EAST TIMOR

Five arrested in Dili police operation

Lusa -- August 30, 2001

Five people arrested Thursday in the East Timorese capital had various weapons in their possession, the UN civil police spokesman said, adding that the operation had nothing to do with the elections occurring on the same day.

Luis Carrilho told Lusa that the operation took place Thursday because "investigators were only able to obtain arrest warrants" on Wednesday. "We had a search warrant, which we carried out in Dili's Becora neighborhood. But it's not related to the elections", Carrilho specified. The weapons seized included a machine gun, ammunition, a bottle with gasoline and two knive[s].

"The investigation began a few days ago. Despite the elections, we continue our normal patrol and criminal investigation work" he added.

Polling stations for East Timor's Constituent Assembly elections closed at 4p.m. local time Thursday. Police later reported that the situation was calm throughout the territory and that no major incidents had disrupted the voting process.

Woodside says gas venture decision due by end October

Financial Times - August 30, 2001

Woodside Petroleum, Australia's biggest independent oil and gas group, is to evaluate competing proposals from Royal Dutch/Shell and Phillips Petroleum of the US in an attempt to resolve differences over how the substantial deep sea gas fields between Australia and East Timor should be developed.

Plans to develop the first field, Bayu-Undan, were thrown into disarray earlier this month when Phillips, its operator, said it had failed to reach agreement with the East Timorese over the fiscal arrangements. Shell subsequently proposed that the world's first floating liquified natural gas plant be used at Greater Sunrise, the second and much larger field, a move it said would substantially reduce costs.

Royalties from the fields are set to provide by far East Timor's most important source of funding and it is also hoped they will become an important source of gas for California.

Phillips, together with Woodside, operator of Sunrise, has been in negotiations with El Paso, the US energy group, over a long- term US$3.7 billion supply contract from the two fields. Phillips -- which still hopes it can reach agreement with East Timor -- had been planning to bring gas from Bayu-Undan ashore via a pipeline. It would then be processed at a new plant in Darwin. It had also hoped to share the pipeline with Sunrise, plans thrown into doubt by Shell's proposal.

But Woodside said on Thursday that at a meeting in Singapore earlier this week the two companies, as well as Osaka Gas, the other partner in Sunrise, had agreed that the Australian company would evaluate the two proposals by the end of October. This would enable heads of agreement for gas sales from Sunrise, a US$4.9 billion project, also to be signed then as planned.

Shell claims that using a floating LNG facility would cut development costs by up to 40 per cent but others in the industry believe it would leave Sunrise isolated and advocate a joint infrastructure approach with three other fields being developed in the region. Woodside said it was also continuing talks with East Timor over the fiscal regime applicable to Sunrise. However, only 20 per cent of the field is in an area jointly administered by Australia and the new state, with the remainder in Australian waters, whereas Bayu-Undan falls entirely within the shared zone. Canberra has agreed to split the revenues in the shared area 90:10 in favour of East Timor.

Woodside said it expected talks over Sunrise with the new East Timorese government to stretch into next year but that it remained confident it was on track to begin production there in mid-2006 as planned. Woodside holds a 33.4 per cent stake in the field, Phillips 30 per cent, Shell 26.6 per cent and Osaka Gas, 10 per cent.

[Virginia Marsh in Sydney and Matthew Jones in London.]

Guterres says Timorese could end up like Aborigines

Agence France Presse - August 30, 2001

Jakarta -- Feared ex-militia leader Eurico Guterres declared Thursday a "day of mourning for East Timor" and said its people could end up second-class citizens like Australia's Aborigines.

The United Nations was imposing Thursday's election for a constituent assembly on a people who were not yet ready to stand alone, he told AFP.

"This election is actually an election forced by the United Nations," Guterres said. "What might result is some sort of system where East Timorese will become like the Aborigines in Australia," he added, saying East Timorese would become second- class citizens in their own country. He declined to elaborate.

Guterres, who although born in East Timor is now an Indonesian citizen, claimed to have no interest in the poll -- seen as the next step towards nationhood. "As an Indonesian citizen, I have nothing to do with the poll and have no interest whatsoever in it," Guterres said by telephone from Semarang in Central Java.

But he said that as an East Timorese native, he had his own views. Together with other East Timorese exiles in Semarang, he marked what he called "a day of mourning for East Timor".

In a UN-organised ballot exactly two years ago, almost 80 percent of East Timorese voted for independence from Indonesia, which had annexed the former Portuguese colony in 1976. Guterres and his Indonesian supporters in East Timor have accused the UN of electoral fraud in 1999.

Guterres headed the pro-Jakarta Aitarak (Thorn) militia which terrorised Dili and surrounding areas long before the 1999 vote took place. His group also joined in the week of terror, killing and destruction that greeted the pro-independence result.

A senior Indonesian minister said Jakarta honored Thursday's democratic process in East Timor and supported the fledgling country. Susilo Bambang Yudhoyono, coordinating minister for politics and security, said comments by President Megawati Sukarnoputri had made it clear "that Indonesia honors the process in East Timor and has so far contributed to it".

He told reporters: "[East Timor] can do anything as long as it is democratic and fair and does not run counter to Indonesia's interests."

Pro-Jakarta Timorese lower flag to half-mast to mark vote

Kyodo News - August 30, 2001 (slightly abridged)

Christine T. Tjandraningsih, Kupang -- As hundreds of thousands of East Timorese went to the polls Thursday in the UN- administered territory's first legislative elections, pro-Jakarta refugees sheltering in West Timor lowered Indonesia's red-and- white national flag to half-mast to mark what many there see as a black day.

The refugees, mostly family members of militiamen who oppose independence in East Timor, said they wanted to show "condolences for our 'brothers' who were killed during efforts to keep the red-and-white flag aloft in East Timor."

The Thursday legislative election in the East comes exactly two years after the vast majority of East Timorese voted to end all ties with Indonesia, which had invaded the former Portuguese colony in December 1975. After that vote, pro-Jakarta militias, abetted by the Indonesian military, went on a rampage of violence, arson and rape that left the East largely in tatters by the time an international peacekeeping force arrived almost a month later to restore order.

"We don't care about the elections in East Timor. It's not our business ... we're Indonesian citizens," Daniel Sanchez Pinto Leo, 35, who is sheltering in the Noelbaki refugee camp in West Timor's Kupang with his wife and 5-month-old daughter, said.

Martinho da Costa, 47, who in 1975 fought for East Timor's integration into Indonesia, shared a similar view and failed to hide his dislike of independence for East Timor. "What for the elections are? We got independence in 1975. Why should there be another vote for independence?" da Costa said, referring to the 23-year Indonesian occupation of the East.

But life in the Indonesian half of Timor Island, day by day, is getting more difficult for the refugees. And it has indirectly, little by little, affected the spirit of the pro-Jakarta supporters.

"We lack food and medicine and find sanitary problems," Mujiano Lay, refugee coordinator in Noelbaki where about 7,740 refugees live, told Kyodo News. According to Lay, the local government still provides 12 kilograms of rice for each refugee every month and 45,000 rupiah (about $5) per person as a monthly meal allowance.

Education and health, however, is no longer looked after by the local government. "To go to school, our children have to pay a registration fee of 10,000 rupiah per person and 175,000 rupiah for school fees each month. To see a doctor at a hospital, we have to pay transportation fees, the medical consultation and for medicines," Lay said. "How can we afford that?"

Little can be done with such a small amount of money given by the local government to pay for education and health. Speaking in her 3 by 5 meter room where 11 family members live, Merry Soares, 22, said when her daughter Martini is sick and she needs money to visit a hospital, she must sell rice or cut her meal allowance to pay for the doctor. Lay does the same thing to pay for his children's school.

And, compared to just a few months ago, the hardships appear to be causing many to soften their views on the East. "We want to return, because as an East Timorese, we will never forget East Timor. War will never end if we are not seeking reconciliation," Lay said.

Leo agreed, but he is still worried about suspicion of his motives among those who stayed in East Timor. "I was born as a part of TNI [Indonesian Defense Force]. I worked as carpenter for TNI. Most of my relatives are TNI members. Will they accept us?" he wondered.

For that reason, although they refuse to join the legislative elections, the refugees unexpectedly expressed support for independence leader Xanana Gusmao to become East Timor's first president.

"His charisma, hopefully, could boost reconciliation among East Timorese inside and outside East Timor," Lay, who used to be a member of the Alfa militia group controlling the eastern part of East Timor, said. "He has promised to give amnesty to ex-militia members. That's one thing that motivates us to return home," he said.

Heavy turnout as nation starts to take shape

Sydney Morning Herald - August 31, 2001

Lindsay Murdoch in Liquica and agencies -- East Timorese kept what the United Nations had called a date with democracy yesterday, voting in the first democratic election of their turbulent history.

After centuries of foreign occupation, the death of a quarter of the population and the near destruction of the territory, the election for a Constituent Assembly brings the East Timorese a big step closer to full independence.

Yesterday was also the second anniversary of the UN-run ballot that rejected Indonesian rule and unleashed a fury of killing and destruction by pro-Jakarta militias backed by Indonesian troops.

As dawn broke, thousands were on the move, walking up to 25 kilometres to vote. Mr Sama Leki, 77, a farmer, was so exhausted he could barely speak when he joined hundreds of people queuing shortly after daybreak in the ruins of an East Timorese school near the seaside town of Liquica. He had walked for a day across the mountains. "Now we have truly got our independence," he said.

A Sydney lawyer, Mr Pat Burgess, looked in awe at queues of hundreds of voters dressed in their Sunday best in Liquica, the town 50 kilometres west of Dili that saw some of the worst militia violence.

"It's an incredible sight," Mr Burgess said. "Here we have hundreds of smiling, confident people calmly lined up to take their first real step towards democracy. Inside I know their hearts are still feeling what they endured, particularly here in Liquica, where the violence and intimidation was very bad. That will take time to heal."

Like thousands of Timorese, Mr Burgess was attacked by pro- Jakarta militia thugs in 1999 as the UN made arrangements for the plebiscite. When the Timorese refused to be cowed by killings and intimidation and voted overwhelmingly for independence, Mr Burgess stayed in the territory and became the UN-appointed mayor of Liquica. "The Timorese have shown they are well on the way to building a new country," he said.

The independence leader Mr Xanana Gusmao, who is set to become president of the world's newest state, cast his vote after queuing in his home town of Manatuto, 32 kilometres east of Dili. "I feel that this is the beginning of a new life," he said, clutching his one-year-old son, Alex, and accompanied by his Australian wife, Ms Kirsty Sword.

More than 1,000 Australian soldiers who are dug in at the East Timor border were yesterday on highest alert amid fears of raids into the territory by militia sheltering in camps in Indonesian West Timor. But the Indonesian military announced it had closed the border until next Tuesday.

The UN's chief electoral officer, Mr Carlos Valenzuela, said voter turnout was "heavy". "We are very happy, though not surprised, to report that all is well and that the election is taking place in a calm and peaceful atmosphere. Polling has gone off without difficulties." As the polls opened the UN administrator in East Timor, Mr Sergio Viera de Mello, told the East Timorese: "This will be your day to stand up and be counted and for your voices to be heard."

East Timor is expected to achieve full statehood in the first half of next year after the 88-member Constituent Assembly elected yesterday drafts a constitution and the president is elected in another vote early next year. Mr Gusmao last week accepted the presidential nomination of all the territory's key political parties, including Fretilin.

Provisional results will be announced on Wednesday, and the result confirmed on Monday week. Fretilin, the Revolutionary Front of Independent East Timor, is expected to triumph.

In the eastern town of Baucau, Mr Tim Fischer, the former deputy prime minister, leading a nine-member delegation of Australian monitors, said last night that voting had been peaceful. "It has been a splendid day ... a giant step towards independence with confidence leading to democracy."

Two years ago to the day Indonesian Army-trained thugs of the Besi Merah Puti (Red and White Iron) militia roamed Liquica threatening to kill those who voted for independence. Every household was forced to fly Indonesia's flag.

Thugs bashed Mr Francisco da Costa, 39, a school teacher, and stopped him voting because they suspected he favoured independence. Well before sunrise yesterday he was waiting for the polling booths to open as Portuguese peacekeepers stood watch holding automatic rifles. "We can vote freely; there is no intimidation," he said.

East Timor moves toward independence

Associated Press - August 30, 2001

Slobodan Lekic, Dili -- Women nursed babies held in shoulder slings and people joked with UN monitors as they waited in long lines to vote Thursday in a election seen as a historic step toward nationhood for East Timor.

International monitors hailed the vote as a success and officials estimated voter turnout at 93 percent. Vendors sold sweets and cold juices to crowds of voters, who were waiting to chose an assembly that will write the fledgling nation's constitution.

The vote moved East Timor nearer full nationhood after three centuries of Portuguese colonial rule, 24 years of Indonesian occupation, and two years of transitional UN administration. A head of state will be election next April and the 88-member assembly will become the nation's first parliament.

"August 30, 2001 will be remembered in the history of East Timor as a demonstration of the capacity of its people to ... confront their differences in the context of a multiparty democracy," said chief UN electoral officer Carlos Valenzuela.

Unofficial results are expected to be announced next week. There was little doubt the winner would be the Revolutionary Front for an Independent East Timor, which led the country's independence struggle. Charismatic resistance leader Xanana Gusmao is expected to become the Asian nation's head of state after the constitution is adopted.

There had been fears of clashes between supporters of the 16 political parties competing, but reports said no incidents marred the ballot. "There was a kind of determination. But it was without tension," said James Kelly, US Assistant Secretary of State for East Asia and Pacific Affairs.

Kelly was among dozens of diplomats and 800 monitors on hand to ensure that voting took place without intimidation. "Everything went off so well, it was scary," said Saskia Heinz, a Dutch official at a polling station in Dili.

The only problems reported were overcrowding at some polling stations and minor glitches such as malfunctioning equipment and missing keys. Thursday's vote came two years to the day after four-fifths of East Timorese voted to end Indonesia's bloody occupation of their half-island province in a UN-sponsored referendum. Indonesia invaded East Timor in 1975, after Portuguese rule collapsed.

The Indonesian army and paramilitary groups reacted to the 1999 vote by going on a rampage of murder, burning and destruction in which hundreds of civilians were killed and much of East Timor was devastated.

"We struggled for more than 24 years for independence," said Mari Alkatiri, who is tipped to become the first prime minister. "We've learned the lesson that even small people have a voice." In Liquica, a town 25 miles east of Dili, thousands of people lined up before polling stations opened at 7am. Officials said almost all its 3,900 registered voters had cast their ballots by midday. The town gained notoriety before the 1999 referendum when Indonesian police and members of a militia gang known as Red and White Iron hacked to death more than 50 people inside the main church.

On Thursday, UN peacekeepers and townspeople joked as they waited in the scorching sun. Some voters used umbrellas or wide- brimmed hats to block the sun, others shielded their faces with the large UN voter information sheets. "This sure ain't like any election I've ever seen back home," said Roger Oglesbee, a UN policeman from Vanwert, Ohio.

East Timor rushes to build new monetary system

Financial Times - August 29, 2001

Joe Leahy -- Building a central bank from scratch in one of the world's poorest countries was never going to be easy.

But Fernando DePeralto, general manager of the Central Payments Office, East Timor's de facto monetary authority, manages to put a gloss on it.

"In some post-colonial African countries, significant restructuring of central banks was needed," says Mr DePeralto. "In many cases, this proved to be a far more difficult task than establishing a new central bank."

A former Jamaican central bank deputy governor, Mr DePeralto's task is to provide East Timor with a new currency and a workable monetary authority and payments system before it declares formal independence. This is expected to follow within less than a year of an election set for Thursday.

East Timor has never had a central bank. During Portugal's 400- year colonial rule, the escudo was the main currency. After Indonesia invaded East Timor in 1975, Jakarta introduced the rupiah and established a branch of its central bank to handle payments.

But when the Indonesian army pulled out of the territory following a United Nations-supervised independence vote in October 1999, the banks were burned and most of their senior staff fled back to Indonesia. "This resulted in a total cash economy," says Mr DePeralto.

In the ensuing vacuum, a brisk street trade emerged in rupiah and US and Australian dollars. Today, visitors to Dili are harangued by illegal money traders, calculator in one hand, a fistful of currency in the other. Many of them claim they sold their water buffaloes or fields to raise capital for the business, although they are more likely part of an underground network.

"I make 50,000 rupiah ($5.70) a day or 100,000 on a good day," says Thomas, a trader, whose office is the footpath outside Dili's "Hello Mister" supermarket. Not bad in an economy where annual per capita income is estimated at US$325.

To clear things up, the United Nations Transitional Administration in East Timor, the body charged with ruling the territory until formal independence, in early 2000 settled on the US dollar as East Timor's official currency after consultation with local politicians.

Later last year, it established Mr DePeralto's office. Finding skilled hands to man the office has been a challenge. Today, about 30 of its 43 staff are East Timorese but a handover of the more senior positions could take at least three years, Mr DePeralto says.

The choice of the dollar followed a process of elimination. The Australian dollar and the rupiah were considered too volatile or too politically undesirable. The escudo was dismissed because it is about to be phased out. The euro might have been an option but it is not yet in full circulation.

The dollar was seen as a dependable hard currency. But its choice raised eyebrows in a territory where transactions below $1 are still common. There were also concerns that the East Timorese would have difficulty recognising US coins. They come in irregular sizes -- the five cent piece, for instance, is bigger than the dime. And their value is displayed in English wording rather than numerals.

Dollarisation also ties East Timor to US Federal Reserve monetary policy. This means its economy will have less flexibility to respond to fluctuations in the currencies of competitors.

However, Mr DePeralto said dollarisation promoted monetary discipline. "We have seen so many countries in the world where desirable economic decisions are postponed and instead the monetary base is expanded [by printing money], resulting in high interest rates and inflation," he said.

To speed up dollarisation, the UN has been repatriating rupiah to Indonesia and restricting imports of the currency. It is has imported nearly $10 million in cash. Meanwhile, the UN and other international agencies are injecting about $2million a month directly and indirectly into the system.

Mr DePeralto's officials have also been educating people in the outlying districts on their new currency. The campaign seems to have had some success. Young people near Maubisse, a highland town south of Dili, recognise US coins and know their value in rupiah. "It's better that we've changed to the dollar," said a farmer in the district. "If we used rupiah, it would be as if we were still being oppressed by Indonesia."

In Dili, rupiah deposits have shrunk by half to about $200,000 out of total banking system deposits of $30 million, although the East Timorese may be keeping much more "under their beds".

However, the litmus test of dollarisation will be how quickly it is accepted throughout East Timor's $15 million-a-year coffee export industry, says Chris Durman, general manager of ANZ East Timor, one of East Timor's two commercial banks.

While some farmers have reportedly accepted payment in dollars, others are still opting for rupiah even at poorer exchange rates. "I think there will be two currencies in East Timor for quite some time," says Mr Durman. "It's a bit like when the Indonesians replaced the escudo with the rupiah. There are still escudos from the old days turning up around the place today."

The trouble with independence

Australian Financial Review - August 30, 2001

Rowan Callick -- The emergence of democratic government in an independent East Timor is a miracle. The obstacles in its path, through erratic and often cruel Portuguese, Japanese and Indonesian rule, have been horrendous.

It would be entirely understandable if, early next year when the United Nations administration hands over control to the body being elected today, the new country -- almost certainly led by President Xanana Gusmao, widely viewed as an Asian Nelson Mandela -- celebrates, breathes a sigh of relief and relaxes.

But raw data, history and a glance around the neighbourhood warn that East Timor's troubles will then be far from over.

Its living standard is the worst in the region. With 900,000 people it is similar in size to Fiji, but its gross domestic product per head is about a quarter Fiji's, its infant mortality rate is seven times worse and life expectancy -- admittedly, following a period of widespread conflict -- is a shocking 50, compared with 73 in Fiji, according to figures produced by Canberra's National Centre for Development Studies.

Hal Hill, an economics professor at the Australian National University, says the country faces a choice between the outward- looking economic models of East Asia and the more closed systems of the Pacific islands -- a choice that also reflects Timor's geographic location on the cusp of each region, as well as its cultural complexity.

Such tough calls are complicated by the presence of large numbers of "aid donors with their own agendas, competing for the ears of the new rulers," Hill says.

The United Nations administration that has been in place for two years opted last year for the US dollar as East Timor's currency, and has this month started acting tough to squeeze out others.

"[East Timor] has an annual GDP of just $US300 million, like a suburb of Melbourne. It's not feasible to set up a central bank and a monetary policy, so using another currency makes sense," Hill says.

The choice came down to the US dollar or the Australian dollar. Although the $A was widely circulating in East Timor, it finally ruled itself out primarily on political grounds. Its adoption would have been viewed by Jakarta as confirming its suspicions that Australia wished effectively to colonise Timor, and by Canberra as sending out a signal that it would have to underwrite the emerging State, come what may.

Language policy is another major issue that the newly elected constituent assembly -- which will draft a constitution and then transform itself into a parliament before the president is elected -- appears unlikely to change.

So Portuguese, spoken only by the elite 5 per cent of the population including Gusmao, Jose Ramos-Horta and Roman Catholic Bishop Carlos Belo, will become the national language rather than more widely spoken Bahasa Indonesia -- no longer politically correct, but the second language of the younger generation -- or Tetun, Timor's almost universally understood pidgin, or English. Many also speak their tribal mother tongue.

Hill says: "Many aid workers are doing a great job, and it's important to have such assistance during the transition."

But the danger is that an aid-dependent economy -- more than half the current budget comes from aid -- will result, with a bloated government sector" that will suck in much of the country's earnings to maintain it.

Under Indonesia, the bureaucracy -- including teachers and health workers -- comprised 33,000 people; it subsidised and distorted the budget for 25 years.

The International Monetary Fund recommends a target of 12,000 public servants. The average East Timorese public servant is paid about double his or her Indonesian counterpart, although the per capita GDP is about a third of Indonesia's. "This urban labour market is spilling over into the rural sector," Hill says.

"And already the original 'basic needs' approach to health and education has shifted towards the urban elite. There is a massive problem of the return of Timorese studying in Indonesia, returning with incomplete degrees. They have successfully applied huge pressure to allow more people to be admitted to the university, and in time it is inevitable that funds will be reallocated from primary schools."

Much of the country's modest commercial expertise departed when the traders fled the fighting of two years ago. Some trades skills are also missing, mostly filled by people flying up regularly from Darwin.

The collapse of the coffee price -- halved over the past year, substantially because of the enormously increased output of Vietnam -- is another problem. About 15 per cent of the workforce is directly or indirectly dependent on coffee, the dominant cash crop, which promises, when prices are better, to contribute about a sixth of GDP. But Timor does extract a premium for its coffee because it is organically grown. It is on Starbucks' menus.

Fisheries and tourism are other sectors with reasonable potential. The other big ticket item on the economic menu, though, is gas. Within 10 years, it is predicted, gas revenues will comprise half today's GDP.

Although Phillips, the US oil company that has carriage of the project to pipe Timor Gap gas to Darwin and thence across to Queensland, is in a stand-off with the UN administration over the tax rates, an accommodation is almost certain to be reached.

The new assembly in East Timor will be hoping it does so in time to get its gas field up and running before its great rival, the Exxon-led project to run a gas pipeline from PNG's Southern Highlands down Queensland's east coast.

Hill warns that "a fiscal framework, based on high aid and gas receipts which may disappoint, could create major problems" down the track. The failure of PNG itself to convert its vast resources receipts into improved living standards since independence 26 years ago is notorious.

"A dual economy is already starting to grow in East Timor between the local and the international sectors," Hill says -- with the Timorese capacity to maintain subsistence farming likely to remain crucial for some years.

It is "absolutely critical," he says, to get the relationship with Indonesia right. For "East Timor will have free trade with Indonesia, like it or not" -- such is its geography, with a land border with Indonesia's province of West Timor and with Indonesian islands visible from Timor. Such borders will prove impossible to police. And Surabaya, on the eastern tip of Java, is a major source of many supplies for Dili.

"There will have to be a meeting of minds between Timor's new leaders and Jakarta," Hill says -- a meeting made easier by former president Abdurrahman Wahid's visit to Timor's capital Dili, and by the first major statement of his successor President Megawati Soekarnoputri, that stressed her desire too for accommodation with East Timor.

A tenth of East Timor's population is still in refugee camps in West Timor.

Timorese have bank accounts in Indonesian banks that they can no longer process, and Timorese former Indonesian public servants are asking for their pensions to be paid.

Worse, East Timor has experienced four sets of legal codes, and the assembly will have to resolve which jurisdiction to adopt and how to clarify land title. Claims made over the past two years have mostly been filed, awaiting such resolutions.

Hill says that the experience of some independence leaders being exiled in then socialist Mozambique during much of the 24 years of Indonesian rule in East Timor, as well as watching closely the travails of PNG, which is also rich in resources and coffee, and which too began life with a comparatively highly paid bureaucracy, were being drawn on usefully in Dili.

But the economy contracted by about a third in 1998 and 1999, and although it has recovered since then it remains well below its size in 1997. It will take 12 years of growth at 5 per cent a year for the country to reach the current Indonesian living standard. This process would be speeded if a large proportion of the Timorese diaspora of up to 80,000, mostly in Australia but also in Portugal and elsewhere, returned. But that is unlikely.

Australian economist Andrew Elek, who has worked in PNG where he maintains strong links, has written a paper comparing the two. Sound macro-economic management and "an early enthusiasm for nation building" would not be sufficient to produce sustained development, he says; that will take an accountable system of government as well.

"It will take at least a decade to build up a base of infrastructure, skills and institutions that can underpin sustained and increasingly self-reliant growth," he says. "The real challenge is whether it will remain politically possible to sustain the investment until there are decent systems of education, health and communications."

Learning from PNG's failings, he suggests much of the development task could be performed by private enterprises, with public servants concentrating on creating a policy environment providing the right incentives. He warns that, also learning from PNG, "the expectation of riches" from resources such as gas "can lead to a high-cost economy that is unable to diversify".

Satish Chand, of the National Centre for Development Studies, draws on the experiences of 14 Pacific island countries to make three recommendations to East Timor's emerging leadership:

"First, property rights are essential to induce investment that, in turn, is necessary for growth. Second, public sector participation has to be limited to regulation and the funding of public services, with minimal active participation of the State in commerce. Third, institutions of civil society have to be created, cultivated and protected, with particular attention to an independent, effective and credible judiciary."

Helping traumatised land to its feet a mammoth task

South China Morning Post - August 30, 2001

At the Toko Lay hardware store in central Dili, Charles Tan was checking a newly arrived generator to sell to the burgeoning construction industry. "We will close the shop for the election but we are not expecting any trouble," he said. "Everything is safe here now and we only want it to continue."

Mr Tan represents a business which has been in Dili since 1959, having survived Portuguese and Indonesian rule. The outer shell of the shop and inner walls of the large, attached godown bear the dark scars of fire. He has only just replenished his stock from the looting and burning of his shop, which was hit like many others in the Indonesian revenge rampage through East Timor in September 1999.

He and his family were forced to flee Dili on September 4, 1999, and many of his 30 local staff fled to the hills. After travelling through West Timor to Surabaya, East Java, Mr Tan returned in May last year, restarting the business last September. He sells Vietnamese rice, Chinese generators and construction materials -- and says business is now improving.

"I can't be angry at what happened here to us. Everybody suffered, many people much more than me. But it was so very sad to see all the damage. Now we can only rebuild," he said.

The over-riding need to get small business back on its feet and to find a viable economic future for East Timor are tasks which today's election cannot solve.

Whoever wins will instead inherit a poisoned chalice -- a territory not yet an independent nation which faces problems so daunting that many fear it cannot survive.

"This is not the election to win if you are a political party here today," said a diplomat. "This place faces some immediate, tough choices over how to survive economically, and whatever decisions are made, such as how to cover the national budget, how to unite these very traumatised people, there's one hell of a job ahead."

East Timor will need about US$60 million in annual budget support for several years, until oil and gas revenues come on line from the Timor Gap, the diplomat estimates. Even with the Timor Gap revenues, it faces a dark future, he and many others believe.

"We are not talking about Ground Zero here, but something below zero," said an international medical worker. "It is not just the physical destruction which you can see all around you still. What bothers me much more is the shattered hearts and minds, the desperate lack of basic skills and education, the near- impossibility of repairing the wounds inflicted here."

Justice must come before amnesty, says East Timor lawyer

Agence France Presse - August 29, 2001

Dili -- Justice must come before amnesty for people guilty of human rights violations in East Timor, a lawyer working to establish a truth commission said Wednesday.

"There cannot be amnesty without truth," said Aniceto Guterres, a leading East Timorese human rights lawyer and member of the steering committee for the planned Commission for Reception, Truth and Reconciliation.

Guterres spoke to reporters after returning from the committee's first meeting in Indonesian West Timor with leaders who voted to stay as an autonomous part of Indonesia during East Timor's referendum on independence two years ago.

"There was a good reception from the autonomy side," Guterres said, adding both sides differ on how to achieve reconciliation. "From the pro-independence side, the reconciliation has to be based on justice, whereas the pro-autonomy [side] has asked for a traditional-based process," said Jacinto Alves, another member of the steering committee.

Details of that "traditional process" are still under discussion by autonomy leaders. But it could require an offender to confess his crime before his victim and leaders of the community, while providing some type of compensation.

The commission will investigate human rights violations between April 25, 1974, when the Portuguese empire that ruled East Timor began to collapse, and October 25, 1999, when the United Nations replaced occupying Indonesian forces. Jakarta's forces left the territory amid a orgy by pro-Indonesian militias of murder, arson, looting and forced deportation.

East Timor's truth commission will not use community reconciliation to deal with murder, rape, and organised violence. Some of these cases are already being handled by the UN's serious crimes investigation unit which will complement the commission, Guterres said. "The steering committee is not competent to speak about amnesty and we believe it is not relevant ... because a process that is based on justice has started," Guterres said.

The serious crimes unit, after more than one year of operation, has issued 31 indictments -- most of them against pro-Indonesian militia members who committed murders and other violations in East Timor two years ago.

A British member of the European Parliament, in East Timor to observe the first democratic elections here on Thursday, said he and other European observers have found strong resistance among people to proposals for amnesty. "The people of East Timor say justice must be done. The crimes must be paid for," said Richard Howitt.

Members of the truth commission will be chosen after community consultations across East Timor in September, as well as among the East Timorese community across the border in Indonesia. It will have at least two years to do its work.

Timorese bishop rejects Gusmao's call to forgive the guilty

The Independent - August 30, 2001

Richard Lloyd Parry -- Two years to the day after the 1999 referendum on independence, the East Timorese people vote again on Thursday in the first elections to a democratic national assembly.

In that time, after the murderous violence that marked the end of Indonesia's occupation of East Timor, 1,000 United Nations administrators and 9,000 peace-keeping troops have helped the infant nation to make faltering steps towards recovery.

But the quest for justice is slow and there are sharp differences between East Timor's spiritual leader and its presidential candidate and former guerrilla commander on how to move forward. One is pressing for amnesty and forgiveness, the other believes sternly in prosecution and punishment.

But the positions of Bishop Carlos Belo and Jose "Xanana" Gusmao are exactly the opposite of what you would expect.

The Roman Catholic Bishop of Dili, winner of the Nobel peace prize, is the one impatiently pressing for the forces of justice to be used against a shadowy cabal of local militiamen, Indonesian soldiers and high-level commanders behind the violence. Mr Gusmao, the former freedom fighter and almost certainly the future president of East Timor, is calling for them to be forgiven. In the outcome of their debate a great deal lies at stake.

Thursday's elections are the latest stage in a process of political development expected to culminate in a declaration of full independence next year. Schools and hospitals have been rebuilt and reopened. A civil service, a police force and a national army have been established. Judges have been appointed, courts have been established and cases are being heard. But on the question of justice for the victims of the violence before independence, very little progress has been made.

Bishop Belo wrote in an article this week in the Sydney Morning Herald: "Up to 3,000 died in 1999, untold numbers of women were raped and 500,000 persons displaced -- 100,000 are yet to return. Those events live on in the minds of Timorese despite the apparent material progress of the past two years ... Justice for the people of East Timor requires that the perpetrators of the most serious crimes be identified and prosecuted in the same manner as a common criminal."

The process is not at a complete standstill, but it is looking less and less likely that those who gave the orders to devastate East Timor will ever be brought to justice.

Last month a special court in Dili began to hear charges against 11 former members of an East Timorese militia for murders committed before and after the referendum. But these are small fry. The militias were organised, armed and directed by Indonesian army officers who all escaped back across the border after Jakarta finally agreed to admit international peace- keepers.

Kofi Annan, the UN secretary general, has repeatedly called upon Jakarta to bring them to justice in its own courts -- if this does not happen he has promised to establish an international tribunal to hear the cases. In East Timor there is little faith that either possibility will bear fruit.

Three reports -- two commissioned by the UN, and one by an Indonesian human rights commission -- have pointed the finger at a named group of powerful former generals and intelligence officers, including General Wiranto, who at the time was commander of the Indonesian armed forces.

One of the first acts of Megawati Sukarnoputri, who became Indonesia's President last month, was to broaden the scope of a special court to try those behind the 1999 violence. But the laws governing such a court are riddled with loopholes and there is general scepticism that prosecutions would successfully make it through Indonesia's notoriously corrupt courts.

Bishop Belo, in common with many Timorese, demands an international tribunal for "crimes [which] are not only against the people of East Timor but against the international community". But despite the precedents set in Rwanda and the former Yugoslavia, to muster the political will for an East Timor war crimes tribunal in the UN Security Council would be a struggle.

The final nail in the coffin may well be the attitude of Mr Gusmao, universally known by his nom de guerre, Xanana. "I will not oppose [an international tribunal], but I will not push for one myself because I am not a human rights activist. I am not a judge. I'm not an attorney general."

Without the active support of the head of state, a tribunal is out of the question. Mr Gusmao will be content, but many of his countrymen, including Bishop Belo and thousands of unquiet ghosts, will not be.

Dili's new dawn

Sydney Morning Herald - August 30, 2001

Lindsay Murdoch, Dili -- Carlos first introduced himself as a driver. When none of Dili's dilapidated taxis could be found, he would always produce one. Carlos (he never gave a surname) could always get you through -- with a friendly wave of his hand -- the many military and police checkpoints that a decade ago dotted the winding and steep roads across what Indonesia then regarded as its troublesome 27th province. But with Carlos and his friends around, notebooks and film were often mysteriously lost.

After my first few visits to East Timor, I discovered that Carlos was a Timorese agent for the Indonesian security forces which operated a pervasive spy network that intruded into the half- island territory's schools, families, churches and places of work.

The other day, two years after Indonesian soldiers, police and militia embarked on an orgy of killing and destruction across East Timor, I met Carlos again in Dili where he is doing nicely as a security officer and is accepted by the people he once spied on. "The past is the past," he says.

Thousands of other Timorese who used to support Indonesia's often brutal rule are rebuilding their lives in what will soon be proclaimed the world's newest country. More than 400,000 eligible Timorese will vote today in their first democratic election that will lead to full statehood, perhaps as early as next March. And if the election is non-violent, United Nations officials expect a flood of East Timorese refugees to return from squalid, militia- controlled refugee camps in Indonesian West Timor, where they are no longer welcome.

Xanana Gusmao, the pro-independence Timorese hero, has as much reason as anybody to want revenge after spending 15 years roaming the hills fighting Indonesian forces, seeing many of his best friends killed or maimed, then being convicted of subversion and spending seven years in jail. But he is insisting that amnesties must be considered for people who have committed crimes as a way to bring together peacefully people from both sides of a terrible conflict.

"I am concerned about the future development of this country," he says. "We must be realistic. It is better to consider reconciliation and amnesty."

Dramatic changes have taken place in East Timor, particularly since the 1999 atrocities that shocked the world. Exactly two years ago, most Timorese defied the militia violence and intimidation, got dressed in their Sunday best and went determined, with their heads held high, to UN polling stations where they voted overwhelming to reject Jakarta's rule. They queued in silence and spoke in whispers.

Few dared look into the eyes of the Indonesian soldiers and police they feared and despised, or their neighbours or even family members they knew had collaborated with the Indonesians. It was an amazing display of courage, given the behaviour of the militia who were backed by Indonesian soldiers and police.

"They have a gift of perseverance despite all odds," wrote a UN worker of the Timorese after being trapped in the UN compound in Dili as the city burnt in September 1999. "They have exercised passive resistance in their moments of despair and glory ... they are all heroes -- the weeping mothers, the young men and women who huddle together and pray, the children who will be tomorrow's leaders."

Today, most voters will queue in a jubilant mood, expecting a landslide win by Fretilin, the party that led the underground opposition to Jakarta's rule for 24 years. Fretilin has campaigned largely on the past, refusing to announce detailed policies on how it plans to run the country. But East Timorese see only good omens at this momentous turning point in their history.

A few days ago a four-metre crocodile started surfing waves off Dili's Turismo Hotel where Carlos used to hang around the lobby touting business and militiamen hunted journalists in 1999 as we hid in a locked bathroom. It was the first crocodile -- they are sacred in East Timor -- to make its home there since the 1999 bloodshed, locals say.

"The crocodile's return does not have to mean there is violence," says fisherman John da Costa as he sews nets on the pebbled beach. "If we haven't done anything bad, it won't harm us. With Xanana as our leader, we will be safe."

After Portugal's 400 years of rule by neglect and Indonesia's occupation, an air of guarded excitement is sweeping East Timor's cities, towns and villages, boosted by a flood of foreign aid and UN spending that has transformed Dili into a busy commercial centre. Outside the major towns, where 90 per cent of East Timorese live, villagers wave and smile at travellers, unafraid and relaxed, unlike the years before when just being seen talking to a foreigner would almost certainly have seen them dragged in for interrogation and possible torture.

East Timor's problems remain chronic. Its villagers are among the world's poorest who barely scrape together a daily existence. Many farmers earn less than $1 a day. Gangs of youths sometimes express their anger by rioting. An estimated 80 per cent of the people are still unemployed. Hospitals and clinics are nearly non-existent, and illiteracy is common.

The UN's arrival created expectations that there would be immediate jobs, houses and a better life, only to disappoint. The UN money has created a temporary economic bubble that will burst as 1,300 foreign civilians -- plus 9,500 international peacekeepers and police -- withdraw over the next couple of years. Where there are now 300 restaurants in Dili, locals expect that when the UN has gone only half a dozen will be open.

But above all else there is renewed hope and relative peace. Sergio Vieira de Mello, the UN administrator in East Timor who holds the country's sovereignty until independence day, says that East Timor has defied the prophets of doom who predicted violence during the run-up to the election.

"[The election campaign] is testing the political maturity of the Timorese people -- I think they have passed the exam," Vieira de Mello says. "I think that is the best guarantee that what we are building will have a strong foundation." This week thousands of Fretilin supporters packed trucks and buses and walked across the mountains to reach rallies to celebrate the party's victory, even though the polls would not open for several days. They painted their faces and whooped and yelled in anticipation of victory.

Almost everybody you speak with in East Timor believes that Fretilin will sweep the polls and dominate an 88-member Constituent Assembly that will have 90 days to draft a constitution (official results will be announced on September 10).

But Gusmao is more wary than most people about the future of the new state he is set to lead as president after winning the nomination of the major political parties. He is worried that Fretilin will win so easily that it will create a one-party state and not be held to account for its decisions. If Fretilin, or the Revolutionary Front for an Independent East Timor, wins more than 60 seats it will be able to write the constitution. While not mentioning Fretilin by name -- but obviously referring to it -- Gusmao spoke at almost every campaign rally of the "concept that we should not be relying on one political party". He attended some rallies of the smaller parties, apparently in an attempt to temper some of the enthusiasm for Fretilin.

"There is general concern. But not just because it is Fretilin," Gusmao says, pointing out how Golkar, the party of the former Indonesian dictator Soeharto, dominated without checks or balances in that country for three decades.

Deep-seated animosity exists between Gusmao and Fretilin's key leaders, particularly the party's secretary-general, Dr Mari Alkatiri, who is expected to become prime minister of the first government that will be based on the French or Portuguese model of a semi-presidential system where the president is directly elected by the people.

Gusmao took his guerilla fighters out of Fretilin in the mid- 1980s because the party espoused Marxist principles that were alarming the Catholic Church. Under the proposed new system of government, Gusmao as president would have broad authority over defence, foreign affairs and other key portfolios and Alkatiri would run the government on a daily basis.

Mario Carrascalao, a former Jakarta-appointed governor of East Timor, who is widely respected despite the fact he worked with the former Indonesian regime, predicts the two men will have a falling out not long into the partnership. "The relationship between Xanana and Alkatiri up to this point has largely been for show," Carrascalao says.

"When Alkatiri tries to introduce his own policies it will be very hard for Xanana to resist. I have a prediction. Xanana will get the blame because nobody will be able to fix all of the problems of East Timor in the short term. Then Xanana will resign." Asked about future relations with Alkatiri, Gusmao denies there is any friction. "I don't see how we can have animosity," he says. "We meet together. We talk together. I don't believe he is an obstacle."

Jose Ramos Horta, the Nobel peace prize winner and foreign minister of the interim UN administration, says that Fretilin's leaders realise that their world has changed in the past quarter of a century. Ramos Horta is confident that Fretilin will appoint Cabinet members based on experience and talent, not party affiliations. "It will not be an ideological government," he says. "It will not be an arrogant government as many people fear."

Alkatiri, a law professor who was abroad when Indonesia invaded in 1975 and remained in exile during the occupation, says that Fretilin is East Timor's most democratic party, having arranged elections for party positions from the village level to the central committee. He says his government's top priority will be to bring the best people into the Cabinet and other top jobs.

"Our policy is to pursue peace, stability and non-violence and above all else to develop East Timor's democracy," he says. "There is no doubt that we will win. But we will make sure that other parties do not feel defeated." All of East Timor's leaders realise how overwhelming the difficulties will be to build East Timor virtually from ashes. They acknowledge privately that their future depends on revenues from oil and gas in the Timor Sea and worry they may have overplayed their hand in a high-stakes poker game with resource company executives over the level of taxation they will levy.

Many young people are deeply unhappy about a decision by the old elite to develop Portuguese as the official language when most of them speak Bahasa Indonesia and want to learn English.

"We are conscious of the enormous difficulties and the expectations of the people for a better life," says Ramos Horta. "But if you ask people what they want they will tell you schools, a small medical clinic, clean water and public transport. That's all they ask. "We are very modest, humble people. I believe that with good government we can meet those expectations in a short period of time."

Elections mark new step toward independence

Green Left Weekly - August 29, 2001

Jon Land -- The August 30 election for East Timor's Constituent Assembly signifies an important step towards the conclusion of the United Nations transitional administration. As the UN starts to gradually wind back operations and hand over more direct control to the East Timorese, new and old social tensions are coming to the fore.

The election campaign period has been in many respects largely uneventful. Most of the media coverage has focused almost exclusively upon the inevitability of a Fretilin victory or the threat of violence by either pro-Jakarta militia or "dissident" groups within East Timor. The attitude of the populace to the whole process has been a combination of indifference and uncertainty.

Party rallies in Dili and other towns have not attracted large numbers -- certainly nothing like the mobilisations that took place prior to the 1999 referendum or those that followed the downfall of the Suharto dictatorship in 1998. The low turn out for rallies and meetings can partly be attributed to limited funding and resources for parties.

A key factor behind the lack of enthusiasm from most voters is the limited information they have about the parties or any track record by which to judge most of them, except perhaps the longer established parties like Fretilin and the Timorese Democratic Union. But even these two parties have changed considerably since they formed 27 years ago.

Overall there is very little to distinguish the contesting parties from each other. In many cases their platforms or policies are identical. Most espouse support for a "free-market" economy. The only exception is the Socialist Party of Timor (PST) which has consistently focused on developing a base among workers and the rural poor through establishing peasant cooperatives and campaigning for better wages and conditions for East Timorese employed by the UN and private businesses. The 5000 strong rally the PST organised in Dili on August 25 reflects its growing influence.

Support for Fretilin -- the main party associated with the pre- 1975 independence struggle -- appeared to have strengthened just prior to the election. There have, however, been concerns raised over the way Fretilin conducted its campaign activity in many districts and public statements made by some of its leaders.

The independent election Media Mediation Panel (MMP) released a statement on August 20 questioning the use by Fretilin members of the tetum words dasa rai, which means "to sweep the ground". Fretilin leaders said they would "sweep" the country clean after the August 30 elections. The statement read in part: "What concerns the MMP in this context is that the use of the term `dasa rai' is being interpreted by many observers as an act of intimidation that is clearly out of step with the Pact of National Unity signed by most political parties, including Fretilin, on July 8. We are concerned that an atmosphere of suspicion and intimidation may be building in the closing weeks of the election campaign leading to a rise in fear and tension among the people."

New constitution

Once it convenes, the Constituent Assembly will debate and draft a new constitution and, therefore, decide what form of government East Timor should have -- whether a presidential or a parliamentary system. It will determine if and when elections for a president will take place and whether the assembly itself will become the new legislature.

"The PST has called for fresh elections next year for the formation of a legislature. The Constituent Assembly only has the mandate to discuss the constitution", PST secretary general Avelino da Silva told Green Left Weekly. Da Silva said several other parties supported new elections. "The PST does not support a presidential system ... there must be a separation of powers between the executive and legislature."

The nature and powers of the president has already been an issue of considerable debate, though one muddied by the role and attitude of Xanana Gusmao. Gusmao has taken an increasingly low profile since the dissolution of the National Council of Timorese Resistance earlier this year and has regularly expressed a desire not to be president. On the other hand, he has been continually held up by the UN and Western governments, in an almost patronising way, as the only figure capable of uniting the East Timorese.

Despite his expressed reluctance to be involved in politics, Gusmao has accepted a presidential-like appointment by UN administrator Sergio de Mello as head of an "oversight" Political Commission for the new government. According to de Mello, the commission will not be part of the "ministerial structure, but above it, answering to a possible coordinating minister or chief minister... or to me, the transitional administrator..." De Mello told Lusa news service on August 21 that the commission will oversee "all areas of government", with a special focus on "medium and long-term development strategy".

On August 25, Gusmao finally announced that he would accept candidacy for president. Much hope is being pinned on the ability of Gusmao and the members of the Constituent Assembly to steer East Timor through the period of preparation prior to full self- rule. "Everyone wants to be associated with a success story", remarked Sarah Cliffe, head of the World Bank operations in East Timor.

Whatever form of government evolves after the August 30 election it is likely to come under increasing and competing pressures, both domestically and internationally. From the East Timorese masses, expectations will increase for their representatives to adequately deal with social problems such as mass unemployment and land reform.

The World Bank, the International Monetary Fund and the UN have urged "responsible" and "realistic" social and economic policies. The Australian government has been in the lead of foreign governments making similar calls, in particular in relation to the new Timor Sea agreement and the current dispute between East Timor and giant US-based Phillips Petroleum Company.

Dispute over gas

Phillips announced in mid-July that unless it received an assurance from the East Timorese that the tax regime would not increase, it would suspend the construction of a 500-kilometre pipeline from the Bayu-Undan natural gas field in the Timor Sea to Darwin.

Phillips claims that the proposed 4% tax increase by East Timor will severely cut into its profit margins. Any slight reduction in Phillips' profits though is inconsequential when compared to the immense benefit the increase in revenue from Timor Sea gas production will have for East Timor's impoverished economy. East Timor's per capita GDP is now estimated at US$325.

East Timor is a financial flea in comparison to Phillips. Philips' second quarter net operating income of US$601 million is almost 10 times East Timor's projected budget expenditure for the entire 2001-02 financial year.

Despite stating that this is a dispute solely between East Timor and Phillips, the Australian government has clearly sided with Phillips. Foreign minister Alexander Downer does not believe East Timor has the right to renegotiate fairer terms, but that the East Timorese should "reaffirm their earlier commitment regarding the fiscal and taxation policies that would apply to companies".

Industry and resources minister Senator Nick Minchin has continued to claim that there is a threat to Australia's domestic gas supply because the East Timorese dare to assert sovereign rights over their own resources.

The Australian government's position on the Timor Sea dispute is consistent overall with the pro-big business policies implemented by both the Liberal-National Coalition and the Labor Party since the Indonesian invasion of East Timor in 1975. While both may have adjusted their position at times in accordance with changing political circumstances (such as during the upsurge of mass protest calling for UN military intervention to stop the post- referendum slaughter in 1999), Labor and the Liberals have a thoroughly bipartisan approach guided by the central goal of aiding Australian business interests.

The support given by the Howard government and the ALP to the new military-backed government of President Megawati Sukarnoputri in Indonesia is evidence of this, as is the rejection in the Senate on August 21 of a motion by Greens Senator Bob Brown calling for the government to support the creation of an international war crimes tribunal on East Timor and for such a tribunal to cover the whole period of the Indonesian occupation.

Labor Senator Peter Cook won the support of Coalition senators to amend the motion to back the Indonesian government's own investigations and to note the UN Security Council's lack of willingness to set up an international war crimes tribunal on East Timor.

Brown told the Senate: "I don't accept this amendment because it is simply saying, well, this matter should be left to Jakarta and it should be circumscribed to the events surrounding the referendum in East Timor".

TNI to train former guerillas

The Australian - August 29, 2001

Don Greenlees -- The Indonesian army has extended an olive branch to East Timor's fledgling defence force, by offering to train former Falintil guerilla fighters and inviting East Timor's military chief, Taur Matan Ruak, to Jakarta for talks.

Deputy army chief Lieutenant-General Kiki Syahnakri said the Indonesian armed forces (TNI) and Falintil needed to put to rest historic enmities to ensure peace on the East and West Timor border. "We are ready for co-operation, including their training and education and, if it is agreeable to Falintil, to establish a relationship between Falintil and TNI leaders," he said in an interview with The Australian.

"In military ethics there are no eternal enemies. Now they are our allies."

Lieutenant-General Syahnakri's comments are a sign the Indonesian high command is eager to bury the bitter experience of East Timor. The Indonesian military conquest of East Timor cost thousands of innocent lives and tarnished Jakarta's international reputation. Throughout Indonesia's failed 24-year occupation, allegations of human rights abuses by the military persisted, despite Jakarta's strenuous attempts to prove it had won the hearts and minds of East Timorese and was investing in development. But sensitivities also remain acute among retired and serving Indonesian soldiers because of the thousands of troops killed in the unsuccessful campaign to wipe out the small, but elusive, Falintil army. Lieutenant-General Syahnakri, who took command of the military region covering East Timor after the violent backlash against the 1999 vote for independence, acknowledged that the development of official links between the militaries of the two countries could rankle some Indonesians. But he said it was important to start building a relationship before UN peacekeepers left East Timor. He suggested an early meeting between Brigadier-General Matan Ruak, the commander of the East Timor Defence Force, and the chiefs of the Indonesian armed forces and army.

Responding to the Indonesian offer, Brigadier Matan Ruak said yesterday that establishing a working relationship with Indonesia was "priority No 1" for the East Timor defence force. "I will be available for a meeting at any time they think it convenient for them," the former guerilla leader said from his Dili headquarters.

He said the offer of military education and training in Indonesia was a "very big step" for the Indonesian Government and armed forces. "If this happens, it is going to be magnificent for both [sides]," he said.

Brigadier Matan Ruak has proposed turning the often tense border between Indonesia and East Timor into a "demilitarised zone", monitored by international observers.

General Syahnakri says the Indonesian military already has put work into the idea of a joint border committee, similar to border regimes Indonesia has established with Papua New Guinea and Malaysia.

East Timor's economic future is its past - farming

Deutsche Presse-Agentur - August 29, 2001

Joe Cochrane, Ermera -- The farmers of Ermera are fiercely proud of their long tradition of growing East Timor's finest coffee, but these days that is not enough to fill their stomaches.

This pristine, sleepy mountain town is the largest coffee producing region in the territory, but there are few visible signs of its prosperous past. Men, women and children sit quietly on street corners lining crumbling roads, killing time ahead of a second harvest of coffee beans.

This summer's other harvest of prime arabica beans was good, but world coffee prices have slumped, and Ermera's residents have no other viable cash crop and few paying jobs. So they sit and wait for their soon-to-be independent nation to develop in the hopes that it will bring them higher coffee prices, as well as occasional menial side jobs building new roads and schools.

"We cannot just wait for coffee," said farmer Jose da Costa Babo, 28, who said he earns half the price for his unprocessed beans than he did during last few years of Indonesia's occupation of East Timor. "We also need to do other jobs."

In many ways, Ermera's residents are symbolic of the huge task East Timor's forthing government will have in creating jobs for its 800,000 people, half of which are of adult working age. Around 80 per cent of the population are subsistence farmers, ekeing out a living by selling cash crops such as coffee and eating whatever else they grow.

But the euphoria of the territory's 1999 independence vote from Indonesia, and the arrival of the UN and international agencies to set up a multi-party election scheduled for Thursday has given many Timorese false expectations about what life will be like with democracy.

"People were equating the [1999] election to getting jobs, and the economy gets better," said Johanna Kao of the International Republican Institute, a US-funded democracy building group. "It's going to be a lot of hard work and there hasn't been discussion on how much hard work it's going to be."

The arrival of 10,000 foreign UN peacekeepers, police and civilian personnel has further muddied the waters. The foreigners have high salaries, live in nice houses, drive expensive cars and eat at Western-style restaurants.

The vast majority of Timorese live on about one dollar a day, and enviously dream of office jobs, cars and houses to replace what was destroyed by departing Indonesian soldiers and pro-Jakarta militias after the 1999 ballot.

"If it is not easy to get a job, it's possible people will get angry and cause problems," said 73-year-old Sedaliza Santos, who has lived under occupation by Portugal, Japan and Indonesia. "There may be no economic activity." There were already several riots earlier this year, mainly by unemployed youths throwing rocks at UN offices and police, as well as occassional attacks on expatriate workers.

Reality now appears to be setting in about the limited prospects for East Timor's economy after independence, tentatively slated for March of next year. When that happens, the UN mission, the territory's largest employer of Timorese, will pull out along with its so-called "bubble economy."

East Timor political leaders, the UN, World Bank and other agencies have been discussing for months how to build a balanced, sustainable local economy from coffee production, massive off- shore oil and gas deposits, as well as tourism and light industry.

"Agriculture is a very, very important part of it," said Natacha Meden of the World Bank mission in Dili, the territory's capital.

That means the vast majority of the population will continue with subsistence farming, and new jobs from foreign investment such as garment factories, which flock to developing nations, will be some years away.

The international community has pumped around 550 million dollars into East Timor during the past two years, much of which has been used for reconstruction, building infrastructure, agricultural projects and loans to small businesses.

"In terms of attracting manufacturing plants, it will probably take a little while because of the competition in the region, Meden said, "and wages are so much higher here because of the UN presence."

The UN Transitional Administration in East Timor has a budget of only 65 million dollars to run the government, but its massive presence has attracted wildcat businesses that strictly cater to the expatriates.

Some foreign businessmen are convinced that the economy will collapse after the UN pulls out, saying many foreign-owned businesses that employ Timorese would follow. "Without the UN here to run the economy, there is no economy," said one Australian.

Not so, said Brazilian Sergio Vieira de Mello, the UN mission chief. He said many UN and international agencies would remain in East Timor indefinately after independence, thus providing jobs, and that Western and Asian donors were committed to long- term development assistance. "I don't think there will be any implosion," he said.

De Mello better be right for the sake of da Costa Babo and his fellow coffee farmers in Ermera. Until development and jobs can come to their town and give them an alternative income to farming, their very survival will be at the mercy of world markets.

"If there is to be other development, it is the responsibility of the government," da Costa Babo said. "For us, we see only coffee."

Amnesties split leaders on eve of crucial poll

South China Morning Post -August 29, 2001

Vaudine England, Dili -- East Timor's president-in-waiting, Xanana Gusmao, yesterday restated his belief that amnesties should be considered for people who committed serious crimes. But Dili's bishop, Nobel peace laureate Carlos Belo, disagrees, as do most victims of political violence in East Timor.

Whoever wins tomorrow's election for a constituent assembly to draw up a constitution, the amnesty issue is one of the most complicated facing East Timor. "We must not say no, never to amnesty. We must consider how to practise, how to exercise justice in East Timor, but we should not throw amnesty out," Mr Gusmao said. He also was equivocal on the subject of whether an international tribunal should be set up to prosecute Indonesian soldiers and Timorese militia who wrecked East Timor and traumatised a generation during the pro-independence ballot two years ago.

In yesterday's Age newspaper in Australia, Bishop Belo wrote that a tribunal must be set up, adding that without a firm implementation of justice for the country's many victims, its future could not be assured.

"Justice cannot be provided simply or easily. One thing is certain, however, and that is that the future of East Timor depends on it," Bishop Belo wrote. "Justice for the people of East Timor requires that the perpetrators of the most serious crimes be identified and prosecuted."

His view, rather than Mr Gusmao's, is shared by many victims of East Timor's violence. One such group is the Widows' Co-operative in Maliana, a town near the border with Indonesian West Timor, which was ransacked by Indonesia-backed militias and where hundreds of East Timorese were murdered.

"I know who killed my husband. He was a militia member. He came up to me and told me he had just killed my husband," said Agusta da Silva, a 30-year old mother of two who looks twice her age. "Yes I would testify against him, I know his name. There must be justice. "Only if we have justice, if the militia is tried first, only then can I have no hard feelings in my heart. All this must go through the legal process."

Vittoria da Silva found the burned body of her husband at a schoolhouse and says she knows the two men who murdered him. "I am afraid they will come back and kill us too, but I want to see justice. I will testify," she said.

A young activist in the Malian Centre for Human Rights, Diolinda, lost her father to the militia mobs in 1999. "Everyone must be tried ... everything is serious and everybody has to recognise this so it won't happen again," she said. "At first I was not willing to accept the militia back at all, but I have come to accept that if this country wants to stand on its own feet we also have to have reconciliation."

One diplomat said yesterday Mr Gusmao's strong position in favour of reconciliation put him "well ahead of his people". "It's probably due to his personality, his tolerance and desire to look to the future rather than to the past," the diplomat said.

Future Timor president calls for amnesty

Agence France Presse - August 28, 2001

Dili -- East Timor's president in waiting, Xanana Gusmao, said Tuesday that amnesties must be considered for those who led the violence surrounding the territory's independence vote two years ago.

"We must not say 'No, Never' to amnesty," Gusmao told AFP in an interview. "We must consider how to practise, how to exercise justice in East Timor, but we should not throw amnesty out of this process."

Gusmao, the former guerrilla commander who led East Timor's independence struggle since 1981, first from the mountains and then from jail, has become the chief advocate of reconciliation.

He announced at the weekend that he would run for president despite earlier refusals because of pressure from the people and political parties contesting Thursday's elections for a constituent assembly.

Gusmao's stance could set him at odds with the future parliament.

Representatives of the 16 parties and four independent candidates running in this week's poll have declared their support for an international war crimes tribunal.

Gusmao said that while he would not oppose a tribunal, he would not actively seek it. "I support the international tribunal but it is not me, it is not my business. I don't oppose it but it's not my business. I'm not a human rights activist, I'm not a judge, I'm not a prosecutor. I'm not a politician also. I am a citizen that is concerned about the future of the development of this country. We must be realistic. "It is better to consider reconciliation, justice and amnesty, how it can be dealt with."

Pro-Indonesia local militia gangs, raised and backed by the Indonesian military, set the country aflame and killed at least 600 people after the August 1999 ballot in which almost 80 percent voted for independence from Indonesia.

Tens of thousands either fled to Indonesian West Timor or were forced there by militias. Some militia leaders have already been convicted and jailed in Dili but many are still at large in refugee camps in West Timor.

Refugee workers and returnees from West Timor have reported that the militia leaders control many camps and are virtually holding tens of thousands of East Timorese refugees hostage. They are trying to negotiate amnesties in return for bringing the refugees back home.

Indonesia has failed so far to live up to its promise of prosecuting a handful of military and police officers and Timorese militia leaders for gross human rights violations. Jakarta is still in the process of setting up a special court to try 18 suspects. Four militia leaders originally identified as suspects have been omitted from the final list.

Gusmao said that if he is elected president early next year, as universally expected, he will not press Indonesia's new President Megawati Sukarnoputri on the prosecutions. "The problem is that we are not Australia, we are not Japan, we are not Europe or America. We are in very difficult conditions. We have to consider first years of independence without income or resources," he said.

"Maybe I can say 'Yes, of course [prosecute], if you are able, it is not asked by us as vengeance, it is in order to respond to the international request, but not [because of] me.'"

East Timor: raising a nation from rubble

Agence France Presse - August 28, 2001

Vamasae -- In one of the thousands of charred and gutted buildings that still scar East Timor's landscape, 200 villagers squat before the man who won a Nobel peace prize crusading for their independence, Jose Ramos Horta.

Now their interim foreign minister, Horta is imploring the people of this coastal rice plain in the half-island's central north to show the world that they can have an election without violence, which would lose any chance of the foreign investment they are crying out for. "Those who have big money first want to see if there is peace and stability, then they will come. But that is the condition," he says.

Vamasae's people are begging for foreign capital to help them recover from the devastation that followed their last vote two years ago. In 1999 the former Portuguese colony was razed to rubble by departing Indonesian troops and their proxy militias, after 78.5 percent of East Timorese voted to end Indonesia's 24- year occupation. Whole towns were torched and most of the country's infrastructure and facilities destroyed.

Since then, the United Nations and a host of aid agencies have been trying to rebuild the nation at a cost of several hundred million dollars. Multilateral lenders and 15 donor nations are footing the bill, for projects that range from restoring the electricity network to training lawyers for a new justice system.

But the reconstruction has ground to a halt in Vamasae, village head Manuelito Reis complains to Horta. Power still has not been restored, he says. "We have a carpentry industry here, but it can't develop because we have no power," Reis says.

A foreign aid group that came last year to rebuild homes and schools stopped after fixing two houses, he adds. Tractors donated by foreign governments have not made it to the village, so their rice production is poor. Anyway, those villages that have received the vehicles have had to pays fees for them, he says.

Reis also wants to know why the only foreign investment so far seems to be in supermarkets and restaurants for foreigners in the capital Dili, some 60 kilometers to the west. "These have no benefits for us. It should be Timorese who benefit from this."

Horta replies he cannot fix the power; he pledges to investigate and appeals for patience. "Even countries that have had their independence for 150 years are still unable to solve their poverty and improve their schools. "You'll see in two or three years this government cannot also solve all your problems," he cautions. "We have to invite businessmen to come to East Timor, but they can only come if here in Vamasae there is no killing or stone throwing. Otherwise, who wants to open a business here?"

A major problem, according to finance minister in the transitional cabinet, Michael Francino, is that East Timor was always a poor country. "It's not like the reconstruction of post World War II Europe, where countries were devastated but were rich so they recovered quickly," he told "Here we're rebuilding a poor country and sometimes we tend to forget that."

Francino prefers to call the effort one of "building" rather than rebuilding. "You don't really want to go back to what they had before exactly," he said. "We won't rebuild many of the facilities that existed."

The mettled roads Indonesia built for its heavy military presence will not be repaired, and the large fuel and electricity subsidies that Indonesia provided will not be reinstated, he said. "Not every school will be rebuilt, not every government building will be rebuilt. Indonesians had a very large government public service sector, the hope here is that the number can be held down."

And the rural population may not have the same electrical service as before: it will have decide whether to spend money on pricey power, or on other priorities, like improved education or health. "East Timor will build a different East Timor," he said.

Three-tiered economy props up the world's newest nation

Agence France Presse - August 27, 2001

Bronwyn Curran, Baucau -- In a good month Carlos Bovida makes 20 dollars selling sweet potatoes and bananas on a lonely road, winding through the sparse mountains of this half-island nation.

Barely enough to feed his five daughters, it puts him at the poorest but most resilient end of the three-tiered economy that is operating in East Timor as it inches towards full independence.

"There's a rural subsistence economy which was disrupted in 1999 but has recovered and is relatively resilient," said Michael Francino, the finance minister in East Timor's Transitional Cabinet. "There's a sort of urban service-oriented economy ... then there's a third economy that's quite artificial, which arrived with us." "Us" are the 1,300 foreign civilians employed by the United Nations to temporarily administer East Timor, plus the 9,500 international peacekeepers and police keeping it safe.

The UN has been jointly running and rebuilding the territory with local leaders since October 1999 after East Timor voted to end Indonesia's 24-year rule in August 1999 and was subsequently devastated by departing troops and local militias.

"It creates demand for hotels, restaurants, transportation services ... and is a bit of a bubble economy that will disappear as the number of internationals winds down," Francino said.

Further down the road in Baucau's Bucoli village, Mariano grows enough sweet potatoes to enable him "to eat and drink." His teenage nephew Vasco makes 20 dollars a day selling mobile phone cards to foreigners on the streets of the capital Dili. Vasco is typical of the bubble economy, where earnings are wildly enhanced by the massive presence of foreigners on plentiful UN salaries.

The "bubble" economy has many people anxious, with only a few months left until the UN starts winding down its presence ahead of its mandate's expiry on January 31. "Foreign civilian staff will drop from 1,300 to 20 percent of that by this time next year," Francino says. "Managing that withdrawal is going to be a problem for the next 12 to 24 months."

Francino predicts a "disjuncture" as the real urban economy, still in recovery, attempts to absorb those employed in the artificial economy. "There is almost bound to be what amounts to a slump," the minister said.

Most of East Timor's 737,000 people live outside the cash economy, with only 25,000 on a regular wage, mostly on less than 200 dollars a year on average, and 85 percent living in rural areas.

The rural subsistence economy, in which most East Timorese live, has bounced back faster than the urban service economy because it had only lost a few physical facilities in the destruction that followed the 1999 vote, while swathes of towns and cities were torched to the ground. "As you walk around Dili you can see the ruined stores. Some have been rebuilt, but there's a long way to go," Francino says. "That economy was completely devastated, and will recover more slowly."

Some 300 million dollars of foreign donor money is propping East Timor up in the meantime, of which 55 million pays foreign staff. Running East Timor's fledgling civilian administration is costing 65 million dollars this financial year, and is projected to reach 103 million dollars by 2004-2005.

The nation is four years away from financing its own budget, when profits from the Timor Sea oil fields start rolling in, according to official projections. It is projected to raise 25 million dollars in revenue over 2001-2002, mostly in taxes and fees for using facilities like ports.

"We see a financing gap of four or five years with extensive donor support for recurrent government spending," Francino says. "But then suddenly about 2005-6, rather large revenues from the Timor Sea for the first time would allow the budget to be self- financing."

The authority have factored in 92 million dollars in taxes from Timor Sea projects for 2005-6, pushing East Timor's revenue to 114 million dollars that year. Self-sufficiency for the world's newest nation is on the horizon.

Run to regain the top job turns election into a two-horse race

Sydney Morning Herald - August 28, 2001

Mark Dodd, Dili -- He was East Timor's first president, the head of the short-lived Fretilin administration that unilaterally declared independence in November 1975, 10 days before Indonesia invaded the Portuguese colony.

With the rest of Fretilin he withdrew into the mountains. He was later a central figure in a Fretilin split and was jailed and tortured by his former comrades. He was caught by the Indonesians and endured 22 years as a virtual prisoner of Jakarta. Now back in East Timor, and officially cleared of claims of collaborating with Indonesia, Mr Francisco Xavier do Amaral has declared he will contest the country's first democratic presidential election.

It means he will be up against Mr Xanana Gusmao, who at the weekend ended months of speculation by saying he was willing to accept nomination for the position. Mr do Amaral, 67, said he would run for office to show East Timor was a democracy.

"If the eyes of the world are on East Timor, then I think anybody can run for president. It shows we are democratic." He would announce his candidacy after Thursday's elections for the Constituent Assembly, which in effect will become East Timor's first parliament. The assembly will draft a Constitution that will decide how the president will be elected.

Mr do Amaral's decision to stand against Mr Gusmao, who is outright favourite to win the presidency, underlines some of the deep political divisions within East Timor.

His party, the Association of Timorese Social Democrats (ASDT), which has strong support around the highlands town of Turiscai, is highly critical of the United Nations Transitional Administration in East Timor. He believes it has failed to remain neutral and has provided favourable treatment to Mr Gusmao and his colleague Mr Jose Ramos Horta.

Mr do Amaral, a former teacher and founder of the Fretilin party, was appointed president of the Democratic Republic of East Timor in Dili on November 28, 1975. Only four countries, all former Portuguese colonies, recognised the new state, which Indonesia invaded on December 7, 1975.

Mr do Amaral was expelled from the Fretilin central committee in 1977 after an internal rift over tactics to counter the Indonesians. He advocated negotiating with the Indonesians and emphasised the use of underground political tactics, rather than relying solely on guerilla war. He was overthrown by a radical faction and jailed and tortured. Eventually he was captured by the Indonesians, who used him as a propaganda weapon against Fretilin. He was a virtual prisoner in Indonesia before fleeing to Portugal and returning to East Timor last year.

Observers say support for his ASDT in this week's poll could prove a surprise. The party, whose symbols are similar to those of Fretilin, could siphon off a lot votes in what is being regarded as a one-horse race.

Belo seeks war crimes justice for East Timor

Sydney Morning Herald - August 28, 2001

Lindsay Murdoch, Dili -- Nobel Peace Prize-winner Bishop Carlos Belo has made a new appeal to the international community to establish a war crimes tribunal to punish Indonesian military officers and militia leaders who presided over an orgy of killings and destruction in East Timor in 1999.

Bishop Belo said the future of East Timor depends on justice for the survivors of the "scorched earth" withdrawal of Indonesian troops from East Timor when up to 3,000 people were killed. "Justice for the people of East Timor requires that the perpetrators of the most serious crimes be identified and prosecuted in the same manner as a common criminal," Bishop Belo said. "This means that a legal process is needed." Bishop Belo's appeal comes as other East Timorese leaders consider granting an amnesty for all crimes committed in East Timor over more than 20 years, except genocide.

Former guerilla leader Mr Xanana Gusmao made it clear last weekend, when he declared that he would accept nomination to be East Timor's first president, that an amnesty, national reconciliation and good relations with Indonesia would be his priorities.

But all 16 political parties contesting East Timor's first democratic elections on Thursday have pledged to seek an international crimes tribunal, despite the certainty that Indonesia would refuse to co-operate.

The United Nations Secretary-General, Mr Kofi Annan, has warned repeatedly that the UN would consider setting up an international tribunal if Indonesia fails to punish those responsible for the atrocities.

But UN observers say it is unlikely UN Security Council members China and Russia would approve setting up a special East Timor tribunal, leaving UN-established courts in East Timor as the only forum to pursue prosecutions outside Indonesia.

Indonesia has promised to set up a special court to try East Timor cases, but observers doubt that any Indonesian court would convict high-ranking officers such as former armed forces chief, General Wiranto, who has not even been included on a list of 22 suspects by Indonesian prosecutors.

East Timor's Foreign Minister, Mr Jose Ramos Horta, told the Herald yesterday that most of his country's leaders favoured granting an amnesty that would clear the jails on the day it gains independence next year. "But it is my personal view that in the case of genocide or crimes against humanity those found guilty should serve at least part of their sentences," he said.

Bishop Belo warned that unless the large numbers of Indonesian military officers directly engaged in crimes against humanity in East Timor were brought to account they would continue to perpetrate crimes.

He urged the international community to provide adequate resources and expertise to East Timor's legal system for it to deal with hundreds of militia members who remain in the country.

Bishop Belo said he also favoured a truth, reception and reconciliation commission to enable Timorese to overcome the legacy of the past and move down the path to independence.

Elections neither free nor democratic, says UDT leader

Lusa - August 28, 2001

The upcoming Constituent Assembly elections in East Timor serve "only to comply with the calendar and are neither free nor fair", the leader of the historic UDT party, Joao Carrascalao, said on Tuesday. "The people are neither prepared nor informed enough to vote.

They have also been victims of constant threats and aggression before the passivity of UNTAET (UN Transition Administration in East Timor)", Joao Carrascalao told media before a gathering of party members in Dili.

East Timorese voters will on Thursday elect the 88 members of the assembly charged with drawing up the future national constitution.

Joao Carrascalao said his party was not informed of Xanana Gusmao's decision to be a future presidential candidate, announced Saturday during a debate attended by all parties except the UDT (Timorese Democratic Union). "If we'd been advised of the announcement we'd have gone to the session", the UDT leader said, reaffirming that Gusmao, the historic leader of the independence struggle, was the "best candidate for East Timor".

He also reiterated that his party would hold to its presidentialist concept of government, which it hopes to see inscribed in the future national constitution, and support formation of a national unity government after the next elections.

Both positions are contrary to those defended by the Fretilin party, widely tipped to win the Thursday elections, which has called for a semi-presidential system and the formation of a national inclusion government, without negotiations with other parties. "The proposal for a national inclusion government only shows Fretilin's arrogance", Joao Carrascalao said. He was referring to Tuesday comments by the Fretilin secretary general, Mari Alkatiri, who said a future government could include "valid members of other parties." "We are not willing to accept. The UDT doesn't accept handouts", Joao Carrascalao said.

PSD leader hopes for 30-40 percent of vote, criticizes Fretilin

Lusa - August 28, 2001

The leader of East Timor's Social Democratic Party (PSD) said Monday in Dili he hoped his party would obtain between 30 and 40 percent of the vote in Thursday's Constituent Assembly elections.

Mario Carrascalao, who was a governor of East Timor during the Indonesian occupation, nevertheless cautioned that the results would "not be genuine", even if his party won the elections.

"The UN did not provide means for the parties to publicize their messages, so it cannot be said that these elections were genuinely free", Mario Carrascalao said, after considering that the election campaign had been marked by "enormous security conditions". "The PSD has had no reason to complain, except for the stones thrown at one of our campaign caravans in Maliana by members of Fretilin", he stated.

Fretilin supporters, "with or without the guidance of its leadership", have on occasion intimidated or otherwise harassed the PSD, Mario Carrascalao charged. He went on to criticize the historic pro-independence party, accusing Fretilin of "wanting to restore 1975 and to impose what was imposed in 1975".

"If Fretilin obtains an absolute majority, which I don't believe, it will be difficult for it to maintain the prestige to win future elections", the PSD leader said. He defended the formation of national unity government after the August 30 Constituent Assembly elections, a proposal not accepted by Fretilin, which has said it will not negotiate the formation of the future government with other parties.

Fretilin is widely favored to win the Thursday ballot, with its leaders saying they expect to win a minimum 73 of the 88 seats in the Constituent Assembly, which will be charged with drawing up East Timor's future national constitution.

Fretilin warns UN party either leads or stays out of government

Lusa - August 27, 2001

Predicting his Fretilin party would win East Timor's first free elections by a landslide, Mari Alkatiri warned the territory's UN transition administration Monday his party could refuse to join a new interim government if UNTAET did not follow Fretilin's lead.

"Fretilin is not in a hurry to be in government", Alkatiri told a Dili news conference. "Either things are done with our accord or we will stay out of government, limiting our participation to the constitutional assembly and forming a government when independence is restored".

Tensions between Fretilin, which is widely favored to win the constituent assembly election Thursday, and UN administrator Sergio Vieira de Mello center on the latter's publicly expressed intention of forming a broad-based transition cabinet, reflecting the vote.

Alkatiri said Fretilin "defends a government of inclusion, a concept invented by us", but that the party was only open to "a coalition of talents, not a coalition of parties". Fretilin, he added, would "not negotiate" with the UN administration or the other 15 parties contesting seats for the 88-member constituent assembly.

Alkatiri forecast that Fretilin would win outright in 12 of East Timor's 13 districts, gaining around 73 assembly seats with about 83 percent of the ballots.

Mari Alkatiri says Fretilin no longer radical or communist

BBC Monitoring Service - August 27, 2001

Fretilin Party Secretary-General Mari Alkatiri has guaranteed there would be no radical behaviour on the part of his party as Fretilin were no longer a communist or socialist party.

The party's economic policies were proof of this as they support capitalism and personal ownership, plan to invite foreign investors from Indonesia and Australia to put their capital into Timor Lorosae and they also hope to become a member of ASEAN.

This statement was made by the Covalima Coordinator for the General Reconciliation Forum, Helio Caetano Moniz, in Kupang on Sunday, citing comments by Mari Alkatiri after they met in Dili this week.

Helio went to East Timor to represent the 18,000 refugees from Suai, Covalima still residing in camps in Betun, Belu district, East Nusa Tenggara (NTT) after being invited by UNTAET Head Sergio Vieira de Mello to meet with him from 20-24 August.

He also met with the Fretilin secretary-general, political party members participating in the elections, dozens of youth organization members and community and religious figures from Suai to discuss reconciliation and plans for the repatriation of refugees from Suai...

During the Dili meetings amnesty was also brought up. Former PPI [Timorese Integration Forces] members want general amnesty for all former militia members but in Timor Lorosae they believe reconciliation could only be achieved after due legal process and feel they were oppressed for 24 years during integration with Indonesia.

However, it was later determined during the discussions that there was a possibility for amnesty sometime during the process as a number of [East Timorese] political parties were in favour of amnesty for the major cases including PNT [Timorese Nationalist Party] and PD [Democratic Party]...

[Source: Satunet web site, Jakarta, in Indonesian August 26.]

Fretilin facing array of challengers in Timor poll

Canberra Times - August 27, 2001

James Fox -- Parliamentary elections will be held in East Timor on Thursday, two years from the day when the East Timorese turned out en masse to vote for their independence. It is expected that 400,000 East Timorese will take part in the coming election.

Political campaigning has been going on for a full month. Sixteen parties are officially registered with the United Nations, with more than a thousand candidates vying for 88 seats in a Constituent Assembly whose task will be to draft and approve the constitution for the new state of Timor Lorosa'e. Seventy-five of these seats will be chosen on a national basis and 13 at the district level. Choosing from among such an array of possible candidates under so many different party banners poses a new challenge for a population that has never before participated in free democratic elections.

Fortunately, 14 of the 16 parties have signed a "Pact of National Unity" intended to foster a non-violent election process and a degree of stability after the ballot. These parties have joined in an expression of support for Xanana Gusmao as a future president. Athough the rhetoric has become more heated, there has been, as yet, relatively little violence.

Fretilin, the party that led the revolutionary struggle, is expected to poll well. Mari Alkatiri, Fretilin's secretary general, has already claimed that his party is confident of 80 to 85 per cent of the vote. Given this presumed predominance, all the other parties are in effect running against Fretilin and its well-prepared organisation.

There are, in fact, many challenges to Fretilin. Its position has been weakened by divisions within the ranks of its old guard. Francisco Xavier do Amaral, an early founder of Fretilin, has formed his own party, the Timorese Social Democratic Union (ASDT), and is relying on the old Fretilin revolutionary flag to garner support in the countryside. Abilio Araujo, another former Fretilin leader, who became closely associated with Indonesian interests, has recently returned to lead the Timor Nationalist Party (PNT).

The ASDT and PNT parties appear to have the support of various dissidents including members of the Popular Council for the Defence of the Democratic Republic of East Timor (CPD RDTL) who claim that East Timor has been independent since 1975. This group objects to the UN's presence and opposes the present election process. If violence occurs during the campaign, it is most likely to come from this group in particular.

The Timorese Socialist Party (PST) has positioned itself to the left of Fretilin and is trying to capture some of Fretilin's former support base. The party, for example, is campaigning against Fretilin's commitment to Portuguese as an official language. The Socialist Party regards the use of Portuguese as a clear form of neo-colonialism.

Fretilin's old rival, the Timorese Democratic Union (UDT), has also joined the fray. At a rally on August 12 in Dili, Joao Carrascalao, the leader of UDT directed most of his energetic rhetoric against Fretilin, accusing the party of promoting an intimidating, undemocratic campaign.

Fretilin's old rival has also joined the fray. The main challenge to Fretilin, however, is likely to come from two new parties: the Social Democratic Party (PSD), led by Mario Carrascalao, a respected former governor of East Timor when it was under Indonesian rule, and the Democratic Party (PD), led by Fernando de Araujo, a former student leader who was once jailed with Gusmao in Cipinang prison.

The Social Democratic Party comprises an impressive group of moderates with bureaucratic experience whereas the Democratic Party's support is expected to come from the younger generation.

Fretilin appears to see the Democratic Party as its greater threat, especially since it comprises so many of the youth who successfully organised the East Timorese vote for independence in 1999. They have proved themselves able to do well with few resources against a formidable organisation.

Fretilin has provoked matters by proclaiming that members of the Democratic Party "still smell of their mother's milk". In a country where more than 50 per cent of the population is under 21, it seems an imprudent political tactic to campaign against the younger generation. Even if it loses, the Democratic Party sees itself as the party of the future.

Hundreds of international observers with an accompanying media are now making their way to East Timor with hopes for a peaceful election and a successful transition to independence. In the coming weeks, the world's spotlight will once more be focused on the East Timorese.

[Professor Fox is director of the Research School of Pacific and Asian Studies at the Australian National University. He was an international observer for the East Timorese independence ballot in 1999 and will be in East Timor again as an observer.]

Dili will ask UN to help bring children home

Sydney Morning Herald - August 27, 2001

Lindsay Murdoch, Jakarta -- East Timor's leaders are planning an international campaign to pressure the Indonesian Government to allow Timorese children separated from their parents at the height of mayhem in East Timor to be reunited with their parents.

The Cabinet member for foreign affairs, Mr Jose Ramos Horta, yesterday described Indonesia's handling of the children's plight as shocking and outrageous, and promised to raise the case in the United Nations Security Council, which he is to address in October.

The interim UN-administered government in East Timor has also asked the independence leader Mr Xanana Gusmao to raise the situation at an international summit on children in New York next month.

"It will be enormously embarrassing for Indonesia, particularly those in authority who do not seem to be willing to have this case resolved," Mr Ramos Horta said. "We plan to raise it in every international forum. This is a crime. The new government, the new president [Megawati Sukarnoputri] cannot allow this to take place."

The Herald revealed last October that pro-Indonesian Timorese activists had separated 130 East Timorese children from their parents living in refugee camps in Indonesian West Timor and had left the children with poor Catholic orphanages in Central Java.

In June this year one of the most prominent of the activists, Dr Octavio Soares, brought another 46 Timorese children from West Timor to Java, where he says he will supervise their education. Humanitarian workers and church officials suspect the activists want to indoctrinate the children to get them to push for East Timor's reintegration with Indonesia.

Dr Soares has refused to allow the UN High Commissioner for Refugees (UNHCR) to reunite the children with 16 sets of parents who are demanding them back after returning to their villages in East Timor. He has threatened to kill UN officials if they try to take the children home without his consent. Last month he snatched 12 of the children from Catholic nuns as they were about to be taken to the airport to be flown to East Timor by UN officials.

The Herald has learnt that a high-ranking official of Indonesia's Department of Foreign Affairs called on Dr Soares two weeks ago and told him to allow the children to be reunited with their parents if that was what the parents wanted.

Mr Chalief Akbar, the head of political and information affairs at the Indonesian Consulate in East Timor, told a Dili newspaper this month that the children had been unable to return to their parents because of an argument between the UNHCR and the Hati Foundation.

Dr Soares runs the foundation, set up in the early 1990s to support Timorese partisans who helped Indonesian forces invade East Timor in 1975.

Mr Akbar said Indonesia would "work towards the best solution". But he was also quoted as saying the foundation was "exploring another transfer of 500 children to other locations in Indonesia".

Gusmao ditches pumpkins for presidency

Sydney Morning Herald - August 27, 2001

Mark Dodd, Dili -- The East Timor independence leader Mr Xanana Gusmao has decided not to retire from politics to grow prize pumpkins for the Dili show. He ended months of speculation by announcing at the weekend that he would stand as president of the world's newest country.

"I declare here and now that I will accept to be nominated by the parties to the office of president of the Republic of Timor Lorosae [East Timor] if the parties commit themselves to accepting the outcome of the elections." Mr Gusmao gave the undertaking at the end of a nationally televised debate between 15 of the 16 political parties and independent candidates contesting Constituent Assembly elections on Thursday.

For the first time, Mr Gusmao raised the issue of an amnesty for anti-independence militia leaders holding tens of thousands of refugees in camps in West Timor.

A capacity crowd packed into the Dili gymnasium cheered when Mr Gusmao, 55, announced his candidacy for the presidency. He appealed for all parties to ensure this week's historic election passed peacefully.

For more than a year Mr Gusmao had denied any intention to stand for president. He was forced into the decision, he said. "I always nurtured the dream that after independence I would have time to cultivate pumpkins and breed animals."

A tale of two Timors: optimism and disillusion

Deutsche Presse-Agentur - August 26, 2001

Dili -- It is easy to be optimistic about East Timor's future when you are sitting at the villa of its de facto king -- UN diplomat Sergio Vieira de Mello.

As a staffer served wine to visiting journalists sitting in new rattan furniture on de Mello's spacious front porch, the Brazilian chief of the UN Transitional Administration in East Timor painted a pretty picture of its performance in preparing this stife-torn territory for independence. The Timorese, de Mello said, are being thoroughly trained by international UN staff to run the country's administration, finance and banking sectors.

The false "bubble" economy created by the infusion of hundreds of millions of dollars in foreign aid and wildcat businesses catering to expatriates will not burst after the UN begins pulling out later this year, he assured his guests. And most importantly, the Timorese people, who have only known colonial occupation by Portugal, Japan and Indonesia for the past 500 years, are grasping the complexities of democracy just ahead of their first-ever election scheduled for Thursday, de Mello said. "[The election campaign] is testing the political maturity of the Timorese people -- I think they have passed the exam," he said optimistically. "I think that is the best guarantee that what we're building will have a strong foundation."

It is a different story 1 kilometre down the street of the capital Dili, where three Western businessmen sat on plastic chairs behind a local supermarket, drinking canned beers. "When the UN pulls out, this place is going to end up like Somalia," said one of them. "Without the UN here to run the economy, there is no economy."

The businessmen, who openly admitted they had become disillusioned by the UN's performance, told horror stories of endless red tape and arbitrary regulations that hurt their companies, and incompetent UN staff who are here only out of self-interest and treat the Timorese with contempt. There is no commitment to building democracy, little law enforcement and few signs that things are getting better, they said. "The only interest the UN has here is to promote their self-interest," said an Australian who works in the commercial finance sector. "They're not building democracy. They're here to promote themselves and have a good time."

A quick look around Dili is proof enough that the foreigners are having a good time: numerous restaurants and bars, Range Rover vehicles, and two luxury floating hotels with discotheques blasting house music across the city's port.

But the real problem is outside the capital, where most of the territory's 800,000 people are living on less than 1 dollar a day. Unemployment is rampant, hospitals and clinics nearly non- existent and illiteracy commonplace.

The UN's arrival 19 months ago, and promises by Timorese independence leaders of multi-party democracy, has given the population something to look forward to. But it has also created extremely high, naive expectations that democracy will instantly translate into jobs, houses and a better life. "There's going to be these expectations -- 'Where are our roads, our schools, our jobs'?" said Johanna Kao of the US-funded International Republican Institute, a democracy-building group. "It's going to be a lot of hard work, and there hasn't been discussion on how much hard work it's going to be." But Kao said there was room for optimism that East Timor will make it as the world's newest democratic nation, considering where it was only two years ago.

A prime example that the Timorese were grasping democracy, de Mello said, was the peaceful election campaign for seats in an 88- member constituent assembly. The new body will draft a constitution, set a date for a presidential election and then become East Timor's first parliament. Among the 16 parties running are old battlefield enemies from the territory's civil war that preceded Indonesia's invasion in 1975. "Some of you were predicting instability, violence, blood during the election campaign," he said. "[There was] nothing -- eight incidents."

A few months ago, a poll found that the vast majority of Timorese did not think multi-party democracy was a good idea because it could led to confrontation, but de Mello said most how understand and have embraced the process. He said the UN was on schedule to train a Timorese civil service for a government, police and armed forces, and that the seeds of democracy have been properly planted, unlike past UN missions including Cambodia 10 years ago.

As a back-up, international peacekeepers, UN agencies and dozens of international aid groups will remain in East Timor indefinitely to assist the new country. "The bottom line is we will not let them down, and we will not pull out on independence day," which could come next March, de Mello said.

The biggest concern and challenge will be the economy. The East Timorese will have to rely on coffee production and other agriculture to replace the money being pumped in by the international community. The territory will also eventually receive hundreds of millions of dollars in revenue from off-shore oil and natural gas deposits that will be exploited in the coming years. "I don't think there will be any implosion," de Mello said.

Sedaliza Santos, a 73-year-old Timorese woman from Ermera, said she was happy to see independence after growing up under Japanese occupation and raising 12 children during the Portuguese and Indonesian regimes. But unlike some of her compatriots, she has no illusions about the tough road ahead. "It will be better living under democracy, but we still need time," she said. "The economy is not there yet."

UN administrator for East Timor plans broad-based government

Agence France Presse - August 27, 2001

Lisbon -- East Timor's UN administrator said in a newspaper interview Friday that a broad-based government will be named to govern the territory following next week's elections.

The government "will be comprised of members of the two or three parties that garner the greatest number of votes, of independent candidates, if elected, and of independent figures who are not participating in the elections but have recognized competence," Sergio Vieira de Mello told Portuguese daily Publico.

The August 30 elections are being held to choose an 88-member constituent assembly, which will be sworn in on September 15 and will have 90 days to draft and adopt a new constitution for East Timor.

The UN official, who is overseeing the former Portuguese colony's transition to democracy since it voted for independence from Indonesia two years ago, expressed confidence that the parties running in the election would support this type of government and that he had already discussed the concept with them.

However, Vieira de Mello voiced concern over accusations of intimidation by certain parties during the otherwise peaceful electoral campaign. "We are investigating certain allegations, but we are not sure if they are true," he said. Two activists from front-runner party Fretilin were arrested Friday for allegedly using threats while campaigning.

Vieira de Mello conveyed hope that the new government of East Timor would remain after the country-to-be became fully indepedent. "My hope is that the government will remain after independence so that the period of seven or eight months before independence would constitute as a sort of training period for the day when they [the politicians] will have all the power in their own hands," the UN administrator said.

The UN official also said that presidential elections should take place before independence. Xanana Gusmao, the historic leader of East Timor's resistance movement, is a candidate for the presidency.

The UN transitional administration was set up on October 25, 1999 following a vote by the East Timorese to split from Indonesia, which invaded their country in 1975 and annexed it the following year. East Timor's first democratic elections will return 88 members to an assembly which is charged with the task of preparing an independent and democratic constitution within 90 days.

The little country that wants to

Los Angeles Times - August 26, 2001

David DeVoss -- The East Timor branch of Portugal's Banco Nacional Ultramarino in Dili looks like a modern financial institution. It has a smiling receptionist, an unctuous guard and executives seated behind desks papered with documents. But don't bother asking for a Visa card, a letter of credit or interest on any money you might deposit. The bank's deputy director, Rui Peixe, can't even extend home loans to deserving families.

"How do you expect me to extend mortgage loans when all the land titles are destroyed?" he asks with a sigh. "I'm working in a country that's still writing all the rules. This is frontier banking." That East Timor even has an air-conditioned building that calls itself a bank is something of an accomplishment, given the fact that 80% of the country's houses, government buildings and municipal utilities were destroyed two years ago after 78.5% of the population voted to secede from Indonesia. That remarkable act of democracy was followed by a paroxysm of hellish violence, during which 1,000 people died and 300,000 were driven from their burning homes by Indonesian army officers and their militia compatriots. When a United Nations peacekeeping force composed of Australians and New Zealanders arrived three weeks later, what once had been Indonesia's 27th province lay broken, charred and silent.

This week, East Timor will hold another election. Under the fretful gaze of the UN, qualified voters will go to the polls on Aug. 30 to elect a constituent assembly charged with writing a formal constitution. Once that task is complete, Timor will elect a new president and formally declare independence. Most Timorese hope the process will conclude by Nov. 28. That was the day in 1975 when the former Portuguese colony declared independence before being overrun nine days later by Indonesia.

This is the first time the UN has attempted to create a new country. To ensure success, it annually spends $563 million in support of a mission second in size only to the one administering Sierra Leone. The 11,000 soldiers and civilians who comprise the United Nations Transitional Administration in East Timor (UNTAET) accomplished a lot in two years. Peace has been restored and all but 40,000 refugees in Indonesian West Timor have been repatriated. There is a credible defense force, a functioning constabulary and an indigenous civil service ready to take over when the UN's civilian workforce departs. "Even the harshest critics must be surprised that the United Nations has turned ashes and debris into a functioning state heading fast toward a democratic future," boasts Sergio Vieira de Mello, the UN's chief administrator.

Unfortunately, Timor's success is by no means assured. The government that emerges from next week's election will be an international mendicant that relies on foreign aid for two-thirds of its $65-million budget. Outside of Dili, the roads are crumbling and electricity is sporadic. In the isolated enclave of Oecussi, which the UN has made no attempt to rebuild, the situation is so bleak that some leaders believe the district's survival will hinge on reintegration into Indonesia. How can the UN assume absolute control of a place without ensuring pure drinking water, regular trash collection or adequate transportation? "Because our job is to provide administration, not government services," explains Peter W. Galbraith, UNTAET's top-ranking American.

The difference between expectation and reality lies in the divide between $65 million -- the amount spent rebuilding East Timor -- and the $365 million that goes to employ, shelter and air- condition UN peacekeepers and bureaucrats. The international lifestyle long has been a source of resentment for Timorese living in Dili. Some worry the subdued anger could flare when foreigners begin to depart, taking with them all the UN-owned SUVs, computers and air conditioners that have been reserved for their personal use.

Ironically, the UN's departure could hasten the redevelopment of Timor's crumbling infrastructure. Under UNTAET, responsibility for highway maintenance and repair has been given to a battalion of engineers from Bangladesh who favor smudge pots and hazard tape over rebar and asphalt. Not surprisingly, roads leading from Dili into the interior often resemble those linking Chittagong with Dhaka. A shift to bilateral assistance will remove the UN bureaucracy and allow funds to go to experienced private construction firms.

For two years, the United Nations' presence has masked the looming reality of Indonesia, a powerful neighbor that must be mollified if East Timor is to survive. Under recently deposed President Abdurrahman Wahid, Jakarta did little to disarm militias or reform its rapacious army. New President Megawati Sukarnoputri says she wants to expand the scope of an Indonesian human-rights tribunal investigating violence in East Timor, but her ability to control the army remains in doubt. Army leaders have denounced UNTAET's decision to keep a "robust presence" guarding the border after the election. But it is exactly such a presence that could be the key to maintaining peace on the divided island.

One immediate act of good faith that would signal an improved relationship would be for Megawati to honor an agreement that was signed and immediately forgotten by Wahid more than a year ago. It calls for reopening the border separating East and West Timor to commercial traffic. The move would provide a market for Oecussi cattle ranchers and allow West Timor vendors to supply goods that currently must be shipped in from Java because of the 200% export tax arbitrarily imposed by the Indonesian military.

A recent study by the National Democratic Institute for International Affairs suggests that "there is significant fear [in East Timor] that multiparty political competition will lead to conflict and violence," but most observers believe next week's election will be peaceful. They are less sanguine, however, about the presidential race, which revolutionary leader Jose Alexandre "Xanana" Gusmao is expected to win. Xanana, like 1996 Nobel Peace Prize-winner Bishop Carlos Filipe Ximenes Belo, is a living icon in East Timor. But several recent business deals -- one of them involving $2 million received for an illegal shipment of teak -- raise questions about the type of government he might form.

East Timor's new president won't be strapped for cash. Offshore oil and gas reserves discovered and developed by Australia are expected to provide close to $7 billion in revenues over a 20- year period once a pipeline to Darwin, built by Phillips Petroleum, is completed in 2004. Shipped across the Pacific to a regasification terminal currently being developed by Phillips and El Paso Energy Corp., most of the 680 million cubic feet of natural gas produced each day will be sold to energy-hungry California.

One potential threat to stability is the generational divide separating the country's Portuguese-speaking political establishment from the Indonesian-educated younger generation. Neither feels much kinship for the other, and existing differences are exacerbated by the presence of 1,350 Portuguese nationals, many of them teachers, who, having failed to get the escudo named East Timor's national currency (that distinction belongs to the US dollar), now hope to make Portuguese the official language.

The Portuguese deny their goal is to resurrect a colonial relationship. "We are here because of the heart," explains Luis Miguel Ribeiro Carrilho, who heads the UN civilian police force. "We must repay our debt to history."

[David DeVoss is a former Time magazine bureau chief for Southeast, Asia who helps coordinate a print-media development program for Internews, in East Timor.]

To stop the dogs of war

Sydney Morning Herald - August 27, 2001

[Speaking for the first time, former Indonesian president B.J. Habibie tells David Jenkins how and why he made the fatal decision to leave control of East Timor in the hands of the military before the bloody referendum which secured the province's freedom.]

It is a golden summer's day in Paris and Dr B.J. Habibie, who served for 17 months as Indonesia's third president, has just left his serviced holiday apartment on the 34th floor of a tower block overlooking the Seine. The Eiffel Tower is a few hundred metres to the right, he points out, and you can just see it if you squeeze up against the window.

Not much further away is the Church of St-Louis-des-Invalides, where Habibie has spent the morning with his grandchildren, pondering the military and political career of Napoleon Bonaparte and coming to the conclusion that, on balance, Napoleon's achievements stack up less favourably than those of former President Soeharto.

Now, over a late lunch of consomme, omelet and salmon, Habibie is talking about East Timor, the province Indonesian critics say he had no right to "give away". Dressed in a khaki suit and string tie and sporting a post-retirement moustache, the former president is as ebullient and as voluble as ever -- and keen to present his own version of those tumultuous events.

Habibie had been president for seven months when, in December 1998, John Howard wrote to him suggesting that there should at some stage be an act of self-determination in East Timor. The Howard letter was not especially welcome in Indonesia. But it does seem to have set Habibie thinking.

It reinforced the "let's ditch Timor" arguments being marshalled by his key advisers, many of them Muslim intellectuals who saw the largely Christian province as both mendicant and ungrateful, a burden being "carried" by the rest of Indonesia.

Within a month, Habibie had told his Cabinet he was willing to let East Timor slip the surly bonds of Indonesian control if that is what the people of the province wanted. The Indonesian army (TNI) had other ideas. It wanted to hold on to East Timor by fair means or foul. True to form, it opted for foul. In February, militia units recruited, trained, organised, armed, funded and fed by the TNI stepped up a campaign of terror against those favouring independence.

In the next seven months, 50 to 60 independence supporters were killed, many hacked to death with machetes as the army stood idly by. When the August 30 poll went so decisively against Indonesia, the militias went on an even more destructive rampage, killing hundreds and reducing much of the territory to a smoking ruin.

Why, many still ask, was there such a delay before an Australian-led force moved in to East Timor, on September 20? Why, for that matter, was a multinational force not in place when the poll was held? There were, Habibie says, two reasons -- one internal, the other external -- why he had refused to allow "Australian troops" into East Timor ahead of the UN vote.

"East Timor, with a population of 700,000 people, had been of interest to the world," he says. "But I had 210 million people. If I let foreign troops take care of East Timor, I will implicitly admit that the TNI cannot perform and it could be counterproductive for the stability of my whole country. And this risk I will not take." The army, he says, would have been seriously divided and quite possibly dangerous, with some military factions "playing politics" in a "very emotional and irrational society", jeopardising Indonesia's attempts to promote democracy. This first argument is persuasive. The TNI, angry about the referendum and engaged in a brutal covert operation designed to ensure a favourable poll outcome, would have felt humiliated by the arrival of foreign troops on Indonesian soil. Equally, Habibie's position would have been fatally weakened among the Indonesian political elite. With Indonesia refusing to budge on the issue, any multinational force would have had to fight its way in. No-one wanted that.

It would have meant sinking the Indonesian navy, shooting down the Indonesia air force and engaging in combat with the Indonesian army, actions that would have generated 100 years of enmity between Canberra and Jakarta.

In the event, Habibie put his faith -- wrongly, as it turned out -- in a TNI promise that it would guarantee security in the province, never imagining, it seems, that the Indonesian generals could be so mendacious, so callous, so obtuse and so incompetent, despite warnings that they could be all those things and more. The international community was obliged to do the same.

Habibie's second argument is less persuasive. Australia, he says, had been "a true friend" of Indonesia since the proclamation of independence in 1945 and he had had no wish to put that friendship at risk.

"I was convinced that if I let Australian troops come in to Indonesia, not only am I going to insult and embarrass the TNI, which would have been counterproductive for the other regions [of Indonesia], but if the Australians come in, whatever the decision will be, the loser would blame Australia.

"I am not going to take a risk that a people who are, in their hearts and their [deeds], real friends in helping us should [be brought] into a trap. That's wrong! ... I cannot let somebody help if they will be blamed. Cannot!" Nor, says Habibie, had it been possible to beef up Indonesian troop numbers in the province ahead of the UN vote, even though there had been concern about post-poll clashes between East Timorese.

Had he sent in additional troops a month ahead of the poll he would have created "an international problem because they will come to the conclusion I am preparing to ... sabotage the election. Difficult! If I let [too many] Indonesian troops come then they will say that I'm planning to win." To get around this problem, Habibie says he hammered out an agreement with UN Secretary-General Kofi Annan under which the UN would let him know the outcome of the vote three days before those details were officially announced.

Habibie argues that in those three days, Indonesia could have proclaimed a military emergency, withdrawn the TNI units then stationed in East Timor and replaced them with "new blood" -- "disciplined" troops with no "cultural connection" with the territory and no sympathy for the integrationist cause. The new troops could have kept the situation under control "until the Australians arrived".

These plans came to nought, the former president claims, because Annan reneged on a promise to give three days' advance notice of the election result. Instead of giving Habibie three days' notice, the secretary-general had given him only 30 minutes' notice. Annan's announcement had triggered an "irreversible process" in which the province descended into anarchy.

"I thought I had three days. ... And then, I'm sorry to say, Kofi Annan said, 'I'm now on my way to announce that to the press.' And then we had the blow-up! ... You see! But of course I'm the bad guy!" Had the UN stuck by the agreement, says Habibie, repeatedly thumping the table for emphasis, "the amplitude of the destruction will not be 100 per cent as it was but maybe 10 per cent. The violence could be minimised ... we can prevent that happening." Asked whether he thinks Annan personally broke the agreement, he says, "If you get that [outcome, yes]. But I'm not going to blame him. Why should I have [a slanging match]?" That, he says, would achieve nothing.

"The United Nations, they have given their contribution, that the elections go fair. Why should I create unnecessary problems? But I think it is unfair, please, to blame all Indonesia." There is no doubt the UN did break its agreement with Indonesia, although the time frame was apparently two days rather than three. Habibie was to have been told the outcome of the poll on September 4, with the information only made public on September 6.

"I think it was a bad mistake to bring forward the announcement of the count," says a Western source with a detailed knowledge of those events. "It was done unilaterally.

"It looked at the time to be a dangerous gamble and it was. This was at a time when the UN was totally unprepared to cope with any violence. And they brought forth the likely outburst of violence. It was a stupid decision." The UN had argued, said this source, that the situation was getting out of hand, that there was mounting panic and that the East Timorese would be impatient or dissatisfied if they had to wait any longer; the uncertainty had to be brought to an end. "But it was unconvincing at the time and in retrospect, I think, it was a disastrous decision." Whatever the truth of the matter, it strains credulity to suggest that Indonesia could have withdrawn 14,000 soldiers from East Timor in two or three days and replaced them with a similar number of "disciplined" troops, "with UN experience", always assuming such forces could be found.

Jakarta was simply in no position to co-ordinate movements so that new troops were there before the old troops left. This would have looked like an Indonesian withdrawal, generating confusion and panic. "Rumours would have abounded," said one source. "'Indonesia has lost so they're withdrawing as quickly as possible.'" Nor can anyone be sure there would have been substantially less violence had the UN announcement been delayed. East Timor was tinderbox. The violence would presumably have broken out anyway.

About the best that can be said is that the UN would have had more time to make contingency plans.

Looking back, Habibie blames "criminal elements", not the TNI, for the violence that followed the poll. And much of the blame for that, he says, rests with the UN.

Asked who had been responsible for the killing and burning, Habibie says: "I don't know, I really don't. Amok! Amok! Uncontrolled and without any damper." Does he think the TNI Commander, General Wiranto, lost control of his troops? "No! No! Because he couldn't [do anything]. There's no decision announced. He couldn't march in." This, many would feel, lets Wiranto and his fellow officers off far too lightly.

Wiranto didn't need to "march in" to East Timor. He had 14,000 heavily armed troops there, including crack special forces units and members of the army strategic reserve, to say nothing of 8,000 police.

If Habibie seems to have put far too much trust in the TNI's pledge that it would guarantee security in East Timor and if he seems to be too inclined, even now, to exempt the TNI from any blame, he nonetheless wins praise from some Indonesia watchers.

"I think he performed a fairly honourable role [on East Timor]," says one source. "I don't think he lied at all. Whereas [Indonesian Foreign Minister Ali] Alatas often lied. But I don't think Habibie deceived anybody." Was Habibie surprised that 80 per cent of the people of East Timor voted for independence? "No," he says, "I was not surprised." The Timorese had never felt they belonged in Indonesia.

Looking at the events of 1999 from Western Europe, where he now spends much of his time, Habibie laments the bloodshed but takes pride in the fact that he was able to allow the Timorese their freedom, even though he had always been seen as an anak mas (favourite child) of Soeharto, the man who inflicted so much suffering on the territory. "Why," he asks rhetorically, speaking of himself in the third person, "is Habibie able to solve that and not Soeharto? Because if I saw that, I did not lose my face. I was not responsible for that [problem]."

Labour struggle

Indonesian regions seek money for overdue pay

Straits Times - September 1, 2001

Jakarta -- Desperate officials are scrambling to find funds, including taking commercial loans if necessary, to pay striking teachers demanding their six months' overdue salary.

On Thursday, thousands of teachers failed to show up for classes in Madiun regency, East Java, Muna regency, Southeast Sulawesi, and the town of Lampung. But striking teachers in Purbalingga regency, Central Java, resumed work the same day after the local administration promised them that they would soon borrow money from a local development bank to pay their salary.

The Muna administration has revealed that it will copy Purbalingga's way of dealing with the problem. It plans to borrow a total of 8.5 billion rupiah (S$1.8 million) from state-owned Bank Negara Indonesia (BNI).

Muna Regent Ridwan said that the administration's move to take out a commercial loan to pay the teachers had been approved by the regency's legislative council. "This is the best alternative ... so that we will be able to pay civil servants their back pay," Mr Ridwan told Antara news agency.

The councillors decided that the administration should borrow money from banks and then ask for additional education funding from the central government to repay the loan.

Meanwhile, in Jakarta, Coordinating Minister for People's Welfare Jusuf Kalla said that the central government had already disbursed funds.

An observer with the University of Indonesia, blamed the central government for the furore, saying that the government should not have entrusted all educational affairs, including budget management, to local administrations.

However, former education minister Fuad Hassan disagreed with the view that the central government was to blame, saying that the current mix-up over teachers' back pay was only a consequence of the complex decentralisation process. "This is only an example of problems in the implementation of regional autonomy."

Aceh/West Papua

Megawati postpones Aceh trip

Reuters -- August 31, 2001

Jakarta -- Indonesian President Megawati Sukarnoputri has postponed a September 2 visit to rebellious Aceh province, an official said, citing technical reasons. "The proposal is for the fifth and sixth or eighth and ninth," Aceh governor Abdullah Puteh told reporters on Friday. Asked the reason, he replied: "Technical matters ... preparations."

Chief security minister Susilo Bambang Yudhoyono who travelled to the violence-torn territory two weeks ago also declined to give any reason for the delay. But he said Megawati would maintain the so-called "security approach," which many have criticised for worsening rather than calming the violence in Aceh. "The operation to recover security must be performed to halt the GAM separatists, repair the economic facilities and create a conducive situation for further steps," he said.

Many analysts say the hardline tactics are actually encouraging Acehnese support for GAM or the Free Aceh movement. But Yudhoyono said the president was also keen to continue investigations into alleged human rights abuses by the Indonesian security forces.

The trip to Aceh would be Megawati's first to the resource-rich province since becoming president last month. Indonesia has offered special autonomy to appease the Acehnese who have suffered for more than two decades of violence, much of it at the hands of the military. The violence in Aceh has surged this year with more than 1,500 people, mostly civilians, killed.

pported the fledgling country. Susilo Bambang Yudhoyono, coordinating minister for politics and security, said comments by President Megawati Sukarnoputri had made it clear "that Indonesia honors the process in East Timor and has so far contributed to it".

He told reporters: "[East Timor] can do anything as long as it is democratic and fair and does not run counter to Indonesia's interests."

Indonesia frees key Aceh separatist negotiators

Reuters - August 30, 2001

Jakarta -- Indonesian police on Wednesday released five key negotiators from the separatist Free Aceh Movement (GAM) days ahead of President Megawati Sukarnoputri's visit to the troubled province.

But police said the negotiators still faced trials over allegations of spreading hatred against the government.

"Five out of the six GAM negotiators are being released on a temporary basis. As of today those five can go back to their home," Aceh deputy police spokesman Sudarsono told Reuters.

Police detained the six separatist negotiators last month over allegations of provoking the public and inciting rebellion. Sudarsono said police were still holding one negotiator for having a fake passport and because he faced trial in Indonesia's capital. "The trial must be held in Jakarta because that's where the fake passport was made," Sudarsono said.

Megawati, a staunch nationalist who will travel to Aceh on Sunday, recently apologised to the province for past human rights abuses and has agreed to the release of the separatist figures. But she has stood by earlier comments that she will not allow Aceh to break away from Indonesia.

On Tuesday, during a visit to Malaysia, Megawati sent a stern warning to Aceh's separatist rebels saying they would face "tough action" from Jakarta.

Thousands have died in decades of fighting between security forces and rebel fighters in resource-rich Aceh on the northern tip of Sumatra island.

Two dead in police clash with army in Indonesia's Irian Jaya

Agence France Presse - August 28, 2001

Jakarta -- Two soldiers were killed and five people were wounded in a shootout between police and troops in Indonesia's easternmost province of Irian Jaya, police said Tuesday.

The incident stemmed from a traffic accident involving a policeman and a soldier late Monday in the remote town of Serui on Yapen island, said Second Private Rizal. A brawl broke out in which the policeman was injured, Rizal told AFP from the provincial capital of Jayapura.

"The policeman then fled to his precinct which was later attacked by a group of soldiers. One soldier was shot dead while four other soldiers and another policeman were wounded in the shootout," Rizal said. Security officials said a second soldier died later.

Regional military chief Major General Mahidin Simbolon was quoted by the state Antara news agency as saying a joint military-police team would be set up to investigate the incident.

In another development separatist Free Papua Movement rebels attacked a police post on Monday in Sarmi district near Jayapura and injured three civilians, Antara said. Three rebels were injured in the attack.

At least 11 more killed in Indonesia's Aceh province

Agence France Presse - August 27, 2001

Banda Aceh -- At least 11 more people have been killed in clashes between Indonesian troops and police and separatist rebels in Aceh province, police and residents said Monday.

In another incident two men on a motorcycle threw a hand grenade at a bank in the provincial capital Banda Aceh early Monday. There was minimal damage and no casualties, said Aceh police spokesman Commissioner Sudarsono. Several members of the police paramilitary unit Brimob who were guarding the bank fired in the air and sparked a brief panic at the nearby market, witnesses said. It was the fourth blast to rock the city in the past week.

In South Aceh seven bodies with gunshot wounds were found at four separate locations on Sunday, humanitarian workers said. Police and the separatist Free Aceh Movement (GAM) blamed each other for the killings.

South Aceh GAM spokesman Ayah Manggeng said Brimob members killed the seven after arresting them in sweep operations on Saturday. Sudarsono said there were indications that rebels killed the civilians.

Aceh Besar GAM spokesman Ayah Sofyan said Brimob officers conducting a sweep in the Kuta Baro district near Banda Aceh shot dead a teenage civilian there on Sunday. Sudarsono said police had been ambushed and the victim was one of four rebels spotted during an exchange of fire. Sudarsono said a civilian was found dead with a gunshot wound in Pidie district on Sunday.

Residents in the Baktiya district of North Aceh said troops killed seven people -- not five, as the military reported Sunday -- in an attack early Sunday on a suspected rebel base. The North Aceh deputy GAM commander, Sofyan Daud, said four of those killed were guerrillas and the other three were civilians.

In an unconfirmed report, Daud said his men killed four soldiers in an attack on a security outpost at Samakurok in the same district on Sunday which also claimed the life of one guerrilla. Military spokesman Lieutenant Colonel Firdaus said he had no report of the incident.

Rebels have been fighting since 1976 for an independent Islamic state in the resource-rich province on Sumatra island. More than 1,200 people have been killed this year alone, most of them since the military began a crackdown in April.

Corruption/collusion/nepotism

World Bank to Jakarta: Stamp out graft or else

Straits Times - September 1, 2001

Jakarta -- The World Bank has warned the Indonesian government to seriously tackle corruption, saying that progress in stamping out loan abuse was the key to the bank's future lending strategy for the country. Indonesia should focus less on the level of lending it received, more on how well the money was being used, World Bank country director Mark Baird said on Thursday.

"Indonesia should not borrow money if it is not prepared to take every step to see that it is used well," he said in a speech marking the signing of a US$448 million loan and grant package for Indonesia.

The loans are aimed at the reduction of poverty across a broad spectrum. They are to cover development projects for the health, education and environment sectors, district economies, and overseas working women. About one-third of the loans will come from the concessional International Development Assistance (IDA) facility, which carries zero interest and is payable over a term of 35 years.

"The more confidence we have that the money is well spent, the more willing the government will be to borrow, and the more willing we will be to lend," Mr Baird said. "Corrupt projects are bad projects and they should be stopped dead in their tracks." Last April, the World Bank cancelled a US$300 million loan tranche to Indonesia in order, many believed, to prevent further abuse of its loan.

The tranche was part of a $600-million loan agreement signed in 1999 which was designed to shelter the poor from the effects of the economic crisis. The World Bank noted in its review of the first loan tranche that the "slow pace of meaningful change in bureaucratic culture had rendered modest the impact of the aid on the poor".

Unconfirmed reports said about 30 per cent of World Bank loans, about US$10 billion, fell victim to corruption under the 30-year rule of former President Suharto. The World Bank has acknowledged the abuse took place but has never named a suspect.

Reports of the alleged abuse of World Bank funds were still under investigation. Progress was slow because of difficulties faced in Indonesia when seeking proof of corruption.

Noting that the current loan programmes provided ways to prevent abuse, Mr Baird said transparency needed to be balanced with proper accountability to ensure that corruption was weeded out and that the aid money was well spent.

NGOs blast two court rulings on bribery cases

Jakarta Post - August 27, 2001

Jakarta -- A coalition of watchdogs on legal affairs has lashed out at two court's decisions to dismiss cases against three Supreme Court justices who allegedly accepted bribes, arguing it was an insult to people's sense of law and justice.

The Coalition of Judicial Corruption Watch urged the Supreme Court on Friday to examine both the decisions and the judges who handled the cases, and openly disclose the examination results to the public.

Nizar Suhendra of the Indonesian Transparency Society (MTI) argued that the rulings by judges of the West Jakarta District Court and Central Jakarta District Court were a bad precedent for the battle against widespread corruption in the country.

"From these decisions we can learn that lawyers can argue against the anti-corruption law used by the prosecutors to charge their clients," he told a media briefing at the Jakarta Legal Aid Institute.

The West Jakarta District Court turned down the indictment against retired Supreme Court justice Yahya M. Harahap on Tuesday, stating that the prosecutor had charged him under the wrong law. The prosecutor, according to Judge Suharyono, had charged Harahap under the 1999 Anti-Corruption Law while the case was covered by the 1971 Law, which is no longer valid.

On the same day, the Central Jakarta District Court dismissed the trials of Supreme Court justices Supraptini Suprapto and Marnis Kahar, who were charged for a similar crime in connection to Harahap's case.

Rusdi As'ad, the presiding judge, said that the court had to dismiss the trials of the two defendants as the indictments "overlapped too much and were inaccurate". He said the prosecutors could not charge the suspects under both the 1971 Anti-Corruption Law and the Criminal Code, but had to choose either one.

The three, who allegedly accepted a total of Rp 196 million (some US$16,800) from a middleman in connection with a land case they were handling in 1998, were also charged under Criminal Code articles for allegedly accepting bribes in their capacity as judges and for reportedly receiving gifts as state officials.

The coalition of watchdogs argued that the judges' arguments were illogical because the new Anti-Corruption Law did not replace the old one and that, by law, it was appropriate for prosecutors to combine charges in a corruption case.

Asep Rahmat from the Indonesia Society for Judicial Watch (MaPPI) said that there was nothing wrong with the indictments and should there be uncertainties in the laws covering the case, he challenged the judges to settle it. "The judges have to be brave enough to make their own judgment in battling corruption, and the public should also be taught that judges have the authority to make such a breakthrough," he said. Nizar underlined the urgency for a special corruption tribunal, one free from any interest and influence since graft cases could involve both state institutions and members of the judiciary.

Separately, Judge Binsar Gultom, who is secretary of the Bogor chapter of Association of Indonesian Judges (IKAHI), said in a statement made available to The Jakarta Post on Friday that both the judges and the prosecutors had to decide upon a common concept on compiling indictments in a bid to avoid further accusations of a conspiracy among judges to protect their own kind.

Jakarta Governor caught in row over allowances

Straits Times - August 26, 2001

Jakarta -- Clothes make the man, or the governor, in this case. Jakarta Governor Sutiyoso has proposed increasing his wardrobe allowance this year from 40 million rupiah (S$8,400) to 60 million rupiah.

And while city councillors are in hot water for making frivolous overseas trips, he has proposed an increase in the allocation for his official trips from 165 million rupiah to 445 million rupiah.

He has also asked for a higher health allowance, from 78 million rupiah to 138 million rupiah, and an increase in the allocation for the maintenance of his residence and office from 480 million rupiah to 705 million rupiah.

The proposals were made earlier last week in a review of the city Budget 2001, increasing it from 7.495 trillion rupiah to 8.1 trillion rupiah.

Mr Sutiyoso, however, claimed on Friday that the proposals had been made without his knowledge. He also said he had asked his subordinates to review them.

Expectedly, the proposals drew criticism. The head of the urban division of the Jakarta Legal Aid Institute, Mr Tubagus Karbyanto, questioned the use of taxpayers' money for such expenditure. "It shows that Sutiyoso and his administration have no sense of crisis. It's just wasting public money," he said on Friday.

As for the wardrobe allowance, he said Mr Sutiyoso should display the clothes that he had bought so far during his term. "Maybe he can open a clothes store after his term ends next year," he said.

The city councillors would ask for similar wardrobe allowances, he added. He pointed out that the council had earlier demanded facilities -- like a sauna -- on a par with city officials.

Meanwhile, the city administration expects the revenue from personal income tax and other taxes to rise by 537 billion rupiah. The allocation for routine expenditure, such as for the salaries of city employees, would shoot up from 4.9 trillion rupiah to 5.5 trillion rupiah.

The funds for informal-sector development, currently budgeted at 650 million rupiah, and the allocation for the construction of facilities for the informal sector, currently 3 billion rupiah, will be unchanged.

Human rights/law

Rights body needs revamping, activists say

Jakarta Post - August 27, 2001

Jakarta -- Activists have urged the government to reform the National Commission on Human Rights (Komnas-HAM), which they said was ineffective as it was dominated by a "conservative group". They claimed that the rights body had failed to carry out the mission laid out by the government, which founded it in 1993.

Asmara Nababan, the Komnas secretary-general, proposed on Saturday that the House of Representatives screen new Komnas members and rescreen the 18 incumbent members to refresh the organization. "A fit and proper test is needed to have professional Komnas members who are selected through a transparent process. Otherwise, Komnas will never have professional personnel," he said.

As stipulated by law, Komnas has 35 members. The membership has dropped to 18 and is in the process of recruiting another 17. The selection of new members has been heating up with internal politicking. The rights body will propose new names to the House by September 23. The House will have the final say in the selection. On the list are big names such as Todung Mulya Lubis, Hendardi, Abdul Hakim Garuda Nusantara and Wardah Hafidz.

Asmara declined to identify the "conservative" members but reliable sources at the rights body said they included Djoko Sugianto, chairman of the rights body, Koesparmono Irsan, Sugiri and Aisyah Amini.

The sources, who requested anonymity, said the conservative members, mostly ex-servicemen and former civil servants, were pro-military in their stance.

Asmara conceded that the conservative camp had made the current membership selection tough. The independent selection team, set up by the commission, has proposed 14 new names but the commission, by a vote, decided to propose another 20.

Although the commission has agreed to cut the total number of members to 25 to make the body more effective, the conservative camp has changed its mind and wants to maintain 35.

"If the House agrees to allow the commission to have 35 members, all the money allocated to Komnas will all be spent on operation costs," Asmara said. As a comparison, a similar body in Malaysia has only 11 members, while the Philippines has five and India 10.

Asmara said the recent resignations of Benyamin Mangkudilaga, who was appointed as justice, and Anton Suyata, who was appointed chairman of Ombudsman, have weakened the position of the progressive group who were committed to upholding human rights and conducting independent investigations into human rights abuses.

"Over the last year, tension between the two camps has crippled its investigations into human rights abuses in Maluku, Irian Jaya, Aceh, Sampit [Central Kalimantan] and Poso [Central Sulawesi]," he said. Joko Sugianto and Koesparmono Irsan were not available for comment.

Munir, who declined to be named a member of the human rights commission, said he had long observed the commission's ineffectiveness because of the presence of the conservative members. "It's better for the House to conduct a fit and proper test on the commission's current 18 members because 75 percent of them are not professional and have no strong commitment in investigating human rights abuses," he said.

Munir, who is also the chairman of the Commission for Missing Persons and Victims of Violence (Kontras), said in addition to handling past human rights abuses, the commission should be proactive in investigating human rights violations in Aceh, Ambon, Irian Jaya, Sampit and Poso.

News & issues

Hard-hit fishermen turn to bomb-making for profit

Straits Times - August 29, 2001

Derwin Pereira, Jakarta -- The economic crunch in Indonesia is spurring a new deadly handicraft in its eastern islands: bomb- making. Police believe that homemade explosives from south-east Sulawesi are being sold to the neighbouring strife-torn areas of Maluku and Poso.

A one-star police general said that several suspects had already been arrested in recent weeks for manufacturing bombs in the remote Wangiwangi district. "There are indications that they are fuelling the conflicts in some of these trouble spots," he told The Straits Times.

Tempo magazine reported recently that residents in the area -- predominantly fishermen -- had been making these explosives for decades, unhindered by the police. They were used to catch fish illegally.

Now conflicts in nearby provinces have created new markets for these products. The report said Wangiwangi was a base for smuggling in urea-based fertiliser, used in making bombs, as well as detonators and fuses from as far away as Taiwan and Malaysia. The trade has brought a huge bounty to an area ravaged by the financial crisis.

Wangiwangi residents make a living from farming corn, tubers and vegetables, but these do not bring in much revenue. They make at most 700,000 rupiah (S$140) every month.In contrast, bomb-making and the distribution of bomb parts rake in millions of rupiah.

Tempo noted that a 50-kg sack of urea-based fertiliser bought in Tawau, Malaysia, costs 80,000 rupiah. But smuggled into Wangiwangi, it can be sold for as much as 400,000 rupiah. In Poso and Ambon, the price can be several times more. The price for a bomb itself can range from 250,000 rupiah to 500,000 rupiah, depending on whether detonators are fitted.

Making the bomb is easy. Urea fertiliser is first mixed with kerosene and then dried in the sun. It is then put into soft- drink bottles sprinkled with sulphur. Some bomb makers use milk cans for the explosives. The bombs are in high demand because they are cheap, yet highly explosive. Tempo quoted a senior Sulawesi police official, Mr Andi Ahmad Abdi, as saying that in one incident, the body of a victim from a bomb explosion was ripped apart. His hand landed 15 m away from the blast.

Provincial officials seem helpless to stop the growing trade. Observers say bomb-making has the backing of police and military elements, who want the sectarian and religious violence to fester in the far-flung regions. But police sources in Jakarta brush aside such allegations, saying several suspects have been arrested, with more to follow.

There are also fears that such bombs could be made available to Java and other parts of the archipelago. Police have already found them in East Java. There is also growing concern that they might eventually reach terrorists who have already wrecked havoc in Jakarta with bombings over the last year. A senior police officer noted: "This is a serious matter ... Why make it easier for foreign terrorist groups by making available to them ready- made bombs in the country?"

General is third reformer to die in two months

Straits Times - August 31, 2001

Derwin Pereira, Jakarta -- A military reformer, once tipped as a leading candidate to head the powerful Indonesian armed forces (TNI), died yesterday.

Close friends said that Lt-General Agus Wirahadikusumah, the 49- year-old Harvard-trained officer who made bitter enemies with several generals for exposing widespread corruption in the army, died of heart failure.

He is the third major reformist figure in the country to die in a space of two months. His death followed that of Attorney-General Baharuddin Lopa who also mysteriously suffered a fatal heart attack in Saudi Arabia and that of Supreme Court Justice Syafiuddin Kartasasmita.

Conspiracy theorists in Jakarta were fuelling suggestions that the general was perhaps another victim of a campaign by New Order forces to eliminate reformist elements.

"Things are beginning to get dirty now," said one prominent political figure in the past administration. "It just might be that some of his enemies in the army might have wanted to get rid of him because of this fear that he could pose a threat to their interests."

But there was little evidence to suggest foul play, even if Lt- Gen Agus had no record of serious medical problems. Dr Hidayat, a general practitioner and the general's brother, said that his brother did not suffer heart problems and other ailments.

A military ally and friend, Maj-Gen Saurip Kadi, said that he had met the general a week ago and he seemed in very good health. "It is such a big loss. He did not look like someone who was suffering from any chronic illness," he said.

But others close to Lt-Gen Agus said that he frequently complained of headaches and tiredness. One of his aides, Mr Idra, said that the general "appeared to be in his own world" after he was sacked from the Army Strategic Reserve Command (Kostrad), which he headed for five months. The aide said the general was praying and reading the Quran all the time.

Lt-Gen Agus angered the military leadership when he uncovered US$41 million allegedly taken from his unit's operating budget by the man he replaced. He increasingly became a thorn in the side for several army officers after he called on the TNI to become a professional defence force rather than a tool for maintaining internal security.

He told The Straits Times in an interview recently that the military needed someone with "the guts" to bring about change. "I think I can do the job. I just need the chance to show that it can be done," he said.

But his attempt to secure the military chief's post, despite the backing of former president Abdurrahman Wahid, was in vain because of supposed resistance from within the ranks. "He was under a lot of stress and felt that his rivals were ganging up on him," said Mr Idra.

Family friends said the general collapsed at home at about 5am yesterday after complaining of chest pains and a high temperature. He was buried with full military honours yesterday.

Environment/health

Jakarta court says Freeport misled parliament

Reuters - August 28, 2001

Jakarta -- An Indonesian court ordered mining giant PT Freeport Indonesia on Tuesday to improve its toxic waste management after it was found guilty of giving false information over a fatal accident at a mining site last year.

The South Jakarta court backed a suit from leading environmental group Walhi which accused the copper and gold miner of presenting a misleading report to parliament on a landslide at its mine in the remote eastern province of Irian Jaya. Four workers were killed during that landslide in May last year at the Wanagon Lake waste dump.

"The defendant did not reveal what actually occured during the incident. In parliament they gave information that was contradictory ... It was manipulative and misleading," presiding judge Rusmandani Ahmad told the court.

Freeport plans to appeal the ruling. Company officials were not immediately available for comment. Ahmad said Freeport -- a unit of US-based Freeport McMoRan Copper & Gold Inc -- told the parliamentary hearing the landslide did not result in loss of life and it was due to natural causes not negligence.

Walhi chief Emmy Hafild hailed the ruling as a victory but said it was also moderate. Walhi did not seek damages, only a public apology. "Yes, it's lenient. But it's still a landmark as Walhi has never won a case against these companies before," Hafild told Reuters.

The mine in jungle-clad Irian Jaya is one of the largest in the world and has been at the centre of controversy for years over its impact on the surrounding region.

Indonesian city plans to make rain to clear haze

Agence France Presse - August 28, 2001

Jakarta -- Authorities in a haze-shrouded Indonesian city will make artificial rain to wash away choking smoke from forest and ground fires, the state Antara news agency said Thursday,

"We will soon make artificial rain to overcome the smoke haze which has continuously blanketed Palangkaraya because of the fires in fields and from land clearing for other purposes," it quoted Salundik Gohong, mayor of the city in Central Kalimantan province, as saying.

Gohong was addressing the parliament of the province. Palangkaraya,a city of some 160,000 people, is its capital. He have no details of the apparent cloud-seeding exercise. The city on Borneo island had also made ready 21 fire fighting units before the arrival of the dry season.

Local air quality monitor M.N. Gozali was quoted as saying that by Tuesday afternoon, the air over the city had reached unhealthy levels. Provincial spokesman Harun Al Rasyid told AFP that many people are suffering from nausea and respiratory ailments but gave no figures. He said many motorcyclists were wearing face masks. Others covered their nose and mouth with a wet cloth.

In neighbouring East Kalimantan, Lili Juhari of the provincial environmental impact management agency said the number of hot spots -- areas of high temperatures indicating possible fires -- was "negligible" at just over 60 compared to Central and West Kalimantan. But the fire danger index, measuring several factors such as temperature and humidity, was already high in the region, Juhari said.

In Pontianak, the capital of West Kalimantan, strong winds and light rain on Monday had helped keep the sky relatively clear Tuesday. "But this is only temporary, as once the drought starts in a few weeks a return to thick smoke over Pontianak is only a matter of time," a local weather official said.

Fires in Indonesia's Borneo and Sumatra in 1997-98 caused thick haze to choke the region for months.

Religion/Islam

FPI demands enactment of Jakarta Charter

Jakarta Post - August 28, 2001

Jakarta -- Thousands of activists of the Islamic Defenders Front (FPI) on Monday staged a rally at the People's Consultative Assembly (MPR)/House of Representatives (DPR), demanding the implementation of Syariah Islam (Islamic Law) as stipulated in the Jakarta Charter.

Clad in white shirts and headdresses, the activists arrived at the entrance gate of the MPR/DPR building at 10:20 a.m. and staged oration, Antara reported. Their action caused traffic jam in the area, mainly on the traffic from the Semanggi cloverleaf to Slipi area.

The activists carried FPI's banner and posters, which read among others: "Uphold the Islamic Law" and "Fight against Immoral Deeds." The FPI leaders said while staging the oration that the MPR and DPR should enact and insert the Jakarta Charter into the Preamble of the 1945 Constitution. The protest was the first of its kind in the past two months.

Arms/armed forces

Military ties: US spells out terms to Indonesia

Straits Times - September 1, 2001

Jakarta -- Indonesia must properly punish the killers of three UN workers before the United States can resume full military ties, a senior US official said yesterday.

Visiting Assistant Secretary of State for East Asia and Pacific Affairs James Kelly said Washington "very much wants to have a good relationship with Indonesia's military". "But our Congress has put some limitations on us that would have to do with the accountability for some things that have happened in the past," he said.

Most US military contacts were cut when Indonesian troops were implicated in a militia rampage ignited by East Timor's vote for independence in 1999. Mr Kelly said one of the stumbling blocks for the resumption of military ties was the lenient sentencing of six East Timorese militiamen for the murder of three UN humanitarian staff -- including an American -- in Indonesian West Timor last September.

A Jakarta court in May found all six men not guilty of murder and instead sentenced them to between 20 and 10 months in jail for other minor crimes. "The judicial remedies that were taken did not seem to be proportionate to the terrible nature of the crime," Mr Kelly said. "These problems need to have some progress before we can have full relationship with Indonesia's military that I hope will develop again before long." The staff -- an American, a Croatian and an Ethiopian -- were stoned, stabbed and beaten to death by a mob. Their bodies were set on fire.

Mr Kelly said he did not have a timetable for Washington to resume ties with Jakarta, but it would be "something that we're going to have to work out over time". "There are some modest things that we're able to do together and I hope we can build on this over a period of time and be in a better state," he added.

He was speaking at a press briefing after a courtesy call on Indonesian Vice-President Hamzah Haz. Mr Kelly is the second senior US official to visit Indonesia after Trade Representative Robert Zoellick met President Megawati Sukarnoputri last month. Ms Megawati starts a visit to the US on September 19.

US reaches out to Indonesia, military links on the table

Agence France Presse - August 30 2001

Washington -- The State Department's top Asia hand is due in Jakarta this weekend in the latest sign of a new US drive to engage Indonesia -- but the path to closer US relations with Southeast Asia's dominant power is fraught with controversy.

James Kelly, Assistant Secretary of State for East Asia and Pacific Affairs will be the second senior US official to travel to Jakarta in a matter of weeks -- Trade Representative Robert Zoellick stopped by several weeks ago.

Both trips are laying groundwork for new President Megawati Sukarnoputri's White House talks with President George W. Bush next month -- another sign of Washington's desire to quickly forge links with the new government in Jakarta.

But while US politicians from all sides want to engage Indonesia -- where and how contact should take place is the subject of fierce debate.

Megawati's visit looms as a campaign gathers pace for a renewal of US military links with Indonesia, which the smart money says is emanating from the Pentagon.

Most US military contacts were cut when Indonesian troops were implicated in the bloody militia rampage ignited by East Timor's vote for independence two years ago.

Zoellick told Megawati that some "basic" ties could be restored: some analysts say a strategic dialogue with leading generals could be a starting point.

But even limited military-to-military contacts, with generals tainted with human rights questions, will be controversial, particularly in Congress. "There is a certain amount, not of making a deal with the devil, but having dinner with the devil," said Southeast Asia analyst Dana Dillon of the Heritage Foundation, a think-tank with close ties to the Bush administration.

Dillon argues that US aid for military training programs should be withheld until members of Indonesia's armed forces implicated in human rights abuses face justice. But he says discussions with generals on regional issues should be resumed -- as they enhance US security and foreign policy goals.

"As long as it is in direct US interests it should be permitted and encouraged." Congressional sources say administration officials have already held discreet consultations on Capitol Hill on just how much political latitude there is for a resumption of some military ties. The issue is likely to build up a head of steam when Senators and Representatives return from their summer break next week.

But rights campaigners have responded to the administration's soundings by stepping up their own activity. Jon Miller of the US-based East Timor Action network took aim at what he said was a "full force lobbying campaign" by Bush aides.

"The administration wants to see how far it can go without causing a full reaction from Congress," he said. "But there is no indication that the Indonesian military is tempering its behavior."

Indonesian soldiers have been recently accused of fomenting civil strife in Aceh and other areas, and there is private concern among US officials over the still overt influence of the military in domestic politics and its power over Megawati.

Whether military links are renewed or not, solid diplomatic realities underline the US desire to engage Jakarta. Policymakers here remain deeply concerned about instability spawned by secessionist and ethnic conflicts across Indonesia -- not to mention the fragile state of the country's fledgling democracy, and crisis-shackled economy.

But US economic aid would likely be unpopular domestically and critics say could simply bolster failing institutions and deter Indonesia from carrying out badly needed reforms.

For years Indonesia, the world's fourth most populous nation has been the most powerful voice in the Association of Southeast Asian Nations (ASEAN). The United States wants ASEAN to eventually emerge as a democratic-oriented grouping, more weighty than its current incarnation which critics scoff is merely a talking shop handicapped by a need to pander to sensitivities of members like Myanmar and Vietnam.

If Indonesia develops into a largely functional democracy backing open markets, in common with Thailand and the Philippines, ASEAN would likely follow the same road.

Washington is also closely watching China's accelerating diplomacy in Southeast Asia and is alarmed at the possible threat to regional stability of cracks in Indonesia's unity.

Britain ready to resume arms exports to Indonesia

Jakarta Post - August 29, 2001

Jakarta -- Britain is ready to resume sales of weapons to Indonesia, saying that it has accepted the assurances from the Indonesian Military (TNI) that these arms would not be used for internal repression, including in Aceh.

"The assurances they [TNI] gave us are reliable," visiting Foreign Minister Ben Bradshaw said at a media briefing held at the British Council to wind up his three-day visit.

Britain, traditionally a major supplier of military hardware to Indonesia, was in the middle of delivering several of its Hawk jets when the European Union imposed an arms embargo in September 1999 in protest against Jakarta's handling of East Timor. The embargo was lifted in January 2000, allowing Britain to complete the delivery of the remaining six Hawk fighters.

Plans for new arms sales to Indonesia have since come under close scrutiny from international non-governmental organizations. While East Timor has become an independent state, Indonesia continues to face insurgency in Aceh and Irian Jaya. In lifting the embargo, the European Union sets strict terms for future arms sales to Indonesia from its members, including a guarantee that the weapons would not be used for either external aggression or internal repression.

Bradshaw said that although Britain would resume arms exports to Indonesia, his government would keep a close watch on their use by TNI, and cautioned that any violation of the pledge would seriously hurt bilateral relations. Britain would also push for closer military ties with Indonesia, and would assist with the quest to turn TNI into a professional and accountable force, he said.

From Indonesia, Bradshaw is scheduled to proceed to East Timor, which is holding a general election on Thursday. During his three-day stay here, he met with Vice President Hamzah Haz, Minister of Defense Matori Abdul Djalil and Attorney General MA Rachman, among others. During these meetings, Bradshaw said he discussed the role that British companies could play in the Indonesian economy. He underlined Britain's commitment to assist Indonesia in education, pointing out the increasing number of Indonesians receiving the British Chevening Scholarships each year. Some 2,000 Indonesians study in Britain at any one time, he said.

Meanwhile, the United States Embassy in Jakarta announced the visit of US Assistant Secretary of State for East Asia and Pacific Affairs, James A. Kelly, to Indonesia and East Timor, beginning on Tuesday. Kelly, who will observe Thursday's election in East Timor, hoped to meet with Indonesian leaders to express US support for Indonesia's democratic transition, the embassy said.

Economy & investment

Indonesian 2002 growth above five percent called `tough'

Reuters - August 30, 2001

Jakarta -- Indonesia's chief economics minister said on Thursday the haggard economy would be hard pressed to grow more than five percent next year, signalling more hardship ahead for millions of the country's poor.

"There is a lot of work that needs to be done in 2002. It is predicted that economic growth above five percent will be difficult to reach while ideally inflation will be below 10 percent," Dorodjatun Kuntjoro-Jakti told reporters. Inflation is currently around 13 percent year-on-year.

Some economists say growth needs to be at least double the 3.5 percent targeted in the 2001 state budget to generate employment. "In order to absorb new job seekers you need to grow at 7-8 percent," said Raden Pardede, an economist at state-owned Danareksa Securities.

But Pardede agreed growth of five percent at best was all Indonesia was likely to achieve next year because of its low domestic savings rate, currently at around 17-18 percent of GDP. Indonesia had domestic savings of around 28 percent of GDP before the economic crisis and consistently booked growth of around eight percent.

The country's soaring interest rates -- currently at two year highs -- are also hindering growth. The central bank has been steadily raising rates over the past year to defend the ailing rupiah. The Bank's weekly auction of its one-month certificates yielded a rate of 17.67 percent on Wednesday from 17.61 percent a week earlier.

Separately on Thursday, Finance Minister Boediono said the government was considering a stronger rupiah exchange rate of 8,000-9,000 per dollar for the 2002 budget. A rate of 9,600 is assumed for the 2001 budget.

Asked about the possible rate for 2002, Boediono told reporters: "Between 8,000-9,000. We haven't picked the rate yet." The government is expected to submit key economic assumptions for the 2002 budget to parliament in September.

The rupiah has been way off its 2001 target, hitting a low of around 12,000 at the end of April. It has since recovered, buoyed by the election of Megawati Sukarnoputri last month. By 1000 GMT, the rupiah was quoted at 8,925/8,955 against the dollar.

Key points of Indonesia's agreement with IMF Monday

Dow Jones Newswires - August 27, 2001

Jakarta -- Following are the key points of Indonesia's agreement with the International Monetary Fund Monday. The agreement, known as a letter of intent, lays out a timetable for economic reforms which Indonesia must complete in return for loans under a $5 billion lending program. The fund has suspended lending since December due to failure to meet reform commitments.

• Indonesia promises to keep 2001 budget deficit at 3.7% of GDP as previously agreed with IMF. Proposes to reduce deficit to between 2% and 3% by 2002 budget.
• Sets other 2001 fiscal targets: GDP growth at 3%-3.5%; inflation between 9.0%-11.0%. Base money supply to grow by 12.5% in the 12 months from March this year.
• To keep budget deficit on target through following measures: increasing non-oil tax revenues and cuts to fuel and electricity subsidies (both already implemented); further sales of assets taken over from banking system; and partial privatization of state-owned companies.
• Will raise IDR27 trillion from sale of assets under Indonesian Bank Restructuring Agency, and IDR6.5 trillion from sale of stakes in state-owned companies, as promised under previous IMF agreements.
• To sell 51% stake in PT Bank Central Asia and a "majority" stake in PT Bank Niaga by the end of 2001. Previously, Jakarta planned to sell only 30% stake in BCA to strategic investor.
• Sale of 30% stake in state-owned PT Bank Mandiri, country's largest bank in terms of assets, through initial public offering by year-end. Bank Mandiri to takeover PT Bank Internasional Indonesia by end November.
• Promises to publish independent reports on 10 debt restructuring agreements which IBRA has signed. Many IBRA debt restructuring agreements have drawn flack from IMF for favoring debtors, while failing to recover enough money for the government.
• Finance Ministry will issue treasury bills by the end of this year to improve local debt market, increasing options for government to fund budget deficit.
• Plans to review decentralization laws to make sure provinces don't spend more money that they receive through taxation.
• Postpones planned amendments to central bank law. Government needs six months to find solution to problem. The amendment proposes government can fire central bank governor to increase bank's accountability. But IMF concerned this will reduce bank's independence.

Internal conflict threatens IBRA revenue target

Jakarta Post - August 27, 2001

Jakarta -- Drastic restructuring measures introduced by the new leadership of the Indonesian Bank Restructuring Agency (IBRA) to improve the agency's efficiency has left the agency mired in internal conflict, which analysts say could threaten its ambition to meet 2001 revenue target.

IBRA chairman I Putu Gede Ary Suta admitted that he faced resistance from people within the agency in his effort to revamp the organization. But he is optimistic that IBRA will be able to meet its revenue target of Rp 27 trillion (about US$3.1 billion) for this year.

"Clearly some people are offended by what I am doing. Cash flow- wise I am confident we can raise the Rp 27 trillion by the end of the year," he told The Jakarta Post in an interview last week.

Since his appointment as IBRA chief by former president Abdurrahman Wahid in late June, Ary Suta has embarked on a mission to boost the agency's efficiency.

IBRA is in charge of selling assets it took over from the ailing banking sector hit by the 1997 economic crisis. Controlling some Rp 600 trillion (about $68.72 billion) in assets, IBRA's success in selling them is the key to putting the country's economy back on track.

Ary Suta has moved to streamline IBRA's decision-making process, cut the overriding presence of consultants and to accelerate asset sales.

The restructuring measures will enable the agency to cut its budget spending to Rp 1.7 trillion this year from the initial budget allocation of Rp 3.1 trillion, he claimed. He did not detail the spending cuts, but said the bulk would come from slashing the number of consultancy firms working for IBRA.

He later told a media meeting that he had cut three major consultancy firms from IBRA's payroll. They are state owned consultancy firms PT Danareksa Securities and PT Bahana Securities, and the Indonesian unit of Lehman Brothers Inc. Ary Suta accused the three of outsourcing their work to other consultancy firms, a practice he called unethical and costly.

Although effective in shoring up public support, analysts warned, the restructuring introduced by Ary Suta would affect IBRA's ongoing work flow. With only some Rp 14 trillion in revenue obtained so far, the agency is under pressure to reach its revenue target of Rp 27 trillion within four months.

However, Ary Suta dismissed claims that the restructuring had stalled the agency's asset sales and debt restructuring program. He said he was speeding up asset sales to meet the revenue target, including the sales of eight companies formerly owned by the Salim Group.

Among them is publicly listed television broadcasting company PT Indosiar Visual Mandiri. IBRA expects the biggest gain from selling 49 percent of its 57.26 percent stake in the company.

Banking analyst and former IBRA Ombudsman member, Pradjoto, said he had heard that IBRA officials had become demoralized after Ary Suta took over and had "centralized" decision-making. "They [IBRA officials] just abandoned their work and left everything to him [Ary Suta]," he said. "IBRA should be restructured, but I disagree with Ary Suta's way of centralizing decisions," he told the Post.

IBRA deputy Irwan Siregar was quoted as saying by Bloomberg that many asset sales and debt restructuring proposals were left untouched by Ary Suta, a claim the latter refuted. "If there was indeed no work, how is it then that we still receive money?" Ary Suta argued.

Pradjoto added that Ary Suta should have refrained from criticizing his own men before an open forum. Ary Suta must realize that he would not be able to meet the Rp 27 trillion revenue target without the full support of IBRA officials, he said.

Ary Suta should also realize that as an official installed by the previous government, he also faces the risk of being dumped by the new government. "It's custom for a new government to place its own people in important positions of a bureaucracy," he said.