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Billions in international aid for East Timor missing its target

Most of the money appears to have gone toward foreign security

September 13, 2009|Anthony Deutsch

DILI, EAST TIMOR — A decade after tiny East Timor broke from Indonesia and prompted one of the most expensive U.N.-led nation-building projects in history, there is little to show for the billions of dollars spent.

The world has given more than $8.8 billion in assistance to East Timor since the vote for independence in 1999, according to figures compiled by the Associated Press from the United Nations and 46 donor countries and agencies. That works out to $8,000 for each of East Timor's 1.1 million people, one of the highest per-person rates of international aid.

But little of the money, perhaps no more than a dollar of every 10, appears to have made it into East Timor's economy. Instead, it goes toward foreign security forces, consultants and administration, among other things.

In the meantime, data from the International Monetary Fund, World Bank, World Food Program, U.N. Development Program and others show the money has done little to help the poor. In fact, poverty has increased. Roads are in disrepair, there is little access to clean water or health services, and Dili, the capital, is littered with abandoned, burned-out buildings where the homeless squat.

"The international intervention has preserved the peace, which was always its primary objective," said James Dobbins, director of the Rand International Security and Defense Policy Center. "Its success in promoting political reform and economic development has been more limited."

East Timor was once seen as the poster child for U.N. nation-building.

After a bloody 24-year occupation by Indonesia that left 174,000 dead, the people of this predominantly Roman Catholic former Portuguese colony voted overwhelmingly in a U.N.-managed referendum on Aug. 30, 1999, to separate. The vote triggered a rampage by Indonesian soldiers and proxy militias who killed more than 1,000 people and destroyed much of the infrastructure.

A provisional U.N. administration restored basic services, repaired buildings and resettled hundreds of thousands of people who had lost their homes. With greater powers than for any previous mission, the U.N. was supposed to help create the pillars of a new country, virtually from scratch.

The vastness and complexity of the job became apparent in early 2006, just as the U.N. was pulling out its last staff members. Fighting broke out between rival police and army factions, killing dozens and toppling the government. Then, last February, President Jose Ramos-Horta was nearly killed by rebel gunmen in an ambush.

East Timor still faces grave challenges:

-- From 2001 to 2007, the number of East Timorese living in poverty jumped nearly 14% to about 522,000, or roughly half the population, according to the World Bank.

-- Children make up half of the poor, and 60% of those under 5 suffer malnutrition, the World Bank and World Food Program found.

-- The Norwegian Agency for Development Cooperation concluded in a 2007 report that very little aid was channeled into "productive activities, including private sector development."

-- The unemployment rate for 15- to 29-year-olds in the capital, who make up the vast majority of the national work force, was more than 40% in 2007, according to the IMF.

Atul Khare, who has headed the U.N. operation in East Timor since 2006, dismissed the World Bank and IMF figures as "absolutely incorrect" and not representative. He said the country has made "considerable progress" since 1999, and that the U.N. East Timor mission has been effective and successful.

"All these figures are a cause of concern, but they are extrapolations, they are not the real figures, and I would not rely on those figures for making assessments," he said. "In the last 10 years, with their own efforts . . . assisted by the international community, this country has largely, yes, been a success.

"Were you here in 1999? If you were not here, you cannot gauge."

Khare cited increased fertility rates, among the highest in the world, new buildings and fewer potholes in Dili as positive signs. He said accurate numbers will emerge after 2010, when the next national census is held.

But groups that study East Timor have concluded that a mere fraction of aid money is trickling into the economy -- just 10% of about $5.2 billion, estimates La'o Hamutuk, a respected Dili-based research institute. Its figure excludes more than $3 billion in military spending by Australia and New Zealand.

The other 90% went to international salaries, overseas procurement, imported supplies, foreign consultants and overseas administration, the institute said. About 20% of pledged aid was never delivered, it said.

Another group, the Peace Dividend Trust, concluded that as little as 5% of the U.N. mission budget trickled into East Timor's economy between 2004 and 2007.

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