Achievements of a “failed state”

However, the most significant development in health has been the collaboration with Cuba, which began in 2004. Cuba, a poor socialist country, has the best health system in Latin America and the largest bilateral medical aid program in the world. There are now around 100 Cuban doctors in Timor Leste, most based at village level, and several hundred young East Timorese are studying medicine in Cuba.

In December 2005 Alkatiri travelled to Cuba, visiting the students and the Cuban Government. He secured an increase in promised medical scholarships from 200 to 600. This could generate an enormous rise in health workers, particularly considering the whole country, as at 2005, only had 45 doctors. US Ambassador Grover Joseph Rees III, predictably, protested the development of a relationship with Cuba.

The US ambassador also supported the 2005 church-led protests at government attempts to make religious education optional in schools. This rally turned into demands for the criminalisation of homosexuality and abortion, the removal of “communists” from the government and for the resignation of Prime Minister Alkatiri. The US provided logistical support for the demonstrators - porta loos, to help sustain their protests. The government backed down, keeping religious education compulsory.

The other side to this developmental picture is the growth of unemployment and income poverty in Dili, which has seen its urban population double in recent years. The dislocation of 1999 and the “bubble” economy of 2000-02 contributed to the urban migration, but maintenance of rural programs could help slow it. Yet Australia and the World Bank rarely provide support for the subsistence sector and domestic markets. The large unemployed and young urban population has added to the strains that have built up around the Xanana-Mari Alkatiri rivalry, a rivalry which has been exploited by Australia in the 2006 crisis.

There was international praise for Alkatiri's fiscal conservative management, both in the budgets and in managing oil and gas revenues. However there is also international resentment at his controls over investment and his resource nationalism. In 2003 Alkatiri said, "Independence means sovereignty over all our resources". He has so far maintained the popular “debt free” start for the country, though there are plans to borrow from the Kuwait Fund, to support a national energy grid. Bypassing the World Bank in this way might cause further consternation in Australia and the US.

Caution over foreign investment and borrowing is one area where Jose Ramos Horta - the talented diplomat - differs from his prime minister. Ramos Horta has said he would prefer to "move faster" and would support more "facilities, privileges" for foreign investors. Asserting extraordinary independence from government policy, he is also the only Timor Leste minister to support the disastrous Iraq war.

The more independent economic path pursued by Alkatiri, and the more accommodating attitude shown by Ramos Horta, help explain why the latter has become the “Australian candidate” in the latest Australian intervention. Australian commentators (with little regard for East Timorese democratic processes) have openly declared their preference to replace Alkatiri and Fretilin with some sort of Ramos Horta-led coalition. Such playing of favourites is a great threat to independent development and to public institution-building in Timor Leste.

Australian intervention also has immediate dangers. Several senior army commanders are known to have lost confidence in Xanana because of his perceived links to renegade army leader Major Alfredo Reinado. Though it is not yet clear exactly what links Xanana or Ramos Horta may have with the rebel soldiers, the loyal army commanders are likely to resist any Australian-backed attempts to depose Alkatiri and the Fretilin leadership.

It seems likely that, in his attempts to overthrow Alkatiri, Reinado had at least implicit support from Catholic Church leaders and the Australian and US governments, as well as some understandings with Xanana. Observers have noted that Reinado's wife works at the US Embassy and that Reinado has undertaken extensive leadership training with the Australian armed forces. One Australian officer has said, despite the rebellion, that he regards Reinado as a future political leader. These are hostile acts against the East Timorese nation.

Whatever their prior knowledge of the Reinado-led rebellion, the Australian Government made good use of it to undermine the elected government of Timor Leste. However, domestic compromises (including two ministerial resignations, the promotion of Ramos Horta and a UN inquiry) seem to have forced a temporary back-down. Yet if the “palace coup” does not succeed on this occasion, we will need to closely watch progress in what The Australian calls the now “poisoned” relationship between the Howard and the Alkatiri governments. At stake is an independent economic path for Timor Leste.