[Easttimorstudies] The Paradox of Aid in Timor-Leste

[Charles Scheiner]

The Paradox of Aid in Timor-Leste

By Guteriano Nicolau S. Neves
La’o Hamutuk, Timor-Leste Institute for Reconstruction Monitoring and Analysis,

Presented at the seminar on "Cooperação 
Internacional e a Construção do Estado no 
Timor-Leste", University of Brasilia, Brazil, 25-28 July 2006

Complete paper available in English at:
www.laohamutuk.org/reports/06ParadoxOfAid.htm

Excerpt from the introduction:

During UNTAET’s administration, international 
assistance began to flow to Timor-Leste. First 
came emergency and humanitarian assistance, then 
reconstruction and development assistance, and 
finally long term assistance. As in other third 
world countries receiving assistance, the money 
was accompanied by multilateral institutions, 
International Financial Institutions, United 
Nations agencies, Western NGOs, International 
Development Agencies (USAID, AusAID, JICA, etc), 
international staff and consultants, foreign 
businessmen, and equipment imported from 
overseas. They even brought in foreign floating 
hotel ships to house the foreign workers.

Since 1999, two billion U.S. dollars has been 
allocated to Timor-Leste as aid. The five biggest 
donors are Portugal, Australia, the United States 
of America (USA), Japan and the European 
Commission. In addition, UNTAET and UNMISET have 
their own budget, totaling US$1.7 billion, from 
assessed and voluntary contributions from UN 
Member states. In total, it’s more than three 
billion US dollars. None of this money was loans 
which have to be repaid; it’s all grants, 
projects, or operations of foreign institutions.

Some questions arise: what are the implications 
of the assistance for the nation-building 
process? Everyone has their own point of view to 
respond these questions. But viewing today’s 
reality, Timor-Leste is one of the most 
petroleum-dependent countries in the world, with 
89% of our GDP and 94% of government revenues 
from Petroleum extraction in a few years. 
Although our revenues from petroleum increase 
each month at least as long as oil prices stay 
high, they don’t impact much on people’s lives, 
as the money is not being spent or providing 
jobs.. Non-petroleum development remains low, 
growing only 0.4% in 2004 and 1.8% in 2005, and 
non-oil exports are only about $7 million/year, 
about 2% of total GDP (which is itself about one 
dollar/person/day). Unemployment increases every 
year, and is currently 23% in urban areas, 44% 
among Dili youth. Because of the latest 
incidents, it is likely to get even worse.

Although most of the state institutions defined 
in the Timor-Leste Constitution have been 
established, some of them are still pending, and 
in many, high-quality human resources and legal 
frameworks are not yet in place. We face 
challenges in dealing with checks and balances 
within the government, underlined by our 
constitution. The latest incidents reflect the 
weakness of our institutions, especially the 
military and police. These incidents also raise 
questions about the military training done by the 
USA, Australia, South Korea, Portugal, Malaysia 
and other countries, as well as the international 
advisers in every state institution, including in 
the military (F-FDTL) and police.

Human Rights Watch reported last April that the 
record of our national police on human rights is 
problematic, that they continue to use force in 
arresting suspects, and commit abuse and 
ill-treatment of detainees in police detention. 
Internal police disciplinary mechanisms remain 
weak at addressing such issues.. The HRW report 
reflects the lack of priority given to human 
rights during education and training in the 
police academy. The timeframe for this training 
is very short and many countries are involved, 
each with its own systems and methods. The 
training fails to consider the actual conditions in Timor-Leste.

The above demonstrates that Timor-Leste is still 
facing a lot of problems. So, the questions 
is:  What happened to the billions of dollars 
that have been flowing to Timor-Leste? What did 
the hundreds of advisors in state institutions 
do? This paper tries to give another perspective 
about Timor-Leste’s experience with international 
assistance from 1999 until today.

***********************************************************
Charles Scheiner
La'o Hamutuk (The East Timor Institute for 
Reconstruction Monitoring and Analysis)
P.O. Box 340, Dili, Timor-Leste
Telephone:  +670-3325013 or +670-7234335  (mobile)
email: charlie at laohamutuk.org    website: http://www.laohamutuk.org

P.O. Box 1182, White Plains, NY 10602 USA
Tel. +1-914-831-1098  or  +1-914-473-3185  (mobile)