goliath fight," Alfredo Pires, East Timor's Secretary of State for Natural Resources, said in a July 11 statement. The oil and gas companies owe "hundreds of millions, possibly billions" of dollars, he said.

No court dates have been set for the tax hearing, Prosper said. The government can press for back taxes owing and add additional penalties, according to the tax law, he said. "I wouldn't want to put a specific number on it," he said, but "it's a significant amount of money."

The East Timorese government is examining the scope of offshore energy production and auditing existing projects such as the Bayu-Undan and reviewing new developments such as Sunrise.

Sunrise dispute

Woodside Petroleum Ltd., (WPL) Australia's second-biggest oil producer and leader of the Sunrise project, has been in dispute with East Timor over how to develop the gas field.

East Timor is pressing for the construction of a plant, while Woodside says it would be too expensive. Pipeline construction and an onshore processing plant would add about $5 billion to the cost of the project, Woodside has said.

Costs to build gas developments are rising, with BG Group Plc (BG/) saying in May that gains in the Australian dollar, higher labor and material costs and increased regulatory expenses boosted the bill for its Curtis LNG project in Queensland state by 36 percent.

Prosper said the pipeline issue, and the tax dispute, are open to negotiations as East Timor seeks to establish itself as an economically stable neighbor for Australian. "It would be one less country to worry about in an unstable region," he said. "We're using all the tools available."

East Timor seeks 'unpaid taxes' from foreign oil

Agence France Presse - July 11, 2012

East Timor is seeking "possibly billions" of dollars from foreign oil companies, including US-owned ConocoPhillips, in unpaid taxes, the government said in a statement received Wednesday.

The government has begun an auditing process, hoping "to recover substantial monies it believes are rightfully owed... under legal obligations", the statement said.

The companies under audit operate in the Joint Petroleum Development Area in the Timor Sea, whose resources are 90 percent owned by East Timor and 10 percent owned by neighbouring Australia.

The statement did not explain the timeframe or how many companies would be audited, but it said the government had so far made 28 assessments against several companies. The only named company, ConocoPhillips, could not be immediately contacted.

"It is a David and Goliath fight," said Secretary of State for Natural Resources Alfredo Pires, adding that "hundreds of millions, possibly billions" is owed.

The cause is backed by lawyer Pierre-Richard Prosper, a former US- Ambassador-at-large for war crimes, who will represent the state. Prosper said that during the auditing process, authorities "are discovering that there are large areas where there were discrepancies".

East Timor is one of the world's youngest nations, winning formal independence just a decade ago. It is one of Asia's poorest countries and its economy relies heavily on energy reserves, which make up 90 percent of its GDP.

The International Monetary Fund has described East Timor as the world's most oil-dependent nation.

East Timor poll of keen interest to Woodside

Melbourne Age - July 7, 2012

Peter Ker – Academics and other dedicated election observers will not be the only Australians watching today's East Timor election with interest.

Thousands of kilometres away, Perth oil and gas executives will be taking more than a passing interest in the young nation's latest effort at peaceful democracy.

Few companies have more riding on the make-up of East Timor's next parliament than Woodside Petroleum, whose vast Greater Sunrise gas project remains stalled under the weight of politics in the poverty-stricken nation.

Development of the lucrative gas and condensate asset – which is in a territorially disputed patch of sea floor between Australia and East Timor -- has been frustrated by disagreement over how the gas should be processed.

East Timor wants the gas piped to a processing plant on its shores, while Woodside and its joint venture partners – Shell, Osaka Gas and ConocoPhillips – doubt the feasibility of that option, and prefer a floating processing ship as the best alternative.

Today's election threatens to change the face of negotiations between East Timor and Woodside.

While neither of the two major political parties in East Timor is explicitly campaigning for Woodside's floating policy, Damien Kingsbury, a humanities professor at Deakin University, said the company might find life easier under a coalition led by the Fretilin party.

"The principal difference is that Fretilin said several months ago that it would now look at doing a deal with Woodside," he said, after spending much of the past month in East Timor.

"They didn't say that explicitly. All they said is 'we would be able to do a deal and negotiate an outcome', so I think what that implies is they would look at some sort of arrangement that was a compromise."

Public comments by Fretilin's main rival – the CNRT party of the Prime Minister, Xanana Gusmao – appear more rigidly fixed to onshore processing.

Neither political party is expected to win government in its own right, with power likely to be formed by a complex multi-party coalition which may not be settled until next month.

"I think Woodside would be hoping whoever wins will calm down their nationalist rhetoric and start to negotiate seriously," Mr Kingsbury said.

Some analysts believe it is in Woodside's best interest to get a deal done before February, when East Timor can terminate the present international treaty that sets the rules for the development of Sunrise.

Few are optimistic that a deal can be struck soon, and there are signs East Timor might be preparing for life after the treaty. In January Mr Gusmao reportedly asked geologists to reinvestigate whether the two nations shared the same continental shelf.

Some interpretations of international law suggest that East Timor could claim 100 per cent ownership of Sunrise if the two nations are proved to share the same continental shelf. Such a scenario could leave Woodside in a weaker negotiating position.

Federal Resources Minister Martin Ferguson declined to give his view of that interpretation when contacted yesterday. Woodside was also silent on interpretations of the treaty's termination but said it was seeking "further engagement", including more data, from East Timor.

"Most recently we submitted a range of requested technical data and information to further clarify the various aspects of Greater Sunrise. We believe that with the involvement and support of both the Australian and Timor-Leste (East Timor) governments and a genuine intention by all parties to continue dialogue, there is an opportunity to arrive at a mutually beneficial development outcome," a Woodside spokeswoman said.

Mr Kingsbury said Woodside was believed to be offering a compromise arrangement under which development of Sunrise would see some onshore facilities built but not necessarily the processing plant.

Woodside, meanwhile, said it had not made any political donations or attended any fund-raising events for political parties in East Timor.

East Timor wants gas pipeline and plans to build supply base

Macauhub - July 2, 2012

The East Timor government believes that the choice of the south coast of the country for the new gas pipeline running from the Greater Sunrise field, which it shares with Australia, will prevail.

The Secretary of State for Natural Resources, Alfredo Pires told Macauhub that that, "several feasibility studies have been carried out," and that, "the results show that the gas pipeline to East Timor costs US$1 billion and to Australia it costs US$1.8 billion."

The aim is also to build a 1000-hectare supply base in the south of the country, which, "in ten or 15 years will create 40,000 jobs."

"Australia already has a gas pipeline and it makes sense to us and is fair that now we should get this one. Nobody would lose money. We are discussing this matter and carrying out comparative studies," said Pires.

The Secretary of State gave assurances that the issues raised by Australia, which could be a problem for the East Timor option, have already been refuted by the studies put forward by the Government.

In terms of distance, Pires said that the pipeline would extend over 150 kilometres to the East Timor coast [230 if more geologically troublesome areas are avoided] and over 530 kilometres to the Australian coast.

"We have the south coast mapped out and we have chosen a route for the gas pipeline. We have depths of 2,800 metres and the maximum could be 3,300 metres, with current technologies. We have done those feasibility studies," the Secretary of State said.

In May at the celebration of 10 years of the country's independence the Timorese government decided to present a small sample of the pipeline that it hopes to bring to the south of the country – and it did so in front of the Government Palace.

"We brought a small piece and said 'it's here' to confirm our position, show the technology and also to show the people what we are talking about. We have always been under pressure and now it is our turn to put pressure on the other side. We're ready."

According to Pires this is the "ideal investment," to apply the capital accumulated in the Oil Fund – the balance of the fund in April of this year was US$10.54 billion.

"An investment in the gas pipeline has a fixed return of 7 to 8 percent over 40 years. What I can say is that the option of East Timor is technically and commercially viable. We are in discussions but for us there is no other way," he noted.

One of Timor's big projects for the next few years is construction of a base to support energy exploration on the south coast of the country, in the area known as Tacimane.

The supply base – a model used in other oil producing countries – would be in the districts of Suai, Betano and Beaco.

"Suai will be the logistical support base for oil activities, Betano will be for the petrochemical industry, Viqueque and Beaco is where the Greater Sunrise gas pipeline will be. These are three points along a distance of 160 kilometres," Pires explained.

"For the supply base, Parliament ahs already approved US$100 million and US$45 million for the highway. We are now talking with the population, and we are buying the land as needed," Pires added. (macauhub)

Invasion & occupation

East Timor's stolen children

Global Post - July 8, 2012

Dili, East Timor, and Jakarta, Indonesia – Not until she was at the deathbed of the man presumed to be her father did Alexhia Cordova da Silva's life start to make sense.

Raised by an elite political family in Jakarta, da Silva had endured years of hushed rumors about her dark, Melanesian features at social events. On the street, "slumdog" and "monkey" were regular taunts.

And then in his last breaths, her father revealed the secret: She was East Timorese, snatched away from her mother and father when she was only 24 days old.

From 1975 to 1999, Indonesia fought a brutal war to suppress East Timor's independence movement and control the former Portuguese colony. A reported 183,000 died from fighting, starvation and disease during the war and human rights abuses were widespread.

But this had little relevance to da Silva until her family bombshell hit. And at 19, she reacted as any angry and emboldened teenager might. She ran away from home, left her law degree and Islam in the dust and made contact with the East Timorese Prime Minister Xanana Gusmao via Facebook. He became personally involved in locating her family.

"It was like an electric shock," says da Silva of first meeting her mother. "She told me she always knew I would come home."

With family connections in the banned independence group Fretilin, da Silva's illiterate parents say they feared for their lives if they didn't sign a document handing over custody of their daughter.

"They were under pressure," she tells me in a cafe near her Jakarta university, "My mother said to me, 'I knew you're were going to be a smart girl so I wanted you to have a good future, that's why I gave you to someone rich.' And OK, I can accept that."

Educated abroad and blessed with political connections that, somewhat ironically, led her back to her East Timorese family – da Silva is one of the lucky ones.

Some 4,000 children were transferred from East Timor during the 24-year occupation. Many of the Indonesian soldiers, civil servants and religious organizations that took in the children were motivated by altruism, genuinely wanting to help. But some were treated as pseudo-slaves, raised by soldiers who had murdered their parents. Others were confronted with the unfamiliarity of strict Islamic boarding schools.

Many of the children sent to Islamic boarding schools in Indonesia were very young and from poor and remote parts of the country. In many cases, their parents were coerced into handing them over on the promise they would receive a good education.

Sjamsul Bahari's mother permitted him to be sent to an Islamic boarding school in Bandung, West Java, in 1998. Nine years old at the time, Bahari was able to remember his mother and send her annual letters, but many others were too young.

"Lots of the children were only 2 or 3 years old, so they found it difficult to tell who they were," he explains during a tense interview overseen by two East Timorese Islamic leaders at Dili's An Nur Mosque.

Getting an Islamic organization to acknowledge that children were contentiously removed from their parents, forced to convert to Islam, and then shipped off to Indonesia is an undeniably fraught exercise. The issue is even more sensitive because East Timor is predominately Catholic.

But Bahari admits that in Indonesia, many of the East Timorese were stressed and unhappy. In the mid-1990s, he wrote to the organization that had sent them, the Nasrullah Islamic Welfare Foundation (Yakin) in Dili, for help. They never replied. No one helped and no one was ever responsible for the ones that ran away.

"That is the tragedy of it. In a lot of cases [the children] just disappeared and nobody knows where they are," writes Helene Van Klinken in her recently published book, "Making Them Indonesian: Child Transfers out of East Timor," which offers the first comprehensive account of East Timor's so-called "stolen children."

A secret military document suggested that soldiers should help promote the transfer of children in order to spread Islam in East Timor and that such "suggestions" were difficult for parents to deny. Dr Klinken also notes that the transfers were "conducted in a low-key, almost secretive manner" and almost certainly would have raised eyebrows if the children transferred were from wealthy and influential families.

Besides the one secret military document, the removals were arbitrary and never state policy, although it was former Indonesian dictator Suharto that started it. A year after Indonesia had invaded, 23 Timorese children were taken to meet the president and his wife at their private residence in Jakarta.

"The children became, on behalf of the East Timorese, putative members of his [Suharto's] family and by extension of the Indonesian family," explains Klinken.

The East Timorese rejected Indonesia's annexation, which was never recognized by the UN, but was supported by the US ostensibly to keep a key submarine passageway out of Soviet control. Klinken suggests the resistance to Indonesian occupation may have inspired Suharto's unofficial hearts and minds campaign.

The children sent to Islamic boarding schools were expected to return to East Timor and spread the Islamic faith. Others were raised with the expectation they would later promote East Timor's integration with Indonesia. Such motives echo the forced removal of Aboriginal children in Australia and babies during Argentina's dirty war, observes Klinken.

"Young children were the target of these transfer projects as they are impressionable and easily manipulated to serve political, racial, ideological and religious aims of the power holders to civilize and assimilate, incorporate and dominate, as well as to weaken the group to which the children belonged," she writes.

To be fair, da Silva admits she would possibly be dead or "married and pregnant" rather than foreign-educated and trilingual if she hadn't been raised in Indonesia. Still, that doesn't seem to make it less disorienting.

"I like Indonesia, but I don't really love it. I think that's because I am not really Indonesian, I just have my life here," she says unsteadily. The 19-year-old hasn't spoken to her Indonesian mother since she ran away from home late last year, and she doesn't exactly fit in with her dirt-poor East Timorese family either.

Her parents and more than 10 siblings live in a remote village six hours drive from Dili, a world away from Jakarta's mega malls and traffic jams. On top of that, da Silva can't even converse directly with her father. He only speaks Tetum and Portuguese, not Bahasa Indonesian.

It's a dislocating experience that human rights advocate Vitor da Costa knows well. When he returned to East Timor in his mid-20s, his grandmother cried at first sight of him, but they could only understand each other after they found a translator.

Before meeting his extended family (both his parents had died) he couldn't return to the village until they had performed an animist ritual to revive him. Believing he was dead they had already built him a tomb and carried out the funeral rites.

"Somehow I could feel that they were my family," says da Costa slowly, "although now I have to learn how to be an East Timorese again."

These days he works with a Jakarta NGO that helps to reconnect separated family members from his homeland.

The cases of child transfers are just one example of the rights abuses that scar East Timor's past. During the occupation, crimes against humanity and rape were widespread, and between 100,000 and 200,000 East Timorese were killed.

But almost no one has been held accountable. The country's reconciliation process is widely perceived as a sham, purely diplomatic exercise. With the exception of a few high-profile cases, it is unsurprising then that little has been done to help transferred children find their Timorese families.

The case of East Timor shows that compromising justice for stability has become a political and economic trade-off. In a country of more than 1 million, where 41 percent live below the poverty line and the majority survives off subsistence farming, East Timor's leaders have repeatedly espoused arguments in favor of development over due process.

That development, along with the security of the impoverished and underdeveloped nation, is premised almost entirely on a stable relationship with Indonesia - its largest trading partner and giant land-linked neighbor.

Yet the reality is that holding rights abusers to account would mean very little to people like Bahari. Nor to the mothers that seek him out at the Dili mosque with photos of their lost children.

For da Silva, meeting her family has been justice enough. Now 21, she hopes others will be able to have a similar experience. "Even if it is just for one hug, one kiss; one look in the eye."

Analysis & opinion

Falling short of majority, Gusmao set to form coalition government in Timor

The Conversation - July 17, 2012

Armindo Maia and Sue Ingram – Hopes and fears of an alliance between Timor-Leste's two major political parties, CNRT (National Congress for Timorese Reconstruction) and Fretilin (Revolutionary Front for an Independent East Timor), appear to have fallen away.

A special meeting of CNRT on Saturday discussed options for an alliance with other parties following the 7 July parliamentary election.

CNRT, with the largest single share of the vote although still well short of overall majority needed, seemed confident throughout last week that the decision on the shape of the future government would rest with it. While technically a third party, PD (Democratic Party), won a sufficient share of the vote to play kingmaker with either of the two major parties, this option gained little traction in Dili's rumour mill.

Close but not close enough

Preliminary results from the election put only four parties above the 3% threshold required to secure a place in the parliament. Under Timor's constitution, the president is guided by the parliament in his nomination of the prime minister. In effect, this means that the party or alliance of parties with a majority of seats determines who will be appointed.

Based on the preliminary results, CNRT expects 30 seats in the 65-member Parliament, trumping arch rival Fretilin which has 25, while PD expects eight seats and a new party, Frente-Mudanca, two.

CNRT, led by outgoing Prime Minister Xanana Gusmao, massively improved its vote share over the previous election in 2007 (36.7% compared to 24.1% in 2007) and came much closer to the overall majority it hoped for.

But coming close is not enough, and CNRT must form an alliance with another party or parties to form government. PD, with an expected eight seats and already a coalition partner with CNRT in the outgoing government, is the obvious alliance candidate and reportedly held discussions with CNRT in the week before the election.

Outgoing President Jose Ramos Horta threw his weight behind PD in recent weeks as a counterweight to Gusmao in the wake of the political estrangement between the two men and, in the weeks before the election, was also publicly advocating a broad alliance government including Fretilin.

With the results in, both Horta and the Catholic Bishop of Dili reportedly urged CNRT and Fretilin to join forces in government, and Fretilin was receptive. Others were less enthusiastic, with some sections of civil society warning of the dangers of a grand coalition that governs without the scrutiny of a parliamentary opposition.

Three roads to government

CNRT's special meeting on Saturday seems to have put paid to any hopes that Fretilin might be joining government.

Reportedly, CNRT president Xanana Gusmao made it plain to the meeting that a grand coalition including Fretilin was not his preference, although he was looking for party consensus on its approach. Arguing that parliament needed a strong opposition, he reportedly put forward three options for the meeting to consider:

1. CNRT in alliance with Fretilin
2. CNRT in alliance with PD and Frente-Mudanca
3. CNRT sitting on the cross benches in opposition

Unsurprisingly, it was announced after the meeting that the party had chosen the second option, to invite PD and Frente-Mudanca to join with it in a coalition government.

Party politics

A record 21 parties contested this election, seven more than in 2007. In the lead-up to Timor's independence, the UN hailed the proliferation of political parties as a positive achievement. More recently, the multiplicity of parties has been seen as risking inherently weak coalitions. CNRT was only able to form government in 2007 in an alliance with three other parties.

While not unstable, the multi-party Council of Ministers was at times fractious and divided. Three years into the life of the government, Deputy Prime Minister Carrasalao from PSD resigned, denouncing the failings of the government, and Prime Minister Gusmao has been publicly critical of the competence of some of his ministers (attracting the obvious rejoinder from Fretilin that as head of the Council of Ministers he should look to himself). It remains to be seen whether a coalition of three parties will be tighter in the next government.

Electoral casualties

A striking development with this election is the swathe that it has cut through many of Timor's political parties. The biggest casualty is PSD, which won almost 16% of the vote in 2007 in coalition with ASTD. Now, it is out of the parliament.

ASTD, whose notable leader, Xavier do Amaral, died recently, is also out of the parliament this time round. A further casualty is UNDERTIM, led by the colourful Cornelio Gama (L7 in his days as a resistance leader), who in 2007 counted on sufficient support from veterans in the east to just get the party over the three percent hurdle. A fourth casualty is PUN, a small party but one which made its presence felt in the parliament through the committee system. The final casualty is the three-party coalition of AD- KOTA-PPT which also just squeaked in to the last Parliament.

Voter turnout for the Parliamentary election was down on 2007: 74.8% compared with 80.5% the last time around.

Regional concentrations of party loyalty remained pronounced in this election, with Fretilin's support continuing strongest in the three easternmost districts where it eclipsed CNRT. Elsewhere, CNRT generally polled well ahead of Fretilin, although in two of the western districts they were fairly evenly pegged.

[Armindo Maia is PhD candidate at Australian National University. Sue Ingram is a PhD Candidate at Australian National University. An earlier version of this article was first published by the ANU College of Asia and the Pacific at the Australian National University.]

Wading deeper into an oily swamp

La'o Hamutuk Blog - July 13, 2012

Six weeks ago, Prime Minister Xanana Gusmao formally nominated two leaders from our oil and gas sector to develop investment policy for Timor-Leste's sovereign wealth fund. Unnoticed by the media and politicians, this action was not mentioned during the recent election campaign. However, La'o Hamutuk believes it foreshadows additional concentration of Timor-Leste's limited wealth in the petroleum sector, which could endanger our children's futures.

La'o Hamutuk often explains how the resource curse affects Timor-Leste's economy, policies and governance. One of the more dangerous symptoms is the "capture" of the policy-making process by the petroleum sector. Because oil and gas exports comprise most of our economy and paid for 97% of state expenditures in 2011, they attract capable, persuasive, imaginative people. When these people do their jobs well, they make enticing proposals and convincing arguments for developing the petroleum sector which divert attention and resources from health, education, agriculture, light industry, rural infrastructure and other essential components of sustainable, equitable, inclusive development. This is why the Tasi Mane project is the centerpiece of the National Strategic Development Plan, even though it is financially dubious, may be impossible to carry out and will create very few jobs.

Last year, the Government and Parliament revised Timor-Leste's Petroleum Fund Law, loosening rules about sustainable spending and secure investments, and weakening the governance of the Fund. One change was to enlarge the Fund's Investment Advisory Board (IAB), which develops investment policy and makes recommendations to the Minister of Finance about how the Fund should be invested.

On 1 June, Prime Minister Xanana Gusmao appointed two new members to the IAB. Dispatch No. 016/GPM/2012 named Francisco Monteiro and Gualdino da Silva to join Olgario de Castro, Kevin Bailey and Torres Trovik. Director of the Treasury Sara Lobo Brites (responsible for the nation's fiscal policies) and Central Bank Head Abraao de Vasconselos (responsible for Timor-Leste's monetary policies and Operational Manager of the Petroleum Fund) go to IAB meetings but can no longer vote.

Francisco and Gualdino have already participated in at least two IAB meetings. Unfortunately, the minutes of those meetings are not yet on the Central Bank website, and the Jornal da Republica (Official Gazette) has not yet published this Dispatch on its website or in its printed edition.

Francisco da Costa Monteiro became President of the new TimorGAP national oil company in September 2011. In the early 1990s, Francisco worked under Alfredo Pires in the office of President Xanana Gusmao. After Prime Minister Gusmao appointed Pires to be Secretary of State for Natural Resources in 2007, Francisco interrupted his geology Ph.D. studies overseas to return as Pires' Executive Advisor. He leads the Government's Sunrise Task Force and is on the Executive Board of the National Petroleum Authority. In addition, Francisco represents Timor-Leste on both Australia-Timor-Leste supervisory bodies for the Joint Petroleum Development Area: the Joint Commission which oversees the ANP and the Sunrise Commission which discuses technical issues about the Sunrise project.

As President of TimorGAP, Francisco is responsible to build and operate the multi-billion-dollar Tasi Mane project, which will include a supply base for offshore oil operations in Suai, an oil refinery in Betano, the Sunrise LNG plant in Beacu, a 150 km highway, ports, airports, new towns and other infrastructure. Tasi Mane will receive $163 million from the State Budget in 2012 and much more in the future.

Gualdino Carmo da Silva became President of the National Petroleum Authority (ANP) when it was created in 2008 after serving as Executive Director of its predecessor, the Timor Sea Designated Authority. The ANP signs Timor-Leste's contracts with oil companies, and regulates all aspects of petroleum operations in Timor-Leste proper and in the TL-Australia Joint Development Area in the Timor Sea, including exploration, production, processing, refining, distribution and sales. It also manages bidding for new exploration contracts and collects about $2 billion in royalties (FTP) from the companies every year. Although all money paid by oil companies is required to be deposited into the Petroleum Fund, the ANP retains a few million dollars for its own activities.

Dispatch 016/GPM/2012 says that "Both [new] nominees have proven experience in the oil sector and in management and investment."

Although Timor Leste has a shortage of skilled, educated people, expertise is not so rare that the busy people responsible to regulate and build our oil industry should spend their time on financial investment management, an area in which they have no training or experience. La'o Hamutuk believes that there may be another reason for appointing Francisco and Gualdino to the IAB - to encourage the investment of the Petroleum Fund in petroleum projects in Timor-Leste, particularly the Tasi Mane project and the Sunrise pipeline. Private investors are wary about expecting Tasi Mane to provide a good return on their money, and we think it would be foolhardy to risk Timor-Leste's sole resource endowment on such a risky project.

We agree with what Minister of Finance Emilia Pires said last year: that public money spent or invested to develop Timor-Leste should be appropriated through the State Budget in a transparent, democratic process. Such decisions should be made by our elected Parliament, not by "investment advisers." Article 15.1 of the revised Petroleum Fund Law says that the Fund can only be invested outside Timor-Leste, in internationally recognized jurisdictions, and we hope that this will continue to be followed in spirit as well as in letter.

In early July, the IAB received unwelcome publicity when newspapers reported a secretly recorded conversation. In a Darwin coffee shop in 2010, IAB Chairman Olgario de Castro bragged about hundreds of millions of dollars to share with his friends, saying "I want the money, not the power." La'o Hamutuk's blog discusses these revelations, hoping that de Castro can clear his name but pointing out that $10 billion dollars owned by a small, impoverished, new nation with little experience is a tempting target for unscrupulous, greedy people. One scam was attempted by Asian Champ Investments in 2009, and we are troubled by Mr. de Castro's references to aspects of that attempted theft – including perpetrator Datuk Edward Ong, Swiss and Singapore bank accounts, trips to London and infrastructure deals.

The IAB elected Mr. de Castro as its Chairman "for one year at a time" on 5 May 2008, and he has been re-elected only once, on 15 April 2010. We hope they pay more attention to protecting Timor-Leste's investments than they do to Article 2.2 of their own rules of procedure.

The Investment Advisory Board now has at least three members whose priority may be other than the security and return on Timor-Leste's Petroleum Fund, which is essential to support financial stability and intergenerational equity for this country. We hope that the Board does not lose its focus, and that the Minister of Finance and Prime Minister in the Fifth Constitutional Government will ensure that our resources are safely protected, wisely invested, and effectively used for the long-term benefit of our people.

East Timor's second major transition since independence

Christian Science Monitor - July 12, 2012

Simon Roughneen – The party of East Timor's prime minister won the majority of seats this weekend in peaceful parliamentary elections, paving the way for him to form another coalition government as the country faces its second major transition a decade after independence.

The elections come at an important juncture for the impoverished half- island country, which celebrated its 10th birthday May 20. The United Nations mission and police are slated to withdraw by 2013, by which time Australian and New Zealand troops who have been stationed there on a separate peacekeeping mission will have departed.

These changes will leave the young democracy standing on its own feet, and perhaps in a better position to pursue its goal of joining the regional bloc known as ASEAN, or the Association of Southeast Asian Nations. "The next five years are crucial for us," says former President Jose Ramos- Horta.

The economic stakes are high. The Timorese people are among the poorest in Asia, but the country has ambitious plans to become a middle-income country by 2030.

The country has recently accrued $10 billion to $11 billion in oil and gas revenue, but relies on one field called Bayu Undan – which could run dry as early as 2024 – for some 90 percent of spending. In 2010 East Timor had only $17 million in nonenergy exports to its name, a signal of just how dependent the government is on its oil revenue.

After the parliamentary results came in Tuesday, Kay Rala Xanana Gusmao, the likely next prime minister, appeared confident that the country could achieve its ambitious plans to become a middle-income country by 2030.

He places his hope in potential revenue from an untapped oil and gas field known as Great Sunrise, which, like Bayu Undan, is situated under the ocean between East Timor and Australia. The tapping of it is currently on hold, as East Timor wants to pipe the gas to its south coast, but the companies involved want to set up a floating liquefied natural gas plant instead.

"I believe we will achieve this goal," Mr. Gusmao says. "The next government needs to invest in human capital, education, health, and infrastructure," says Joao Alves Correia who voted near the country's main international airport, which has flights to only three destinations – Bali, Darwin, and Singapore – another indication of East Timor's relative isolation from international trade links.

While it was expected that the current prime minister and the Democratic Party (PD) would continue their alliance from the outgoing 2007-12 governing coalition, another option is for Gusmao's National Congress for Reconstruction (CNRT) to align with FRETILIN, the second-biggest party, with 25 seats.

"We have at least 3 options," said Gusmao in an interview at his party office in Dili, the capital, after the voting. His party won 30 seats, three shy of a majority that would allow it to govern alone.

Fretilin leader Mari Alkatiri on Tuesday repeated a call made before the vote for East Timor's old guard political leaders to forge a grand bargain -- regardless of the result – for handing power over to younger politicians. "Sooner or later we have to hand political power and leadership to the new generation," Mr. Alkatiri told Dili newspaper Tempo Semanal.

Alkatiri, Gusmao, and Mr. Ramos-Horta are veterans of the Timorese independence struggle against Indonesia's 1975-99 occupation and have dominated the country's politics since Indonesia withdrew in 1999.

A call for a national unity government was also made by Ramos-Horta, who earlier this year lost out in the first round of the election for the mostly-ceremonial job as president and subsequently campaigned for the Democratic Party in the parliamentary election. "We need a strong stable government and that can only happen if we have a national unity government," said Ramos-Horta, a 1996 Nobel peace laureate.

Given the fact that the PD and another party were the only two other parties to win seats besides Gusmao's CNRT and Fretilin, however, a unity government would leave East Timor without much of an opposition in parliament, raising questions about checks and balances.

That outcome might be a slap in the face for voters who lined up patiently in almost 90-degree heat on Saturday. Further concerns could arise from allegations of vote-buying coming from some defeated candidates and by the European Union election observer team, in what was otherwise deemed a free, fair, and peaceful vote.

"It is important to vote and to choose who our next leader will be at this time," Jacquelina Sarmento, a civil servant in Dili told the Monitor after voting in the capital on Saturday. "It is for our future as a country."

A glass half full

The Dili Weekly - July 2, 2012

Damien Kingsbury – In 2010, a senior Timorese political figure remarked in private conversation that Timor-Leste had never been better. This particular political figure was commenting on the general state of Timor- Leste since his return in 1999, after a forced 25 year absence from the country.

What is remarkable is not the political figure's comment at that time, but that this same person now publically decries Timor-Leste's lack of development. That is, I suppose, how politics is played.

This negative appraisal does come around a time when there has been much public negativity about Timor-Leste's development process. Much of this negative comment is either anecdotal or reflects a snap-shot of Timor-Leste now, without reference to where it has come from.

In the mid-1990s, Timor-Leste was the second poorest 'province' in Indonesia, at that time itself a country which had an internationally low benchmark for poverty. Within Timor-Leste, there was a huge gap in wealth and living standards between Timorese and Indonesians, so that the local standard of living – already abysmally low – declined drastically once Indonesians were removed from the average.

This is not, however, to suggest that prior to the Indonesian invasion there was some golden age.

Under Portuguese colonialism, the noted English naturalist, Alfred Russell Wallace, in 1861, described the colony as 'a most miserable place' with Portuguese officers who 'in gorgeous uniforms abound in a degree quite disproportionate to the size or appearance of the place'.

Wallace also commented on the swamps and mud-flats that surrounded Dili and its extreme prevalence of malaria. The road from Dili to Balibar was, he said, 'a mere track' that was in places only traversable by foot. 'Nobody seems to care the least about the improvement of the country, and at this time, after three hundred years of occupation, there has not been a mile of road made beyond the town'.

By the 1990s, despite the deaths of around a quarter of the population and oppressing the rest, the late Indonesian period did see some infrastructure development.

Yet in 1999, when everyone knew that the Popular Consultation would result in a clear vote for independence, there was a common expectation that with independence would come almost unlimited development and opportunity. The post-independence of almost all new states shows significant decline before there is improvement, so that even in the best of circumstances, these post-independence aspirations were wildly optimistic. And the circumstances which followed were very far from the 'best'.

In short, Timor-Leste has always been poor, it has always been under- developed and its people have always suffered from malnutrition, high infant mortality, stunted growth, poor water, non-existent and then inadequate education and health care and extremely low or non-existent incomes.

In simple terms, then, the notable politician, in 2010, was correct to note that the situation was the best it had ever been. And it is has improved further since then.

The UN Development Program's human development index (HDI) shows that Timor-Leste has gone from being next to the bottom of the development scale in 2000 to improving by around 20%. Almost no other country has developed so much over that time.

Life expectancy, under 56 years as recently as 2005, is now over 62 while infant mortality has declined from being the world's worst at 24% in 1980 to around 8% in 2005 to 4.5% now. Any infant mortality is always too high, but there is no doubting that a cut of almost half is heading in the right direction.

Similarly, while average income is not an accurate measure of wealth for most people, it does illustrate how well a country is doing in broad economic terms. Average income in 2005 was just $367, while in 2011 it had risen to a relatively massive $3,005. Income inequality is growing in Timor-Leste, both between rich and poor and between urban and rural divides – a problem common in almost all developing countries. But there is no doubt that more people have more money and more access to goods and services than in the past.

The recent report by the UN Special Rapporteur on Extreme Poverty and Human Rights largely reiterated what was already widely known about Timor-Leste. However, its claim that poverty, at 41%, remained 'roughly the same' as it was in 2001, is laughable. One can only imagine that the Special Rapporteur, or the World Bank reporters her comments were based on, did not actually spend much time in Timor-Leste in 2001.

In 2001, there were critical food shortages across the country, most people still lived in temporary shelter, very few schools existed, there were almost no health clinics and very few other services were operating. The HDI over those two periods shows a very different situation.

A number of commentators, also noted by the Special Rapporteur, are critical of Timor-Leste's reliance on oil and gas income and worry about what they call the 'resources curse'. What commentators don't say is that, without this income, Timor-Leste would still be among the world's very poorest countries, relying heavily on subsistence agriculture grossly inadequate to meet the food requirements of its growing population.

Reliance on oil and gas does bring potential problems, primarily with proper management of income. But the problems of not having this income would vastly outweigh such problems that do exist because of this source of income.

What many commentators also mistake is that the 'resources curse', in its usual context, refers to resource-based currency strengthening which undermines the viability of other economic sectors. In Timor-Leste's case, however, it is not as though without oil and gas revenue the rest of the economy would flourish.

Timor-Leste does not enjoy the economies of scale, skills base or cost structure to compete in manufacturing. Apart from some niche tourism, it also cannot compete in the service sector. In this respect, then, Timor- Leste is not 'cursed', but blessed, with an oil and gas supported economy. It is the oil and gas-based government spending that continues to drive the rest of the economy, not as a problem but as the almost sole means of independent economic development, upon which almost all other improvements in the quality of life depend.

There is no doubt that Timor-Leste still has a very long way to go towards reaching its sometimes inflated dreams. But there is equally no doubt that it has made considerable progress along that path.

As much as we might like it to be so, the world is often not a fair or easy place and Timor-Leste has had more than its share of difficulties. There is no question that much poverty continues in Timor-Leste and there will improvements will never be enough.

But with careful management and realistic expectations, Timor-Leste's place in the world looks set to continue to improve.