Economist thinks free market wonderful – supprise

The Economist

Timor-Leste on its own

Young and growing

Mar 9th 2011, 11:29 by J.C. | DILI

THE taxi drivers at Timor-Lestes international
airport are a many-tongued chorus. Every one of
them has at least four different languages with
which to try talking you into paying double the
normal fare. A useful reminder of the colonial
history of one of the worlds youngest nations as
well as testament to the universal opportunism of
young men looking to make a quick buck in a free-market economy.

Of course, Timor-Leste (formerly known as East
Timor), will soon be bumped a peg down the league
table of the worlds youngest nations by
Sudan, falling just behind Montenegro and
It hardly matters. Timor-Leste is perfectly ready
to pass the torch to an even-younger brother. The
buzz of deals being done in Dili, the capital,
and an ambience of strong animal spirits are at
their highest since the country became an
independent state, in 2002. The whispers had been
about whether East Timor would be capable of
surviving on its own. Till 1975 a Portuguese
colony, Timor-Leste is little more than half an
island not one of the Indonesian archipelagos
largest isolated and broken by decades of brutal
conflict and neglectful rule by Jakarta. In 2006,
factional fighting between the army and police
killed dozens of people in Dili and left around
150,000 homeless. Their feuding was inflamed by
civilians who had been armed and goaded to fight
by rival political parties. The government
collapsed and a political crisis followed,
forcing UN peacekeepers come back in and restore
order. The talk turned to whether Timor-Leste had become a failed state.

But the new country had a card up its sleeve:
offshore oil and gas, mineral wealth just waiting
to be cashed in. Today the country is rolling in
filthy lucre. In 2002 Timor-Lestes national
budget was less than $20m; for 2011 it is more
than $1 billion. The government of Jos Xanana
Gusmo, an independence hero turned prime
minister, is spending like mad. It has busied
itself dishing out $450m for a national grid and
power plant; other contracts for roads, bridges,
farming equipment; improved pensions for the
elderly and veterans; and spending on sundry
other priorities that Mr Gusmo judges to be
essential to growth and development. The spending
spree is made possible by the East Timor
Petroleum Fund, which held $7.2 billion as of
March 1st and allows the government to draw a
small percentage of it each year to fund its
otherwise insignificant budget. Dili is a boom
town, dotted with shops, internet cafs,
restaurants, building-supply store snot to
mention the calming presence of UN vehicles and
international police officers. An
Australian-Timorese businessman is building a
giant shopping mall on 15 hectares of land near the airport.

But not everyone is pleased. Opposition
politicians, aid organisations and even the
president, Jos Ramos-Horta, have all expressed
alarm at the level of government spending and at
the absence of oversight for contract-bidding and
performance. They note too that 85% of the
population lives in rural districts, and that the
poverty rate tops 40%. Timor-Leste has the
worlds third-highest rate of child malnutrition.

It also has one of the highest rates of
population growth anywhere; only in sub-Saharan
Africa and Afghanistan is its rate of fertility
to be matched. For better or for worse, this will
be a young population, for a long time. Yet 85%
of its schoolteachers fail a test of basic
competency. Critics of the government complain
that spending should concentrate on the country’s
human capital, by improving education and health
care, and on improving agricultural irrigation,
taking into consideration that the vast majority
of Timor-Lestes 1m people are subsistence farmers.

The debate on spending priorities is playing out
on the floor of parliament, in the press, and
even at village meetings. On a return to Dili
after years away, it doesnt seem to matter so
much which side has it right. What matters more
is that the levers of a functioning
democracy governance, political opposition, a
free press, civil society, trade, infrastructure
development and the like are clearly moving in
Timor-Leste. For all the creaking and grinding,
this is working. The talk of ten or even five
years ago of a country that might just be
impossibly hot wide of the mark, mercifully.
Parliamentary and presidential elections are
scheduled for 2012 and the withdrawal of the UNs
international police force is to follow. Mark it
on the calendar as another opportunity for the
Timorese to prove they’ve made the grade.


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