East Timor is Asia’s youngest nation — as well as one of its poorest. From its colonization by the Portuguese in the 16th century to the 1970s, the country existed in a state of stagnancy. In his book “A Brief History of Indonesia,” author Tim Hannigan writes: “In the early 1970s, it was a place that seemed to have been forgotten by history, for in a post-colonial epoch East Timor was still a colonial territory … East Timor was a ghostly survivor of the Portuguese Empire.” Following a brutal period of Indonesian occupation that began in 1975, East Timor finally gained its full independence in 1999 resulting from a United Nations intervention.
And ever since, East Timor has been one of the world’s poorest nations. The violent struggle for independence against the Indonesians devastated the already underdeveloped nation, as most of the nation’s infrastructure and 95 percent of its schools were destroyed. As of 2014, 41.8 percent of the population was estimated to be living below the poverty line and is placed 133rd on the Human Development Index.
The solution to East Timor’s economic woes is — according to its leaders — the vast supply of oil in the Greater Sunrise oil fields located off the southern coast of the island. The problem is that the fields are equidistant from East Timor and its southern neighbor Australia, and the two nations have yet to come to an agreement about the official maritime border. The basis of East Timorese-Australian relations have hinged on this issue for nearly two decades, and despite three separate treaties, the issue remains unresolved. The dispute is hopefully about to end as there is supposedly an agreement between the two nations that would grant East Timor a maximum of 80 percent of the revenue from the oil fields that are expected to be worth $40 billion U.S. dollars.
Not only does this deal give East Timor access to revenues nearly 40 times its current GDP, it also resolves the long-standing maritime border dispute with Australia — perhaps bringing an end to the strenuous relations between the two nations. But the natural question is: What will East Timor actually do with this revenue? Afterall, the country has been blessed with oil revenues in the past and evidently has not capitalized on them. The track record for poverty-stricken, oil-producing nations is not good, and there is fear that East Timor will squander this opportunity.
For its credit, East Timor seems to be aware of the potential consequences of taking in so much money so quickly. Xanana Gusmao, the lead negotiator and former president and prime minister of East Timor, said that nations such as East Timor “must avoid the resource curse and build bridges which link petroleum and prosperity.” Gusmao said in a speech in Abu Dhabi this January that the future revenues will “lay the foundations for diversifying our economy by building other sectors of strategic industries including manufacturing, agriculture, fisheries and tourism.” With the energy sector accounting for 60 percent of the country’s GDP and 90 percent of the government’s revenue, diversification is clearly of utmost importance.
East Timor is currently mired in a political stalemate, as the current government led by Mari Alkatiri has been unable to pass its budget plan. Consequently, President Francisco “Lu-Olo” Guterres dissolved the parliament and called for an election in May of this year. He said in a statement: “For a democracy to be meaningful we must communicate with each other, listen to each other … and through serious responsible discussion reach a consensus.”
With $40 billion now suddenly in the cards, the situation in East Timor has now shifted from a strangling political impasse to an exciting opportunity. Combining this opportunity with an ongoing election increases accountability for whichever party is victorious in May.
Optimism is a tough sell for a nation coming out of such a violent conflict just two decades ago. Furthermore, oil revenues have historically not been conducive to long-term economic growth and wide-shared prosperity. But East Timor is now in a position to take charge of its own fate, which is something it hasn’t been able to do in over 500 years. Will they rise to the challenge and serve as an idol for formerly oppressed people around the world? We should hope that they do.