In the weeks before Timor-Leste’s historic 1999 vote for independence, amid violence and destruction, there was a rising sense that the horror and misery of the previous 24 years would soon be over. In the face of massive intimidation, an overwhelming majority voted for independence, with high expectations of what the future would hold. 20 years later, many may be reflecting on those hopes and expectations.
In the years since 1999, Timor-Leste has rebuilt from the ground up. Yet the limited capacity of newly independent states can rarely match expectations and often spill over into violence, authoritarian responses and, frequently, one-party rule. Timor-Leste escaped the last part of this fate in 2006, in significant part because of international intervention, and has since emerged as the most democratic state in Southeast Asia.
Democracy does not, however, necessarily imply good decision-making, nor does it obviate the influence of charismatic figures, such as former guerrilla leader, president and prime minister, Xanana Gusmao. Gusmao has been a uniting figure for most East Timorese, not least for personifying what many believed would be an unrealizable dream of independence. With Timor-Leste’s nay-sayers proven wrong once, Gusmao’s vision for the country has reflected hope – and luck – over probability.
The 2007 elections settled remaining political tensions and windfall oil income from the Timor Sea oil fields helped buy off disaffected soldiers and veterans, provide funds for rebuilding thousands of razed homes, and allowed small pensions for the elderly. Importing subsidized rice and better information led to a dramatic fall in infant and maternal mortality, and a related increase in life expectancy.
Less positively, since then, such indicators have stagnated, while malnutrition and poor education remain endemic. The country remains heavily dependent on imported foodstuffs, while the agricultural sector remains unlikely to reach even basic self-sufficiency.
Crucially, government spending over more than a decade has been at double or more of sustainable (three per cent) withdrawals from the country’s $16 billion sovereign wealth Petroleum Fund. With the Timor Sea oil fields expected to cease production by 2023 and no other meaningful sources of income, at the current rate of spending the country will be broke before 2030.
Since 2007, Timor-Leste has focused on the Timor Sea’s potential $50 billion Greater Sunrise liquid natural gas (LNG) and oil field to boost revenues and, in theory, create desperately needed jobs. The resolution of the Timor Sea dispute with Australia in Timor-Leste’s favor brought the Greater Sunrise field a step closer to being developed. But the project remains at a standstill.
The Timor-Leste government insists that the LNG be piped to a planned processing plant on the country’s south coast. Lead Greater Sunrise operator Woodside Petroleum is deeply reluctant to lay pipelines across a technically challenging deep undersea trench to Timor-Leste’s south coast, preferring either a floating platform or piping to Darwin. This has put the project on hold, perhaps indefinitely.
Timor-Leste has tried to get around this by moving to buy out Woodside’s partners, seeking a majority consortium share to develop the field itself. It has already committed to building the LNG refinery, plus infrastructure, at a cost of at least five billion dollars – potentially up to $16 billion for the whole project. Yet the country does not have the technical capacity to build or run an LNG plant.
If Timor-Leste does go it alone it is, on balance, likely to be a white elephant and quickly exhaust the country’s limited financial reserves. Timor-Leste may then require a loan, probably from China, which will make it beholden to a regional superpower whose intentions are not always benign and which is at strategic odds with neighbors such as Australia and Indonesia.
If Greater Sunrise is developed by Woodside, on the other hand, Timor-Leste stands to deliver much needed revenue to the sovereign wealth fund at virtually no domestic cost. And it will allow the country time to work out an economically sustainable way forward.
The events of 1999 required a very particular set of circumstances to deliver independence; the Cold War had ended and the US was less concerned to prop up allies such as Indonesia’s President Suharto, Indonesia was in economic crisis, and idiosyncratic post-Suharto President B.J. Habibie acted against his country’s elites and military by allowing Timor-Leste’s referendum on independence. That the ballot had the support of the wider international community was a rare exception.
Achieving independence was extraordinarily difficult and, on the back of 24 years of resistance, was borne of a lucky confluence of circumstances. Successfully running a young country is, however, less reliant on lucky circumstances and much more on making sound decisions.
If Timor-Leste can reconcile its ambitions with its capacity, it has a chance of remaining a stable developing country. If it over-reaches, which it appears to be doing, it is likely to fall flat on its economic face, with disastrous consequences for its long-suffering people.