The Future of East Timor

In contrast to the celebratory mood in Dili, many seasoned observers of East Timor are deeply pessimistic about the fledgling nation's future.

The reasons for their pessimism are not hard to discern. An independent East Timor starts life as one of the poorest countries on the planet and the most impoverished within Asia. Despite Dili's veneer of prosperous cosmopolitanism, the harsh reality is that the country's economy is still virtually non-existent while the East Timorese people face three lean economic years before revenue from oil and gas deposits in the Timor Sea is expected to flow.

In developing states like East Timor it is a truism that economics and politics are inseparable. Budgetary pressures may quickly erode the government's reservoir of political capital, as well as its limited monetary reserves. Every drop will be needed if the business of nation building is to succeed.

There are two immediate political challenges. First, is the difficult task of reconciling supporters and opponents of independence. As East Timor's Foreign Minister, Jose Ramos Horta, observes, if the country cannot heal the emotional wounds generated by past conflicts then peace is unlikely. Without political stability East Timor will find it difficult to attract the foreign investment and international aid that is vital to economic reconstruction and development.

Festering leadership tensions are not helping. It is no secret that East Timor's charismatic and populist President, Xanana Gusmao, and Chief Minister, Mari Alkatiri, do not get on and their differences are not only personality driven. Gusmao is determined that reconciliation should be the new nation's highest priority and worries that the ruling Fretilin party, to which he once belonged, is beginning to exhibit unilateralist and authoritarian tendencies.

The pragmatic and intense Alkatiri is less forgiving of the pro-Indonesian militias and wants to entrench Fretilin's political supremacy, and focus on East Timor's myriad economic problems.

The fragile security situation is another reason for pessimism. There are well-founded fears that militia activity could resume once the UN withdraws its forces from East Timor (probably in 2004). East Timor's security could also be imperilled by internecine conflict, gang warfare, widespread unemployment, transnational crime and a host of other ills that afflict many of East Timor's Asia-Pacific neighbours.

But the pessimists would do well to remember that every cloud has its silver lining. A regression to feudalism or anarchy is not preordained. Nor is it likely provided Australia continues to play a constructive role.

East Timor's vulnerabilities must be balanced against its considerable strengths and assets. These include;

• significant commitments of aid from donor countries,
• a high international profile that can be parlayed into political and economic support,
• strong historical and emotional ties with Portugal and Australia,
• a more promising relationship with Indonesia than many would have thought possible,
• ownership of substantial off-shore oil and gas deposits,
• a dedicated, generally able leadership group.

Although East Timor's destiny is in the hands of its own people, Australia will play a crucial role in determining whether the country prospers or is consigned to the ranks of the world's failed states.

It is self-evident that Australia's policy on East Timor should be governed by the national interest. But to pose this as a stark choice between morality and Realpolitik, as some analysts do, is a false dichotomy. The challenge for Australian foreign policy is to incorporate elements of both in a coherent way.