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The curse of commodities

26 March 2009

The small south-east Asian nation of East Timor, also known as Timor-Leste, is no stranger to suffering and dashed hopes. This is a rich land whose people are poor - desperately poor. After 24 years of brutal occupation by its large neighbour Indonesia, independence brought with it many hopes and dreams. The island’s substantial mineral wealth further increased these expectations.

In the past two years the country has received an average of $1.1 billion a year in oil and gas revenues. A substantial amount if one takes into account its tiny population of just one million.

However, the long-suffering people have seen very little of this wealth come their way. Unemployment remains high, reaching 80 percent in the capital city, and the countryside left in a state of abandonment. While poverty has been part of daily life for the majority, it now exists side by side with small pockets of scandalous affluence resulting from the oil bonanza.

While most people live on less than a dollar a day, the 350 foreign advisors hired by the Timorese government have salaries as high as $20,000 a month, while government officials drive Lexus, Mercedes and luxury four-by-four vehicles along the potholed streets of Dili. Power cuts are frequent, with a dozen cuts a day a common occurrence.

These pockets of wealth in the middle of extreme poverty are fast breeding prostitution and drug addiction. 

Timor L'Este - facts

The economy of Timor L'Este largely relies on foreign aid and government spending generated from petroleum revenues. The enormous rebound in economic growth in 2007 (19.8%) has been assigned mostly to international personnel deployed in the country. Their spending generated a high demand for houses, goods and services while the security situation remained weak. After violence broke out in 2006, the economy contracted sharply. Reconstruction measures added to the high growth rate in 2007. The numbers are expected to have fallen back to around 3% in 2008 (official numbers not yet avaliable), which demonstrates the instability of the economy and its lack of self-sufficiency.

In the future much will depend on the government's ability to direct a steady flow of oil and gas revenues into the country in order to stimulate its economy and fight the still alarming degree of poverty. Crucial to this is Timor's sovereign wealth fund that currently comprises US$3.2 billion and is ranked the third-best run sovereign wealth fund (PDF) in the world by the Peterson Institute of International Economics. It was developed after the Norwegian model in close cooperation with Norway's "Oil for Development"-programme.

The Timorese economy relies heavily on its oil and natural gas resources, which account for roughly 98% of the country's revenues. It is therefore a sign of hope to see that the Petroleum Fund is well-managed. However, as long as corruption and violence prevail, the temptation is great for future governments to get their hands on the fund.

Near schools men wait in their cars for young girls to approach them. A young school girl relates her story, “we approach them and tell them we need a new pair of shoes to go to a party. We go with them and then do it and get our shoes". Girls are reported to have sold their bodies for as little as $5. In the countryside local journalists have reported various cases of girls as young as 10 prostituting themselves for $1.

As described by a local reporter: “In the districts the parents receive the money and sit on their veranda while their daughters are used inside their own house. This is how bad poverty is in our country.”

Traffic in young girls is becoming a serious problem. A group of 18 young girls were rescued from foreign traffickers near the border with Indonesia early this year. In a devotedly Catholic country the issue of prostitution is often ignored. Many of the women are being abused and raped by the police. Fear of reporting and social hypocrisy aggravates the problem even further.

The condition of women in Timor is, by any measure, dreadful. The country has one of the highest rates of violence against women in the world with 70 percent of the country's prison population made up of individuals convicted of rape and domestic violence.

The fact that many prominent figures in society are rumoured to visit prostitutes makes the issue even harder to address. There are persistent rumours of high-ranking government officials frequenting brothels that host young Timorese girls in addition to Indonesian, Thai, Chinese and Philippino prostitutes. A Timorese policemen from the elite CSP unit charged with VIP protection tells me with a naughty smile:

“I went to pick up Chinese girls many times for a mao bot (big brother)”
How big I ask him. A minister? “Bot diak” “bigger" he replies.

The nocturnal habits of the Timorese leadership further undermine any attempt at helping the daughters of Timor, who, after 24 years of rape and humiliation under the Indonesian military, now see their own leaders and self-proclaimed liberators turn their backs on them. Many women are being lost while their leaders pretend to be rich.

Official name República Democrática Timor-Leste (RDTL) Government Republic, Parliamentary System President Dr. José Ramos-Horta Prime minister Xanana Gusmao Capital Dili Population 925,000 (2004 Census) Religion Predominantly Roman Catholic, with Muslim and Protestant Christian minorities Languages Tetum and Portuguese (official); English and Bahasa Indonesia (working languages) and dozens of native languages/dialects GDP (per capita, PPP US$) $668 Economic growth 2006: 2.3%
2006: -3.4%
2007: 19.8%
Poverty 43% of population living on less than 1.25 US$ a day, making it the poorest country in East Asia & Pacific Income distribution & inequality
Gini index: 39.52%
(with 0%=perfect income equality, 100%=perfect income inequality

Currency American dollar Main exports Coffee, oil and natural gas Life expectancy 60,2 years Human development index 0.483 (ranks 158th out of 179 countries) Sources: UNDP – The Human Development Index, World Bank Regional Data Data compiled by Dennis Nottebaum

The country is also attracting a growing number of foreign sex workers brought into the country by Chinese and south-east Asian crime syndicates. According to The Alola Foundation, an NGO headed by Prime Minister Gusmao's Australian wife, more than 200 foreign sex workers are believed to be in Timor - many against their will. Alola is one of the very few organisations that has paid any attention to the plight of the many Timorese and foreign girls.

As I walked out of a Dili night club I saw a young girl not more than eight years old holding her little brother, who was about four, by the hand. I asked them what they are doing here at three o'clock in the morning, "You should be at home", I say. She says "need money to buy food”. I press them further, after a few more questions the girl, with innocence still in her eyes, tells me. “My older brother sends me, he is at the end of the road, if I don’t get money he beats me". I give her $5 and walk away still wondering if I did the right thing. Children don’t belong on the street and certainly not in an oil-rich nation.

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